Technology Transfer, License and Distribution Agreement between Global Data, Inc. and Telenetics Corporation
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Summary
Global Data, Inc. and Telenetics Corporation have entered into an agreement granting Telenetics the exclusive worldwide rights to manufacture and sell certain products developed by Global Data. In exchange, Telenetics will pay Global Data a 5% royalty on net revenues from product sales for five years. The agreement also covers the transfer and purchase of inventory and related technology and materials. Telenetics may pay royalties directly to a bank if Global Data owes debt. The agreement outlines procedures for adding new products and managing inventory transfers.
EX-10.1 3 telenetics_8kex10-1.txt EXHIBIT 10.1 TECHNOLOGY TRANSFER, LICENSE AND DISTRIBUTION AGREEMENT THIS TECHNOLOGY TRANSFER, LICENSE AND DISTRIBUTION AGREEMENT (the "AGREEMENT") is made as of the latter of the signature dates below (the "EFFECTIVE DATE"), by and between Global Data, Inc., a corporation organized and existing under the laws of the State of Nevada, with offices located at 405 North Smith Avenue, Corona, CA, 92880 ("GLOBAL DATA"), and Telenetics Corporation, a corporation organized and existing under the laws of the State of California, with offices at 25111 Arctic Ocean, Lake Forest, California 92630 ("TELENETICS"). RECITALS -------- WHEREAS, GLOBAL DATA has designed, developed and manufactured certain products which are set forth on Appendix A hereto (each a "PRODUCT" and together the "PRODUCTS"), and distributes such Products for sale to its customers around the world; and WHEREAS, GLOBAL DATA has designed and developed and owns related materials, parts lists, schematic diagrams, electronics files, test fixtures, case molds, components, spare boards, software, object code, source code, homologation files, published and electronic marketing documents including datasheets, application notes, brochures, product manuals, web pages and other similar materials, test and repair equipment, technical information, data, designs, drawings, patents, copyrights, know-how, trade secrets and technical knowledge with respect to designing, engineering, marketing, constructing, applying, fabricating, marketing, distributing and shipping said Products, as more particularly described on Appendix B hereto (collectively, the "PRODUCT TECHNOLOGY AND MATERIALS"); and WHEREAS, Telenetics desires to acquire the exclusive worldwide rights to manufacture and market the Products; and WHEREAS, GLOBAL DATA agrees to license to Telenetics on an exclusive basis those rights related to the Product Technology and Materials as are necessary to manufacture, market and sell the Products under the terms and conditions of this Agreement; and WHEREAS, Telenetics wishes to manufacture and distribute the Products utilizing the Product Technology and Materials and rights provided by GLOBAL DATA hereunder; and WHEREAS, GLOBAL DATA and Telenetics agree that the royalty payments provided in Section 2 of this Agreement and the other consideration as otherwise stated herein constitute good and sufficient consideration in exchange for the exclusive license granted herein, and that the royalty payment formula is endorsed by both parties for mutual convenience in calculating a fair compensation for these benefits. NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, and other consideration, the sufficiency of which is hereby mutually acknowledged, the parties hereto agree as follows: 1. SCOPE. This Agreement establishes the terms and conditions under which GLOBAL DATA shall license to Telenetics the right to manufacture and sell the Products. The Products are further described in Appendix A attached hereto and the Product Technology and Materials are further described in Appendix B attached hereto. At any time during the term of the Agreement, the parties may identify additional Products to be licensed hereunder and governed by the terms and conditions set forth in this Agreement. In such event, the parties shall mutually agree upon specifications for such additional products, amend the Agreement in writing and add the additional Products to Appendix A and the additional Product Technology and Materials to Appendix B. 2. ROYALTY PAYMENTS AND PURCHASES OF INVENTORY. 2.1 For a period of five (5) years after the Effective Date, Telenetics shall pay to GLOBAL DATA royalty payments equal to five percent (5%) of the Net Revenues generated from sales of the Products by Telenetics. During the one-year period commencing on the Effective Date, the royalty payments shall be paid monthly on the first (1st) business day of the second month following the full or partial calendar month of Product sales during such initial one-year period (Example: Royalties for the month of December 2003 would be due on February 2, 2004) and, after the end of such initial one-year period, on the first (1st) business day of the second month following the full or partial calendar quarter of product sales (Example: Royalties for the months of January, February, & March 2005 would be due on May 2, 2005). As used in this Agreement, the defined term "NET REVENUES" shall mean gross revenues actually received by Telenetics with respect to sales of Products after deductions for freight allowance, taxes, and returns for credit due to defective products or due to stock rotation by distributors. GLOBAL DATA hereby acknowledges and agrees that, until and unless Telenetics has received evidence reasonably satisfactory to Telenetics that all indebtedness of GLOBAL DATA to Silicon Valley Bank has been repaid in full, Telenetics shall have the right to make the royalty payments provided for hereunder directly to Silicon Valley Bank as indirect payment of the indebtedness owed by GLOBAL DATA to Silicon Valley Bank, which payment to Silicon Valley Bank shall constitute payment by Telenetics of the royalties provided for hereunder duly made to GLOBAL DATA pursuant to and in accordance with this Section 2.1. GLOBAL DATA shall not be entitled to any royalty payments or other amounts of any kind from Telenetics on and after the date that is five (5) years after the Effective Date (the "Royalty Termination Date"). 