EXHIBIT 10.2
OPTION
ez Tel, LLC, a Nevada limited liability company (the "Company"), hereby
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agrees with NS8 Corporation, a Delaware corporation (the "Investor"), as
follows:
RECITALS
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A. Concurrently with entering into this Agreement, the Investor is
advancing a US$200,000 loan to Long Distance Billing Services, Inc., a
subsidiary of the Company.
B. The loan would not be advanced if the Company were not concurrently
entering into this Agreement.
C. The parties acknowledge that this Agreement sets forth certain of the
basic terms concerning the transaction contemplated by this Agreement, but that
many details remain to be negotiated in good faith by the parties further to
which this Agreement will be amended.
NOW, THEREFORE, in consideration of the premises:
1. Option
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. The Company grants the Investor an option (the "Option") to make an
equity investment in the Company of US$1,500,000 following which 100% of all
equity, membership and ownership interests in and to the Company shall be issued
to and held by the Investor. The foregoing is subject to confirmation of this
Agreement and confirmation of a revised Plan of Reorganization ("Plan") by the
Bankruptcy Court [name] in a final non-appealable order. The Option is
exercisable only in writing and at the sole discretion of the Investor.
2. Covenants
---------
. The Company shall amend the Plan as contemplated above and shall
advocate to the Bankruptcy Court that the amended Plan be confirmed such that
the transactions contemplated in this Agreement can proceed. Without limiting
the generality of the foregoing:
(a) the Plan shall call for all current and then existing equity,
membership and ownership interests, including options, warrants and similar
rights, to be cancelled such that the Investor holds 100% of all such interests
following its exercise of and the Closing on the option.
(b) [creditor's committee]
3. Closing
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. The closing of the transactions contemplated by this agreement shall
take place at the offices of Xxxxxx & Xxxxxxx LLP, [Washington, D.C.] at 5 p.m.,
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Eastern time, ten calendar days after the Investor gives the Company notice of
its exercise of the Option (the "Closing Date") or at such other place or
different time or day as may be mutually acceptable to the Investor and the
Company.
4. Representations and Warranties by the Company
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. In order to induce the Investor to consider exercising the Option, the
Company hereby represents and warrants to the Investor that, except as disclosed
in the attached Exhibit A:
(a) Organization, Standing, Etc.
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The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the state of _____, and has the
requisite corporate power and authority to own its properties and to carry on
its business in all material respects as it is now being conducted. The Company
has the requisite corporate power and authority to issue the 100% equity,
membership and ownership interest ("Units") and to otherwise perform its
obligations under this agreement.
(b) Governing Instruments
----------------------
. The copies of the Articles of formation and operating agreement of the
Company which have been delivered to legal counsel for the Investors prior to
the execution of this agreement are true and complete copies of the duly and
legally adopted Articles of formation and operating agreement of the Company in
effect as of the date of this agreement.
(c) Subsidiaries, Etc.
-------------------
The Company does not have any direct or indirect ownership interest in
any corporation, company, partnership, joint venture, association or other
business enterprise. If any entity is listed on Exhibit A and the Company owns
a controlling interest in such entity, the representations and warranties set
forth in this Article 4 are being hereby restated with respect to such entity
(modified as appropriate to the nature of such entity).
(d) Qualification
-------------
. The Company is duly qualified, licensed or domesticated as a foreign
limited liability company in good standing in each jurisdiction wherein the
nature of its activities or the properties owned or leased by it makes such
qualification, licensing or domestication necessary and in which failure to so
qualify or be licensed or domesticated would have a material adverse impact upon
its business.
(e) Financial Statements
---------------------
. Attached to this agreement as Exhibit B are (a) a balance sheet, as at
__G for the Company, together with the related statements of income and retained
earnings and changes in financial position for the fiscal year then ended which
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balance sheet and related statements have been audited by _____, CPAs, and (b) a
balance sheet, as at H for the Company, together with the related
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statement of income and retained earnings for the _____-month period then ended.
