DATED 14 DECEMBER 1998
OPTION AGREEMENT
SYMPOSIUM TELECOM CORPORATION (1)
XXXXXX XXXXX (2)
XXXXXXX XXXXX
XXXXXXX XXXXXX
AUTOMATIC COMMUNICATIONS LIMITED (3)
OPTION AGREEMENT
DATE
14 DECEMBER 1998
PARTIES
(1) SYMPOSIUM TELECOM CORPORATION LIMITED of 000 Xxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 ("the Grantee");
(2) XXXXXX XXXXX of Apartment 211, Parc Saint Roman, 0 Xxxxxx Xxxxx Xxxxx,
Xxxxxx 00000;
XXXXXXX XXXXX of Apartment 107, Parc Saint Roman, 0 Xxxxxx Xxxxx
Xxxxx, Xxxxxx 00000; and
XXXXXXX XXXXXX of Apartment 107, Parc Saint Roman, 0 Xxxxxx Xxxxx
Xxxxx, Xxxxxx 00000 (collectively "the Grantors")
(3) AUTOMATIC COMMUNICATIONS LIMITED (no 76494B) of Suites 00-00 Xxxxxxxxx
Xxxxx, Xxxxxxx Street, PO Box N-7521, Nassau New Providence, Bahamas
("the Company")
INTRODUCTION
(A) The Company was incorporated in the Bahamas on 22 May 1998 and is
registered under number 76494B as a private limited company and has an
authorised share capital of US$5,000 divided into 5,000 shares of US$1
each of which 5,000 of such shares have been issued fully paid or
credited as fully paid.
(B) The Grantee is a corporation organised under the laws of Delaware, USA
and has a share capital of 25,000,000 shares of common stock, with a
par value of $0.001 per share and 10,000,000 shares of preferred
stock, with a par value of $0.001 per share.
(C) The parties have agreed that the Grantors shall grant to the Grantee
an option to purchase 5,000 shares of US$1 each in the Company
beneficially owned by the Grantors upon the terms and subject to the
conditions contained in this Agreement.
OPERATIVE PROVISIONS
1 DEFINITIONS
1.1 In this Agreement unless the context otherwise requires the following
expressions shall bear the meanings shown:
Accounts Date the date of the last day of the eighteenth
month following the Trading Date
Admission the date a broker/dealer initiates quotations
for Purchaser Common Stock in the OTC
Bulletin Board Service or a comparable
medium.
Audited Accounts the accounts determined pursuant to Schedule
2 for the period commencing on the first day
of the seventh month (being the first day of
a calendar month) following the Trading Date
and ending on the Accounts Date
Business Day a day on which banks in the City of London
generally are open for business
Common Stock common stock with a par value of US$0.001 per
share of the Grantee
Completion the performance by the parties hereto of
their respective obligations under clause 3
the Conditions as set out in clause 3.2
Consideration Shares shares of common stock of the Grantee to be
allotted to the Grantors pursuant to clauses
3 and 4
the Disclosure Letter the letter from the Grantors to the Grantee
to be dated as at Completion
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Grantee's Auditors a firm of auditors to be determined by the
board of directors of the Grantee
Grantors' Auditors Xxxxxxxx Croydon of Xxxxxxx House, 00-00 Xxxx
Xxxxxx, Xxxxxxxxxx, Xxxxx XX00 0XX
Grantors' Solicitors Xxx, Xxxxxxx & Xxxxx
the Grantee's Solicitors X X Xxxxxx & Co of 000 Xxxxx Xxx Xxxx Xxxxxx
XX0X 0XX
Xxx Xxxxxxx & Xxxxx Xxx Xxxxxxx & Xxxxx of Xxx Xxxxx Xxxxxxxxxx
Xxxxx, Xxxxxx X0X 0XX
NASD National Association of Securities Dealers
NASDAQ National Association of Securities Dealers
Automated Quotation System
the Option the right granted to the Grantee pursuant to
clause 2 to purchase the Option Shares at the
Option Price
the Option Fee the aggregate sum of US$2 million to be
satisfied in accordance with the terms of
clause 3
the Option Period the period commencing on the Business Day
following the signing off of the Audited
Accounts and ending 6 months thereafter
provided that if any matter is referred to an
independent solicitor or an independent
chartered accountant pursuant to clause 4.10
then the Option Period shall be extended by a
period equal to the length of the period
required for the matter so referred to be
finally determined in accordance with clause
4.10
the Option Price the aggregate sum determined pursuant to
clause 4
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the Option Shares the 5,000 Shares in the capital of the
Company now owned by the Grantors in the
proportions set out in Schedule 1,
representing the entire issued share capital
of the Company and any other shares, stock or
securities referred to in clause 6
OTC Bulletin Board Service a service operated by the NASD providing an
electronic quotation medium to reflect market
making interest in eligible securities
Recipients those persons whose names appear in Part 1 of
Schedule 1 who will receive the Option Fee
and Option Price in the proportions set out
in the Schedule 1
Regulation S Regulation S under the Securities Exchange
Act of 1933, as amended
Relevant Profits as referred to in Clause 4.2.1
Relevant Receipts as referred to in Clause 4.9
Reorganisation in relation to the Company includes every
issue by way of capitalisation of profits or
reserves and every issue by way of rights and
every consolidation or sub-division or
reduction of capital or capital dividend or
other reconstruction or adjustment relating
to the equity share capital (or any shares or
securities derived therefrom) and any
amalgamation or reconstruction affecting the
equity share capital (or any shares stocks or
securities derived therefrom)
Securities Act the United States Securities Act of 1933 (as
amended)
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Share Sale and Purchase an agreement of even date herewith relating
Agreement to the purchase by the Grantee of the entire
issued share capital of Xxxxxxxx
International Limited
Trading Date the date upon which the Company begins
trading or if such date is not the first day
of a calendar month then the first day of the
calendar month following the date on which
the Company commenced trading
Warranty the warranty, representation and undertaking
given in clause 8.3
Warranty Claim a claim made by the Grantee on the breach by
the Grantors of any of the Warranty
Statements
Warranty Statements the warranty statements to be given by the
Grantors pursuant to clause 4.10
1.2 Reference to clauses and the parties are respectively to clauses of
and the parties to this Agreement.
