STRATEGIC ALLIANCE AGREEMENT
Made and entered on this ____ day of ___________1996
by and between
Logiphone Telephone Communications Ltd., a limited company registered and
validly existing under the laws of the State of Israel, with registered
offices at 0 Xxxxxxxx Xx., Xxxxxxxxxx Xxxx, X.X.X. 0000, Ra'anana 00000
Xxxxxx (hereinafter, "Logiphone");
on the first part;
And
1. Logiphone Group, Inc., formerly known as Star Resources, Inc.,
a corporation incorporated and validly existing under the laws of the State
of Delaware, USA. with registered offices at Xxx Xxxxxxx Xxxxxx, Xxxxx 000,
0000 XXX Xxxxxxx L.B. 56 Xxxxxx, Xxxxx 00000 (hereinafter, "Star");
2. ICA BV, a B.V., registered and validly existing under the laws
of The Netherlands, with registered offices at Brasem 31-4941 SE
Raamsdanksveer (hereinafter: "ICA");
(hereinafter jointly together referred to as: "Strategic Partner"):
on the second part;
Whereas, Logiphone is engaged in the design, manufacture and marketing of
telephone exchanges and Other telecommunications equipment; and
Whereas, ICA is engaged in marketing, distribution and sale,
directly and through a network of agents and dealers, of telephone
communications equipment and services; and
Whereas, pursuant to an agreement dated October 10, 1996, Star has
purchased the entire outstanding and issued share capital of ICA in
consideration of the issue of Star Common Stock; and
Whereas, Strategic Partner wishes to purchase telephone communications
equipment from Logiphone and Logiphone wishes to sell such equipment to
Strategic Partner and Strategic Partner wishes to fund
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certain capital requirements of Logiphone so as to enable Logiphone to
further develop products the Strategic Partner may wish to purchase under the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration or the premises and of the respective
representations and warranties hereinafter set forth and the covenants and
undertakings contained herein, the parties agree as follows:
1. Introduction
1.1 The preamble and appendices to this Agreement form an integral
part hereof.
1.2 The headings of the paragraphs of this Agreement are inserted
for convenience only and do not constitute an integral part
hereof.
1.3 Star and ICA enter into this Agreement jointly and severally
and shall together be referred to as "Strategic Partner".
1.4 Except as expressly provided for herein, this Agreement shall
be effective as of the Effective Date. In the event that
the Effective Date has not been reached by December 15,1996,
then this Agreement shall be null and void and the parties
hereto shall have no claim against the other in respect
hereof.
2. Definitions
As used herein, the following terms shall, unless the context clearly indicates
otherwise, have the following meanings:
2.1 "Effective Date" shall mean the day upon which Logiphone shall have
received at least $250,000 of the funds as stated in Section 7 below.
2.2 "Proprietary Rights" shall mean any patent, registered or pending, methods,
models, technical data, plans, drawings, shape, designs, names, trade names,
patents, calculations, or sketches relating to any product designed, developed,
produced or sold by Logiphone, and any improvement, modification or enhancement
thereof.
3. Representations and Warranties of Logiphone
Logiphone warrants and represents to Strategic Partner as follows, which
representations and warranties shall survive the Effective Date, regardless of
what investigation, if any, Strategic Partner shall have made thereof:
3.1 Logiphone is a limited liability company, duly incorporated, validly
existing and in good standing under the laws of the State of Israel. Logiphone
has full power and authority to own its property to
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conduct the business being conducted by it and contemplated to be conducted
hereunder, and to execute, deliver and perform this Agreement.
3.2 Logiphone has the technical know-how required for the fulfillment of
its undertakings obligations herein.
3.3 No consents or approvals of any government or government agency or any
other public or third party are required by Logiphone to execute, deliver and
perform this Agreement.
3.4 This Agreement executed by Logiphone is a valid and binding obligation
of Logiphone and is enforceable against it in accordance with its terms.
3.5 The execution, delivery and performance of this Agreement, by and on
behalf of Logiphone, has been approved by the Board of Directors of Logiphone.
This Agreement has been duly executed and delivered by and on behalf of
Logiphone by its authorized officers.
