EX-10.27
Amended and Restated
STOCK PURCHASE AGREEMENT
among
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.,
CONVERGENT TECHNOLOGIES, LTD.
AND
THE STOCKHOLDERS LISTED ON SCHEDULE 1 ATTACHED HERETO
-----------------------
December 16, 2004
Amended and Restated
On January 11, 2005
STOCK PURCHASE AGREEMENT
THIS AGREEMENT dated as of December 16, 2004, is among Fusion
Telecommunications International, Inc., a Delaware corporation ("Buyer"),
Convergent Technologies, Ltd., a company organized under the laws of the country
of Jamaica (the "Company"), and the undersigned Xxxxxxx Xxxxxx ("Xxxxxx"),
individually, and Patrick Dallas ("Dallas"), individually, both as listed on
Schedule 1 hereto (collectively, the "Stockholders" and each a "Stockholder").
WITNESSETH
WHEREAS each of the Stockholders owns the number of the issued and
outstanding shares (collectively, the "Shares") of the common stock, no par
value per share (the "Common Stock"), of the Company set forth opposite such
Stockholder's name on Schedule 1 attached hereto, which Shares in the aggregate
represent all of the authorized, issued and outstanding shares of the capital
stock of the Company;
WHEREAS Buyer desires to acquire all of the Shares from Dallas, and
Dallas desires to sell all of his Shares to Buyer, upon the terms and subject to
the conditions hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and of the
covenants set forth below, the parties hereby agree as follows:
SECTION
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PURCHASE AND SALE OF THE SHARES
1.1 Purchase and Sale. Upon the terms and subject to the conditions
of this Agreement, at the Closing (as defined below), Dallas agrees to sell to
Buyer, and Buyer agrees to purchase from Dallas, the number of Shares owned by
Dallas, as set forth opposite his name on Schedule 1 hereto (255,000 Shares).
The aggregate purchase price for the Shares (the "Purchase Price") shall be One
Hundred Fifty Thousand Dollars (US $150,000.00) and is payable as set forth in
Section 1.
1.2 Closing. The closing (the "Closing") of the purchase and sale of
the Shares hereunder shall take place at the Buyer's office located at 000
Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000, at 2:00 p.m. (EST) on
January 11, 2005, or at such other time or place as Buyer and the Stockholders
agree (the "Closing Date").
(a) Upon execution of this Agreement, Buyer shall deliver to
Dallas the sum of Seventy Five Thousand Dollars (US $75,000.00) in cash, by
cashier's or certified check, or by wire transfer of immediately available funds
to an account designated by Dallas as an advance towards the Purchase Price.
Should this Agreement fail to close for any reason, Dallas shall promptly return
the advance to Buyer.
(b) At the Closing, Buyer shall deliver to Dallas the sum of
Seventy Five Thousand Dollars (US $75,000.00) in cash, by cashier's or certified
check, or by wire transfer of immediately available funds to an account
designated by Dallas.
(c) At the Closing, Dallas shall deliver to Buyer the
certificate or certificates for the Shares owned by such Stockholder, duly
endorsed or accompanied by stock powers duly endorsed in blank, satisfactory to
the Buyer in all respects.
(d) At the Closing, there shall be delivered to the respective
parties the certificates and instruments provided to be delivered at the closing
under Sections 6 and 7 hereof.
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(e) Prior to Closing, the Company shall only make such
payments as required to pay its employees and interconnect charges, unless the
Buyer provides prior written approval otherwise.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS WITH RESPECT TO THE COMPANY
Each of the Stockholders, jointly and severally, represents and warrants to
Buyer as of the date hereof and on and as of the Closing Date as follows:
2.1 Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
country of Jamaica and has all requisite corporate power and lawful authority to
own, lease and operate its assets, properties and business and to conduct its
business as and in the places where such properties are now owned, leased or
operated or such business is now conducted or proposed to be conducted.
2.2 Capitalization; Voting Rights. The authorized capital of the
Company consists of 500,000 shares of Common Stock, of which 500,000 shares have
been validly subscribed and issued, are outstanding as fully paid and
non-assessable shares as of the date hereof, and represent all of the issued and
outstanding shares of capital stock of the Company, as set forth on Schedule 1.
There is no: (i) outstanding security of the Company convertible into or
exchangeable for any share or shares of the capital of the Company; (ii)
outstanding subscription, option, warrant, call, commitment, agreement or
understanding (oral or written) obligating the Company to issue any share or
shares of its capital stock or any security or securities of any class or kind
which in any way relate to the authorized or issued capital stock of the Company
or any interest therein; (iii) agreement or understanding (oral or written)
(other than this Agreement) which grants to any Person (as hereinafter defined)
the right to purchase or otherwise acquire any share or shares of the issued and
outstanding shares of the capital stock of the Company or any interest therein,
including without limitation any preemptive right, right of first refusal or
co-sale right; (iv) voting trust or voting agreement or pooling agreement or
proxy (oral or written) with respect to any issued and outstanding shares of the
capital stock of the Company; or (v) obligation of the Company (oral or written)
to purchase, redeem, or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or distribution with respect thereto.
2.3 Consents. Other than the Minister or Telecommunications or the
Registrar of Companies, no consent, approval, waiver or other action by any
individual, corporation, company, partnership, association, trust or other
entity or organization, including any government or political subdivision or
agency or instrumentality thereof (each, a "Person"), under any contract,
agreement, understanding, indenture, lease, instrument or other document (oral
or written) to which the Company is a party or by which it or any of the assets
of the Company is bound, is required or necessary for (i) the execution,
delivery and performance of this Agreement or any Related Agreement by the
Stockholders or the Company or the consummation of the transactions contemplated
hereby or thereby or (ii) the continuation after the consummation of the
transactions contemplated hereby or thereby of any contract, agreement,
indenture, lease, instrument or other document to which the Company is a party
or by which it or its assets are bound.
2.4 Authorization; No Breach. The execution and delivery by the
Company of this Agreement and all the agreements contemplated herein (the
"Related Agreements"), and the consummation by the Company of all transactions
contemplated hereunder and thereunder by the Company, have been duly authorized
by all requisite corporate action. This Agreement and the Related Agreements
have been duly executed by the Company and each of the Stockholders (where
applicable) and each other party thereto. This Agreement and the Related
Agreements and all other agreements and obligations entered into and undertaken
in connection with the transactions contemplated hereby or
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thereby to which the Company or any of the Stockholders is a party constitute
the valid and legally binding obligations of the Company and each of the
Stockholders, enforceable against each of them in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights; and (ii) general principles of equity that
restrict the availability of equitable remedies. The execution, delivery and
performance of this Agreement and the Related Agreements and the consummation of
the transactions contemplated hereby and thereby will not: (i) violate,
contravene or breach any provision of the Articles of Incorporation or By-laws
of the Company; (ii) violate, conflict with, contravene, or result in the breach
of any of the terms or conditions of, result in modification of the effect of,
or otherwise give any other contracting party the right to terminate, accelerate
or cancel any right or obligation of the Company or constitute (or with notice
or lapse of time or both constitute) a default under, any instrument, contract
or other agreement to which the Company is a party or by which it or its assets
or properties may be bound or subject; (iii) violate, contravene or breach any
constitution, treaty, law, statute, code, ordinance, decree, rule, regulation,
or municipal by-law, whether domestic, foreign or international, any judgment,
order, writ, injunction, decision, ruling, decree or award of any governmental
authority or body, or any provision of any of the foregoing applicable to or
binding upon, the Company or its properties, assets or business (each, a "Law,"
and collectively, "Laws"); (iv) violate any license, permit, franchise, or order
or other approval of any federal, provincial, state, local or foreign
governmental or regulatory body (each, a "Permit", and collectively, "Permits");
or (v) result in the creation of any mortgage, pledge, charge, security
interest, lien or other encumbrance (each, a "Lien") on the Shares or on any of
the assets or properties of the Company.
2.5 Subsidiaries and Other Affiliates. The Company has no
subsidiaries. The Company does not directly or indirectly own or have any
investment in any shares of the capital stock of, or any other proprietary
interest in (including without limitation, any partnership or joint venture
interest), any other Person. For this purpose, "joint venture" means any entity
or contractual relationship (written or oral) pursuant to which the Company
shares with any Person the profits and/or losses of any undertaking or pursuant
to which the Company may be liable for the acts or undertakings of any Person.
2.6 Corporate Records. The Company has previously delivered to Buyer
true and complete copies of its Articles of Incorporation, as amended, and
By-laws as currently in effect. The minute books of the Company, which have been
furnished to Buyer, are complete and accurate, and contain copies of all by-laws
and resolutions passed by the shareholders and directors of the Company since
the date of its incorporation, all of which by-laws and resolutions have been
duly passed. The share certificate books, register of shareholders, register of
transfers and register of directors of the Company are complete and accurate.
The financial books and records of the Company have been maintained in
accordance with sound business practices and fairly, accurately and completely
present and disclose the financial position of the Company, and (ii) all
transactions of the Company.
2.7 Financial Statements. The Company has delivered to Buyer dated
November 15, 2004 of the unaudited financial statements of the Company for the
fiscal year ended October 31, 2004 (the "Unaudited Financial Statements"), the
unaudited balance sheet (the "Current Balance Sheet") of the Company as of
November 15, 2004 (the "Current Balance Sheet Date") and the unaudited interim
financial statements of the Company for the one-month period ended October 31,
2004(the "Interim Financial Statements" and, collectively with the Unudited
Financial Statements and the Current Balance Sheet, the "Financial Statements").
The Interim Financial Statements together with the notes thereto have been
prepared on a cash basis in accordance with past practices, and the Unaudited
Financial Statements together with the notes thereto have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout such period. Such Financial Statements are true, correct and
complete, and present fairly and accurately the financial condition and position
of the Company as of the dates indicated.
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2.8 Absence of Undisclosed Liabilities. The Company has no
liabilities of any nature, whether direct, indirect, accrued, absolute,
contingent or otherwise(including, without limitation, liabilities as guarantor
or otherwise with respect to obligations of others or liabilities for Taxes due
or then accrued or to become due), that were not fully and adequately reflected
or reserved against on the Financial Statements of the Company. There is no
existing condition, situation or set of circumstances (excluding possible
changes in the Tax laws of any jurisdiction) that could reasonably be expected
to result in any such liability, other than liabilities (i) fully and adequately
reflected or reserved against on the Financial Statements or (ii) incurred since
the Current Balance Sheet Date in the ordinary course of business consistent
with past practice, which in the aggregate are not material to the Company. For
purposes of this Section 2.8, "material" shall mean any amount in excess of
$5,000.
2.9 No Material Adverse Change. To the best knowledge of the
Company, since the Current Balance Sheet Date (November 15, 2004), there have
been no changes in the assets,properties, business, operations, prospects or
condition (financial or otherwise) of the Company that, individually or in the
aggregate, materially and adversely affect the Company, nor does any Stockholder
or executive of the Company know of any such change that is reasonably likely to
occur, nor has there been any damage, destruction or loss materially and
adversely affecting the assets, properties, business, operations, prospects or
condition (financial or otherwise) of the Company, whether or not covered by
insurance. Without limiting the generality of the foregoing since the Current
Balance Sheet Date, the Company has not:
(i) incurred any indebtedness for borrowed money,
assumed or guaranteed or otherwise become responsible for the obligations of any
Person, or otherwise made or assumed any commitment, obligation or liability
outside the ordinary course of business;
(ii) declared or paid any dividend or declared or made
any other distribution of any kind to its shareholders, or made any direct or
indirect redemption, retirement, purchase or other acquisition of any shares of
its capital stock or entered into any agreement or made any commitment with
respect to the same;
(iii) made any loan, advance or capital contribution to
or investment in any Person;
(iv) made any payment or commitment to pay any severance
or termination pay to any of its officers, directors, shareholders, employees,
consultants, agents or other representatives;
(v) entered into any lease (as lessor or lessee), sold,
abandoned or made any other disposition of any of its assets, properties or
rights, granted or suffered any Lien or other encumbrance on any of its assets
or properties, or entered into or amended any contract or other arrangement to
do any of the foregoing or pursuant to which the Company agreed to indemnify any
party or to refrain from competing with any party;
(vi) except for inventory or equipment acquired in the
ordinary course of business, made any acquisition of all or any part of the
assets, properties, capital stock or business of any other Person or entered
into or amended any contract or other arrangement to do the same;
(vii) made any change in any method of accounting or
accounting practice, waived or cancelled any material claim, account receivable,
or right, or changed its pricing, credit, or payment policies;
(viii) paid any long-term liability otherwise than in
accordance with its terms;
(ix) (A) entered into any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement)with any director, officer, shareholder, consultant, agent or employee
of the Company, (B)
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increased the benefits payable under any existing severance or termination pay
policies or employment agreement or (C) increased the compensation, bonus or
other benefits payable to directors, officers or employees of the Company;
(x) suffered any labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company, which employees
were not subject to a collective bargaining agreement at the Current Balance
Sheet Date, or any lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to any employees of the Company; or
(xi) failed to comply with any Law in any respect that,
individually or in the aggregate, has had or is reasonably likely to have a
material adverse effect on the assets, properties, business, operations,
prospects or conditions (financial or otherwise) of the Company.
2.10 Accounts and Notes Receivable. All accounts and notes
receivable reflected in the Financial Statements and all accounts receivable
arising after the Current Balance Sheet Date (collectively, the "Accounts
Receivable") have arisen in the ordinary course of business of the Company,
represent valid and enforceable obligations due to the Company, and are not
subject to any discount, set-off or counter-claim. All such Accounts Receivable
have been collected or, to the best knowledge of the Company, are fully
collectible in the ordinary course of business of the Company in the aggregate
recorded amounts thereof in accordance with their terms.
2.11 Tax Matters.
(a) As used in this Agreement, "Taxes" shall mean all taxes,
including without limitation income taxes, corporation taxes, capital taxes,
excise taxes, value added and sales taxes, use taxes, gross receipts taxes,
franchise taxes, employment and payroll related taxes, goods and services taxes,
stamp taxes, transfer taxes, withholding taxes, property taxes and import
duties, whether or not measured in whole or in part by net income, all imposts,
levies, duties, deductions, withholdings, charges, public and private pension
plan contributions, social security contributions, workmen's compensation,
medicare and public health contributions, regulatory fees and taxes,
assessments, reassessments or fees of any nature, and all deficiencies or other
additions to tax, interest and penalties owed by it; and "Tax" shall mean any
one of them. The Company has paid all Taxes required to be paid by it through
the date hereof (other than Taxes not yet due and payable the liability for
which is adequately reserved for by the Company in the Financial Statements).
