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EXHIBIT 10.51
AGREEMENT
THIS AGREEMENT is made by and between Intelect Communications Systems
Limited, a Bermuda corporation (the"Company"), Intelect Network Technologies
Company, formerly known as Intelect, Inc., a wholly-owned subsidiary of the
Company ("Intelect"), and Xxxx Xxxxxxxxxx ("Xxxxxxxxxx").
WHEREAS, Intelect, Xxxxxxxxxx, and Electronic Communications Systems,
Inc., a corporation owned by Xxxxxxxxxx and Xxxxxxx Xxxxxxx, entered into that
certain Irrevocable Option Agreement dated as of October 1, 1995, providing
for, among other things, the right and option of Intelect to purchase certain
technology concerning switching of digital data communications signals on
fiber-optic cable (as described in the Option Agreement, the "Technology"):
WHEREAS, Section 1.5 (b) of the Option Agreement provides in part that
Intelect will pay to Xxxxxxxxxx a product royalty for a period of ten (10)
years commencing with the date of the exercise of the Option on all products
sold by Intelect (as further described in the Option Agreement, the "Product
Royalty");
WHEREAS, Intelect exercised the Option and purchased the Technology,
and the parties desire to enter into this Agreement to provide that Xxxxxxxxxx
will release Intelect from all of its remaining obligations under the Option
Agreement, including specifically the obligation to pay the Product Royalty, in
exchange for the receipt of shares of Common Stock of the Company as set forth
in this Agreement:
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereby agree as follows:
1. Consideration. Xxxxxxxxxx hereby acknowledges and agrees that
Intelect has fulfilled all of its obligations under the Option Agreement except
for the continuing obligation to pay the Product Royalty in accordance with the
provisions of Section 1.5 (b) of the Option Agreement. Accordingly, in
consideration of the agreement of the Company to issue to Xxxxxxxxxx 542,182
shares of the Company's Common Stock (the "Shares") and pay Xxxxxxxxxx a total
of $60,000 within the next 120 days, Xxxxxxxxxx does hereby release,
extinguish and cancel all of his rights in and under the Option Agreement,
including without limitation, any and all rights that Xxxxxxxxxx may have to
any Product Royalty under Section 1.5 (b) of the Option Agreement, whether
accrued and unpaid or to be paid in the future, and Xxxxxxxxxx does hereby
release to Intelect all of his right, title and interest in and to the
Technology, whether arising under the Option Agreement or otherwise, and
Xxxxxxxxxx does hereby further release and discharge Intelect, the Company, and
all of their affiliates and related entities, successors, transferees, assigns,
officers, directors, employees, and representatives (the "Released Parties")
from any and all claims, demands, causes of action of any kind or nature,
whether known or unknown, liquidated or contingent, against the Released
Parties under the Option Agreement, arising out of or related to or connected
with the
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transactions contemplated by the Option Agreement, and of or relating to the
Technology or any rights to the Technology. Xxxxxxxxxx further agrees to
indemnify and hold harmless the Released Parties from and against any and all
losses or damages, including attorneys fees, arising from or relating to any
claims, demands, or causes of action of any kind or nature, made by any person
claiming any rights directly or indirectly to the Technology. Xxxxxxxxxx
acknowledges and agrees that the Released Parties will suffer irreparable
damage in the event any such person asserts claims or rights to the Technology,
and accordingly, Xxxxxxxxxx covenants and agrees that the Company shall have
the right to cancel the Shares issuable to Xxxxxxxxxx pursuant to this
Agreement as a remedy to offset against the Company's rights to indemnification
by Xxxxxxxxxx hereunder. To protect the Company's rights to indemnification
hereunder, Xxxxxxxxxx further specifically authorizes the Company to instruct
the Company's transfer agent to notify the Company prior to effecting the
transfer of any of the Shares.
2. Investment Representation. Xxxxxxxxxx agrees and acknowledges
that the Company, in issuing the Shares pursuant to this Agreement, is relying
upon the availability of an exemption from the registration requirements of
federal and state law, and that consequently the Shares may not be sold or
transferred unless the Shares are either registered or an available exemption
from registration is fully complied with with respect to such Shares.
Xxxxxxxxxx accordingly represents to the Company that he is acquiring the
Shares for investment purposes only and that the Shares may not be sold except
upon receipt of evidence by the Company that the Shares have either been
registered under applicable federal and state law or an available exemption
from registration has been fully complied with. Xxxxxxxxxx further agrees and
acknowledges that each certificate evidencing such Shares shall bear a
restrictive legend reading substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN WITHOUT A
VIEW TO THE DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH SUCH ACT AND THE RULES
AND REGULATIONS THEREUNDER AND IN ACCORDANCE WITH THE APPLICABLE STATE
SECURITIES LAWS. THE ISSUER OF THESE SHARES WILL NOT TRANSFER SUCH
SHARES EXCEPT UPON RECEIPT OF EVIDENCE SATISFACTORY TO THE COMPANY
THAT THE REGISTRATION PROVISIONS OF SUCH ACT HAVE BEEN COMPLIED WITH
OR THAT SUCH REGISTRATION IS NOT REQUIRED AND THAT SUCH TRANSFER WILL
NOT VIOLATE ANY APPLICABLE STATE SECURITIES LAWS.