3.6 Logiphone has legal rights and good and marketable title to all of its
assets both real and personal, tangible and intangible (including the
Proprietary Rights), that it purports to own, including the assets as stated in
the financial statements of Logiphone and in this Agreement, free and clear of
all leases, liens, security interests and encumbrances of any kind, except for
those liens and pledges listed in Annex 3.6 attached hereto.
3.7 Logiphone has complied in all material respects with all laws and
regulations applicable to it. Logiphone has all the permits, licenses, orders,
consents and approval of all governmental or regulatory bodies material to
carrying on its business. Logiphone is not in default under any such permits,
licenses or any other authority. To the best of its knowledge, no suspension or
cancellation of any such permits, licenses, or other authority is threatened,
nor does Logiphone anticipate any difficulties in their renewal.
3.8 Except as disclosed in Annex 3.6, Logiphone has the right to use the
Proprietary Rights used in the conduct of its business without infringing or
violating the rights of any third parties. No claim has been asserted by any
person to ownership of or right to use any Proprietary Right or challenging or
questioning the validity or effectiveness of any such license or agreement, and
Logiphone does not know of any valid basis for any such claim. Each of the
Proprietary Rights is valid and subsisting, has not been canceled, abandoned or
otherwise terminated and, if applicable, has been duly issued or filed.
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Logiphone has no knowledge of any claim or inquiry as to whether, any product,
activity or operation of Logiphone infringes upon or involves, or has resulted
in the infringement of, any proprietary right of any other person, corporation
or other entity; and no proceedings have been instituted, are pending or are
threatened that challenge the rights of Logiphone; nor is Logiphone bound by any
agreement of indemnification for any proprietary right as to the property
manufactured, used or sold by Logiphone.
3.9 Since the inception of Logiphone, there have been no violations of the
Foreign Corrupt Practices Act or of any similar state or federal statute
relating to bribery by Logiphone or any of its agents.
4. Representations and warranties of Star and ICA
Star and ICA, jointly and severally, warrant and represent to Logiphone as
follows, which representations and warranties shall survive the Effective Date,
regardless of what investigations, if any, Logiphone shall have made thereof:
4.1 Star is a corporation, duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. ICA is a B.V., duly
registered, validly existing and in good standing under the laws of The
Netherlands.
4.2 Pursuant to an agreement dated October 10, 1996, between ICA, Star and
ICA Marketing Company, L.C. Star purchased 100% of the issued and paid-up share
capital of ICA in consideration of the issue of shares equal to approximately
89% of the outstanding and paid-up Star Common Stock.
4.3 Strategic Partner shall make best efforts to have the resources,
financial and otherwise, required for the fulfillment of its obligations herein
and it has the ability to market, distribute, and sell Logiphone products
effectively in the manner set forth herein.
4.4 No consents or approvals of any government or government agency or any other
public or third party are required by Strategic Partner to execute, deliver and
perform this Agreement, except that (i) in connection with the raising of
capital as contemplated in Section 7.1 hereof, Strategic Partner may have to
make certain filings with the United States Securities and Exchange Commission,
certain state securities commissions and certain foreign securities authorities
and seek clearance by such securities authorities with respect to such filings
and (ii) Strategic Partner may have to obtain certain permits and licenses in
connection with the import, marketing, distribution, sale, installation and
service of Logiphone products in certain jurisdictions pursuant to Section 8.1
of the Agreement.
4.5 This Agreement is a valid and binding obligation of Strategic Partner
and is enforceable against them in accordance with their respective terms.
4.6 The execution, delivery and performance of this Agreement, by and on behalf
of Strategic Partner, has been duly authorized by the Boards of Directors of
Strategic Partner, and this Agreement has been duly executed and delivered by
and on behalf of Strategic Partners' by their authorized officers. This
Agreement constitutes the valid and legally binding agreement of Strategic
Partner.
5. The Cooperation
5.1 In consideration of the timely and complete fulfillment of the parties'
obligations hereunder, the parties hereto shall cooperate in the planning,
design, research and development, marketing and distribution of telephone
communications equipment and specifically:
5.1.1 Strategic Partner shall make best efforts in establishing a network of
dealers in those locations set forth in Annex 5.1 for the distribution of
Logiphone's products in conjunction with its telephone communication services.
