CYNET, INC.
00000 XXXXX XXXX, XXXXX 000
XXXXXXX, XXXXX 00000
(000) 000-0000
June 26, 1996
Xx. Xxxx-Xxxxx Xxxxxxxx
International Fax Corporation
Craigmuir Xxxxxxxx
P.O. Box 71
Road Town
Tortola, British Virgin Islands
LETTER AGREEMENT
Gentlemen:
This letter is to memorialize THE AGREEMENT among you, Xxxx-Xxxxx Xxxxxxxx
("Benichou"), your company, International Fax Corporation ("IFC"), Xxx Xxxxx
("Xxxxx") and CyNet, Inc. ("CyNet") for IFC to acquire 1,050,000 shares of stock
in CyNet, Inc. ("CyNet"), a Texas corporation controlled by Xxxxx, in exchange
for CyNet acquiring a right of first refusal to acquire all of the outstanding
common stock of I-Media, S. A., a French company controlled by Benichou.
The following paragraphs describe our mutual agreement:
1. Right of First Refusal to Acquire I-Media, S.A. CyNet agrees to issue
1,050,000 shares of unregistered, restricted CyNet stock to IFC and IFC agrees
to acquire such shares from CyNet in exchange for the night of first refusal to
acquire all the outstanding common shares of I-Media, S.A., subject to the
fulfillment of the following conditions:
a. Authority and Identity of IFC Shareholders. The IFC shareholder
represents that he is also the controlling shareholder of I-Media,
S.A.,, a French company operating an international European fax
Network similar to that of CyNet, and further represents that he has
full authority to cause I-Media, S.A. to carry out the transactions
agreed to herein;
b. Transfer of Shares at Closing. On or before June 28, 1996 (the
"Closing Date"), CyNet shall have issued 1,050,000 of its private,
unregistered and restricted common shares to IFC, or as the
shareholders of IFC may direct, and the parties acknowledge and
agree that up to 300,000 of the shares so issued may be subsequently
transferred to shareholders of I-Media, S.A.;
c. Right of First Refusal. As consideration for the common shares, the
IFC shareholders grant CyNet the right of first refusal to acquire
all the outstanding shares of I-Media in the event such shares are
offered for sale at any time prior to CyNet's initial public
offering (IPO). CyNet shall have, for fifteen days following receipt
of notice of the sale offer, the option to exercise its right of
first refusal;
d. Valuation. In the event shares of capital stock of the I-Media and
CyNet are exchanged as part of the agreed transaction, the necessary
valuation of each company's shares for the exchange will be made on
a basis that is the same for each Company,
e. Directorship. Xxx Xxxxx, as controlling shareholder of CyNet, will
amend the By-Laws of CyNet, if necessary, and appoint or elect
Xxxx-Xxxxx Xxxxxxxx as a Director of CyNet, and continue to so
appoint or elect him as director until the time of CyNet's IPO;
f Director's Expenses. Xxxx-Xxxxx Xxxxxxxx will receive the normal
travel and expense reimbursements for his service as a board member
and such other compensation and travel and expense reimbursements as
he and CyNet shall from time to time agree; and
h Closing Documents. At Closing Date, and at any exercise of the Right
of First Refusal, IFC, I-Media, CyNet and their respective
shareholders will execute all such documents as our respective legal
counsel shall deem necessary to effectuate the transaction
contemplated hereby in compliance with all applicable laws and
regulations.
2. Contingent Reacquisition by CyNet. In the event that IFC has exercised its
options pursuant to paragraphs 2 and 3 of a certain agreement dated June
_______, 1996 by and between the Xxx X. Xxxxx Family Partnership, Ltd. ("Xxxxx")
and IFC and Xxxxx has repurchased all of the CyNet shares acquired by IFC
pursuant to that agreement, and that CyNet has not acquired I-Media, then this
agreement is terminated and IFC and its shareholders shall return the 1,050,000
shares to CyNet and neither CyNet nor IFC and its shareholders shall have any
further obligations or liability to the other party.
