<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Quarterly Period Ended September 30, 1998
or
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition Period From _______________ to
________________.
Commission file number 0-27560
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ACT Teleconferencing, Inc.
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(Name of small business issuer as specified in its charter)
Colorado 84-1132665
- -------------------------------- ----------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1658 Cole Blvd., Suite 130, Golden, Colorado 80401
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(Address of principle executive offices) (Zip Code)
(303) 235-9000 (303) 233-0895
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(Issuer's telephone number, including (Issuer's facsimile number,
area code) including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [X]
No [_]
As of October 31, 1998, 3,641,801 shares of the issuer's common stock were
outstanding.
This report contains 15 pages
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ACT TELECONFERENCING, INC.
FORM 10-QSB
Table of Contents
<TABLE>
<CAPTION>
PART I. Financial Information Page No.
<S> <C>
Item 1. Financial Statements 3
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flow 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7
Item 4. Submission of Matters to a Vote of Security Holders
PART II. Other Information
Item 6. Exhibit Index 12
SIGNATURES 13
</TABLE>
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Item 1. FINANCIAL STATEMENTS
ACT TELECONFERENCING, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, 1998 December 31, 1997
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Assets
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 586,234 $ 451,434
Accounts receivable (net of allowances for doubtful accounts
of $51,543 and $18,992 in 1998 and 1997 respectively) 4,705,708 2,885,125
Prepaid expenses 358,839 203,673
Inventory 178,105 136,116
Available for sale marketable securities - 50,000
------------------------------------------
Total current assets 5,828,886 3,726,348
Equipment:
Telecommunications equipment 4,264,934 2,651,395
Office equipment 3,781,364 1,910,606
Less: accumulated depreciation (1,700,829) (1,094,938)
------------------------------------------
Total equipment - net 6,345,469 3,467,063
Other Assets:
Goodwill 711,845 736,300
Deferred Items 244,371
==========================================
Total assets $ 13,130,571 $ 7,929,711
==========================================
Liabilities and shareholders' equity Current liabilities:
Notes payable $ 554,754 $ 540,014
Accounts payable 2,510,572 1,349,337
Accrued liabilities 1,264,073 777,526
Current portion of long term debt 330,364 253,251
Income taxes payable 687,623 293,238
------------------------------------------
Total current liabilities 5,347,386 3,213,366
Long-term debt 4,287,686 613,714
Deferred income taxes 123,252 117,454
Minority interest 874,437 607,244
Shareholders' equity:
Preferred stock, no par value, 1,000,000 shares
authorized; none issued Common stock, no par value;
10,000,000 shares authorized 3,641,801 and 3.612,758
shares issued and outstanding in 1998 and 1997, respectively 6,787,855 6,158,584
Accumulated deficit (4,085,236) (2,729,069)
Currency translation adjustment (204,809) (51,582)
------------------------------------------
Total Shareholders' equity 2,497,810 3,377,933
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Total liabilities and shareholders' equity $ 13,130,571 $ 7,929,711
==========================================
</TABLE>
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ACT TELECONFERENCING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30,
1998 1997
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<S> <C> <C>
Net revenues $ 4,706,499 $ $ 2,612,841
Costs and expenses:
Cost of sales (2,594,222) (1,407,336)
Marketing, general and administration expense (2,570,583) (1,208,878)
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Total costs and expenses (5,164,805) (2,616,214)
Income (loss) before income taxes and minority interest (458,306) (3,373)
Provision for income taxes (86,644) (105,560)
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Income (loss) before minority interest (544,950) (108,933)
Minority interest in earnings of consolidated subsidiary (16,677) (55,076)
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Net income (loss) for the quarter $ (561,627) $ (164,009)
================== =================
Net income (loss) per share $ (0.15) $ (0.05)
================== =================
Weighted average number of shares outstanding 3,635,952 3,393,001
================== =================
<CAPTION>
Nine Months Ended September 30,
1998 1997
----------------- -----------------
<S> <C> <C>
Net revenues $ 13,565,028 $ 7,235,069
Costs and expenses:
Cost of sales (7,412,783) (3,244,360)
Marketing, general and administration expense (6,857,599) (3,744,355)
----------------- -----------------
Total costs and expenses (14,270,382) (6,988,715)
Income (loss) before income taxes and minority interest (705,354) 246,354
Provision for income taxes (418,151) (219,435)
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Income (loss) before minority interest (1,123,505) 26,919
Minority interest in earnings of consolidated subsidiary (232,662) (152,473)
----------------- -----------------
Net income (loss) for the quarter $ (1,356,167) $ (125,554)
================= =================
Net income (loss) per share $ (0.37) $ (0.04)
================= =================
Weighted average number of shares outstanding 3,622,785 3,099,087
================= =================
</TABLE>
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ACT TELECONFERENCING, INC
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1998 1997
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<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (1,356,167) $ (125,554)
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation 605,891 229,539
Amortization of goodwill 24,455 13,530
Deferred income tax 5,798 (1,656)
Minority interest 267,193 143,569
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Cash flow before changes in operating assets and liabilities: (452,830) 259,428
Changes in operating assets and liabilities (Net of effect of
business combination):
Accounts receivable (1,747,251) (1,066,671)
Inventory (41,989) (7,515)
Prepaid expenses and other assets (399,537) (186,862)
Accounts payable and accrued liabilities 1,647,780 332,800
Income tax payable 394,384 95,828
--------------------------------------
Net cash used for operating activities (599,443) (572,992)
INVESTING ACTIVITIES
Property and equipment purchases (3,484,297) (929,097)
Investment in marketable security 50,000
--------------------------------------
Net cash used for investing activities (3,434,297) (929,097)
FINANCING ACTIVITIES
Net proceeds from issuance (repayment) of debt 3,692,495 197,883
Net proceeds from issuance of common stock 629,272 1,628,712
--------------------------------------
Net cash provided by financing activities 4,321,767 1,826,595
Effect of change in exchange rate on cash (153,227) (149,277)
--------------------------------------
Net (decrease) increase in cash and cash equivalents $ 134,800 $ 175,229
======================================
Cash and cash equivalents, beginning of year $ 451,434 $ 621,742
Cash and cash equivalents, end of year 586,234 796,971
--------------------------------------
Net (decrease) increase in cash $ 134,800 $ 175,229
======================================
</TABLE>
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ACT TELECONFERENCING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary of a fair presentation have
been included. Operating results for the nine-month period ending September 30,
1998 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1998. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual report on Form
10-KSB for the year ended December 31, 1997.
BUSINESS
ACT Teleconferencing, Inc (the Company) is engaged in the business of providing
high-quality audio, data, and video conferencing products and services to
business clients. The Company operates in the United States, Canada, the United
Kingdom, the Netherlands, Belgium, France and Australia.
NET EARNINGS (LOSS) PER SHARE
Net earnings (loss) per share is computed based upon the weighted average number
of shares of common stock outstanding during the period. Options and warrants
are not included in the computations since their effect is presently either
anti-dilutive or not material. In February 1997, the Financial Accounting
Standards Board issued Statement No. 128, Earnings per Share, which was adopted
on December 31, 1997. Under the new requirements for calculating primary
earnings per share, the dilutive effect of stock options has been excluded.
COMPREHENSIVE INCOME (LOSS)
The difference between net loss and comprehensive loss solely relates to foreign
currency translation.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Management's Discussion and Analysis section of this report contains
forward-looking statements, which are subject to certain risks and
uncertainties. Certain such statements are repeated at the end of this
Management's Discussion and Analysis section together with specific
cautionary statements identifying factors that could cause actual results
to differ materially from current expectations contained in each such
statement. Forward-looking statements also may be implicit but not readily
identified within the context of other statements. In general, among the
factors that could affect the Company's actual results and could cause
results to differ from those contained in the forward-looking statements
are the continued ability of the Company to generate revenue growth in
audio teleconferencing, the general rate of development of the market for
videoconferencing services, the available opportunities to explore new
international markets and the availability of financing to support growth.
Other factors could also cause actual results to vary materially from the
anticipated results covered in such forward-looking statements.
OVERVIEW
The Company completed another satisfactory quarter in terms of revenue growth.
Third quarter 1998 revenues of $4.7 million grew by 80% over the third quarter
of 1997, reflecting continued growth in the market for audio teleconferencing
services, additional market share gains made by the Company and revenues from
new international operations which grew tenfold over the previous period.
Cumulative revenues for the nine months were $13.5 million (88% growth over 1997
revenues of $7.2 million).
Third quarter net loss after taxes and minority interest amounted to $561,627, a
decline of $397,613 from the third quarter of 1997 but a slight improvement over
second quarter 1998. This decline was due mainly to continued investment and
start up costs absorbed in the Company's new operations based in New York,
Paris, Amsterdam, Sydney, Toronto and Ottawa.
The Company anticipates continued significant forward growth in teleconferencing
revenues in its established operations in North America and the United Kingdom.
Revenues from these operations for the nine-month period grew by 56% while
revenues from new operations grew by tenfold over the same period to $2.6
million. Development expenses incurred in connection with the entry into the
French, Dutch, Canadian and Australian markets as well as the Company's new
Internet and videoconferencing products and technologies; that expense amounted
to approximately $2 million for the nine months to September 30, 1998 up from
$932 thousand for the comparable prior period.
On July 14, 1998, the Company announced a three-year supply agreement with
Concert Global Networks Limited ("Concert"), the British Telecom("BT")/MCI
global services company, for Concert Audioconferencing Service. This service is
scheduled to commence in the fourth quarter of 1998, and will be provided by the
ACT centers in New York, Denver, London, Paris, Amsterdam, Sydney, Toronto and
Ottawa. Following BT's purchase of MCI's interest, Concert is now owned solely
by BT.
Concert, which is based in Reston, Virginia, provides an array of managed voice,
data and Internet services to over 4,300 multinational companies in over 50
countries. Concert Audioconferencing Service, the world's first global virtual
private network-based conference service, offers a flexible, cost-effective
seamless audioconferencing service to multinational companies via over 30
distributors worldwide including British Telecom and MCI.
Market information currently available to ACT indicates that the effect of this
transaction could be to increase ACT's revenues by approximately $40 million
over a three-year period. Actual revenues will depend on customer usage and in-
country penetration. Global presence and commitment to service excellence,
innovation and quality were key factors in Concert's decision to award the
contract to ACT. As a result of the Concert contract, the Company plans to
continue to expand its geographic penetration over the next twelve months.
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On September 1, 1998 the Company announced the opening of two offices in Canada,
with the establishment of ACT Teleconferencing Canada Inc. in Toronto, and the
acquisition of Advanced Multi-Point Conferencing based in Ottawa, Canada. In
October the Company appointed Robert Aubry as Managing Director of the Canadian
operations.
On September 22, 1998 the Company announced an agreement with GTE to become its
preferred videoconferencing services provider. This agreement enhances ACT's
worldwide video presence as ACT takes over GTE's existing videoconferencing
bridges and deploys them in the United States, the United Kingdom, France, the
Netherlands and Australia.
On October 22, 1998 ACT announced a videoconferencing distribution agreement
with Toyoda Machinery USA to sell and market Toyoda's Virtual Tech video product
line. This product is a two-way wireless audio and visual communication system
which utilizes high tech video links on an ISDN network to transmit live images
in a remote location to another facility. The Toyoda product boasts varied
functions including remote diagnostics and immediate maintenance, training,
inspections and videoconferencing. Depending upon market penetration. Plans for
implementation are under way, but an immediate impact on revenues is not likely.
COMPONENTS OF REVENUE AND EXPENSE
The Company derives revenues principally from fees charged to clients for audio
and video conference "bridging" services which connect multiple parties to a
conference call, from fees for enhanced services and from the sale of
videoconferencing equipment units.
The costs of teleconferencing services consist of local and long-distance
telephone services, depreciation on equipment, salaries, benefits, and office
expenses of conference operators.
Selling, general and administrative costs consist of salaries, benefits, and
office expenses of the Company's administrative, market development, and sales
organizations.
RESULTS OF OPERATIONS
Quarter Ended September 30, 1998, compared to Quarter Ended September 30, 1997
Net Revenues. Net Revenues increased by 80% to $4.7 million for the quarter
ended September 30, 1998, compared to $2.6 million for the same period in 1997,
primarily due to increased sales of audio teleconferencing services and video
equipment. Revenue growth resulted from repeat sales to established customers,
increased sales of enhanced services, sales to new customers and the impact of
new international operations. Established operations accounted for 83% of the
total revenue and increased by 52% over the quarter ended September 30, 1997.
New operations accounted for 17% of the total revenue and increased more than
tenfold to $700 thousand over the quarter ended September 30,1997.
Cost of Teleconferencing Services. Cost of teleconferencing services increased
by 84% to $2,594,222 for the third quarter, compared to $1,407,336 for the
quarter ended September 30, 1997. Gross profit percentage dropped from 46.1%in
1997 to 44.9% reflecting the impact of the UK move (see below) as well as low
volumes in start up countries and the effect of lower margin video systems
equipment. During the third quarter 1998, the United Kingdom commenced
relocation to premises some three times larger than currently occupied incurring
significant downtimes and reduced revenues.
Selling, General and Administrative Costs. Selling, General and Administrative
expenses for the third quarter were $2,570,583, or 54.6% of revenue, compared to
$1,208,878 or 46% of revenue for the third quarter of 1997. The 113% increase in
such expenses reflects an aggressive marketing focus on audio and video
conferencing sales efforts, as well as development costs for the Company's new
business units in France, Australia and Canada and the entry into internet and
video conferencing.
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Income (Loss) Before Taxes and Minority Interest. Loss before taxes and
minority interest amounted to $458,306, compared to a loss of $3,373 for the
third quarter ending September 30, 1997. The increased loss of $454,933 was due
to higher development costs and relocation expenses as described above.
Taxes on Income and Minority Interest. Taxes on income and minority interest
amounted to $103,321 for the quarter ended September 30, 1998, compared to
$160,636 for the quarter ended September 30, 1997. This reduction was primarily
due to lower taxes paid on and minority interest in earnings achieved by the
Company's 60% majority-owned United Kingdom operation. The Company paid no
United States or other international income tax due to net operating losses
incurred in its United States and other international operations in previous
years.
Net income (loss). Net loss amounted to $561,627 for the quarter ended September
30, 1998 compared to $164,009 for the quarter ended September 30, 1997, a
decline of $397,618. This increased loss was due mostly to the cost of
absorbing new and developing international operations amounting to approximately
$600,000 for the quarter as well as the cost of relocating UK operations.
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1998, COMPARED TO NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1997.
Net Revenues. Net revenues increased by 87% to $13.6 million for the nine
months ended September 30, 1998, compared to $7.2 million for the same period in
1997, primarily due to increased sales of audio teleconferencing services as
described above. During this period, established operations accounted for 81%
of net revenues which increased 54%, while new operations accounted for 19% of
net revenues which increased to $2.45 million over the nine month period ended
September 30, 1997. This continued increase is due to the aggressive sales and
marketing stance adopted by the Company, especially in new operations.
Cost of Teleconferencing Services. Cost of teleconferencing services amounted
to $7,412,783 compared to $3,244,360 or an increase of 128% for the nine-month
period. Gross margin percentage (net revenues less costs of conferencing
services divided by net revenues) decreased to 45.3%, compared to 55.2% achieved
during the previous comparable period. As noted above, gross margin has been
affected by the impact of international start ups in France, Canada and
Australia which are still at relatively low volumes in comparison to fixed
operational start up costs. Costs also increased for established operations due
to the one-time charge to upgrade and relocate technical equipment for the
Company's expanded Denver operations in the second quarter and for the expansion
and relocation of UK operations in London in the third quarter.
Selling, General and Administrative Costs. Selling, General and Administrative
expenses increased 83% to $6,857,599 and declined as a percentage of revenue to
50.6%, compared to $3,744,355 or 51.7% of revenue for the period ended September
30, 1997.
Income (Loss) Before Taxes and Minority Interest. Loss before taxes and
minority interest amounted to $705,354, compared to income before taxes and
minority interest of $246,354 for the nine month period ended 1997. The
$951,708 decline was due to higher development costs and relocation expenses as
described above.
Taxes on Income and Minority Interest. Taxes on income and minority interest
amounted to $650,813 for the nine months ended September 30, 1998, compared to
$371,908 for the nine months ended September 30, 1997, primarily due to taxes on
and minority interest in earnings achieved by the Company's 60% majority-owned
United Kingdom subsidiary which pays full tax.
Net Income (Loss). Net loss amounted to ($1,356,167) or an increase in loss of
$1,230,613 compared to nine-month period ended September 30, 1997. As discussed
above, this loss was due to the cost of international start ups in Australia,
France and Canada as well as the effect of relocation charges, the investment in
new and developing products in video and Internet conferencing and the effect of
UK taxation and minority interest.
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LIQUIDITY AND CAPITAL RESOURCES (FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998)
During the nine months ended September 30, 1998, net cash increased by $134,800
from December 31, 1997. At September 30, 1998, the Company had cash and cash
equivalents of $586,234 compared to cash and cash equivalents on hand at
December 31, 1997 of $451,434.
Cash used in operating activities before funding net operating assets amounted
to $452,830 for the nine months ended September 30, 1998, compared to cash
generated of $259,428 for the nine months ended September 30,1997. Cash after
financing operating assets and liabilities amounted to a net outflow of $599,443
reflecting mainly the significant growth in accounts receivable, inventory and
prepaid expenditures.
During the period, the Company invested $3.5 million in additional equipment, to
provide new bridging technology, software and capacity to its United States,
European and Asia Pacific operations. The gross cash outflow of $3.4 million
(after capital investment and before financing arrangements) was funded by a
combination of debt and lease finance amounting to $4.5 million and resulted in
a net cash inflow (before effect of exchange rate changes) of $288,027.
The Company believes that, given the present rate of sales and profit growth in
its core audio teleconferencing business as well as indicated volumes from
certain contractual relationships, it will have access to sufficient cash
resources to meet its needs for the next twelve months. The Company has further
plans to expand capacity and open new operations in new geographic locations and
to develop its videoconferencing and Internet conferencing businesses. These
expansion plans will be financed using a mix of lease financing for capital
equipment, the anticipated conversion of outstanding warrants and bank lines of
credit. The Company is prepared to make other equity capital arrangements to
ensure the Company can continue to build its teleconferencing platform beyond
1999.
On March 31, 1998 the Company raised net proceeds of $2.0 million pursuant to
the completion of a subordinated debt financing arrangement executed with Sirrom
Capital Corporation and Equitas LP based in Nashville, Tennessee. Documentation
was completed during the second quarter. A further $500,000 was available under
this arrangement and was drawn down during the third quarter. This financing has
been used primarily to finance the growth in working capital due to sales
growth.
In 1997 the Company completed a post-effective amendment registration statement
to its initial public offering concerning 712,497 publicly traded warrants,
which are exercisable until February 2, 1999 at $5.00 per share. The gross
proceeds from the above warrants, should they be fully converted, would amount
to approximately $3.5 million which would also be used to fund the geographical
expansion of the business. As the exercise depends on the market price of the
Company's common stock and the ability of the market to absorb additional float,
we are unable to determine the actual degree to which these warrants will be
exercised.
FORWARD-LOOKING STATEMENTS
Statements made above, certain of which are summarized below, are forward-
looking statements that involve risks and uncertainties, and actual results may
be materially different. Factors that could cause actual results to differ
materially from those in the forward-looking statement include (but are not
limited to) the following:
THE COMPANY ANTICIPATES CONTINUED GROWTH IN TELECONFERENCING REVENUES IN ITS
ESTABLISHED OPERATIONS IN NORTH AMERICA AND THE UNITED KINGDOM. A significant
downturn in economic conditions generally or the development of alternative
technologies could render audio teleconferencing less effective and could affect
the rate of growth of teleconferencing revenues.