2 OPTION
In consideration of the agreement to pay the Option Fee to the
Recipients in the proportions set out in Schedule 1 the Grantors grant
to the Grantee the right exercisable during the Option Period to
purchase all but not some of the Option Shares in consideration of the
Option Price subject to the satisfaction of the Conditions.
3 OPTION FEE
3.1 The Option Fee shall (subject to clause 3.2) be satisfied by the issue
and allotment, free of any lien, option, charge or other encumbrance
whatsoever and credited as fully paid, of the Consideration Shares to
the Recipients in the proportions set out opposite their respective
names in Part 1 of Schedule 1, at par.
3.2 Subject to and conditional upon:
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(a) the completion of the Share Sale and Purchase Agreement ("the
Xxxxxxxx Completion"); and
(b) the inclusion of a quotation for Common Stock on the OTC
Bulletin Board Service (which the Grantee shall use all
reasonable endeavours to procure as quickly as possible); and
(c) the Grantors' Auditors certifying to the Grantee that within
nine months of the date of this Agreement the Company has
earned in any one month in excess of US$100,000 over its
expenditure to be calculated in accordance with generally
accepted accounting principles applied in the United Kingdom.
the Grantee shall within 10 Business Days of the satisfaction of the
Conditions satisfy the Option Fee by the allotment and issue, credited
as fully paid, to the Recipients of such number of shares of Common
Stock as shall have an aggregate value of US$2 million as derived from
the average closing bid prices of shares of Common Stock on each of
the 20 trading days immediately prior to the issue of such stock. For
the avoidance of doubt if the conditions in (a) and (b) shall not have
been satisfied within six months and the condition (c) has not been
satisfied within 9 months of the date of this Agreement any of the
parties may by their solicitors giving notice to the remaining parties
rescind this Agreement whereupon this Agreement be shall of no further
effect but without prejudice to any parties' rights in respect of any
antecedent breach of any provision thereof.
3.3 The Consideration Shares will rank pari passu in all respects with the
other outstanding shares of Common Stock.
3.4 The Grantee will use all reasonable endeavours to become listed on the
NASDAQ stock market within 16 months of the signing of this Agreement.
4 OPTION PRICE
4.1 The Option Price shall be paid and satisfied to the Recipients in the
proportions set out in Part 1 of Schedule 1 subject to clause 4.10,
without set-off or deduction of any kind whatsoever.
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4.2.1 The Option Price shall be the Relevant Profits of the Company as at
the Accounts Date as determined in accordance with Schedule 2
multiplied by six less the Option Fee expressed in US Dollars.
4.2.2 The Grantors shall use all reasonable endeavours to procure the
preparation and signing off of the Audited Accounts as soon as
possible after the Accounts Date.
4.3 The Option Price shall be paid and satisfied by:
(a) the payment to the Recipients in the proportions set out in
Schedule 1 on Completion: (a) US$2 million; and (b) a sum in
US Dollars equal to 50 per cent. of the balance of the Option
Price (after deducting the said sum of US$2 million) ("the
Balance"); and
(b) the issue and allotment on Completion to the Recipients in the
proportions set out in Schedule 1 of Consideration Shares,
free of any lien, option, charge or other encumbrance
whatsoever and credited as fully paid, of such number of
shares of Common Stock as have an aggregate market price as
nearly as possible equal to but not exceeding 50 per cent. of
the amount of the Balance, such shares to rank pari passu with
the existing Common Stock then in issue.
4.4.1 For the purpose of clause 4.3, the market price of Common Stock shall
be the average of the closing bid prices of the Common Stock on each
of the 20 trading days prior to the date of signing off of the Audited
Accounts pursuant to the provisions of Schedule 2.
4.4.2 The market price of the Common Stock on any date shall be determined
as follows:
(i) if the Common Stock shall be listed on a national securities
exchange or on NASDAQ, the bid price shall be the closing bid
price of the Common Stock as reported in the WALL STREET
JOURNAL (or comparable publication if the WALL STREET JOURNAL
shall not then be published);
(ii) if the Common Stock shall not be listed on a national
securities exchange or NASDAQ, and quotations for Common Stock
shall be reported on the OTC Bulletin Board Service, the
average of the closing bid quotations for the Common
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Stock on such date by the principal broker/dealer (as
determined in good faith by the Board of Directors of the
Grantee) providing quotations for Common Stock on such date.
