SECURITIES PURCHASE AGREEMENT
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SECURITIES PURCHASE AGREEMENT, dated May 1, 1998, by and between Xx.
Xxxxxx Xxxxx (the "Seller"), Union Telecard Alliance, LLC, a Delaware limited
liability company (the "Company"), and IDT Corporation, a Delaware corporation
(the "Buyer").
The Seller wishes to sell and the Buyer wishes to purchase 51% of the
membership interests (the "Interests") of the Company on the terms and
conditions set forth in this Agreement.
The Buyer and the Seller seek to set forth certain terms upon which
the business and operations of the Company shall be managed, on the terms set
forth herein.
Accordingly, the parties, each intending to be contractually bound,
hereby agree as follows:
1. Sale and Purchase of Interests. On the terms and subject to the conditions
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set forth herein, the Seller agrees to sell to the Buyer, and the Buyer agrees
to purchase from the Seller, 51% of the Interests of the Company for a purchase
price consisting of up to 200,000 shares of common stock, par value $.01 per
share (the "IDT Common Stock"), of the Buyer (the "Purchase Price"), which shall
be paid to Seller in accordance with and subject to the conditions set forth in
Section 2 hereof.
As of the date of this Agreement, the Seller is indebted to the Buyer
in the amount of $0.00 (zero dollars). In order to induce the Seller to enter
into this transaction, any additional indebtedness of the Seller to the Buyer
that is reflected in the books and records of the Buyer but which is not
reflected in the books and records of the Seller or any of his affiliates shall
be deemed by the Buyer to be forgiven.
2. Closing; Payment of Purchase Price; Declaration of Distribution.
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(a) The closing (the "Closing") of the sale and purchase of the
Interests shall take place at the offices of IDT Corporation, 000 Xxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx, at such time and place as the Seller and the Buyer shall
agree. At the Closing, the Operating Agreement of the Company shall be amended
to reflect the transfer of the Interests to IDT.
(b) The Purchase Price shall consist of: (i) 100,000 shares of IDT
Common Stock (the "Initial Shares"), to be paid on the Closing Date; plus (ii)
10,000 additional shares of IDT Common Stock for each $100,000 of net income
generated by the Company above $1.4 million for the one year period commencing
on May 1, 1998 and ending April 30, 1999 (the "Determination Period"), up to an
additional 100,000 shares of IDT Common Stock, adjusted pro rata and rounded off
to the nearest whole share (the "Additional Shares"). For purposes of this
calculation, the net income of the Company shall be calculated in accordance
with generally accepted accounting principles, applied on a consistent basis.
If the parties do not reach an agreement as to the amount of such net income,
then such net income shall be determined by any nationally-recognized accounting
firm agreed to by the Buyer and the Seller, with the expenses of such firm to be
payable one-
half by the Buyer and one-half by the Seller, and with such determination set
forth in writing to the parties. The designated firm shall present its
determination within 30 days following its retention, or any other reasonable
time period agreed to by the Buyer and the Seller. The Purchase Price shall be
adjusted for stock splits, stock dividends, or any similar transaction effected
by the Buyer. The Additional Shares, if earned, shall be promptly payable within
10 business days following the date that the parties shall have reached an
agreement as to the amount of the Company's net income during the Determination
Period, or within 10 business days following the date that such accounting firm
determines the Company's net income during the Determination Period. The date
that the Initial Shares shall be paid by the Buyer pursuant to this Section 2(b)
is referred to herein as the "Initial Payment Date." The date on which the
Additional Shares shall be paid by the Buyer pursuant to this Section 2(b) is
referred to herein as the "Additional Payment Date."
(c) The Seller covenants that he will not directly or indirectly sell,
offer to sell, short sell or make any other disposition of (a) any of the
Initial Shares until May 1, 1999, or (b) more than 80,000 shares of IDT Common
Stock until May 1, 2000; provided, however, that the foregoing restrictions
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shall not apply to a disposition (a) pursuant to the laws of testamentary or
intestate descent; or (b) pursuant to a final nonappealable order of a court or
other body of competent jurisdiction.