Such financial statements (i) are in accordance with the books and records of
the Company, (ii) present fairly the financial condition of the Company at the
balance sheets dates and the results of its operations for the periods therein
specified, and (iii) have, in all material respects, been prepared in accordance
with generally accepted accounting principles applied on a basis consistent with
prior accounting periods. Without limiting the generality of the foregoing, the
balance sheets or notes thereto disclose all of the debts, liabilities and
obligations of any nature (whether absolute, accrued or contingent and whether
due or to become due) of the Company at G, and H, which,
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individually or in the aggregate, are material and which in accordance with
generally accepted accounting principles would be required to be disclosed in
such balance sheets, and includes appropriate reserves for all taxes and other
liabilities accrued as of such dates but not yet payable.
(f) Tax Returns and Audits
-------------------------
. All required federal, state and local tax returns or appropriate
extension requests of the Company have been filed. Except as set out in Exhibit
A all federal, state and local taxes required to be paid with respect to such
returns have been paid or due provision for the payment thereof has been made
and the Company has not received notice of any tax deficiency proposed or
assessed against it, and it has not executed any waiver of any statute of
limitations on the assessment or collection of any tax. The Company does not
have any tax liabilities except those reflected on Exhibit B or those incurred
in the ordinary course of business since H.
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(g) Title to Properties and Encumbrances
----------------------------------------
. The Company has good and marketable title to all of the properties and
assets reflected on Exhibit B and the properties and assets used in the conduct
of its business, except for property disposed of in the ordinary course of
business since H, which properties and assets are not subject to any
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mortgage, pledge, lease, lien, charge, security interest, encumbrance or
restriction, except (a) those which are shown and described on Exhibit B or the
notes thereto, (b) liens for taxes and assessments or governmental charges or
levies not at the time due or in respect of which the validity thereof shall
currently be contested in good faith by appropriate proceedings, or (c) those
which do not materially affect the value of or interfere with the use made of
such properties and assets.
(h) Litigation; Governmental Proceedings
--------------------------------------
. There are no legal actions, suits, arbitrations or other legal,
administrative or governmental proceedings or investigations pending or, to the
knowledge of the Company, threatened against the Company, or its properties or
business, and the Company is not aware of any facts which are likely to result
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in or form the basis for any such action, suit or other proceeding. The Company
is not in default with respect to any judgment, order or decree of any court or
any governmental agency or instrumentality. The Company has not been threatened
with any action or proceeding under any business or zoning ordinance, law or
regulation.
(i) Compliance With Applicable Laws and Other Instruments
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. The business and operations of the Company have been and are being
conducted in all material respects in accordance with all applicable laws, rules
and regulations of all governmental authorities. Neither the execution nor
delivery of, nor the performance of or compliance with, this agreement nor the
consummation of the transactions contemplated hereby will, with or without the
giving of notice or passage of time, result in any breach of, or constitute a
default under, or result in the imposition of any lien or encumbrance upon any
asset or property of the Company pursuant to, any agreement or other instrument
to which the Company is a party or by which it or any of its properties, assets
or rights is bound or affected, and will not violate the Articles of formation
or operating agreement of the Company. The Company is not in violation of its
Articles of formation or operating agreement nor in violation of, or in default
under, any lien, indenture, mortgage, lease, agreement, instrument, commitment
or arrangement in any material respect. The Company is not subject to any
restriction which would prohibit it from entering into or performing its
obligations under this agreement.
(j) Units and Conversion Units
-----------------------------
. The Units, when issued and paid for pursuant to the terms of this
agreement, will be duly authorized, validly issued and outstanding, fully paid,
non-assessable shares and shall be free and clear of all pledges, liens,
encumbrances and restrictions.