4.4.3 If the Common Stock shall not on Completion be listed on a national
securities exchange or NASDAQ, and quotations for the Common Stock
shall not be included in the OTC Bulletin Board Service the whole of
the Option Price shall be satisfied in cash.
4.5.1 Each of the Recipients agrees not to offer, sell, transfer, assign,
pledge, hypothecate or otherwise dispose of (collectively, "Transfer")
any of the Consideration Shares except pursuant to an effective
registration statement under the Securities Act, the provisions of
Regulation S or pursuant to an exemption from registration under the
Securities Act. As a further condition to any such Transfer, except
in the event that such Transfer is made pursuant to an effective
registration statement under the Securities Act, if in the reasonable
opinion of counsel to the Company any Transfer of the Shares by the
contemplated transferee thereof would not be exempt from the
registration and prospectus delivery requirements of the Securities
Act, the Company may require the contemplated transferee to furnish
the Company with an investment letter setting forth such information
and agreements as may be reasonably requested by the Company to ensure
compliance by such transferee with the Securities Act.
Each certificate evidencing the Consideration Shares will bear the
following legend:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
AND OTHERWISE IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN
THE ISSUER AND THE ORIGINAL ALLOTTEE OR PURCHASER OF THE
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SECURITIES, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICE OF THE ISSUER".
The Company shall have no obligation to register any purported
Transfer of any of the Consideration Shares in violation of this
Agreement on its stock transfer records, and any such Transfer shall
be null, void and of no force and effect.
Each of the Recipients agrees not to engage in any hedging
transactions with regard to the Consideration Shares except in
compliance with the Securities Act.
4.5.2 Each of the Recipients undertakes to the Grantee, in relation to such
number of the Consideration Shares issued and allotted to it pursuant
to the terms hereof that, in the period of 12 months following the
allotment of such shares that it shall not, without the written
consent of the Grantee (such consent not to be unreasonably withheld
or delayed) sell or otherwise dispose of or encumber or charge or
create any interest or trust or agree to sell or otherwise dispose of
or encumber or charge or create any interest or trust, in any of the
Consideration Shares and for the purpose of this clause 4.5 any of the
Recipients shall be deemed to dispose of a share if it ceases, in any
circumstances whatsoever, to be the absolute legal or beneficial owner
of it.
4.6 The Option shall subject to the satisfaction of the Conditions, be
exercisable during the Option Period in respect of all (but not part)
of the Option Shares by 10 Business Days notice in writing served on
each of the Grantors but not without the prior written consent of
Grantors (not to be unreasonably withheld) in the event that the whole
of the consideration payable to the Vendors under the Share Sale and
Purchase Agreement shall not have been paid prior to the date on which
the Grantee wishes to exercise the Option (except to the extent that
any part of the Deferred Consideration (as defined in the Share Sale
and Purchase Agreement) shall have been paid into the joint client
deposit account as contemplated by Clause 3.6 of the Share Sale and
Purchase Agreement).
4.7 The Option Shares shall be sold free from all liens, charges and
encumbrances and with all rights attached thereto at the date of such
exercise.
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4.8 In the event that any amounts of money or other valuable consideration
are received by the Company being monies or any other valuable
consideration due to the Company in relation to trading up to close of
business on the date of Completion ("Relevant Receipts") the Grantee
shall pay or transfer to the Grantors in the proportions set out in
column 3 of Part 2 of Schedule 1 by way of further consideration sums
equivalent to such amounts or other valuable consideration as are so
received from time to time (a) by the Company or by any third party on
its behalf or (b) by any third party (not on its behalf) in the event
that payment or transfer of such other valuable consideration shall be
made to such a third party due to any act or default on the part of
the Company. The Grantee shall within 7 days of the end of each
calendar month following Completion send to each of the Grantors by
Recorded Delivery Post or equivalent a declaration as to the relevant
amounts or other valuable consideration received by the Company during
that month. Such declarations shall be posted to each of the Grantors
within 14 days of the end of the relevant calendar month accompanied
by a remittance for the amount or other valuable consideration shown
in such declaration.
4.9 The Grantee agrees not to issue or sell any shares of capital stock
without imposing on the purchaser/allottee restrictions substantially
similar to those imposed under clauses 4.5.1 and 4.5.2 of this
Agreement until the satisfaction of the Option Price.