3. Contingent Purchase by CyNet on Sale of Controlling Interest by Xxxxx. At
IFC's sole option and upon written notice of such demand, CyNet agrees to
purchase all of the CyNet shares acquired by IFC at a price equal to the price
per share received by Xxxxx in the event Xxxxx, or Xxx Xxxxx, individually,
sells sufficient of its shares so that it no longer holds controlling interest
in CyNet. Such amounts shall be due and payable in full fifteen days following
the receipt of IFC's written notice.
4. Obligation to Provide Financial Information. Prior to the exercise of the
Right of First Refusal granted hereby, I-Media shall provide its most recent
financial statements to CyNet as well as
documents and other evidence sufficient for CyNet to determine the bona fides of
the third party offer it must match;
5. Confidentiality. This letter agreement, our discussions and all information
and data furnished to each party by the other pursuant to this letter agreement
shall be confidential and shall not be divulged by any party to any third party
without the prior written consent of the other party providing said confidential
information, except that CyNet, Inc. shall be permitted to make all disclosures
of this transaction as are necessary to comply with state and federal security
laws, rules and regulations.
6. Publicity. All announcements and publicity relating to this letter agreement
shall be subject to the mutual approval of both IFC and CyNet, except as
otherwise required by laws or regulations.
7. Choice of Law. The parties agree that this letter agreement shall be governed
by and interpreted in accordance with the laws of the State of Texas, excluding
any principle or provision thereof that would require application of the laws of
any other jurisdiction.
8. Arbitration. Any dispute as to any matter or activities arising out of or
in connection with this letter agreement, including, without limitation, any
dispute as to the validity, construction, enforceability or breach of this
letter agreement, which cannot be settled amicably shall be exclusively and
finally settled by arbitration, and any party may submit such a dispute to
arbitration.
Arbitration proceedings shall be conducted by three (3) arbitrators in
accordance with the Rules of Conciliation and Arbitration of the International
Chamber of Commerce. Unless otherwise agreed in writing by the parties, the
third arbitrator appointed in accordance with said rules shall not be a national
of the United States or France.
In any arbitration proceeding hereunder:
a. proceedings shall, unless otherwise agreed in writing by the parties,
be held in London, England;
b. proceedings shall be construed under and governed by the laws of the
State of Texas, excluding any choice of law rule thereof that would direct the
application of the laws of any other jurisdiction;
c. the English language shall be the official language for all purposes;
and
d. the decision of a majority of the arbitrators shall be final and
binding and shall be enforceable in any court of competent jurisdiction.
9. Prior Agreements. This Agreement supersedes and is in lieu of any and all
prior or contemporaneous agreements, communications or understandings, whether
written or unwritten,
verbal or tacit, or implied by prior dealings, between and among any of the
parties, their predecessors or affiliates with respect to the matters set out
herein.
10. Amendment in writing. No amendment, modification or change to this agreement
shall be binding unless in writing, signed by all the parties hereto.
11. Agreement binding. This letter constitutes a binding agreement between us.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, legatees, administrators, executors, legal
representatives, successors, and assigns (including remote, as well as
immediate, successors to and assignees of said parties).
12. Representations, Warranties and Agreements of CyNet. CyNet represents,
warrants and agrees as follows:
a. Authority. CyNet is a corporation duly organized, validly existing, and
in good standing under the laws of Texas, with full corporate power and
authority to carry on its business as it is now being conducted, to own or
hold under lease the properties and assets it now owns or holds under
lease, and to enter into and perform its obligations under this Agreement.
Copies of the charter documents and bylaws have been delivered to IFC and
such copies are complete and correct. The execution and delivery of this
Agreement and the consummation of all the transactions contemplated
thereby have been duly authorized by all necessary corporate action on
behalf of CyNet. The persons signing on behalf of CyNet are duly
authorized to do so and this Agreement will be binding upon CyNet. CyNet
is not subject to any lien or encumbrance of any kind nor subject to any
agreement, instrument, order, or decree of any court or government body
which would prevent consummation of the transaction contemplated by this
agreement.
b. Tax Obligations. CyNet has filed all tax returns required to be filed
and paid all taxes and assessments due, including interest and penalties
(the "Taxes"). There are no unpaid Taxes that are or could become a lien
on the property or assets of CyNet, except for current Taxes not yet due
and payable.
