Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the "Agreement") is made as of
April 9, 1999 between World Callnet, Inc., a Delaware corporation (the
"Company"), and the parties listed on Exhibit A hereto, as it may be amended
from time to time, each of whom has executed this Agreement (each a "Purchaser"
and collectively the "Purchasers").
WHEREAS, the Company desires to sell to the Purchasers $500,000 of its
10% Unsecured Notes (the "Notes") and warrants (the "Warrants") to purchase up
to 1,000,000 shares of the Company's common stock, par value $.001 per share
(the "Common Stock"), and
WHEREAS, the Purchasers have agreed to purchase the Notes and the
Warrants.
NOW, THEREFORE, in consideration of the premises and the covenants
herein contained, the parties hereto agree as follows:
1. Authorization. The Company has authorized the issuance to the
Purchasers of the Notes under the terms and conditions set forth herein and
substantially in the manner set forth as Exhibit B hereto and the Warrants on
the terms and conditions set forth in Section 7 hereof.
2. Purchase and Sale of Notes. On the Closing Dates (as defined below),
the Company will sell to the Purchasers and, subject to the terms and conditions
herein set forth, such Purchasers will purchase from the Company, an aggregate
of $500,000 principal amount of the Notes and the Warrants for a purchase price
equal to 100% of the principal amount of the Notes purchased (the "Purchase
Price") on such Closing Date. The Company will make delivery of the Notes and
the Warrants by delivering to each such Purchaser a Note in the principal amount
being purchased by such Purchaser and a certificate representing the Warrants
being purchased by such Purchaser, against payment in each case of the Purchase
Price by valid check. Exhibit A shall be amended from time to time until Notes
evidencing the entire amount authorized by the Company have been sold.
3. Closing. The closings of the transactions contemplated hereby (each
a "Closing") shall take place on one or more dates (each a "Closing Date" and
collectively the "Closing Dates") at the offices of Eagle Equity, Inc., Two
Lincoln Centre, Suite 1280, 0000 XXX Xxxxxxx, XX 00, Xxxxxx, Xxxxx 00000 at such
dates and times as shall be determined by the Company and as reasonably
acceptable to Purchasers.
4. Representations and Warranties of the Company. The Company and its
existing subsidiaries, jointly and severally, hereby separately represents and
warrants to each Purchaser as follows:
4.1 Organization; Standing and Power. Each of the Company and
its existing subsidiaries (a) is a corporation duly organized, existing
and in good standing under the laws of its respective jurisdiction (b)
has all requisite corporate power and authority to own its properties
and to carry on its businesses as now conducted and as proposed
hereafter to be conducted, (c) is duly qualified to do business as a
foreign corporation in each and
every jurisdiction where such qualification is necessary except where
the failure to so qualify would not have a material adverse effect on
the financial condition, business, operations, assets or prospects of
the Company or any of such subsidiaries (a "Material Adverse Effect"),
and (d) has all requisite corporate power and authority to execute and
deliver, and perform all of their respective obligations under this
Agreement, the Notes, and the Warrants, (collectively and together with
the Registration Rights Agreement in the form annexed hereto as Exhibit
C, the "Transaction Documents").
4.2 Capitalization. The capitalization of the Company is set
forth in Schedule 4.2.
4.3 Authorization. The execution, delivery and performance by
the Company of its obligations under the Transaction Documents has been
duly authorized by all requisite corporate action and will not, either
prior to or as, a result of the consummation of the transactions
contemplated by this Agreement: (a) violate any law, any order of any
court or other agency of government, any provision of the Certificate
of Incorporation or Bylaws of the Company or any subsidiary, or any
contract, indenture, agreement or other instrument to which the Company
or any subsidiary is a party, or by which the Company or any such
subsidiary or any of their respective assets or properties are bound,
or (b) be in conflict with, result in a breach of, or constitute (after
the giving of notice of lapse of time or both) a default under, or
result in the creation or imposition of any lien of any nature
whatsoever upon any of the property or assets of any Company or any
such subsidiary pursuant to any such contract, indenture, agreement or
other instrument. Neither the Company nor any of its subsidiaries is
required to obtain any government approval, consent or authorization
from, or to file any declaration or statement with, any governmental,
instrumentality or agency in connection with or as a condition to the
execution, delivery or performance of any of the Transaction Documents
other than the filing of Form D and any applicable state securities law
filings.