(k) Trademarks and Other Intangible Rights
------------------------------------------
. The Company (a) owns or has the exclusive right to use, free and clear
of all material liens, claims and restrictions, all patents, trademarks, service
marks, trade names, copyrights, licenses and rights with respect to the
foregoing, used in the conduct of its business as now conducted without
infringing upon or otherwise acting adversely to the right or claimed right of
any person under or with respect to any of the foregoing, (b) is not obligated
or under any liability whatsoever to make any payments of a material nature by
way of royalties, fees or otherwise to any owner of, licensor of, or other
claimant to, any patent, trademark, trade name, copyright or other intangible
asset, with respect to the use thereof or in connection with the conduct of its
business or otherwise, (c) owns or has the unrestricted right to use all trade
secrets, including know-how, customer lists, inventions, designs, processes,
computer programs and technical data necessary to the development, operation and
sale of all products and services sold or proposed to be sold by it, free and
clear of any rights, liens or claims of others, and (d) is not using any
confidential information or trade secrets of others.
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(l) Capital Stock
--------------
. At the date hereof, the authorized Units consists of _____, of which
_____ are issued and outstanding. All of the outstanding Units of the Company
were duly authorized, validly issued and are fully paid and non-assessable.
There are no outstanding subscriptions, options, warrants, calls, contracts,
demands, commitments, convertible securities or other agreements or arrangements
of any character or nature whatever, other than this agreement, under which the
Company is obligated to issue any securities of any kind representing an
ownership interest in the Company. Neither the offer nor the issuance or sale
of the Units constitutes an event, under any anti-dilution provisions of any
securities issued or issuable by the Company or any agreements with respect to
the issuance of securities by the Company, which will either increase the number
of shares issuable pursuant to such provisions or decrease the consideration per
share to be received by the Company pursuant to such provisions. No holder of
any security of the Company is entitled to any preemptive or similar rights to
purchase any securities of the Company from the Company; provided, however, that
nothing in this section shall affect, alter or diminish any right granted to the
Investors in this agreement. All outstanding securities of the Company have
been issued in full compliance with an exemption or exemptions from the
registration and prospectus delivery requirements of the Securities Act and from
the registration and qualification requirements of all applicable state
securities laws.
(m) Corporate Acts and Proceedings
---------------------------------
. This agreement has been duly authorized by all necessary corporate
action on behalf of the Company, has been duly executed and delivered by
authorized officers of the Company, and is a valid and binding agreement on the
part of the Company that is enforceable against the Company in accordance with
its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and to judicial limitations on the
enforcement of the remedy of specific performance and other equitable remedies.
All corporate action necessary to the authorization, creation, issuance and
delivery of the Units has been taken by the Company, or will be taken by the
Company on or prior to the closing date.
(n) Accounts Receivable
--------------------
. To the extent that they exceed the reserves for doubtful accounts set
forth in Exhibit B, the accounts receivable which are reflected in Exhibit B and
all accounts receivable of the Company which have arisen since H
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(except such accounts receivable as have been collected since H) are
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valid and enforceable claims, and the goods and services sold and delivered
which gave rise to such accounts were sold and delivered in conformity with the
applicable purchase orders, agreements and specifications. Such accounts
receivable are subject to no valid defense or offsets except routine customer
complaints or warranty demands of an immaterial nature. The reserve for
doubtful accounts that is included in Exhibit B is adequate.
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(o) No Brokers or Finders
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. No person, firm or corporation has or will have, as a result of any act
or omission of the Company, any right, interest or valid claim against the
Company or any Investor for any commission, fee or other compensation as a
finder or broker in connection with the transactions contemplated by this
agreement. The Company will indemnify and hold each of the Investors harmless
against any and all liability with respect to any such commission, fee or other
compensation which may be payable or determined to be payable in connection with
the transactions contemplated by this agreement.