4.10.1 The Grantee and the Grantors shall within 90 Business Days of the
signing off of the Audited Accounts endeavour in good faith to agree
Warranty Statements (and suitable provisions limiting the Grantors'
liability pursuant to the said Warranty Statements) which shall upon
agreement be deemed to be incorporated in this Agreement to which
Clause 8.3 shall relate. Such Warranty Statements shall be such of
the Warranty Statements contained in the Share Sale and Purchase
Agreement (together with similar provisions limiting the Grantors'
liability pursuant to the said Warranty Statements) as shall be
appropriate to the Company as at the date of the signing off of the
Audited Accounts provided that in the event that the Grantors and the
Grantee shall be unable to agree such Warranty Statements (or the
aforementioned provisions limiting the Grantors' liability) then the
matter shall be referred to an independent solicitor with suitable
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experience of such matters for adjudication as to what would be normal
commercial practice in the circumstances of this transaction, whose
identity shall be agreed by the Grantors and the Grantee or in the
event that they are unable to agree upon such appointment within five
Business Days following it having become apparent that there is a
dispute, by the President for the time being of the Law Society of
England and Wales on the application of the Grantors or the Grantee.
Such solicitor shall be deemed to act as an expert and not as an
arbitrator and his decision shall be final and binding on the Grantors
and the Grantee (in the absence of clear or manifest error) and the
question of who shall be responsible for his fees and in what
proportion shall be in his award.
4.10.2 (i) In the event that the Grantors' Auditors shall in the course
of the preparation of the Audited Accounts identify a
contingent liability ("the Liability") the Grantee shall be
entitled to pay from the amount of the Option Price otherwise
payable to the Recipients on Completion, into a joint clients'
deposit account at a clearing bank to be established by Xxx,
Xxxxxxx & Xxxxx and the Grantee's Solicitors in their joint
names, such amount as in the opinion of Grantors' Auditors
represents the value of the Liability provided that such
expression of opinion shall not bind any party.
(ii) The Grantors and the Grantee shall endeavour in good faith to
agree such reduction in the Option Price as may be appropriate
in respect of the Liability but if they are unable to agree
the same within 20 Business Days of the exercise of the Option
by the Grantee the matter shall be referred to an independent
chartered accountant to be appointed by the Grantors and the
Grantee jointly but if they shall be unable to agree on such
appointment then by the President for the time being or the
appropriate officer of the Institute of Chartered Accountants
in England and Wales on the application of any party. Such
Chartered Accountant shall be deemed to be acting as an expert
and not as an arbitrator and his decision shall be final and
binding on the Grantee and the Grantors (in the absence of
clear or manifest error) and the question of which party shall
be responsible for his fees and in what proportion shall be in
his award.
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(iii) Upon any determination pursuant to clause 4.10.2(ii) above in
the Grantee's favour there shall be paid to the Grantee the
amount so determined which shall have been deemed to have been
set off against the Option Price and Xxx, Xxxxxxx and Xxxxx
and the Grantee's Solicitors shall by notice in writing
(following receipt of suitable evidence of any such
determination) transfer to the Grantee from the joint deposit
client account a sum equal to such amount determined to be due
to it (if any) and the balance (if any) (or the whole if it is
determined pursuant to clause 4.10.2(ii) that the Purchaser is
not entitled to any of the sum held) determined not to be due
to the Grantee shall be paid to the Recipients and the
interest earned on the said account shall be apportioned
between the Recipients and the Grantee in the same proportions
as the amounts of principal paid to them respectively from the
joint client deposit account.
5 EXERCISE OF THE OPTION
5.1 Completion of the transfer of the Option Shares shall take place at
the offices of the Grantors' Solicitors (or at such other place as the
parties shall mutually agree) on the expiration of the notice referred
to in clause 4.6, (subject to clause 4.10 in which case Completion
shall take place within 10 Business Days of any agreement or
determination in accordance with Clause 4.10.2(ii)) when:
(a) the Grantee shall pay or procure the payment to the Grantors'
Solicitors (or as the Grantors may direct) of the Option Price
and insofar as Common Stock is to be issued, hand to them the
appropriate stock certificates provided that in the event that
the Grantors' Solicitors give notice in writing prior to
Completion to the Grantees' Solicitors, the following
provisions shall have effect:-
(i) On Completion all documents shall be held in escrow and
shall constitute escrows pending receipt of payment
pursuant to sub-clause (ii) of this proviso and;
(ii) the Grantee or its Solicitors shall immediately following
completion of all other matters to be done on Completion in
accordance with this clause 5.1 send by
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Swift to Barclays Bank Plc, Monaco Branch of that part of the
Option Price as is payable under Clause 5.1(a) as to one third
thereof for the account of each of Xxxxxx Xxxxx and Xxxxxxx
Xxxxx and as to one sixth thereof for the account of Xxxxxxx
Xxxxxx. On receipt by such bank of such monies the condition
of the escrows shall be deemed to have been satisfied (and the
relevant documents shall no longer be deemed to be the subject
of any escrow and shall thereupon have full effect); and
(b) the Grantors shall deliver to the Grantee:
(i) duly executed stock transfer forms in respect of the
Option Shares together with the relative share
certificates (or, if applicable, duly executed
indemnities in respect of missing certificates);
(ii) a waiver of any applicable rights of pre-emption, duly
signed by all the other members of the Company; and
(iii) such other deeds and documents (if any) as may be
necessary to transfer to the Grantee or as it may
direct the unencumbered beneficial ownership of the
Option Shares.
5.2.1 The parties agree that at any time on or after the date of Completion,
each party, being ready and willing to fulfil its own outstanding
obligations pursuant to this Agreement, may (without prejudice to any
other right or remedy available to it) give to the other parties
notice in writing requiring completion of this Agreement in conformity
with this clause.