2.2 GLOBAL DATA and Telenetics agree that the royalty payments provided for above and the other consideration as otherwise stated herein constitute good and sufficient consideration in exchange for the exclusive license granted herein, and that the royalty payment formula is endorsed by both parties for mutual convenience in calculating a fair compensation for these benefits. 2.3 Inventory. GLOBAL DATA agrees to sell to Telenetics and Telenetics agrees to purchase from GLOBAL DATA any available inventory needed by Telenetics, including without limitation components, and other raw materials and sub-assemblies, in accordance with the terms set forth below. Page 2 of 15 2.3.1 As soon as possible after the Effective Date, GLOBAL DATA will physically relocate all Inventory identified on Appendix D hereto to a location designated by Telenetics pursuant to pick up and delivery arrangements to be agreed upon by GLOBAL DATA and Telenetics, the final identification and account of which inventory will be performed by the parties within 30 days after the Effective Date ("Inventory"). Such Inventory will be deemed sold on consignment to Telenetics with title to such Inventory remaining with GLOBAL DATA until and unless purchased by Telenetics and Telenetics will account in writing to GLOBAL DATA for the usage and resale of such Inventory by Telenetics (which written account will include the date on which each such item of Inventory was purchased) and shall pay for such used and resold Inventory at the same time as royalties are paid by Telenetics pursuant to Section 2.1 above; provided, that if any additional inventory which is not part of the Inventory is purchased by Telenetics directly from GLOBAL DATA after the Effective Date and GLOBAL DATA is required to pay the contract manufacturer that has provided such inventory to GLOBAL DATA within a shorter period of time than Telenetics will pay GLOBAL DATA for such inventory as provided herein, Telenetics will pay for such inventory it has purchased directly from GLOBAL DATA on the same terms as the contract manufacturer has required GLOBAL DATA to pay such contract manufacturer for such inventory. The purchase price for such inventories as purchased by Telenetics shall be the lower of (i) the actual cost of same to GLOBAL DATA or (ii) the lowest fair market price that otherwise would be obtainable by Telenetics from one or more other sources in the marketplace for such inventories and provided further, that Telenetics shall have no obligation, except as set forth in Section 2.3 above, to purchase any such inventories from GLOBAL DATA or use and resell such inventories. Inventory received from GLOBAL DATA pursuant hereto shall be segregated from all other inventory of Telenetics. Telenetics shall perform a physical inventory of the Inventory on an annual basis and shall provide a report to GLOBAL DATA in regard to same as soon as practicable after the completion of such physical inventory. GLOBAL DATA hereby acknowledges and agrees that, until and unless Telenetics has received evidence reasonably satisfactory to Telenetics that all indebtedness of GLOBAL DATA to Silicon Valley Bank has been repaid in full, Telenetics shall have the right to make payments for Inventory and other inventory purchased by Telenetics hereunder directly to Silicon Valley Bank as indirect payment of the indebtedness owed by GLOBAL DATA to Silicon Valley Bank, which payment to Silicon Valley Bank shall constitute payment by Telenetics for such purchased Inventory and other inventory duly made to GLOBAL DATA pursuant to and in accordance with this Section 2.3.1. 2.4 Telenetics agrees to purchase from GLOBAL DATA all production equipment, assembly and test equipment which is currently required for engineering support, manufacturing, applying and fabricating, testing and shipping the Products as listed in Appendix C ("CAPITAL EQUIPMENT"), for an aggregate purchase price of Thirty Thousand Dollars (U.S. $30,000) which shall be paid by Telenetics to GLOBAL DATA on the Effective Date. These items include, but are not limited to, engineering, production assembly and test equipment owned by GLOBAL DATA which is currently located at Corona, California and any other similar production, test and repair equipment, fixtures, tooling, and any other GLOBAL DATA materials which are currently used by either GLOBAL DATA or its vendors and contractors to manufacture and supply the Products. Page 3 of 15 2.3.2 GLOBAL DATA hereby acknowledges and agrees that, until and unless Telenetics has received evidence reasonably satisfactory to Telenetics that all indebtedness of GLOBAL DATA to Silicon Valley Bank has been repaid in full, Telenetics shall have the right to make payments for the Capital Equipment hereunder directly to Silicon Valley Bank as indirect payment of the indebtedness owed by GLOBAL DATA to Silicon Valley Bank, which payment to Silicon Valley Bank shall constitute payment by Telenetics for the Capital Equipment duly made to GLOBAL DATA pursuant to and in accordance with this Section 2.3.2. GLOBAL DATA will pay all sales tax applicable to the transfer and sale of the Capital Equipment to Telenetics and Telenetics will reimburse GLOBAL DATA for such sales tax paid by GLOBAL DATA within thirty (30) days after GLOBAL DATA has paid such sales tax and submitted to Telenetics a written request for payment of same with usual and appropriate supporting documentation therefor. 