(p) Conflicts of Interest
-----------------------
. No officer, director or shareholder of the Company or any affiliate (as
such term is defined in Rule 405 under the Securities Act) of any such person
has any direct or indirect interest (a) in any entity which does business with
the Company, (b) in any property, asset or right which is used by the Company in
the conduct of its business, or (c) in any contractual relationship with the
Company other than as an employee. For the purpose of this section, there shall
be disregarded any interest which arises solely from the ownership of less than
a 1% equity interest in a corporation whose stock is regularly traded on any
national securities exchange or in the over-the-counter market.
(q) Licenses
--------
. The Company possesses from the appropriate agency, commission, board and
government body and authority, whether state, local or federal, all licenses,
permits, authorizations, approvals, franchises and rights which (a) are
necessary for it to engage in the business currently conducted by it, and (b) if
not possessed by the Company would have an adverse impact on the Company's
business. The Company has no knowledge that would lead it to believe that it
will not be able to obtain all licenses, permits, authorizations, approvals,
franchises and rights that may be required for any business the Company proposes
to conduct.
(r) Retirement Plans
-----------------
. The Company does not have any retirement plan in which any employees of
the Company participates that is subject to any provisions of the Employee
Retirement Income Security Act of 1974 and of the regulations adopted pursuant
thereto ("ERISA").
(s) Environmental and Safety Laws
--------------------------------
. The Company is not in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, and no
material expenditures are or will be required in order to comply with any such
existing statute, law or regulation.
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(t) Employees
---------
. To the best of the Company's knowledge, no officer of the Company or
employee of the Company (whose annual compensation is in excess of $50,000) has
any plans to terminate his or her employment with the Company. The Company has
complied in all material respects with all laws relating to the employment of
labor, including provisions relating to wages, hours, equal opportunity,
collective bargaining and payment of Social Security and other taxes, and the
Company has not encountered any material labor difficulties. The Company does
not have any worker's compensation liabilities, except those reflected on
Exhibit B.
5. Representations of the Investor
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. The Investor represents that:
(a) Acts and Proceedings
----------------------
. This agreement has been duly authorized by all necessary action on the
part of such Investor, has been duly executed and delivered by such Investor,
and is a valid and binding agreement of such Investor.
(b) No Brokers or Finders
------------------------
. No person, firm or corporation has or will have, as a result of any act
or omission by such Investor, any right, interest or valid claim against the
Company for any commission, fee or other compensation as a finder or broker, or
in any similar capacity, in connection with the transactions contemplated by
this agreement. Such Investor will indemnify and hold the Company harmless
against any and all liability with respect to any such commission, fee or other
compensation which may be payable or determined to be payable as a result of the
actions of such Investor in connection with the transactions contemplated by
this agreement.
6. Conditions of The Investor's Obligation
-------------------------------------------
. Upon written exercise of the Option, the obligation to purchase and pay
for the Units on the closing date is subject to the fulfillment prior to or on
the closing date of the conditions set forth in this Article 6. In the event
that any such condition is not satisfied to the satisfaction of the Investor.
(a) No Errors, Etc.
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The representations and warranties of the Company under this agreement
shall be true in all material respects as of the closing date with the same
effect as though made on and as of the closing date.
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(b) Compliance with Agreement
---------------------------
. The Company shall have performed and complied with all agreements or
conditions required by this agreement to be performed and complied with by it
prior to or as of the closing date.
(c) Approvals
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. The Bankruptcy Court [and the Creditor's Committee] shall have amended
the Company's Disclosure Statement and Plan of Reorganization under Chapter 11
of the Bankruptcy Code to take into account this Agreement and the transactions
herein contemplated.
(d) Certificate of Officers
-------------------------
. The Company shall have delivered to the Investors a certificate, dated
the closing date, executed by the President and the senior financial officer of
the Company and certifying various facts typically covered by an officers'
certificate.