THE COMPANY BELIEVES THAT, GIVEN THE PRESENT RATE OF SALES AND PROFIT GROWTH IN
ITS CORE AUDIO TELECONFERENCING BUSINESS, IT WILL HAVE ACCESS TO
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SUFFICIENT CASH RESOURCES TO MEET ITS FINANCING NEEDS FOR THE NEXT TWELVE
MONTHS. Failure to maintain ongoing profit margins or an increase in costs of
expansion, resulting in a significantly higher level of cash utilization, could
result in the Company deferring other expansion plans or could cause it to seek
additional financing in the capital markets for its future growth plans and
working capital needs.
THESE EXPANSION PLANS WILL BE FINANCED USING A MIX OF LEASE FINANCING FOR
CAPITAL EQUIPMENT, THE ANTICIPATED CONVERSION OF OUTSTANDING WARRANTS AND BANK
LINES OF CREDIT. THE COMPANY IS PLANNING TO MAKE OTHER EQUITY CAPITAL
ARRANGEMENTS TO ENSURE THE COMPANY CAN CONTINUE TO BUILD ITS TELECONFERENCING
PLATFORM BEYOND 1999. If the share price of the Company's common stock declines
substantially or some other unforeseen event discourages warrant-holders from
exercising all or a substantial part of these warrants, the Company would seek
other financing for its growth or curtail its growth accordingly.
MARKET INFORMATION CURRENTLY AVAILABLE TO ACT INDICATES THAT THE EFFECT OF THIS
TRANSACTION COULD BE TO INCREASE ACT'S REVENUES BY APPROXIMATELY $40 MILLION
OVER A THREE-YEAR PERIOD. ACTUAL REVENUES WILL DEPEND UPON CUSTOMER USAGE AND
IN-COUNTRY MARKET PENETRATION. AS A RESULT OF THE CONCERT CONTRACT, THE COMPANY
PLANS TO CONTINUE TO EXPAND ITS GEOGRAPHIC PENETRATION OVER THE NEXT TWELVE
MONTHS. The Company's failure or inability to continue its expansion into new
markets will have an adverse impact on its penetration into markets that Concert
services, that are not already served by the Company.
IN 1997 THE COMPANY COMPLETED A POST-EFFECTIVE AMENDMENT REGISTRATION STATEMENT
TO ITS INITIAL PUBLIC OFFERING CONCERNING 712,497 PUBLICLY TRADED WARRANTS,
WHICH ARE EXERCISABLE UNTIL FEBRUARY 2, 1999 AT $5.00 PER SHARE. THE GROSS
PROCEEDS FROM THE ABOVE WARRANTS, SHOULD THEY BE FULLY CONVERTED, WOULD AMOUNT
TO APPROXIMATELY $3.5 MILLION WHICH WOULD ALSO BE USED TO FUND THE GEOGRAPHICAL
EXPANSION OF THE BUSINESS. If the share price of the Company's common stock
declines substantially or some other unforeseen event discourages warrant-
holders from exercising all or a substantial part of these warrants, the Company
would seek other financing for its growth or curtail its growth accordingly.
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PART II -- OTHER INFORMATION
-----------------
ITEM 6(A). EXHIBITS AND REPORTS ON FORM 10QSB
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
3.1/2/ Restated Articles of Incorporation of the Company dated April 15,
1996
3.2/2/ Bylaws of the Company, amended as of April 15, 1996
4.1/1/ Form of specimen certificate for Common Stock of the Company
4.2/1/ Form of Unit Purchase Option
4.3/1/ Impound Agreement
4.4/1/ Lock-up Letter Agreement
10.1/1/ Stock Option Plan of 1991, as amended, authorizing 400,000 shares
of Common Stock for issuance under the Plan
10.2/1/ Form of Stock Option Agreement
10.3/1/ Form of Common Stock Purchase Warrant
10.10/1/ Split Dollar Insurance Agreement dated March 1, 1990, between the
Company and Gerald D. Van Eeckhout
10.11/1/ Service Agreement dated April 10, 1992 between David Holden and
ACT Teleconferencing Limited
10.19/3/ Stock Option Plan of 1996
10.20/4/ Stock Option Plan of 1996, as amended
10.21/5/ Employee Stock Purchase Plan
10.22/6/ Loan and Security Agreement dated March 31, 1998 and Form of Stock
Purchase Warrant with Sirrom Capital Corporation and Equitas L.P.
10.23/6/ Loan Agreement with Key Bank, N.A.
10.24 Lease Commitment and Warrant with R.C.C. Finance Group Ltd.
10.25 Contract for the Supply of Conferencing Services Design Development
and Information signed July 14, 1998 between ACT Teleconferencing
Sevices, Inc. and Concert Global Networks Limited
10.26 Agreement for the Supply of Conferencing Services signed July 14,
1998 between ACT Teleconferencing Services, Inc. and Concert Global
Networks Limited
10.27 Agreement for Videoconferencing Equipment and Services (GTE Telephone
Operating Companies) dated October 1, 1998
27.1 Financial Data Schedule
</TABLE>
/1/Incorporated by reference, attached as an exhibit of the same number to our
Registration Statement on Form SB-2, filed with the SEC on October 10, 1995, and
amendments to the Form, SB-2, File No. 33-97908-D.
/2/Incorporated by reference, attached as an exhibit of the same number to the
Company's Form 10-QSB for the Quarter ended March 31, 1996, File No. 0-27560,
filed May 15, 1996.
/3/Incorporated by reference, attached as an exhibit to the Company's Schedule
14A Information filed with the SEC on April 30, 1997, File No. 0-27560.
/4/Incorporated by reference, attached as Exhibit 4.6 to the Company's Form S-8,
File 0-27560, filed July 21, 1998.
/5/Incorporated by reference, attached as an Appendix A to our Schedule 14A
Information filed with the SEC on April 15, 1998, File No. 0-27560.
/6/Incorporated by reference, attached an Exhibit of the same number to our
Amendment No. 1 to Form 10-QSB for the Quarter ended June 30, 1998, File 0-
27560, filed August 24, 1998 (originally filed under cover of Form SE on August
14, 1998).
ITEM 6(B).
On July 17, 1998, the Company filed an 8-K with the Securities and Exchange
Commission reporting its supply agreement with Concert Global Networks, Ltd. to
supply audioconferencing service for Concert Audioconferencing Service. Also on
October 30, 1998 the Company filed an 8-K with the Securities and Exchange
Commission reporting its acquisition of Advanced Multi-Point Conferencing.
Page 12
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ACT TELECONFERENCING, INC.
DATE: November 13, 1998 By: /s/ Gavin J. Thomson
---------------------
Gavin J. Thomson,
Chief Financial Officer
(Duly authorized officer and
Principal Financial Officer)
Page 13
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
3.1 Restated Articles of Incorporation of the Company dated April 15, 1996 Incorporated by reference
3.2 Bylaws of the Company, amended as of April 15, 1996 Incorporated by reference
4.1 Form of specimen certificate for Common Stock of the Company Incorporated by reference
4.2 Form of Unit Purchase Option Incorporated by reference
4.3 Impound Agreement Incorporated by reference
4.4 Lock-up Letter Agreement Incorporated by reference
10.1 Stock Option Plan of 1991, as amended, authorizing 400,000 shares of
Common Stock for issuance under the Plan Incorporated by reference
10.2 Form of Stock Option Agreement Incorporated by reference
10.3 Form of Common Stock Purchase Warrant Incorporated by reference
10.10 Split Dollar Insurance Agreement dated March 1, 1990, between the
Company and Gerald D. Van Eeckhout Incorporated by reference
10.11 Service Agreement dated April 10, 1992 between David Holden and ACT
Teleconferencing Limited Incorporated by reference
10.19 Stock Option Plan of 1996 Incorporated by reference
10.20 Stock Option Plan of 1996, as amended Incorporated by reference
10.21 Employee Stock Purchase Plan Incorporated by reference
10.22 Loan and Security Agreement dated March 31, 1998 and Form of Stock Incorporated by reference
Purchase Warrant with Sirrom Capital Corporation and Equitas L.P.
10.23 Loan Agreement with Key Bank, N.A. Incorporated by reference
10.24 Lease Commitment and Warrant with R.C.C. Finance Group Ltd. Filed electronically
10.25 Contract for the Supply of Conferencing Services Design Development and Filed electronically
Information signed July 14, 1998 between ACT Teleconferencing Services,
Inc. and Concert Global Networks Limited
10.26 Agreement for the Supply of Conferencing Services signed July 14, 1998 Filed electronically
between ACT Teleconferencing Services, Inc. and Concert Global Networks
Limited
10.27 Agreement for Videoconferencing Equipment and Services (GTE Telephone Filed electronically
Operating Companies) dated October 1, 1998
27.1 Financial Data Schedule Filed electronically
</TABLE>
Page 14
<PAGE>
Exhibit 10.24
R.C.C. FINANCE GROUP LTD.
1086 TEANECK ROAD SUITE 5C LEASE NO.__________________
TEANECK, NEW JERSEY 07666
201-833-4480
(Hereinafter called "Lessor")
LEASE AGREEMENT
1
ACT TELECONFERENCING, INC. COMPUNETIX
1658 COLE BLVD., SUITE 130 2420 MOSSIDE BLVD.
GOLDEN, COLORADO 80401 MONROEVILLE, PA 15146
(Hereinafter Called "Lessee") (Hereinafter Called "Supplier")
Contact: GAVIN THOMPSON Contact:
Telephone: 303-233-3500 Telephone:
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
QUANTITY DESCRIPTION OF LEASED EQUIPMENT (Hereinafter Called "equipment")
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
THE ITEMS DESCRIBED ON EQUIPMENT SCHEDULE "A", WHICH IS ANNEXED HERETO AND MADE A PART HEREOF.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2. TERMS OF RENTAL PAYMENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Term of No. of Rentals Amount of Rental ADDITIONAL PROVISIONS:
Lease Rental Payable Payment In U.S. Currency
Payments.
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
48 48 Monthly $3,352.00 EQUIPMENT LOCATION:
Months plus all applicable taxes 1243 ISLINGTON AVENUE TORONTO, ONTARIO CANADA
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3. ADVANCE RENTALS: Lessee shall pay the first month's and last one months'
rental in advance upon the execution of this Lease.
4. LEASING: Lessee hereby leases from Lessor, and Lessor hereby leases to
Lessee, in accordance with the terms, provisions, covenants and conditions of
this lease, the equipment described above and/or in Schedule "A", which is
annexed hereto and made a part hereof.
5. TERM AND RENT. The obligations under this lease shall begin upon the date the
Lessor orders the equipment to be leased hereunder and shall end upon the full
performance and/or observance of each and every term, provision, covenant and
condition set forth in this lease. The term of this lease shall begin on the day
the first rental payment is due and shall terminate on the last day of the final
rental payment period. Rental payments paid in advance upon execution of this
lease shall be deemed to have been earned by Lessor immediately upon Lessor's
receipt thereof and shall be applied immediately to satisfy Lessee's obligations
to make such payments hereunder. These payments shall not be refundable to
Lessee under any circumstances, including (without limitation) any termination
of this Lease for any reason prior to the end of its scheduled term in
accordance with the terms hereof. The first rental payment shall be due and
payable on the day of delivery of all the equipment and thereafter each payment
of the rent shall be consecutively paid on the same day of each payment period.
In the event of the delivery of only a part of the equipment, a pro rata portion
of the rent shall be paid, until delivery of all of the equipment. All rents
shall be paid to Lessor at its address set forth above, or as otherwise directed
by Lessor in writing.
6. TIME. Time is hereby made of the essence of this lease and of each and of all
its terms, provisions, covenants and conditions.
THIS INSTRUMENT CONSTITUTES THE ENTIRE CONTRACT BETWEEN THE PARTIES HERETO, AND
NO REPRESENTATIONS, ORAL OR WRITTEN, SHALL CONSTITUTE AN AMENDMENT, MODIFICATION
OR TERMINATION HEREOF UNLESS SIGNED IN WRITING BY AN OFFICER OF THE LESSOR. THIS
LEASE AGREEMENT, WHICH CONSISTS OF THREE PAGES, IS NON-CANCELABLE AND
IRREVOCABLE AND IS SUBJECT TO THE TERMS, PROVISIONS, COVENANTS AND CONDITIONS
PRINTED ABOVE AND ON PAGE 2 AND PAGE 3 WHICH ARE MADE PART HEREOF AND WHICH
LESSEE, BY HIS EXECUTION BELOW AND INITIALING OF PAGE 2 AND PAGE 3, ACKNOWLEDGES
THAT LESSEE HAS READ AND AGREES TO.
IN WITNESS WHEREOF, THE LESSEE HAS HEREBY EXECUTED THIS LEASE THIS ____ DAY OF
___________,19__.
ACCEPTED___________, 1998 ACT TELECONFERENCING, INC.
BY: ___________________________________
R.C.C. FINANCE GROUP LTD. (Authorized Signature and Title)
By_________________________ Attest: __________________________________________
Secretary of Corporation or Witness if
not Corporation)
<PAGE>
PAGE 1 OF 3 PAGE LEASE AGREEMENT (CONTINUED ON FOLLOWING PAGES)
7. SELECTION OF EQUIPMENT; ACCEPTANCE; WARRANTIES; REPRESENTATIONS. Lessee
acknowledges that Lessee has selected both the equipment and the Supplier from
whom Lessor covenants to purchase the equipment at Lessee's request. Lessee
further acknowledges that Lessor has no expertise or special familiarity about
or with respect to the equipment and that Lessor did not participate in any way
in Lessee's selection of the equipment or of the Supplier. Lessee agrees to
accept the equipment if delivered in good repair, and to execute the delivery
receipt supplied by Lessor, as evidence thereof. Lessee agrees to hold Lessor
harmless from specific performance of this lease and from damages, if, for any
reason, the Supplier fails to deliver the equipment so ordered. Lessee agrees
that any delay in delivery of the equipment shall not affect the validity of
this lease. LESSEE AGREES THAT THE EQUIPMENT LEASED HEREUNDER IS LEASED "AS IS"
AND IS OF A SIZE, DESIGN AND CAPACITY SELECTED BY LESSEE AND THAT LESSEE IS
SATISFIED THAT THE SAME IS SUITABLE FOR LESSEE'S PURPOSE, AND THAT LESSOR HAS
MADE NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE SUITABILITY OR DURABILITY
OF SAID EQUIPMENT FOR THE PURPOSES AND USES OF LESSEE, OR ANY OTHER
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT THERETO, INCLUDING
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Lessor hereby assigns, without recourse, to Lessee for and during the term of
this lease any applicable factory warranty covering the equipment leased
hereunder.
LESSEE ACKNOWLEDGES AND AGREES THAT NEITHER THE SUPPLIER NOR ANY SALESMAN,
EMPLOYEE, REPRESENTATIVE OR AGENT OF THE SUPPLIER IS AN AGENT OR REPRESENTATIVE
OF LESSOR, AND THAT NONE OF THE ABOVE ARE AUTHORIZED TO WAIVE OR ALTER ANY TERM,
PROVISION, COVENANT OR CONDITION OF THIS LEASE, OR MAKE ANY REPRESENTATION OR
WARRANTY WITH RESPECT TO THIS LEASE OR THE EQUIPMENT LEASED HEREUNDER. Lessee
further acknowledges and agrees that Lessee, in executing this lease, has relied
solely upon the terms, provisions, covenants and conditions contained herein,
and any other statements, warranties or representations, if any, by the
supplier, or any salesman, employee, representative or agent of the supplier,
have not been relied upon, and shall not in any way affect Lessee's obligation
to pay the rent and otherwise perform as set forth in this lease.
THIS LEASE CONSTITUTES A NET LEASE AND LESSEE AGREES THAT ITS OBLIGATIONS
TO PAY ALL RENT AND OTHER SUMS PAYABLE HEREUNDER AND THE RIGHTS OF LESSOR AND
ITS ASSIGNEE IN AND TO SUCH RENT AND OTHER SUMS, ARE ABSOLUTE AND UNCONDITIONAL
AND ARE NOT SUBJECT TO ANY ABATEMENT, REDUCTION, SET OFF, DEFENSE, COUNTERCLAIM
OR RECOUPMENT DUE OR ALLEGED TO BE DUE TO, OR BY REASON OF, ANY PAST, PRESENT OR
FUTURE CLAIMS WHICH LESSEE MAY HAVE AGAINST LESSOR, ANY ASSIGNEE, THE
MANUFACTURER OR SELLER OF THE EQUIPMENT, OR AGAINST ANY PERSON WHATSOEVER.
Lessee represents and warrants that: (a) The execution, delivery and
performance of the Lease Documents and compliance with the terms thereof do not
and will not contravene any law, governmental rule, regulation or order now
binding on Lessee, or the charter or by-laws of Lessee, or contravene the
provisions of, or constitute a default under, or result in the creation of any
lien or encumbrance upon the property of Lessee under, any indenture, mortgage,
contract or other agreement to which Lessee is a party or by which it or its
property is bound. (b) Each of the Lease Documents, when entered into, will
constitute legal, valid and binding obligations of Lessee enforceable against
Lessee, in accordance with the terms thereof, except as the enforceability
thereof may be limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws effecting the enforcement of creditors rights
generally. (c) There are no pending actions or proceedings to which Lessee is a
party, and there are no other pending or threatened actions or proceedings of
which Lessee has knowledge, before any court, arbitrator or administrative
agency which would adversely affect the financial condition of Lessee or its
ability to perform its obligations under the Lease Documents. Lessee has no
knowledge of any default under any obligation for borrowed money which would
have the same effect.
8. ERRORS IN ESTIMATED COST: As used in this paragraph "actual cost" means the
cost to Lessor of purchasing and delivering the equipment to Lessee, including
taxes, transportation charges, and all other expenses and charges. The amount of
each rental payment initially set forth above is based on the total cost of the
equipment as ordered by Lessor in its purchase order which is an estimate and
each shall be adjusted proportionately if the actual cost of the equipment
differs from said estimate. Lessee hereby authorizes Lessor to correct the
amount of each rental payment when the actual cost is known.
9. LOCATION, INSTALLATION AND USE OF EQUIPMENT. The equipment shall be
delivered to Lessee and installed by Lessee at Lessee's own expense, and
thereafter kept at the location specified above. Lessee shall not remove the
equipment from the aforementioned location without Lessor's prior written
consent. Lessee shall use the equipment in a careful and proper manner and shall
comply with all laws, regulations and ordinances relating to its possession, use
and maintenance. Lessee shall affix the labels supplied by Lessor, upon a
visible place on each item of equipment, and maintain the same on each. Lessor
shall have the right from time to time during reasonable business hours to enter
upon the Lessee's premises for the purpose of inspecting the equipment.
10. MAINTENANCE: Lessee shall, at Lessee's own expense, maintain the equipment
in good operating condition, repair and appearance, and protect same from
deterioration other than normal wear and tear. LESSEE SPECIFICALLY WAIVES ANY
OBLIGATION IMPOSED UPON LESSOR TO MAINTAIN AND/OR REPAIR THE EQUIPMENT. Lessee
shall only use the equipment in the regular course of Lessee's business and
within normal capacity. Lessee shall not make any modifications, alterations or
additions to the equipment without the prior written consent of Lessor, and
then, all such modifications, alterations and additions shall belong to Lessor.
The equipment shall remain personal property at all times and Lessee shall not
so affix the equipment to realty so as to change its nature to real property.
11. OWNERSHIP. The equipment is, and shall at all times be and remain, personal
property, and title thereto shall remain in Lessor exclusively, notwithstanding
that the equipment or any part thereof may now be, or hereafter become, in any
manner affixed or attached to, or embedded in, or permanently resting upon, real
property, or any building thereon, or attached in any manner to that which is
permanent, by any means whatsoever. Upon the expiration or termination of this
lease, Lessee shall, at Lessee's own expense, promptly return the equipment by
delivering it, packed and ready for shipment, to such place or carrier as Lessor
may specify, in the same condition as received, reasonable wear and tear
expected. IT IS THE INTENT OF LESSEE AND OF LESSOR THAT THIS LEASE BE A TRUE
LEASE.