5.2.2 Upon the service of such notice as stated in Clause 5.2.1, it shall
become and be a term of this Agreement in respect of which time shall
be of the essence thereof, that the parties to whom the notice is
given shall complete this Agreement within ten Business Days after
service of the notice (exclusive of the day of service), but this
condition shall operate without prejudice to any right of any party to
rescind this Agreement in the meantime.
5.3 If the Grantors make default in transferring the Option Shares as
aforesaid the Directors of the Company shall be entitled to receive
and give a good discharge for the Option Price
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and Option Fee on behalf of the Grantors (but shall not be bound to
earn any interest thereon) and the Grantors hereby irrevocably appoint
such one of the Directors of the Company as the Grantee shall
nominate in writing as the Grantors' attorney to execute on its behalf
the transfer or transfers of the Option Shares in favour of the
Grantee (or as the Grantee may direct) and such other documents as may
be necessary to transfer title to the Option Shares to the Grantee
(or as the Grantee may direct) and hereby authorises the Directors of
the Company to approve the registration of such transfer or transfers
or the documents.
5.4 The Grantors shall (so far as they are able) procure that upon
presentation of the stamped transfer of the Option Shares to the
Company, together with the relative share certificates it shall be
approved and the transferee will be registered as the holder of the
Option Shares.
5.5 On Completion, there shall be repaid to the Grantors a sum equal to
all amounts owing to them by the Company in respect of outstanding
loans
6 REORGANISATION
The Grantors shall procure that no Reorganisation shall take place
from the date hereof until the expiration of the Option Period.
7 PROHIBITION ON DISPOSAL
Notwithstanding the provisions of clause 4 while the Option entitling
the Grantee to purchase the Option Shares remains exercisable the
Grantors shall not, without the prior written consent of the Grantee,
sell, transfer or otherwise dispose of (including without prejudice
to the generality of the foregoing accept an offer made to all
holders for the class or classes of securities to which the Option
Shares belong) any of the Option Shares or any interest therein.
8 GRANTORS' WARRANTIES
8.1 Each of the Grantors severally warrant to the Grantee that:
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(a) they are and will remain until the exercise of the Option or
expiry of the Option Period (whichever is the later) the
beneficial owner of the Option Shares, subject only to the
Option, and have and will have full power and authority to
grant an option in respect of the same upon the terms and
conditions of this agreement;
(b) they will not during the Option Period transfer, dispose of,
charge, pledge or encumber in any way their interest in any of
the Option Shares or enter into negotiations with any third
party with a view to doing any of such things; provided that
notwithstanding anything else contained in this Agreement each
of the Grantors may transfer his or her Option Shares to a
single purpose vehicle company or companies which has/have not
previously traded (or one or more of the Grantors may do so),
and shall thereupon give notice to the Grantee's Solicitors to
that effect. In that event, the Grantors shall procure that
such company or companies shall and the Company and the
Grantee shall enter into a novation deed to give effect to
this Agreement on the basis that such company or companies
shall be substituted for such of the Grantors who shall have
transferred his or her Option Shares to the relevant company
or companies
(c) there is not and will not on Completion be any option or right
outstanding in favour of any third party in respect of the
Option Shares;
8.2 Each of the Grantors severally warrant to the Grantee that:
(a) all written replies to the enquiries made by the Grantee or
its professional advisers in relation to the Company and its
affairs subject to any details supplied by the Grantors or
Recipients under clause 8.2(b), are accurate in all material
respects and do not omit anything which would be likely to
make any such reply misleading;
(b) the Grantors shall forthwith give details in writing to the
Grantee or the Grantee's Solicitors of any matter or thing
which becomes known to the Grantors prior to Completion
directly or indirectly relating to any of the written replies
to enquiries referred to in clause 8(c); and
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(c) that the Company will begin and continue trading as soon as
possible following the date of this Agreement (if it has not
already done so).
8.3.1 The Grantors jointly and severally warrant, represent and undertake to
the Grantee that every Warranty Statement which is to be given shall
be accurate in all material respects in respect of ACL at Completion,
subject only to the matters stated in the Disclosure Letter.
8.3.2 The Warranty is a separate and independent warranty, representation
and understanding in relation to each of the Warranty Statements and
no Warranty shall be limited by reference to any other Warranty
Statement.
8.3.3 The rights and remedies of the Grantee in respect of any breach of the
Warranty shall not be affected by Completion but shall take effect
subject only to matters specifically disclosed by the Grantors or the
Grantors' Solicitors in writing or in the Disclosure Letter.
8.3.4 References to awareness or knowledge of the Grantors in a Warranty
Statement shall only limit that Warranty Statement by the Grantors'
awareness or knowledge if each of the Grantors has made all due and
careful enquiries to ascertain if the relevant information is true,
accurate, correct and not misleading.
8.3.5 Any Warranty Claim or claim under this Agreement may be satisfied by
the Grantors as to 50 per cent. in cash and the balance of the
Warranty Claim satisfied by transferring to the Purchaser or as it may
direct, Purchaser Common Stock valued at the price at which shares in
Purchaser Common Stock were allotted to the Vendors or in the event of
there having been allotments at two different striking prices, then at
the average of such striking prices.