2.5 GLOBAL DATA will provide advice for the dismantling, packaging, shipment, site preparation, and installation of the Capital Equipment. Telenetics will be responsible for site preparation, unpacking and physical installation of the Capital Equipment; provided, however, that GLOBAL DATA will provide at no cost to Telenetics an on-site support technician at Telenetics' facilities for at least one (1) week to provide on-site support and assistance in the site preparation, unpacking, setup, installation and correct functioning of the Capital Equipment. Telenetics agrees to obtain access to the equipment vendor support/service organizations for the various Capital Equipment to assist in the installation. 3. LICENSE GRANT TO TELENETICS AND ADDITIONAL GLOBAL DATA OBLIGATIONS. 3.1 GLOBAL DATA hereby grants to Telenetics a twenty-year exclusive, worldwide, sublicenseable right to use, reproduce, distribute, and create derivative works of and to sublicense the Product Technology and Materials, in the manufacture, marketing, distribution and sale of the Products and any future products that may be developed by Telenetics. 3.2 During the 30-day period commencing on the Effective Date, GLOBAL DATA shall provide an engineer at no cost to Telenetics (except that Telenetics will pay for the reasonable out-of-pocket expenditures for travel, food, lodging and transportation incurred by such engineer, upon presentation of usual and appropriate supporting documentation therefor, if Telenetics requires that such engineer travel to Telenetics' facilities in Southern California) and shall also provide a support technician, for which Telenetics will reimburse GLOBAL DATA in an amount equal to the actual labor cost to GLOBAL DATA of such technician for such period of time, to provide technical and manufacturing assistance, training and support for the Products at such place or places as Telenetics shall request (which shall include, at a minimum, Telenetics' facilities) and shall otherwise provide any and all reasonable support in connection with the transition to Telenetics of the manufacture of the Products and the transfer of the Product Technology and Materials to Telenetics. GLOBAL DATA shall also use best efforts to provide to Telenetics reasonable technical assistance and support requested by Telenetics during such period. 3.3 Upon execution of the Agreement, GLOBAL DATA shall refer all inquiries relating to the Products to Telenetics and provide relevant data to manufacture, sale and support of the Products. GLOBAL DATA will further refer inquires from other Divisions and Subsidiaries of GLOBAL DATA, if any, which currently purchase the Products from GLOBAL DATA. Page 4 of 15 3.4 GLOBAL DATA agrees that it shall not at any time conduct, establish or reestablish manufacturing and marketing, directly or indirectly, of the Products or any products based on or in reference to any Product Technology and Materials in competition with Telenetics. 4. IMPROVEMENTS; WARRANTY SERVICE; MANUFACTURE OF PRODUCTS. 4.1 All improvements, modifications and derivative works based on or in reference to the Product Technology and Materials created by or on behalf of Telenetics shall be owned by Telenetics, subject to GLOBAL DATA's rights in the original Product Technology and Materials. GLOBAL DATA hereby waives any and all moral rights or "droit moral" and the benefits of any similar law in any country of the world GLOBAL DATA has or may have in or to any such improvements, modifications or derivative works. 4.2 As of the Effective Date of this Agreement, subject to the other terms and conditions of this Agreement, Telenetics shall assume, perform and discharge the following obligations and commitments related directly to the Products sold by Telenetics: (a) Ongoing technical support, in warranty service, out of warranty service, product maintenance and other similar obligations, including repairs to Products sold by GLOBAL DATA on or prior to the Effective Date. (b) Specific obligations under support agreements, service and warranty agreements and other agreements as specifically disclosed and incorporated into the agreement between the parties. 4.3 Telenetics will undertake to manufacture, market and sell the Products described. It is understood that Telenetics may not be able to ensure constant availability of certain Products based on transition issues, parts availability, parts obsolescence or other unforeseen circumstances. 5. EXPORT/IMPORT. Telenetics agrees to comply with all applicable export and import laws, regulations and orders. Telenetics agrees that it will not resell, re-export or ship, directly or indirectly, any Products or technical data in any form without obtaining required export or re-export licenses from the countries involved. This Section shall survive any termination or expiration of this Agreement. 