STRATEGIC ALLIANCE AGREEMENT
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This Agreement is entered into and made effective as of the day of April 23,
1998 by and between EasyTe1, a Nevada Corporation ("EasyTel") and Drayton Hall &
Co., an Illinois Corporation ("Drayton").
Whereas, EasyTel is in the business of providing;) delivering marketing and
selling telecommunications services (hereinafter 'EasyTel')
Whereas" Drayton is capable of re-selling the telecommunications products and
services aforesaid of EasyTel;
Whereas, both parties seek the mutually successful expansion of the geographic
markets and customer base of the products and services of EasyTel by a strategic
alliance hereto.
II IS HEREBY AGREED AS FOLLOWS:
1. So as to effectuate the mutual goals of the parties and permit Dray ton the
ability to bring the products and services of EasyTel to new markets and to
new customers, EasyTel grants to Dra~1on, strictly subject to the terms and
conditions herein,
the rights to re-sell and further commercially disseminate
telecommunications products and services of EasyTel that operate on the
proprietary platform of EasyTel, now or hereafter developed, collectively
called "EasyTel".
2. The term of these rights shall be for a period often years from the date of
this Agreement and may be extended for successive five-year terms by the
mutual written consent of both parties, on the same terms and conditions as
set forth herein. It is agreed by the parties that if this Agreement is not
extended beyond its ten year term, at the termination of the Agreement,
Drayton and EasyTel shall continue to hold joint rights, title, and
ownership to any and al! Universal Office platforms implemented by the
parties
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pursuant to this Agreement. Further, if this agreement is not renewed
beyond the ten year term of this Agreement the parties shall continue to
maintain the ownership rights and proprietary rights to such subscribers
enrolled herein, according to the terms of the Strategic Alliance Agreement
jointly. Further, if this Agreement is not renewed beyond the ten year term
of this Agreement, the parties agree that all revenues generated following
the termination of this Agreement, as derived from the Universal Office
platform so jointly owned and from the jointly owned customer base accrued
during the course of the term of this agreement, shall thereafter be
distributed to the parties on the same terms as set forth herein, or as
later amended in writing subsequently by the parties during the initial
term of this agreement.
3. Drayton is hereby authorized to utilize all features and services afforded
by EasyTel software, including, but not limited to: system prompts and
application prompts necessary during the course of providing the EasyTel
services. Drayton understands and acknowledges that the ownership of the
software described herein is vested in the Universal Office Corporation, a
Nevada corporation, but is licensed to EasyTel. Drayton further agrees not
to make any claim known or unknown, to said software as to its fitness for
its intended purpose herein.
4. Drayton shall, pursuant to this Agreement open new geographic markets to
implement the re-selling of such services and products of EasyTel. The
parties agree that Drayton is permitted to utilize one or more third party
marketing entities to assist in effectuating such re-selling.
5. Pursuant to this Agreement, the parties agree to allocate, share, and
divide adjusted gross revenues from the re-sale of services and products of
EasyTel wheresoever marketed by Drayton, on an equal fifty-percent (50%)
division to each party.
6. For the purpose of the Strategic Alliance Agreement, adjusted gross revenue
shall be defined as all revenues generated from customer usage of
telecommunication services, less all fees consisting of telephone billing
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costs, 20% marketing costs, charge backs relating to credit card usage and
credit card fees.
7. Drayton shall serve to re-sell the products and services of EasyTel, on
behalf of EasyTel, within the continental United States, in accordance with
this Agreement. EasyTel shall not grant the same re-selling rights
hereunder to any other party in a geographic market opened by Drayton for a
period of two years from the date of the opening of such new geographic
market. If EasyTel does grant such similar or comparable re-selling rights
to a third party after a two year period from the opening of new geographic
market by Drayton, EasyTel shall not grant such re-selling rights to any
third party at any terms more favorable than those set forth herein.