c. No Suits Pending. There are no actions, suits, or proceedings pending,
outstanding or threatened, against or affecting CyNet or any of the
assets, properties or business of CyNet at law or in equity, or before or
by any governmental authority, except for a lawsuit by a placement agency
for an unpaid, disputed $10,000 placement fee.
d. No Violations of Laws. CyNet is not in default or violation under any
law, ordinance or regulation, or with respect to any order, writ,
injunction, decree or demand of any court or any governmental authority,
or in the payment of any indebtedness for borrowed money or
under the terms or provisions of any agreement or instrument evidencing or
security any such indebtedness.
e. Governmental Agencies. CyNet will comply with the requirements of all
applicable laws, regulations, and requirements pertaining to CyNet.
f. Information Provided. To the best of its knowledge, all information
provided by CyNet to IFC was and is accurate in all material respects and
did not or does not, to the best of CyNet's knowledge, omit any
information necessary to make sure information and documentation not
misleading.
g. Financial Statements. CyNet has delivered to IFC its 1995 audited
annual report and the interim unaudited financial statements. The
financial statements present fairly the financial position and results of
operations of CyNet.
h. Licenses and Permits. CyNet has all licenses, permits, approvals,
consents, orders, rights and other authorizations which are necessary in
order to enable it to conduct its business as currently conducted.
I. No Undisclosed Liabilities. Except as set out in its financial
statements, and except for a meritless suit by an employment agency for a
disputed $10,000 placement fee, CyNet has no liabilities or obligations.
j. No Conflict with Other Documents. Neither the execution and delivery of
this agreement nor the carrying out of this transaction will result in any
violation, termination or modification of, or be in conflict with CyNet's
charter documents or bylaws, any contract or agreement to which CyNet or
any of its shareholders is a party or is bound, or result in the creation
of any lien or encumbrance upon any of the properties or assets of CyNet.
13. Representation, Warranties and Agreements of IFC. IFC represents, warrants
and agrees as follows:
a. Authority. IFC is, or will be at all times material hereto, duly
organized, validly existing, and in good standing in its state or county
of organization. The persons signing on behalf of IFC are duly authorized
to do so and this Agreement will be binding upon IFC.
b. Tax Obligations. IFC has filed all tax returns required to be filed
and paid all taxes due, including interest and penalties.
c. No Suits Pending. There are no actions, suits, or proceedings pending,
outstanding or threatened, against or affecting IFC at law or in equity,
or before or by any governmental authority.
d. No Violations of Laws. IFC is not in default under any law, ordinance
or regulation, or with respect to any order, writ, injunction, decree, or
demand of any court or any governmental authority, or in the payment of
any indebtedness for borrowed money or under the terms or provisions of
any agreement or instrument evidencing or security any such indebtedness.
e. Governmental Agencies. IFC will comply with the requirements of all
applicable laws, regulations, and requirements pertaining to IFC.
14. Representations, Warranties and Agreements of I-Media represents, warrants
and agrees as follows:
a. Authority. I-Media is a corporation duly organized, validly existing,
and in good standing under the laws of its state or country of
organization, with full corporate power and authority to carry on its
business as it is now being conducted, to own or hold under lease the
properties and assets it now owns or holds under lease, and to enter into
and perform its obligations under this Agreement. Copies of the charter
documents and bylaws have been delivered to CyNet and such copies are
complete and correct. The execution and delivery of this Agreement and the
consummation of all the transactions contemplated thereby have been duly
authorized by all necessary corporate action on behalf of I-Media. The
persons signing on behalf of I-Media are duly authorized to do so and this
Agreement will be binding upon I-Media. I-Media is not subject to any lien
or encumbrance of any kind nor subject to any agreement, instrument,
order, or decree of any court or government body which would prevent
consummation of the transaction contemplated by this agreement.
b. Tax Obligations. I-Media has filed all tax returns required to be filed
and paid all taxes and assessments due, including interest and penalties
(the "Taxes"). There are no unpaid Taxes that are or could become a lien
on the property or assets of I-Media, except for current Taxes not yet due
and payable.