6. LABELS AND MARKINGS. Telenetics agrees to include on the Products all patent numbers, all registration or identification numbers and country of origin labels and markings as are required by the applicable laws of the country where the Products are intended to be sold to end-users. Page 5 of 15 7. SAFETY AND TELECOMM APPROVALS. It shall be the responsibility of Telenetics, and at Telenetics' sole expense, to obtain UL, CSA and Telecom approvals, as well as any other governmental approvals or licenses, for any products it manufactures using the Licensed Materials provided by GLOBAL DATA. GLOBAL DATA agrees to provide license files and to reasonably assist Telenetics at Telenetics' expense in transferring of approvals. 8. RESALE OF PRODUCTS. Telenetics shall have the exclusive right to resell the GLOBAL DATA Products on a worldwide basis. 9. WARRANTIES AND ADDITIONAL COVENANTS OF GLOBAL DATA . GLOBAL DATA hereby represents and warrants to Telenetics and further agrees as follows: 9.1 Except with respect to the first priority lien(s) of Silicon Valley Bank, the second priority lien(s) of the holders of debentures guaranteed by GLOBAL DATA (the "Secured Debenture Holders"), and the third priority lien(s) of GDI Global Data Inc. ("Global Data Canada"), GLOBAL DATA possesses all ownership rights and good and marketable title in and to the Product Technology and Materials free and clear of any liens, encumbrances, security interests, charges and other defects in title or limitations on ownership and no other person has any rights therein or thereto. To the extent that any part or element of any of the Products or any Product Technology and Materials incorporates any intellectual property or other materials that constitute proprietary property of any third parties, GLOBAL DATA has acquired all requisite rights with respect to same as is necessary to enable GLOBAL DATA to grant the license granted to Telenetics herein. Telenetics shall not be obligated to perform its obligations and covenants hereunder unless and until GLOBAL DATA has delivered to Telenetics evidence, in form and content satisfactory to Telenetics, that each of Silicon Valley Bank, the Secured Debenture Holders and Global Data Canada will release its lien(s) in regard to the Product Technology and Materials upon payment in full to them of all amounts owed by GLOBAL DATA to them. 9.2 Except with respect to the first priority lien(s) of Silicon Valley Bank, the second priority lien(s) of the Secured Debenture Holders and the third priority lien(s) of Global Data Canada, GLOBAL DATA possesses all ownership rights and good and marketable title in and to the Capital Equipment free and clear of any liens, encumbrances, security interests, charges and other defects in title or limitations on ownership and no other person has any rights therein or thereto. Telenetics shall not be obligated to perform its obligations and covenants hereunder unless and until GLOBAL DATA has delivered to Telenetics evidence, in form and content satisfactory to Telenetics, that each of Silicon Valley Bank, the Secured Debenture Holders and Global Data Canada will release its lien(s) in regard to the Capital Equipment concurrently with the execution of this Agreement or, in the case of Silicon Valley Bank, upon payment in full to Silicon Valley Bank of all amounts owed by GLOBAL DATA to Silicon Valley Bank. Page 6 of 15 9.3 Except with respect to the first priority lien(s) of Silicon Valley Bank, the second priority lien(s) of the Secured Debenture Holders and the third priority lien(s) of Global Data Canada, GLOBAL DATA possesses all ownership rights and good and marketable title in and to the Inventory free and clear of any liens, encumbrances, security interests, charges and other defects in title or limitations on ownership and no other person has any rights therein or thereto. Telenetics shall not be obligated to perform its obligations and covenants hereunder unless and until GLOBAL DATA has delivered to Telenetics evidence, in form and content satisfactory to Telenetics, that each of Silicon Valley Bank, the Secured Debenture Holders and Global Data Canada will release its lien(s) in regard to the Inventory and any other inventory purchased from GLOBAL DATA by Telenetics concurrently with the execution of this Agreement or, in the case of Silicon Valley Bank, upon payment in full to Silicon Valley Bank of all amounts owed by GLOBAL DATA to Silicon Valley Bank. 9.4 GLOBAL DATA has full power and authority to enter into and fulfill the terms of this Agreement and the performance of its obligations hereunder will not breach or violate the terms of any other agreement, understanding or commitment to which GLOBAL DATA is a party or by which GLOBAL DATA is bound. 9.5 GLOBAL DATA shall not commit any act or enter into any agreement, understanding or commitment with any third party which is in conflict with or otherwise inconsistent or incompatible with this Agreement. 9.6 Neither the Products nor any Product Technology and Materials, nor the use thereof, violates any patent, copyright, trade secret or other intellectual property right of any third party. As of the Effective Date, GLOBAL DATA has not received any notice, claim or allegation that the Products or any Product Technology and Materials, or any use thereof, infringes any patent, copyright, trade secret or other intellectual property right of any third party. 9.7 During the term of this Agreement, GLOBAL DATA shall honor and perform in all respects all obligations, covenants, agreements and commitments that GLOBAL DATA has agreed to with each of Silicon Valley Bank, the Secured Debenture Holders and Global Data Canada under all documents, agreements and instruments to which GLOBAL DATA and any of Silicon Valley Bank, the Secured Debenture Holders or Global Data Canada are parties or with respect to which GLOBAL DATA is otherwise subject in respect of Silicon Valley Bank, the Secured Debenture Holders or Global Data Canada. 