(d) The Buyer covenants that it shall in any and all events register
such number of Registrable Securities, rounded up to the nearest whole share, as
shall be necessary to ensure that the Seller shall be able to resell, without
restriction under the federal securities laws, at least 80,000 shares of IDT
Common Stock on or prior to May 1, 2000, and shall register the number of shares
constituting the balance of the Registrable Securities by May 1, 2000. For
purposes of this subsection (d), the term "Registrable Securities" shall refer
to those shares constituting a portion or all of the Purchase Price that cannot
be sold, either free of or subject to volume limitations, without registration
under the federal securities laws.
(e) Notwithstanding any other provisions of this Agreement, the
parties will negotiate in good faith to make any appropriate arrangements that
shall be necessary to enable the Seller to pay, on a timely basis, any federal,
state or local taxes that are incurred as a result of his receipt of IDT Common
Stock pursuant to this Agreement, including (a) the sale and/or registration of
a portion of the IDT Common Stock prior to the dates otherwise specified herein
or (b) the loan of cash to Seller in amounts that are sufficient to pay such
taxes.
(f) The Buyer's obligation to remit the Initial Shares and the
Additional Shares, respectively, to the Seller shall be further subject to the
satisfaction of the following conditions:
(i) The representations and warranties of the Seller shall be
true and correct as of the Initial Payment Date and Additional Payment
Date, respectively.
(ii) The Seller shall not be in default of its obligations set
forth in this Agreement on or prior to the Initial Payment Date and
Additional Payment Date,
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respectively.
(iii) The Buyer shall have received on the Initial Payment Date
and Additional Payment Date, respectively, a certificate executed by the
Seller affirming that the conditions set forth in (i) and (ii) above are
true and correct as of the Initial Payment Date and Additional Payment
Date, respectively.
(g) If the conditions set forth in paragraph (e) above are not
satisfied as of the Initial Payment Date or the Additional Payment Date, as
applicable, the Buyer may terminate its obligations under this Agreement by
setting forth its intention to do so in writing to the Seller within ten days of
the applicable payment date, at which time the Buyer shall transfer the
Interests of the Company acquired pursuant to this Agreement to the Seller and
this Agreement shall be terminated. Under such circumstances, the Buyer shall
not be entitled to any net income generated by the Company prior to the
Additional Payment Date; however, prior to surrendering its Interests of the
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Company, the Buyer shall be entitled to receive from the Company a cash payment
equal to the value of the services it has provided to the Company and the costs
it has expended, on behalf of the Company pursuant to this Agreement. The
amount of such payment shall be agreed upon by the Buyer and Seller or, if the
Buyer and the Seller to fail to reach an agreement as to the amount of such
payment, then the amount of such payment shall be determined by any nationally-
recognized accounting firm agreed to by the Buyer and the Seller.
(h) To the extent permitted by applicable law, all net income beyond
the amount utilized for ordinary business purposes or for the Company's
expansion shall be paid to the Buyer and the Seller as consulting and service
fees and or distributions, in such amounts as mutually agreed upon by the Buyer
and Seller and as shall be reasonable under the circumstances.
3. Further Obligations of Buyer, Seller and the Company.
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(a) Employment. The Company hereby agrees to employ the Seller, and
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the Seller hereby agrees to perform services for the Company, on the terms and
conditions set forth herein.
(i) The Seller shall, on a full time basis, use his skills and
render services to the best of his abilities, in both maintaining the
current level of, as well as developing and expending, all facets of the
Company's calling card business, including without limitation, the
promotion and operation of the Company, the acquisition and distribution of
phonecards, and any such other activities as may be required or desirable
regularly or from time to time for the successful continuation and growth
of the Company's business.
(ii) The length of employment is for the three-year period
commencing on the date of this Agreement, and terminating on the third
anniversary of such date, or upon the Seller's earlier death or other
termination of this Agreement pursuant to Section 2(f), Section 8 or
Section 9 hereof; provided, however, that commencing on the third
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anniversary of the date of this Agreement, and upon each
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anniversary thereafter, the term of the Seller's employment under this
Agreement shall be automatically extended for one additional year beyond
such expiration date unless, not later than 90 days prior to any such
anniversary, either the Buyer or the Seller shall have notified the other
in writing that such extension shall not take effect.
(iii) The Company shall pay to the Seller an annual base salary
(the "Base Salary") at a rate not less than $75,000 per year, such salary
to be paid in equal installments of a frequency not less than monthly.