9 MATTERS REQUIRING APPROVAL OF THE GRANTEE
9.1 During the Option Period the Grantors and the Company shall procure
that no action shall be taken by the Company without the prior written
permission (not to be unreasonably withheld or delayed) of the Grantee
in respect of the implementation of any of the matters listed below by
or on behalf of the Company:
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(a) any material change in the nature of business of the Company
or the establishment or acquisition of any new business;
(b) the initiation of any litigation or arbitration (other than
any action alleging the non-performance by any third party of
such third party's contractual obligations or for the
collection of debts arising in the ordinary course of
business);
(c) the issue or allotment of any share or other capital or the
granting or entering into any agreement to grant any option
over the uncalled capital of the Company or any
Reorganisation;
(d) the borrowing or raising of money (other than from the
Grantors or any of them) whether or not on the security of any
property or assets of the Company or the creation of any
mortgage, charge or pledge upon or in respect of the business
or the assets of the Company or any part thereof.
9.2.1 The Grantors hereby undertake to the Grantee throughout that they
shall forthwith notify the Grantee if any matters listed in clause 9.1
is being considered or is proposed to be implemented by or on behalf
of the Company and in addition shall forthwith notify the Grantee on
the purchase, sale, taking or letting on lease or tenancy or other
acquisition of any real or leasehold property by the Company or the
appointment of any employee.
9.2.2 The Grantors shall forthwith forward a copy of all half yearly and
annual reports of accounts of the Company to the Grantee within 7
Business Days of the issue of such reports and accounts.
10 GENERAL
10.1 It is declared for the avoidance of doubt that any projections which
may have been prepared by the Grantors' auditors were prepared in good
faith but that no responsibility for any of the same is accepted by or
placed upon such auditors or upon any other party to this Agreement
since the same were intended for illustration purposes only.
10.2 Until such time as all of the consideration has been paid to the
Vendors and for so long as either of the Consultancy Agreements in
favour of Panton Management Limited and
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Northern Management Limited shall subsist, the Purchaser shall
procure that no one shall be appointed a Director of the Company
without the written consent of Xxxxxx Xxxxx and Xxxxxxx Xxxxx.
10.3 No amendment, change or addition hereto shall be effective or binding
on either party unless reduced to writing and executed by both
parties.
10.4 The Grantee undertakes not to issue preferred stock without the
approval of Xxxxxx Xxxxx or Xxxxxxx Xxxxx (such approval not to be
unreasonably withheld) except in connection with obtaining any
financing required to complete the Share Sale and Purchase Agreement
or this Agreement provided that the Grantee's obligations pursuant to
this clause shall terminate upon the earliest to occur or:
(a) the satisfaction of the Option Price; and
(b) the date the capital stock of the Grantee becomes listed on
NASDAQ.
10.5 This Agreement or any rights hereunder shall not be assigned whether
in whole or in part.
10.6 The headings to clauses of this Agreement are for ease of reference
only and do not form part of this Agreement and are not in any way to
affect its construction.
10.7.1 Any notice to be given under this Agreement:
(a) must be in writing;
(b) may be given to the Grantors and Recipients at the addresses
stated at the beginning of this Agreement (or such other
address as it may notify to the Grantee for such purpose);
(c) may be given to the Grantee at its registered office (or such
other address as it or its assignee may notify to the Grantors
for such purpose); and
(d) will be effectively served:
(i) on the day of receipt, where any hand delivered letter,
telex or telefax message is received on any Business
Day (being any day between
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Monday and Friday other than United Kingdom public or
bank holidays) before or during normal working hours;
(ii) on the following Business Day, where any hand delivered
letter, telex or telefax message is received either on
any Business Day after normal working hours or on any
day which is not a Business Day; or
(iii) on the second Business Day following the day of
posting, upon despatch from within the United Kingdom
of any posted letter by post office inland first class
mail postage prepaid and in proving such service it
shall only be necessary to prove that the same was
stamped, addressed and posted as aforesaid.
10.7.2 Each of the Company, Grantors and Recipients hereby appoint Xxx
Xxxxxxx & Xxxxx of 0 Xxxxxxxxxx Xxxxx, Xxxxxx X0X 0XX (marked for the
attention of Xxxxx Xxx or Xxxxxxxx Xxxxxx) as their authorised agents
for the purpose of accepting service of process and notices for all
purposes in connection with this Agreement).
10.7.3 The Grantee hereby appoints X X Xxxxxx & Co of 000 Xxxxx Xxx Xxxx,
Xxxxxx XX0X 0XX (marked for the attention of Xxxxxx Xxxxxx or Xxxxx
XxXxxx) as its authorised agent for the purpose of accepting service
of process and notice (for all purposes or in connection with this
Agreement).
10.8 This Agreement is governed by and is to be construed in accordance
with English Law.