4.4 Non-contravention. Neither the Company nor any of its
subsidiaries, to the Company's knowledge, is in violation or breach of
or in default with respect to, complying with any material provision of
any contract, agreement, instrument, lease, license, arrangement or
understanding to which the Company or such subsidiary is a party, and
each such contract, agreement, instrument, lease, license, arrangement
and understanding is in full force and effect and is the legal, valid
and binding obligation of the Company or such subsidiary enforceable as
to the Company or such subsidiary, as the case may be, in accordance
with its terms (subject to applicable bankruptcy, insolvency and other
laws affecting the enforceability of creditors' rights generally and to
general equitable principals). The Company and its subsidiaries enjoy
peaceful and undisturbed possession under all real property leases
under which they are operating,
4.5 Litigation. Except as set forth in Schedule 4.5, there is
no action, suit or proceeding at law or in equity or by or before any
governmental instrumentality or other agency now pending or, to the
knowledge of the Company, threatened in writing against
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the Company, any of its subsidiaries or any of their respective assets,
which, if adversely determined, would have a Material Adverse Effect.
4.6 Financial Statements.
(a) The financial statements of the Company set forth
in the Company's reports filed with the Securities and Exchange
Commission (the "Commission") (the "Financial Statements") have been
prepared in accordance with United States generally accepted accounting
principle ("GAAP") on a consistent basis for all periods and fairly
present in all material respects the consolidated financial condition
of the Company and its consolidated subsidiaries as at said dates, and
the results of operations for the periods stated. The books of account
and other financial records of the Company and each of its subsidiaries
have been maintained in accordance with GAAP, consistently applied.
(b) Neither the Company nor any Subsidiary has any
liabilities, obligations or commitments of any kind or nature
whatsoever, whether absolute, accrued, contingent or otherwise
(collectively "Liabilities and Contingencies") except: (i) Liabilities
and Contingencies disclosed in the Financial Statements or footnotes
thereto, (ii) Liabilities and Contingencies incurred in the ordinary
course of business and consistent with past practice since the date of
the most recent Financial Statements, or (iii) those Liabilities and
Contingencies which are not required to be disclosed under GAAP.
(c) Except as set forth in Schedule 4.5, since the
date of the most recent Financial Statements, there have been no
changes which would have a Material Adverse Effect.
4.7 Securities Law Exemption. Assuming the accuracy of each
Purchaser's representations and warranties set forth herein, the sale
of the Notes and Warrants pursuant to this Agreement has been made in
accordance with the provisions and requirements of Regulation D
("Regulation D") under the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable state law.
4.8 Use of Proceeds. The net proceeds from the sale of the
Notes shall be used for working capital and general corporate purposes
of the Company and its existing subsidiaries.
4.9 Solvency. Neither the Company nor any of its subsidiaries
is contemplating either the filing of a petition under any state or
federal bankruptcy or insolvency law, or the liquidation or sale of the
Company or any of its subsidiaries or any substantial portion of their
respective assets or property; and the Company has no knowledge of any
person contemplating the filing of any such petition against the
Company or any of its subsidiaries.
4.10 Tax Returns. Except as otherwise set forth in footnotes
to the consolidated balance sheet of the Company, which the Company
shall furnish to the Purchasers at their
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request, and except for any returns currently on extension pursuant to
properly and timely filed extensions, the Company and its subsidiaries
have each filed all federal, state and local tax returns required to be
filed by any of them and have paid or made adequate provision (as
reflected in the Financial Statements) for the payment of all federal,
state and local taxes, charges and assessments as set forth on such
returns.
4.11 ERISA. Neither the Company nor any of its subsidiaries
maintains or has any obligation to make any contributions to any
pension, profit sharing or other similar plan providing for deferred
compensation to any employee.
4.12 Compliance with Laws. The Company and its subsidiaries
are in compliance in all material respects with all occupational
safety, health, wage and hour, employment discrimination,
environmental, flammability, labeling, usury and other applicable laws
which are material to their respective businesses, and the Company is
not aware of any state of facts, events, conditions or occurrences
which may now or hereafter constitute or result in a violation of any
of such applicable laws, or which may give rise to the assertion of any
such violation, the effect of which could have a Material Adverse
Effect.
4.13 Licenses and Permits. The Company and its subsidiaries
have all federal, state and local licenses and permits required to be
maintained in connection with and material to their respective
operations, and all such licenses and permits are valid and in full
force and effect.