(b) "Back Office" Support. The Buyer hereby agrees to provide the
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Company with such support as the Buyer reasonably determines to be necessary for
the maintenance and development of the Company's business, including the
Company's organizational expenses. Such support shall consist of bookkeeping
and accounting services, inventory control, provision of computers and technical
support, and billing and collection services. The value of such support
provided by the Buyer shall not be reduced from the Company's net income in
connection with the calculations to made pursuant to Section 2(b) hereof.
4. Representations and Warranties of the Seller.
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(i) The Seller has full power and authority to execute, deliver
and perform this Agreement and to consummate the transactions contemplated
hereby.
(ii) The Seller has not created any security interest, claim,
lien, encumbrance or adverse interest in the Interests, has granted no
options, warrants or other rights to purchase the Interests (other than
pursuant to this Agreement), has entered into no agreements or other
obligations to issue, and has not granted any other rights to convert any
obligations into any equity interests of the Company.
(iii) The Seller has not taken any action to cause the
dissolution, termination or winding up of the Company.
(iv) This Agreement has been duly executed and delivered by the
Seller and constitutes the legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms.
(v) Neither the execution or delivery of this Agreement by the
Seller nor the performance by the Seller of this Agreement will, with or
without notice or lapse of time or both, violate, constitute a default
under, result in the breach or acceleration of any obligation under, or
cause the termination of, (a) any agreement, mortgage, instrument or
obligation to which the Seller is a party or by which the Seller or any of
its assets are bound or (b) any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority applicable
to the Seller.
(vi) The Seller is currently in compliance with all applicable
federal, state and local laws and regulations that apply, whether directly
or indirectly,
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to the operation of the business that the Seller will conduct through the
Company, except where the failure to comply would not have a material and
adverse effect upon the business and operations of the Company.
(vii) To the best of the Seller's knowledge, there is no actual,
pending, or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Seller or the Company, other than the matter of DigiTEC, Index No.
604920/97, currently pending in the Supreme Court of the State of New
York, New York County, and there exists no set of facts or circumstances
constituting a valid basis for such an action, suit or proceeding not yet
threatened or asserted which, if determined adversely to the Seller or the
Company, would individually or in the aggregate have a material adverse
effect on the business and operations of the Company.
For purposes of paragraph (vii) of this Section, all references to
"the Company" shall include any entities to which the Company shall be deemed to
be a successor by operation of law or otherwise.
5. Representations and Warranties of the Buyer. The Buyer represents and
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warrants to the Seller that (i) the Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware, (ii) the Buyer
has full corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby, (iii) the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action by the Buyer, (iv) this Agreement has been duly executed and
delivered by the Buyer and constitutes the legal, valid and binding obligation
of the Buyer, enforceable against it in accordance with its terms, (v) neither
the execution or delivery of this Agreement by the Buyer nor performance by the
Buyer of this Agreement will, with or without notice or lapse of time or both,
violate, constitute a default under, result in the breach or acceleration of any
obligation under, result in the termination of, (a) the Buyer's restated
certificate of incorporation or bylaws, (b) any agreement, mortgage, instrument
or obligation to which the Buyer is a party or by which the Buyer or any of its
assets is bound or (c) any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental authority applicable to the
Buyer, and (vi) the Buyer has not taken any action to cause the dissolution,
termination or winding-up of the Company.
6. Covenants.
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(a) The Seller agrees to conduct all of his telecommunications-related
business activities, including but not limited to the distribution of calling
cards and any other telecommunications products, exclusively through the Company
during the period of his employment and for a period of one year immediately
following the termination of his employment.
(b) Seller hereby agrees that he shall not, either as an employee,
employer, consultant, agent, principal, partner, stockholder, corporate officer,
director or in any other individual or representative capacity, engage or
participate, directly invest in any publicly
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traded company over the amount of five hundred thousand dollars ($500,000) or
become employed by any business that is in direct competition in any manner
whatsoever with the business of the Company in any of the United States during
his employment by the Company and for a period of one year immediately following
the termination of his employment with the Company, except upon express written
consent of the Company.
(c) Seller agrees that, during the period of his employment and for a
period of two (2) years thereafter, Seller shall not, directly or indirectly:
(i) influence or attempt to influence customers or suppliers of
the Company, or any of its subsidiaries or affiliates, to divert their
business to any competitor of the Company, and
(ii) solicit or recruit any employee of the Company for the
purpose of being employed by him or by a competitor of the Company or
convey any confidential information about other employees of the Company to
any other person.