The provisions for Taxes reflected in the Financial Statements are adequate to
cover any and all Tax liabilities of the Company in respect of their respective
assets, properties, business and operations during the periods covered by said
Financial Statements and all prior periods.
(b) The Company has timely filed all Tax returns required to
be filed by it through the date hereof. Each of the Tax returns filed by the
Company completely, correctly and accurately reflects the amount of the
Company's Tax liability for the period covered thereby.
(c) There has not been any audit of any Tax return filed by
the Company, no audit of any Tax return of the Company is in progress, and the
Company has not been notified by any Tax authority that any such audit is
contemplated or pending. Neither the Internal Revenue Service nor any other
taxing authority is now asserting or, to the best knowledge of any Stockholder,
threatening to assert any Tax deficiency or claim for additional Taxes or
interest thereon or penalties in connection therewith. All Tax returns of the
Company have been assessed through and including the date hereof, and there are
no outstanding waivers of any limitation periods or agreements providing for an
extension of time for the filing of any Tax return or the payment of any Tax or
for the issue of an assessment or reassessment against the Company. All
deficiencies proposed as a result of such assessments of the Tax returns have
been paid and settled.
(d) The Company has withheld from each payment made to any of
its
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past and present shareholders, directors, officers, employees and agents the
amount of all Taxes and other deductions required to be withheld and has paid or
made adequate provision for the payment of such amounts to the proper receiving
authorities.
(e) The Company is not subject to and shall not be subject
after the Closing Date to any assessments, levies, penalties or interest with
respect to Taxes which shall result in any liability on its part in respect of
any period ending on or prior to the Closing Date in excess of the amount
provided for and reserved against in the Financial Statements.
2.12 Compliance with Laws; Permits.
(a) The Company is not in violation or default of any term of
its Articles of Incorporation or Bylaws, or of any provision of any mortgage,
indenture, contract, agreement, instrument or contract to which it is party or
by which it is bound or of any judgment, decree, order, writ or, to its
knowledge, any Law applicable to the Company which would materially and
adversely affect the business, assets, liabilities, financial condition,
operations or prospects of the Company.
(b) Schedule 2.12 sets forth a complete list of (i) all
Permits and Licenses (collectively referred to as "Permits") that are material
to the conduct of the Company's business.
(c) The Company has, is in full compliance with, and is
entitled to all the benefits under, all Permits that are material to the conduct
of its business and the uses of its assets; such Permits have been validly
issued and are in full force and effect and will continue in full force and
effect upon consummation of the transactions contemplated hereunder; no
violations are or have been recorded with any governmental or regulatory body in
respect of any Permit; and no proceeding is pending or, to the best knowledge of
the Stockholders threatened to revoke or limit any Permit.
2.13 Actions and Proceedings. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, governmental or
regulatory body or arbitration tribunal against or involving the Company or any
of its securities, assets, or properties or any Stockholder or Employee of the
Company. There are no actions, proceedings (or any basis therefor), suits or
claims or legal, administrative or arbitral proceedings pending against or, to
the best knowledge of the Company, threatened against or affecting (whether or
not the defense thereof or liabilities in respect thereof are covered by
insurance) the Company or any of its securities, assets or properties, or any
Stockholder or Employee of the Company, nor, to the best knowledge of the
Company, is there any investigation pending or threatened against or affecting
the Company or any Stockholder or Employee of the Company, that questions the
validity of this Agreement, or any of the Related Agreements or any of the
Schedules or Exhibits attached hereto or the right of the Company or any
Stockholder or other party to enter into any of such agreements, or to
consummate the transactions contemplated hereby or thereby, or which might
result, either individually or in the aggregate, in any material adverse change
in the business, assets, intellectual property rights, liabilities, financial
condition, operations, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company. To the
best knowledge of the Company, there is no fact, event or circumstance that may
give rise to any suit, action, claim, investigation or proceeding that
individually or in the aggregate could have a material adverse effect on the
transactions contemplated hereby or on the assets, properties, business,
operations, prospects or condition (financial or otherwise) of the Company.
2.14 Contracts and Other Agreements.
(a) Schedule 2.14 sets forth a list of all of the following
contracts and other agreements (oral or written) to which the Company is a party
or by or to which it or its assets or properties are bound or subject
(collectively, the "Material
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Contracts"): (i) contracts and other agreements with any current or former
officer, director, shareholder, employee, consultant, agent or other
representative of the Company and contracts and other agreements for the payment
of fees or other consideration to any entity in which any officer or director of
the Company has an interest; (ii) contracts and other agreements with any labor
union or association representing any employee of the Company or otherwise
providing for any form of collective bargaining; (iii) contracts and other
agreements for the purchase or sale of materials, supplies, equipment,
merchandise, products or services providing in each instance for a purchase or
sale price exceeding $10,000; (iv) contracts and other agreements for the sale
of any of the assets or properties of the Company other than in the ordinary
course of business or for the grant to any person of any options, rights of
first refusal, or referential or similar rights to purchase any of such assets
or properties; (v) partnership or joint venture agreements; (vi) contracts or
other agreements under which the Company agrees to indemnify any party or to
share the tax liability of any party; (vii) contracts, options and other
agreements for the purchase of any asset, tangible or intangible, calling for an
aggregate purchase price or payments in any one year of more than $25,000 in any
one case (or in the aggregate, in the case of any related series of contracts
and other agreements; (viii) contracts and other agreements that cannot by their
terms be canceled by the Company and any successor or assignee of the Company
without liability, premium or penalty on no less than thirty (30) days' notice
and which provide for payments in any one year in excess of $5,000 and $10,000
in the aggregate; (ix) contracts and other agreements with customers or
suppliers for the sharing of fees, the rebating of charges or other similar
arrangements; (x) contracts and other agreements containing obligations or
liabilities of any kind to holders of the securities of the Company as such
(including, without limitation, an obligation to register any of such securities
under any federal or state securities laws); (xi) contracts and other agreements
containing covenants of the Company not to compete in any line of business or
with any person or covenants of any other person not to compete with the Company
in any line of business; (xii) contracts and other agreements relating to the
acquisition by the Company of any operating business or the capital stock of any
other person; (xiii) contracts and other agreements requiring the payment to any
person of a commission or fee, including contracts or other agreements with
consultants which provide for aggregate payments in excess of $10,000; (xiv)
contracts, indentures, mortgages, promissory notes, loan agreements, guaranties,
security agreements, pledge agreements, and other agreements relating to the
borrowing of money or securing any such liability; (xv) distributorship or
licensing agreements; (xvi) contracts under which the Company will acquire or
has acquired ownership of, or license to, intangible property, including
software (other than software licensed by the Company as an end user for less
than $10,000 and not distributed by it); (xvii) leases, subleases or other
agreements under which the Company is lessor or lessee of any real property or
personal property and which provide for payments in any one year in excess of
$5,000 and $10,000 in the aggregate; or (xviii) any other material contracts or
other agreements whether or not made in the ordinary course of business that are
in each instance material to the Company or the terms of which in each instance
would have a material adverse effect on the Company's business or prospects,
condition, financial or otherwise, or any of its assets or properties of the
Company.
(b) There have been delivered or made available to Buyer true
and complete copies of all such Material Contracts (and all amendments, waivers
or other modifications thereto) and, with respect to any oral Material
Contracts, complete and accurate summaries thereof. Except as set forth on
Schedule 2.14, making specific reference to the Material Contract as to which
exception is taken and explaining the exception, all of such Material Contracts
are valid, subsisting, in full force and effect, binding upon the Company, and
to the best knowledge of the Company, binding upon the other parties thereto in
accordance with their terms. The Company, and to the best knowledge of each
employee of the Company each other party thereto has in all material respects
performed all the obligations required to be performed by them to date, has
received no notice of default and is not in default under any such Material
Contracts. The Company has no present expectation or intention of not fully
performing all its obligations under each Material Contract, and no employee of
the Company has any knowledge of any breach or anticipated breach by the Company
or any other party to any such Material Contract.
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(c) Except for this Agreement and the Related Agreements none
of the officers, directors or employees of the Company, nor any person directly
or indirectly controlled by, or any relative of, one or more of such officers,
directors or employees (each, an "Insider" and collectively, the "Insiders"), is
presently a party to any transaction or agreement with the Company (other than
agreements and transactions in the ordinary course of business disclosed
hereunder for services as officers, directors and employees) in connection with
the business of the Company, including, without limitation, any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from, any officer, director, any such employee, any
relative of any officer, director or such employee or any corporation,
partnership, trust or other entity in which any officer, director or any such
employee has a substantial interest or of which he or she is an officer,
director, trustee or partner.
(d) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities or mortgaged or pledged, or otherwise placed or agreed to
place a lien or security interest on any asset of the Company individually in
excess of $10,000 or in excess of $20,000 in the aggregate, (iii) made any loans
or advances to any person, other than ordinary advances for travel or other
expenses, or (iv) sold, exchanged, licensed, encumbered, mortgaged, pledged or
otherwise disposed of any of its assets or rights, other than in the ordinary
course of business.
2.15 Real Estate. The Company does not own any real property or any
buildings or other structures and does not have any options or any contractual
obligations to purchase or acquire any interest in real property. The leasehold
interests of the Company set forth in Schedule 2.15 are subject to no Lien
(other than Liens on the interests of the respective lessors that indirectly
burden such leasehold interests). All such leases are in good standing and in
full force and effect without amendment thereto, and the Company is entitled to
all benefits under such leases.
2.16 Personal Property. Schedule 2.16 attached hereto sets forth (i)
a true, correct and complete list of all items of tangible personal property (A)
owned by the Company as of the date hereof having either a net book value per
unit or an estimated fair market value per unit in excess of $10,000 or (B) not
owned by the Company but in the possession of or used or useful in the business
of the Company and having rental payments therefor in excess of $250 per month
or $3,000 per year (collectively, the "Personal Property") as well as other
assets (i.e. cash, etc.); and (ii) a description of the owner of, and any
agreement relating to the use of, each item of Personal Property not owned by
the Company and the circumstances under which such Personal Property is used.
Except as disclosed in Schedule 2.16:
(a) no officer, director, stockholder or employee of the
Company, nor any spouse, child or other relative or affiliate thereof, owns
directly or indirectly, in whole or in part, any of the Personal Property;
(b) each item of Personal Property not owned by the Company is
in such condition that upon the return of such Personal Property to its owner in
its present condition at the end of the relevant lease term or as otherwise
contemplated by the applicable agreement between the Company and the owner or
lessor thereof, the obligations of the Company to such owner or lessor will be
discharged;
(c) the Personal Property is in good operating condition and
repair, normal wear and tear excepted, is currently used by the Company in the
ordinary course of its business and normal maintenance has been consistently
performed with respect to the Personal Property; and
(d) the Company owns or otherwise has the right to use all of
the
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Personal Property now used or useful in the operation of its business or the use
of which is necessary for or useful in the performance of any material contract,
letter of intent or proposal to which the Company is a party.
2.17 Proprietary Rights.
(a)(i) As used in this Agreement, the term "Proprietary
Rights" means all:
(A) trademarks, service marks, trade names, franchises and
copyrights and all registrations and applications to register any of the
foregoing with any agency or authority;
(B) patents, patent applications, inventions and designs, and
any registration thereof with any agency or authority;
(C) trade secrets, including all processes, know-how,
technical data, shop rights, and any media or other tangible embodiment thereof
and all descriptions thereof; and
(D) other technology and intangible property, including
without limitation computer programs, databases, and documentation and flow
charts.
(ii) The Company does not have any Proprietary Rights.
(b)(i) None of the present activities or, to the best
knowledge of the Company, the proposed activities, of the Company or its
products or assets infringe on any Proprietary Rights of others, (ii) the
Company has not received any claim or notice of any claim to that effect, and
(iii) to the best knowledge of the Company, there is no existing or threatened
infringement or violation by others of the Proprietary Rights of the Company.
(c) To the best knowledge of the Company, there is no existing
or threatened violation of the confidentiality of the Company's confidential
information or trade secrets. The Company is not making unauthorized use of any
confidential information or trade secrets of any Person, including without
limitation any former employer of any past or present employees or consultants
of the Company.
(d) To the best knowledge of the Company, none of the
activities of the employees or consultants of the Company on behalf of the
Company violates or has violated any agreements or arrangements that any such
employees or consultants have or have had with former employers. Each of the
employees and consultants who contributed to the discovery or development of any
of the Proprietary Rights (other than Proprietary Rights licensed to the Company
by any party other than a consultant to the Company) did so in each case within
the scope of his or her employment or contractual relationship with the Company.
2.18 Title to Assets; Liens. The Company owns outright and has good,
valid and marketable title to all of its assets and properties of every nature
whatsoever, including Proprietary Rights and Personal Property, used in the
business, including, without limitation, all of the assets and properties
reflected in the Financial Statements, free and clear of any Lien, except for
(i) assets and properties disposed of, or subject to purchase or sales orders,
in the ordinary course of business consistent with past practice since the
Current Balance Sheet Date or (ii) liens or other encumbrances securing the
claims of materialmen, carriers, landlords and like persons, all of which are
not yet due and payable. There are no developments affecting any of such
properties or assets pending or, to the best knowledge of the Company,
threatened, that might materially detract from the value of such property or
assets, materially interfere with any present or intended use of any such
property or assets or materially and adversely affect the marketability of such
properties or assets.
10
2.19 Customers and Distributors. Schedule 2.19 sets forth all
representatives and distributors of the Company's products (whether pursuant to
commission, royalty or other arrangement) and the four (4) customers who account
for the largest sales of the Company (collectively, the "Customers and
Distributors"). To the best knowledge of the Company, the relationships of the
Company with its Customers and Distributors and its suppliers are generally good
commercial working relationships. No Stockholder knows of any plan or intention
of any such Customer, Distributor, or supplier, and the Company has not received
any written or oral threat from any Customer, Distributor or supplier, to
terminate, cancel or otherwise adversely modify its relationship with the
Company or to decrease materially or limit its services, supplies or materials
to the Company or its usage, purchase or distribution of the services or
products of the Company.
2.20 Employee Benefit Plans. The Company does not maintain, and has
not maintained, any pension, profit sharing, retirement, deferred compensation,
stock purchase, stock option, incentive, bonus, sales commission, vacation,
severance, disability, life insurance, group insurance, multi-employer or other
employee benefit plans, programs or other contractual arrangements, in respect
of, or that otherwise cover, any of the current or former officers or employees
of the Company, or their heirs or beneficiaries (collectively, the "Plans").