(e) Opinion of the Company's Counsel
------------------------------------
. The Company shall have delivered to the Investor an opinion,
satisfactory to each of the Investors, of Xxxxx Xxxx, counsel for the Company,
dated the closing date, to the effect that:
(1) The Company is a limited liability company duly organized and
validly existing in good standing under the laws of the state of its
incorporation, and has the corporate power and authority to own and hold
the properties owned and leased by it and to carry on the business in which
it is engaged. The Company has the corporate power and authority to enter
into this agreement, to issue and sell the Units and to carry out the
provisions of this agreement.
(2) This agreement has been duly authorized, executed and delivered by
the Company, is the legal, valid and binding agreement of the Company and
is enforceable against the Company in accordance with its terms, subject,
as to the enforcement of remedies, to limitations under applicable
bankruptcy, insolvency, moratorium, reorganization, and other laws
affecting the rights of creditors generally and to judicial limitations on
the enforcement of the remedy of specific performance and other equitable
remedies.
(3) The Units being purchased on the closing date have been duly
authorized, validly issued and delivered by the Company, are fully paid and
non-assessable, and are entitled to the rights, preferences and provisions
of the Company's Articles of incorporation and the benefits of the
provisions of this agreement applicable thereto. The certificates
evidencing the Units are in valid and sufficient form.
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(4) All corporate proceedings required by law or by the provisions of
this agreement to be taken by the Board of Directors and shareholders of
the Company on or prior to such closing date in connection with the
execution and delivery of this agreement, the adoption of the amendments to
the company's Articles of incorporation to include the provisions that are
set forth in Exhibit A, the offer, issuance and sale of the Units and the
consummation of the transactions contemplated by this agreement, have been
duly and validly taken.
(5) The Company is authorized by its Articles of formation to issue
_____ Units, _____ par value. Immediately prior to such closing date there
were no Units then issued and outstanding. All Units outstanding on the
date of this Agreement and issued prior to Closing shall have been
cancelled.
(6) The Company has obtained the approval or consent of all
governmental agencies or bodies, including the Bankruptcy Court, required
for the legal and valid execution and delivery of this agreement and the
legal and valid offer, issuance and sale of the Units and for the
performance of the obligations of the Company under all provisions of this
agreement. To the best of such counsel's knowledge, the Company is not in
violation of any term, provision or condition of its Articles of formation
or operating agreement, or in violation of any agreement or other
instrument to which the Company is a party or by which it is bound or to
which any of its properties, assets or business is subject or any judgment,
decree or order or any statute, rule or regulation. Assuming the accuracy
of the representations made by the Investors in Article 5, the execution,
delivery and performance of this agreement, the offer, issuance and sale of
the Units and the consummation of the transactions contemplated by this
agreement will not result in any breach or violation of the terms or
provisions of, or constitute a default under, the Articles of incorporation
or the bylaws of the Company or any statute, rule or regulation affecting
the Company or its business. To the best of such counsel's knowledge, the
execution, delivery and performance of this agreement by the Company, the
offer, issuance and sale of the Units and the consummation of the
transactions contemplated by this agreement will not result in any
violation of any agreement or other instrument to which the Company is a
party or by which it is bound or to which any of its properties, assets or
business is subject or any judgment, decree or order.
(7) Assuming the accuracy of the representations made by the Investors
in Article 5, the offer, sale, issuance and delivery of the Units to the
Investors under the circumstances contemplated by this agreement are exempt
from the registration and prospectus delivery requirements of the
Securities Act and all applicable state securities laws.
(8) The offer, sale and issuance of all outstanding securities of the
Company were made pursuant to and in full compliance with an exemption from
the registration and prospectus delivery requirements of the Securities Act
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and from any registration or qualification requirements of applicable state
securities laws.
(9) Except for matters disclosed on Exhibit A, such counsel has no
knowledge of any litigation, proceeding or governmental investigation
pending or threatened against the Company or its properties or business.