(d) The Buyer acknowledges and agrees that the Seller retains all
right, title and interest in and to the customer lists compiled prior to the
date of this Agreement, and that such customer lists constitute a trade secret
of the Seller. The Seller authorizes the Buyer's use of such customer lists
only to the extent necessary and for the sole purpose of furthering the
interests of the Company.
(e) The Buyer and the Seller agree to vote all of their interests in
the Company over which they exercise (either directly or indirectly) the power
to vote in such manner as shall be necessary to effect and maintain the election
of (i) Xxxxxx Xxxxx as President of the Company and (ii) Xxxxxx Xxxxxxx as Vice
President, Secretary and Treasurer of the Company (or, subject to approval of
the Seller, which shall not be unreasonably withheld, another officer of the
Buyer selected by the Buyer in the place of Xx. Xxxxxxx). Without the prior
consent of the other party, neither the Buyer or the Seller shall vote any of
its interests in the Company during the term of this Agreement to remove either
of such officers from their respective offices or to reduce the powers and
responsibilities of such officers as they are set forth in the Company's
Operating Agreement.
7. Right of First Refusal Upon Transfers.
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(a) In the event that the Buyer or the Seller receives a bona fide
offer from a third party, other than any affiliate of such party receiving such
bona fide offer (an "Offeror"), and other than a "Permitted Transferee" of the
Buyer or the Seller, to purchase for cash some or all of the Interests of the
Company owned by such party (an "Offer") and such party desires to transfer some
or all of its Interests pursuant to such Offer, such party (hereinafter referred
to as a "Selling Member") shall give written notice of such Offer (a "First
Refusal Notice") to the Company and to the other party (each an "Offeree
Member"), stating (i) its bona fide intention to offer such Interests, (ii) the
percentage of the Company's outstanding Interests proposed to be disposed of
pursuant to such Offer (the "First Refusal Interests"), (iii) the price proposed
to be paid by the Offeror pursuant to the Offer (the "First Refusal Price"),
(iv) the identity of the Offeror and (v) any other terms and conditions of the
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proposed Transfer. The First Refusal Notice shall be accompanied by a true and
correct copy of the Offer and shall constitute an offer (a "First Refusal
Offer") to the Offeree Member, in accordance with this Section, all of the First
Refusal Interests for cash or any other asset of equal value at the First
Refusal Price and on such other terms and subject to such conditions as are set
forth in the Offer.
(b) For purposes of this Section 7, a "Permitted Transferee" of the
Buyer or the Seller shall mean the following:
(1) In the case of the Buyer:
(i) The Buyer or any one or more of its directly or
indirectly wholly owned subsidiaries; or
(ii) Any other person directly or indirectly controlling,
controlled by or under direct or indirect common control with the Buyer.
(2) In the case of the Seller:
(i) The spouse of the Seller (the "Spouse"), any lineal
ancestor of the Seller or of the Spouse, and any person who is a lineal
descendant of a grandparent of the Seller or of the Spouse, or a spouse of
any such lineal descendant or such lineal ancestor (collectively, the
"Family Members");
(ii) A trust (including a voting trust) exclusively for the
benefit of the Seller or one or more of his Family Members;
(iii) The estate, executor, executrix or other personal
representative, custodian, administrator or guardian of the Seller; or
(iv) Any corporation or partnership directly or indirectly
controlled, individually or as a group, only by the Seller and/or any of
his Permitted Transferees as determined under this subsection (b).
(3) In any and all cases, qualification as a "Permitted
Transferee" is contingent upon the additional requirement that such
transferee agrees to be bound by and to comply in all respects with the
provisions of this Section 7.
(c) The Offeree Member shall have the option to purchase the First
Refusal Interests at the First Refusal Price and on such other terms as are set
forth in the Offer, by giving notice of acceptance to the Selling Member within
forty (40) days of receipt by the Offeree Member of the First Refusal Notice (an
Offeree Member which gives such a notice of acceptance being referred to as an
"Accepting Offeree Member"), and by purchasing such First Refusal Interests for
the First Refusal Price in cash within ten (10) days following the expiration of
such 40-day period.