3. Registration Rights.
(a) Subject to the terms hereof, if at any time or from time to
time the Company or any shareholder of the Company shall determine to register
any of its securities (except for registration statements relating to employee
benefit plans or exchange offers), either for its own account or the account of
a security holder, the Company will promptly give to Xxxxxxxxxx written notice
thereof no less than 10 days prior to the filing of any registration
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statement; and include in such registration (and any related qualification
under blue sky laws or other compliance), and in the underwriting involved
therein, if any, such Shares as Xxxxxxxxxx may request in a writing delivered
to the Company within 5 days after Xxxxxxxxxx'x receipt of Company's written
notice.
(b) Xxxxxxxxxx may participate in any number of registrations
until all of the Shares held by Xxxxxxxxxx have been distributed pursuant to a
registration or until the Shares are transferable pursuant to Rule 144 under
the Securities Act.
(c) If any registration statement is an Underwritten Public
Offering, the right of Xxxxxxxxxx to registration pursuant to this Section
shall be conditioned upon each such holder's participation in such reasonable
underwriting arrangements as the Company shall make regarding the offering, and
the inclusion of Shares in the underwriting shall be limited to the extent
provided herein. Xxxxxxxxxx and all other shareholders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other holders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the managing
underwriter selected for such underwriting by the Company. Notwithstanding any
other provision of this Section, if the managing underwriter concludes in its
reasonable judgment that the number of shares to be registered for selling
shareholders (including Xxxxxxxxxx) would materially adversely effect such
offering, the number of Shares to be registered, together with the number of
shares of Common Stock or other securities held by other shareholders proposed
to be registered in such offering, shall be reduced on a pro rata basis based
on the number of Shares proposed to be sold by Xxxxxxxxxx as compared to the
number of shares proposed to be sold by all shareholders.
(d) The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section prior to the effectiveness of
such registration whether or not Xxxxxxxxxx has elected to include securities
in such registration.
(e) All Registration Expenses shall be borne by the Company.
Unless otherwise stated herein, all Selling Expenses relating to securities
registered on behalf of the holders of Registrable Securities shall be borne by
the holders of Registrable Securities.
4. Transferability. No party may assign this Agreement or the
rights and obligations hereunder without the express written consent of the
other parties. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of each of the parties hereto and its
respective successors and assigns, including any corporation with which, or
into which, a party hereto may be merged or which may succeed thereto.
5. Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Texas.
6. Entire Agreement; Amendment. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to
the subject hereof. This Agreement, or any provision hereof, may be amended,
waived, discharged or terminated upon the written consent of the Company and
the Purchaser.
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7. Notices, etc. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been duly given or made when delivered
to the party to which such notice, request, demand or other communication is
required or permitted to be given or made under this Agreement, addressed to
such party at its address set forth below or at such other address as either of
the parties hereby may hereafter notify the other in writing.
To Corporation: INTELECT COMMUNICATIONS SYSTEMS LIMITED
INTELECT NETWORK TECHNOLOGIES COMPANY
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
Attention: Xxxxxx Xxxxxxxx, Chairman and CEO
with a copy to: Xxxxxx X. Sudan, Jr.
Xxxx & Sudan, L.L.P.
000 Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
To Xxxxxxxxxx: Xxxx Xxxxxxxxxx
0000 Xxxxxxx
Xxxxx, Xxxxx 00000
Telephone: 000-000-0000
8. Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any party
to this Agreement shall impair any such right, power or remedy of such party
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this agreement, must be in
writing and shall be effective only to the extent specifically set forth in
such writing. All remedies, either under this Agreement or by law or otherwise
afforded to any party to this Agreement, shall be cumulative and not
alternative.
9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
10. Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision.
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11. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
IN WITNESS WHEREOF, the Company, Intelect, and Xxxxxxxxxx have
executed this Agreement this 25th day of April, 1997.
INTELECT COMMUNICATIONS SYSTEMS LIMITED
By: /s/ XXXXX X. XXXXXXX, XX.
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Name: Xxxxx X. Xxxxxxx, Xx.
Title: Vice President/Chief Financial Officer
INTELECT NETWORK TECHNOLOGIES COMPANY
By: /s/ XXXX XXXXXX
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Name: Xxxx Xxxxxx
Title: President
XXXX XXXXXXXXXX
/s/ XXXX XXXXXXXXXX
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Xxxx Xxxxxxxxxx
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