4.14 Environmental Laws. To the best of the Company's
knowledge, the land and improvements owned or leased by the Company or
any of its subsidiaries for use in their respective business operations
are free of dangerous levels of contaminates, oils, asbestos, radon,
PCB's, hazardous substances or waste as defined by federal, state or
local environmental laws, regulations or administrative orders or other
materials, the removal of which is required or the maintenance of which
is prohibited, regulated or penalized by any federal, state or local
governmental authority.
5. Representations and Warranties of the Purchasers. Each Purchaser,
for himself and not for any other Purchaser, hereby represents and warrants to
the Company with respect to this Agreement and to the issuance of the Notes and
Warrants as follows:
5.1 Authorization of Agreement. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
action on the part of such person, does not violate any laws or
regulations applicable to such person and is the valid binding and
enforceable obligation of such person in accordance with its terms.
5.2 Experience; Accredited Investor. The Purchaser is
experienced in evaluating and investing in the type of companies such
as the Company, The Purchaser is an "accredited investor" as that term
is defined in Rule 501(a) of the Securities Act, and the rules
promulgated thereunder.
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5.3 Investment. The Purchaser is acquiring the Notes, the
Warrants and the shares of Common Stock issuable upon exercise of the
Warrants for investment for such Purchaser's own account and not with
the view to, or for resale in connection with, any distribution
thereof. The Purchaser understands that none of the Notes, Warrants and
shares of Common Stock issuable upon exercise of the Warrants have been
registered under the Securities Act by reason of a specific exemption
from the registration provisions of the Securities Act which depends
upon, among other things, the bona ride nature of the investment intent
as expressed herein.
5.4 Nature of Securities. The Purchaser understands that the
Notes are unsecured, unguaranteed obligations of Company.
5.5 Access to Data. The Purchaser has had an opportunity to
discuss the Company's business, management and financial affairs,
including the business, management and financial affairs, of its
subsidiaries, with the Company's management and the opportunity to
review the Company's facilities. The Purchaser understands that such
discussions, as well as any written information issued or provided by
the Company, were intended to describe the aspects of the Company's
business and prospects which the Company believes to be material but
were not necessarily a thorough or exhaustive description thereof. The
Purchaser has received from the Company all materials and information
it deems necessary for it to make its investment decision with respect
to the securities offered hereby.
6. Legends. The Company will cause each Note to be endorsed with the
following legends:
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), SHALL HAVE BECOME EFFECTIVE WITH
RESPECT THERETO OR (ii) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION
UNDER THE ACT IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER
NOR IS IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS
LEGEND SHALL BE ENDORSED UPON ANY NOTE ISSUED IN EXCHANGE FOR THIS
NOTE.
7. Warrants.
7.1 Terms of Warrants.
(a) The Warrants shall have the following terms:
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(i) for each $ 100,000 principal amount of
Notes purchased, the Company shall issue a Warrant to
purchase 200,000 shares of Common Stock. (In the
event Purchaser purchases a Note having a principal
amount less than $100,000 or a Note the principal
amount of which is not a whole multiple of $100,000,
the number of shares of Common Stock issuable upon
exercise of a Warrant shall be adjusted pro rata);
and
(ii) The Warrants issued to a Purchaser (or
affiliated parties) with respect to the first 350,000
shares of Common Stock underlying the Warrants shall
have an exercise price of $4.00 per share of Common
Stock and shall have the other terms as set forth in
a warrant agreement, the form of which is annexed
hereto as Exhibit C.
(iii) The Warrants issued to a Purchaser (or
affiliated parties) with respect to the remaining
150,000 share of Common Stock underlying the Warrants
shall have an exercise price of $10.00 per share of
Common Stock and have the other terms as set forth in
a warrant agreement, the form of which is annexed
hereto as Exhibit D.
(b) The Warrant Agreements shall be issued to the
Purchasers at the Closing.
7.2 Registration Under the Securities Act. The Company and the
Purchasers shall enter into a Registration Rights Agreement with
respect to the shares of Common Stock issuable upon exercise of the
Warrants substantially in the form annexed hereto as Exhibit E.
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8. Covenants.