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(d) If the Offeree Member does not give notice of acceptance during
the aforesaid periods or if such notice is given, but the Offeree Member fails
to purchase the First Refusal Interests within the time period specified in this
Section, then, subject to the terms of this Agreement, the Selling Member may,
within the 90-day period immediately following the expiration of periods during
which the Offeree Member may give notice of acceptance, transfer the First
Refusal Interests to the Offeror for cash at a price not less than the First
Refusal Price and on the same terms and subject to the same conditions as were
set forth in the First Refusal Offer; provided, however, that the Company
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receives copies of any instruments of transfer and the Offeror's written
agreement to be bound by this Agreement as an assignee, in respective forms
reasonably satisfactory to the Company.
(e) If the Selling Member does not make such transfer within such 90-
day period, no subsequent transfer of any of the Interests of the Selling Member
may be made without again complying with this Section.
(f) If any party fails to comply with this Section with respect to all
or any part of its Interests, and the Company shall not recognize such transfer
in its records (including without limitation any beneficial interest therein),
and any attempted or purported transfer thereof shall be void and of no effect.
Nothing herein contained shall prevent the pledging of Interests
by a Member if there is neither a transfer of the legal title thereto nor a
transfer on the books of the Company into the name of the pledgee. However, no
pledgee or person claiming thereunder shall be entitled to make or cause to be
made any transfer of pledged Interests by sale thereof or otherwise (including
in this prohibition transfers on the books of the Company into the name of the
pledgee) except upon compliance herewith, and any such pledge shall be subject
to those conditions and restrictions. In addition, the Buyer may transfer its
Interests of the Company to any of its direct or indirect majority-owned
subsidiaries upon the delivery of written notice to the Seller.
8. Termination; Purchase Rights.
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(a) Buyer and Seller agree that each of the events set forth below
shall constitute a "Termination Event" if the party with the Right of
Termination (as defined herein) elects to terminate its obligations hereunder
upon the occurrence of such event:
(1) The Buyer shall have the Right of Termination under the
following circumstances:
(i) Upon the death of the Seller.
(ii) If, as a result of the Seller's incapacity due to
physical or mental illness, the Seller shall have been absent from his
duties hereunder for the period of six consecutive months.
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(iii) Upon the occurrence of a material breach of this
Agreement by the Seller.
(iv) Upon the Seller's conviction for the commission of an
act or acts constituting a felony under the laws of the United States or any
state thereof.
(v) Upon the Seller's continual failure to substantially
perform his duties hereunder, after written notice has been delivered to the
Seller by the Buyer, and the Seller's failure to substantially perform his
duties is not cured within thirty days after notice of such failure has been
given to the Seller.
(vi) In the event a court having jurisdiction in the premises
shall enter a decree or order for relief in respect of the Seller in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect.
(vii) In the event the Seller shall commence a voluntary case
under any applicable bankruptcy, insolvency, or other similar law now or
hereafter in effect.
(viii) In the event the Seller shall give notice to any
governmental body of insolvency or pending insolvency.
(2) The Seller shall have the Right of Termination under the
following circumstances:
(i) Upon the occurrence of a material breach of this
Agreement by the Buyer.
(ii) In the event a court having jurisdiction in the premises
shall enter a decree or order for relief in respect of the Buyer in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect.
(iii) In the event the Buyer shall commence a voluntary case
under any applicable bankruptcy, insolvency, or other similar law now or
hereafter in effect.
(iv) In the event the Buyer shall give notice to any
governmental body of insolvency or pending insolvency.
(b) Upon the occurrence of a Termination Event, the Buyer and Seller
agree that the party with the Right of Termination shall have the right (and
solely in the case of (a)(i) and (a)(ii), the obligation), to cause the
termination of all further obligations under Section 3 herein, as well as the
covenant to effect and maintain the election of Managers pursuant to Section 6
herein, and to purchase the interest in the Company of the other party for an
amount equal to the fair market value of such interest, as determined in
accordance
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with Section 8(c). If the Buyer's Right of Termination arises due to the
occurrence of circumstances set forth in subsections (1)(iv) or (1)(v) above,
the Buyer shall have, in addition to the remedies set forth hereinabove, the
option to cause the Seller to purchase the Buyer's Interests in the Company for
an amount equal to the fair market value of such Interests, as determined in
accordance with Section 8(c) below.