9.8 All obligations of GLOBAL DATA or Global Data Canada due and owing to Chris Naprawa, Montcap Financial Corporation, Ronald D. Barnes, Williams S. Grant c/o The Loyalist Insurance Company and Corey Tkachuk have heretofore been fully satisfied. As soon as possible but not later than thirty (30) days after the Effective Date, GLOBAL DATA will file or cause to be filed UCC Termination Statements with respect to each UCC Financing Statement filed by any of such former creditors in all jurisdictions in which any of such former creditors had filed UCC Financing Statements (other than any UCC Financing Statement filed against GLOBAL DATA or Global Data Canada by Corey Tkachuk, as secured party, or Chris Naprawa, as secured party, in regard to which GLOBAL DATA hereby agrees to indemnify, defend and hold harmless Telenetics, its agents, distributors, and/or customers, from and against all loss, claim, damage or liabilities with respect to the failure to have any such UCC Financing Statement terminated prior to its expiration). Page 7 of 15 9.9 GLOBAL DATA is a corporation, duly organized, validly existing and in good standing in the State of Nevada and is duly qualified and in good standing as a foreign entity authorized in each other jurisdiction where, because of the nature of its activities or properties, such qualification is required (including, without limitation, the State of California). The execution, delivery and performance of this Agreement by GLOBAL DATA has been duly and validly authorized and approved by the director of GLOBAL DATA and its sole shareholder (Global Data Canada), and by the director of Global Data Canada. No other authorization or approval of the execution, delivery or performance of this Agreement by GLOBAL DATA is required under any federal, state or foreign law, statute, regulation, ordinance or rule promulgated by any governmental or regulatory body, agency or authority applicable to GLOBAL DATA. GLOBAL DATA hereby agrees to indemnify, defend and hold harmless Telenetics, its agents, distributors, and/or customers, from and against all loss, claim, damage or liabilities with respect to any action or proceeding based on or arising out of any claim, action or allegation that such approval by the shareholders of Global Data Canada is or was required. 9.10 There are no actions or proceedings which are pending or, to the knowledge of GLOBAL DATA, threatened or in regard to which GLOBAL DATA has received notice or is otherwise aware which would reasonably be expected to have an adverse effect on or otherwise interfere with the consummation of the transactions contemplated by this Agreement and GLOBAL DATA shall, promptly upon becoming aware of any such pending or threatened action or proceeding, give written notice thereof to Telenetics. 10. CONFIDENTIAL INFORMATION. Telenetics acknowledges and agrees that, until the Product Technology and Materials Transfer Date, the Product Technology and Materials and related information are Confidential Information of GLOBAL DATA and material to the interests, business and affairs of GLOBAL DATA. GLOBAL DATA acknowledges and agrees that, on and after the Product Technology and Materials Transfer Date, the Product Technology and Materials and related information are Confidential Information of Telenetics and material to the interests, business and affairs of Telenetics. As used herein, "CONFIDENTIAL INFORMATION" shall mean any business, marketing, technical, scientific or other information disclosed by either party to the other, which at the time of disclosure is designated as confidential (or like designation), is disclosed in circumstances of confidence, or would be understood by the parties exercising reasonable business judgment to be confidential, including, without limitation, the terms and conditions of this Agreement and the existence of any discussions between the parties. Any Confidential Information received by a party shall be retained in confidence and shall be used, disclosed, and copied solely for the purposes of, and in accordance with, this Agreement. The receiving party shall use the same degree of care as it uses to protect its own Confidential Information of a similar nature, but no less than reasonable care, to prevent the unauthorized use, dissemination or publication of the Confidential Information. Notwithstanding the foregoing, the parties acknowledge and agree that Telenetics shall be permitted to disclose this Agreement publicly pursuant to the requirements imposed on Telenetics under the rules and regulations promulgated by the Page 8 of 15 Securities Exchange Commission. No party shall be bound by obligations restricting disclosure and use set forth in this Agreement with respect to Confidential Information, or any part thereof, which: (a) was known by the receiving party prior to disclosure, as evidenced by its business records which are in form and substance reasonable and appropriate according to industry customs and practices; (b) was lawfully in the public domain prior to its disclosure, or becomes publicly available other than through a breach of this Agreement; (c) was disclosed to the receiving party by a third party provided that such third party, to the best knowledge of the receiving party, is not in breach of any confidentiality obligation in respect of such information; (d) is independently developed by the receiving party, as evidenced by its business records which are in form and substance reasonable and appropriate according to industry customs and practices; or (e) is disclosed when such disclosure is compelled pursuant to legal, judicial, or administrative proceeding, or otherwise required by law, subject to (x) the receiving party providing written notice to the disclosing party so as to allow the disclosing party sufficient opportunity to seek a protective or other court orders, and (y) the receiving party cooperating with the disclosing party, at the disclosing party's expense, to prevent or limit the disclosure. 