8.1 Affirmative Covenants of the Company. The Company and its
subsidiaries hereby jointly and severally covenant and agree that, from
the date hereof and until the Notes have been paid in full, they shall:
(a) Corporate and Insurance. Do or cause to be done
all things necessary to at all times (a) other than mergers
solely among the Company and any of its subsidiaries,
preserve, renew and keep in full force and effect their
corporate existence, rights, licenses, permits and franchises,
(b) comply with this Agreement, (c) maintain and preserve all
of their material property used or useful in the conduct of
their respective businesses, (d) keep, under the coverage of
an "umbrella policy or other, form of coverage, its insurable
properties adequately insured at all times, by financially
sound and reputable insurers, to such extent and against such
risks, including fire and other risks and casualty insured
against by extended coverage, and maintain, as part of such
coverage, liability and such other insurance, as is
customarily maintained by companies engaged in similar
businesses (including, without limitation, products liability
insurance), and (e) comply with
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all applicable laws material to their respective businesses,
whether now in effect or hereafter enacted, promulgated or
issued.
(b) Payment of Taxes. File, pay and discharge, or
cause to be paid and discharged, all taxes, Assessments and
governmental charges or levies imposed upon them or upon their
income and profits or upon any of their property (real,
personal or mixed) or upon any part thereof, before the same
shall become in default, as well as all lawful claims for
labor, materials, supplies and otherwise, which, if unpaid
when due, might become a lien or charge upon such property or
any part thereof; provide , however, that they shall not be
required to pay and discharge or cause to be paid and
discharged any such tax, assessment, charge, levy or claim
(other than taxes and/or assessments relating to real property
or the use thereof) so long as, (a) the validity thereof shall
be contested in good faith by appropriate proceedings and they
shall have set aside on their books adequate reserves with
respect to any such tax, assessment, charge, levy or claim so
contested, and (b) payment with respect to any such tax,
assessment, charge, levy or claim shall be made before any of
their property shall be seized or sold in satisfaction
thereof.
(c) Notice of Proceedings. Give prompt written notice
to the Purchasers of any proceeding instituted against any of
them in any federal or state court or before any commission or
other regulatory body, whether federal, state or local, which,
if adversely determined, could have a material adverse effect
upon their business, operations, properties, assets or
condition, financial or otherwise when taken as a whole.
(d) Periodic Reports. Furnish to the Purchasers:
(i) Within ninety (90) calendar days after
the end of each fiscal year, consolidated balance
sheets, statements of income, statements of
stockholders" equity, and statements of cash flows,
together with footnotes and supporting schedules
thereto, all reported on without qualification as to
scope of audit by independent certified public
accountants of their choosing, showing their
financial condition at the close of such fiscal year
and the results of operations during such fiscal
year;
(ii) Within ninety (90) calendar days after
the end of each fiscal quarter, unaudited
consolidated balance sheets and statements of income
certified by the Company's Chairman, President or
Chief Financial Officer, such balance sheets to be as
of the close of such fiscal quarter and such
statements of income to be for the period from the
beginning of the then-current fiscal year to the end
of such fiscal quarter, together with comparative
statements of income for the corresponding fiscal
period in the immediately preceding fiscal year, in
each case subject to normal audit and year-end
adjustments;
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(iii) Concurrently with the delivery of each
of the financial statements required above, a
certificate (the "Compliance Certificate"), signed by
the Company's Chairman or President or Chief
Financial Officer, certifying that he has examined
the provisions of this Agreement and that no Event of
Default (as defined below) has occurred and/or is
continuing;
(iv) Promptly, from time to time, provide
such other information regarding their operations,
assets, business, affairs and financial condition, as
those Purchasers holding notes which, in the
aggregate, represent more than 50% of the then
outstanding principal amount of all of the Notes
issued pursuant to this Agreement (the "Requisite
Majority") shall reasonably request.
(e) Books and Records; Inspection. Maintain books and
records respecting all of their business operations, and
permit agents or representatives of the Purchasers to inspect,
at any time during normal business hours, Upon reasonable
notice, and without undue material disruption of their
business operations, all of such books and records.
(f) Notice of Default or Material Adverse Change.
Promptly advise the Purchasers of: (a) any Material Adverse
Effect; and (b) of the existence or occurrence of any Event of
Default:
(g) Accounting. Maintain a standard system of
accounting in order to permit the preparation of consolidated
financial statements in accordance with GAAP.