-20-
SCHEDULE 1
PART 1
RECIPIENTS
RECIPIENTS OPTION FEE OPTION PRICE
Xxxxxx Xxxxx 36 per cent. One third
Xxxxxxx Xxxxx 36 per cent. One third
Xxxxxxx Xxxxxx 18 per cent. One sixth
Shropshire Five Investment Limited Nil One eighteenth
Xxxxxx Xxxxxxx Nil One eighteenth
Xxxxxx Holdings BVI Nil One eighteenth
Church Bay Trust Company Limited 3.5 per cent Nil
Gulf Securities Corporation 6.5 per cent Nil
PART 2
GRANTORS
GRANTORS SHAREHOLDINGS PROPORTION OF RELEVANT RECEIPTS
Xxxxxx Xxxxx 2,000 Shares Two fifths
Xxxxxxx Xxxxx 2,000 Shares Two fifths
Xxxxxxx Xxxxxx 1,000 Shares One fifth
-21-
SCHEDULE 2
AUDITED ACCOUNTS
1 The Net Profit will be determined by reference to the financial
statements of the Company to be audited as at the Accounts Date in
accordance with the provisions of this Schedule 2 ("the Audited
Accounts"). Such accounts shall be prepared and audited by the
Grantors' Auditors applying accounting policies and principles on a
basis which is consistent with the generally accepted accounting
policies and practices applied in the United Kingdom. The Net Profit
shall be the aggregate after-tax profit as shown in the accounts so
prepared.
2 The Relevant Profits will be determined by reference to the Net Profit
of the Company as shown by the Audited Accounts.
In order to arrive at the Relevant Profits the relevant Net Profit
shall be subject to the following adjustments (if not already taken
into account in the Profit and Loss Accounts):
A By adding back
(i) Taxation shown by the audited Profit and Loss Account of the
Company or as otherwise payable by the Company;
(ii) any payments:
(a) not made at arms length;
(b) made to any other company within the Group of which
the Company forms part, including in particular the
Grantee including any management fees or other
charges paid to any other such company;
(c) made in connection with anything not in the Company's
normal course of business;
(iii) all payments made to any of the following:
(a) Panton Management Limited;
(b) Northern Management Limited;
(c) Mediterranean Telecommunications Limited;
(d) Xxxx Xxxxxx Limited;
(e) Xxxxxx Xxxxx;
(f) Xxxxxxx Xxxxx;
(g) Xxxxxxx Xxxxxx; and
(h) Xxxx Xxxxxx
and any expenses payable to them, whether under any
Consultancy Agreement or otherwise howsoever;
(iv) any depreciation charged in respect of any items which would
normally fall to be depreciated;
(v) any rents, licence fees or outgoings in respect of any
premises occupied or shared by the Company.
-22-
B So as to negate any profits or losses on the revaluation of
any assets or any adjustment arising on the translation into
US Dollars of assets and liabilities denominated in currencies
other than US Dollars;
C Adding back any extraordinary items described in Financial
Reporting Standard 3(FRS3) not deriving from the ordinary
activities of the Company and any Associated Company of the
Company; and
D So as to exclude profits or losses of a capital nature.
-23-
ATTESTATIONS
Executed as a Deed by )
SYMPOSIUM TELECOM CORPORATION )
by: )
Director: Xxxxxx Xxxxxxxx - Xxxxx
Director: Xxxxxx Xxxxxxx
Executed as a Deed by )
XXXXXX XXXXX in ) XXXXXX XXXXX
the presence of: )
Name of Witness: Xxxxxx Xxxxxx
Occupation: Hotel Front Office Teamleader
Address: 0/00 Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxx, Xxx Xxxxxxx
Executed as a Deed by )
XXXXXXX XXXXX in ) XXXXXXX XXXXX
the presence of: )
Name of Witness: Xxx XxXxxxxxx
Occupation: Senior Private Broker
Address: Eden Star, 98000 Monaco
Executed as a Deed by )
XXXXXXX XXXXXX in ) XXXXXXX XXXXXX
the presence of: )
Name of Witness: Xxx XxXxxxxxx
Occupation: Senior Private Broker
Address: Eden Star 9800 Monaco
-24-
Executed as a Deed by )
AUTOMATIC COMMUNICATIONS )
LIMITED by: )
Director: Xxxxxx Xxxxx
Director: Xxxxxxx Xxxxx
-25-
THIS NOVATION AGREEMENT is made the 22nd day of February 1999 BETWEEN (1)
SYMPOSIUM TELECOM CORPORATION of 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx, 00000, XXX ("the Grantee"), (2) XXXXXX XXXXX of Apartment 211, Parc Saint
Roman, 0 Xxxxxx Xxxxx Xxxxx, Xxxxxx, 00000 ; XXXXXXX XXXXX of Apartment 107,
Parc Saint Roman, 0 Xxxxxx Xxxxx Xxxxx, Xxxxxx, 00000; XXXXXXX XXXXXX of
Apartment 107, Parc Saint Roman, 0 Xxxxxx Xxxxx Xxxxx, Xxxxxx, 00000
(collectively "the Grantors") (3) AUTOMATIC COMMUNICATIONS LIMITED (No. 7649B)
of Suites 00-00 Xxxxxxxxx Xxxxx, Xxxxxxx Street, P O Box N-7521, Nassau, New
Providence, Bahamas ("the Company") and (4) A.C.L. HOLDINGS LIMITED (No. 84,257
B) whose registered office is at First Floor, Kings Court, P O Box N3944, Bay
Street, Nassau, New Providence, Bahamas ("Holdings").