Drayton agrees that it will not vend or resell any services of the kind
offered by, or competing with, EasyTel from any other vendor for so long as
Drayton shall resell the telecommunications products and services of
EasyTel, wheresoever Drayton is engaged in business. It is agreed by the
parties that the first four new geographic markets to be opened by Drayton
under this Agreement shall be: San Francisco, Chicago, Las Vegas, and New
York City. Subject to access 10 telephone lines and installation of
equipment Drayton shall open the first of these markets on August 1, 1998.
Drayton shall open the remaining three of these markets on or before the
end of 1998. These dates and schedules may be modified by the mutual
consent of the parties as conditions so require.
8. The parties represent and covenant relating to the EasyTel
telecommunications products and service that:
a. Title to all patents trademarks, trade names and/or service marks of
the products and services herein in use on the date of this Agreement
are, and shall remain the property of EasyTel. Drayton shall have only
such rights or use hereto as is required for its re-selling activities
and functions during the term of this Agreement, or subsequent
Agreements between the parties.
b. Drayton acknowledges that it has, and shall continue to receive from
EasyTel confidential information that is the property and
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trade secret of EasyTel and that any unauthorized use, unauthorized
publication, or any unauthorized disclosure to any third party of such
confidential information may cause immediate and substantial harm to
EasyTel. Drayton will take all reasonable steps to maintain the
confidentiality of the confidential information. Drayton agrees not to
disclose to any third party any and all such confidential information
belonging to EasyTel acquired by Drayton as a result of this
Agreement. Drayton shall not, without EasyTel's prior written consent,
disclose, provide, or make available any of the confidential
information in any form to any person, except to its employees whose
access is necessary to enable Drayton to perform under this agreement,
to marketing affiliates and in the ordinary course of securities
compliance procedures, Drayton agrees to maintain all such
confidential information provided to it by EasyTel so1ely for
Drayton's own internal use and/or no other purpose.
c. Drayton agrees" covenants and warrants to EasyTel that it shall not
use or apply software, technology, confidential information or trade
secrets belonging to EasyTel for any other purpose except those
purposes set forth in the Strategic Alliance Agreement.
9. EasyTel and Drayton shall each be separately responsible for their own
respective operating costs and routine overhead expenses.
a. Drayton shall be solely responsible for all costs relating to the
opening of new re-selling markets, including, but not limited to,
start up-costs, equipment, administrative expenses, sales and overhead
directly related to Drayton, rental and lease expenses.
b. Upon the opening of each and every new market by Drayton, Drayton
agrees to purchase and install a Universal Office Mode148 (with 48
ports) to provide service in that area. EasyTel, at its discretion,
and at no additional cost to Drayton, may install additional hardware
and software to increase the port capacity to deliver service to more
customers under this Agreement, In return for increasing the capacity
of the Universal Office with additiona1 48 ports to 96 ports
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(doubling the capacity), EasyTel and Drayton will each own fifty
percent (50%) of the equipment and the installation".
c. Drayton represents that it will expend adequate funds required for the
opening of each new geographic market. Such expenditures shall be made
by Drayton as necessarily required for re-selling costs, product
advertising, including the purchase and installation of equipment and
other overhead expenses. Such equipment expenditures shall include an
initial installation in each new market location or equipment
consisting of a 48 port Universal Office platform capable of being
expanded to 288 ports, with additional hardware and software.
d. Drayton hereby agrees to pay to EasyTel for minimum line access
charges as follows: for each of the first four new geographic market
locations opened by Drayton, Drayton shall pay for each location for
the fourth, fifth, and sixth month of each said location the sum of
$3,000.00; thereafter, for so Long as Drayton operates not more than
four new geographic locations; Drayton shall pay to EasyTel for each
location that has been opened for six months, the sum of $6,250.00.
Subsequent new geographic market locations shall be negotiated as to
minimum line access payments, as agreed by the parties in writing, All
such minimum payments as set forth in this Subparagraph 8d, shall be
credited toward Drayton's share of monthly line access charges and
dial tone costs related to the delivery' of the services.