To this aim, Strategic Partner's strategic plan includes the purchase of
Logiphone's products for their distribution to end-users at no capital expense
to the end-user in consideration for a services contract with such end-users.
5.1.2 Logiphone shall not discontinue the manufacture of telephone
communications equipment which the Strategic Partner is currently purchasing
from Logiphone absent the Strategic Partner's prior consent.
5.1.3 Logiphone shall research, develop, design and manufacture new telephone
communications equipment for sale by Strategic Partner, at Strategic Partner's
request, provided, however, that Strategic Partner fund any capital requirements
of Logiphone for such research, development, design and manufacture on terms
mutually acceptable to Logiphone and Strategic Partner.
5.1.4 Logiphone shall invite the clients and dealers of its products to
participate in the Strategic Partner's network of dealers of telephone
communications equipment.
5.2 Strategic Partner shall furnish, once every quarter, a marketing,
purchasing and distribution plan for Logiphone products, detailing the Logiphone
products it estimates that it will purchase during the course of the quarter.
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6. Purchase of Logiphone Products
6.1 In consideration for the timely and complete fulfillment of Strategic
Partner's obligations herein, Strategic Partner shall have the following rights
with respect to the purchase of Logiphone products:
6.1.1 Strategic Partner shall have most "favored customer" status for the
purchase of products from Logiphone, namely, that any products purchased from
Logiphone by Strategic Partner shall be supplied to Strategic Partner on a
first-priority basis compared to other Logiphone customers.
6.1.2 Strategic Partner shall have the right to purchase products from Logiphone
at a FOB purchase price equal to the cost of such products to Logiphone as
defined in Annex 6.1.2 in addition to 10% of such cost (the "Purchase Price"),
but in no event more than the price charged by Logiphone to other customers for
such products. Logiphone shall use best efforts to implement cost controls so
that costs will be minimized to the extent reasonable.
6.1.3 Terms or payment for products purchased from Logiphone by Strategic
Partner shall be as agreed upon by the parties from time to time, in each case
considering the volume of any particular transaction, and the terms of payment
demanded by Logiphone in the ordinary course of business from its other
customers and the terms of payment demanded from Logiphone by its suppliers.
7. Investment in Logiphone
7.1 Star hereby undertakes, that within 15 days from the receipt of funds
from any private or public offering, or series of offerings of Star securities,
Star will provide Logiphone with funding in an amount equal to 25% of the net
proceeds of such offerings up to US $1,000,000.
7.2 The funds provided to the Logiphone shall be used for the further
research and development and working capital needs of Logiphone, in accordance
with the principles set forth in Annex 7.2.
7.3 The funds provided in accordance with the Section 7.1 shall be a loan to
Logiphone pursuant to the Loan Agreement in the form attached hereto as Annex
7.3 (the "Loan"). The Loan shall be due upon the fifth anniversary from the
Effective Date. Notwithstanding the above, Logiphone shall have the right, at
any time, to either repay the outstanding balance of the Loan or convert the
Loan to a 7.5% equity interest in Logiphone measured on a fully-diluted basis,
with preemptive rights. In the event the Loan, or any part thereof, shall be
converted to equity of Logiphone, any Logiphone shares held by Strategic Partner
shall be subject to a right of first refusal on the transfer of such shares
granted to the other shareholders of Logiphone.
7.4 In order to induce Strategic Partner to make this investment, Logiphone
agrees that for a period ending on the first anniversary of the Effective Date
it will not increase any executive salaries or pay any cash or in-kind dividends
or make any other distribution to shareholders.