2.21 Employees and Consultants. Set forth on Schedule 2.21 is a
complete list of the Company's (i) employees, (ii) consultants and (iii)
independent contractors who spend at least fifty percent (50%) of their
professional time working for the Company, with names, current salaries and,
with respect to employees, current positions with the Company. The Company
generally enjoys a good employer-employee relationship with its employees. The
Company is not delinquent in payments to any of its employees or consultants for
any wages, salaries, commissions, bonuses or other direct compensation for any
services performed by them to the date hereof or amounts required to be
reimbursed to such employees.
2.22 Labor Relations; Compliance. The Company is not, and has never
been, a party to any collective bargaining or other labor agreement.
2.23 Certain Transactions. The Company is not indebted to any
Insiders, in any amount whatsoever, other than for payment of salary for
services rendered and reasonable expenses; none of said Insiders are indebted to
the Company or, to the best knowledge of the Company, after due inquiry, have
any direct or indirect ownership interest in, or any contractual relationship
with, any firm, corporation, or other Person with which the Company is or was
affiliated or with which the Company has a business relationship, or any firm,
corporation, or other Person which, directly or indirectly, competes with the
Company; and no Insider is, directly or indirectly, a party to or otherwise an
interested party with respect to any contract with the Company.
2.24 Insurance. Schedule 2.24 sets forth a list of all policies or
binders of fire, liability, product liability, workmen's compensation,
vehicular, directors and officers and other insurance held by or on behalf of
the Company. Such policies and binders are in full force and effect, are
reasonably believed to be adequate for the businesses engaged in by the Company
and are in conformity with the requirements of all leases to which the Company
is a party and, to the best knowledge of the Company, are valid and enforceable
in accordance with their terms. The Company is not in default with respect to
any provision contained in any such policy or binder, nor has the Company failed
to give any notice or present any claim under any such policy or binder in due
and timely fashion. There are no outstanding unpaid claims in excess of $10,000
in the aggregate under all such policies and binders. The Company has not
received notice of cancellation or non-renewal of any such policy or binder. The
Company does not have notice, and does not have any reason to believe that it
will receive notice, of cancellation or non-renewal of its policy number
SG10032625896E held by Solid General Insurance Brokers Limited.
2.25 Banks, Brokers and Proxies. Schedule 2.25 sets forth (i) the
name of each bank, trust company, securities or other broker or other financial
institution with which the Company has an account, credit line, or safe deposit
box or vault or
11
otherwise maintains relations; (ii) the name of each person authorized by the
Company to draw on any such account or credit line, to transfer securities, or
to have access to any safe deposit box or vault; (iii) the purpose of each such
account, safe deposit box or vault; and (iv) the names of all persons authorized
by proxies, powers of attorney or other like instruments to act on behalf of the
Company in matters concerning its business or affairs. All such accounts, credit
lines, safe deposit boxes and vaults are maintained by the Company for normal
business purposes, and no such proxies, powers of attorney or other like
instruments are irrevocable.
2.26 Brokerage. No broker, finder, agent or similar intermediary has
acted on behalf of the Company in connection with this Agreement or the
transactions contemplated hereby, and there are no brokerage commissions,
finders' fees or similar fees or commissions payable by the Company, Buyer or
any subsidiary that acquires the Shares in connection therewith based on any
agreement, arrangement or understanding with the Company or any Stockholder or
any action taken by it or any of them.
2.27 FCPA. The Stockholders represent and warrant to Buyer that they
are familiar with the U.S. Foreign Corrupt Practices Act, as amended, and the
regulations adopted thereunder (the "Act"), and that the Company has conducted
all of its activities in full compliance with such Act and regulations. The
Company, nor anyone acting on its behalf, has made or offered any payment or
given anything of value directly or indirectly to any government official or to
any official of a political party or candidate for public office in violation of
the Act.
2.28 Full Disclosure. The Schedules hereto and all documents and
other papers listed therein or required to be delivered pursuant to this
Agreement and the Related Agreements are true, complete, correct and authentic.
No representation or warranty of any Stockholder contained in this Agreement,
and, to the best knowledge of the Company and each Stockholder or executive of
the Company, no document or other paper furnished by or on behalf of the Company
to Buyer (or any of its agents) pursuant to this Agreement or in connection with
the transactions contemplated hereby, taken as a whole, contains an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements made, in the context in which
made, not false or misleading. There is no fact known to any Stockholder or
executive of the Company that has not been disclosed to Buyer in this Agreement
and the Related Agreements or the Schedules hereto and thereto that has or will
have a material adverse effect on the Company or its assets, properties,
business, operations, prospects or condition (financial or otherwise), or is
reasonably likely to have such an effect.
2.29 Best Knowledge. As used herein, an individual will be deemed to
have "best knowledge" of a particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter;
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in
the course of conducting a reasonably comprehensive
investigation concerning the existence of such fact or
other matter; or
(c) it relates to any matter of Law.
A corporation or entity (other than an individual) will be deemed to
have "best knowledge" of a particular fact or other matter if any individual who
is serving, or who has at any time served, as a director, officer, employee,
agent, partner, executor, or trustee of such corporation or entity (or in any
similar capacity) has, or at any time had, knowledge of such fact or other
matter. Without limiting the generality of the foregoing, each individual listed
on Schedule 1 hereto shall be deemed to have knowledge of any fact or matter of
which the Company has knowledge as provided above.
12
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders, jointly and severally, represents and warrants to
Buyer as of the date hereof and on and as of the Closing Date as follows:
3.1 Title to Shares.
(a) Each Stockholder is and will be at the Closing the holder
of record and the owner of the entire beneficial interest in the Shares set
forth opposite such Stockholder's name on Schedule 1 hereto, free and clear of
any Lien whatsoever and without any exception whatsoever.
(b) Each Stockholder will transfer and deliver to Buyer or its
designee at the Closing a good and valid title to all of the Shares set forth
opposite his or her or its name on Schedule 1, free and clear of any Lien or
claim of any kind, and the entire beneficial interest therein without any
exception whatsoever.
3.2 Authority to Execute and Perform Agreements. Each Stockholder
has full legal right and power to enter into, execute and deliver this Agreement
and to perform in full such Stockholder's obligations hereunder. The execution,
delivery and performance of this Agreement or any Related Agreement (where
applicable) by each Stockholder requires no consent, approval, waiver or other
action by or in respect of, or filing with, any governmental body, agency,
official or authority, the landlord or any other Person. This Agreement or any
Related Agreement (where applicable) has been duly executed and delivered and is
the valid and binding obligation of each Stockholder, enforceable against each
Stockholder in accordance with its terms.
3.3 No Breach. The execution, delivery and performance of this
Agreement and the Related Agreements and the consummation of the transactions
contemplated hereby and thereby will not violate, conflict with, contravene, or
result in the breach of or constitute (or with notice or lapse of time or both
constitute) a default under, any instrument, contract or other agreement to
which each Stockholder is a party or to which each Stockholder or each
Stockholder's Shares may be bound or subject; or violate, conflict with or
contravene any order, judgment, injunction, award or decree or other requirement
of any court, arbitrator or governmental or regulatory body against, or binding
upon, each Stockholder or each Stockholder's Shares; or violate, contravene or
conflict with any statute, law, ordinance or regulation of any jurisdiction
binding upon or applicable to each Stockholder or each Stockholder's Shares.
3.4 Actions and Proceedings. There are no actions, investigations,
proceedings (or any basis therefor), suits or claims or legal, administrative or
arbitral proceedings pending against or, to the best knowledge of each
Stockholder, threatened against or affecting each Stockholder or each
Stockholder's Shares that have or may have (a) the effect of restraining,
modifying or preventing the consummation of the transactions contemplated hereby
or (b) a materially adverse effect on the assets, properties, business,
operations, prospects, or condition (financial or otherwise) of the Company or
Buyer.
3.5 Brokerage. There are no brokerage commissions, finders' fees or
similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with such Stockholder or any action
taken by such Stockholder, the liability for which is or will be on the Company
or Buyer.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Stockholders as follows:
4.1 Organization. Buyer is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and has the
corporate
13
power and lawful authority to own, lease and operate its assets, properties and
business and to carry on its business as now being and as heretofore conducted.
4.2 Authority to Execute and Perform Agreements. Buyer has the full
legal right and power and all authority required to enter into, execute and
deliver this Agreement and to perform fully its respective obligations
hereunder, and this Agreement has been duly executed and delivered and is the
valid and binding obligation of Buyer enforceable in accordance with its terms
except, (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; and (ii) general principles of equity that restrict the
availability of equitable remedies.
4.3 No Breach. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not
(i) violate any provision of the respective charter or By-laws of Buyer; (ii)
violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon, Buyer or
upon the securities, properties, assets or business of Buyer; (iii) violate any
Law which relates to Buyer or to the securities, properties, assets or business
of Buyer; (iv) violate any Permit of the Buyer; or (v) except as set forth on
Schedule 4.3, require any filing with, notice to, or permit, approval or consent
of any foreign, federal, state, local or other governmental or regulatory body
or of any other person.
SECTION 5
COVENANTS AND AGREEMENTS
The parties covenant and agree as follows:
5.1 Consummation of Agreement. Each of Buyer and the Stockholders
shall use their best efforts to perform and fulfill all conditions and
obligations to be performed and fulfilled by it under this Agreement and the
Stockholders shall use their best efforts further to ensure that to the extent
within the Stockholders' control, no breach of any of the Stockholder's
representations, warranties, and agreements hereunder or contemplated hereby
occurs or exists on or before the Closing Date to the end that the transactions
contemplated by this Agreement shall be fully carried out.
5.2 Further Assurances. Each of the parties shall execute such
documents, further instruments and other papers and take such further actions as
may be reasonably required or desirable to carry out the provisions hereof and
the transactions contemplated hereby.
5.3 Survival. Each of the parties agrees that following or at
Closing, the following action shall be taken:
(i) The Company will be renamed Fusion Jamaica Limited
and the Company and its shareholders shall take such action as to cause the name
change to be filed with the applicable government authorities.
(ii) Satellite Dish. (i) The Company, via a loan from
Buyer, will purchase a satellite dish ("Dish"). Dallas shall pay Buyer the full
amount of the purchase and installation price of the Dish either from, in whole
or in part and in the Company's discretion, (i) insurance proceeds which are
received from the Company's claim with Solid Life & General Insurance Brokers
Ltd., claim number SG2004-2625-423E, in cash, or through dividends that would
otherwise be made to him by the due date set forth in the promissory note
("Secured Dish Note") which is attached to and incorporated herein as Exhibit A.
The Secured Dish Note shall be secured by all equipment, accounts and other
assets of the Company. In the event the Company receives insurance proceeds as
set forth above, Dallas shall accept the proceeds in trust on behalf of the
Buyer and immediately forward the proceeds to Buyer. The Company will cause
Buyer to be named a loss payee on the insurance policy. (ii) In the event the
Company determines after Closing that a Dish is not needed for industry standard
14
connectivity to conduct business, Dallas shall accept the insurance proceeds in
trust on behalf of the Buyer and immediately forward the proceeds to Buyer.
(iii) Equipment Purchase. Buyer will loan the Company
such amount as reasonably necessary, as the Buyer shall determine following
Closing, to purchase the equipment required for deployment of services in
Jamaica ("Secured Equipment Note"). A copy of a form of the Equipment Note is
attached as Exhibit "B". The Secured Equipment Note shall be secured by all
equipment, accounts and other assets of the Company.
(iv) Working Capital. Buyer will loan the Company an
amount to be mutually agreed, for working capital purposes (the "Secured Working
Capital Note"). The loan will bear interest at the lowest amount required by law
(the imputed interest rate). A copy of a form of Secured Working Capital Note is
attached as Exhibit "C". The Secured Working Capital Note shall be secured by
all equipment, accounts and other assets of the Company.
(v) Repayment of the Secured Equipment Note and Secured
Working Capital Note. 80% of the Company's net profits each month will be used
to repay the Buyer and applied to the Secured Equipment Note and Secured Working
Capital Note. 20% of the Company's net profits each month will be distributed to
the shareholders, on a pro-rata basis, unless the Company determines otherwise.
A copy of a Form of Security Agreement is attached as Exhibit "G".
(vi) Financials. The Company shall provide,
notwithstanding whether prior to or post Closing, (i) unaudited financial
statements within 5 days after the end of each month; (ii) audited financial
statements within 15 days after the end of each quarter and (iii) audited
financial statements within 15 days after the end of each fiscal year in
accordance with U.S. GAAP in U.S. dollars. The Company's accountant, shall be
accountable to the accounting department of the Buyer, and will follow all of
the Buyers corporate processes, procedures and compliance regulations. The
Stockholders shall take such action as necessary to provide information
regarding the Company prior to the date of this Agreement as necessary for the
accountants to prepare the financial statements identified herein. The Company
will use auditors appointed by Buyer. All costs and fees associated with an
audit(s) shall be the Company's obligation.
(vii) The Company shall reimburse Buyer, in an amount to
be determined between the parties, for its costs and expenses associated with
the provision of legal, financial, operations, engineering and other services to
the Company.
(viii) Dallas Employment. Dallas's employment shall be
"at-will" and follow the terms as set forth on Exhibit "D".
(ix) Right of First Refusal. The parties shall enter
into a Right of First Refusal Agreement. A copy of a form of Right of First
Refusal is attached as Exhibit "E".
(x) Share Restriction. The Shares owned by Shareholders
post Closing shall be restricted from trade for a period of two (2) years
following Closing, or as the Company shall otherwise require.
(xi) Drag Along
If the Majority Shareholders propose to enter into a Drag-Along Sale
(as defined below), upon delivery by such Majority Shareholders of a written
notice to the Minority Shareholders containing the terms of the Drag-Along Sale
(the "Drag-Along Notice") each Minority Shareholder shall be deemed to have
consented to and waived any objection to, and shall sell all of such Minority
Shareholder's Shares in the Drag-Along Sale on the same terms and for the same
price per Share as the Majority Shareholder's Shares as set forth in the
Drag-Along Notice. Each Minority Shareholder shall bear a proportionate share of
any expenses attributable to the sale of the Shares in connection with the
Drag-Along Sale and shall take all necessary or desirable actions, as requested
by the Majority Shareholders in connection with the
15
sale of his or their Shares. A "Drag-Along Sale" shall mean a bona fide offer
from an Offeror unrelated to the Majority Shareholders to purchase or otherwise
acquire for value one hundred percent (100%) of the Shares at a price per Share
equal to or greater than $5.00 (so long as the current capital structure is not
changed).