12. LOSS OR DAMAGE. Lessee shall bear the entire risk of loss, theft,
destruction, damage or disrepair of the equipment or any part thereof for any
cause whatsoever. No such loss, damage, theft, destruction or disrepair of the
equipment shall relieve Lessee of the obligation to pay rent or from any other
obligation under this lease. In the event of any of the above, Lessee, at
Lessee's own expense and at Lessor's option, shall either (a) repair the
equipment, returning same to its previous condition, unless unrepairable; or (b)
replace same with like equipment of equivalent value, in good condition and
acceptable to Lessor, which shall become the property of the Lessor; or (c)
immediately pay Lessor all rent due and to become due under this lease or such
amounts as may be allocated by Lessor to specific items of equipment. All
proceeds of insurance received by Lessor as a result of such loss or damage
shall, where applicable, be applied toward the replacement or repair of the
equipment or the payment of the obligations of Lessee hereunder.
13. INSURANCE. Lessee shall keep the equipment insured against all risks of
loss, theft, or damage from every cause whatsoever for its full insurable value,
with Lessor as loss payee, and, Lessee shall carry public liability insurance
insuring both Lessor and Lessee against damages and claims for personal injury,
death and property damage. All such insurance shall be in form, amount and with
companies satisfactory to Lessor. Each Policy of Insurance shall provide for 30
days prior written notice of cancellation or modification to Lessor. Lessee
shall pay all premiums for such insurance and shall deliver to Lessor the
policies of insurance or duplicates thereof, and such other evidence of coverage
satisfactory to Lessor. Lessee hereby irrevocably appoints Lessor as Lessee's
attorney in fact to make claim for, receive payment of, and execute and endorse
all documents, checks or drafts received in payment for loss or damage under any
such insurance policy. Lessee agrees if Lessee shall fail to procure, maintain
and pay for such insurance, Lessor shall have the right, but not the obligation,
to obtain such insurance on behalf of and at the expense of Lessee. In the event
Lessor does obtain such insurance, Lessee agrees to pay all costs thereof, with
the next rental payment.
14. INDEMNITY. Lessee shall, and does hereby, indemnify and save Lessor harmless
from any and all losses and/or liability, including, but not limited to STRICT
LIABILITY IN TORT, for funds advanced to Supplier, and for taxes, costs and
expenses, including reasonable attorneys' fees, arising out of the purchase,
ownership, location, installation, possession, leasing, renting, operation,
control, use, maintenance, repair, delivery and/or return of the equipment.
Lessee shall be credited with any proceeds received by Lessor from insurance
policies paid for or obtained by Lessee. The obligations of Lessee under this
paragraph shall continue indefinitely.
<PAGE>
PAGE 2 OF 3 PAGE LEASE AGREEMENT (CONTINUED ON FOLLOWING PAGE)
<PAGE>
15. TAXES, FEES AND LIENS. Lessee shall pay all, or reimburse Lessor when
invoiced by Lessor for, charges, registration, permit and license fees,
assessments, taxes, interest and penalties (local, state and federal) which may
now or hereafter be imposed upon the ownership, leasing, rental, maintenance,
purchase, possession or use of the equipment, or upon this lease, or the rental
payments or any other sums due or to become due hereunder. Lessee shall not
rent, sublet, pledge, loan, mortgage, or attempt in any manner to dispose of the
equipment or to suffer any liens or legal process to be placed, incurred or
levied upon the same. Lessee shall immediately notify Lessor of the occurrence
of any of the above; shall pay all sums for taxes, fees, charges, assessments,
penalties and interest; and shall keep the equipment free of levies, liens and
encumbrances. In the event Lessee does not pay all sums specified above, Lessor
has the right, but not the obligation, to pay the same. If the Lessor shall so
pay any of the aforementioned, then the Lessee shall remit such amount with the
next installment of rent.
16. DEFAULT. If Lessee shall default in the payment of any rent or in the making
of any other payment hereunder when due, or in the payment when due of any
indebtedness of Lessee to Lessor arising independently of this lease, or in the
event of any default, breach or failure to perform or observe any terms,
provisions, covenants or conditions contained in this lease or in any other
lease or agreement between Lessor and Lessee, or if any proceeding in
bankruptcy, reorganization, receivership or insolvency shall be commenced by or
against Lessee or Lessee's property or assets, or if Lessee makes an
arrangement, extension or any assignment for the benefit of one or more of
Lessee's creditors, or if Lessee seeks relief under any other law providing for
the relief of debtors, or Lessee, if an individual, dies or is judicially
declared incompetent, or any of the above described events occur with respect to
any guarantor or any other party liable for payment or performance of this
lease, then, and in any of such events, if and to the extent permitted by
applicable law, Lessor shall have the right to exercise any one or more of the
remedies set forth below.
17. REMEDIES. Upon the happening of any one or more events of default set forth
above, Lessor shall have the right without notice or demand, to declare the
entire balance of rent due and to become due hereunder, together with such other
sums as may be due and payable hereunder, to be immediately due and payable,
whereupon the same shall become immediately due and payable; and/or commence an
action against Lessee for the total rental payments due and to become due under
this lease and for all other sums due or to become due hereunder; and/or without
demand or legal process to enter into the premises where the equipment may be
found and take possession of and remove same, whereupon all right of Lessee in
the equipment shall terminate absolutely; and/or retain all prior payments of
rent and of all other sums and the equipment; and/or retain all prior payments
of rent and of all other sums and sell the equipment at public or private sale
with or without notice to Lessee, at which sale Lessor may be purchaser, and the
proceeds of such sale less all expenses incurred by Lessor in connection
therewith, including, but not limited to retaking, storing, repairing,
reselling, delivering, commissions and reasonable attorney's fees will be
applied to the total rent due and to become due for the balance of the term of
this lease, and all other sums due or to become due hereunder, with Lessee
remaining liable for the balance thereof; and/or retain all prior payments of
rent and of all other sums and lease the equipment to another with or without
notice to Lessee and the proceeds of such leasing less all expenses incurred by
Lessor in connection therewith, including, but not limited to retaking,
repairing, delivering, commissions and reasonable attorneys' fees, will be
applied to the total rent due and to become due for the balance of the term of
this lease, and all other sums due or to become due hereunder, with Lessee
remaining liable for the balance thereof; and/or any other remedy in law and/or
equity available to Lessor. Lessee shall be liable for all expenses and costs
Lessor incurs or may incur in connection with the enforcement of any of its
remedies herein, including all collection fees and reasonable attorneys' fees.
If Lessee shall fail to pay when due and any rental payment portion thereof or
any other sums due or to become due hereunder, Lessee shall pay Lessor a late
charge of ten percent (10%) per month of such rent or other sum, but not higher
than the maximum amount of interest allowed by law. All the remedies of Lessor
hereunder are cumulative and may, to the extent permitted by law, be exercised
concurrently or separately, and the exercise of any one remedy shall not be
deemed to be an election of such remedy or to preclude the exercise of any other
remedy. No failure on the part of the Lessor to exercise, and no delay in
exercising any right or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by Lessor of any right or remedy hereunder
preclude any other or further exercise of any partially exercised right or
remedy or any other right or remedy.
18. WAIVER OF NOTICE AND HEARING. LESSEE HEREIN WAIVES ANY AND ALL RIGHTS TO
NOTICE AND TO A HEARING WITH RESPECT TO THE RIGHT OF AND THE REPOSSESSION OF THE
EQUIPMENT BY LESSOR IN THE EVENT OF A DEFAULT HEREUNDER BY LESSEE. LESSEE AGREES
LESSOR MAY REPOSSESS SAID EQUIPMENT WITHOUT NOTICE AND WITHOUT A HEARING AND
WITHOUT OTHER LEGAL PROCESSES, AND LESSEE SPECIFICALLY WAIVES ANY RIGHT TO
NOTICE AND TO A HEARING AND TO OTHER LEGAL PROCESSES.
19. ASSIGNMENT. Without Lessor's prior written consent, Lessee shall not assign,
transfer, sublet, pledge, hypothecate or otherwise dispose of this lease or any
interest herein. Lessor may assign this lease in whole or in part, without
notice to Lessee, and such assignee shall have all of the rights but none of the
obligations of Lessor under this lease. Lessee shall recognize each such
assignment and covenants not to assert against the assignee any defense,
counterclaim or setoff that Lessee has or may hereafter have against Lessor, and
agrees to pay such rent and other payments due and to become due hereunder to
assignee.
20. LAWS GOVERNING. LESSOR and LESSEE agree that this lease shall be deemed to
have been made in the State of New Jersey regardless of the order in which the
signatures of the parties shall be affixed hereto. Lessor and Lessee further
agree that this lease shall be interpreted, and the rights and liabilities of
the parties hereto determined in accordance with the laws of the State of New
Jersey except for local recording acts. For the purpose of resolving any issue
pertaining to conflict of laws, this lease shall be deemed to have been executed
in the State of New Jersey and all of the terms, provisions, covenants and
conditions contained in this lease is each to be deemed to be and be fully
performed and/or observed in the State of New Jersey. Lessee hereby agrees that
all actions or proceeding arising, directly or indirectly, from this lease shall
be litigated, at the option of Lessor, in courts having situs within the State
of New Jersey and Lessee hereby consents to the jurisdiction of any local, state
or federal court selected by Lessor that is located within the State of New
Jersey and agrees not to disturb such choice of Forum by Lessor.
21. ARBITRATION. At Lessor's sole election, Lessor may submit any matter arising
out of or relating to this transaction, including any claim, counterclaim,
setoff, or defense, to binding arbitration by the American Arbitration
Association in Bergen County, New Jersey or any other site of our choice. The
decision and award of the arbitrator(s) shall be final and binding and may be
entered as rendered in any court having jurisdiction thereof.
22. UCC FILINGS. Lessee agrees to execute UCC Financing Statements and all
amendments thereto and authorizes Lessor to file the same. Lessee authorizes
Lessor or its agents or assigns to execute and file UCC Financing Statements and
all amendments thereto without the Lessee's signature being affixed thereon.
Lessee grants to Lessor a specific power of attorney for Lessor to execute and
file on Lessee's behalf any document, including, but not limited to, UCC
financing statements and all amendments thereto that Lessor deems necessary to
perfect or protect Lessor's interest in the equipment or pursuant to the Uniform
Commercial Code. Lessee agrees to pay Lessor the costs of filing such UCC
Financing Statements and all amendments thereto. Lessee and Lessor intend this
transaction to be a True Lease, but if any court or tribunal, having power to
bind the Lessee or Lessor, should conclude that all or part of this transaction
is not a True Lease but is in the nature of a sale, consignment, or other
transaction, the Lessee and Lessor intend and the Lessee hereby grants a
continuing security interest in the equipment and proceeds from the sale, rent,
or other disposition of the equipment from the date of this agreement to secure
the payment of all Lessee's indebtedness to Lessor. No rights or remedies
referred to in Article 2A of the Uniform Commercial code will be conferred on
Lessee unless expressly granted in this Lease or a Schedule.
23. NOTICE. Any notice, request or other communication to either party by the
other will be given in writing and deemed received upon the earlier of actual
receipt or three days after mailing if mailed postage prepaid by regular or
airmail to Lessor or Lessee, at the address set out on the face of this Lease
or, one day after it is sent by courier or facsimile transmission if receipt is
verified by the receiving party.
24 MISCELLANEOUS All obligations of the Lessee if more than one, shall be joint
and several. Lessee shall provide Lessor with a copy of Lessee's annual
financial statement within ninety (90) days after the close of Lessee's business
year. Lessee also authorizes Lessor to amplify the description of the equipment
and to correct any and all patent errors or omissions in the typewritten or
handwritten portions of this and all related documents. This lease shall be
binding upon the parties, their successors, legal representatives and assigns
and is a valid and subsisting legal instrument, and no provision which may be
deemed unenforceable shall in any way invalidate any other provision or
provisions, all of which shall remain in full force and effect. All paragraph
headings are inserted for reference purposes only and shall not affect the
interpretation or meaning of this agreement.
PAGE 3 OF 3 PAGE LEASE AGREEMENT
<PAGE>
LESSOR: R.C.C. FINANCE GROUP LTD. LEASE #
LESSEE: ACT TELECONFERENCING, INC.
ACKNOWLEDGMENT AND ACCEPTANCE
OF EQUIPMENT BY LESSEE
THE ITEMS DESCRIBED ON EQUIPMENT SCHEDULE
'A', WHICH IS ANNEXED HERETO AND MADE A PART HEREOF.
LESSEE HEREBY ACKNOWLEDGES THAT THE EQUIPMENT DESCRIBED ABOVE HAS BEEN RECEIVED
IN GOOD CONDITION AND REPAIR, HAS BEEN PROPERLY INSTALLED, TESTED, AND
INSPECTED, AND IS OPERATING SATISFACTORILY IN ALL RESPECTS FOR ALL OF LESSEE'S
INTENDED USES AND PURPOSES. LESSEE HEREBY ACCEPTS UNCONDITIONALLY AND
IRREVOCABLY THE EQUIPMENT
BY SIGNATURE BELOW, LESSEE SPECIFICALLY AUTHORIZES AND REQUESTS LESSOR TO MAKE
PAYMENT TO THE SUPPLIER OF THE EQUIPMENT. LESSEE AGREES THAT SAID EQUIPMENT HAS
NOT BEEN DELIVERED, INSTALLED, OR ACCEPTED ON A TRIAL BASIS.
WITH THE DELIVERY OF THIS DOCUMENT TO LESSOR, LESSEE ACKNOWLEDGES AND AGREES
THAT LESSEE'S OBLIGATIONS TO LESSOR BECOME ABSOLUTE AND IRREVOCABLE AND LESSEE
SHALL BE FOREVER ESTOPPED FROM DENYING THE TRUTHFULNESS OF THE REPRESENTATIONS
MADE IN THIS DOCUMENT.
DATE OF ACCEPTANCE: Lessee: ACT TELECONFERENCING, INC.
_________________, 1998 By:_____________________________________________
Attest:_________________________________________
Secretary (or Witness if not corporation)
IMPORTANT:
THIS DOCUMENT HAS LEGAL AND FINANCIAL CONSEQUENCES TO YOU. DO NOT SIGN THIS
DOCUMENT UNTIL YOU HAVE ACTUALLY RECEIVED ALL OF THE EQUIPMENT AND ARE
COMPLETELY SATISFIED WITH IT.
<PAGE>
CERTIFICATE OF AUTHORITY
FOR EQUIPMENT LEASE
R.C.C. FINANCE GROUP LTD.
1086 TEANECK ROAD
TEANECK, NEW JERSEY 07666
The undersigned certifies to R.C.C. FINANCE GROUP LTD. (RCC) that the
following resolution was duly adopted by the Board of Directors of ACT
TELECONFERENCING, INC., a corporation existing under the laws of ____________,
at a meeting duly held on _______________________, 19__; that the same has not
been modified or rescinded and is not in conflict with any provision of the
charter, bylaws, or any agreement of said corporation:
"RESOLVED that the lease of certain equipment by this
Corporation from RCC is hereby approved, and any officer of
this Corporation is authorized, in the name and on behalf of
this Corporation, to execute and deliver to RCC a lease
covering such equipment, at such rental, and containing such
other terms and provisions, as may be approved by the
officer executing the same, his execution thereof to be
deemed conclusive evidence of such approval, and any officer
for this Corporation is also authorized, in the name and on
behalf of this Corporation, to execute and deliver such
documents and take such other action as he may deem
necessary or advisable to effectuate and perform such
lease."
The undersigned further certifies that the duly elected officers and/or
authorized officials of said Corporation and the respective offices held by them
are:
President_______________________________________________________________________
Specimen Signature
Vice President__________________________________________________________________
Specimen Signature
Treasurer_______________________________________________________________________
Specimen Signature
Secretary_______________________________________________________________________
Specimen Signature
Other___________________________________________________________________________
Specimen Signature
Signed and sealed this ____________ day of _____________________, 19
(Corporate Seal)
_________________________
Secretary
I, the undersigned, President of the corporation above named, do hereby certify
that the foregoing certificate is in all respects true and contains a true copy
of the resolutions adopted by the Board of Directors of said corporation.
_________________________
President
<PAGE>
[LETTERHEAD OF R.C.C. FINANCE GROUP LTD.]
To: Agency
Name:________________________________________________ Date ____________
Address:________________________________________________ Lease #_______
City:_____________________________________ State:________ Zip:_________
Phone No: ________________________________ Fax:________________________
Attention:_____________________________________________________________
From: ACT TELECONFERENCING, INC.
1658 COLE BLVD., SUITE 130
GOLDEN, COLORADO 80401
Gentlemen:
We have entered into a lease agreement with R.C.C. FINANCE GROUP LTD., lessor,
which has been assigned to __________________________________________, assignee,
covering the equipment shown below.
The equipment location is: ___________________________________. This is a net
lease and we are responsible for the insurance cost. Please see that we have
immediate coverage and notify lessor and assignee at once in the form of a copy
of the insurance policy or Certificate of Insurance. If the latter is sent,
please include therein the standard 30 day notice of cancellation clause.
X Physical Damage: Insurance is to be provided for fire, theft, extended
coverage, vandalism and malicious mischief for full
value of the equipment.
Lessor and assignee are to be named as Loss Payees, as
their interest may appear.
X Liability: Coverage should be written with minimum limits of
$100,000/$300,000 for BODILY INJURY and $50,000
property damage. Lessor and assignee are to be named
Additional Insured parties.
Titled Vehicle Limits: The minimum limits for each vehicle lease shall be:
Bodily injury liability per individual $500,000.00
Bodily injury liability per accident $500,000.00
Property Damage liability $250,000.00
Fire, Theft and Comprehensive Full
EQUIPMENT TO BE INSURED: EQUIPMENT COST:
THE ITEMS DESCRIBED ON EQUIPMENT SCHEDULE 'A', $117,737.50
WHICH IS ANNEXED HERETO AND MADE A PART HEREOF.
If you have any questions, please do not hesitate to call the Insurance
Department at 201.833.8840
Thank you,
BY:_____________________________________ DATE:____________________________
<PAGE>
EQUIPMENT SCHEDULE "A"
Schedule referred to in and made a part of agreement by and between R.C.C.
FINANCE GROUP LTD. as lessor and ACT TELECONFERENCING, INC. as lessee
EQUIPMENT LOCATION: 1243 ISLINGTON AVENUE
TORONTO, ONTARIO CANADA
<TABLE>
<CAPTION>
QTY DESCRIPTION SERIAL #
<S> <C> <C>
- -1- COMPUNETIX ACT 72 PORT CONTEX 240 SYSTEM - AC P/N: 00-2616-0240-DA2
- -5- COMPUNETIX WINDOWS 3.X OPERATOR CONSOLE KIT - P/N: 00-9021-0210
</TABLE>
INCLUDING, BUT NOT LIMITED TO, REPLACEMENT PARTS, SUBSTITUTIONS, ADDITIONS,
ACCESSORIES, AND PROCEEDS THEREOF.
This Schedule 'A' is attached to and made a part of R.C.C. FINANCE GROUP LTD.
lease #_______ and constitutes a true and accurate description of the equipment.
R.C.C. FINANCE GROUP LTD. ACT TELECONFERENCING, INC.
(Lessor) (Lessee)
____________________________ _________________________________
<PAGE>
OPTION TO PURCHASE
ADDENDUM ANNEXED TO AND MADE PART OF LEASE AGREEMENT # ___________, BY AND
BETWEEN R.C.C. FINANCE GROUP LTD. ("LESSOR") AND ACT TELECONFERENCING, INC.
("LESSEE")
Provided that Lessee shall have made all payments due under the above referenced
Lease and provided, further, that there is no default in compliance with any of
the terms or conditions thereof, Lessee shall have the option to purchase the
Equipment covered by and described in said Lease, in whole and not in part, in
its then condition and at its then location, on an "as-is, where is" basis, as
of the expiration date of said Lease.
