STRATEGIC ALLIANCE AGREEMENT
AMONG
EPHONE TELECOM, INC.
AND
7BRIDGE SYSTEMS, LTD.
This Strategic Alliance Agreement (the "Agreement") is made as of July
7, 2000, between ePHONE TELECOM, INC., a corporation incorporated under the laws
of the State of Florida and having its principal office at 1145 Herndon Parkway,
Suite 100, Herndon, VA 20170 ("ePHONE"), and 7BRIDGE SYSTEMS, LTD., a
corporation incorporated under the laws of the Republic of Mauritius and having
its principal office at Suite 1803, CLI Building, 313-317 Hennessy Road,
Wanchai, Hong Kong ("7bridge").
RECITALS
WHEREAS, ePHONE is in the business of providing certain
telecommunications services, including international long distance services that
allow users to perform phone-to-phone one step dialing via Voice over Internet
Protocol;
WHEREAS, ePHONE wishes to establish and formalize a relationship with
7bridge in order for 7bridge to engage in the sale of ePHONE services in the
Asia-Pacific region;
WHEREAS, 7bridge wishes to gain access to ePHONE's expertise in order
to accelerate the start-up of operations of 7bridge in certain countries in the
Asia-Pacific region; and
WHEREAS, 7bridge wishes to engage in the sale of ePHONE services in
certain countries in the Asia-Pacific region.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants, agreements and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE 1.
SALE AND PURCHASE OF ASSETS
Section 1.1 Sale and Purchase of Assets. Subject to the terms and
conditions of this Agreement, on the Closing Date (hereinafter defined), ePHONE
shall sell, transfer, convey and deliver to 7bridge ePHONE's Array Telecom
Corporation ("Array") Series 3000 gateway, currently located in Hong Kong, (the
"Purchased Asset"). The transfer and conveyance of the Purchased Asset shall be
made by a bill of sale (the "Bill of Sale") in substantially the form attached
hereto as Exhibit A.
ARTICLE 2.
LICENSES
Section 2.1 License. Subject to the terms and conditions herein, as of
the Closing Date, ePHONE grants to 7bridge, and 7bridge accepts, a right and
license to market, distribute and sell (the "License") certain ePHONE products
and services set forth on Exhibit B hereto (the "Licensed Products"), and any
other products subsequently agreed upon, to customers in certain designated
countries set forth on Exhibit C hereto ("Designated Countries"). The License
granted herein shall terminate upon the expiration of this Agreement. The
License shall not be subject to sublicense, assignment or transfer without the
prior written consent of ePHONE.
Section 2.2 Trademark License. Subject to the terms and the conditions
of the Agreement, as of the Closing Date, ePHONE grants to 7bridge, and 7bridge
accepts, a right and license to use the common law trademark and service mark
"ePHONE" to promote and sell the Licensed Products (the "Trademark License").
The Trademark License granted herein shall terminate upon the expiration of this
Agreement. The Trademark License shall not be subject to sublicense, assignment
or transfer without the prior written consent of ePHONE.
ARTICLE 3.
REPRESENTATIONS BY 7bridge
Section 3.1 Organization and Qualification. 7bridge is a corporation
duly organized, validly existing and in good standing under the laws of the
Republic of Mauritius and has all necessary corporate power and authority to own
its assets and carry on its business as it is presently being conducted. 7bridge
is duly qualified and in good standing to do business in each jurisdiction in
which its business makes such qualification necessary, except in those
jurisdictions where failure to be duly qualified and in good standing does not
and cannot reasonably be expected to have, in the aggregate, a material adverse
effect on its properties or its business. 7bridge is in a position to carry out
the purpose and execute the terms of its business plan (the "Business Plan") and
to deliver such Business Plan to ePhone within forty-five (45) days of the
Closing Date (the "45-Day Term").
Section 3.2 Authority Relative to Agreement. 7bridge has all necessary
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery by
7bridge of this Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by the Board of Directors of
7bridge and no other corporate proceedings on the part of 7bridge are necessary
with respect thereto. This Agreement has been duly executed and delivered by
7bridge, and constitutes the valid and binding obligation of 7bridge enforceable
against 7bridge in accordance with its terms except as its terms may be limited
by (i) bankruptcy, insolvency or similar laws affecting creditors' rights
generally or (ii) general principles of equity, whether considered in a
proceeding in equity or at law.