(xii) Non-compete. The Shareholders agree not to compete
with the Company in Jamaica, West Indies, for a period of not less than two (2)
years from the date they leave employment with the Company or have sold all of
their shares (which ever is later). A copy of a form of non-compete is attached
as Exhibit "F".
(xiii) Nothing herein shall be deemed to restrict Xxxxxx
from selling a portion of her Shares to Dallas post Closing under terms and
conditions as they shall agree upon.
(xiv) Board of Directors. Until the next annual meeting
of the Company's Shareholders, the following directors shall serve on the board
of directors: Xxxxxxx X. Dallas, Xxxxxxx Xxxxxx, and Xxxxxxx X. Xxxxx and two
additional persons to be designated by Buyer.
(xv) Transfer of Shares. Dallas and Buyer shall split
50%/50% of the stamp duty and transfer tax and any other taxes or fees
associated with the sale and transfer of the Shares. This tax is estimated to be
$4,000.00.
(xvi) Service Agreements. At Closing the parties agree
to execute (i) a standard buy/sell carrier agreement which will contain standard
industry terms and allow for Buyer to terminate traffic in Jamaica at a price no
less than its first route in its LCR; and (ii) a service agreement for other
products and services which will include an administrative cost to be paid to
Buyer in an amount to be determined.
SECTION 6
CONDITIONS PRECEDENT TO THE OBLIGATION OF BUYER TO CLOSE
The obligations of Buyer to enter into and complete the Closing is
subject, at the option of Buyer acting in accordance with the provisions of this
Agreement with respect to termination hereof, to the fulfillment of the
following conditions, each of which is for the exclusive benefit of Buyer and
not of any of the Stockholders and any one or more of which may be waived by
Buyer alone:
6.1 Representations, Warranties and Covenants. The representations
and warranties of the Company and each Stockholder contained in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same force and effect as though made on and as of the Closing Date. The
Company and each Stockholder shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by it on or before the Closing Date. The Company and
each Stockholder shall have delivered to Buyer a certificate, dated the Closing
Date, to the foregoing effect and stating that all conditions to Buyer's
obligations hereunder have been satisfied.
6.2 Consents and Approvals. All consents, Permits and approvals from
all Persons, including without limitation all governmental authorities and all
parties to contracts or other agreements with any Stockholder or the Company,
that may be required in connection with the performance by each Stockholder of
his or her obligations under this Agreement, the continuance (without
modification, amendment, variation or renegotiation) after the Closing of such
contracts or other agreements with the Company or Buyer or any subsidiary of
Buyer that acquires the Shares, and/or the acquisition and ownership of the
Shares by Buyer or its subsidiary shall have been obtained.
6.3 Litigation. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body or instituted or
threatened by any governmental or regulatory body to restrain, modify or prevent
the consummation of the transactions contemplated hereby, or to seek damages or
a discovery order in
16
connection with such transactions, or that has or may have, in the reasonable
opinion of the Buyer, (a) the effect of restraining, modifying or preventing the
consummation of such transactions or (b) a materially adverse effect on the
assets, properties, business, operations or condition (financial or otherwise)
of the Company or Buyer.
6.4 Delivery of Share Certificates. The Stockholders shall have
delivered or caused to be delivered to Buyer or its designee the certificates
for all of the Shares, which shall be all of the issued and outstanding capital
shares of the Company, duly endorsed for transfer to Buyer or its designee, free
and clear of any Liens or beneficial interests of any party.
6.5 Releases. Each Stockholder shall, in form satisfactory to
Buyer's counsel, have released and discharged the Company from any and all
claims, demands and liabilities whatsoever arising or accruing before the
Closing under each and every agreement, arrangement, Law or other state of
facts.
6.6 Certificates as to Representations and Warranties. Each of the
Stockholders shall have delivered to Buyer a certificate in form and substance
reasonably satisfactory to Buyer certifying as to his or her knowledge of
certain representations and warranties of the Company.
6.7 Documents. The Stockholders shall have delivered or caused the
Company to deliver such documents as are set forth in Section 5.
6.8 Additional Action. The Stockholders shall have delivered or
caused the Company to deliver such additional certificates, and shall have taken
such additional actions, as Buyer shall reasonably require to evidence and
confirm the authorization and approval of the sale of the Shares, their
assignment and transfer to Buyer or its designee, and their registration in the
name of the Buyer or its designee.
6.9 Board Approval. This Agreement and the transactions contemplated
hereby shall have been approved by the Board of Directors of Buyer.
6.10 Government Approval. The Registrar of Companies and Minister
shall have provided Buyer counsel with approval of the transactions contemplated
herein.
6.11 Attorney Approval. The Buyer receives approval from its
Jamaican counsel that this Agreement meets the requirements of the Registrar of
Companies and contains the necessary terms and conditions of similar stock sales
transactions within Jamaica.
SECTION 7
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE STOCKHOLDERS TO CLOSE
The obligation of the Stockholders to enter into and complete the
Closing is subject to the fulfillment of the following conditions, each of which
is for the exclusive benefit of the Stockholders and not of Buyer and any one or
more of which may be waived by the Stockholders:
7.1 Representations, Warranties and Covenants. The representations
and warranties of Buyer contained in this Agreement shall be true in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date. Buyer shall have performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed or complied with by it on or before the Closing
Date. Buyer shall have delivered to the Stockholders a certificate, dated the
Closing Date and signed by an officer of the Buyer, to the foregoing effect and
stating that all conditions to the obligations of the Stockholders hereunder
have been satisfied.
7.2 Litigation. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or instituted by
any governmental or regulatory body, to restrain, modify or prevent the carrying
out of the
17
transactions contemplated hereby, which such action, suit or proceeding shall
not have been stayed.
7.3 Consents and Approvals. All consents, permits and approvals from
parties to contracts or other agreements with Buyer that may be required in
connection with the performance by Buyer of its obligations under this Agreement
shall have been obtained.
7.4 Board Approval. This Agreement and the transactions contemplated
hereby shall have been approved by the Board of Directors of Convergent
Technologies, Ltd.
SECTION 8
INDEMNIFICATION
8.1 Survival. Notwithstanding any right of any party to investigate
fully the affairs of the other party and notwithstanding any knowledge of facts
determined or determinable by such party pursuant to such investigation or right
of investigation, each party has the right to rely fully upon the
representations, warranties, covenants and agreements of each other party in
this Agreement or in any Schedule, certificate or financial statement delivered
by any party pursuant hereto. All such representations, warranties, covenants
and agreements shall survive the execution and delivery hereof and the Closing
hereunder and be indemnified in accordance with this Section 8, and, except as
otherwise specifically provided in this Agreement, shall thereafter:
(a) except as provided in clauses (b) and (c) hereof,
terminate and expire at the end of the thirty-sixth (36th) full calendar month
after the Closing Date with respect to any claim based upon, arising out of or
otherwise in respect of any inaccuracy in or any breach of any representation or
warranty of any of the Stockholders contained in Sections 2 or 3 hereof or of
Buyer contained in Section 4 hereof, of which the party asserting such claim
shall have given no notice on or before the end of such thirty-sixth (36th)
month, except for any claim based upon fraud or wilful misconduct by any of the
Stockholders or the Company, which shall survive until the end of the eighty-
fourth (84th) full calendar month after the Closing Date;
(b) survive forever, with respect to the representations and
warranties of the Stockholders contained in Section 2.28 hereof and the
representations and warranties of the Stockholders contained in Sections 3.1
through 3.4 hereof; and
(c) terminate and expire, with respect to any Tax Claim (as
hereinafter defined), on the later of (i) the date upon which the assessment of
any taxes to which any such Tax Claim may relate is barred by all applicable
statutes of limitations and (ii) the date upon which any claim for refund or
credit related to such Tax Claim is barred by all applicable statutes of
limitations. As used herein, "Tax Claim" means any claim based upon, arising out
of or otherwise in respect of (A) issues raised on audit of the Company by
taxing authorities with respect to any period ending on or before the Closing
Date, (B) any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of any of the Stockholders contained in this Agreement
related to Taxes or (C) any other Tax liabilities of the Company other than
Taxes of the Company that are properly allocable to periods of time beginning
after the Closing Date; provided that "Tax Claim" shall exclude any such claim
arising out of any Tax return filed by the Company after the Closing which claim
(x) is not based on incorrect or incomplete information compiled by the Company
before the Closing and (y) does not result from any misconduct or bad faith of
any of the Stockholders or of the Company prior to the Closing.
8.2 Obligation of the Stockholders to Indemnify. Subject to the
limitations set forth below and to the termination provisions set forth in
Section 8.1, each Stockholder agrees, jointly and severally, to indemnify,
defend and hold harmless Buyer (and its subsidiaries, directors, officers,
employees, affiliates and assigns) from and against all losses, liabilities,
damages, costs or expenses (including
18
interest and penalties imposed or assessed by any judicial or administrative
body and reasonable attorneys fees ("Losses") based upon, arising out of or
otherwise in respect of:
(i) any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of any Stockholder contained in
this Agreement or in any Schedule delivered pursuant hereto;
(ii) any Tax Claim, whether or not included in clause
(i); compensation by any broker, finder, agent or similar intermediary claiming
to have been employed or retained by or on behalf of the Company or any of the
Stockholders; or any claim based upon any fraud or willful misconduct by any of
the Stockholders or the Company, and
(iii) any claim relating to the terms and conditions of
employment of any of the Company's employees before the Closing, whether first
asserted before or after the Closing. While claims based on the fact or manner
of termination of any employee terminated after the Closing shall not be
indemnifiable under this clause (iii), any claim made by any such employee that
otherwise falls within this clause (iii) shall be subject to this Section 8.
The liability of the Stockholders with respect to indemnification hereunder
shall be joint and several.
8.3 Obligation of Buyer to Indemnify. Subject to the limitations set
forth below and in Section 8.5 hereof and to the termination provisions set
forth in Section 8.1, Buyer agrees to indemnify, defend and hold harmless each
Stockholder from and against any Losses based upon, arising out of or otherwise
in respect of (i) any material inaccuracy in or breach of any representation,
warranty, covenant or agreement of Buyer contained in this Agreement or in any
Schedule, certificate, document or other papers delivered pursuant hereto, or
(ii) any claim or demand for commission or other compensation by any broker,
finder, agent or similar intermediary claiming to have been employed by or on
behalf of Buyer.
8.4 Notice and Opportunity to Defend.
(a) Notice of Asserted Liability. Promptly after receipt by
any party entitled to indemnification (the "Indemnitee") of notice of any
demand, claim or circumstances that, with or without the lapse of time, would
give rise to a claim or the commencement (or threatened commencement) of any
action, proceeding or investigation (an "Asserted Liability") that may result in
a Loss, the Indemnitee shall give notice thereof (the "Claims Notice") to any
other party or parties obligated to provide indemnification pursuant to Sections
8.2 or 8.3 hereof (the "Indemnifying Party"). The Claims Notice shall describe
the Asserted Liability in reasonable detail, and shall indicate the amount
(estimated, if necessary) of the Loss that has been or may be suffered by the
Indemnitee. If the Indemnitee fails to give the Indemnifying Party timely and
reasonable notice of an Asserted Liability that might result in a Loss, such
failure to so notify Indemnitee shall relieve the Indemnifying Party from
liability hereunder with respect to such claim if such failure to so notify the
Indemnifying Party results in the forfeiture by the Indemnifying Party of any
material rights and defenses otherwise available to the Indemnifying Party with
respect to such Asserted Liability.
(b) Opportunity to Defend. The Indemnifying Party may elect to
compromise or defend, and control the defense of, at its own expense and by
counsel reasonably satisfactory to the Indemnitee, any Asserted
Liability,provided that the Indemnitee shall have no liability or obligation,
and shall be subject to no restriction, under any compromise or settlement
agreed to by the Indemnifying Party that it has not approved in writing.
19
SECTION 9
MISCELLANEOUS
9.1 Publicity. Neither the Company nor the Stockholders shall make
any public release or announcement concerning this Agreement or the transactions
contemplated hereby without advance approval thereof by the Buyer.
9.2 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such cost or expense.
9.3 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission or,
if mailed, two days after the date of deposit in the mails, as follows:
(a) if to Buyer:
Fusion Telecommunications International, Inc.
c/o Xxxxxxx X. Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Xxxxx & Associates, P.C.
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 585-387-0130
(b) if to any Stockholder before the Closing:
Convergent Technologies, Ltd.
c/o Xxxxxxx Xxxxxx
00 Xxxxxx Xxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Dickson, Ashenfelter, Slous, Tanner & Trevenen LLP
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Telephone: 000-000-0000
Facsimile: 973-509-9521
(c) if to any Stockholder after the Closing, to such
Stockholder's address as set forth on the signature page hereof.
Any party may by notice given in accordance with this Section 9.3 to the other
parties designate another address or person for receipt of notices hereunder.
9.4 Entire Agreement. This Agreement (including the Related
Agreements, Exhibits and Schedules) contain the entire agreement among the
parties with respect to the transactions contemplated hereby, and supersedes all
prior agreements, written or oral, with respect thereto.
20
9.5 Waivers and Amendments; Non-Contractual Remedies; Preservation
of Remedies. This Agreement may be amended, superseded, cancelled, renewed or
extended, and any term hereof may be waived, only by a written instrument signed
by Buyer and the Stockholders or, in the case of a waiver, by Buyer or the
Stockholder, as the case may be, waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any waiver on the part of any party of any such right,
power or privilege, nor any single or partial exercise of any such right, power
or privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity. The rights and remedies of any party based
upon, arising out of or otherwise in respect of any inaccuracy in or breach of
any representation, warranty, covenant or agreement contained in this Agreement
shall in no way be limited by the fact that the act, omission, occurrence or
other state of facts upon which any claim of any such inaccuracy or breach is
based may also be the subject matter of any other representation, warranty,
covenant or agreement contained in this Agreement (or in any other agreement
between the parties) as to which there is no inaccuracy or breach.
9.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard to its conflict
of laws provisions. The parties hereto specifically attorn to the exclusive
jurisdiction of the courts of the State of New York in respect of any litigation
arising out of this Agreement or the nonperformance hereof. The prevailing party
of any litigation shall be entitled to receive from the losing party reasonable
attorneys' fees and costs.
9.7 Binding Effect; No Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
legal representatives. This Agreement is not assignable except by operation of
law or by Buyer to any of its affiliates.
9.8 Variations in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
9.9 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 such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
9.10 Exhibits and Schedules. The Exhibits and Schedules are a part
of this Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
9.11 Headings. The headings in this Agreement are for reference
only, and shall not affect the interpretation of this Agreement.