This option is only exercisable by delivery of written notice to Lessor at least
thirty (30) days prior to the expiration date of said Lease, together with
delivery of payment of the full net cash price of said Equipment, plus
applicable taxes.
The net cash purchase price will be $1.00.
This Option to Purchase must be exercised no later than five (5) days prior to
the original expiration of the Lease Term. The original expiration of the Lease
Term shall be -48- months subsequent to the date Lessee executes an
"Acknowledgment and Acceptance of Delivery" for the Leased Equipment.
Time is of the essence of this option.
Any notice required by this Addendum shall be by U.S. Mail, Registered, Return
Receipt Requested.
LESSEE: ACT TELECONFERENCING, INC.
BY: ______________________________
(Name and Title)
DATE: ______________________________
LESSOR: R.C.C. FINANCE GROUP LTD.
BY: ______________________________
DATE: ______________________________
<PAGE>
EXHIBIT 10.25
CONTRACT FOR THE SUPPLY OF CONFERENCING SERVICES
DESIGN DEVELOPMENT AND IMPLEMENTATION
This Agreement made between:
CONCERT GLOBAL NETWORKS LIMITED, a company organised and existing under the
laws of England, with its registered office at 81 Newgate Street, EC1A 7AP,
London (hereinafter "Concert"), and
ACT TELECONFERENCING SERVICES, INC., a company organised and existing under
the laws of Minnesota, with its principal office located at 1526 Cole
Boulevard, Suite 300, Golden, Colorado (hereinafter "ACT"),
(individually referred to herein as a "Party" and collectively as the
"Parties");
WHEREAS, Concert desires to implement a seamless global audio conferencing
platform that will enable Concert to enhance its current conferencing service
design and capabilities, and establish a conferencing support function for
authorised distributors and end-users of Concert conferencing services; and
WHEREAS, in response to Concert's Technical Requirements document, dated March
30, 1998, for supply of Teleconferencing Support Services (the "SOR"), ACT
provided a proposal (the "Response"), that was accepted by Concert subject to
agreement on terms and conditions; and
WHEREAS, the Parties have agreed the terms and conditions to establish and test
ACT's proposed solution architecture for the supply of conferencing services to
demonstrate that it will meet the requirements of the SOR, as proposed in the
Response, and wish to set forth their agreement in a written contract;
NOW, THEREFORE, it is agreed as follows:
1. SCOPE OF AGREEMENT
1.1 ACT agrees to supply conferencing services, including design and
implementation of a turnkey reservation system and a turnkey billing
system, development of site-specific software, implementation and project
management and the hardware and software associated with these activities,
all as more fully described herein to Concert in accordance with, and
subject to, the provisions of this Agreement.
1.2 Concert agrees to provide support as necessary for this Project and to meet
the Dependencies set forth in Appendix 4.
2. DEFINITIONS
In this Contract the following expressions shall, unless the context
requires otherwise, have the following meanings:
"Accepted" means the point at which the Project elements have been tested
and approved in writing by Concert in accordance with Appendix 1, Section
2.12, and an agreed acceptance test plan.
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<PAGE>
"Acceptance Test Plan" or "ATP" means the performance criteria for the
Project as set forth in Appendix 4 at Section 10.6. Upon completion
performance criteria identified as "TBD" in Appendix 4 shall be
incorporated into this Agreement by reference.
"Agreement" means this document made between Concert and ACT, including
appendices, exhibits, and/or schedules hereto.
"Authorised Distributor" means British Telecommunications plc, MCI
Communications Corporation, and any entity with which Concert or BT or MCI
has contracted as a subdistributor of Concert services.
"Deliverables" means those elements of the Project to be provided by ACT,
as set forth in Appendices 2 and 3, to meet the requirements of Appendices
1 and 4.
"Effective Date" means the date on which the Parties have executed this
Agreement or if executed on different dates, the later thereof.
"End-Customer" shall mean the party with whom Concert or one of its
Authorised Distributors has contracted to provide Concert conferencing
services.
"Information" shall mean all information whether written or oral or in any
other form including, but not limited to documentation, specifications,
reports, data notes, drawings, models, patterns, samples, software,
computer outputs, designs, circuit diagrams, inventions (whether patentable
or not) and know-how obtained from either party in connection with the
performance of the Agreement, and all information in relation to Concert's,
Authorised Distributors' or End-Customers' affairs, business or business
practices, which comes to ACT's knowledge during the period of this
Agreement, including but not limited to the existence of this Agreement and
any provisions of this Agreement.
"Intellectual Property" shall mean any patent, trade secret, copyright,
know-how, network designs, system designs and platform development or other
intellectual property provided or developed pursuant to this Agreement.
"Intellectual Property Rights" shall mean patents, utility models, design
patents, registered designs, copyright of any kind, semi-conductor
topography rights, design rights and any rights of a similar nature in any
country of the world, including rights in trade secrets and confidential
information where such rights arise and includes applications therefor but
excludes trademarks.
"Platform" means the conferencing system owned and operated by ACT and
utilised by ACT to provide the Deliverables.
"Response" means ACT's Global Teleconferencing Proposal, dated March 5,
1998, with amended pricing thereafter, responding to Concert's SOR and
duplicated in Appendix 2 to this Agreement.
"Software" means all software relevant to Concert in respect of the Project
including but not limited to all source code and object code whether in
machine readable, optically readable or any other format.
"Project" shall mean any or all of the design, development, hardware,
software, documentation and training to be supplied to Concert by ACT
hereunder in order to provide the Deliverables.
"SOR" shall mean Concert's Teleconferencing Support Services Technical
Requirements, dated 5/28/98 and duplicated in Appendix 1 to this Agreement.
"Support Requirements" shall mean the final working conferencing elements
that will be available from ACT at the end of this Development and
Implementation and are set forth in Appendix 4. The full terms
2
<PAGE>
and conditions governing the actual provision of the conferencing services
to Concert by ACT shall be provided in a separate agreement.
3. TERM
This Agreement shall commence on the Effective Date and continue until the
Project has met the Acceptance Test Plan and final payment has been made,
unless terminated earlier by a Party as provided herein.
4. PAYMENT
4.1 At the time this Agreement was executed, Concert has been invoiced by
ACT for USD$26,200 covering the application design and consulting
charges for the Project. The remaining development and implementation
charge of USD$223,800 shall be due and payable by Concert upon
successful completion of the Acceptance Test Plan for each Milestone
and at the payment increments set forth in Appendix 3. There are no
additional time, materials, travel, taxes or other charges for the
Project.
4.2 Any sum due ACT hereunder shall be invoiced and paid in accordance
with Appendix 3 Milestones and Appendix 5. ACT must include a valid
purchase order number on its invoice, which shall be provided by
Concert.
4.3 Payment shall be made in United States Dollars to the account
specified by Contractor.
5. ACT'S UNDERTAKINGS
ACT shall be responsible for providing the Deliverables set forth in
Appendices 2 and 3, to meet the requirements of Appendices 1 and 4.
6. CONCERT'S UNDERTAKINGS
Concert shall be responsible for providing all necessary support to meet
the Dependencies set forth in Appendix 4.
7. ACCEPTANCE AND REJECTION
7.1 ACT shall participate fully in all Acceptance Testing. For
Deliverables subject to an Acceptance Test Plan and requiring approval
by Concert, Concert shall, within ten (10) business days of receipt of
ACT's statement that the Deliverable is complete, review the
deliverable and approve it or notify ACT in writing of non-approval,
documenting in reasonable detail any and all material defects in the
deliverable. ACT shall, upon receipt of such notice, use its best
efforts to correct any such material failures and shall notify Concert
of its completion thereof. Concert shall, after receipt of said
notice, review the deliverable and report. Concert shall do so
promptly using diligent efforts, but in no event shall such process
exceed ten (10) days. This cycle shall be repeated as necessary. A
work product Deliverable shall be deemed approved by Concert if
either:
3
<PAGE>
7.1.2 Concert notifies ACT in writing of its approval and the
approval date shall then be the date of such notice;
7.1.3 Concert fails to notify ACT in writing within the applicable
time period of any material defect in the deliverable and the
approval date shall then be the last day of the said period.
7.2 In the event Concert places in productive use any portion of a
Deliverable that has not been deemed approved by Concert, both
Parties shall remain liable to continue to follow the procedure
outlined in Section 7.1 until the Deliverable is deemed approved.
7.3 Any delay in the completion of Deliverables that is not the result
of unreasonable action or inaction by Concert, shall entitle Concert
to liquidated damages, as provided elsewhere in this Agreement,
until final acceptance of the delayed Deliverables by Concert.
8. CONTRACT CHANGE PROCEDURE
8.1 The representatives of Concert and ACT as nominated in Section 25.6
hereof (`Notices'), shall be the only people who may make or receive a
formal proposal for a variation to this Agreement to or from the other
Party.
8.2 No such variation shall be effective unless confirmed in writing by the
other Party. A Party shall confirm to the other within 10 days of receipt
of a written instruction to proceed with any such variation or its
intention to negotiate the proposed variation in accordance with Section
8.3 below.
8.3 Upon ACT's issuance of such request or receipt of each such request from
Concert, ACT will evaluate the impact that the Change Request will have
on the resources required by ACT to perform its requirements hereunder,
the Appendix on which such requirements are then being performed, and the
charges then payable to ACT hereunder. ACT will notify Concert as to the
results of such evaluation (the "Change Proposal") as soon as reasonably
feasible following the issuance or receipt of the Change Request, which
notice will be submitted in writing if so requested by Concert.
8.3.1 To the extent that the changes set forth in the Change Request can
reasonably be performed within the milestone requirements then
established for the applicable Deliverables without an increase in the
resources then being utilised therefore, there will be no adjustment to
ACT's charges hereunder.
8.3.2 In the event the Change Proposal contemplates an increase in ACT's
charges hereunder or an additional charge payable to ACT therefor and
Concert so requests, ACT and Concert will work together in good faith to
adjust the milestone requirements and/or priorities with respect to the
other requirements being performed by ACT hereunder so as to permit such
Change Request to be implemented without an increase in ACT's charges.
8.3.3 If the milestone requirements and/or priorities with respect to the other
requirements being performed by ACT cannot be adjusted to accommodate the
Change Request without an increase in ACT's charges, ACT shall provide to
Concert a good faith estimate of the additional charges required to meet
the requirements of the Change Request. This increase shall be amended as
described in paragraph 8.4 below.
8.4 Following agreement of such variation, Concert will manage the issue of
an amendment to this Agreement as necessary. Any increases or decreases
in price and changes to delivery timescales as a result of such
variation(s) shall be reasonable, calculated according to the prices in
the Agreement and subject to negotiation between Concert and ACT.
8.5 In the event Concert requests ACT to provide additional services or
functions which are not covered in this Agreement, ACT and Concert shall
execute an additional addendum or addenda referencing this Agreement to
provide such additional services or functions, which shall be provided at
rates expressly agreed in writing. Any such additional addendum or
addenda shall be incorporated herein by reference and shall be subject to
the terms and conditions hereof.
4
<PAGE>
9. PROTECTION OF DOCUMENTS AND SOFTWARE
9.1 ACT shall take suitable precautions to protect all documentation and
Software generated or required for this Agreement against loss of any
kind. Upon the release of each Software or documentation update a set of
the latest Software and documentation (relevant to the Deliverables to be
provided to Concert under the Agreement) shall be stored by the
Contractor in a safe location remote from ACT's normal work premises.
9.2 ACT shall select an escrow agent, establish an escrow agreement and
maintain an escrow account for all Software, technologies and related
applications and IP developed in the course of the Project which shall
give Concert access to the Intellectual Property developed pursuant to
the Project in the event of termination of this Agreement pursuant to
Section 13 ("Escrow Agreement"). Concert shall pay the fees associated
with this escrow agreement and shall be allowed to approve the escrow
agent selected by ACT and to review and require changes to the Escrow
Agreement with ACT prior to acceptance of the Escrow Agreement by ACT.
The Escrow Agreement shall be put in place as soon as reasonably
practicable.
10. INTELLECTUAL PROPERTY LICENSE
10.1 The Intellectual Property used or developed by ACT pursuant to
completing the Project and providing the Deliverables ("Project
IP") shall be owned by ACT and shall be used by ACT exclusively
to support the Project, Deliverables and other services provided
to Concert for three years following acceptance of all
Deliverables per Section 7 of this Agreement. With respect to
such Project IP, Act hereby gives Concert an irrevocable, non-
transferable, paid-up license to the Project IP that may be
developed by ACT pursuant to this Project and shall license the
IP exclusively to Concert for three years following
expiration/termination of this Agreement. This license allows
Concert to:
10.1.1 make, use and sell goods and services based
thereon or interoperating therewith or becoming
part thereof and to display and perform the works
publicly, all for the purposes of furnishing
Concert conferencing services to End-Customers;
and
10.1.2 Sublicense Authorised Distributors to use, and to
sublicense other Authorised Distributors to use,
the Project IP licensed from ACT in the same
manner as set forth for Concert in 10.1.1; and
10.1.3 grant Concert's Authorised Distributors the right
to grant sublicenses to the Authorised
Distributors' customers where such licenses are to
enable the receipt and usage of Concert
conferencing services by the End-Customers where
necessary.
10.2 The Escrow Agreement referenced in Section 9.2 shall include a
clause giving Concert an irrevocable, non-transferable, paid-up
license to the Project IP that may be developed by ACT pursuant
to this Project and shall license the Project IP exclusively to
Concert. This license allows Concert to:
10.2.1 make, use and sell goods and services based
thereon or interoperating therewith or becoming
part thereof and to reproduce the works therein in
copies, sell or otherwise distribute to the pubilc
copies of the works alone or incombination with
other works, prepare derivative works therefrom
and display and perform the works publicly, all
for the purposes of furnishing Concert
conferencing services, and interface, adapt,
modify or develop an Authorised Distributor's
network for the purpose of enabling such network
to support Concert conferencing services provided
by Concert and to distribute such Concert
conferencing services; and
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<PAGE>
10.2.2 Sublicense Authorised Distributors' use, and to
sublicense other Authorised Distributors to use,
the Project IP licensed from ACT to make, use and
sell goods and services based theron or
interoperating therewith or becoming part thereof
and to display and perform the works publicly, all
for the purposes of furnishing Concert
conferencing services to End-Customers; and
10.2.3 Grants Concert's Authorised Distributors the right
to grant sublicens to the Authorised Distributors'
customers where such licenses are to enable the
receipt and usage of Concert conferencing services
by the End-Customers.
10.3 ACT represents and warrants that it has the right and power to
grant Concert and the other potential licensees set forth above
the licenses granted by it under this Agreement.
10.4 ACT warrants that the Project IP licensed pursuant to this
Agreement is a full and accurate reproduction of the Project IP
in ACT's possession. In the event it is not, ACT shall supply
the appropriate corrections as soon as reasonably practicable.
11. STATUS REPORTS
ACT shall provide Concert with weekly status reports of information
relevant to the provision of the Deliverables. The form and content of
each type of report shall be agreed between the Parties. ACT will
provide any additional information as Concert may reasonably request
(including statistical information).
12. LIQUIDATED DAMAGES/CREDITS
12.1 Where, except as proven to be a direct result of an Event of Force
Majeure, as defined elsewhere in this Agreement, or an event for which
Concert is directly or indirectly responsible, the provision of
Deliverables or another obligations of ACT are delayed beyond the
agreed date for implementation or interrupted, as provided below,
Concert shall be entitled to the liquidated damages as follows.
12.2 ACT shall provide Concert with the Deliverables outlined in this
Agreement on the agreed Milestone Completion Dates referred to in
Appendix 3. In the case the provision of Deliverables is delayed as a
direct result of an event of Force Majeure or an event for which
Concert is directly or indirectly responsible, the Milestone Completion
Date shall be changed, if necessary, by mutual agreement between the
parties to reflect the amount of time during the event in which work
could not be continued on the Deliverable due directly to the event. In
the event a Deliverable does not pass the Acceptance Test Plan, (as
defined in Appendix 6) on or before the applicable Milestone Completion
Date, ACT shall pay a compensation to Concert in the amount of US$1,000
per Deliverable that is delayed for each day of the delay. The total
amount payable by ACT pursuant to this Section shall not exceed ten
percent (10%) of the total amount paid or payable to ACT by Concert
pursuant to this Agreement. In the event the delay is such that ACT
reaches this 10% cap, Concert may, at its sole discretion, terminate
this Agreement within thirty (30) days after the affected Milestone
Completion Date without liability or penalty.
13. TERMINATION
13.1 If either Party commits a breach or persistent breaches of this Agreement,
and in the case of a breach which is capable of remedy, fails to remedy the
breach within 7 days (or such longer period as agreed in writing by the
other Party) of written notice then the other Party shall have the right:
(a) at any time to terminate the whole or part of the Agreement forthwith;
and
6
<PAGE>
(b) to recover from the breaching party all directly resulting losses and
expenses. Where a Party terminates due to breach/persistent breach by
the other Party, the breaching Party shall pay resulting losses and
expenses to the nonbreaching Party to a maximum amount as set forth in
Section 13.8 below.
13.2 Both Parties shall have the right at any time to terminate the Agreement
forthwith and to recover from the other Party all directly resulting losses
and expenses if the other Party shall become insolvent or cease to trade or
compound with its creditors; or a bankruptcy petition or order is presented
or made against the other Party; or a receiver or an administrator receiver
is appointed in respect of any of the other Party's assets; or a petition
for an administration order is presented or such an order is made in
relation to the other Party; or a resolution or petition or order to wind
up the other Party is passed or presented or made or a liquidator is
appointed in respect of the other Party (other than a members' voluntary
liquidation solely for the purpose of reconstruction or amalgamation or the
equivalent of such liquidation in the jurisdiction of the other part).
13.3 Concert may at any time on written notice terminate the Agreement forthwith
without penalty or further liability to Concert if the ownership or control
of ACT is materially changed to (in Concert's reasonable opinion) Concert's
detriment. Concert shall pay ACT all resulting losses and expenses to a
maximum amount, as set forth in Section 13.8 below.
13.4 Concert may at any time on written notice terminate the Agreement forthwith
for its convenience. Where Concert terminates the Agreement under this
Clause 13.4 and does not have any other right to terminate the Agreement,
the following shall apply:
(a) Concert shall subject to subparagraph (b) below, pay ACT such amounts
as may be necessary to cover its reasonable costs and outstanding and
unavoidable commitments (and reasonable profit thereon) necessarily
and solely incurred in properly performing the Agreement in relation
to Accepted Deliverables prior to termination.
(b) Concert shall only pay costs and commitments in respect of
Deliverables that Concert has accepted to its satisfaction.
(c) The costs payable by Concert pursuant to (a) and (b) above shall be
limited to the amounts set forth in Section 13.8 below.
13.5 In the event that Concert terminates all or part of the Services and pays
ACT pursuant to this Section 13, Concert shall have the right to require
ACT to transfer ownership in the relevant equipment (hardware, software,
network) which ACT shall cause to occur as soon as reasonably practicable.
13.6 In case of termination of this Agreement, ACT agrees to co-operate with
Concert for the smooth migration of the Deliverables to Concert, including
access to all system configuration, design and implementation status and
the transfer of the software (source code and binary) and any Intellectual
Property Rights developed by ACT for the purpose of creating the
Deliverables.
13.7 Should a Force Majeure Event cause ACT to delay in providing the
Deliverables or any of them for a period of more than 28 consecutive days,
Concert shall have the option to terminate the Deliverables or part thereof
by written notice to ACT and pay ACT resulting losses and expenses to a
maximum amount, as defined in Section 13.8 below.