RECITALS:
(1) This Novation Agreement is supplemental to an Option Agreement dated 14th
December 1998, and made between the parties of the First, Second and Third
parts ("the Agreement").
(2) Pursuant to the proviso to clause 8.1(b) of the Agreement and as
contemplated by that clause, each of the Grantors wishes to transfer
his/her Option Shares to Holdings and have given notice to the Grantee's
Solicitors to that effect, and accordingly this Novation Agreement is
entered into upon the terms and conditions hereinafter contained.
NOW IT IS AGREED as follows:-
1. INTERPRETATION
1.1 In this Agreement, unless the context otherwise requires, words and
expressions not expressly defined herein shall have the respective meanings
given to them in the Agreement, and the rules of interpretation contained
in clause 1 of the Agreement shall apply to this Agreement as if the same
had
1
been set out herein with references to the Agreement being references
to this Agreement.
1.2 References to clauses and the parties are respectively to clauses of
and the parties to this Agreement.
2. This Agreement shall take effect in the event that the Grantors transfer
the Option Shares to Holdings (forthwith upon the last of such transfers
being effected) ("the Effective Date").
3. HOLDING'S UNDERTAKING
Holdings undertakes to perform the Agreement and to be bound by the terms
of the Agreement in every way and unconditionally assume the rights and
obligations of each of the Grantors under the Agreement in all respects as
if Holdings were a party to the Agreement in lieu of the Grantors.
4. RELEASE OF GRANTORS
With effect from the Effective Date the Grantee releases and discharges the
Grantors from all claims and demands whatever in respect of the Agreement,
and accepts the liability of Holdings under the Agreement in lieu of the
liability of the Grantors.
5. RELEASE BY GRANTORS
With effect from the Effective Date, the Grantors release and discharge the
Grantee from all claims and demands whatever in respect of the Agreement,
insofar as the same could be made by the Grantors Provided That with effect
from such date the Grantee shall be liable to Holdings under the Agreement
in lieu of being liable to the Grantors and agrees to continue to be bound
by the terms of the Agreement, as though the Agreement had been made
between (1) the Grantee, (2) Holdings and (3) the Company.
2
6. WARRANTY
The Grantors hereby jointly and severally represent and warrant to the
Grantee that Holdings was incorporated on 14th December 1998 and has not
since that date traded (save to the extent if any that any of the Option
Shares shall have been transferred to Holdings and to the extent that any
payment may have been made or shares issued in consideration of the
transfer of the Option Shares).
6.1 The parties hereby undertake with each other to do or procure to be done,
all such further acts and things and execute or procure to be executed all
such further deeds and documents as may be necessary or desirable fully and
effectively to give full effect to the terms of this Agreement.
6.2 The terms of the Agreement shall continue to have full force and effect as
varied or amended by this Agreement and the parties hereby undertake to do
all such acts or things and execute or procure to be executed all such
further deeds and documents as may be necessary or desirable fully and
effectively to give fully effect to the terms of the Agreement as so varied
or amended.
7. This Agreement is governed by and is to be construed in accordance with
English Law.
8. Holdings hereby appoints Xxx Xxxxxxx & Xxxxx of One Great Cumberland Place,
London, WIH 7AL (marked for the attention of Xxxxx Xxx or Xxxxxxxx Xxxxxx)
as their authorised Agent for the purpose of accepting service of process
and notices for all purposes in connection with this Agreement and the
Agreement.
3
IN WITNESS whereof this document has been executed as a Deed the day and year
first before written
EXECUTED as a Deed by SYMPOSIUM )
TELECOM CORPORATION )
by: )
/s/ XXXXXX XXXXXXXX-XXXXX
Director
/s/ XXXXXX XXXXXXX
Director
EXECUTED as a Deed by )
XXXXXX XXXXX ) /s/ Xxxxxx Xxxxx
in the presence of : )
Witness Signature /s/
Name -------------------------------------------------------------
Address
-------------------------------------------------------------
-------------------------------------------------------------
Occupation
-------------------------------------------------------------
EXECUTED as a Deed by )
XXXXXXX XXXXX ) /s/ Xxxxxxx Xxxxx
in the presence of : )
Witness Signature /s/
-------------------------------------------------------------
Name
-------------------------------------------------------------
Address
-------------------------------------------------------------
-------------------------------------------------------------
Occupation
-------------------------------------------------------------
4
EXECUTED as a Deed by )
XXXXXXX XXXXXX ) /s/ Xxxxxxx Xxxxxx
in the presence of : )
Witness Signature /s/
-------------------------------------------------------------
Name
-------------------------------------------------------------
Address
-------------------------------------------------------------
-------------------------------------------------------------
Occupation
-------------------------------------------------------------
EXECUTED as a Deed by AUTOMATIC )
COMMUNICATIONS LTD )
by: )
/s/ XXXXXX XXXXX
Director
/s/ XXXXXXX XXXXX
Director
EXECUTED as a Deed by A.C.L HOLDINGS LTD )
by: )
/s/
---------------------------------------
Director
5