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Section 3.3 No Violation. The execution and delivery by 7bridge of this
Agreement does not, and the consummation of the transactions contemplated hereby
will not, (i) violate or result in a breach of any provision of the Certificate
of Incorporation or bylaws of 7bridge, or (ii) violate any law or regulation, or
any judgment, order or decree of any court, governmental body, commission,
agency or arbitrator applicable to 7bridge or its business excluding such
defaults and violations which do not and cannot reasonably be expected to have a
material adverse effect on its properties or its business.
Section 3.4 Absence of Litigation. There are no actions, suits, claims,
investigations or proceedings pending or, to the knowledge of 7bridge,
threatened against 7bridge, before any court, governmental body, commission,
agency or arbitrator, which have or can reasonably be expected to have a
material adverse effect on its business or which seek to limit, in any manner,
the right of 7bridge to control the Purchased Asset after the consummation of
the transactions contemplated in this Agreement. Furthermore, there are no
judgments, orders or decrees of any such court, governmental body, commission,
agency or arbitrator which have or can reasonably be expected to have any such
effect.
ARTICLE 4.
REPRESENTATIONS BY EPHONE
Section 4.1 Organization and Qualification. ePHONE is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida and has all necessary corporate power and authority to own its
assets and carry on its business as it is presently being conducted. ePHONE is
duly qualified and in good standing to do business in each jurisdiction in which
its business makes such qualification necessary, except in those jurisdictions
where failure to be duly qualified and in good standing does not and cannot
reasonably be expected to have, in the aggregate, a material adverse effect on
its properties or its business.
Section 4.2 Authority Relative to Agreement. ePHONE has all necessary
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery by
ePHONE of this Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by the Board of Directors of
ePHONE and no other corporate proceedings on the part of ePHONE are necessary
with respect thereto. This Agreement has been duly executed and delivered by
ePHONE and constitutes valid and binding obligations of ePHONE enforceable
against ePHONE in accordance with their terms except as their terms may be
limited by (i) bankruptcy, insolvency or similar laws affecting creditors'
rights generally or (ii) general principles of equity, whether considered in a
proceeding in equity or at law.
Section 4.3 No Violation. The execution and delivery by ePHONE of this
Agreement does not, and the consummation of the transactions contemplated hereby
will not, (i) violate or result in a breach of any provision of the Articles of
Incorporation or bylaws of ePHONE, or (ii) violate any law or regulation, or any
judgment, order or decree of any court, governmental body, commission, agency or
arbitrator applicable to ePHONE or its business as presently conducted excluding
such defaults and violations which do not and cannot reasonably be expected to
have a material adverse effect on its properties or its business.
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Section 4.4 Titles to Assets. ePHONE holds good and marketable title to
the Purchased Asset, free and clear of any encumbrances, and has the right to
sell, transfer and assign the Purchased Asset to 7bridge and to grant the
License and the Trademark License to 7bridge.
Section 4.5 Absence of Litigation. There are no actions, suits, claims,
investigations or proceedings pending or, to the knowledge of ePHONE, threatened
against ePHONE, before any court, governmental body, commission, agency or
arbitrator, which have or can reasonably be expected to have a material adverse
effect on its business or which seek to limit, in any manner, the right of
ePHONE to control the Purchased Asset after the consummation of the transactions
contemplated in this Agreement. Furthermore, there are no judgments, orders or
decrees of any such court, governmental body, commission, agency or arbitrator
which have or can reasonably be expected to have any such effect.
ARTICLE 5.
OTHER AGREEMENTS
Section 5.1 Non-Competition.
---------------
(a) In connection with the granting of the License and the
Trademark License, ePHONE agrees not to compete with 7bridge in the marketing
and sale of the Licensed Products in the Designated Countries for a period of
one year from the Closing Date. Notwithstanding the foregoing, ePHONE shall be
permitted to sell equipment and software (but not long distance service) to any
current customer of ePHONE in any of the Designated Countries.
(b) In connection with this Agreement, 7bridge agrees not to
compete with ePHONE in the marketing and sale of the Licensed Products outside
of the Designated Countries for a period of one year from the Closing Date.
Section 5.2 Public Announcements. As of the Closing Date, the parties
will consult with each other before issuing any press releases or making any
public statements with respect to this Agreement or the transactions
contemplated hereby and will not issue any such press release or make any such
public statement without the prior consent of the other, except to the extent
required by law.
Section 5.3 7bridge Purchases of Licensed Products. During the term of
this Agreement, 7bridge shall be entitled to purchase Array Series 3000 gateways
pursuant to the discount schedule (the "Discount Schedule") attached hereto as
Exhibit D. Notwithstanding the terms set forth on the Discount Schedule, in the
first six calendar months after the Closing Date, 7bridge shall be entitled to
purchase Array Series 3000 gateways at a discount of forty percent (40%) from
current published prices charged by ePHONE to third parties.