13.8 In no event shall Concert's total liability with respect to ACT's costs
upon termination under this Article 13, as set forth above, exceed the
lesser of (i) ACT's proposal quote of USD$223,800 less amounts already
paid; or (ii) a percentage of ACT's proposal quote, as set forth below,
less
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<PAGE>
amounts already paid. The percentages below apply based on the month in
which termination occurs:
<TABLE>
<CAPTION>
Percentage of
Project Month proposal quote
------------- --------------
<S> <C>
June 1998-July 1998 60%
August 1998-September 1999 40%
October 1998-February 1999 10%
March 1999 or later 0%
</TABLE>
13.9 Concert may terminate this Agreement pursuant to Section 12.2.
13.10 The above clauses encompass the total liability of Concert for
termination pursuant to this Article 13, and Concert shall be liable for no
other costs, claims, damages, or expenses consequent upon such termination. In
any event, both Parties shall use all reasonable efforts to mitigate their costs
associated with any such termination.
14. CONFIDENTIALITY
14.1 Subject to Clause 14.3 of this Agreement, each Party shall keep safe all
of the other Party's Information and shall not without the prior written
consent of the giving Party:
(a) use any of other Party's Information for any purpose other than
is necessary for the performance of its obligations under this
Agreement or,
(b) disclose any Information to any person other than a person
directly employed or engaged by either Party in the performance
of the Agreement. Disclosure to all persons shall be made in
confidence and only to the extent necessary for the performance
of the Parties' obligations under this Agreement.
14.2 Subject to Clause 14.3 of this Agreement, the Parties shall keep
confidential all Information supplied to each other and indicated as
being confidential and shall not disclose the same to any third party
without the prior written consent of the other, provided always that
each party may disclose or use, without consent, such Information to the
extent necessary for the exercise of the Parties' rights under this
Agreement, including any licences granted.
14.3 Neither Party to this Agreement shall be bound by the above provisions
of this Condition in relation to Information that is:
(a) published or comes into the public domain otherwise than by a
breach of this Agreement; or,
(b) lawfully known to it before the publication of the SOR and is not
subject to a previous obligation of confidentiality binding that
Party; or,
(c) lawfully obtained by it from a third party which is free to
divulge that Information; or,
(d) replicated by development independently carried out by an
employee or other person without access to, or knowledge of, such
Information.
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<PAGE>
14.4 ACT shall ensure that each subcontractor engaged in relation to the
Contract is bound by similar confidentiality terms to those set out in
this Condition.
14.5 All Information and any copies thereof and all Intellectual Property
Rights therein belonging to either Party shall remain as their property,
such information shall be clearly marked as such prior to passing to the
other Party. Each Party shall return the other's Information to them
upon completion or termination of the Agreement, or earlier upon
reasonable request by the other Party.
14.6 ACT shall not design a conferencing system or solution based upon a
substantial copying of the design and other work performed pursuant to
this Agreement for another customer without Concert prior approval for a
period of the life of this Agreement. This restriction shall not prevent
ACT from designing a conferencing system or solution based on general
know-how gained from exposure to or development of the Application
Design and Consulting or any other aspect of the Project.
14.7 The provisions of this Condition shall survive the termination or
expiration of this Agreement.
15. CONFLICT OF INTEREST
ACT represents and warrants to the best of ACT's knowledge and belief
that it is not now under contract or obligation, nor will ACT enter into
a contract or assume an obligation during the term of this Agreement
that would materially and detrimentally affect ACT's performance of this
Agreement.
16. WARRANTIES
16.1 ACT warrants that the performance of the Project and the work prepared
for Concert shall be of the highest professional quality in the
telecommunications industry, in accordance with the SOR and the Supplier
Support Requirements (Appendix 4), and shall not be improperly derived
from any copyrighted or patented material or trade secret or otherwise
be subject to or infringe upon any interest, proprietary or otherwise,
of any individual or entity.
16.2 ACT warrants that its work will not cause the equipment, software,
communications facilities, ACT or Concert to violate any law. ACT will
comply with all applicable laws including, but not limited to, building
and electrical regulations, employee and sales tax, the Communications
Act of 1934, as amended, and equal employment laws. ACT shall assume all
liabilities and obligations imposed by such laws, regulations and
requirements with respect to ACT's performance hereunder.
16.3 ACT warrants that the Deliverables, including hardware and network
support, shall be capable of processing dates up to December 31, 1999
and from January 1, 2000 forward without failure.
17. REMEDIES AND LIABILITIES
17.1 EXCEPT AS STATED IN SECTION 18, NEITHER PARTY SHALL BE LIABLE TO THE
OTHER PARTY, ANY SUBCONTRACTOR, OR OTHER THIRD PARTY, WHETHER BASED ON
CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE), WARRANTY OR
ANY OTHER CAUSE OF ACTINO FOR ANY LOSS OF INTEREST, DATA OR INFORMATION,
LOSS OF USE, LOST PROFITS OR LOST OPPORTUNITY OR LOST REVENUE BY THE
OTHER PARTY OR FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL,
PUNITIVE OR EXEMPLARY DAMAGES, ARISING FROM OR RELATED TO THIS
AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY
THEREOF.
17.2 EXCEPT AS STATED IN THIS AGREEMENT, IN NO EVENT, WHETHER AS A RESULT OF
BREACH OF CONTRACT, BREACH OF WARRANTY, TORT (INCLUDING NEGLIGENCE), OR
OTHERWISE, SHALL EITHER PARTY HAVE ANY LIABILITY UNDER THIS AGREEMENT.
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18. EXCLUSIONS FROM LIMITATIONS
No disclaimer of warranty or limitation of liability shall apply where
the claim or cause of action involves: injury to person or tangible
personal property; gross negligence or wilful misconduct of a Party or
any of their subcontractors, officers, directors, or other agents;
obligations related to indemnification; or breach of confidentiality
obligations.
19. INTELLECTUAL PROPERTY - INDEMNITY
19.1 ACT shall indemnify and shall keep fully indemnified Concert against all
actions, claims, proceedings, damages, costs and expenses arising from
any infringement or alleged infringement of any Intellectual Property
Right or any trade mark or service mark, whether registered or not, or
any breach or alleged breach of any obligation of non-disclosure by the
possession, use , manufacture, sale, lease, hire, distribution or
disposal in respect of the Deliverables or other work provided by ACT
hereunder or the packaging thereof by any person anywhere in the world.
19.2 Concert and ACT shall notify each other immediately in writing of any
infringement or alleged infringement referred to above of which they
become aware.
19.3 In the event of any such infringement or alleged infringement, ACT shall
at its own expense and at the option of Concert:
a) secure a royalty free licence allowing Concert unrestricted use of
the infringing Deliverable or work and the ability to exercise its
other rights granted under the Agreement in respect of the
Deliverable or work; or
b) modify or replace the Deliverable or work, at the option of
Concert, so as to meet the existing functional specification and
avoid the claim of infringement and any injunction or court order.
19.4 Unless otherwise agreed in writing, ACT shall conduct all negotiations
and litigation in relation to any such infringement or alleged
infringement and be responsible for all costs and expenses incurred.
Concert shall afford all reasonable assistance in contesting such
allegations but if ACT fails to conduct such negotiations or litigation,
or in the opinion of Concert fails to do so in a manner which is in the
best interests of Concert or fails to do so within a reasonable time,
Concert may assume conduct of the same at ACT's expense.
19.5 The provisions of this Condition shall survive the expiry or termination
of this Agreement.
20. INDEMNITY - GENERAL
20.1 Except as specifically provided for elsewhere in this Agreement and
without prejudice to any other rights or remedies available to a Party,
each Party shall indemnify and hold harmless the other Party against any
and all claims for loss or damage arising out of or related to the
performance or non-performance by the indemnifying Party, its employees,
agents, contractors, or other representatives, of the indemnifying
Party's obligations hereunder.
20.2 ACT warrants that it has obtained all necessary licences, authorities'
consents and permits for the provision of the Deliverables and other
work for this Project and for the unrestricted export of any supplied
Deliverables to Concert, and re-export to such countries as Concert
shall have notified the Contractor at any time before delivery to
Concert. ACT shall identify and comply with the provisions of all
applicable national and international laws, ordinances, regulations and
codes covering the provision of required permits, certificates,
approvals and inspections. ACT shall indemnify Concert against all
costs,
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proceedings, losses, damages, claims, or demands resulting directly or
indirectly from any breach of the above warranty.
11
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21. FORCE MAJEURE
21.1 Neither Party shall be liable to the other Party for any period of delay
in the performance of the Agreement directly caused by any event beyond
its reasonable control, including acts of nature, war, civil disorder,
prohibitions or orders issued by public authorities; restrictions
imposed by legislation; strikes, or lockouts, fire, lightning, inclement
weather, explosions, epidemics, or other events outside of a Party's
control ("Force Majeure ") provided such party shall have first given
the other party written notice as soon as practicable after becoming
aware that such delay was likely to occur.
21.2 If due to Force Majeure ACT is the delaying party and the Force Majeure
period exceeds 28 days:
21.2.1 Concert shall have the option by written notice to ACT to terminate the
Agreement forthwith in whole or in part and be under no further
liability to ACT other than in accordance with clause 13.7.
21.2.2 ACT shall have the option by written notice to Concert to request
renegotiation of this Agreement. Upon receipt of such request, Concert
shall have the option to renegotiate the milestones for the Deliverables
or terminate this Agreement.
21.3 For the avoidance of doubt, the provisions of this Condition shall not
affect Concert's right to terminate the Contract under Article 13
("Termination").
22. [Section 22 is intentionally omitted.]
23. GOVERNING LAW AND JURISDICTION
The laws of New York shall govern the Agreement.
24. ARBITRATION
Unless the Parties agree upon another arbitration forum, any claim,
dispute, controversy or other matter in question arising out of or
relating to this Agreement or the breach thereof, shall be settled by
final, binding arbitration to be held in New York, New York, in
accordance with the then effective Commercial Arbitration Rules of the
American Arbitration Association, or their successor. Judgement upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The decision of the arbitrator shall be final and
binding on the Parties. Each Party shall bear its own costs in respect
of any arbitration proceeding.
25. GENERAL PROVISIONS
25.1 Conflicts. In the event the Response, in reference to the SOR, has
----------
explicitly proposed a substitute requirement, a different means or
method to meet the SOR requirement, or has otherwise taken an exception
to meeting a requirement, the terms of the Response prevail to the
extent of that substitution, different means or method, or exception.
In the event of a conflict between this Agreement and the Response, the
terms of this Agreement shall prevail.
25.2 Insurance. ACT shall maintain, at all times during the term of this
---------
Agreement, insurance coverage suitable for the Deliverables and other
work being provided hereunder and in compliance with the requirements
of the jurisdiction(s) where the work is performed, including, but not
limited, to End-Customer or Authorised Distributor sites, if
applicable.
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25.2 Security. ACT shall comply with all Concert's security procedures for
--------
the Deliverables, all Intellectual Property, Information and other work
produced under this Agreement. In addition, where ACT attends a site
other than its own, ACT shall comply with all reasonable security
procedures as advised by Concert or the site owner, as appropriate.
25.3 Assignment. Neither ACT nor Concert shall, without the prior written
----------
consent of the other (such consent not to be unreasonably withheld)
assign the whole or any part of the Agreement, provided however, that
Concert may, upon notice to Contractor, assign all or part of this
Agreement to any affiliated subsidiary, or parent company, or to its
successor, whether by merger, reorganization, or sale of all, or
substantially of the assets to which this Agreement relates.
25.4 Subcontracting. ACT shall not, without the prior written consent of
--------------
Concert (such consent not to be unreasonably withheld) sub-contract the
development of the Deliverables. Such permission, shall not relieve ACT
of any obligation or liability under the Agreement.
25.5 Publicity. Neither Party shall name the other in any publicity relating
---------
to the Contract without the other's prior written approval. The
provisions of this Section 25.5 shall survive the expiry or termination
of the Agreement for a period of six months.
25.6 Notices. Any and all notices required to be given by one party to the
-------
other under this Contract shall be delivered by hand, post, telex, or
facsimile transmission to the following addresses, or such other address
as the parties may notify in writing from time to time:
If to ACT: Beth Carter
1526 Cole Blvd.
Suite 300
Golden, CO 80401
with copy to: Gavin Thompson
1658 Cole Blvd.
Suite 162
Golden, CO 80401
If to Concert: Jeff Baccetti
Concert
11921 Freedom Drive
Reston, VA 20190
Fax No.: 703-707-4072
with copy to: Concert
Office of General Counsel
11921 Freedom Drive
Reston, VA 20190
Fax No: 703-707-4080
25.7 Waiver. No delay, neglect or forbearance on the part of Concert in
-------
enforcing against ACT any provision of the Agreement shall be deemed to
be a waiver or in any way prejudice any rights of Concert under the
Contract. No waiver by Concert shall be effective unless in writing nor
shall any waiver by Concert of a breach of the Agreement by ACT
constitute a waiver of any subsequent breach.
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25.8 Enforceability. The validity or enforceability for any reason of any
--------------
provision of this Agreement shall not prejudice or affect the validity
or enforceability of any other provision.
25.9 Headings. The headings in this Contract are for convenience only and
---------
shall not affect its interpretation.
26. ENTIRE AGREEMENT
This Agreement and its appendices:
Appendix 1 - Technical Requirements (SOR)
Appendix 2 - ACT Response (Response)
Appendix 3 - Work Order, Deliverables, Milestones
Appendix 4 - Supplier Support Requirements
Appendix 5 - Payment and Invoicing
constitute the entire agreement between Concert and ACT in respect of
the subject matter hereof and supercedes all prior negotiations,
representations, or agreements in relation to such subject matter. This
Agreement may not be modified or amended except in writing, executed by
the duly authorized representatives, from time to time, of the Parties.
WITNESS the signatures of the duly authorised representatives of the Parties.
ACT TELECONFERENCING SERVICES, INC. CONCERT GLOBAL NETWORKS LIMITED
___________________________________ _____________________________________
Signature Signature
___________________________________ _____________________________________
Printed Name & Title Printed Name & Title
___________________________________ _____________________________________
Date Date
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Exhibit 10.26
AGREEMENT FOR THE SUPPLY OF CONFERENCING SERVICES
This Agreement made between:
CONCERT GLOBAL NETWORKS LIMITED, a company organised and existing under the
laws of England, with its registered office at 81 Newgate Street, EC1A 7AP,
London (hereinafter "Concert"), and
ACT TELECONFERENCING SERVICES, INC., a company organised and existing under
the laws of Minnesota, with its principal office located at 1526 Cole
Boulevard, Suite 300, Golden, Colorado (hereinafter "ACT"),
(individually referred to herein as a "Party" and collectively as the
"Parties");
WHEREAS, Concert desires to implement a seamless global audio conferencing
platform that will enable Concert to enhance its current conferencing service
design and capabilities, and establish a conferencing support function for
Authorized distributors and end-users of Concert conferencing services; and
WHEREAS, Concert issued a Technical Requirements document, dated March 30, 1998,
for supply of Teleconferencing Support Services which states the requirements
for conferencing services to meet certain of business and technical requirements
(Set forth as Attachment 1, incorporated herein and referred to as the "SOR");
and
WHEREAS, Concert desires to procure and ACT desires to provide (procure,
install, manage, operate and maintain) a conferencing service which meets the
requirements and specifications of the SOR and the Supplier Support
Requirements, dated 6/23/98 (set forth as Attachment 2, incorporated herein and
referred to as the "Support Requirements" and the Concert Global
Teleconferencing Proposal from ACT, dated 3/5/98, as amended 3/12/98 (set forth
as Attachment 3, incorporated herein and referred to as the "Response); and
WHEREAS, the Parties desire to enter into a services agreement for conferencing
services that shall become effective upon successful completion of the
establishment and testing phase of ACT's proposed solution architecture for the
supply of conferencing;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
conditions herein contained, Concert and ACT agree as follows:
1. DEFINITIONS
In this Agreement the following expressions shall, unless the context
requires otherwise, have the following meanings:
"Agreement" means this document made between Concert and ACT, including
attachments, appendices, exhibits, and/or schedules hereto.
"Authorized Distributor" means British Telecommunications plc, MCI
Communications Corporation, and any entity with which Concert or BT or MCI
has agreements as a subdistributor of Concert services.
"Conferencing Services" means the services provided by ACT to Concert to
meet the requirements of the SOR and the Support Requirements and as more
fully detailed in this Agreement.
<PAGE>
"Effective Date" means the date on which the Parties have agreed to begin
moving End-Customers onto the Conferencing Service following the Acceptance
of the Deliverables per the terms of the Contract for the Supply of
Conferencing Services Design, Development and Implementation between the
Parties.
"End-Customer" shall mean the party with whom Concert or one of its
Authorized Distributors has contracted to provide Concert conferencing
services. For clarity, this definition does not include Concert, its
personnel or internally-utilized contractors.
"Information" shall mean all information whether written or oral or in any
other form including, but not limited to documentation, specifications,
reports, data notes, drawings, models, patterns, samples, software,
computer outputs, designs, circuit diagrams, inventions (whether patentable
or not) and know-how obtained from either party in connection with the
performance of the Agreement, and all information in relation to Concert's,
Authorized Distributors' or End-Customers' affairs, business or business
practices, which comes to ACT's knowledge during the period of this
Agreement, including but not limited to the existence of this Agreement and
any provisions of this Agreement.
"Intellectual Property" shall mean any patent, trade secret, copyright,
know-how, network designs, system designs and platform development or other
intellectual property provided or developed pursuant to this Agreement.
"Intellectual Property Rights" shall mean patents, utility models, design
patents, registered designs, copyright of any kind, semi-conductor
topography rights, design rights and any rights of a similar nature in any
country of the world, including rights in trade secrets and confidential
information where such rights arise and includes applications therefor but
excludes trademarks.
"Platform" means the conferencing system owned and operated by ACT and
utilised by ACT to provide the Deliverables.
"Response" means ACT's Global Teleconferencing Proposal, dated March 5,
1998, with amended pricing thereafter, responding to Concert's SOR and
duplicated in Attachment 3 to this Agreement.
"Software" means all software relevant to Concert in respect of the Project
including but not limited to all source code and object code whether in
machine readable, optically readable or any other format.
"SOR" shall mean Concert's Teleconferencing Support Services Technical
Requirements, dated 5/28/98 and duplicated in Attachment 1 to this
Agreement.
"Specifications" shall mean the SOR, the Support Requirements and the
Response collectively.
"Support Requirements" shall mean the final operational conference elements
that are required be Concert and that will be available from ACT and are
set forth in Attachment 2.
2. TERM
This Agreement shall commence on the Effective Date and shall remain in
effect three (3) years thereafter (the "Initial Term"). This Agreement
shall automatically renew for three successive one (1) year terms ("Renewal
Term(s)") unless and until a Party gives written notice of termination to
the other Party not later than six (6) months prior to the end of the
Initial Term or any Renewal Term. Notwithstanding the foregoing, this
Agreement may be earlier terminated by either Party pursuant to Section 15
hereof. The rights and obligations of the Parties as provided in Sections
11, 12, 14, 15, 16, 18, 19, 20, 21, 22, 23, 27, and 28 shall survive the
date of termination until fully performed in accordance with the terms of
said Sections.
3. PAYMENT
<PAGE>
3.1 The price for the Conferencing Services is set forth in
Attachment 4. Charges for the Conferencing Services shall begin
the first calendar day after the Effective Date of this
Agreement. The prices in Attachment 4 shall be evaluated
beginning 9 months after the Effective Date. In the event a
revised Concert forecast and/or revised Term can result in lower
costs for ACT, then ACT shall reduce Concert's prices accordingly
as agreed in writing by the Parties. Such writing shall replace
Attachment 4 to this Agreement.
3.2 Invoices will be sent by ACT to Concert monthly. All invoices
submitted for payment will be accompanied by the appropriate
documentation such as electronic reporting and delivery
information as agreed to by the Parties. ACT must include a valid
purchase order number (which shall be provided by Concert) on its
invoice. Any sum due ACT hereunder shall be invoiced and paid in
accordance with Attachment 5.
