Exhibit 10.1
Private Stock Swap Agreement
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In Madrid, November 11, 2002
BY AND BETWEEN
On the one side, Mr. XXXXXXX XXXXX XXXXXXX, a Spanish national, of legal age,
married, with address in Madrid, Xxxxx Xxxxxxxxxx 00, 5 Planta holding National
Identification Card Number 14301513-K.
On the other side, Xx. XXXXXXX XXXXX XXXX XXXXX XXX XXXXXXX, of legal age, a
German national, single, with address at Marbella Club, Urbanizacion Sta.
Xxxxxxxxx-Sta. Xxxxxxx, in Marbella (Malaga), holding Resident's and Foreigner's
Identification Card Number X-0977758-M.
And Xx. XXXXXXX XXXXXXX XX XXXXXX XXXXX, of legal age, a Spanish national,
single, with address in Madrid, Calle Xxxxxx No. 5 and holding National
Identification Card Number 51063523-G.
ACTING
- Mr. Xxxxxxx Xxxxx Xxxxxxx, in the name and on behalf of ITS NETWORKS
INC., a US company with registered offices at 0000 Xxxxx Xxxx Xxxxxx
Xxxx, Xxxxxxxxxx, Xxxxxxx 00000, validly and duly incorporated
according to the laws of the State of Florida (U.S.A.) and
duly registered with number P98000098356 in the Companies Registry,
in the State of Florida (U.S.A.). He acts hereby with the powers of
attorney granted by the aforementioned company attached as Schedule I.
Hereinafter referred to as "ITS".
- Xx. Xxxxxxx Xxxxxxx de Xxxxxx Xxxxx, in his own name and on his
own behalf.
- Xx. Xxxxxxxx Xxxxx Xxxx, Xxxxx Xxx Xxxxxxxx, in his own name and on
his own behalf and in the name and on behalf of:
The Company IMBUEHL INMOBILIEN-UND FINANZ, A.G., with registered
offices at CH 2601 ZUG, Chamerstr, 14, incorporated on April 13,
1961, and recorded in the Companies Registry of Switzerland with
number ZUG 170.3.018.119-9.
The Company "COMPOSTELLA STIFTUNG", with registered offices in
Liechtenstein, Xxxxx Xxxxxxx, 0, XX 0000, Xxxxx.
The Company "OPTA Ltd.", with registered offices at 0 Xxxxxx Xxxx
Xxxxxxxx Xxxx, Xxxxxx Road Haywards Xxxxx X. Sussex RH161TV, recorded
in the Companies Registry with number 2522439.
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Xx. XXXX-XXXX XXXXXX, a Swiss national, with business address in the
city of Xxxxxxxx, XX-0000, Xxxxxxxxxxx at Xxxxx Xxxxxxxxxxxxx, 00,
holding valid passport number 0181283.
The Company "MULTIMEDIA SPORT PRODUCCIONES, S.L.", with registered
offices in Madrid, at Calle Conde Xxxxxxxx number 61 with National
Tax Identification Code Number B-82.730.904.
The company "OLACAPITAL, S.L.", with registered offices in Marbella,
at Avenida Xxxxxx Xxxxx, number 28, Edificio Marina Marbella
with National Tax Identification Code Number B-92206101.