11. INTELLECTUAL PROPERTY. 11.1 The parties acknowledge and agree that, as between GLOBAL DATA and Telenetics, GLOBAL DATA shall retain exclusive ownership of the Product Technology and Materials and, apart from the license granted to Telenetics by GLOBAL DATA under this Agreement with respect to the Product Technology and Materials, Telenetics shall have no other rights in or to any of GLOBAL DATA's intellectual property rights therein or thereto. 11.2 Telenetics agrees to take all necessary precautions to prevent GLOBAL DATA's intellectual property rights from being disclosed or used for any purpose other than for the design and manufacture of Products by Telenetics. GLOBAL DATA agrees to take all necessary precautions to prevent Telenetics' intellectual property rights from being disclosed or used for any purpose other than for the design and manufacture of Products by Telenetics. 12. TRADEMARKS. 12.1 The Products manufactured under the terms and conditions of this Agreement will carry Telenetics' trademark and proprietary marks or such other logo or other proprietary marks. 12.2 Telenetics shall not do anything to infringe upon, harm, or contest the validity of trademarks, tradenames or other proprietary marks of GLOBAL DATA, as identified in Appendix E. 12.3 Telenetics shall be permitted to use GLOBAL DATA model numbers, product codes and product names (per Appendix A and Appendix E) used by GLOBAL DATA for the products. 12.4 GLOBAL DATA agrees that Telenetics can use external material with GLOBAL DATA marks for not more than one hundred and eighty (180) days from the Effective Date. Internal marking, such as on Printed Wiring Boards, must be removed in one hundred and eighty days (180) from the Effective Date. Without exception all Products manufactured by Telenetics must bear a serializing label that clearly shows that the Product is Manufactured by Telenetics. In the event Telenetics continues to own a supply of GLOBAL DATA branded Product or parts beyond the timelines outlined above in this Section 12.5, GLOBAL DATA and Telenetics shall negotiate a good-faith extension of such time periods. Page 9 of 15 13. INDEMNIFICATION. 13.1 GLOBAL DATA shall indemnify and hold harmless Telenetics from and against all intellectual property infringement claims that are brought against Telenetics with regard to the Products and any Product Technology and Materials, and GLOBAL DATA shall pay all damages that are finally awarded against Telenetics based upon such claims. 13.2 Telenetics shall indemnify, defend and hold harmless GLOBAL DATA, its agents, distributors, and/or customers, from and against all loss, claim, damage or liabilities with respect to the distribution or sale of the Products by Telenetics on and after the Effective Date, including but not limited to losses that may result from any third party claims of bodily injury or property loss or damage caused by a defect in the Telenetics branded Product's design, manufacture or handling by Telenetics hereunder, or any representations made with respect to the Products' functionality. 13.3 GLOBAL DATA shall indemnify, defend and hold harmless Telenetics, its agents, distributors, and/or customers, from and against all loss, claim, damage or liabilities with respect to the distribution or sale of the Products by GLOBAL DATA prior to the Effective Date of this Agreement, including but not limited to losses that may result from any third party claims of bodily injury or property loss or damage caused by a defect in the Product's design, manufacture or handling by GLOBAL DATA hereunder, or any representations made with respect to the Products' functionality. 13.4 GLOBAL DATA shall indemnify, defend and hold harmless Telenetics, its agents, distributors, and/or customers, from and against all loss, claim, damage or liabilities arising out of any breach by GLOBAL DATA of any representation, warranty, agreement, covenant or obligation of GLOBAL DATA set forth herein and GLOBAL DATA shall pay all damages that are finally awarded against Telenetics based upon such claim. 14. LIMITATION OF LIABILITY. Except as stated in Section 13 of this Agreement, UNDER NO CIRCUMSTANCES AND UNDER NO LEGAL THEORY, TORT, CONTRACT, OR OTHERWISE, SHALL GLOBAL DATA OR TELENETICS OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AFFILIATES BE LIABLE TO ONE ANOTHER FOR ANY DIRECT, INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OF ANY CHARACTER INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFIT OR GOODWILL, WORK STOPPAGE, OR ANY AND ALL OTHER COMMERCIAL DAMAGES OR LOSSES OCCASIONED BY THE USE OF MATERIAL LICENSED TO TELENETICS, WHETHER FORESEEABLE, ARISING OUT OF THE USE OR INABILITY TO USE THE PRODUCT TECHNOLOGY AND MATERIALS, REGARDLESS OF THE BASIS OF THE CLAIM AND EVEN IF GLOBAL DATA OR TELENETICS OR THEIR RESPECTIVE REPRESENTATIVES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. THIS LIMITATION OF LIABILITY SHALL NOT APPLY TO LIABILITY FOR DEATH OR PERSONAL INJURY TO THE EXTENT APPLICABLE LAW PROHIBITS SUCH A LIMITATION. Page 10 of 15 15. TERM AND TERMINATION. 15.1 TERM. The term of this Agreement shall commence on the Effective Date and shall continue until September 25, 2023 unless earlier terminated in accordance with Section 15.2 below. 