10. EasyTel shall be responsible for providing "back office" and technical
support to Drayton to allow Drayton to administer the EasyTel services, and
EasyTel shall be responsible for such costs. Back office service shall
include: remote operation of Drayton Universal Office platform, software
maintenance, software development, software improvement or modification,
long distance access maintenance, maintenance of customer account
information, billing processing and services) collection of customer
remittances, technical support and segregation of revenues allocable to
Drayton pursuant to this Agreement. Revenues for the parties to be divided
pursuant to this Agreement shall be held in a clearing account pursuant to
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credit card processing procedures determined by EasyTel. Revenues accrued
to Drayton as a result of reselling conducted by Drayton shall be disbursed
to Drayton from the EasyTel clearing account maintained by EasyTel for its
credit card processing purposes.
11. All revenues to Drayton from EasyTel shall be paid on a monthly basis as
earned, For purposes of such revenues, services, and products revenues are
deemed earned at the time of full payment received or credited debited by
EasyTel from such customer and user. The parties agree that EasyTel closes
its books on the last day of each month and distributions of revenues to
Drayton from EasyTel shall be forwarded to Drayton on the 15th day of the
following month.
12. Drayton agrees that EasyTel shall establish from such revenues, a reserve
for the purpose of refunding charge-backs to customers and credit card
processing costs in an amount equal to 5% of credit card processing charges
of gross revenues due to the parties. This 5% reserve shall be so deducted
for a period of three months. During the fourth month, after settlement of
charge-backs, processing costs of charge card issuers and other relevant
costs being settled and subtracted from the reserve, the balance of the
reserve relevant to the first month shall be divided and disbursed equally
between the parties. Likewise, this process shall be repeated during the
fifth month for the 5% reserve held back during the second month. The
parties shall continue withholding revenues in the amount of 5% of credit
card processing charges and disbursing this reserve) after settlement of
these costs and charge-backs, on a continuing three month arrears basis as
set forth in this paragraph. The parties agree that the provisions of this
Paragraph 12 may be an1ended in the future according to the mutual
agreement of the parties.
13. EasyTel shall furnish to Drayton, on a monthly basis, a statement certified
by an Officer of EasyTel, specifying all products and services re- sold by
Drayton and its affiliates, if any) per market, per month- This statement
shall be forwarded to Drayton on the 15th day of the following month.
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15. EasyTel agrees to make available to Drayton its latest technology relating
to Universal Office and such other products or services re-marketed by
Drayton for EasyTel as part of this Agreement.
16. As an acquisition fee for the re-selling rights acquired by Dray ton,
Drayton shall pay to EasyTel for the re-selling rights herein payment in
the form of 990,000 common shares in Drayton of its authorized and issued
common shares representing 9.9% of its authorized and issued. It is agreed
that Drayton shall be raising additional capital through the sale of its
securities or issuing further securities pursuant to shareholder approval
that may cause a dilution of the percentage of ownership in this Paragraph
16.
17. It is agreed between the parties hereto that they will not disclose either,
directly or indirectly to any third person any confidential information
relating to the business, properties or financial conditions which any
party hereto has disclosed to the other.
18. EasyTel warrants and represents to Drayton that EasyTel holds, possess, and
retains all interests, proprietary rights and ownership to the Universal
Office sufficient for the grant of re-selling rights herein.
19. EasyTel represents that it holds a license from the Universal Office
Corporation concerning the software that the Universal Office platform
operates under this strategic alliance agreement. EasyTel represents that
it has no notice from Universal Office of any action, suit, proceeding,
claim, or arbitration pending, threatened or contemplated by at1y
governmental or regulatory agency concerning the Universal Office or
products or services provided by EasyTel herein which would have the effect
of restricting, prohibiting, or delaying the consummation of this strategic
a11iance agreement for reselling rights described herein.
20. Each party hereto warrants and represents that neither the execution nor
delivery of this Agreement, nor the consummation of the agreement set forth
herein will result in, with or without the giving of notice or lapse of
time, or both, a violation of any material contract, agreement, license,
regulatory prohibition, or material instrument to which either party hereto
is a signatory.