3.3 Concert agrees to pay ACT in United States Dollars to the account
specified by ACT within 30 days of the receipt by Concert of the
invoice for all amounts invoiced. In the event Concert provides
Notice to ACT of a bona fide dispute within the same 30-day
period, Concert may withhold payment of an amount equal to the
amount of the disputed portion of the invoice. If the parties are
unable to resolve the dispute within an additional 15 days, the
dispute shall be escalated to the appropriate executives in each
Party for resolution. Late payment shall not constitute a
material breach of this Agreement.
4. ACT'S UNDERTAKINGS
ACT shall be responsible for providing the Conferencing Services in
accordance with Concert's requirements as set forth in Attachments 1
and 2, which may be amended from time to time by agreement between the
Parties. ACT warrants and represents that the Conferencing Services
will meet the Specifications. ACT shall install, maintain, and upgrade
the Conferencing Services per the terms of this Agreement.
5. CONCERT'S UNDERTAKINGS
During the term of this Agreement, ACT will be the preferred provider
of (audio, video, data, and fax) teleconferencing services for
Concert. The Conferencing Services shall be branded as Concert
services, and Concert shall promote the sale of the Conferencing
Services to End-Customers by Authorized Distributors. Concert shall
indemnify and hold harmless ACT for promotional language that exceeds
the limitations of the Conferencing Services as set forth in this
Agreement.
6. MIGRATION SCHEDULE AND MIGRATION PROCEDURE
6.1 In the event it is foreseen that a migration date cannot be met
or a migration cannot be completed by the scheduled date, ACT
agrees to utilise all applicable resources within its control to
resolve the problem.
6.2 All work associated with a migration must be performed in a good
and workmanlike manner, in accordance with manufacturer and
industry standards and specifications.
6.3 During installation, ACT will perform a 48-hour test procedure to
verify that the Conferencing Services continue to meet the
Quality of Service ("QOS") Requirements of Attachment 2, Section
10.6.
6.4 If during the 48-hour test period, the Conferencing Services fail
to meet the QOS Requirements, ACT shall repair the problem and
provide an additional test period.
6.5 All End-Customers shall be treated by ACT as new accounts for the
purpose of this Agreement.
6.6 Additional Migration plans and schedules shall be agreed between
the Parties and shall be appended to and made part of this
Agreement.
7. MAINTENANCE SCHEDULE AND SECURITY/CAPACITY/DISASTER RECOVERY
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7.1 ACT Maintenance shall include such work as necessary to conform
the Conferencing Services to the requirements of this Agreement.
7.2 ACT will provide to Concert Notice at least 5 days in advance of
planned (non-corrective) maintenance windows that may affect the
Conferencing Services. If such involves a single point of failure
for the Conferencing Services, then Concert may request the
postponement of such outage; and ACT shall use best efforts to
accommodate a Concert objection to the outage or request for
postponement.
7.3 ACT shall have, during the life of this Agreement, up-to-date
documentation of the physical configuration of the Platform,
including locations and detailed information about all equipment,
circuits and Software, as well as documentation of ACT's disaster
recovery and security mechanisms and contingency plans. ACT shall
give Notice to Concert of any alteration in a Conferencing
Services security mechanism or disaster recovery plan.
7.4 Each Party shall give Notice to the other Party of the names of
the Conferencing Services security/disaster recovery points of
contact. In the event of disaster or security breach, each point
of contact shall be the person responsible for coordinating and
directing action by that party to resolve a security breach or
disaster. These points of contact shall periodically stage
mutually agreed upon tests of the disaster recovery plans and
test response to security breaches; and ACT shall provide prompt
Notice to Concert of the results of each test and each response.
ACT shall promptly provide Notice to Concert of any security
breach that did or potentially could impact the Conferencing
Services and ACT's response.
7.5 Additional Maintenance and Security/Capacity/Disaster plans and
schedules shall be agreed between the Parties and shall be
appended to and made part of this Agreement.
8. DEFECT NOTIFICATION
8.1 ACT will inform Concert of any known defects in the Conferencing
Services, which might materially interfere with operation, or use
of the Conferencing Services as proposed in the Specifications.
ACT warrants that to the best of its knowledge it knows of no
defect in the Conferencing Services, including security
mechanisms, "Year 2000" problems, viruses (code embedded in the
services whose purpose is to halt effective operation or use of
the Conferencing Services on conditions set by or triggered by an
event or a person other than Concert), or similar problems.
8.2 ACT shall fix any such defects as fast as is practicable under
industry standards. If Concert believes that ACT is not fixing
the defect as fast as is practicable under industry standards,
then Concert may escalate the situation to any ACT senior
management person deemed appropriate by Concert, and ACT shall
utilise all available resources to remedy the defect.
9. PERSONNEL
9.1 In no event shall a Party, or employees or agents of that Party,
be or be considered employees or agents of the other Party.
Except as stated herein, matters governing the terms and
conditions of employment of a Party's employees and agents are
entirely within the control of that Party. Except as stated
herein, each Party's business matters such as work schedules,
wage rates, withholding income taxes, disability benefits or the
matter and means through which a party's obligations to its
employees or other agents will be accomplished are entirely
within the discretion of the Party.
9.2 Each Party will be responsible for the supervision, direction and
control of its own personnel while engaged in performance of
activities under this Agreement.
9.3 When this Agreement requires performance by ACT or Concert
employees or other agents on the other Party's premises, the
performing Party shall carry and maintain Worker's Compensation
and Employer's Liability Insurance covering its employees or
other agents (or require its agents to carry and maintain such
insurance) in accordance with the statutory requirements
applicable to the location where services are to be performed.
The performing Party shall also carry and maintain adequate
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insurance coverage (or require its agents to carry and maintain
such insurance) against losses or damages caused by the
performing Party's (including its other agents) negligence.
9.4 ACT shall determine the ACT personnel to support the Conferencing
Services. ACT shall, upon reasonable request by Concert, replace
any personnel employed by ACT engaged in the performance of the
Conferencing Services under this Agreement, with another selected
by ACT and acceptable to Concert. Concert shall not be liable for
costs incurred by ACT to replace any personnel. At no point in
time shall ACT be obligated to inform Concert of ACT's reasons
for replacing or not assigning ACT personnel. Additionally,
Concert shall address any ACT personnel-related concerns only to
the ACT designated point of contact or that person's management;
and shall not address such concerns directly to any other ACT
personnel.
9.5 Each Party will comply with all applicable governmental
regulations, pay all applicable taxes, and exercise control over
its personnel. Each Party shall be responsible for its own
employee taxes or other governmental taxes, fines, or fees
(including all such taxes, any interest or penalties and
reasonable attorneys' fees and costs related thereto), and shall
indemnify and hold harmless the other Party from any liability
therefor.
9.6 ACT shall obtain all approvals, permits, and licenses and pass
all inspections, required for Conferencing Services under
applicable law. Concert shall assist in obtaining such, were
necessary.
9.7 ACT may perform its obligations through its subsidiaries or
affiliates, or through the use of ACT-selected independent
subcontractors or manufacturers; provided that ACT shall be
solely responsible for the performance, duty, quality, and any
breach by an agent of ACT, as if such agent were ACT. ACT shall
obtain (or cause its subcontractors to obtain) any necessary
permits, business licenses, bonds, or other governmental
authority to perform its obligations under this Agreement.
10. AGREEMENT CHANGE PROCEDURE
10.1 The representatives of Concert and ACT as nominated in
Section 28.7 hereof (`Notices'), shall be the only people who may
make or receive a formal proposal for a variation to this
Agreement to or from the other Party.
10.2 No such variation shall be effective unless confirmed in
writing by the other Party. A Party shall confirm to the other
within 10 days of receipt of a written instruction to proceed
with any such variation or its intention to negotiate the
proposed variation in accordance with Section 10.3 below.
10.3 Upon ACT's issuance of such request or receipt of each such
request from Concert ("Change Request"), ACT will evaluate the
impact that the Change Request will have on the resources
required by ACT to perform its requirements hereunder, the
Attachment on which such requirements are then being performed,
and the charges then payable to ACT hereunder. ACT will notify
Concert as to the results of such evaluation (the "Change
Proposal") as soon as reasonably feasible following the issuance
or receipt of the Change Request, which notice will be submitted
in writing if so requested by Concert. To the extent that the
changes set forth in the Change Request can reasonably be
performed without an increase in the resources then being
utilised therefore, there will be no adjustment to ACT's charges
hereunder. In the event the Change Proposal contemplates an
increase in ACT's charges hereunder or an additional charge
payable to ACT therefor and Concert so requests, ACT and Concert
will work together in good faith to adjust the priorities with
respect to the other requirements being performed by ACT
hereunder so as to permit such Change Request to be implemented
without an increase in ACT's charges.
10.4 Following agreement of such variation, Concert will manage
the issue of an amendment to this Agreement as necessary. Any
increases or decreases in price and other changes resulting from
such variation(s) shall be reasonable, calculated according to
the prices in the Agreement and subject to negotiation between
Concert and ACT.
10.5 In the event Concert requests ACT to provide additional
services or functions which are not covered in this Agreement,
ACT and Concert shall execute an additional addendum or addenda
referencing this Agreement to provide such additional services or
functions,
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which shall be provided at rates expressly agreed in writing. Any
such additional addendum or addenda shall be incorporated herein
by reference and shall be subject to the terms and conditions
hereof.
11. PROTECTION OF DOCUMENTS AND SOFTWARE
11.1 ACT shall take suitable precautions to protect all
documentation and Software generated or required for this
Agreement against loss of any kind. Upon the release of each
Software update or documentation update a set of the latest
Software and documentation (relevant to the Conferencing Services
to be provided to Concert under the Agreement) shall be stored by
ACT in a safe location remote from ACT's normal work premises.
11.2 ACT shall select an escrow agent, establish an escrow
agreement and maintain an escrow account for all Software,
technologies and related applications and IP developed or
required for this Agreement which shall give Concert access to
the Intellectual Property developed or required for this
Agreement in the event of termination of this Agreement pursuant
to Section 13 ("Escrow Agreement"). Concert shall pay the fees
associated with this Escrow Agreement and shall be allowed to
approve the escrow agent selected by ACT and to review and
require changes to the Escrow Agreement with ACT prior to
acceptance of the Escrow Agreement by ACT. The Escrow Agreement
shall be put in place as soon as reasonably practicable and, in
any event, prior to the signing of this Agreement by Concert.
12. INTELLECTUAL PROPERTY LICENSE
12.1 ACT and Concert affirm that the provisions of the
Intellectual Property License set forth in Section 10 of the
Contract for the Supply of Conferencing Services Design
Development and Implementation between the Parties and executed
contemporaneously herewith are consistent with the purposes and
intentions of this Parties as set forth in this Agreement and are
incorporated herein by this reference except as follows:
12.1.1 The licenses established under Sections 10.4 and
10.6 shall continue for the term of this Agreement
and any subsequent agreement between the Parties
for conferencing services.
13. MONTHLY REPORTS AND PROGRESS MEETINGS
13.1 ACT shall provide Concert with monthly operations reports per the
terms of Attachment 2, Section 10.7. Additionally ACT will
provide any additional information as Concert may reasonably
request (including statistical information).
13.2 ACT and Concert representatives shall meet once a month in person
or by conference call. ACT shall produce before the meeting, a
written progress report outlining status and known material
problems. ACT shall produce, before the next meeting, minutes and
list of action items coming out of each meeting.
14. PERFORMANCE REMEDIES AND LIABILITIES
14.1 Performance Remedies are set forth in Attachment 6.
14.2 Where, except as proven to be a direct result of Force
Majeure as defined elsewhere in this Agreement, or of an
event for which Concert is directly or indirectly responsible, the
Conferencing Services fail to meet the requirements set forth in
Attachment 6, Concert shall be entitled to the performance remedies
per Attachment 6. However, in any event, ACT shall use its best
efforts to restore the Conferencing Services to meet the requirements
as soon as is practicable.
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14.3 ACT must notify Concert if ACT believes it is not obtaining
necessary access to a Concert, Authorized Distributor or End-User
facility required to restore the Conferencing Services to meet
the requirements.
15. TERMINATION
15.1 Either Party may elect, without prejudice to any other
rights or remedies, to give Notice of breach and of proposed
termination of this Agreement upon 60 days' Notice to the other,
with an opportunity to cure within that Notice period, provided
the breach is potentially curable, if the other Party has failed
to perform any material obligation under this Agreement. If the
Party has not cured the breach within the 60-day period, the non-
breaching Party may then give a Notice of termination.
15.2 Both parties shall have the right at any time by written
Notice to terminate the Agreement forthwith and to recover from
the other Party all directly resulting losses and expenses if the
other Party shall become insolvent or cease to trade or compound
with its creditors; or a bankruptcy petition or order is
presented or made against the other Party; or a receiver or an
administrator receiver is appointed in respect of any of the
other Party's assets; or a petition for an administration order
is presented or such an order is made in relation to the other
Party; or a resolution or petition or order to wind up the other
Party is passed or presented or made or a liquidator is appointed
in respect of the other party (other than a members' voluntary
liquidation solely for the purpose of reconstruction or
amalgamation or the equivalent of such liquidation in the
jurisdiction of the other Party).
15.3 Concert may at any time on written Notice terminate the
Agreement forthwith without penalty or further liability to
Concert if the ownership or control of ACT is materially changed
to (in Concert's reasonable opinion) Concert's detriment.
15.4 Should a Force Majeure Event cause ACT to delay in providing
the Deliverables or any of them for a period of more than 28
consecutive days, Concert shall have the option to terminate the
Deliverables or part thereof by written Notice to ACT.
15.5 Concert may at any time on written 6-month Notice terminate
the Agreement forthwith for its convenience. Where Concert
terminates this Agreement under this Clause 15.5 and does not
have any other right to terminate the Agreement, Concert shall
pay ACT such amounts as may be necessary to cover its reasonable
costs and outstanding and unavoidable commitments necessarily and
solely incurred in properly performing the Agreement in relation
to the Conferencing Services prior to termination. The costs
payable by Concert pursuant to this Section 15.5 shall be subject
to the following limitations:
If terminated in Maximum
Contract Year Amount
-------------- ------
1 $4 Million USD
--------------------------------
2 $3 Million USD
--------------
$2 Million USD
--------------
15.6 In the event that all or part of the Conferencing Services are
terminated pursuant to Section 15 of this Agreement, ACT agrees
to co-operate with Concert for the smooth migration of the
Conferencing Services to Concert or its appointed agent. Such
migration shall include making the Conferencing Services
Platform, including the relevant equipment, circuits, Software
and any Intellectual Property Rights developed by ACT or
otherwise used in support of this Agreement, under a reasonable
license agreement (including fees, confidentiality and a
restriction to use exclusively for services to b e
7
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provided to Authorized Distributors and End-Customers) to be
negotiated between the Parties.
15.7 Within 60 days of the date of a termination Notice in accord
with this Section 15, the Parties shall agree on a de-
installation plan, for a period not to exceed 6 months. If the
Parties have not reached agreement on a de-installation plan
within this 60-day period, either Party may initiate Arbitration
procedures in accord with the terms of this Agreement. Unless
otherwise agreed by the Parties, the arbitrator(s) shall hear the
matter and produce a de-installation plan within 60 days of the
Arbitration. In any event, both Parties shall use all reasonable
efforts to mitigate their costs associated with any such
termination.
15.8 The above clauses encompass the total liability of Concert
for termination pursuant to this Section 15, and Concert shall be
liable for no other costs, claims, damages, or expenses
consequent upon such termination. In any event, both Parties
shall use all reasonable efforts to mitigate their costs
associated with any such termination.
16. CONFIDENTIALITY
16.1 Subject to Clause 16.3 of this Agreement, each Party shall keep safe all of
the other Party's Information and shall not without the prior written
consent of the giving Party:
(a) use any of other Party's Information for any purpose other than is
necessary for the performance of its obligations under this Agreement
or,
(b) disclose any Information to any person other than a person directly
employed or engaged by either Party in the performance of the
Agreement. Disclosure to all persons shall be made in confidence and
only to the extent necessary for the performance of the Parties'
obligations under this Agreement.
16.2 Subject to Clause 16.3 of this Agreement, the Parties shall keep
confidential all Information supplied to each other and indicated as being
confidential and shall not disclose the same to any third party without the
prior written consent of the other, provided always that each party may
disclose or use, without consent, such Information to the extent necessary for
the exercise of the Parties' rights under this Agreement, including any
licences granted.
16.3 Neither Party to this Agreement shall be bound by the above provisions of
this Condition in relation to Information that is :
(a) published or comes into the public domain otherwise than by a breach
of this Agreement; or,
(b) lawfully known to it before the publication of the SOR and is not
subject to a previous obligation of confidentiality binding that
Party; or,
(c) lawfully obtained by it from a third party (excepting British
Telecommunications plc, MCI Communications Corporation, their
subsidiaries and affiliates) which is free to divulge that
Information; or,
(d) replicated by development independently carried out by an employee or
other person without access to, or knowledge of, such Information.
16.4 ACT shall ensure that each subcontractor engaged in relation to the
Agreement is bound by similar confidentiality terms to those set out in
this Condition.
8
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16.5 All Information and any copies thereof and all Intellectual Property Rights
therein belonging to either Party shall remain as their property; and such
information shall be clearly marked as such prior to disclosure to the
other Party. Each Party shall return the other's Information to them upon
completion or termination of the Agreement, or earlier upon reasonable
request by the other Party.
16.6 ACT shall not design a conferencing system or solution based upon a
substantial copying of the design and other work performed pursuant to this
Agreement for another customer without Concert prior approval for a period
of the life of this Agreement. This restriction shall not prevent ACT from
designing a conferencing system or solution based on general know-how
gained from exposure to or development of the Conferencing Services.
However, the source of a technological enhancement or development by ACT
shall not be disclosed as having been developed for Concert.
17. CONFLICT OF INTEREST
ACT represents and warrants to the best of ACT's knowledge and belief that
it is not now under Agreement or obligation, nor will ACT enter into an
Agreement or assume an obligation during the term of this Agreement that
would materially and detrimentally affect ACT's performance of this
Agreement.
18. INTELLECTUAL PROPERTY WARRANTIES
18.1 ACT warrants and represents that nothing in the Response or the
Conferencing Services violates any other agreement, duty of nondisclosure
or is based on a patent, trade secret, confidential, copyrighted or other
intellectual property that ACT does not have the authority to reprint in
the Response or to utilise in the implementation of the Conferencing
Services. Concert warrants and represents that nothing in the RFP violates
any other agreement, duty of non-disclosure, or is based upon a patent,
trade secret, confidential, copyrighted or other intellectual property that
Concert does not have the authority to reprint in the SOR or to utilise in
the implementation of the Conferencing Services.
18.2 ACT warrants and represents that ACT knows of no patent, copyright, other
intellectual property or other legal claims or actions that would preclude
or hinder ACT from implementing the Conferencing Services.
19. GENERAL WARRANTIES
19.1 ACT warrants that the Conferencing Services shall be of the
highest professional quality in the telecommunications industry, in
accordance with the SOR and the Supplier Support Requirements
(Attachment 2), and shall not be improperly derived from any
copyrighted or patented material or trade secret or otherwise be
subject to or infringe upon any interest, proprietary or otherwise, of
any individual or entity.
19.2 ACT warrants that the Conferencing Services will not be in
violation of any applicable law, or cause Concert, any Authorized
Distributors or any End-Customer to violate any applicable law. ACT
warrants that it shall perform all work in a good and workmanlike
manner in accordance with manufacturer and industry standards and
specifications.
19.3 ACT warrants that its work will not cause the Platform, Software,
or other communications facilities to violate any law. ACT will comply
with all applicable laws including, but not limited to, building and
electrical regulations, employee and sales tax, the Communications Act
of 1934, as amended, foreign communications laws applicable to the
provision of the Conferencing Services, and equal employment laws. ACT
shall assume all liabilities and obligations imposed by such laws,
regulations and requirements with respect to ACT's performance
hereunder.