c. No Suits Pending. There are no actions, suits, or proceedings pending,
outstanding or threatened, against or affecting I-Media or any of the
assets, properties or business of I-Media at law or in equity, or before
or by any governmental authority.
d. No Violations of Laws. I-Media is not in default or violation under any
law, ordinance or regulation, or with respect to any order, writ,
injunction, decree, or demand of any court or any governmental authority,
or in the payment of any indebtedness for borrowed money or under the
terms or provisions of any agreement or instrument evidencing or security
any such indebtedness.
e. Governmental Agencies. I-Media will comply with the requirements of all
applicable laws, regulations, and requirements pertaining to I-Media.
f. Information Provided. To the best of its knowledge, all information
provided by I-Media to CyNet was and is accurate in all material respects
and did not or does not, to the best of IMedia's knowledge, omit any
information necessary to make such information and documentation not
misleading.
g. Financial Statements. I-Media has delivered to CyNet its 1995 audited
annual report and the interim financial statements. The financial
statements present fairly the financial position and results of operations
of CyNet.
15. Representations, Warranties and Agreements of IFC and its Shareholders. For
purposes of this paragraph, "IFC" shall include onto only the corporation to be
formed with that name but IMedia, S.A., as well, and the term "IFC and its
shareholders" shall also include the shareholders of I-Media, S.A. IFC and its
shareholders represent, warrant and agree as follows:
a. familiarity with CyNet's Business. IFC and its shareholders are
familiar with the fax broadcast industry in general and CyNet's business
in particular, have had opportunities to ask questions of its officer(s),
and have received all information requested.
b. Knowledge and Experience. IFC and its shareholders possess the
requisite knowledge and experience in financial and business matters to be
capable of evaluating the merits and risks of an investment in CyNet.
c. Substantial Net Worth. The shareholders of IFC and I-Media, S.A are
individuals having a net worth, either individually or together with his
or her spouse, of at least $1,000,000.
d. Willingness to Bear Risk of Economic Loss. IFC and its shareholders are
willing and able to bear the economic risk of this agreement, and have
considered whether they could afford to hold the shares for an indefinite
period and whether, at this time, they could afford a complete loss of the
Funds.
e. Purchase for Own Account. IFC and its shareholders are entering into
this agreement for their own account and not for the account of any other
person.
f. No Market for Shares. IFC and its shareholders acknowledge that there
is no market of the shares of CyNet, there may not be any market in the
future and the agreed price for these shares has been arbitrarily
determined by the parties and is not an indication of the actual value of
the shares, if any.
g. No Registration. IFC and its shareholders are aware that the Shares
have not been registered nor is registration contemplated under the
Securities Act of 1933, and accordingly, that the Shares must be held
indefinitely (except for the provisions of paragraph 2 above) unless they
are subsequently registered under said Act or unless, in the opinion of
counsel for CyNet, a sale or transfer may be made without registration
thereunder. IFC and its shareholders are further aware that they may not
be entitled to make any sales or transfers of the Shares pursuant to the
exemption afforded by Rule 144 promulgated under said Act. IFC and its
shareholders agree that any certificates evidencing the Shares may bear a
legend restricting the transfer thereof consistent with the foregoing and
that a notation may be made in the records of CyNet restricting the
transfer of the Shares in a manner consistent with the foregoing.
I. No Advertising. IFC and its shareholders acknowledge that neither CyNet
nor any person acting on its behalf offered to sell them shares by means
of any form of general advertising, such as media advertising or seminars.
j. No Preemptive Rights. IFC and its shareholders acknowledge and agree
that they have no preemptive rights with respect to the shares to be
conveyed hereunder.