8. Undertakings
8.1 Strategic Partner hereby undertakes as follows:
8.1.1 Abide and obey, in all material respects, all laws, permits, licenses,
ordinances, bylaws, rules and regulations of any competent authority pertaining
to the products purchased from Logiphone and the import, marketing,
distribution, sale, installation and service thereof in any territory where
Strategic Partner may engage in such activity. Strategic Partner shall bear the
full responsibility and cost to apply for, obtain, and maintain all permits,
licenses, and approvals, governmental or otherwise, required in connection with
the importation, marketing, distribution, sale, installation and servicing of
any product purchased form Logiphone, in which case such permit, license or
approval shall be owned by Strategic Partner, and Logiphone will have no right
to directly or indirectly market its products in reliance on such permit
licenses or approval except through Strategic Partner. Logiphone shall have the
right to bear 50% of the expenses associated with the application and
maintenance of such permits, licenses and approvals in which case such permit,
license or approval shall be in Logiphone's name as well, and Logiphone shall
own such permit, license or approval together with Strategic Partner and shall
have the right to directly or indirectly market its products in reliance
thereon.
8.1.2 Strategic Partner shall follow Logiphone's storage, shipping, handling,
installation and use instructions concerning products purchased from Logiphone.
8.2 Logiphone hereby undertakes as follows:
8.2.1 Sell the Logiphone Products to Strategic Partner as provided hereunder.
8.2.2 Abide and obey, in all material respects, all laws, permits, licenses,
ordinances, bylaws, rules and regulations of any competent authority pertaining
to the products sold to Strategic Partner and the export, marketing,
distribution, sale, and service thereof in any territory where Logiphone may
engage in such activity. Logiphone shall bear the full responsibility and cost
to apply for, obtain, and maintain all permits, licenses, and approvals,
governmental or otherwise, required in connection with the exportation,
marketing, distribution and sale of any product sold to Strategic Partner.
8.2.3 Logiphone shall cooperate with Strategic Partner with respect to Strategic
Partner's compliance with its undertakings in Section 8.2.2 hereunder.
9. Proprietary Rights
9.l The Proprietary Rights of any product developed, manufactured, sold by
Logiphone, or any part thereof, and any improvement, modification or enhancement
thereof, shall be in the sole ownership of Logiphone. It is hereby acknowledged
and agreed that Strategic Partner shall not in any way acquire any rights in the
Proprietary Rights, or any part thereof, with respect to any of the Logiphone
products.
9.2 Effective as of the execution of this Agreement, Strategic Partner shall
have the right to use "Logiphone" in its corporate name and in connection with
products purchased from Logiphone. If Strategic Partner has invested the full
$1,000,000 under Section 7.1 and made all payments to Dutchco required under a
certain agreement of even date herewith between Dutchco and Star, the Strategic
Partner may use the "Logiphone" name in perpetuity; otherwise, Strategic Partner
shall immediately cease to make any use of the "Logiphone" name upon termination
of this Agreement for any reason whatsoever or in the event Logiphone so
notified Strategic Partner upon the occurrence of any event as listed in Section
13 below, unless and to the extent Strategic Partner continues to purchase and
distribute Logiphone products. In the event any claim shall be made against the
"Logiphone" name in any territory in which Strategic Partner shall use the
"Logiphone" name, then Strategic Partner shall make all efforts to immediately
defend such claim, at its own expense.
9.3 Logiphone shall indemnify and hold Strategic Partner harmless against any
and all costs, claims, damages, expenses, losses and demands (including legal
expenses) incurred by or against Strategic Partner as a result of or in
connection with any claim made or alleged that the Proprietary Rights,
trademarks or any product supplied to Strategic Partner infringes any patent,
copyright, trade secret, trademark or other intellectual property rights of any
third party.
10. Warranty
10.1 Logiphone shall warrant all products sold under this Agreement in
accordance with its standard warranty in the form attached hereto as Annex 10.1
(the "Warrant"). Strategic Partner shall promptly give Logiphone written notice
of any actual or threatened claim made against the Strategic Partner and/or
Logiphone concerning any product purchased from Logiphone, or the Proprietary
Rights, save for the use of the "Logiphone" name as stated in Section 9.2, and
shall forward all documents it may receive and all relevant information it may
have in connection with such claim. Failure to so notify Logiphone or provide
such documents or information within the period of warranty as set forth in the
Warranty , shall be deemed to constitute a waiver of any claim in connection
therewith by Strategic Partner in the event that such delay materially impacts
Logiphone's ability to provide a defense to such warranty claim, and Logiphone
shall be released of any liability in connection therewith.