9.12 Severability. Any Section, subsection or other subdivision of
this Agreement or any other provision of this Agreement which is, or becomes,
illegal, invalid or unenforceable shall be severed herefrom and shall be
ineffective to the extent of such illegality, invalidity or unenforceability and
shall not affect or impair the remaining provisions hereof, which provisions
shall (a) be severed from any illegal, invalid or unenforceable Section or other
subdivision of this Agreement, and (b) otherwise remain in full force and
effect.
[signature page follows]
21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
Fusion Telecommunications International, Inc.
By:
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
STOCKHOLDERS:
XXXXXXX XXXXXX
By:
--------------------------------------
Name: Xxxxxxx Xxxxxx
PATRICK DALLAS
By:
--------------------------------------
Name: Patrick Dallas
CONVERGENT TECHNOLOGIES, LTD.
By:
--------------------------------------
Name: Patrick Dallas
22
SCHEDULE 1
PRE-CLOSING
SHAREHOLDER NUMBER OF SHARES
--------------------------------------------------------------------------------
Xxxxxxx Xxxxxx 245,000
Patrick Dallas 255,000
--------------------------------------------------------------------------------
Total 500,000
POST CLOSING
SHAREHOLDER NUMBER OF SHARES
--------------------------------------------------------------------------------
Xxxxxxx Xxxxxx 245,000
Fusion Telecommunications International, Inc. 255,000
--------------------------------------------------------------------------------
Total 500,000
23
SCHEDULE 2.12
Convergent Technologies, Limited
Licenses
SUMMARY OF
CONVERGENT AUTHORITY
LICENSES EFFECTIVE EXPIRES GRANTED
---------- --------- ------- ----------
Own and operate the following facilities: Cable Landing Stations,
Satellite Earth Station including VSATS, International Gateway Switches,
Transmission Towers, etc. such facilities comprising of a public network for the
INTERNATIONAL provision of specified services to the public to and from (a) anywhere in
VOICE/DATA/TRANSIT Jamaica and/or anywhere outside Jamaica, provide that such foreign
CARRIER LICENSE 4/7/2003 4/6/2018 locations have not been proscribed by the government
------------------------------------------------------------------------------------------------------------------------------------
Own and operate the following licensed
facilities: "Telecommunications
DOMESTIC CARRIER transmission, switching and subscriber
LICENSE 4/7/2003 4/6/2013 Own and operate the following licensed
------------------------------------------------------------------------------------------------------------------------------------
Sell to the public
SERVICE PROVIDER domestic switched
LICENSE 4/7/2003 4/6/2013 minutes
------------------------------------------------------------------------------------------------------------------------------------
Provide telecommunications
services (excluding voice
INTERNET SERVICE service) only in relation to
PROVIDER LICENSE 1/1/2001 12/31/2003 internet access
------------------------------------------------------------------------------------------------------------------------------------
Provide only
DATA SERVICE data
PROVIDER LICENSE 1/1/2001 12/31/2003 services
------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL
VOICE SERVICE Resell to the public, international switched minutes obtained
PROVIDER* 3/1/2001 12/31/2003 from the existing telecommunications carrier (C&W)
------------------------------------------------------------------------------------------------------------------------------------
Convergent Technologies, Limited also represent and warrant that the Company
holds all rights to the above listed licenses, and that although some are
presently expired, each license is duly recognized and honored by the government
of Jamaica and all service providers within Jamaica, West Indies until such time
that the government of Jamaica reissues each license.
24
SCHEDULE 2.14
Convergent Technologies, Ltd. and CaribTel
Convergent Technologies, Ltd. and Inra Global Communications, Inc.
Convergent Technologies, Ltd. and WorldTalk
Convergent Technologies, Ltd. and Rubicon
Convergent Technologies, Ltd. and C&WJ
25
SCHEDULE 2.16
Convergent Technologies, Limited
Equipment List and Other Assets
We, the officers of Convergent Technologies, Limited represent and warrant that
the following list accurately describes the company's existing equipment.
1 - Nuera ORCA GX-8 (Switch)]
1 - Cisco 3640 Router
1 - APC Smart-UPS 3000
1 - Xxxxxxx Vantage 3500 Generator
We, the officers of Convergent Technologies, Limited represent and warrant that
as of December 15, 2004, the Company's total assets include:
o the equipment listed above
o the licenses mentioned on Schedule 2.06
o a letter of credit for interconnection services held by Cable &
Wireless Jamaica in the amount of US$85,000
o US$121,163.46 cash
26
Schedule 2.19
Customers and Distributors
Convergent Technologies, Ltd. and CaribTel
Convergent Technologies, Ltd. and Inra Global Communications, Inc.
Convergent Technologies, Ltd. and WorldTalk
Convergent Technologies, Ltd. and Rubicon
Convergent Technologies, Ltd. and C&WJ
27
SCHEDULE 2.21
Convergent Technologies, Limited
Employee List
We, the officers of Convergent Technologies, Limited represent and warrant that
the following list accurately depicts the Company's current employees, and
associated salaries.
1. Xxxx Xxxxxxxx, Network Engineer - Salary US$4000 per month
2. Xxxxxx Xxx Xxxxxxxxxxxx, Billing Administrator/Systems Programmer -
Salary US$3000 per month
*See Attached Resumes
28
SCHEDULE 2.24
We, the officers of Convergent Technologies, Limited represent and warrant that
to the best of our knowledge the insurance claim for the satellite dish
referenced in Section 5.3 (iii) of the agreement is as presented below.
Name of Insurance Company: Solid Life & General Insurance Brokers Ltd.
00 Xxxx Xxx Xxxx Xxxx, Xxxxxxxx 00
Xxxxxxx, Xxxx Xxxxxx
Insurance Policy Number: SG10032625896E
Insurance Policy Premium: J$945,900 (US$15,765) per annum
Insurance Claim Number: SG2004/2625/423E
Satellite Antenna Replacement
Value: J$359,100 (US$5,985)
Electronics Replacement Value: J$684,000 (US$11,400)
Equipment description attached
Date claim was filed: September 30, 2004
Status of claim: Under review
29
Schedule 2.25
Banks Brokers and Proxies
National Commercial Bank of Jamaica
Matilda Xxxxxxx Xxxxxx
Xxx Xxx Xxxx
Xxxxxxxx 0, Xxxxxxx
30
Schedule 4.3
Minister of Telecommunications
Registrar of Companies
31
EXHIBIT LIST
Exhibit A Dish Note
Exhibit B Equipment Note
Exhibit C Working Capital Note
Exhibit D Dallas Employment
Exhibit E Right of First Refusal
Exhibit F Form of Non-compete
Exhibit G Form of Security Agreement
32
EXHIBIT A
FORM OF SECURED DISH NOTE
New York, New York
[__, 2004]
$[ ]
ON DEMAND, for value received, PATRICK DALLAS, an individual,
("Dallas"), whose principal place of business is X000 Xxxxxxxx Xxxxx, Xxxxxxxx
00, Xxxxxxxx, Xxxxxxx, promises to pay Fusion Telecommunications International,
Inc., ("Lender"), the sum of DOLLARS ($) in lawful money of the United States of
America or such lesser sum as may be demanded hereunder.
Dallas shall pay interest on the amount due under this Demand
Note and on overdue interest payments hereunder at a rate equal to the lesser of
(a) 6.25% per annum and (b) the maximum rate permissible under applicable usury
or similar laws limiting interest rates, said interest to be payable quarterly,
beginning [ ]. This payment rate shall be computed on the
basis of the actual number of days elapsed over a year of 360 days.
If the indebtedness represented by this Demand Note, or any
part thereof, is collected at law or in equity or in bankruptcy, receivership or
other court proceedings, or this Demand Note is placed in the hands of attorneys
for collection, Dallas agrees to pay, in addition to the principal and interest
(if any) due under this Demand Note, reasonable attorneys' and collection fees.
The undersigned waives demand, presentment for payment, notice
of nonpayment, protest, notice of dishonor and protest, notice of intention to
accelerate, notice of acceleration, and all other notices, filing of suit and
diligence in collecting this Demand Note and agrees to any substitution,
exchange or release of any such security or the release of any party liable
hereon and further agrees that it will not be necessary for any holder hereof,
in order to enforce payment of this Demand Note by it, to first institute suit
or exhaust its remedies against Dallas, and consents to any extension or
postponement of time of payment of this Demand Note or any other indulgence with
respect hereto, without notice thereof.
The undersigned hereby irrevocably submits to the jurisdiction
of any court in the State of New York located in the City of New York and the
County of New York, and any appellate court from any thereof, in any action,
suit or proceeding brought against it in connection with this Demand Note or for
the recognition or enforcement of any judgment. The undersigned hereto agrees
that a final judgment in any such action, suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. To the extent permitted by applicable law, the
undersigned hereby waives and agrees not to assert by way of motion, as a
defense or otherwise in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that the Demand Note may not be
litigated in or by such courts.
To the extent permitted by applicable law, the undersigned
agrees that it shall not seek and hereby waives the right to seek any review of
the judgment of any such court by any court of any other nation or jurisdiction
which may be called upon to grant an enforcement of such judgment.
The undersigned hereby irrevocably agrees that the summons and
complaint or any other process in connection with this Demand Note may be served
by mailing to the address set forth below or by hand delivery to a person of
suitable age and discretion at the address set forth below. Such service will be
complete on the date such process is so mailed or delivered, and the undersigned
will have thirty days from such completion of service in which to respond in the
manner provided by law. The
33
undersigned may also be served in any other manner permitted by law, in which
event the undersigned's time to respond shall be the time provided by law.
The amounts hereunder shall not be subject in any way
whatsoever to offset, setoff, counterclaim or other deduction of any kind
whatsoever.
THE UNDERSIGNED HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING
DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS DEMAND NOTE. THE
UNDERSIGNED HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY LENDER THAT LENDER HAS BEEN INDUCED TO
ACCEPT THIS DEMAND NOTE BY, AMONG OTHER THINGS, THIS WAIVER.
This Demand Note shall be governed by, and for all purposes
construed in accordance with, the laws of the State of New York (except for its
conflict of laws rules).
PATRICK DALLAS
[ADDRESS]
-------------------------------------
Name:
Title:
34
EXHIBIT B
FORM OF SECURED EQUIPMENT NOTE
New York, New York
[DATE]
$[AMOUNT]
ON DEMAND, for value received, CONVERGENT TECHNOLOGIES, LTD.,
a company organized under the laws of the country of Jamaica ("Convergent"),
whose principal place of business is [ ], promises to pay Fusion
Telecommunications International, Inc., ("Lender"), the sum of [ ]
DOLLARS ($[ ]) in lawful money of the United States of America or
such lesser sum as may be demanded hereunder.
Convergent shall pay interest on the amount due under this
Demand Note and on overdue interest payments hereunder at a rate equal to the
lesser of (a) 6.25% per annum and (b) the maximum rate permissible under
applicable usury or similar laws limiting interest rates, said interest to be
payable quarterly, beginning [ ]. This payment rate shall be
computed on the basis of the actual number of days elapsed over a year of 360
days.
If the indebtedness represented by this Demand Note, or any
part thereof, is collected at law or in equity or in bankruptcy, receivership or
other court proceedings, or this Demand Note is placed in the hands of attorneys
for collection, Convergent agrees to pay, in addition to the principal and
interest (if any) due under this Demand Note, reasonable attorneys' and
collection fees.
The undersigned waives demand, presentment for payment, notice
of nonpayment, protest, notice of dishonor and protest, notice of intention to
accelerate, notice of acceleration, and all other notices, filing of suit and
diligence in collecting this Demand Note and agrees to any substitution,
exchange or release of any such security or the release of any party liable
hereon and further agrees that it will not be necessary for any holder hereof,
in order to enforce payment of this Demand Note by it, to first institute suit
or exhaust its remedies against Convergent, and consents to any extension or
postponement of time of payment of this Demand Note or any other indulgence with
respect hereto, without notice thereof.
The undersigned hereby irrevocably submits to the jurisdiction
of any court in the State of New York located in the City of New York and the
County of New York, and any appellate court from any thereof, in any action,
suit or proceeding brought against it in connection with this Demand Note or for
the recognition or enforcement of any judgment. The undersigned hereto agrees
that a final judgment in any such action, suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. To the extent permitted by applicable law, the
undersigned hereby waives and agrees not to assert by way of motion, as a
defense or otherwise in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that the Demand Note may not be
litigated in or by such courts.
To the extent permitted by applicable law, the undersigned
agrees that it shall not seek and hereby waives the right to seek any review of
the judgment of any such court by any court of any other nation or jurisdiction
which may be called upon to grant an enforcement of such judgment.
The undersigned hereby irrevocably agrees that the summons and
complaint or any other process in connection with this Demand Note may be served
by mailing to the address set forth below or by hand delivery to a person of
suitable age and discretion at the address set forth below. Such service will be
complete on the date such process is so mailed or delivered, and the undersigned
will have thirty days from
35
such completion of service in which to respond in the manner provided by law.
The undersigned may also be served in any other manner permitted by law, in
which event the undersigned's time to respond shall be the time provided by law.
The amounts hereunder shall not be subject in any way
whatsoever to offset, setoff, counterclaim or other deduction of any kind
whatsoever.
THE UNDERSIGNED HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING
DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS DEMAND NOTE. THE
UNDERSIGNED HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY LENDER THAT LENDER HAS BEEN INDUCED TO
ACCEPT THIS DEMAND NOTE BY, AMONG OTHER THINGS, THIS WAIVER.
This Demand Note shall be governed by, and for all purposes
construed in accordance with, the laws of the State of New York (except for its
conflict of laws rules).
CONVERGENT TECHNOLOGIES, LTD.
[ADDRESS]
-------------------------------------
Name:
Title:
36
EXHIBIT C
FORM OF SECURED WORKING CAPITAL NOTE
New York, New York
[DATE]
$[AMOUNT]
ON DEMAND, for value received, CONVERGENT TECHNOLOGIES, LTD.,
a company organized under the laws of the country of Jamaica ("Convergent"),
whose principal place of business is [ ], promises to pay Fusion
Telecommunications International, Inc., ("Lender"), the sum of [ ] DOLLARS
($ ]) in lawful money of the United States of America or such
lesser sum as may be demanded hereunder.
Convergent shall pay interest on the amount due under this
Demand Note and on overdue interest payments hereunder at a rate equal to the
lesser of (a) 6.25% per annum and (b) the maximum rate permissible under
applicable usury or similar laws limiting interest rates, said interest to be
payable quarterly, beginning [ ]. This payment rate shall be
computed on the basis of the actual number of days elapsed over a year of 360
days.