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Section 5.4 Services Provided by ePHONE. ePHONE shall provide call
termination, training, technical support services, customer support services and
product development resources on terms to be mutually agreed upon at a date in
the future by the parties hereto, but in no event on terms less favorable than
ePHONE provides to its other strategic partners.
Section 5.5 Future Arrangements. Within 90 days of the date of this
Agreement the parties will agree on terms and compensation for exchange of sales
leads, traffic termination and other relevant matters.
ARTICLE 6.
CLOSING OF TRANSACTIONS
Section 6.1 Time and Place of Closing. The closing ("Closing") shall
take place at 1145 Herndon Parkway, Suite 100, Herndon, Virginia 20170 on (i)
July 7, 2000 or (ii) such other date as may be agreed upon by the parties
(either of which dates is referred to in this Agreement as the "Closing Date").
If the Closing takes place, the Closing and all of the transactions contemplated
by this Agreement shall be deemed to have occurred simultaneously and become
effective at the same time on the Closing Date.
Section 6.2 Deliveries by 7bridge. At the Closing, 7bridge shall
deliver to ePHONE the following:
(a) $100 in cash;
(b) a letter from each Peter Francis resigning from the Board of
Directors of ePHONE and Robert Clarke resigning from the position of Chairman of
the Board. Both Robert Clarke and John Fraser remaining on the board of
directors until replacements are identified.
(c) certified copies of the resolutions duly adopted by 7bridge
constituting all necessary corporate authorization for the consummation by
7bridge of the transactions contemplated by this Agreement;
(d) a certificate dated as of a recent date from Shane Weir of
Weir & Associates, legal counsel to 7bridge, as to the good standing of 7bridge;
(e) a certified copy of the Business Plan of 7bridge, to be
delivered within the 45-Day Term;
(f) such other documents, instruments, certificates and writings
as reasonably may be requested by ePHONE at least three business days prior to
Closing; and
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Secttion 6.3 Deliveries by ePHONE. At the Closing, ePHONE shall deliver
to 7bridge the following:
(a) A Bill of Sale substantially in the form of Exhibit A
attached hereto, duly executed, transferring to 7bridge title to the
Purchased Asset;
(b) Certified copies of resolutions duly adopted by ePHONE
constituting all necessary corporate authorization for the consumption
by ePHONE of the transactions contemplated by this Agreement;
(c) A certificate dated as of a recent date from the Florida
Secretary of State as to the good standing of ePHONE; and
(d) Such other documents, instruments, certificates and
writings as reasonably may be requested by 7bridge at least three
business days prior to Closing.
ARTICLE 7.
TERM AND TERMINATION
Section 7.1 Term
This Agreement and the licenses granted herein shall become effective
as of the Closing Date and shall remain in effect for a period of one year,
subject to automatic renewal for additional one year periods unless ePhone
notifies 7bridge at least 60 days prior to the end of a year period of its
election not to renew the Agreement, or unless terminated pursuant to Section
7.2 (the "Term").
Section 7.2 Termination. This Agreement and the licenses granted herein
may be terminated prior to the expiration of the
Term:
(g) by the mutual agreement of 7bridge and ePHONE;
(h) by ePHONE, if:
(i) 7bridge does not receive with 30 days of the
Closing Date a minimum of $250,000 in equity financing;
(ii) 7bridge does not receive on or before December
31, 2000, a minimum of $1,000,000 in equity financing;
(iii) 7bridge does not hire at least four full time
equivalent employees to market Licensed Products and to manage
its activities in connection with the Agreement within the
45-Day Term;
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(iv) 7bridge defaults in the performance of any
covenant, agreement, term, or provision under this Agreement,
and such default continue for a period of thirty (30) days
after the written notice thereof by ePHONE to 7bridge;
(v) 7bridge files a voluntary petition for
bankruptcy, reorganization, or an arrangement under any
bankruptcy or involuntary law, or an involuntary petition
under any such law being filed against 7bridge and not
dismissed within sixty (60) days; or
(vi) 7bridge makes an assignment for the benefit of
its creditors.
Section 7.3 Effect of Termination. Following the termination of this
Agreement, 7bridge shall immediately cease its activities in connection with
this Agreement, including, without limitation, the use of the "ePHONE" name in
connection with any marketing or sales of the Licensed Products.
ARTICLE 8.