And the following individuals whose personal details are stated in the
relevant powers of attorney attached to this Agreement as Schedule II:
- Xxxxxxxxx xx Xxxxxx Xxxxx
- Xxxx Xxxxx
- Xxxx Xxxxxx Xxxxx
- Xxxxxxx Xxxxxxxxxxxxx Xxxxxx
- Xxxx Xxxxxx Xxxxx Otz
- Xxxxxx Xxxx Xxxxxxx Xxxxxxxx
- Xxxxxxxxx xx Xxxxx Baza Segimon
- Xxxx Xxxxx Xxxx Segimon
- Xxxxx Xxxxxxx Xxxxxxx Xxxx
- Xxxxxxxx Xxxxxx Xxxxx
- Xxxxxx Xxxxxx Xxxxx
- Xxxxx Xxxxxx Xxxxx
- Xxxxxxx Xxxxxxxx Xxxxxxxx
- Xxxxx Xxxxxx
- Xxxx Xxxxx Xxxxxx Xxxxxx
- Xxxxxxx Xxxxxxxx Xxxxxxx
- Xxxxxxx Xxxxxxx Xxxxxxx
- Xxxxxx Xxxxx Xxxxx Xxxxxxxxx xx Xxxxxxx
- Xxxxx Xxxxx Xxxx
- Montserrat Xxxxxxx
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- Xxxxx del Xxxxxx Xxxxx Xxxxx
- Xxxxxxxx Xxxxxxxxx Xxxxxx
- Xxxxx Xxxx Xxxxxx Xxxx
- Xxxx Xxxxxx Xxxxx Xxxxxxx
- Xxxxxxx Xxxxx Mata
- Angel Xxxx Xxxxxx Xxxxx
Xx. Xxxxxxxx Xxxxx Xxxx, Xxxxx Xxx Xxxxxxxx acts by virtue of the powers of
attorney granted by the individuals and companies mentioned above, which have
been attached hereto as Schedule II.
Xx. Xxxxxxxx Xxxxx Xxxx, Don Xxxxxxx xx Xxxxxx Xxxxx, and all the individuals
represented by Xx. Xxxxxxxx Xxxxx Xxxx, are hereinafter jointly referred to as
the MAJORITY SHAREHOLDERS OF TELECONNECT. The MAJORITY SHAREHOLDERS OF
TELECONNECT own shares that represent 90.96 per cent of the stock capital and
voting rights of TELECONNECT COMUNICACIONES, S.A. (hereinafter referred to as
"TELECONNECT").
The parties appearing hereby, in the positions in which they respectively act,
make the following
REPRESENTATIONS
III.1 Representations by ITS: ITS states that, in order to carry out its
wishes, it has particularly valued the fact that the MAJORITY
SHAREHOLDERS OF TELECONNECT guarantee the truth of the representations
regarding TELECONNECT made in this AGREEMENT and on its behalf
represents and guarantees the following to the shareholders of
TELECONNECT:
III.1.1. Incorporation and authority: ITS is a company, duly organized and
validly existing, with a good status under the laws of the State of
Florida. It holds the corporate authority and all the material
government licenses, authorizations, permits and approvals to own its
property and to carry out its business, as it has been doing up to
now, duly qualified to perform its business and with a good status for
the nature of its activities in all the jurisdictions that such
qualifications are required.
III.1.2. Corporate authorization: Entering into, delivery and performance of
this Agreement, and the transactions included therein, within the
corporate authority of ITS, has been duly approved by the Board of
Directors. No other approval or authorization is required therefor by
the shareholders of ITS nor any additional corporate action that has
not already been obtained. The Agreement is a legal obligation and is
validly binding regarding ITS, and enforceable pursuant to the terms
and conditions therein, unless this has been restricted due to
bankruptcy, insolvency, reorganization or other related laws that
affect the enforcement of creditors' rights and the obligations of
debtors.
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III.1.3. Capitalization: The authorized stock capital of ITS consists of a
single class of 50,000,000 common shares, with a par value of $ 0.001
each, of which 25,263,870 shares are issued and pending at present;
one class of 5,000,000 Convertible Preferential Shares, of which
1,500,000 are convertible preferential shares of Series A, without a
par value, which were issued and are still pending. All the pending
shares of the common stock of ITS have been duly issued, fully paid
up, may not be encumbered and free of any preemptive rights, pledges,
encumbrances, liens, claims, legal actions and restrictions of any
kind.