(c) For the purpose of this Section 8 the fair market value of a
party's Interests in the Company shall be determined by the parties, provided,
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however, that inasmuch as the Buyer and Seller recognize and agree that a
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significant portion of the value of the Company resides in the person of the
Seller, his knowledge of the Company's operations and customers and the good
will attached to his person, therefore upon the occurrence of a Termination
Event under Section 8(a)(1) above, and at the option of the Buyer, the appraisal
shall be conducted so as to establish the value of the Company and the Seller's
Interests therein in the absence of the Seller's involvement in the Company. In
addition, such appraisal shall reflect the effect of the Buyer's covenants set
forth in Section 6 hereof on the value of the Company following the termination
of this Agreement. If the parties do not reach an agreement as to the amount of
such fair market value, then such fair market value shall be determined by any
nationally-recognized accounting firm agreed to by the Buyer and the Seller,
with the expenses of such firm payable by the Buyer and the Seller, and with
such determination set forth in writing to the parties.
(d) Notwithstanding the foregoing, if either of the parties exercises
its Right of Termination pursuant to paragraph (b) above prior to the one year
anniversary of the Additional Payment Date, in place of the purchase option
described in such paragraph, the Buyer shall return to the Seller all of the
Interests of the Company acquired pursuant to this Agreement, and the Buyer
shall not be entitled to receive any distributions of any portion of the
Company's undistributed net income; however, the Buyer shall be entitled to
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receive a payment from the Company equal to the Buyer's actual and reasonable
expenses incurred in connection with its provision of any services rendered, or
expenses expended on behalf of the Company prior to such anniversary, in the
manner provided by Section 2(f) hereof.
9. Deadlock and Dissolution
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(a) If the Buyer and Seller have a bona fide dispute with respect to a
material matter affecting the interpretation of either this Agreement or the
Operating Agreement of the Company (the "Operating Agreement") which they shall
fail to resolve, the parties shall agree upon a third party arbitrator who shall
resolve such dispute. If the parties fail to agree upon the identity of such
arbitrator, the parties shall refer such matter to the American Arbitration
Association, which shall appoint an arbitrator to resolve such dispute.
(b) In addition, each of the Buyer and the Seller (the "Dissolution
Offeror") shall have the right, exercisable by written notice (the "Offer") to
the non-offering party (the "Dissolution Offeree"), to offer to buy the
Dissolution Offeree's interest in the Company at a purchase price and upon the
other terms specified in the Offer, if, there are one or more material bona fide
disputes or disagreements among the Buyer and the Seller which may not be
resolved through the measures identified in the previous paragraph.
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(c) The Dissolution Offeree must elect by written notice (the "Notice
of Election") to the Dissolution Offeror within sixty days after receipt of the
Offer, either:
(i) to sell the Dissolution Offeree's entire interest in the
Company to the Dissolution Offeror at the purchase price and on the
other terms specified in the Offer, or
(ii) to offer to purchase the Offeror's entire interest in the
Company at a purchase price equal to the price set forth in the Offer;
provided, however, that if the Seller is the Dissolution Offeree, the
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Seller may pay the purchase price set forth in the Offer in up to ten
semi-annual installments, together with interest at the rate of LIBOR
plus 2%, upon the grant and perfection of a first-priority security
interest in collateral with a value that the Buyer shall agree to be
equal to or greater than the purchase price set forth in the Offer,
and upon the execution of a note and a security agreement in a form
reasonably acceptable to the Buyer.
(d) If the provisions of this Section 9 are triggered prior to the
Additional Payment Date, in place of the purchase option described in this
Section, the Seller shall return to the Buyer all of the shares of the Buyer
acquired pursuant to this Agreement, and the Buyer shall return to the Seller
all of the Interests of the Company acquired pursuant to this Agreement. If the
provisions of this paragraph are triggered during the one year period commencing
on the Additional Payment Date, in place of the purchase option described in
this Section, the Seller shall return to the Buyer 50% of the shares of the
Buyer acquired pursuant to this Agreement which it has not sold as of the date
that the Offer is delivered pursuant to paragraph (b) above, and the Buyer shall
return to the Seller all of the Interests of the Company acquired pursuant to
this Agreement. In either event, the Buyer shall not be entitled to receive any
distribution of any portion of the Company's undistributed net income; however,
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the Buyer shall be entitled to receive a payment from the Company on account of
the services rendered, and expenses expended on behalf of the Company prior to
the Additional Payment Date (in the event of a termination pursuant to the first
sentence of this paragraph) or during the one year period commencing on the
Additional Payment Date (in the event of a termination pursuant to the second
sentence of this paragraph), as applicable, in the manner provided by Section
2(f) hereof.
