CONTRIBUTION AGREEMENT
THIS AGREEMENT (this "Agreement") is made as of this 6th day of October,
1997 by and between FIDELITY HOLDINGS, INC., a Nevada Corporation (the
"Company"), XXXXX XXXXX, an individual ("Xxxxx"), and Xxxxx Xxxxxxx, an
individual ("Xxxxxxx").
Recitals
WHEREAS, in connection with that certain Agreement dated March 25, 1996
(the "Master Agent Agreement") by and between Computer Business Sciences, Inc.
("CBS"), Nissko Telecom, Ltd. (the "Agent"), Xxxxxxx Xxxxxxxxx ("Nissanian"),
Xxxxx Xxxxx ("Koren"), and Chamual Livian ("Livian" and together with Nissanian
and Koren, the "Nissko Principals") under which the Agent has agreed to purchase
certain machines.
WHEREAS, under the terms of the Master Agent Agreement, CBS has agreed
that in the event that the Nissko Principals do not realize certain revenues
from the operations of the machines purchased from CBS that CBS will pay the
shortfall (the "Payment Obligations").
WHEREAS, to secure the Payment Obligations, Xxxxx and Xxxxxxx have each
pledged 500,000 shares of the common stock of the Company (the "Pledged Shares")
to the Nissko Principals.
WHEREAS, in the event that CBS does meet its Payment Obligations and the
Nissko Principals foreclose on the Pledged Shares, the Nissko Principals will be
required to transfer to Xxxxx and Xxxxxxx in equal shares the remaining 55% of
the Agent's issued and outstanding stock (the "Agent's Shares").
WHEREAS, Xxxxx and Xxxxxxx agree that upon receipt of the Agent's Shares,
Xxxxx and Xxxxxxx will contribute the Agent's Shares to the Company in exchange
for reimbursement by the Company to Xxxxx and Xxxxxxx of the value of the
Pledged Shares foreclosed upon by the Nissko Principals.
Terms of Agreement
In consideration of their mutual covenants and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Contribution of Agent's Shares to the Company. The parties agree that,
in the event that the Nissko Principals foreclose upon the Pledged Shares, Xxxxx
and Xxxxxxx will contribute the Agent's Shares received from the Nissko
Principals to the Company in exchange for reimbursement by the Company of the
Fair Market Value (as defined below) of the Pledged Shares.
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2. Fair Market Value. The parties agree that the "Fair Market Value" of
the Pledged Shares of the Company will be equal to (i) the closing price of the
Company's common stock as reported by the NASDAQ National Market or SmallCap
Market, or other exchange upon which the Company's shares are listed, for the
trading day immediately preceding the date of the foreclosure on the Pledged
Shares or (ii) the mean between the closing bid and asked prices per share of
the Company's common stock over the 20 consecutive days prior to the date of the
foreclosure on the Pledged Shares.
3. Entire Agreement. This Agreement contains the entire agreement among
the parties with respect to the subject matter of this Agreement, and supersedes
all prior agreements, written or oral, with respect thereto.
4. Waivers and Amendments. This Agreement may be amended, superseded or
canceled, and the terms hereof may be waived, only by a written instrument
signed by both parties or, in the case of a waiver, by the party waiving
compliance.
5. 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 such State.
6. Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
FIDELITY HOLDINGS, INC.
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
President
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