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both, a violation of any material contract, agreement, license regulatory
prohibition, or material instrument to which either party hereto is a
signatory,
21. Drayton represents and warrants that it shall not at any time attempt to
encumber, convey, transfer, or take any other action that would impair any
proprietary property right or interest of EasyTel.
22. This Agreement shall be binding on any successors of the parties.
Neither party shall have the right to assign its interests in this
Agreement to any other party without the express written permission and
consent of the other party.
23. Either party hereto shall have the right to terminate this Agreement and
the re-marketing arid re-selling rights granted herein in the event of any
of the following:
a. A party breaches the Agreement and does not cure such breach within 30
days after notice thereof from the other party specifying such breach;
b. Dissolution, insolvency or bankruptcy of a party whether voluntary or
involuntary;
c. Appointment of a trustee or receiver for a party;
then) and in addition to all other rights and remedies which the other
party may have at law or in equity, the other party may, at its
option, terminate this Agreement by notice thereof in writing
specifying the reason for such termination and a termination date.
Such termination shall become effective on the date of the termination
set forth in the notice of termination, but in no event earlier than
30 days from the date of mailing thereof. In the event of termination
of this Agreement, Drayton shall return all materials furnished by
EasyTel, including all relevant documents received by Drayton tram
EasyTel.
24. Nothing contained in this Agreement shall be construed as conferring by
waiver, implication, estoppel or otherwise upon Dray ton, any license) or
any trade secrets) or know how from EasyTel. No such other proprietary
rights shall arise from this Agreement or from any acts) statements or
dealings resulting in the execution of this Agreement, except as stated
herein regarding re-selling rights.
25. EasyTel shall not be responsible for the failure to deliver any
telecommunications products or services~ or to continue to deliver the
same, under this Agreement due to federal, state, or municipal action,
statute, ordinance or regulation, strike, or other labor trouble, riots or
other civil disturbance, acts .of God consisting of natural disasters,
whether weather related, or otherwise, state of war, or circumstances
within or without the United States not subject to the control of EasyTel
which prevents or hinders the delivery, or continued delivery of any
product) service or responsibility of EasyTel hereunder.
26. This agreement shall be governed by and construed in accordance with the
laws of tile State of Nevada.
27. This Agreement contains the entire understanding between and among the
parties and supersedes any prior understanding and agreements among them
respecting the subject matter of this Agreement.
28. If at any time during the term of this Agreement by dispute, difference, or
disagreement shall arise upon or in respect of the Agreement, and the
meaning and construction hereof, every such dispute) difference, and
disagreement shall be referred to a single arbiter agreed upon by the
parties, or if no single arbiter can be agreed upon, an arbiter or
arbiters) shall be selected in accordance with the rules of the American
Arbitration Association and such dispute, difference, or disagreement shall
be settled by arbitration in accordance with the then prevailing commercial
rules of the American Arbitration, and judgment upon the award rendered by
the arbiter may be entered in any court having jurisdiction thereof.
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29. The parties hereto shall execute and deliver all documents, provide all
tnfoffi1ation and take or forbear from all such action as may be necessary
or appropriate to achieve the purposes of the Agreement. This Agreement may
be signed in counterparts of original or facsimile form, and all so
executed shall constitute one Agreement, binding on all the parties hereto
even though all the parties are not signatories to the original or same
counterpart.
30. Nothing herein shall be construed to be to the benefit of any third par1y,
nor is it intended that any provision shall be for the benefit of any third
party.
31. If any provision of this Agreement, or the application of such provision to
any person or circumstance, shall be held invalid, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid, shall not be affected
thereby
Dated: April 23, 1998
EasvTel DRAYTON HALL & CO.
A Nevada Corporation An Illinois Corporation
by: by:
Its Corporate Secretary Its Authorized Representative
Thomas Ska1a Bill J. Angelos, Jr.
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