III.1.4. Registration, Information and Financial Situation: ITS has fully
and accurately submitted, in all their aspects, all tax or statutory
reports, records and statements required by the government
authorities, fulfilling all the material aspects of applicable laws or
regulations. Within a term of two months, counted from the date this
AGREEMENT is signed, ITS shall draw up and deliver the following to
TELECONNECT (i) the audited statements of the assets, liabilities and
taxable base on the capital revenue of ITS and the relevant
statements on profits, expenses and accumulated profits for the period
ending on June 30, 2002, drawn up according to generally accepted
accounting principles ("GAAP"), applied in a congruent manner; and
(ii) the federal tax return for the company ITS for the financial year
closed on September 30, 2001.
Such financial statements and returns provide a fair image of the
assets, liabilities and capital of ITS and its profits, expenses and
accumulated profits for the relevant period. The books and records of
ITS are complete and correct in all their material aspects, and have
been kept in accordance with suitable corporate practices and
accurately show the basis of the financial situation and profits or
losses from ITS business in all material aspects.
III.1.5. Lack of material assets and liabilities: On the date this Agreement
is signed, ITS has no liabilities of any kind, either accrued,
absolute, contingent or of any other kind, neither materially due or
that will be due, for ITS and of any nature that should be stated in a
balance sheet or the notes thereto, drawn up pursuant to the GAAP,
which are not revealed or forecast in the balance sheet of ITS drawn
up for the financial year closed on September 30, 2001 and in Form
10-QSB for the period closed on June 30, 2002.
III.1.6. Legal actions: There are no proceedings, claims or legal actions
pending in any court, commission or other authority nor, as far as ITS
is aware, which are threatened to be brought that ITS is involved and
which (a) are not fully covered by an insurance policy or (b) if the
results are against the interests of ITS, they would mean an adverse
material effect on the business, properties or transactions of ITS,
except that stated in its Report in Form 10-KSB for the financial year
closed on September 30, 2001. ITS is not aware of any reasonable cause
for any other action, claim or proceedings to be brought. There are no
investigations pending, or that ITS is aware of, that are threatened
to be brought by any body, agency or public or governmental
authorities that affect ITS.
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III.1.7. Non-infringement; Fulfillment of the law: ITS holds full legal
rights, powers of attorney and legal authority to enter into this
Agreement and to take part in the transactions as they are planned to
be carried out. Neither entering into this Agreement nor the delivery
and performance thereof, nor carrying out such transactions could
imply termination, cancellation or early enforcement of any right or
obligation of ITS, nor do they imply any breach, contradiction or
failure in fulfillment of the terms, conditions or provisions
of the deed of incorporation or the by-laws of ITS, nor any provision
of any document, mortgage, pledge, credit agreement, deed, law,
order, ruling, decree, arbitration decision, regulation, rule or
other legal restriction, which ITS is party to or whereby such company
or any of its properties is or could be related to. ITS does not
breach any applicable provision of any law, statute, rule, regulation,
administrative interpretation, order, policy or decree of any court
or governmental or administrative authority, which may be applicable
to the company or any of its properties, and that are offences that
do not have or may not be reasonably expected to have, either
individually or as a whole, an adverse material effect. ITS has
been granted all the permits, licenses, certificates of authorization,
orders and approvals, and it has carried out all the actions and
made all the applications and registrations to the relevant federal
governmental or statutory, state, local or foreign bodies so that it
may perform its business activity, except the permits, licenses,
certificates of authority, orders, assessments, procedures,
applications or registrations, the absence or non-performance of
which could not reasonably be expected to result in a material
adverse effect. Such permits, licenses, certificates of
authorization, orders and approvals are fully valid and in force
and, as far as ITS is aware, there is no risk of suspension or
cancellation of any of them and all such reports and registrations
are up to date in all the material aspects, except those, the
absence or non-performance of which could not reasonably be expected
to result in a material adverse effect. There are no pending
investigations regarding ITS by any government agency, as far as ITS
is aware, that could be imminently brought and that, as far as ITS is
aware, no government agency has stated its intention to carry out any
investigation, the results of which could imply a material adverse
effect on the business, income, liquidity or financial situation of
ITS.