19.4 ACT warrants and represents that it shall have title free and clear
of any liens to the Conferencing Services; or the right, free and
clear of any liens to license or otherwise permit use of Conferencing
Services by Concert, its Authorized Distributors and End-Customers in
accord with this
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<PAGE>
CONCERT/ACT CONFIDENTIAL
Agreement. ACT further warranties the right of quiet enjoyment of the
Conferencing Services by the Authorized Distributors and End-
Customers.
19.5 ACT warrants that the Conferencing Services, including hardware,
software and network support, shall be capable of processing dates up
to December 31, 1999 and from January 1, 2000 forward without failure.
20. REMEDIES AND LIABILITIES
20.1 EXCEPT AS STATED IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO
THE OTHER PARTY, ANY SUBAGREEMENTOR, OR OTHER THIRD PARTY, WHETHER
BASED ON AGREEMENT, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE),
WARRANTY OR ANY OTHER CAUSE OF ACTION FOR ANY LOSS OF INTEREST, DATA
OR INFORMATION, LOSS OF USE, LOST PROFITS OR LOST OPPORTUNITY OR LOST
REVENUE BY THE OTHER PARTY OR FOR ANY INDIRECT, INCIDENTAL, SPECIAL,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES, ARISING FROM OR RELATED
TO THIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY THEREOF.
20.2 EXCEPT AS STATED IN THIS AGREEMENT, IN NO EVENT, WHETHER AS A RESULT
OF BREACH OF AGREEMENT, BREACH OF WARRANTY, TORT (INCLUDING NEGLIGENCE), OR
OTHERWISE, SHALL EITHER PARTY HAVE ANY LIABILITY UNDER THIS AGREEMENT.
21 EXCLUSIONS FROM LIMITATIONS
No disclaimer of warranty or limitation of liability shall apply where
the claim or cause of action involves: injury to person or tangible
personal property; gross negligence or wilful misconduct of a Party or
any of their subcontractors, officers, directors, or other agents;
obligations related to indemnification; or breach of confidentiality
obligations.
22. INTELLECTUAL PROPERTY - INDEMNITY
22.1 Each Party shall indemnify and shall keep fully indemnified the other
Party against all actions, claims, proceedings, damages, costs and
expenses arising from any infringement or alleged infringement of any
Intellectual Property Right or any trade mark or service mark, whether
registered or not, or any breach or alleged breach of any obligation
of non-disclosure by the possession, use , manufacture, sale, lease,
hire, distribution or disposal in respect of the Deliverables or other
work provided by the indemnifying Party under or the packaging thereof
by any person anywhere in the world.
22.2 Concert and ACT shall notify each other immediately in writing of any
infringement or alleged infringement referred to above of which they
become aware.
22.3 In the event of an infringement or alleged infringement involving
Project IP, Act IP or Improved IP, ACT shall at its own expense and at
the option of Concert:
a) secure a royalty free licence allowing Concert unrestricted use
of the infringing Deliverable or work and the ability to exercise
its other rights granted under the Agreement in respect of the
Deliverable or work; or
b) modify or replace the Deliverable or work, at the option of
Concert, so as to meet the existing functional specification and
avoid the claim of infringement and any injunction or court
order.
22.4 Unless otherwise agreed in writing, ACT shall conduct all negotiations
and litigation in relation to any such infringement or alleged
infringement and be responsible for all costs and expenses incurred.
Concert shall afford all reasonable assistance in contesting such
allegations but if ACT fails to conduct such
10
<PAGE>
negotiations or litigation, or in the opinion of Concert fails to do
so in a manner which is in the best interests of Concert or fails to
do so within a reasonable time, Concert may assume conduct of the same
at ACT's expense.
23. INDEMNITY - GENERAL
23.1 Except as specifically provided for elsewhere in this Agreement and
without prejudice to any other rights or remedies available to a
Party, each Party shall indemnify and hold harmless the other Party
against any and all claims for loss or damage arising out of or
related to the performance or non-performance by the indemnifying
Party, its employees, agents, contractors, or other representatives,
of the indemnifying Party's obligations hereunder.
23.2 ACT warrants that it has obtained all necessary licences, authorities'
consents and permits for the provision of the Conferencing Services
and for the unrestricted delivery of the Conferencing Services to
Concert, and export to such countries as Concert shall have notified
ACT at any time before delivery to Concert. In response to such
notification, ACT shall identify in writing to Concert those countries
for which the Conferencing Services are not available. ACT shall
identify and comply with the provisions of all applicable national and
international laws, ordinances, regulations and codes covering the
provision of required permits, certificates, approvals and
inspections. ACT shall indemnify Concert against all costs,
proceedings, losses, damages, claims, or demands resulting directly or
indirectly from any breach of the above warranty.
24. INDEMNIFICATION PROCEDURES
Any right to indemnification is conditioned on (1) prompt Notice of
the claim (in a time frame that does not prejudice the defense of the
claim); (2) reasonable assistance by the Indemnified Party and (3) the
indemnifying Party retaining sole authority to defend or settle the
claim, providing that the Indemnified Party's cooperation is without
waiver of that Party's attorney-client, work product, or other legal
privilege. The indemnification rights in this Agreement are the
exclusive indemnification rights and supersede any rights otherwise
available to a Party.
25. FORCE MAJEURE
25.1 Neither Party shall be liable to the other party for any period of
delay in the performance of the Agreement directly caused by any event
beyond its reasonable control("Force Majeure "), including acts of
nature, war, civil disorder, prohibitions or orders issued by public
authorities; restrictions imposed by legislation; strikes, or
lockouts, fire, lightning, inclement weather, explosions or epidemics,
provided such Party shall have first given the other Party written
notice as soon as practicable after becoming aware that such delay was
likely to occur.
25.2 If due to Force Majeure ACT is the delaying party and the Force
Majeure period exceeds 28 days, Concert shall have the option by
written notice to ACT to terminate the Agreement forthwith in whole or
in part and be under no further liability to ACT other than in
accordance with Section 15.
25.3 For the avoidance of doubt, the provisions of this Condition shall not
affect Concert's right to terminate the Agreement under Section 15
("Termination").
26. GOVERNING LAW AND JURISDICTION
The laws of New York shall govern this Agreement.
27. ARBITRATION
11
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Unless the Parties agree upon another arbitration forum, any claim,
dispute, controversy or other matter in question arising out of or relating
to this Agreement or the breach thereof, shall be settled by final, binding
arbitration to be held in New York, New York, in accordance with the then
effective Commercial Arbitration Rules of the American Arbitration
Association, or their successor. Judgement upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. The
decision of the arbitrator shall be final and binding on the Parties. Each
Party shall bear its own costs in respect of any arbitration proceeding.
28. GENERAL PROVISIONS
28.1 Conflicts. In the event the Response, in reference to the SOR, has
----------
explicitly proposed a substitute requirement, a different means or method
to meet the SOR requirement, or has otherwise taken an exception to meeting
a requirement, the terms of the Response prevail to the extent of that
substitution, different means or method, or exception. In the event of a
conflict between this Agreement and the Response, the terms of this
Agreement shall prevail. In the event of a conflict between this Agreement
and any Attachments hereto, this Agreement shall prevail.
28.2 Insurance. ACT shall maintain, at all times during the term of this
---------
Agreement, insurance coverage suitable for the Conferencing Services and
other work being provided hereunder and in compliance with the requirements
of the jurisdiction(s) where the work is performed, including, but not
limited, to End-Customer or Authorized Distributor sites, if applicable.
28.3 Security. ACT shall comply with all Concert's security procedures for the
--------
Conferencing Services, all Intellectual Property, Information and other
work produced under this Agreement. In addition, where ACT attends a site
other than its own, ACT shall comply with all reasonable security
procedures as advised by Concert or the site owner, as appropriate.
28.4 Assignment. Neither ACT nor Concert shall, without the prior written
----------
consent of the other (such consent not to be unreasonably withheld) assign
the whole or any part of the Agreement, provided however, that Concert may,
upon notice to ACT, assign all or part of this Agreement to any affiliated
subsidiary, or parent company, or to its successor, whether by merger,
reorganization, or sale of all, or substantially of the assets to which
this Agreement relates. Any assignment pursuant to this clause shall
include an assignment of all the rights and obligations of the assigning
Party pursuant to this Agreement.
28.5 Subcontracting. ACT shall not, without the prior written consent of
--------------
Concert (such consent not to be unreasonably withheld) subcontract the
provision of the Conferencing Services. Such permission, shall not relieve
ACT of any obligation or liability under the Agreement.
28.6 Publicity. Neither Party shall name the other in any publicity relating
---------
to the Agreement without the other's prior written approval (such approval
not to be unreasonably withheld). The provisions of this Section 28.6 shall
survive the expiry or termination of the Agreement for a period of six
months.
28.7 Notices/Points of Contact. The term Notice means written communications
-------------------------
directed to the persons below in the manner directed in this Section. Such
communications shall be deemed to have been duly given upon actual receipt
by the Parties, or upon constructive receipt if sent by certified mail,
return receipt requested, or any other delivery service which actually
obtains a signed delivery receipt, addressed to the person named below to
the following addresses or to such other address as any party hereto shall
hereafter specify by written notice to the other Party.
If to ACT: Karen Dyrenforth
1526 Cole Blvd.
Suite 300
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Golden, CO 80401
with copy to: Gavin Thompson
1658 Cole Blvd.
Suite 130
Golden, CO 80401
If to Concert: Jeff Baccetti
Concert
11921 Freedom Drive
Reston, VA 20190
Fax No.: 703-707-4072
In addition to the above communications, notices of material dispute or
default shall also be delivered, with the same delivery requirements as
stated above, to the following addresses:
For ACT:
For Concert: Concert
Office of General Counsel
11921 Freedom Drive
Reston, VA 20190
Fax No: 703-707-4080
28.8 Waiver. No delay, neglect or forbearance on the part of Concert in
------
enforcing against ACT any provision of the Agreement shall be deemed to
be a waiver or in any way prejudice any rights of Concert under the
Agreement. No waiver by Concert shall be effective unless in writing nor
shall any waiver by Concert of a breach of the Agreement by ACT
constitute a waiver of any subsequent breach.
28.9 Enforceability. The validity or enforceability for any reason of any
--------------
provision of this Agreement shall not prejudice or affect the validity
or enforceability of any other provision.
28.10 Headings. The headings in this Agreement are for convenience only and
---------
shall not affect its interpretation.
29. ENTIRE AGREEMENT
This Agreement and its attachments:
Attachment 1 - Technical Requirements (SOR)
Attachment 2 - Supplier Support Requirements
Attachment 3 - ACT Response (Response)
Attachment 4 - Prices and Leadtimes
Attachment 5 - Payment and Invoicing
Attachment 6 - Performance Remedies
constitute the entire agreement between Concert and ACT in respect of
the subject matter hereof and supercedes all prior negotiations,
representations, or agreements in relation to such subject matter. This
Agreement may not be modified or amended except in writing, executed by
the duly authorized representatives, from time to time, of the Parties.
WITNESS the signatures of the duly authorized representatives of the Parties.
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ACT TELECONFERENCING SERVICES, INC. CONCERT GLOBAL NETWORKS LIMITED
___________________________________ ________________________________
Signature Signature
Gene Warren, Managing Director Robert Hargrove, Secretary
- ----------------------------------- --------------------------
Printed Name & Title Printed Name & Title
July 2, 1998 July 10, 1998
- ----------------------------------- -------------
Date Date
14
<PAGE>
Exhibit 10.27
AGREEMENT FOR VIDEOCONFERENCING EQUIPMENT AND SERVICES
THIS AGREEMENT FOR VIDEO CONFERENCING EQUIPMENT AND SERVICES (this
"Agreement") is entered into between the GTE Telephone Operating Companies
listed in Exhibit 1 (individually and collectively "GTE"), and ACT
Videoconferencing, Inc. ("ACT") and is effective on October 1, 1998 (the
"Effective Date").
WHEREAS, GTE provides multipoint videoconferencing bridging service and
sells videoconferencing equipment; and
WHEREAS, GTE desires to exit the videoconferencing service business,
but will maintain its business of selling videoconferencing equipment; and
WHEREAS, ACT also provides videoconferencing bridging service, and is
willing to purchase certain videoconferencing service equipment from GTE and to
provide ACT's videoconferencing service to GTE customers; and
WHEREAS, GTE and ACT desire to support each other in the marketing of
videoconferencing services and products.
In consideration of the mutual promises set forth below, the
parties hereby agree:
1. PURCHASE OF EQUIPMENT:
1.1 GTE will sell, and ACT will purchase, the equipment listed in
Exhibit 2. This includes a transfer of licenses to any software
that is installed on the equipment and is related to operation of
the equipment, and all user's manuals and other documentation.
1.2 The parties will coordinate on the disconnection and removal of
the equipment, and on delivery of the items to ACT. GTE will
invoice ACT for its shipping costs associated with shipping
equipment to locations designated by ACT.
1.3 The equipment, to include installed software, is sold in an "as-
is" condition.
1.4 No network services are provided as part of this transaction. ACT
is responsible for securing its own telecommunications services.
1.5 The purchase price is $625,000 to be paid in a combination of
cash and services, as follows:
Within 30 days of the Effective Date:
<PAGE>
ACT will record a liability to GTE of $93,333.00 effective 30 days
from the Effective Date. Payment of this liability will be made in
quarterly installments of $23,333.25, with the first installment paid
30 days from the Effective Date. ACT will also pay interest at the
rate of 7% per annum on the unpaid balance of the liability.
1,000 hours of bridging service, valued for this transaction at
$45,000. ACT will provide GTE with coupons for this service for GTE to
provide to customers who can, in turn, use the coupons to pay for
bridging service obtained from ACT. The coupons will be valid for
bridging service for a period of two years from the date of contract
signing. The coupons will be in a form that is mutually agreeable, and
will be supplied within 30 days of the Effective Date.
$300,000 in bridging service that GTE may use at its discretion over a
period of two years from the date of contract signing. For purposes of
using this $300.000, ACT will make this service available to GTE at a
price of $45.00 per hour per port and at ACT's standard pricing for
related services. The parties will jointly agree upon procedures for
tracking and accounting for use of the bridging service. Unless
otherwise agreed subsequently, any unused amount shall expire on the
second year anniversary of the Effective Date.
At the first year anniversary of the Effective Date:
Cash Payment Of $93,333.00
At the second year anniversary of the Effective Date:
Cash payment of $93,333.00.
1.6 GTE will invoice ACT for the cash amounts noted in the preceding
subsection. Payments are due as stated above.
1.7 The parties believe that this sale qualifies as an occasional or incidental
sale that is not subject to sales tax in the states where the transactions
will take place. Should there be a sales tax in one or more of these
states, however, ACT agrees to pay the applicable amount upon invoice by
GTE. For purposes of determining such sales tax, and for filing of any tax
returns, the parties agree that all of the $625,000 sales price shall be
allocated to the equipment in accordance with the allocation shown in
Exhibit 2.
1.8 GTE represents and warrants that it has good and marketable title to the
listed equipment, and that the equipment is free of any liens or other
2
<PAGE>
encumbrances, other than as may be made by GTE pending payment in full
by ACT in accordance with the schedule set out above.
2. BUSINESS RELATIONSHIP:
2.1 Upon contract signing, GTE will, in an orderly transition, close down
its current provision of multi-point videoconferencing service. GTE
agrees that, for a period of 18 months from the Effective Date, GTE
will not offer any new service of this nature. GTE will remain in the
business of providing videoconferencing endpoint or customer premises
equipment.
2.2 ACT will be GTE's preferred provider of videoconferencing service. GTE
will refer existing and new videoconferencing service customers to
ACT, and will actively support the marketing of ACT to its existing
clients and prospects.
2.3 ACT agrees to accept customer referrals from GTE and to offer them
ACT's videoconferencing service.
2.4 In consideration for GTE's referral of videoconferencing service
customers, ACT will pay GTE a commission of 10% of the first year's
gross revenue it receives for videoconferencing service from customers
serviced through referrals or sales leads from GTE. This commission
excludes existing base and transport. This commission will be paid on
a quarterly basis. The parties will work together to develop
procedures to track customer referrals and to administer commission
payments.
2.5 In lieu of the 10% commission set out in the previous subsection, ACT
and GTE will determine a commission to be paid on large volume
accounts, defined as videoconferencing service customers who qualify
for ACT's highest tier of discounted pricing, on a case-by-case basis.
The parties will similarly negotiate an appropriate commission or
other compensation for GTE referral or assistance to ACT in securing
videoconferencing service business through customer requests for
proposals or other competitive bidding opportunities.
2.6 ACT will establish and dedicate an overlay staff of 3 representatives
to work directly on GTE customer leads and RFP opportunities.
Additional sales staff members will be added as revenue opportunities
dictate.
2.7 ACT agrees not to use customer lists provided by GTE or sales leads
for videoconferencing service referred by GTE for purpose of selling
video conferencing equipment to the customer. ACT's dedicated overlay
staff will not sell videoconferencing equipment. In managing an
account of a customer that was referred to ACT by GTE, ACT will refer
customer requests and interest in videoconferencing equipment to GTE.
3
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2.8 ACT will support GTE's sales of videoconferencing equipment by
providing GTE with 10 port hours of videoconferencing service per
month at no charge, for GTE's use to demonstrate videoconferencing at
GTE's Technology Solution Centers and at trade shows. This no-charge
videoconferencing service is in addition to the provision of
videoconferencing service set out in Section 1.5, above. ACT will bill
GTE for videoconferencing service used for demonstrations in excess of
10 hours per month at the rate of $45.00 per hour. GTE may use the
$300,000 set out in Section 1.5, above, to pay for the additional
usage.
2.9 ACT will work directly with GTE to support all video related activity
at the Technology Solution Centers and to support GTE's sales of
videoconferencing equipment. ACT agrees to establish promotions and
sales incentives. ACT will arrange for applications training to be
conducted for GTE account managers and sales representatives on an
ongoing basis with industry experts introducing new and innovative
uses for videoconferencing and network sales. ACT will work with GTE
to develop packages for bundling bridging services and
videoconferencing equipment sales, and will develop a program that
will allow GTE to package equipment, bridging and network sales.
2.10 ACT shall maintain and keep current records of the videoconferencing
service business it provides to customers obtained through leads or
referrals provided by GTE.
3. TRANSITION STEPS
3.1 Within 30 days of the Effective Date, ACT and GTE shall, in
coordination with each other, develop transition plans to accomplish
an orderly transfer of current GTE videoconferencing service customers
to ACT. The plans will include procedures and schedules for referral
of customers to ACT and for establishment of service arrangements for
those customers.
3.2 ACT will use its best efforts to have the capability in place to
provide videoconferencing service to former GTE customers within 30
days of the Effective Date.
3.3 The parties will use their best efforts to complete all equipment
transfers within 90 days of the Effective Date, and commit to having
the process entirely accomplished no later than 120 days after the
Effective Date. GTE will assist ACT in contacting the suppliers of the
equipment, related software and maintenance, as may be required for
continued supplier support and proper transfer of any software
licenses.
3.4 Within 45 days of the Effective Date, ACT will provide GTE with sales
and service literature and other information as appropriate for GTE
account representatives to use to inform GTE customers about the
transition and the services that are available from ACT.
4
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3.5 The parties will develop a joint press release that describes their
relationship and the activities described in this Agreement.
4. TERM AND TERMINATION:
4.1 This Agreement shall remain in effect, unless earlier terminated as
provided below, for an initial term of 3 years from the Effective
Date.
4.2 Either party may terminate this Agreement in the event of a default by
the other party (meaning failure to perform a material obligation or
violation of a material term or condition of this Agreement),
provided, however, that the non-defaulting party notifies the other in
writing of the alleged default, and the defaulting party does not cure
the default within thirty (30) calendar days of receipt of the notice.
4.3 Either party may terminate this agreement by written notice if the
other party admits insolvency, makes an assignment for the benefit of
creditors, files for bankruptcy or has a trustee appointed over all or
a substantial part of its assets.
4.4 After two years from the Effective Date, either party may terminate
this agreement upon 90 days written notice to the other.