MISCELLANEOUS PROVISIONS
Section 8.1 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) upon
confirmation of receipt of facsimile; (ii) one (1) business day following the
date sent when sent by overnight delivery; or (iii) five (5) business days
following the date mailed when mailed by registered or certified mail return
receipt requested and postage prepaid to the following address:
If to 7bridge:
7bridge Systems Ltd.
Attention: Robert Clarke
Suite 1803, CLI Building
313-317 Hennessy Road
Wanchai, Hong Kong
Phone: 852-2838-6126
Fax. 852-2514-3601
Copy to:
Weir & Associates
Attention: Shane Weir
5th Floor, Landmark East
12 Ice House Street
Central, Hong Kong
Phone: 852-2526-1767
Fax. 852-2868-3568
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If to ePHONE:
ePHONE Telecom, Inc.
Attention: Row Zadeh
1145 Herndon Parkway, Suite 100
Herndon, VA 20170
Phone: (703) 787-7001
Fax: (703) 787-7009
Email: Row.Zadeh@arraytel.com
Copy to:
Arnold & Porter
Attention: Paul D. Freshour
555 Twelfth Street, N.W.
Washington, D.C. 20004-1202
Phone: (202) 942-5872
Fax: (804) 942-5999
Email: paul_freshour@aporter.com
Section 8.2 Arbitration
(a) Any dispute, controversy or claim arising under, out of or
relating to the Agreement or the License Agreement (any "Dispute"),
shall be solely, finally and conclusively settled by arbitration in
accordance with the Commercial Arbitration Rules (the "Rules") of the
American Arbitration Association (the "AAA") in force when such
arbitration is commenced. The arbitration shall take place in
Washington, D.C. The Dispute shall be decided in accordance with the
laws of the Commonwealth of Virginia. In the event that more than one
Dispute is pending at the same time, such Disputes shall be
consolidated in a single arbitral proceeding.
(b) In any dispute between the parties hereto, the number of
arbitrators shall be three. If the parties are unable to agree on the
arbitrators, the arbitrators shall be selected in accordance with the
Rules.
(c) The parties hereto intend that the provisions to arbitrate
set forth herein be valid, enforceable and irrevocable. The
arbitrator's award shall be final and binding upon the parties. The
parties shall carry out the final order on the award without delay and
waive their right to assert any form of recourse against, or objection
or defense to such order or its enforcement insofar as such waiver can
validly be made. Judgment upon the award may be entered by any court
having jurisdiction thereof or having jurisdiction over the parties or
their assets or application may be made for judicial acceptance of the
award and an order of enforcement, as the case may be.
(d) Each party to the arbitration proceeding shall pay the
fees and expenses of such party's attorney's and witnesses. The fees
and expenses of the arbitrator and all other expenses shall be borne by
the party that loses the arbitration. The parties agree that if it
becomes necessary for any party to enforce an arbitral award by a legal
action or additional arbitration or judicial methods, the party against
whom enforcement is sought shall pay all reasonable costs and
attorneys' fees incurred by the party seeking to enforce the award.
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Section 8.3 Governing Law. This Agreement shall be governed in all
respects, and it and the transactions contemplated hereby shall be construed and
interpreted, by the laws of the Commonwealth of Virginia without regard to its
choice of law rules.
Section 8.4 Entire Agreement. This Agreement, including the Exhibits
attached hereto, constitutes the entire agreement between the parties with
respect to the subject matter hereof, and supersedes all other prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof.
Section 8.5 Counterpart Copies. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 8.6 No Third Party Beneficiaries This Agreement shall not
confer any rights or remedies upon any person or entity other than the parties
and their respective successors and permitted assigns.
Section 8.7 Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Any of the parties hereto shall be permitted
to assign this Agreement to a successor in interest of all or substantially all
of its assets, or to an affiliated entity.
Section 8.8 Amendments. No amendment of any provision of this Agreement
shall be valid unless the amendment shall be in writing and signed by all
parties hereto.
Section 8.9 Waivers. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, regardless of
whether intentional, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
Section 8.10 Severability. Any term or condition of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
Section 8.11 Construction. The parties have participated mutually in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted mutually by the parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement.
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Section 8.12 Headings. The Article and Section headings contained in
this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement by its duly authorized officer as of the date first set forth above.
7BRIDGE SYSTEMS, LTD.
Name: /s/ Robert C. Clarke
-------------------------
Title: Chief Executive Officer
-----------------------
ePHONE TELECOM, INC.
Name: /s/ Row Zadeh
---------------------------
Title: Chief Executive Officer
---------------------------
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