III.1.8. Health and Safety, Environmental Pollution and Contamination
Control: As far as ITS is aware, it fulfils all the applicable
federal, state and local laws and rules regarding health, hygiene,
pests, disinfection and de-rodent treatment, waste dumping,
environmental pollution and contamination control, with no
limitations, all the laws and rules have been fulfilled that govern
production, use, collection, treatment, storage, transport, recycling,
disposal, unloading or dumping food products or toxic materials. It
has never been alleged that ITS infringes, nor is subject to any
legal or administrative proceedings under such laws or regulations,
either now or at any time in the last three years that have not
been duly settled.
III.1.9. Negotiations and commission: All the negotiations related to this
AGREEMENT and the transactions included therein have been directly
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carried out by ITS with TELECONNECT. No party, that ITS is aware of,
has been involved that could give rise to any valid claim against any
of the parties of the agreement, regarding brokerage commission,
overdraft commission or payment of any other kind.
III.1.10. Government Authorization and Permission: No authorization,
approval or consent is required by any body, authority, person or
public or governmental institution that has not already been
obtained so that ITS may acquire the shares of TELECONNECT, as
stipulated in this AGREEMENT.
III.1.11. Accuracy of the Representations and Guarantees: None of the
representations and guarantees made by ITS in this document or
any written representation or certificate provided, or that must be
provided by ITS pursuant thereto, contains or will contain any
false declaration regarding a material fact, nor that omits nor will
omit a material fact required for the statements made to be
misleading, in view of the circumstances in which they were made.
III.1.12. Documents provided to TELECONNECT: There are no obligations,
agreements, leases, commitments, policies, contracts, easements or
documents related to ITS that have not been provided to TELECONNECT.
All the obligations, agreements, office leases, commitments,
policies, relationships, contracts, clauses, forms, easements or
deeds, which have materially meant that the transactions, the value
or use of the tangible assets of ITS are fully valid and in force; no
part of any document implies a material conflict with any other part
thereof, either due to breach of contract or lack of fulfillment of
any of its obligations stated therein; no fact, event or circumstance
has arisen that, due to the passing of time or notification, or both,
implies breach of contract or infringement thereof; no part of any
document has been notified or is there any risk of notification of any
proceedings to settle, cancel, withdraw or bring legal remedy
regarding any deed; entering into and performing this AGREEMENT and
carrying out the transactions stated therein do not imply a breach
of contract or infringement, nor imply any offence under the
provisions of any deed, law, ordinance, order, regulation, decree or
rule applicable to ITS or the assets of ITS that could give rise
to a material adverse effect for ITS or its most important assets.
III.1.13 Shareholding: ITS holds THREE MILLION (3,000,000) shares of the
shareholders' equity, representing 12 per cent of its current stock
capital.
III.2 Representations by the MAJORITY SHAREHOLDING OF TELECONNECT:
The MAJORITY SHAREHOLDERS OF TELECONNECT states that in order to carry out its
wishes, it has particularly valued the fact that ITS guarantees the truth of the
representations regarding ITS, made in this AGREEMENT, and on ITS behalf they
represent and guarantee the following to the shareholders of ITS:
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III.2.1. Composition of TELECONNECT's stock capital: TELECONNECT's stock
capital is currently divided into 29,650,724 common stock, validly issued,
fully subscribed and paid up. All the shares that are irrevocably
transferred, by virtue of this AGREEMENT, are free from any liens and
encumbrances, with no limitation whatsoever that could affect them from
being fully and freely transferred.
III.2.2. SHAREHOLDING: The MAJORITY SHAREHOLDERS OF TELECONNECT are the true
and legitimate holders of the SHARES with full ownership thereof (economic
and political rights), which are duly transferred by virtue of the documents
and in that provided as stated in Schedule III.