16. Unenforceable Provisions. In the event any one or more provisions contained
in this letter agreement shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this letter, this letter shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
17. Indemnification by CyNet. CyNet agrees to indemnify IFC and I-Media
(collectively referred to as IFC), as follows:
a. Indemnification for Breach. CyNet covenants and agrees to indemnify,
defend and hold harmless IFC, any of its officers, directors,
shareholders, employees, agents or affiliates, successors and assigns, at
all times from and after Closing, from and against any and all claims,
suits, losses, damages, judgement and liabilities (collectively referred
to as "Claims") to which IFC may become subject, if such Claims arise out
of or are based upon any facts or circumstances that could result in or
give rise to a misrepresentation, omission, breach of warranty, or breach
of covenant by CyNet of IFC in this Agreement. This right of
indemnification is in addition to any other right available to IFC.
b. Indemnification for Income Tax. Without limiting the foregoing, CyNet
shall indemnify, defend and hold harmless IFC from and against any Losses
to which IFC may become subject insofar as such Losses arise out of or are
based on any income tax on or measured by the net income of CyNet in any
period on or before Closing.
c. Notice and Defense. IFC agrees to give prompt notice to CyNet of any
action or proceeding to which it believes it has a right to
indemnification hereunder. On receipt of the notice, CyNet shall have the
right to direct the defense of the matter, but IFC shall be entitled to
participate in the defense and, to the extent that IFC desires to jointly
direct the defense with CyNet with Counsel mutually satisfactory to CyNet
and IFC, at CyNet's expenses.
18. Indemnification by IFC/I-Media. IFC and I-Media (collectively referred to as
IFC) agree to indemnify CyNet, as follows:
a Indemnification for Breach. IFC covenants and agrees to indemnify,
defend and hold harmless CyNet, any of its officers, directors,
shareholders, employees, agents or affiliates, successors and assigns, at
all times from and after Closing, from and against any and all claims,
suits, losses, damages, judgements and liabilities (collectively referred
to as "Claims") to which CyNet may become subject, if such Claims arise
out of or are based upon any facts
or circumstances that could result in or give rise to a misrepresentation,
omission, breach of warranty, or breach of covenant by IFC to CyNet in
this Agreement. This right of indemnification is in addition to any other
right available to CyNet.
b. Indemnification for Income Tax. Without limiting the foregoing, IFC
shall indemnify, defend and hold harmless CyNet from and against any
Losses to which CyNet may become subject insofar as such Losses arise out
of or are based on any income tax on or measured by the net income of IFC
in any period on or before Closing.
c. Notice and Defense. CyNet agrees to give prompt notice to IFC of any
action or proceeding to which it believes it has a right to
indemnification hereunder. On receipt of the notice, IFC shall have the
right to direct the defense of the matter, but CyNet shall be entitled to
participate in the defense and, to the extent that CyNet desires to
jointly direct the defense with IFC with Counsel mutually satisfactory to
IFC and CyNet, at IFC's expense.
19. Survival. The representations, warranties and agreements made by the parties
in this Agreement and in any other document delivered in connection herewith
shall survive the Closing.
20. Unenforceable Provisions. In the event any one or more provisions contained
in this letter agreement shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this letter, this letter shall be
construed as if such invalid, illegal or unenforceable provisions had never been
contained herein.
21. Additional Condition to Closing: The obligations of IFC to consummate the
transactions contemplated by this agreement are subject to the following
condition:
All representations and warranties of CyNet contained in this agreement,
information and documentation delivered pursuant hereto, on or before the
closing or in connection with the transaction provided to IFC shall have
been true and correct in all respect on and as of Closing as if made on or
as of the Closing.
Please acknowledge your agreement with the contents of this letter by signing
and dating one counterpart of its in the space provided below, and returning
that counterpart to us for our records. Thank you for prompt attention to this
matter.
Very truly yours,
CYNET, INC.
By:________________________________
Xxx Xxxxx, CEO
___________________________________
Xxx Xxxxx, Individually
ACKNOWLEDGED AND AGREED TO THIS _________DAY OF JUNE __________, 1996.
INTERNATIONAL FAX CORPORATION
By: __________________________________________________________
Xxxx-Xxxxx Xxxxxxxx, on behalf of IFC and its Shareholders
Title: _______________________________________________________
______________________________________________________________
Xxxx-Xxxxx Xxxxxxxx, Individually
I-MEDIA, S.A.
______________________________________________________________
Xxxx-Xxxxx Xxxxxxxx, General Manager