If the indebtedness represented by this Demand Note, or any
part thereof, is collected at law or in equity or in bankruptcy, receivership or
other court proceedings, or this Demand Note is placed in the hands of attorneys
for collection, Convergent agrees to pay, in addition to the principal and
interest (if any) due under this Demand Note, reasonable attorneys' and
collection fees.
The undersigned waives demand, presentment for payment, notice
of nonpayment, protest, notice of dishonor and protest, notice of intention to
accelerate, notice of acceleration, and all other notices, filing of suit and
diligence in collecting this Demand Note and agrees to any substitution,
exchange or release of any such security or the release of any party liable
hereon and further agrees that it will not be necessary for any holder hereof,
in order to enforce payment of this Demand Note by it, to first institute suit
or exhaust its remedies against Convergent, and consents to any extension or
postponement of time of payment of this Demand Note or any other indulgence with
respect hereto, without notice thereof.
The undersigned hereby irrevocably submits to the jurisdiction
of any court in the State of New York located in the City of New York and the
County of New York, and any appellate court from any thereof, in any action,
suit or proceeding brought against it in connection with this Demand Note or for
the recognition or enforcement of any judgment. The undersigned hereto agrees
that a final judgment in any such action, suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. To the extent permitted by applicable law, the
undersigned hereby waives and agrees not to assert by way of motion, as a
defense or otherwise in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that the Demand Note may not be
litigated in or by such courts.
To the extent permitted by applicable law, the undersigned
agrees that it shall not seek and hereby waives the right to seek any review of
the judgment of any such court by any court of any other nation or jurisdiction
which may be called upon to grant an enforcement of such judgment.
The undersigned hereby irrevocably agrees that the summons and
complaint or any other process in connection with this Demand Note may be served
by mailing to the address set forth below or by hand delivery to a person of
suitable age and discretion at the address set forth below. Such service will be
complete on the date such process is so mailed or delivered, and the undersigned
will have thirty days from
37
such completion of service in which to respond in the manner provided by law.
The undersigned may also be served in any other manner permitted by law, in
which event the undersigned's time to respond shall be the time provided by law.
The amounts hereunder shall not be subject in any way
whatsoever to offset, setoff, counterclaim or other deduction of any kind
whatsoever.
THE UNDERSIGNED HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING
DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS DEMAND NOTE. THE
UNDERSIGNED HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY LENDER THAT LENDER HAS BEEN INDUCED TO
ACCEPT THIS DEMAND NOTE BY, AMONG OTHER THINGS, THIS WAIVER.
This Demand Note shall be governed by, and for all purposes
construed in accordance with, the laws of the State of New York (except for its
conflict of laws rules).
CONVERGENT TECHNOLOGIES, LTD.
[ADDRESS]
-------------------------------------
Name:
Title:
38
EXHIBIT D
GENERAL TERMS OF EMPLOYMENT FOR PATRICK DALLAS
1. JOB TITLE
o Managing Director, reporting to Xxxxxxx Xxxxxx, Vice President, Managing
Director Caribbean Operations of Fusion Telecommunications
International, Inc.
o May be assigned other duties from time to time that are necessary to
meet the needs of the Company's business and will be required to travel
internationally.
2. JOB FUNCTION
o Assure the profitability of Fusion Jamaica Limited
o Manage all revenue based, day-to-day operations
o Assume responsibility for the hiring of staff and the assignment of
responsibilities to all employees.
3. REMUNERATION
o Gross pay, not to exceed US$5000 per month for the first two (2) months
of operations as an advance which will be repaid from the Company's
dividend distribution over a period of six (6) months.
o Thereafter remuneration will be derived from company dividends (pro-rata
based upon Dallas' ownership) paid monthly in arrears.
4. HOURS OF WORK
o Hours of work whilst working in Jamaica are determined according to the
local job requirements.
o Required to adjust working hours accordingly without entitlement to
additional remuneration.
5. ANNUAL LEAVE
o Entitled to 30 working days leave per annum. This is in addition to any
normal public/national holidays in your host location.
o Entitlement to leave will be pro-rated for any incomplete years of
service.
o On termination of employment, if annual leave entitlement was exceeded,
the excess will be deducted from any payments due. If you have any
unused leave then the Company may require you to take leave during the
notice period.
39
EXHIBIT E
FORM OF RIGHT OF FIRST REFUSAL
AGREEMENT AMONG SHAREHOLDERS
OF FUSION JAMAICA LIMITED
THIS AGREEMENT made and entered into as of the _____ day of ____________,
2005, between and among Patrick Dallas ("Dallas"), Xxxxxxx Xxxxxx ("Xxxxxx") and
Fusion Telecommunications International, Inc. ("Fusion") (each a "Shareholder"
and collectively the "Shareholders"), all of whom own shares of stock of Fusion
Jamaica Limited, a Jamaican corporation (the "Company").
WITNESSETH:
WHEREAS, the Company has authorized 500,000 shares of common capital stock
with a par value of $5.00 per share(the "Common Stock"); and
WHEREAS, the Shareholders have negotiated concerning the terms and
conditions under which they hold their Common Stock and wish to reduce such
negotiations to this writing;
NOW, THEREFORE, the Shareholders intending to be legally bound hereby, it
is agreed:
1. Right Of First Refusal.
a. Limitation On Transfer. Neither Shareholder shall transfer his, her or
its shares of Common Stock to any person, firm, or corporation other than the
Company or an Affiliate (as defined in paragraph 3 below), unless the
Shareholder desiring to transfer shall first have made an offer to sell as
described below and such offer shall not have been accepted. Provided however,
nothing herein shall limit Fusion from entering into any merger, acquisition,
asset sale, or the like with a third party.
b. Offer To Sell. The offer to sell shall be given to the non-selling
Shareholders and shall consist of a written offer to sell a designated number of
the shares of Common Stock (the "Available Shares") owned by the Shareholder
(the "Transferor") together with a statement of intention to transfer the
Available Shares to a third party, the name and address of the prospective
purchaser, and the terms and price of such intended transfer. The Transferor
must have received from the third party a bona fide offer in writing to purchase
all the Available Shares and must attach to the offer to sell a true copy of
such offer.
c. Acceptance Of Offer To Sell. Within 30 days after receipt of the offer
to sell, the non-selling Shareholders may elect to purchase all, but not less
than all, of the Available Shares. The non-selling Shareholders shall exercise
their election to purchase by giving notice to the Transferor. The notice of
election to purchase Available Shares shall specify a date for the closing of
the purchase that shall not be more than 30 days after the date of giving the
notice.
d. Purchase Price. The purchase price and the terms of purchase of the
Available Shares shall be the same price and terms contained in the third party
written offer; provided that if the date for closing the purchase provided in
this Agreement is later than that offered by the prospective purchaser, the
closing date fixed herein shall control.
e. Place Of Closing. The closing of the purchase shall take place at the
principal office of the Company.
f. Release From Restriction. If the non-selling Shareholders do not elect
to purchase all the Available Shares, the Transferor may sell the Available
Shares to the prospective purchaser named in the statement attached to the offer
to sell, such sale to be made only in accordance with the terms therein stated
and its attachments. If the Transferor fails to make such sale in accordance
with each and every term
40
contained in the statement and the attachments, such shares shall remain subject
to all the restrictions of this Agreement. Furthermore, notwithstanding anything
herein contained to the contrary, no such transfer may be closed unless the
transferee executes a counterpart of this Agreement and agrees to be bound by
all the restrictions on the Shareholders hereunder. Notwithstanding anything
herein, the Company is entitled, in its sole discretion, to restrict sale of the
stock in any manner it deems appropriate.
2. Endorsement On Share Certificate. Each Certificate representing shares of
Common Stock now or hereafter held by the Shareholders shall be stamped with a
legend in substantially the following form:
"The transfer of the shares represented by the within Certificate is restricted
under the terms of an Agreement dated [ ], a copy of which is on file and
available for inspection at the office of the issuer."
3. Transfer To Affiliate. Any Shareholder may, notwithstanding the foregoing,
freely transfer shares to an Affiliate of such Shareholder but only on the
condition that the Affiliate executes a counterpart of this Agreement and agrees
to be bound by all the restrictions on the Shareholders hereunder. For the
purposes of this Agreement an Affiliate shall mean only the spouse, parents, and
children of a Shareholder or a trustee or trustees and its or their successors
for the benefit of a Shareholder or for the benefit of the spouse, parents, and
children of a Shareholder, or any combination of the foregoing.
4. Specific Performance. The parties hereby declare that it is impossible to
measure in money the damages that will accrue to a party hereto by reason of a
failure of a Shareholder to perform any of the obligations under this Agreement.
Therefore, if any party hereto shall institute any action or proceeding to
specifically enforce any provisions hereof, any person against whom such action
or proceeding is brought hereby waives a claim or defense that such party has an
adequate remedy at law and shall not urge at such action or proceeding the claim
or defense that such a remedy at law exists.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.
By:
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
STOCKHOLDERS:
XXXXXXX XXXXXX
By:
--------------------------------------
Name: Xxxxxxx Xxxxxx
PATRICK DALLAS
By:
--------------------------------------
Name: Patrick Dallas
41
CONVERGENT TECHNOLOGIES, LTD.
By:
--------------------------------------
Name: Patrick Dallas
42
EXHIBIT F
FORM OF NON-SOLICITATION AND NON-COMPETITION AGREEMENT
This Non-Solicitation and Non-Competition Agreement ("Agreement") is
made and entered into as of the ___ day of [ ], 2005 by and between Fusion
Jamaica Limited, a company organized under the laws of the country of Jamaica
(the "Company"), and [ ], an individual who currently resides at the address set
forth below his signature at the end of this Agreement ("Employee").
BACKGROUND
A. The Employee has been employed by Company for ____ years; and
B. On or about January 11, 2004, Fusion Telecommunications
International, Inc. purchased a majority equity interest in the Company; and
C. As a condition of Employee's continued employment with the Company
Employee must enter into this Agreement to protect and secure the Company's
goodwill including, without limitation, its relationships with manufacturers,
customers, vendors, suppliers, employees, and others, as set forth herein.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and Employee, intending to be legally bound hereby, agree as follows:
1. EMPLOYMENT.
The Company hereby employs Employee, and Employee hereby agrees to be
employed by the Company and to serve the Company, upon the terms and subject to
the conditions set forth herein.
2. TERMINATION OF EMPLOYMENT.
2.1. ACKNOWLEDGMENT OF EMPLOYMENT "AT-WILL".
Notwithstanding any provision of this or any other Agreement,
Employee's employment is "at-will" and, accordingly, either Employee or the
Company may terminate at any time and for any reason Employee's employment with
the Company. No provision of this Agreement shall entitle Employee to remain in
the employment of the Company or affect the right of the Company or Employee to
terminate the Employee's employment at any time or for any reason.
2.2. SURVIVAL OF EMPLOYEE'S OBLIGATIONS.
Notwithstanding the termination of this Agreement by either party
hereto for any reason, the obligations of Employee under Section 3 hereof and
the other provisions thereof shall survive the termination or expiration of this
Agreement and/or the duration of Employee's employment with the Company (the
"EMPLOYMENT TERM") and shall remain in full force and effect for the period
provided therein.
43
3. COVENANTS.
In consideration of the compensation to be paid to Employee by the
Company, Employee hereby makes the following covenants to the Company:
3.1. COVENANT NOT TO COMPETE.
During the Employment Term and for a period of two (2) years
thereafter, or for so long as Employee owns stock in the Company, whichever is
later, (the "Post-Employment Period"), Employee shall not, alone or together or
in association with others, whether as owner, shareholder, employee, officer,
director, partner, manager, member, lender, investor, consultant, principal,
agent, independent contractor, co-venturer or in any other capacity, directly or
indirectly, invest in, engage in, have a financial interest in or be in any way
connected or affiliated with, or render advice or service to, any person, firm,
enterprise or other business that is in competition with the Company.
(a) COMPETITION WITH THE COMPANY. For purposes of this Agreement, (i) the
phrase "in competition with the Company" shall be deemed to include
competition with the Company and its subsidiaries, or its respective
successors or assigns, or the businesses of any of them, and (ii) a
business shall be deemed to be in competition with the Company if it is
engaged in any business activity or has products or services that are
the same or similar to the business activities, products or services of
the Company from time to time in any geographic area in which the
Company is conducting or has conducted business at any time during the
Employment Term in Jamaica, West Indies. Notwithstanding the foregoing,
nothing herein contained shall prevent Employee from acquiring and
holding for investment up to two percent (2%) of any class of
securities of any corporation, if such securities are listed or traded
either on a national securities exchange or the Nasdaq Stock Market or
the over-the-counter market.
(b) INTERPRETATION OF COVENANT. The parties hereto acknowledge and agree
that the duration and area for which the covenant not to compete set
forth in this Section 3.1 is to be effective are fair and reasonable
and are reasonably necessary for the protection of the Company and its
business and good will, and Employee hereby waives any objections to or
defenses in respect thereof. In the event that any court determines
that any portion of the time period or the area, or both of them, are
unreasonable, arbitrary or against public policy, and that such
covenant is to such extent unenforceable, illegal or invalid, the
parties hereto agree that this Section 3.1 shall be deemed amended to
delete there from such provisions or portions adjudicated to be
unenforceable, illegal or invalid so that the covenant shall remain in
full force and effect for the greatest time period and in the greatest
geographical area that would render it enforceable, legal and valid.
The parties intend that the covenant set forth in this Section 3.1
shall be deemed to be a series of separate covenants; one for each and
every county of each and every state of the United States of America
and one for each and every political subdivision of each and every
other country where the covenant is intended to be effective and is not
proscribed by law.