(f) Supporting Documents
---------------------
. The Investor shall have received the following:
(1) A copy of resolutions of the Board of Directors of the Company
certified by the secretary of the Company authorizing and approving the
execution, delivery and performance of this agreement;
(2) A certificate of incumbency executed by the Secretary of the
Company certifying the names, titles and signatures of the officers
authorized to execute this agreement and further certifying that the
Articles of formation and operating agreement of the Company delivered to
legal counsel for the Investors at the time of the execution of this
agreement have been validly adopted and have not been amended or modified,
by other than by the substitution of the provisions set forth in Exhibit A
for the capital stock provisions of the Articles of incorporation; and
(3) Such additional supporting documentation and other information
with respect to the transactions contemplated hereby as legal counsel for
the Investors may reasonably request.
(g) Qualification Under State Securities Laws
---------------------------------------------
. All registrations, qualifications, permits and approvals required under
applicable state securities laws for the lawful execution and delivery of this
agreement and the offer, sale, issuance and delivery of the Units to the
Investors at the closing shall have been obtained.
(h) Employment Agreements
----------------------
. Xxxxxx Xxxxx and _____ and the Company shall have entered into
employment agreements in form and substance acceptable to the Investor.
(i) Board of Directors
--------------------
. The Company shall have taken such actions as shall be appropriate to
reconstitute its Board of Directors in the manner contemplated by the Investor.
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(j) Proceedings and Documents
---------------------------
. All corporate and other proceedings and actions taken in connection with
the transactions contemplated hereby and all certificates, opinions, agreements,
instruments and documents mentioned herein or incident to any transaction of
this type as shall be reasonably requested by, and satisfactory in form and
substance to, legal counsel for the Investors.
(k) Due Diligence
--------------
. The Investor's due diligence shall be satisfactory to it in its sole
discretion.
(l) Loan Repaid
------------
. The US$200,000 loan by the Investor to Long Distance Billing Services,
Inc. shall have been repaid, including accrued interest, in full.
7. Miscellaneous
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Waivers, Amendments and Approvals
. In each case in which approval of the Investors is required by the terms
of this agreement, such requirement shall be satisfied by a vote or the written
action of Investors owning a majority of the Purchased Units then owned by the
Investors. With the written consent of Investors owning a majority of the
Purchased Units then owned by the Investors, the obligations of the Company
under this agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively) and with the written approval of
Investors owning seventy-five percent (75%) of the Purchased Units then owned by
the Investors, the Company may enter into a supplementary agreement for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this agreement or of any supplemental agreement or
modifying in any manner the rights and obligations of the holders of the
Purchased Units of the Company; provided, however, that no such waiver or
supplemental agreement shall (a) amend the terms of the Units as set forth in
the Company's Articles of incorporation (any such amendment to the terms of the
Units shall require the vote of the holders of Units called for by the Articles
of incorporation), (b) amend the provisions of this agreement granting rights to
the holders of the Purchased Units (including, but not limited to, registration
rights under Article 11) without the written consent of the holders of a
majority of the Purchased Units, or (c) reduce the aforesaid proportions of
shares the holders of which are required to consent to any waiver or
supplemental agreement, without the consent of all of the record holders of
shares whose rights would be affected by such reduction. Written notice of any
such waiver, consent or agreement of amendment, modification or supplement shall
be given to the record holders of the Purchased Units who have not previously
consented thereto in writing. In all cases in which the consent or approval of,
or actions by, the Investors or the holders of the Purchased Units is required
by the terms of this agreement, the number of Purchased Units owned by such
holder or Investor shall be determined on an as-if-converted basis.
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(a) Changes, Waivers, Etc.
------------------------
Neither this agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only by a statement in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, except to the extent provided in section 15.1.