10.2 Logiphone's sole responsibility in connection with products sold shall be
for faulty manufacturing, design and workmanship. Logiphone shall either replace
or repair the defective products at its expense or refund Strategic Partner the
purchase price paid thereon by Strategic Partner, provided it receives Strategic
Partner's complaint as stated in the Warranty. Logiphone's liability is limited
to the repair, replacement or refund as stated above. Logiphone's liability
hereunder is contingent upon application, installation and use of the products
and/or any part thereof, in strict compliance with Logiphone's instructions.
10.3 Except as expressly provided for in this Section, no warranty, express or
implied, statutory or otherwise, including any warranties of merchantibility or
fitness for a particular use or purpose is made with the respect to the products
sold by Logiphone, or any part thereof, and all such warranties are hereby
expressly excluded. Logiphone shall not be liable to Strategic Partner and/or
any third party for any consequential or other damages incurred from the use of
Logiphone's products purchased by Strategic Partner and/or any third party,
except where such damages shall have been caused by Logiphone's willful and
gross negligence.
11. Confidentiality
During the term of this Agreement and at any time thereafter, except as required
by applicable law, each party shall maintain in complete confidence all
non-public information pertaining to the other parties' business and/or their
products, including, without limitation, any technical information, design or
data with respect to such products, and any marketing techniques or client list,
and shall take all necessary measures to ensure that such information and data
not be made available to any third party. Notwithstanding the foregoing,
Strategic Partner may disclose such matters relating to Logiphone's business
and/or products in connection with Strategic Partner's raising of capital, with
Logiphone's prior consent, and Logiphone shall respond to Strategic Partner's
request in this matter on a timely basis.
12. Relationship of Parties
Nothing contained herein shall be deemed to constitute Strategic Partner as a
partner and/or agent and/or legal representative of Logiphone and Strategic
Partner shall not make any statements or representations to the contrary. No
contracts, commitments, statements, or representations by or on behalf of
Logiphone shall be binding in any respect on Logiphone. Strategic Partner shall
effect all sales of Logiphone products as principal on its sole responsibility
and Logiphone shall not in any way be responsible for sales made by Strategic
Partner.
13. Term of Agreement
13.1 This Agreement shall remain in effect until the fifth anniversary of
the Effective Date, upon which it may be renewed by mutual written consent of
the parties.
13.2 Notwithstanding the above, upon the occurrence of any one of the following
events, Strategic Partner shall not be entitled to the special terms of sale as
set forth in Section 6 above, and shall be entitled to purchase Logiphone
products at market prices, terms and conditions. In addition, upon the
occurrence of any one of the following events, Logiphone shall be released from
its obligation as stated in Section 5.1.2 and shall be entitled to market, sell
or otherwise distribute any of its products to any party subject to the
limitation set forth in Paragraph 8.1.1 and shall not be bound to the provisions
of Section 14.2 below:
13.2.1 In the event Strategic Partner fails to provide the Logiphone
with $1,000,000 in funding within 90 days from the signing of this Agreement as
set forth in Section 7 above;
13.2.2 if Strategic Partner shall not purchase from Logiphone, and
fully and timely pay for in ten months out of each full calendar year during the
term of this Agreement:
13.2.2.1 1,500 units of PABX systems in each of the three months
following the sixth month from the Effective Date.
13.2.2.2 2,500 units of PABX systems in each of the 21 months
following the ninth month from the Effective Date.
13.2.2.3 3,000 units of PABX systems in each of the 12 months
following the 30th month from the Effective Dare.
13.2.2.4 1,500 units of PABX systems in each month from the 42nd month
from the Effective Date and for the duration of the term of this Agreement.
13.2.3 Notwithstanding paragraph 13.2.2 above, if, in any given month, Strategic
Partner fails to meet the minimum amount for that month, it shall nevertheless
be deemed to meet the minimum amount for that month if it had exceeded the
minimum amount set for any or the preceding months by at least the shortfall
amount.