3.2. COVENANT REGARDING DISCLOSURE OR USE OF CONFIDENTIAL INFORMATION.
Employee acknowledges that during the Employment Term and as part of
his employment, he has learned, he will learn and he will have access to
confidential and proprietary information regarding the Company, its business and
affairs. Employee hereby agrees that he shall at all times during and after the
Employment Term keep confidential and hold in confidence all Confidential
Information (as defined below), and Employee shall not, at any time, either
during or after the Employment Term, either directly or indirectly, use any
Confidential Information for Employee's own benefit or to the benefit of any
other person or entity or divulge, disclose, communicate or otherwise reveal any
Confidential Information to any person or entity in any manner whatsoever, other
than in the performance of Employee's duties hereunder. As used herein,
"CONFIDENTIAL INFORMATION" shall mean any and all information, however
documented, related to the business and affairs of the Company, including, but
not limited to its assets, properties, operations, finances, practices,
44
procedures, policies, methods, contracts, agreements and arrangements, lending
policies, pricing policies, price lists, financial plans, business plans,
financial information, financial projections, budgets, marketing strategies and
techniques; the identity and location of all past, present and prospective
manufacturers, customers, suppliers, vendors, affiliates, debtors, creditors,
lenders, employees, consultants, advisors, agents, distributors, wholesalers,
clients and others who have dealings with the Company; trade secrets, processes,
photographs, graphics, product specifications, formulas, compositions, samples,
inventions, ideas, research and development; patents and patent applications;
copyrights and copyright applications (in any such case, whether registered or
to be registered in the United States or any foreign country) applied for,
issued to or owned by the Company; any and all processes, computer programs and
software (including object code and source codes), database, technologies,
engineering or technical data, drawings, sketches or designs, manufacturing or
distribution methods or techniques; and any other information known to Employee
to be confidential or proprietary information. Employee hereby acknowledges and
agrees that,, as between the Company and Employee, all of the Confidential
Information, however documented, whether or not developed, created or modified
by Employee, is the exclusive property of the Company. Upon the termination or
expiration of the Employment Term, Employee shall leave with or return to the
Company, without making or retaining any copies or other records of, all
Confidential Information including all copies, summaries, abstracts thereof and
all memoranda, notes, records, reports, books, letters, customer lists, customer
databases, manuals and other writings or documents whatsoever pertaining
thereto.
3.3. COVENANTS REGARDING BUSINESS RELATIONSHIPS.
Employee agrees that during and throughout the Employment Term and the
Post-Employment Period, except when acting on behalf of the Company, he shall
not, directly or indirectly, (1) employ, solicit, induce, engage, or be engaged
by, or attempt to solicit, induce or engage any manufacturer, employee,
independent contractor, consultant or salesman of the Company (whether now or
hereafter engaged by the Company) to (A) terminate such employment or
engagement, (B) accept employment or engagement or otherwise render services to
any other person or business (wherever located, and regardless of type of
business conducted), or (C) interfere with the business of the Company; (ii)
solicit any manufacturers, clients or customers of the Company or interfere in
any business relationship between the Company and any other person, firm or
entity, including any person who was at any time an employee, consultant,
contractor, advisor, supplier, lender, manufacturer or customer of the Company.
Employee shall not, at any time during or after the Employment Term or the
Post-Employment Period, disparage the Company or any of its shareholders,
directors, officers, employees or agents.
3.4. INTELLECTUAL PROPERTY.
During and throughout the Employment Term and Post-Employment Period,
Employee agrees to disclose to the Company any and all ideas, improvements,
techniques, modifications, processes, inventions, developments, discoveries,
trade secrets, business plans, software, code or other algorithms and any work
of authorship ("INTELLECTUAL PROPERTY") developed, conceived, created, made,
devised, discovered, acquired or acquired knowledge of, by Employee, either by
himself or in conjunction with any other person, which relates in any way,
directly or indirectly, or maybe useful in any manner in the business of the
Company, and any such item that is based upon or uses Confidential Information,
whether or not patentable or copyrightable. Employee hereby agrees that the
Intellectual Property shall become and remain the sole and exclusive property of
the Company. Employee hereby acknowledges that all of Employee's writing, works
of authorship and other Intellectual Property are works made for hire and the
property of the Company, including patents, copyrights and other intellectual
property rights pertaining thereto. Employee will, at the Company's request and
cost, render assistance as the Company deems necessary or desirable to secure,
prosecute and/or defend the rights thereto by patent, copyright to otherwise to
the Company, including without limitation the assignment, transfer and
conveyance to the Company of all of Employee's right, title and interest in and
to the Intellectual Property.
45
3.5. EQUITABLE RELIEF.
Employee hereby acknowledges and agrees that his services to be
rendered to the Company hereunder and his obligations contained in this Section
3 are of special, unique and personal character which gives them a peculiar
value to the Company, that the Company cannot be reasonably or adequately
compensated in money damages in an action at law in the event Employee breaches
any obligations under this Section 3, and that the provisions of this Section 3
are reasonable and necessary to protect the business of the Company. Employee
therefore expressly agrees that, in addition to any other rights or remedies
which the Company may have at law or in equity or by reason of any other
agreement, the Company shall be entitled to injunctive and other equitable
relief in the form of temporary, preliminary and permanent injunctions without
posting bond or other security in the event of any actual or threatened breach
of any such obligation by Employee and without the necessity of proving actual
damages, and to discontinue any salary, bonus, benefits and/or insurance
continuation provided hereunder. Nothing in this Agreement shall be construed to
prohibit the Company from pursuing any other remedy, and the Employee agrees
that all remedies of the Company are cumulative.
3.6. NATURE OF COVENANTS.
Employee's covenants in Section 3 hereof are independent covenants, and
the existence of any claim by Employee against the Company under this Agreement
or otherwise will not excuse Employee's breach or waive Employee's obligation to
perform, any covenant in Section 3 hereof. If Employee's employment with the
Company terminates for any reason, the terms and conditions of this Agreement
necessary or appropriate to enforce the covenants of Employee in Section 3,
shall survive and remain in full force and effect.
4. CONSOLIDATION, MERGER OR SALE OF ASSETS.
Nothing in this Agreement shall preclude the Company from consolidating
with, merging into, or transferring all or substantially all of its assets to
another corporation or entity which assumes all of the Company's obligations and
undertakings hereunder. Upon such a consolidation, merger or transfer of assets,
the term "Company" as used herein shall mean such other corporation or entity,
and this Agreement shall continue or full force and effect.
5. BINDING AGREEMENT.
This Agreement shall be binding upon, and inure to the benefit of,
Employee and the Company and their respective permitted heirs, legal
representatives, successors and assigns.
6. AMENDMENT OF AGREEMENT.
Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated except by an instrument in writing signed by the
parties hereto.
7. WAIVER.
No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be an estoppel against the enforcement of any tern,
obligation, right, covenant or other provision of this Agreement, except by
written instrument of the party charged with such waiver or estoppel. No such
written waiver shall be deemed a continuing waiver unless specifically stated
therein, and each waiver shall operate only as to the specific teen waived and
shall not constitute a waiver of such terns for the future or as to any act
other than the act specifically waived.
46
8. SEVERABILITY.
The invalidity, illegally or unenforceability of any provision of this
Agreement in any circumstance shall not affect the validity, legality or
enforceability of such provision in any other circumstance or any other
provision of this Agreement, and such provision in any other circumstance and
each such other provision of this Agreement shall, to the full extent consistent
with applicable law, continue in full force and effect.
9. HEADINGS.
The headings contained herein are included solely for convenience of
reference and shall not control the meaning or interpretation of any of the
provisions of this Agreement.
10. ENTIRE AGREEMENT.
10.1. SUPERSEDES PRIOR AGREEMENTS.
This Agreement contains the entire agreement and understanding between
the parties hereto concerning the subject matter hereof and supersedes all prior
agreements, arrangements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the Company and Employee with
respect thereto.
10.2. SUPERSEDES HANDBOOKS ETC.
Employee acknowledges that from time to time the Company may establish,
maintain or distribute employee manuals or handbooks or personnel policy
manuals, and officers or other representatives of the Company may make written
or oral statements relating to personal policies and procedures. Such manuals,
handbooks and statements are intended only for generally guidance. No policies,
procedures or statements of any nature by or on behalf of the Company (whether
written or oral, and whether or not continued in any employee manual or handbook
or personnel policy manual), and no acts or practices of any nature, shall be
construed to modify this Agreement.
11. GOVERNING LAW AND VENUE.
This Agreement shall be governed by and construed and interpreted in
accordance with the internal substantive laws of the State of New York, without
giving effect to the principles of conflict of laws.
Any litigation involving this Agreement shall be triable only in a
court of competent jurisdiction located in state court located within the State
of New York. The parties hereto irrevocably consent to the personal jurisdiction
and venue of such court.
12. NOTICES.
Any notice given under this Agreement must be in writing and shall be
deemed to have been duly given when delivered personally, when sent by facsimile
(upon written confirmation of receipt), when received by the addressee if sent
by a nationally-recognized overnight delivery service, or three (3) business
days after being sent by certified or registered mail, postage prepaid, return
receipt requested, in each case duly addressed to the party concerned at the
address indicated below or to such changed address as such party may
subsequently give notice:
If to the Company, to its principal business office.
If to Employee, to his address as set forth at the end of this
Agreement.
47
13. REMEDIES CUMULATIVE.
No right or remedy conferred upon the Company or the Employee by this
Agreement is intended to be exclusive of any other right or remedy, and each and
every such right or remedy shall be cumulative and shall be in addition to any
other right or remedy given hereunder or now or hereafter existing at law or in
equity.
14. PRONOUNS.
When used in this Agreement, the number and gender of each pronoun
shall be construed to be such number and gender as the contexts circumstances or
antecedent may require.
15. COUNTERPARTS.
This Employment Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
16. LEGAL FEES.
In the event of litigation to enforce the terms and conditions of this
Agreement, the losing party agrees to pay the substantially prevailing party's
costs and expenses incurred including, without limitation, reasonable attorneys'
fees.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
or on behalf of the parties hereto as of the date first above written.
FUSION JAMAICA LIMITED
By:
----------------------------------
Name:
Title:
EMPLOYEE:
--------------------------------------
----------------------
----------------------
48
EXHIBIT G
FORM OF SECURITY AGREEMENT
This SECURITY AGREEMENT (this "AGREEMENT") is dated as of [ ], and
is entered into by and between [ ], a [ ] ("COMPANY"),
and FUSION TELECOMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation
("SECURED PARTY").
PRELIMINARY STATEMENTS
A. Pursuant to that certain Promissory Note, by and between Company
and Secured Party (as it may hereafter be further amended, restated,
supplemented or otherwise modified from time to time, the "NOTE") [dated ]
Secured Party has made a loan to Company, subject to the terms and conditions
set forth in the Note.
B. It is a condition precedent to the Secured Party's purchase of
the Note that Company shall have granted the security interest and undertaken
the obligations contemplated by this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing promises, the agreements and
covenants set forth herein, and in order to induce Secured Party to purchase the
Note, and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
1. GRANT OF SECURITY.
Company hereby grants to Secured Party a security interest in all of Company's
right, title and interest in and to the following, in each case whether now or
hereafter existing, whether tangible or intangible, or in which Company now has
or hereafter acquires an interest and wherever the same may be located (the
"COLLATERAL"):
(a) all equipment in all of its forms, all parts thereof and all
accessions thereto (any and all such equipment, parts and accessions being the
"EQUIPMENT");
(b) all inventory in all of its forms, including but not limited to
all goods held by Company for sale or lease or to be furnished under contracts
of service or so leased or furnished (collectively the "INVENTORY");
(c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other rights and obligations of any kind
owned by or owing to Company and all rights in, to and under all security
agreements, leases and other contracts securing or otherwise relating to any
such accounts, contract rights, chattel paper, documents, instruments, general
intangibles (other than Intellectual Property Collateral) or other obligations
(any and all such accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other obligations being the "Accounts", and
any and all such security agreements, leases and other contracts being the
"RELATED CONTRACTS");
(d) all deposit accounts (the "DEPOSIT ACCOUNTS"), together with (i)
all amounts on deposit from time to time in such deposit accounts, and (ii) all
interest, cash, instruments, securities and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the foregoing;
(e) investment property, including, but not limited to commodity
accounts and commodity contracts;
(f) letter of credit rights;
(g) promissory notes;
49
(h) the "INTELLECTUAL PROPERTY COLLATERAL", which term means:
(i) all right, title and interest (including rights acquired
pursuant to a license or otherwise) in and to all trademarks, service
marks, designs, logos, indicia, tradenames, trade dress, corporate names,
company names, business names, fictitious business names, trade styles
and/or other business identifiers and applications pertaining thereto,
owned by Company, or hereafter adopted and used, in its business
(collectively, the "Trademarks"), all registrations that have been or may
hereafter be issued or applied for thereon in the United States and in
foreign countries (the "TRADEMARK REGISTRATIONS"), and all common law and
other rights in and to the Trademarks in the United States and any state
thereof and in foreign countries (the "TRADEMARK RIGHTS");
(ii) all right, title and interest (including rights acquired
pursuant to a license or otherwise) in and to all patents and patent
applications and rights and interests in patents and patent applications
under any domestic or foreign law that are presently, or in the future may
be, owned or held by Company and all patents and patent applications and
rights, title and interests in patents and patent applications under any
domestic or foreign law that are presently, or in the future may be, owned
by Company in whole or in part, all rights corresponding thereto, and all
re-issues, divisions, continuations, renewals, extensions and
continuations-in-part thereof (all of the foregoing being collectively
referred to as the "PATENTS"); and
(iii) (a) all copyrights under the laws of the United States
or any other country (whether or not the underlying works of authorship
have been published), all registrations and recordings thereof, all
copyrightable works of authorship (whether or not published), and all
applications for copyrights under the laws of the United States or any
other country, including, without limitation, registrations, recordings
and applications in the United States Copyright Office (the "COPYRIGHT
OFFICE") or any similar office or agency in any other country, (b) all
renewals of any of the foregoing, (c) all claims for, and rights to xxx
for, past or future infringements of any of the foregoing and (d) all
income, royalties, damages and payments now or hereafter due or payable
with respect to any of the foregoing, including, without limitation,
damages and payments for past or future infringements thereof (all of the
foregoing collectively being referred to as the "COPYRIGHTS");
(i) all trade secrets, trade secret rights, know-how, customer
lists, processes of production, ideas, confidential business information,
techniques, processes, formulas, and all other proprietary information of
Company;
(j) to the extent not included in any other paragraph of this
Section 1, all other general intangibles (including without limitation tax
refunds, rights to payment or performance, CHOSES IN ACTION and judgments taken
on any rights or claims included in the Collateral);
(k) all books, records, files, correspondence, computer programs,
tapes, disks and related data processing software that at any time evidence or
contain information relating to any of the Collateral or are otherwise necessary
or helpful in the collection thereof or realization thereupon; and
(l) all proceeds, products, rents and profits of or from any and all
of the foregoing Collateral and, to the extent not otherwise included, all
payments under insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.