(h) Environmental Response. In the event of any
discharge, spill, injunction, escape, emission, disposal, leak
or other release of hazardous substances on any real property
owned or leased by the Company or any of its subsidiaries,
which is not authorized by a permit or other approval issued
by the appropriate governmental agencies, and which requires
notification to or the filing of any report with any Federal
or sate governmental agency, the Company shall promptly: (i)
notify the Purchasers; and (ii) comply with the notice
requirements of the Environmental Protection Agency and
applicable state agencies, and take all steps necessary to
promptly clean up such discharge, spill, injection, escape,
emission, disposal, leak or other release in accordance with
all applicable environmental laws and the Federal National
Contingency Plan, and, if required, receive a certification
from all applicable state agencies or the Environmental
Protection Agency, that such real property has been cleaned up
to the satisfaction of such agency(ies).
(i) Consultation. The Company will consult with
Purchasers prior to execution of any agreements with
investment bankers, brokers, intermediaries or finders with
respect to the raising of additional capital and agrees to use
reasonable
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efforts to enter into such agreements only on terms that are
reasonable and in the best interests of the Company.
8.2 Negative Covenants of the Company. The Company and each of
its subsidiaries jointly and severally covenant and agree that, until
the Notes have been paid in full, unless the Requisite Majority shall
otherwise consent in writing, neither the Company nor such subsidiary
shall, directly or indirectly:
(a) Change of Business. Directly or indirectly: (a)
engage in a business materially, different from the general
nature of the business operations as now being conducted or as
same may hereafter be reasonably expanded from time to time in
like areas of business, or (b) wind up its business operations
or cease substantially all of its normal business operations
for a period in excess of thirty (30) consecutive days.
(b) Dividends. Declare and/or pay any dividends on
the outstanding shares of the capital stock of the Company
(other than dividends payable solely in shares of stock of the
Company).
9. Defaults & Remedies.
9.1 Events of Default. Each of the following events is herein
referred to as an Event of Default:
(a) if any representation or warranty made herein, or
in the Transaction Documents, or in any report, certificate,
financial statement or other instrument furnished in
connection with this Agreement, shall be false, inaccurate or
misleading in any material respect when made or when deemed
made hereunder;
(b) any default in the payment of any principal or
interest under any of the Notes when the same shall be due and
payable, whether at the due date thereof or by acceleration or
otherwise;
(c) any default in the payment of any principal or
interest under any material indebtedness of the Company when
the same shall be due and payable, whether at the due date
thereof or by acceleration or otherwise;
(d) any material default in the due observance or
performance of any other covenant, condition or agreement to
be observed or performed under Section 8 hereof, the
Registration Rights Agreement or otherwise pursuant to the
terms hereof, and the continuance of such default unremedied
for a period of twenty (20) days after written notice thereof
to the Company setting forth in reasonable detail the
circumstances of such Event of Default;
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(e) if the Company or any of its subsidiaries shall:
(i) apply for or consent to the appointment of a receiver,
trustee, custodian or liquidator of it or any of its
properties, (i) admit in writing its inability to pay its
debts as they mature, (iii) make a general assignment for the
benefit of creditors, (iv) be adjudicated a bankrupt or
insolvent or be the subject of an order for relief under Title
11 of the United States Code, or (v) file a voluntary petition
in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors or to take
advantage or any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation, law or
statute, or an answer admitting the material allegations of a
petition filed against him or it in any proceeding under any
such law, or (vi) take or permit to be taken any action in
furtherance of or for the purpose of effecting any of the
foregoing;
(f) if any order, judgment or decree shall be
entered, without the application, approval or consent of the
Company or any of its subsidiaries, by any court of competent
jurisdiction, approving a petition seeking reorganization of
the Company or any of its subsidiaries, or appointing a
receiver, trustee, custodian or liquidator of any of the
Company or any of its subsidiaries, or of all or any
substantial part of their respective assets, and such order,
judgment or decree shall continue unstayed and in effect for
any period of sixty (60) days; or
(g) if final judgment(s) for the payment of money in
excess of $50,000 individually or $100,000 in the aggregate
shall be rendered against the Company or any of its
subsidiaries, and the same shall remain undischarged or
unbonded for a period of thirty (30) consecutive days, during
which execution shall not be effectively stayed.