(b) Payment of Fees and Expenses of the Investors
----------------------------------------------------
. The Company agrees to reimburse the Investor for legal expenses incurred
by them to their legal counsel, Xxxxxx & Xxxxxxx, in connection with the
transactions contemplated by this agreement. The Company also agrees to
reimburse the Investor for the reasonable legal expenses incurred by the
Investor in retaining special counsel in connection with any amendments or
waivers under or with respect to this agreement and for any expenses incurred by
the Investor in making public announcements of the investment contemplated
hereby.
(c) Notices
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. All notices, requests, consents and other communications required or
permitted hereunder shall be in writing and shall be delivered, or mailed
first-class postage prepaid, registered or certified mail,
(1) if to any holder of any Purchased Units addressed to such holder
at its address as shown on the books of the Company, or at such other
address as such holder may specify by written notice to the Company, or
(2) if to the Company at _____. Attention: President; or at such other
address as the Company may specify by written notice to the Investors,
and such notices and other communications shall for all purposes of this
agreement be treated as being effective or having been given if delivered
personally, or, if sent by mail, when received.
(d) Survival of Representations and Warranties, Etc.
-----------------------------------------------------
All representations and warranties contained herein shall survive the
execution and delivery of this agreement, any investigation at any time made by
the Investors or on their behalf, and the sale and purchase of the Units and
payment therefor. All statements contained in any certificate, instrument or
other writing delivered by or on behalf of the Company pursuant to this
agreement (other than legal opinions) or in connection with or in contemplation
of the transactions herein contemplated shall constitute representations and
warranties by the Company hereunder.
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(e) Parties in Interest
---------------------
. All the terms and provisions of this agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, whether so expressed or not, and, in particular,
shall inure to the benefit of and be enforceable by the holder or holders from
time to time of any of the Purchased Units; provided, however, that a successor
or assign of an Investor shall not be regarded as an "Investor."
(f) Headings
--------
. The headings of the Articles and sections of this agreement have been
inserted for convenience of reference only and do not constitute a part of this
agreement.
(g) Choice of Law
---------------
. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF WASHINGTON, WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS PRINCIPLES THEREOF, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE MANDATORILY GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF WASHINGTON. Whenever possible, each
provision of this Agreement and any other statement, instrument or transaction
contemplated hereby or relating hereto shall be interpreted in such manner as to
be effective and valid under such applicable law, but, if any provision of this
Agreement or any other statement, instrument or transaction contemplated hereby
or relating hereto shall be held to be prohibited or invalid under such
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement or any other statement, instrument
or transaction contemplated hereby or relating hereto.
(h) Jurisdiction
------------
AT THE OPTION OF THE INVESTOR, THIS AGREEMENT MAY BE ENFORCED IN ANY
FEDERAL COURT OR WASHINGTON STATE COURT SITTING IN KING COUNTY; AND THE COMPANY
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT
THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE COMPANY COMMENCES
ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT,
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THE INVESTOR AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO THE
JURISDICTION AND VENUE ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
(i) Waiver of Notice and Hearing.
---------------------------------
THE COMPANY HEREBY WAIVES ALL RIGHTS TO A JUDICIAL HEARING OF ANY KIND
PRIOR TO THE EXERCISE BY THE INVESTOR OF ITS RIGHTS TO POSSESSION OF THE
COLLATERAL WITHOUT JUDICIAL PROCESS OR OF ITS RIGHTS TO REPLEVY, ATTACH, OR LEVY
UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR HEARING. THE COMPANY ACKNOWLEDGES
THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS PROVISION
AND THIS AGREEMENT.
(j) Waiver of Jury Trial.
------------------------
EACH OF THE COMPANY AND THE INVESTOR, BY ITS ACCEPTANCE OF THIS AGREEMENT,
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
(k) Counterparts
------------
. This agreement may be executed concurrently in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this agreement to be executed by
its duly authorized representative and each of the Investors has caused this
agreement to be executed by signing in counterpart the acceptance form attached
to this agreement.
IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
ez Tel, LLC
By /s/ Xxxxxx Xxxxx
------------------
Title President & CEO
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