50
Notwithstanding anything herein to the contrary, in no event shall the
Collateral include, and Company shall not be deemed to have granted a security
interest in (i) any item of Collateral that is leased to Company and for which
Company has not exercised any applicable purchase option; (ii) any of Company's
rights or interests in any license, contract or agreement to which Company is a
party or any of its rights or interests thereunder to the extent, but only to
the extent, that such a grant would, under the terms of such license, contract
or agreement or otherwise, result in a breach of the terms of, or constitute a
default under, any license, contract or agreement to which Company is a party
(other than to the extent that any such term would be rendered ineffective
pursuant to Section 9-406 of the UCC or any other applicable law (including the
United States Bankruptcy Code (the "BANKRUPTCY CODE")) or principles of equity);
PROVIDED, that immediately upon the ineffectiveness, lapse or termination of any
such provision, the Collateral shall include, and Company shall be deemed to
have granted a security interest in, all such rights and interests as if such
provision had never been in effect, or (iii) any real property leasehold, unless
Company has executed a leasehold mortgage or leasehold deed of trust covering
such real property leasehold.
2. SECURITY FOR OBLIGATIONS.
This Agreement secures, and the Collateral assigned by Company is collateral
security for, the prompt payment or performance in full when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including without limitation the payment of amounts that would become
due but for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code), of all Secured Obligations of Company. "SECURED OBLIGATIONS"
means all obligations and liabilities of Company to Secured Party now or
hereafter existing, including all obligations and liabilities arising out of or
in connection with the Note.
3. REPRESENTATIONS AND WARRANTIES.
Company represents and warrants as follows:
(a) OWNERSHIP OF COLLATERAL. Company owns the Collateral free
and clear of any Lien (as defined below), security interest, assignment, option
or other charge or encumbrance, except for the Liens and security interests (i)
set forth on SCHEDULE A hereto, (ii) created by this Agreement or any other
document in favor of Secured Party, (iii) resulting from taxes which have not
yet been become delinquent, or (iv) that are minor liens, encumbrances and
defects in title which do not materially detract from the value of the property
subject thereto. This Agreement has been duly and validly authorized by Company
and executed and delivered by Company and constitutes the legal, valid and
binding obligation of Company, enforceable against Company in accordance with
its terms (subject to applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally and subject, as
to enforceability, to equitable principles of general application (regardless of
whether enforcement is sought in a proceeding in equity or at law)) and, subject
to the performance of the relevant procedures as specified in Section 6(a)
herein with respect to such Collateral, creates a valid, binding, enforceable
and perfected security interest in and Lien upon all of the Collateral, to the
extent such security interest can be created by performance of the procedures
specified in Section 6(a), and Company is duly authorized to make all filings
and take all other actions necessary or desirable to perfect and to continue
perfected such security interest. For purposes of this Agreement, "LIEN" shall
mean a pledge, assignment, lien, charge, mortgage, encumbrance, or other
security interest obtained under this Agreement or under any other agreement or
instrument with respect to any present or future assets, property, contract
rights, or revenues in order to secure the payment of indebtedness of the party
referred to in the context in which the term is used.
(b) OFFICE LOCATIONS. The principal place of business, the
chief executive office and the office where Company keeps its records are, as of
the date hereof, located at:
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----------------------------
----------------------------
(c) LEGAL NAME. Company's exact legal name and spelling
thereof as it appears on its Articles of Incorporation is as set forth in the
preamble to this Agreement.
(d) STATE OF INCORPORATION; CORPORATE IDENTIFICATION NUMBER.
Company is incorporated and validity exists under the laws of Jamaica, and its
corporate identification number is [___________].
4. FURTHER ASSURANCES.
(a) Company agrees that from time to time, at its reasonable
expense, Company will promptly execute and deliver to Secured Party one or more
financing and continuation statements, and amendments thereto, relating to all
or any part of the Collateral, and all further instruments and documents, and
take all further action, that may be necessary or desirable, or that Secured
Party may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
(b) Company will give prompt written notice to Secured Party
of, and defend the Collateral against, any suit, action or proceeding related to
the Collateral or which could adversely affect the security interests and Liens
granted hereunder.
5. CERTAIN COVENANTS OF COMPANY.
Company shall:
(a) give Secured Party 15 days' prior written notice of any
change in Company's chief place of business, chief executive office or residence
or the office where Company keeps its records regarding the Accounts and all
originals of all chattel paper that evidence Accounts, prior to effectuating any
change described in the preceding sentence, Company shall take or cause to be
taken all actions deemed by Secured Party to be necessary or desirable to
prevent any financing or continuation statement from becoming seriously
misleading or rendered ineffective, or the security interests granted herein
from becoming unperfected or the relative priority thereof otherwise impaired,
as a result of such removal or change and, if reasonably requested by Secured
Party, shall provide an opinion of nationally recognized counsel in form and
substance reasonably satisfactory to Secured Party, describing such actions and
confirming that such actions have been taken and are effective to prevent such
results;
(b) maintain, or cause to be maintained, all items of the
Collateral in good condition and repair, ordinary wear and tear excepted in the
case of Equipment, and pay, or cause to be paid, the costs of repairs to or
maintenance of that Collateral which is of a type that could be repaired or
maintained;
(c) not use any Collateral in material violation of law or any
applicable policy of insurance;
(d) pay or cause to be paid when due all taxes, assessments,
and other charges relating to the Collateral or this Agreement and reimburse
Secured Party for all reasonable costs of and reasonable fees incurred in
connection with the filing of the documents and instruments referred to in
Section 6(a) hereof; and
(e) furnish to Secured Party from time to time (but, unless an
Event of Default (as defined in Section 6(b) below) shall have occurred and be
continuing, no more frequently than quarterly) statements and schedules further
identifying and
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describing the Intellectual Property Collateral and such other reports in
connection with the Intellectual Property Collateral as Secured Party may
reasonably request, all in reasonable detail.
6. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
Company hereby irrevocably appoints Secured Party as Company's attorney-in-fact,
with full authority in the place and stead of Company and in the name of
Company, Secured Party or otherwise, from time to time in Secured Party's
discretion to take any of the following actions:
(a) file one or more financing or continuation statements, and
amendments thereto, relating to all or any part of the Collateral;
(b) upon the occurrence and during the continuance of any of
the default events described in the Note (an "EVENT OF DEFAULT"), to ask for,
demand, collect, xxx for, recover, compound, receive and give acquaintance and
receipts for moneys due and to become due under or in respect of any of the
Collateral;
(c) upon the occurrence and during the continuance of an Event
of Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) upon the occurrence and during the continuance of an Event
of Default, to file any claims or take any action or institute any proceedings
that Secured Party may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of Secured Party with respect
to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Note) levied or placed upon or threatened
against the Collateral, the legality or validity thereof and the amounts
necessary to discharge the same to be determined by Secured Party in its sole
discretion, any such payments made by Secured Party to become obligations of
Company to Secured Party, due and payable immediately upon demand;
(f) upon the occurrence and during the continuance of an Event
of Default, to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and
(g) upon the occurrence and during the continuance of an Event
of Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Secured Party were the absolute owner thereof for all purposes, and to
do, at Secured Party's option and Company's expense, at any time or from time to
time, all acts and things that Secured Party deems necessary to protect,
preserve or realize upon the Collateral and Secured Party's security interest
therein in order to effect the intent of this Agreement, all as fully and
effectively as Company might do.
The appointment set forth in this Section 6 is coupled with an interest and is
irrevocable.
7. REMEDIES.
(a) If any Event of Default shall have occurred and be
continuing, Secured Party may exercise in respect of the Collateral, in addition
to all other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the UCC
(whether or not the UCC applies to the affected Collateral), and also may (i)
require Company to, and Company hereby agrees that it will at its expense and
upon request of Secured Party forthwith,
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assemble all or part of the Collateral as directed by Secured Party and make it
available to Secured Party at a place to be designated by Secured Party that is
reasonably convenient to both parties, (ii) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (iii) prior to the disposition of the Collateral, store, process,
repair or recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent Secured Party deems appropriate, (iv)
take possession of Company's premises or place custodians in exclusive control
thereof, remain on such premises and use the same and any of Company's equipment
for the purpose of completing any work in process, taking any actions described
in the preceding clause (iii) and collecting any Secured Obligation, or (v)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of Secured
Party's offices or elsewhere, for cash, on credit or for future delivery, at
such time or times and at such price or prices and upon such other terms as
Secured Party may deem commercially reasonable. Secured Party may be the
purchaser of any or all of the Collateral at any such sale and Secured Party
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at any such
public sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Collateral payable by Secured Party at
such sale. Each purchaser at any such sale effected in accordance with the
provisions of this Section 7 and applicable law shall hold the property sold
absolutely free from any claim or right on the part of Company, and Company
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Company agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Company of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Company hereby waives any
claims against Secured Party arising by reason of the fact that the price at
which any Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if Secured Party
accepts the first offer received and does not offer such Collateral to more than
one offeree. If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Secured Obligations, Company shall liable for
the deficiency and the fees and costs of any attorneys employed by Secured Party
to collect such deficiency.
8. APPLICATION OF PROCEEDS.
Except as expressly provided elsewhere in this Agreement, all proceeds received
by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied in the
following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other reasonable
expenses, liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Company, and to the payment of all
reasonable costs and expenses paid or incurred by Secured Party in
connection with the exercise of any right or remedy hereunder;
SECOND: To the payment of all other Secured Obligations and, as to
obligations arising under the Note, as provided in the Note; and
THIRD: To the payment to or upon the order of Company, or to whosoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such
proceeds.
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9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS; TERMINATION AND RELEASE.
(a) This Agreement shall create a continuing security interest
in the Collateral and shall (i) remain in full force and effect until the
payment in full of the Secured Obligations or the cancellation, termination or
conversion into Company equity securities of the Note, (ii) be binding upon
Company and its successors and assigns, and (iii) inure, together with the
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and their respective successors, transferees and assigns.
(b) Upon the payment in full of all Secured Obligations or the
cancellation, expiration or conversion of the Note, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
Company. Upon any such payment in full of all Secured Obligations or
cancellations, termination or conversion, Secured Party will, at Company's
expense, execute and deliver to Company such documents as Company shall
reasonably request to evidence such termination.
10. EXCULPATION OF SECURED PARTY.
(a) Secured Party shall not be responsible in any manner for
the validity or transferability of any of the Collateral conveyed or held
pursuant to the terms of this Agreement, nor for any representation or warranty
made by any other party to this Agreement. Nothing contained herein shall be
deemed to obligate Secured Party to deliver any funds or evidences of ownership
of any asset, tangible or otherwise, nor anything else, to any person or entity,
unless the same shall first have been received by Secured Party pursuant to this
Agreement.
(b) Anything in this Agreement to the contrary
notwithstanding, in no event shall Secured Party be liable for any special,
incidental, or consequential loss or damage of any kind whatsoever (including
but not limited to lost profits), even if Secured Party has been advised of the
likelihood of such loss or damage and regardless of the form of action.
(c) Secured Party shall not be liable for any action taken or
omitted by it in its reasonable discretion under or in connection with this
Agreement, the Note, or any other applicable document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct).
(d) Secured Party shall be entitled to rely, and shall be
fully protected in relying, upon advice and statements of legal counsel selected
by Secured Party.
(e) In the event that any notice or instruction required to be
delivered to Secured Party hereunder is not so delivered, Secured Party may hold
any funds in its possession pursuant to this Agreement, or the interest in any
Collateral, pending delivery to it of such written notice or instruction and, if
an Event of Default occurs while such funds are in its possession may exercise
all other rights and remedies of Secured Party under this Agreement.
(f) It is understood and agreed that should any dispute arise
with respect to the delivery or ownership, or right of possession of or to any
of the Collateral, or to any funds received by Secured Party hereunder or in
connection herewith, or the due and proper performance by any party of its
obligations hereunder, Secured Party is authorized and directed to retain in its
possession without liability to anyone all or any of the Collateral or funds
delivered to it pursuant hereto until such dispute shall have been settled by
mutual and unanimous agreement by the parties concerned, or by a final order,
decree or judgment of a court of competent jurisdiction and from which no appeal
has been taken and as to which the time the right to appeal has expired. Secured
Party shall be entitled, but shall be under no duty whatsoever, to institute an
action in interpleader or similar proceedings in order to determine the rights
of the respective parties to the Collateral, any funds held pursuant hereto, or
to defend any such proceedings.
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(g) Notwithstanding any representation or warranty or other
statement set forth herein that the documents and instruments executed and
delivered by Company hereunder or pursuant hereto (including without limitation
any UCC financing statements) are adequate in form and substance to create and
perfect a lien against the Collateral, Secured Party bears no responsibility for
investigating whether or not such documents and instruments do effectively
create such an interest, and Secured Party bears no responsibility or liability
therefor or for the failure of such document or instruments so to create or
perfect such an interest.
11. INDEMNIFICATION OF SECURED PARTY.
Company hereby indemnifies and agrees to hold Secured Party harmless from and
against any and all damage, cost, liability, or expenses (including, but not
limited to, reasonable legal fees and court costs) that Secured Party incurs by
reason of acting in such capacity hereunder, without prejudice to any right that
any party may have to recover from the other party for any such damage, cost,
liability, or expense. It is expressly agreed and acknowledged by the parties
hereto that the foregoing indemnity shall apply to such reasonable legal fees
and expenses incurred by Secured Party in defending any action brought by any
party hereto alleging misconduct or negligence by Secured Party, unless there
shall have been finally concluded by a court of competent jurisdiction that
Secured Party was responsible for, or committed, gross negligence or willful
misconduct in discharging or in failing to discharge its duties hereunder. The
indemnification obligations in this Section shall survive the payment of all
obligations hereunder and the resignation or replacement of Secured Party.
12. AMENDMENTS.
No amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by Company therefrom, shall in any
event be effective unless the same shall be in writing and signed by Secured
Party and by Company. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.
13. NOTICES.
Any notice or other communication herein required or permitted to be given shall
be in writing and may be personally served, or sent by telefacsimile or United
States mail or courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of telefacsimile, or
three business days after depositing it in the United States mail with postage
prepaid and properly addressed to the addresses set forth on the signature pages
hereto.
14. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
15. SEVERABILITY.
In case any provision in or obligation under this Agreement shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
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16. HEADINGS.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
17. GOVERNING LAW; TERMS.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
18. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE, BUT NEED NOT EXCLUSIVELY
BE, BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE
OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; AND (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS.
19. WAIVER OF JURY TRIAL.
COMPANY AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT.
20. COUNTERPARTS.
This Agreement may be delivered by facsimile transmission and be executed in one
or more counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, Company and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[ ]
By: ____________________________
As its President
[ ]
By: _____________________________
As its [ ]
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