9.2 Remedies. Upon the occurrence of any Event of Default, and
at all times thereafter during the continuance thereof: (i) the Notes
shall, at the option of the Requisite Majority (except in the case of
Sections 9.1(d) and (e) hereof, the occurrence of which shall
automatically effect acceleration, regardless of any action or
forbearance in respect of any prior or ongoing Event of Default which
may be inconsistent with such automatic acceleration), become
immediately due and payable, as to principal, interest and premium (if
any), without presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived, anything contained herein or in
the Notes to the contrary notwithstanding, (ii) all outstanding
obligations under the Notes, and all other outstanding obligations on
which the applicable interest rate is determined by reference to the
interest rate under any of the Notes, shall bear interest at the
default rate of interest provided in the Notes, (iii) the Purchasers
may file suit against the Company on the Notes and/or seek specific
performance or injunctive relief thereunder (whether or not a remedy
exists at law or is adequate), and (iv) the Purchasers shall have the
right in accordance with this Agreement and the Notes to exercise any
and all remedies as the Requisite Majority may determine in their
discretion.
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10. Conditions Precedent to the Obligations of the Company. The
obligations of the Company pursuant to this Agreement are subject to the
satisfaction at the Closing of each of the following conditions; provided,
however, that the Company may, in its sole discretion, waive any of such
conditions and proceed with the transactions contemplated hereby.
10.1 Accuracy of Representations and Warranties. The
representations and warranties of the Purchasers contained in the
Transaction Documents shall be true and correct in all material
respects on and as of the Closing Date, as if made on and as of the
Closing Date.
10.2 Performance of Agreements. Each Purchaser shall have duty
executed and delivered to the Company the Transaction Documents which
they are required to sign and shall, have performed and complied in all
material respects with all covenants, obligations and agreements to be
performed or complied with by any of them on or before the Closing Date
pursuant to the Transaction Documents.
11. Conditions Precedent to the Obligations of the Purchasers. The
obligations of the Purchasers under this Agreement are subject to the
satisfaction at the Closing of each of the following conditions; provided,
however, that the Purchasers may, in their sole discretion, waive any of such
conditions and proceed with the transactions contemplated hereby.
11.1 Accuracy of Representations and Warranties. The
representations and warranties of the Company contained in the
Transaction Documents shall be true and correct in all material
respects on and as of the Closing Date, as if made on and as of the
Closing Date.
11.2 Performance of Agreements. The Company shall have duly
executed and delivered the Transaction Documents and shall have
performed and complied in all material respects with all covenants,
obligations and agreements to be performed or complied with by it on or
before the Closing Date pursuant to the Transaction Documents.
11.3 Litigation, etc. No claim, action, suit, proceeding,
arbitration or hearing or notice of hearing shall be pending (and no
action or investigation by any governmental authority shall be
threatened) which seeks to enjoin or prevent the consummation of the
transactions contemplated by this Agreement.
11.4 Officers, Certificate. The Purchasers shall have received
a certificate of the chief executive officer of the Company, dated the
Closing Date, certifying as to the fulfillment of the conditions set
forth in Sections 11.1, 11.2 and 11.3.
11.5 Good Standing Certificate. The Purchasers shall have
received a "good standing" certificate with respect to the Company from
the Secretary of State of its state of incorporation stating that the
Company is duly incorporated and in good standing in its state of
incorporation.
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11.6 Callnet Plan. The Purchasers shall receive by April 26,
1999 documentation relating to the establishment of the Callnet Plc
stock option plan (referenced in Schedule 4.2 hereof), as of February
3, 1999.
12. Indemnification.
12.1 Indemnification by the Company. The Company hereby
covenants and agrees with the Purchasers that it shall reimburse and
indemnify the Purchasers and their respective officers, directors,
employees, agents, successors and assigns (individually an "Indemnified
Party") and hold each of them harmless from, against and in respect of,
any claims, costs, losses, damages, liabilities, fines, penalties,
damages and expenses (including interest which may be imposed in
connection therewith and court costs and reasonable fees and
disbursements of counsel) incurred by any such Indemnified Party due
to, arising out of, or in connection with, a breach of any of the
representations, warranties, covenants or agreements made by the
Company in the Transaction Documents (a "Claim").