III.2.3. Holdings in other companies: TELECONNECT is the sole partner of the
company TELECONNECT LABS, S.A., SOLE MEMBER COMPANY, with a stock capital of
255,965.90 Euros, duly incorporated and recorded in the Companies Registry of
Madrid, in Volume 14.000, Book 0, Folio 30, Section 8, Sheet M-229580,
registration 1. Likewise, each and all of the agreements adopted by the
company boards of TELECONNECT LABS, S.A. have been duly recorded in the
Companies Registry, the latter having paid all the costs, fees and taxes related
to the formalities and registration of such agreements, except those that
are still pending registration as stated in the "report on the legal aspects"
attached hereto as Schedule V and that both parties state they are aware of.
TELECONNECT is also the sole partner of the company OLACOSTA, S.L., SOLE MEMBER
COMPANY, with a stock capital of 3,005.06 Euros, duly incorporated and
recorded in the Companies Registry of Madrid, in Volume 15,344, Book 0,
Folio 91, Section 8, Sheet M-257301, registration 1. Likewise, each and all of
the agreements adopted by the company boards of OLACOSTA, S.L., have been
duly recorded in the Companies Registry, the latter having paid all the costs,
fees and taxes related to the formalities and registration of such agreements.
Except for that stated above, TELECONNECT:
a) Does not hold, either directly or indirectly, any interest in
a company or institution, nor has any relationship with other
parties nor belongs to any joint venture or economic group;
b) Does not take part in any governing body or hold any representation
whatsoever in any company or institution, not even in that of
TELECONNECT LABS, S.A., nor does it take part in the management
of any civil or commercial business;
c) Has not acquired or transferred shares of a listed company representing
a holding equivalent to or higher than 5 per cent or successive
multiples in the stock capital thereof;
d) Has no cross or circular shares nor any others that could
infringe company legislation in force.
III.2.4. Licenses: TELECONNECT has been granted all the pertinent licenses,
permits and authorizations to perform its business. There are no pending
procedures that could imply revocation or limitation of any of such permits,
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licenses, approvals and authorizations, nor that could imply any kind of
conditions or supplementary obligations to keep or transfer them that did not
exist at the time of their being granted; Except for that mentioned in the
Telefonica document attached hereto as Schedule XIV. TELECONNECT is not bound to
make any additional payments to fulfill or continue to fulfill any law.
III.2.5. Financial statements: the FINANCIAL STATEMENTS show a true and
faithful image of the equity and the profit or loss situation of TELECONNECT on
July 31, 2002. Likewise, up to the date of this AGREEMENT, the management of
TELECONNECT has been performed with the normal care, and the current
transactions have all been concluded in normal conditions and at market price,
or no other fact has taken place, regardless of its nature, that could
negatively affect the situation of TELECONNECT.
III.2.6. Non-acceptance of HIDDEN LIABILITIES or contingencies: ITS does not
accept any HIDDEN LIABILITY or contingency that:
(i) Is not duly stated in the FINANCIAL STATEMENTS contained in
Schedule V.
(ii) Is not expressly stated in this AGREEMENT.
Is not expressly set forth in the "Report on legal aspects" of
TELECONNECT, contained in Schedule VI, nor in the "Due Diligence" by
drawn up by Transforma Capital, attached as Schedule VII, nor in the
tax and labor reports referred to below and contained in Schedules
VIII and IX, nor in Schedule X, respectively
In such a manner that all the HIDDEN LIABILITIES and contingencies, except those
stated above, shall be the sole liability of the parties acquiring ITS shares,
by virtue of this AGREEMENT. In particular, the MAJORITY SHAREHOLDERS OF
TELECONNECT represent and guarantee that all the debts payable on the date
this AGREEMENT is signed have been duly paid, except those stated in
(iii) Schedules IV to X, all-inclusive.