13.3 Logiphone's sole remedy in the event of a breach of this Agreement by
Strategic Partner shall be to terminate this Agreement, including its
obligations under Section 14.2 hereof.
14. Non-competition
14.1 Strategic Partner, for the term of this Agreement, agrees that Logiphone
shall be their sole supplier of end-user telephone communications equipment for
distribution to end users, and that Strategic Partner shall not in any way
market or otherwise distribute any other competing products, provided, however,
that Logiphone is able to produce and deliver such product with equivalent
features and functionality at a price equal to or lower than that available from
competing suppliers. In the event that Logiphone is unable to produce or deliver
such product at such a price, Strategic Partner may purchase a competing
product.
14.2 Logiphone, for the term of this Agreement, shall not sell or otherwise
distribute, any products to a competitor of the Strategic Partner, a competitor
of the Strategic Partner being a distributor or telephone communications
equipment to end-users at no capital expense, below cost or for a rental fee to
the end-user in consideration for a services contract with such end-user,
without the prior written consent of the Strategic Partner.
15. Assignment
Strategic Partner shall be entitled to use sub-contractors and/or dealers for
the sale and distribution of Logiphone products, but shall not be entitled to
assign its rights or delegate its obligations under this Agreement to any third
party, except with the prior written consent of Logiphone.
16. Force Majeure
16.1 If either party is affected by Force Majeure, it shall forthwith notify
the other party of the nature and extent thereof.
16.2 Neither party shall be deemed to be in breach of this Agreement or
otherwise liable to the other by reason of any delay in performance or
non-performance of any of the obligations hereunder to the extent that such
delay or non-performance is due to any Force Majeure.
16.3 If the Force Majeure in question prevails for a continuous period in
excess of 60 days, the parties shall enter into bona fide discussions with the
view to alleviating its effects or agreeing to alternative arrangements which
could include termination of this Agreement.
16.4 "Force Majeure" for the purposes of this section shall mean any
circumstances beyond the reasonable control of each party, including, without
limitation, decrees of governments, acts of God, strikes, lockout, war, riot,
civil unrest, sabotage, floods, fires, unavoidable accidents, explosions,
earthquakes, embargo and acts of civil or military authority.
16.5 In the case of Force Majeure, and for such period it will prevail,
Strategic Partner shall be entitled to purchase end-user telephone
communications equipment from any other party.
17. Modification and Waiver
No modification or amendment of any of the provisions of this Agreement, nor
any waiver by any party or its consent to any deviation from the conditions of
this Agreement, shall be binding upon any of the parties unless made in writing
and signed by all the parties. No waiver of any rights by any
party hereto shall be construed as a waiver of the same or any other right at
any prior or subsequent time.
18. Entire Agreement
This Agreement, together with its annexes, forms an entire and conclusive
agreement between the parties and supersedes all proposals, agreements,
understandings, representations and warranties, whether oral or written,
expressed or implied, that were communicated between the parties prior to
signature hereof and the same will be of no effect and inadmissible as evidence.
19. Enforceability
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or their authority to be invalid, void,
unenforceable or against its regulatory or public policy, the remainder of the
terms, provisions, covenants and restriction of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
20. Binding Effect
This Agreement shall inure to the benefit of and shall be binding upon the
parties hereto and their respective heirs, executors,
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representatives and assigns. The rights and obligations of the parties hereto
may not be assigned in whole or in part.
21. Jurisdiction and Governing Law
21.1 Any action, suit or proceeding arising out of or relating to this Agreement
against Logiphone shall be brought exclusively in the courts of Tel-Aviv-Jaffa.
Any action, suit or proceeding arising out of or relating to this Agreement
against Strategic Partner shall be brought exclusively in any state or federal
court sitting in Dallas, Texas. All such actions, suits or proceedings shall be
governed and construed in accordance with the laws of the State of Israel.
22. Expenses
Strategic Partner shall bear all expenses incurred by the Logiphone Group in
connection with this Agreement up to $90,000. All such costs in excess of such
amount will be paid by Strategic Partner only with its prior approval. Except
as provided immediately above, each of the parties hereto shall