12.2 Indemnification by the Purchasers. Each Purchaser hereby
covenants and agrees with the Company that it shall reimburse and
indemnify the Company and its officers, directors, employees, agents,
successors and assigns (also individually an "Indemnified Party") and
hold each of them harmless from, against and in respect of, any and all
costs, losses, damages, liabilities, fines, penalties, damages and
expenses (including interest which may be imposed in connection
therewith and court costs and reasonable fees and disbursements of
counsel) incurred by any such Indemnified Party due to, arising out of,
or in connection with, a breach of any of the representations,
warranties, covenants or agreements made by such Purchaser in the
Transaction Documents (also a "Claim"); provided however, the
obligation of a Purchaser under this Section 12.2 shall not exceed the
principal amount of the Notes held by such Purchaser,
12.3 Right to Defend. If the facts giving rise to any such
indemnification shall involve any actual Claim or demand by any third
party against an Indemnified Party, the indemnifying party shall be
entitled to notice of, and entitled to defend or prosecute, such Claim
at its expense and through counsel of its own choosing if it advises
the Indemnified Party in writing of its intention to do so within
thirty (30) days after notice of such Claim has been given to the
indemnifying party (without prejudice to the right of any Indemnified
Party to participate at its expense through counsel of its own
choosing). Such Indemnified Party shall cooperate in the defense and/or
settlement of such Claim, but shall be entitled to be reimbursed for
costs and expenses incurred by it in connection therewith. No
settlement of any Claim may be made without the consent of the
indemnifying party, which consent may not be unreasonably withheld;:
provided, however, that if such indemnifying party has been offered the
opportunity to defend such Claim and has elected not to do so then
settlement may be made without the consent of the indemnifying Party.
12
13. General Provisions.
13.1 Survival Of Representations, Warranties, Covenants, and
Agreements. The representations, warranties, covenants and agreements
contained in this Agreement shall survive the execution of this
Agreement.
13.2 Notices. All notices, requests, demands and other
communications which are required to be or may be given under this
Agreement to any party to any of the other parties shall be in writing
and shall be deemed to have been duly given when (a) delivered in
person, the day following dispatch by an overnight courier service
(such as Federal Express or UPS, etc.) or (c) five (5) days after
dispatch by certified or registered first class mad, postage prepaid,
return receipt requested, to the party to whom the same is so given or
made:
If to the Company addressed to: World Callnet, Inc.
Brecon House
Meridian Gate
000 Xxxxx Xxxx
Xxxxxx
X000XX
with a copy to: Jenkens & Xxxxxxxxx, P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
If to a Purchaser: at the address of such Purchaser as
set forth on Exhibit A.
13.4 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
13.5 Headings. All headings are inserted for convenience of
reference only and shall not affect the meaning or interpretation of
any such provisions or of this Agreement, taken as an entirety.
13.6 Severability. If and to the extent that any court of
competent jurisdiction holds any provision (or any part thereof) of
this Agreement to be invalid or unenforceable, such holding shall in no
way affect the validity of the remainder of this Agreement.
13.7 Waivers and Amendments. With the written consent of the
Requisite Majority, 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 same consent the Company
may enter into a supplementary agreement for the purpose of
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adding any provisions to this Agreement or to any supplemental
agreement modifying in any manner the rights and obligations of the
Purchasers and of the Company; provided, however, that no such waiver
or supplemental agreement shall reduce the percentage of the Requisite
Majority without the written consent of Purchasers then holding at
least 80% of the aggregate principal amount of the, Notes (the "80%
Majority). Notwithstanding anything to the contrary above, the payment
of interest, time of payment of interest, the interest rate payable,
payment of principal and time of payment of principal on the Notes may
not be changed without the written consent of the 80% Majority, and
this provision may not be waived or amended without the written consent
of the 80% Majority. Written notice of any such waiver, consent or
agreement of amendment. modification or supplement shall be given by
the Company to the Purchasers who have not previously consented thereto
in writing,
13.8 Changes, Waivers, Etc. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated
orally, but rather may only be changed 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 13.7
hereof.
13.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
13.10 Binding Effects. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors, legal representatives and assigns.
14
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
WORLD CALLNET, INC.
By:
-------------------------------
Xxxx Xxxxxxx-Xxxxxxx, President
PURCHASER:
For Purchasers who are not a corporation,
partnership, LLC, LP or trust
-------------------------------------
Print Exact Name of Purchaser
(If a joint purchaser, print both names)
-------------------------------------
Signature
For Purchasers who are a corporation,
partnership, LLC, LP or trust
-------------------------------------
Legal Name of Purchaser
By:
--------------------------------
Name:
Title:
15
Exhibit A
Name Principal Amount of Note
Eagle Equity I, L.P. $250,000
c/o Eagle Equity, Inc.
Two Lincoln Center, Suite 1280
0000 XXX Xxxxxxx, X.X. 00
Xxxxxx, Xxxxx
Attn: Xxxxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxx $250,000
0000 Xxxx Xxxxxx
00xx Xxxxx
Xxxxxx, Xxxxx 00000
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