5. LIABILITY UPON TERMINATION: Termination of this Agreement, or any part
hereof, for any cause shall not release either party from any liability
which at the time of termination had already accrued to the other party or
which thereafter accrues to any act or omission occurring prior to the
termination or from an obligation which is expressly stated in this
Agreement to survive termination. Termination of this Agreement shall not
terminate GTE's right to receive, nor ACT's obligation to pay, the
commissions for sales leads and referrals as described in section 2, above.
6. NATURE OF RELATIONSHIP: No agency, joint venture or partnership,
relationship is created by this Agreement. The parties shall not
characterize their relationship as being any form of agency, joint venture
or partnership. Each party shall perform its respective obligations as set
out in this Agreement and shall not be an agent or partner of the other.
Neither party shall have any authority to bind or to act on behalf of the
other except as specifically set out in this Agreement.
7. SUBCONTRACTORS: ACT may use subcontractors to perform part or all of the
services described in this Agreement but shall remain responsible for the
obligations assumed by ACT in this Agreement.
8. EXCLUSIVITY: This Agreement does not establish an exclusive relationship
between the parties with respect to the provision of services described
herein.
5
<PAGE>
9. TRADEMARKS: Nothing in this Agreement shall grant, suggest or imply any
authority for one party to use the name, trademarks, service marks, or
trade names of the other for any purpose whatsoever.
10. MARKETING MATERIALS: Each party agrees to submit to the other, for written
approval prior to any use, all advertising, sales promotion, press releases
and other publicity matters relating to marketing of the services described
in this agreement, when the other party's name or trademarks are used in
the marketing materials. Each party agrees not to publish or use such
advertising, sales promotions, press releases, or publicity matters without
such prior written approval. Any approval required under this Section shall
not be unreasonably withheld or delayed.
11. PUBLICITY: Any news release, public announcement, advertising or any form
of publicity pertaining to this Agreement, provision of services pursuant
to it, or association of the parties with respect to the subject of this
Agreement shall be subject to prior written approval of both parties.
12. RIGHT TO AUDIT: GTE may, at its expense, audit ACT's books and records for
the purpose of verifying the accuracy of the commission amounts paid by ACT
as described in section 2, above. Such audit must be made by a certified
public accountant or certified public accounting firm, during ACT's regular
business hours, and upon at least 30 day's written notice. Such an audit
may be conducted no more than two times in any calendar year. GTE may
conduct a final audit no later than 12 months following termination of this
Agreement. This audit right shall extend to the books and records of any
subcontractors use by ACT in performance of this Agreement. In making any
subcontractor agreements, ACT shall obtain for GTE a right to conduct these
audits.
13. RESOLUTION OF DISPUTES:
13.1 The parties desire to resolve disputes arising out of this Agreement
without litigation. Accordingly, except for action seeking a
temporary restraining order or an injunction related to the purposes
of this Agreement, or suit to compel compliance with this dispute
resolution process, the parties agree to use the following dispute
resolution procedure as their sole remedy with respect to any
controversy or claim arising out of or relating to this Agreement or
its breach.
13.2 At the written request of a party, each party will appoint a
knowledgeable, responsible representative to meet and negotiate in
good faith to resolve any dispute arising under this Agreement. The
parties intend that these negotiations be conducted by non-attorney,
business representatives. The location, format frequency, duration,
and conclusion of these discussions shall be left to the discretion
of the representatives. Upon agreement, the representatives may
utilize other alternative dispute resolution procedures such as
mediation to assist in the negotiations. Discussions and
correspondence among the representatives for purposes
6
<PAGE>
of these negotiations shall be treated as confidential information
developed for purposes of settlement, exempt from discovery and
production, which shall not be admissible in the arbitration
described below or in any lawsuit without the concurrence of all
parties. Documents identified in or provided with such
communications, which are not prepared for purposes of the
negotiations, are not so exempted and may, if otherwise admissible,
be admitted in evidence in the arbitration or lawsuit
13. 3 If the negotiations do not resolve the dispute within sixty (60)
days of the initial written request, the dispute shall be submitted
to binding arbitration by a single arbitrator pursuant to the
Commercial Arbitration Rules of the American Arbitration
Association, as modified by this subsection. A party may demand such
arbitration in accordance with the procedures set out in those
rules. Discovery shall be controlled by the arbitrator and shall be
permitted to the extent set out in this section. Each party may
submit in writing to a party, and that party shall so respond to, a
maximum of any combination of thirty-five (35) (none of which may
have subparts) of the following: interrogatories, demands to produce
documents, or requests for admission. Each party is also entitled to
take the oral deposition of one individual of another party.
Additional discovery may be permitted upon mutual agreement of the
parties. The arbitration hearing shall be commenced within sixty
(60) days of the demand for arbitration. The arbitration shall be
held in a mutually agreeable location, but if the parties cannot
agree on a location, the arbitration will be held in Dallas, Texas.
The arbitrator shall control the scheduling so as to process the
matter expeditiously. The parties may submit written briefs. The
arbitrator shall rule on the dispute by issuing a written opinion
within thirty (30) days after the close of hearings. The arbitrator
shall have no power or authority to make awards or issue orders of
any kind except as permitted by this Agreement and substantive law,
and in no event shall the arbitrator have the authority to make any
award that provides for punitive or exemplary damages. The
arbitrator's decision shall follow the plain meaning of this
Agreement and the relevant documents. The times specified in this
section may be extended upon mutual agreement of the parties or by
the arbitrator upon a showing of good cause. Judgment upon the award
rendered by the arbitrator may be entered in any court having
jurisdiction.
13.4 Each party shall bear its own costs of these procedures. The parties
shall equally split the fees of the arbitration and the arbitrator.
14. NO OTHER WARRANTIES: EXCEPT AS SPECIFICALLY STATED IN THIS AGREEMENT,
NEITHER PARTY MAKES ANY WARRANTY TO THE OTHER WITH RESPECT TO ANY
EQUIPMENT, PRODUCT OR SERVICE. EACH PARTY DISCLAIMS ANY OTHER WARRANTY,
EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTY OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH
7
<PAGE>
RESPECT TO ALL EQUIPMENT, PRODUCTS AND SERVICES TO BE SUPPLIED BY EITHER
PARTY TO THE OTHER.
15. LIMITATION OF LIABILITY: WITH RESPECT TO CLAIMS ARISING OUT OF THIS
AGREEMENT, EITHER PARTY'S LIABILITY, WHETHER IN CONTRACT, TORT OR
OTHERWISE, SHALL BE LIMITED TO DIRECT DAMAGES, AND NEITHER PARTY SHALL BE
LIABLE FOR INCIDENTAL, CONSEQUENTIAL, OR SPECIAL DAMAGES, NOTWITHSTANDING
THEIR FORESEEABILITY OR DISCLOSURE BY ONE PARTY TO THE OTHER.
16. INDEMNIFICATION:
16.1 Each party agrees to indemnify, defend and hold the other harmless
from all losses, claims, demands, damages, expenses, suits or other
actions, or any liability whatsoever, including, but not limited to
costs and attorney's fees, brought against the indemnified party for
any bodily injury, including death, or damage to property
proximately caused by the indemnifying party arising out of
performance under this Agreement.
16. 2 The indemnified party agrees to notify the other party promptly, in
writing, of any written claims, lawsuits, or demands for which it is
claimed that the indemnifying party is responsible under this
Section and to cooperate in every reasonable way to facilitate
defense or settlement of claims. The indemnifying party shall have
complete control over defense of the case and over the terms of any
proposed settlement or compromise thereof. The indemnifying party
shall not be liable under this Section for settlement by the
indemnified party of any claim, lawsuit, or demand, if the
indemnifying party has not approved the settlement in advance,
unless the indemnifying party has had the defense of the claim,
lawsuit, or demand tendered to it in writing and has failed to
assume such defense. In the event of such failure to assume defense,
the indemnifying party shall be liable for any reasonable settlement
made by the indemnified party without approval of the indemnifying
party.
17. COMPLIANCE WITH LAW: The parties shall comply with all federal, state and
local laws and regulations applicable to their performance as described in
this Agreement.
18. DELAYED PERFORMANCE: If performance of this Agreement is prevented,
restricted or interfered with by reason of acts of God, wars, revolution,
civil commotion, acts of public enemy, embargo, acts of government in its
sovereign capacity, labor difficulties, including without limitation,
strikes, slowdowns, picketing or boycotts, or any other circumstances
beyond the reasonable control and not involving any fault or negligence of
the party affected, the party affected, upon giving prompt notice to the
other party, shall be excused from such performance on a day-to-day basis
during the continuance of such prevention, restriction, or interference
(and the other party shall likewise be excused from performance of its
obligations on a day-to-day basis during the same period),
8
<PAGE>
provided, however, that the party so affected shall use its best reasonable
efforts to avoid or remove such causes of nonperformance and both parties
shall proceed immediately with the performance of their obligations under
this Agreement whenever such causes are removed or cease. If force majeure
condition continues for more than 30 days, then the party affected may
terminate this Agreement upon 15 calendar days notice to the other.
19. INDEPENDENT CONTRACTORS: The persons provided by each party shall be
solely that party's employees and shall be under the sole and exclusive
direction and control of that party. They shall not be considered
employees of the other party for any purpose. Each party shall remain an
independent contractor with respect to the other and shall be responsible
for compliance with all laws, rules and regulations involving, but not
limited to, employment of labor, hours of labor, health and safety, working
conditions and payment of wages. Each party shall also be responsible for
payment of taxes, including federal, state and municipal taxes, chargeable
or assessed with respect to its employees, such as Social Security,
unemployment, workers compensation, disability insurance, and federal and
state withholding. Each party shall indemnify the other for any loss,
damage, liability, claim, demand, or penalty that may be sustained by
reason of its failure to comply with this provision.
20. PROPRIETARY INFORMATION:
20.1 All business information and materials containing business information
provided by one Party to the other, including, but not limited to
lists of present or prospective customers, customer requirements,
methods of operation, management information reports, pricing policies
and price lists, contracts with customers, business plans and
strategies, and similar information, whether provided in writing or
orally, and other written materials that are marked as proprietary or
confidential, shall be Confidential Information under this Agreement.
Such Confidential Information is and shall remain the exclusive
property of originating party. The receiving party shall keep such
Confidential Information confidential and shall retain it in strictest
confidence. Such Confidential Information may be disclosed only to
those employees of a party who have a need to know the Confidential
Information in order to perform services pursuant to this Agreement.
Confidential Information may not be disclosed to any other person or
entity without the advance written consent of the originating party.
The receiving party shall use confidential information only for
purposes related to this Agreement.
20.2 The foregoing obligations shall not apply to any Confidential
Information lawfully in a party's possession prior to its acquisition
from the disclosing party; that was received in good faith from a
third party not subject to any confidential obligation to the
originating party; that was independently developed without benefit of
disclosures made pursuant to this Agreement; or that now is or later
becomes publicly known through no breach of confidential obligation by
the disclosing party.
9
<PAGE>
20.3 If a party receives a request to disclose any Confidential Information
(whether pursuant to a valid and effective subpoena, an order issued
by a court or other governmental authority of competent jurisdiction
or otherwise) on advice of legal counsel that disclosure is required
under applicable law, the party receiving the request agrees that
prior to disclosing any information, it shall (i) notify the other
party of the existence and terms of such request or advice, (ii)
cooperate with the other party in taking legally available steps to
resist or narrow any such request or to otherwise eliminate the need
for such disclosure, if requested to do so by the other party, and
(iii) if disclosure is required, use its best efforts to obtain a
protective order or other reliable assurance that confidential
treatment will be afforded to such portion of the Confidential
Information as is required to be disclosed.
20.4 The specific terms of this Agreement, but not the general nature or
the existence of this Agreement or the services provided by the
parties, shall be confidential Information. Each party agrees not to
provide copies of this Agreement, or otherwise disclose the specific
terms of this Agreement, to any third party without the prior written
consent of the other party; provided, however, that either party may,
without obtaining the other's consent, provide copies or make
disclosures to prospective purchasers of the business of that party
and to affiliates of the party. Filings with the SEC, if clearly
required, are not covered by this section.
20.5 The obligation of confidentiality and use with respect to Confidential
Information shall survive for a period of two years after termination
of this Agreement.
21. LIMITATION ON ACTIONS: Except for indemnification related cause of action,
no action or demand for arbitration arising out of this Agreement may be
brought by a party more than two years after the cause of action has
accrued. The parties waive the right to invoke any different limitation on
the bringing of actions under state law.
22. ASSIGNMENT: Neither party may assign this Agreement without the other
party's written consent, except that either party may assign this Agreement
to an affiliate or successor (whether by Sale, merger, reorganization or
consolidation) without consent, but with prior written notification.
23. SUCCESSORS: This Agreement shall be binding on and inure to the benefit of
the respective successors and permitted assigns of the parties.
24. NOTICES: Notices required by this Agreement shall be in writing and shall
be sent by a method that obtains a written receipt. Notices shall be sent
to the following addresses until such addresses are changed by written
notice.
To GTE:
10
<PAGE>
GTE Network Services
Attn: David Walsh HQW03G66
700 Hidden Ridge
Irving, TX 75038
Fax (972) 718-0048
To ACT:
ACT Videoconferencing, Inc.
Attn: Emily Magrish
1526 Cole Boulevard, Suite 300
Golden, CO 80401-3304
Fax (303) 232-6420
25. GOVERNING LAW: This Agreement is to be governed and construed according to
the laws of the State of Texas.
26. NO WAIVER: Either party's failure to enforce any of the provisions of this
Agreement, or to exercise any right or option is not a waiver of any such
provision, right, or option, and shall not affect the validity of this
Agreement.
27. SURVIVABILITY: If any provision of this Agreement is held by a court,
arbitrator or governmental agency of competent jurisdiction to be
unenforceable, the rest of the Agreement shall remain in full force and
effect and shall not be affected unless removal of that provision results,
in the opinion of either party, in a material change to this Agreement. If
a material change as described in this paragraph occurs as a result of
action by a court, arbitrator or governmental agency, the parties shall
negotiate in good faith for replacement language. If replacement language
cannot be agreed upon within a reasonable period, either party may
terminate this Agreement without penalty or liability for such termination
upon written notice to the other party.
28. HEADINGS: The section headings and titles of this Agreement are for
convenience only and shall not be considered in its interpretation.
29. CONSENT: When consent, approval or mutual agreement is required of a
party, it shall not be unreasonably withheld or delayed.
30. NO THIRD PARTY RIGHTS: This Agreement does not provide and shall not be
construed to provide third parties with any remedy, claim, liability,
reimbursement, cause of action, or other right or privilege.
31. ENTIRE AGREEMENT: This Agreement, including exhibits, constitutes the
entire agreement of the parties pertaining to the subject matter herein and
supersedes all prior agreements, negotiations, and representations, whether
written or oral, concerning such subject matter. No representations or
warranties
11
<PAGE>
express or implied, have been made or relied upon in the making of this
Agreement other than those specifically contained in this Agreement.
IN WITNESS WHEREOF, the Parties have entered into this Agreement effective on
the date specified above.
GTE TELEPHONE OPERATING COMPANIES LISTED IN EXHIBIT 1
By: /s/ Richard G. Martin
-----------------------
Name: Richard G. Martin
-----------------------
Title: V.P./G.M. - Field Sales
-----------------------
ACT VIDEOCONFERENCING, INC.
By: /s/ Gene Warren
-----------------------
Name: Gene Warren
-----------------------
Title: Managing Director
-----------------------
12
<PAGE>
EXHIBIT 1
GTE Telephone Operating Companies
GTE Alaska Incorporated
GTE Arkansas Incorporated
GTE California Incorporated
GTE Florida Incorporated
GTE Hawaiian Telephone Company Incorporated
GTE Midwest Incorporated
GTE North Incorporated
GTE Northwest Incorporated
GTE South Incorporated
GTE Southwest Incorporated
Contel of Minnesota, inc. d/b/a GTE Minnesota
Contel of the South, Inc.
d/b/a GTE Systems of the South,
d/b/a GTE Systems of Indiana,
d/b/a GTE Systems of Michigan
13
<PAGE>
EXHIBIT 2
EQUIPMENT LIST
<TABLE>
<CAPTION>
Dallas Operations
<S> <C> <C>
SERIAL
EQUIPMENT NUMBER SALES PRICE
- -----------------------------------------------------------------
Ascend Max 4070061
PTel Concord 4500 451174
VTel LC 65004211
HP Vectra P90 w/Intel Prshe US61162922
ALLOCATED SALES PRICE 26,899
SELLING COMPANY: GTE SOUTHWEST INCORPORATED
IRVING MAIN CO, TEXAS
SERIAL
EQUIPMENT NUMBER SALES PRICE
- -----------------------------------------------------------------
PTel MCU 1 D97498
PTel MCU 2 B113570
PTel MCU 3 B110117
VTEL MCU 1 70010215
TELEOS MODEL 200 EX200117
Ascend Max 1 6040353
Ascend Max 2 6403331
General Datacom Modem Shelf
Motorola Lifestyle 28.8 Modem
USR 33.6 Modem
USR 33.6 Modem
HP Vectra P90
HP Vectra P90
HP Vectra P90
Smart Jacks
ALLOCATED SALES PRICE 221,299
SELLING COMPANY: GTE SOUTHWEST INCORPORATED
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
West LA Main CO, California
<S> <C> <C>
SERIAL
EQUIPMENT NUMBER SALES PRICE
- -----------------------------------------------------------------
PTel MCU 1 B128406
PTel MCU 2 B128426
VTel MCU 1 70010357
VTel MCU 2 70010384
Teleos Model 200 EX200221
Ascend Max 1 6111642
Ascend Max 2 6290798
General Datacom Modem Shelf
Motorola Lifestyle 28.8 Modem
USR 33.6 Modem
USR 33.6 Modem
HP Vectra P90
HP Vectra P90
HP Vectra P90
Smart Jacks
ALLOCATED SALES PRICE 195,482
SELLING COMPANY: GTE CALIFORNIA INCORPORATED
</TABLE>
<TABLE>
<CAPTION>
WESTSIDE MAIN CO, FLORIDA
<S> <C> <C>
SERIAL
EQUIPMENT NUMBER SALES PRICE
- -----------------------------------------------------------------
PTel MCU 1 B127035
VTel MCU 1 70010430
Teleos Model 200 EX200217
Ascend Max 1 6280420
General Datacom Modem Shelf
Motorola Lifestyle 28.8 Modem
USR 33.6 Modem
Smart Jacks
ALLOCATED SALES PRICE 106,515
SELLING COMPANY: GTE FLORIDA INCORPORATED
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
BEAVERTON MAIN CO, OREGON
<S> <C> <C>
SERIAL
EQUIPMENT NUMBER SALES PRICE
- -----------------------------------------------------------------
PTel MCU 1 B1111882
Teleos Model 200 620.067
General Datacom Modem Shelf
Motorola Lifestyle 28.8 Modem
USR 33.6 Modem
HP Vectra P90
HP Vectra P90
Smart Jacks
ALLOCATED SALES PRICE 74,805
SELLING COMPANY: GTE NORTHWEST INCORPORATED
</TABLE>
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED JUNE 30, 1998 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 586,234
<SECURITIES> 0
<RECEIVABLES> 4,757,251
<ALLOWANCES> (51,543)
<INVENTORY> 178,105
<CURRENT-ASSETS> 5,828,886
<PP&E> 8,046,298
<DEPRECIATION> (1,700,829)
<TOTAL-ASSETS> 13,130,571
<CURRENT-LIABILITIES> 5,347,386
<BONDS> 0
0
0
<COMMON> 6,787,855
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,130,571
<SALES> 13,565,028
<TOTAL-REVENUES> 13,565,028
<CGS> 7,412,783
<TOTAL-COSTS> 14,270,382
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (705,354)
<INCOME-TAX> (418,151)
<INCOME-CONTINUING> (1,356,167)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,356,167)
<EPS-PRIMARY> (0.37)
<EPS-DILUTED> (0.37)
</TABLE>