10. Miscellaneous.
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(i) 10.1 Entire Agreement. This Agreement sets forth the
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entire understanding and agreement among the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements, arrangements
and understandings, written or oral, relating to the subject matter hereof.
(ii) 10.2 Expenses. Whether or not the transactions
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contemplated hereby shall be consummated, each of the parties hereto shall
pay its own expenses and costs (including, without limitation, the fees,
disbursements and expenses of
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attorneys, accountants and advisors) incurred by it in negotiating,
preparing, closing and performing this Agreement and the transactions
contemplated hereby.
(iii) 10.3 Notices. Any notice required or permitted hereunder
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shall be given in writing (unless otherwise specified herein) and shall be
effective upon personal delivery, via facsimile (upon receipt of
confirmation of error-free transmission) or two business days following
deposit of such notice with a recognized courier service, with postage
prepaid and addressed to each of the other parties thereunto entitled at
the following addresses, or at such other addresses as a party may
designate by ten (10) days advance written notice to each of the other
parties hereto.
If to the Seller:
Xxxxxx Xxxxx
c/o Union Telecard Alliance, LLC
00-00 Xxxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxx Xxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
If to the Company:
Union Telecard Alliance, LLC
00-00 Xxxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxx Xxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
If to the Buyer:
IDT Corporation
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
(iv) 10.4 Governing Law. This Agreement shall be governed by
-------------
and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within New York
State, without reference to principles of conflicts of laws.
(v) 10.5 Binding Effect; Assignment. This Agreement shall be
--------------------------
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. This Agreement or any rights hereunder
may not be assigned without the prior written consent of the other party
hereto; provided, however, that
12
the Buyer may transfer its Interests of the Company and its rights under
this Agreement to any of its direct or indirect majority-owned subsidiaries
upon the delivery of written notice to the Seller and to the Company.
(vi) 10.6 Further Assurances. If at any time either party
------------------
hereto shall consider or be advised that any further assignments,
conveyances or assurances are necessary or desirable to carry out the
provisions hereof and the transactions contemplated hereby, the proper
officers and directors of the relevant parties shall execute and deliver
any and all proper deeds, assignments and assurances, and do all things
necessary or proper, to carry out fully the provisions hereof.
(vii) 10.7 Amendment; Waivers. This Agreement may be amended,
------------------
modified, superseded, cancelled, renewed or extended, and the terms or
covenants hereof may be waived, only by a written instrument executed by
the parties hereto or, in the case of a waiver, by the party waiving
compliance. The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect its right at
a later time to enforce the same. No waiver by any party of the breach of
any term or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any breach, or a waiver of
the breach of any other term or covenant contained therein.
(viii) 10.8 Survival. The representations, warranties and
--------
covenants in this Agreement shall remain in full force an effect regardless
of (a) any termination of this Agreement, (b) any investigation made by or
on behalf of any party and (c) payment of the Purchase Price set forth in
this Agreement.
(ix) 10.9 Future Disputes. Any controversy or claim arising
---------------
out of or relating to this Agreement, or the breach thereof, the resolution
of which is not herein provided for, shall be settled by arbitration in
accordance with the Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may
be entered in any court having jurisdiction thereof.
10.10 No Further Representations. The representations of the Buyer, the
--------------------------
Seller, and the Company are limited to those representations and warranties
contained in this Agreement. No representations other than those contained
within this agreement or those required by law are to be assumed or implied.
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day and year first above written.
XXXXXX XXXXX
/s/ Xxxxxx Xxxxx
----------------------------------
UNION TELECARD ALLIANCE, LLC
By: /s/ Xxxxxx Xxxxx
------------------------------
Name: XXXXXX XXXXX
Title: PRES.
IDT CORPORATION
By: /s/ Xxxxxx Xxxxxxx
------------------------------
Name: XXXXXX XXXXXXX
Title: EXEC. V.P. SALES