15.2 TERMINATION. 15.2.1 BREACH. This Agreement may be terminated by either party for failure by the other party to cure a breach in any material term or condition of this Agreement. Such termination shall be effective thirty (30) days following written notice of the breach, unless the breach is cured to the reasonably satisfaction of the non-breaching party within such notice period. 15.2.2 OBLIGATIONS OF THE PARTIES IN THE EVENT OF TERMINATION. (a) In the event GLOBAL DATA or Telenetics duly terminates this Agreement as provided hereunder, Telenetics shall promptly return to GLOBAL DATA all Product Technology and Materials and other Confidential Information of GLOBAL DATA and GLOBAL DATA shall promptly return to Telenetics all Confidential Information of Telenetics. (b) Any obligations and responsibilities, which by their nature extend beyond the expiration or termination of this Agreement, shall survive and remain in effect, including without limitation, outstanding payment obligations, representations and warranties, indemnities, confidentiality, non-competition, limitation of liability, governing law, jurisdiction and dispute resolution. 16. COMPLIANCE WITH LAWS. 16.1 Each of GLOBAL DATA and Telenetics warrants that it will comply with all applicable laws, orders, rules and regulations in performing its respective obligations hereunder and each of GLOBAL DATA and Telenetics shall indemnify, defend and hold harmless the other against any liability on account of any non-compliance by it with the foregoing. 16.2 Telenetics warrants that all Products manufactured by Telenetics hereunder will have been produced in compliance with all applicable laws, orders, rules and regulations. Telenetics shall indemnify, defend and hold harmless GLOBAL DATA against any liability on account of any non-compliance with the foregoing. GLOBAL DATA warrants that all Products manufactured by GLOBAL DATA were produced in compliance with all applicable laws, orders, rules and regulations. GLOBAL DATA will indemnify, defend and hold harmless Telenetics against any liability on account of any non-compliance by it with the foregoing. Page 11 of 15 16.3 Telenetics shall effect or secure and maintain at its own cost all necessary governmental permits, licenses, approvals and registrations required in connection with Telenetics's performance of its obligations hereunder. 17. FORCE MAJEURE. Neither party shall be in breach of its obligation hereunder to the extent that its performance is delayed or prevented by causes beyond its control, including, without limitation, acts of God, acts of third parties, civil disorders, acts of any civil or military authority, acts of terrorism, judicial action, and strikes or other labor disputes. 18. CONTRACTUAL RELATIONSHIP. It is understood and agreed that GLOBAL DATA and Telenetics are, and at all times during the term of this Agreement shall remain, independent contractors. At no time shall either party represent to any third party that it is the agent of the other with respect to the subject matter of this Agreement. GLOBAL DATA and Telenetics further covenant that no authorization shall be given to any employee of either party to act on behalf of the other. In no event shall either party at any time have authority to make any contracts, commitments or undertake any obligations on behalf of the other. 19. NOTICES. 19.1 All notices, consents and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) when delivered by hand; (b) when sent by telecopier (with receipt confirmed), provided that a copy is promptly thereafter mailed by first class postage prepaid registered or certified mail, return receipt requested; (c) when received by the addressee, if sent by air courier (receipt requested) or by such other means as the parties may agree from time to time; or (d) twenty (20) business days after being mailed, by first class postage prepaid registered or certified mail, return receipt requested; in each case to the appropriate addressee and telecopier numbers set forth below (or to such other addresses and telecopier numbers as a party may designate as to itself by notice to the other party): If to Global Data: C/o James Hagan The Hagan Law Firm 350 Cambridge Avenue Suite 150 Palo Alto, CA 94306 Tel number: (650) 322-8498 Fax number: (650) 322-8499 If to Telenetics: TELENETICS CORPORATION 25111 Arctic Ocean Lake Forest, CA 92630 Attn: Chief Operating Officer Tel number: (949) 455-4000 Fax number: (949) 455- 4010 Page 12 of 15 20. GOVERNING LAW, JURISDICTION, AND DISPUTE RESOLUTION. 20.1 Other than with respect to issues with respect to intellectual property rights, GLOBAL DATA and Telenetics will attempt to settle any controversy or claim arising between GLOBAL DATA and Telenetics through good faith negotiation or mediation. Any dispute which cannot be resolved through negotiation or mediation will be submitted to the courts for resolution. 20.2 This Agreement and its interpretation shall be governed by and construed in accordance with the laws of the State of California, without reference to the choice of law principles thereof. The laws and the courts of the State of California are the exclusive laws and forum for resolving disputes under this Agreement. The parties expressly exclude the application of the United Nations Convention on the International Sale of Goods from the terms and conditions of this Agreement. 20.3 Each party further acknowledges and agrees that any breach by it of the confidentiality and intellectual property clauses in this Agreement will cause the other party irreparable harm. Accordingly, each party agrees that the other party shall be entitled to ex parte injunctive relief to prevent any threatened or continued breach of any such clause and to specifically enforce such clause, in addition to any other remedy which such party may be entitled to at law or in equity. Each party hereby waives the claim or defense in any such action or proceeding against it that the other has an adequate remedy at law or that a bond is necessary. 20.4 Should suit be brought to enforce or interpret any part of this Agreement, the prevailing party will be entitled to recover, as an element of the costs of suit and not as damages, reasonable attorneys' fees and costs to be fixed by the court (including, without limitation, costs, expenses and fees on any successful appeal). 21. ASSIGNMENT. Neither party may assign this Agreement or delegate its performance or any of its benefits or obligations hereunder without prior written consent of the other party, such consent not to be unreasonably withheld or delayed, provided, however, that GLOBAL DATA may assign this Agreement and its rights and obligations hereunder to its corporate parent, Global Data Canada, if its corporate parent, Global Data Canada, unconditionally assumes and agrees to fully perform all the obligations and duties of GLOBAL DATA under this Agreement in writing and GLOBAL DATA provides Telenetics with a copy of such written unconditional assumption and agreement. 22. SECTION HEADINGS. The clause headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Page 13 of 15 23. SEVERABILITY. In case any provision of this Agreement shall be held invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement will not in any way be affected or impaired thereby and all provisions herein are declared to be separate and distinct covenants. The parties hereby agree that if any provision is determined by any court to be invalid or unenforceable by reason of such provision extending for too great a period of time or over too broad a scope, then such provision shall be interpreted to extend over the maximum period of time and the maximum scope which such court at that time or which any other court at any subsequent time determines to be valid and enforceable. 24. WAIVER AND AMENDMENTS. All amendments and other modifications hereof shall be in writing and signed by each of the parties hereto. The parties hereto may by written instrument waive compliance by the other party with, or modify any of, the covenants or agreements made to it by the other party contained in this Agreement. The delay or failure on the part of any party hereto to insist, in any one instance or more, upon strict performance of any of the terms or conditions of this Agreement, or to exercise any right or privilege herein conferred shall not be construed as a waiver of any such terms, conditions, rights or privileges but the same shall continue and remain in full force and effect. All rights and remedies shall be cumulative. 25. ENTIRE AGREEMENT. This Agreement, including all Appendices attached hereto, contain the entire agreement between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and undertakings between the parties relating to the subject matter hereof. 26. COUNTERPARTS. This Agreement may be executed in two counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 27. ADDITIONAL UNDERTAKINGS. The parties agree to sign all such other documents and do all such other things as the other party may reasonably require to give effect to this Agreement, including but not limited to releasing its contractors and vendors to provide relevant data to the other party. 28. LIST OF APPENDICES. Appendix A: Description of Products Appendix B: Product Technology and Materials Appendix C: Capital Equipment Appendix D: Inventory Appendix E: Global Data Trademarks and Tradenames Page 14 of 15 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives on the dates written under their signatures below intending for this Agreement to become effective as of the Effective Date. GLOBAL DATA, INC. TELENETICS CORPORATION "GLOBAL DATA" "Telenetics" By: By: ---------------------------------- -------------------------------- Name: Name: ---------------------------------- -------------------------------- Title: Title: ---------------------------------- -------------------------------- Date: Date: ---------------------------------- -------------------------------- Page 15 of 15 APPENDIX A DESCRIPTION OF PRODUCTS ----------------------- The definition of Products and attached lists is intended to cover all models of the seven GDI product families, including EZ-Star, StarPoint, StarStream, StarView, StarPort, StarSpeed and StarPath. [See attached lists] 1
3 APPENDIX B PRODUCT TECHNOLOGY AND MATERIALS -------------------------------- [To be provided within 10 days after the Effective Date] 4 APPENDIX C CAPITAL EQUIPMENT ----------------- [See attached lists] 5
7 Global Data, Inc. Equipment on Hand List as of 9/23/03
(CONTINUED) 8
9
(CONTINUED) 10
11
(CONTINUED) 12
13
(CONTINUED) 14
15 Global Data, Inc. Equipment on Lease or Rent from Others as of 8/31/03 (Form 571-L)
16b GLOBAL DATA, INC. EQUIPMENT OUT ON LEASE OR RENT TO OTHERS AS OF 8/31/03 (Form 571-L)
17 APPENDIX D INVENTORY --------- [See attached list, to be confirmed/finalized within 30 days pursuant to Section 2.3.1]
APPENDIX E GLOBAL DATA TRADEMARKS AND TRADENAMES ------------------------------------- [To be confirmed/finalized within 10 days after the Effective Date] EZ-Star, StarPoint, StarStream, StarView, StarPort, StarSpeed and StarPath. Global Data