HIDDEN LIABILITIES shall be deemed to mean any false, inaccurate or incorrect
statement, both in the representations made by the MAJORITY SHAREHOLDERS OF
TELECONNECT in this AGREEMENT, whether known or not by the MAJORITY SHAREHOLDERS
OF TELECONNECT and in the FINANCIAL STATEMENTS, which could result in payment or
payments needing to be made or planned payment or payments not being received by
TELECONNECT, thus they may not have been taken into account to determine the
value of the SHARES and:
a) in this AGREEMENT that imply any lack of knowledge, omission
or concealment of a contingency, liability, obligation, duty or commitment
of any kind, debt, charge, tax, fee or contribution of any kind, Social
Security payment, fine, interest, or any other harm or financial or
economic damage, including that derived from loss of profit incurred
or that could be incurred by TELECONNECT;
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b) is not stated in the FINANCIAL STATEMENTS or with due provisions
therefor, or expressly stated in any of the Schedules of this
Agreement.
c) and the cause or origin is before November 12, 2002, even
though it arises or is known or claimed on a later date.
In addition, for the purposes of this AGREEMENT, the amount of TELECONNECT's
net debt, which exceeds 2,200,000 Euros on the date of this AGREEMENT, shall
be regarded as a HIDDEN LIABILITY.
III.2.7. Taxes: Except for that stated in the tax report attached as Schedule
VIII, TELECONNECT has made all its declarations and assessments in due time and
manner, and is therefore up to date in all its tax obligations.
III.2.8. - Legal proceedings: TELECONNECT is a defendant party in the lawsuits
listed in Schedule X.
III.2.9. - Labor aspects:
a. - Employees: Except for that stated in the labor reports attached as Schedule
IX, TELECONNECT fulfills and has fulfilled all the laws and obligations derived
from the pension and social security systems or rules and regulations that may
be applicable regarding employment and labor practice, including all the
collective bargaining agreements and has no outstanding or unpaid labor
obligations.
b. - Severance payments: All the labor contracts terminated up to the date of
this document have been suitably settled and paid up.
c. - Salaries, withholding and contributions: TELECONNECT is up-to-date with all
its salary obligations, except for those listed in Schedule IX and which both
parties state they are aware of.
III.2.10.- Information provided to ITS: the MAJORITY SHAREHOLDERS OF TELECONNECT
have informed ITS of all the information that could be considered reasonably
relevant or material for the purpose of assisting ITS in forming its opinion and
adopting a decision to acquire all the stock capital of TELECONNECT in exchange
for the agreed consideration.
III.2.11. - Prior Due Diligence: the financial, legal, and accounting due
diligence of TELECONNECT carried out by ITS, prior to signing this AGREEMENT,
was based on the documents that had been provided to ITS by the MAJORITY
SHAREHOLDERS OF TELECONNECT, therefore it is expressly stated that carrying out
the aforementioned due diligence by ITS does not limit the liability of the
MAJORITY SHAREHOLDERS regarding HIDDEN LIABILITIES.
III.2.12. - Shareholding: the MAJORITY SHAREHOLDERS OF TELECONNECT are holders
of the shares representing 90.96 percent of the stock capital and voting rights
of TELECONNECT.
III.2.13.- Termination of agreements with ASSOCIATED PARTIES: The MAJORITY
SHAREHOLDERS OF TELECONNECT state that all the financial and economic
agreements, contracts and clauses and of any other kind signed between, on the
one side, TELECONNECT, and, on the other side, the MAJORITY SHAREHOLDERS OF
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TELECONNECT or any ASSOCIATED PARTY thereof, on the date of signing this
AGREEMENT have been terminated and there is no cost, liability or obligation for
payment held by TELECONNECT, pending settlement by virtue thereof, except the
Service Agreement authorized in the public deed dated January 29, 2001, by the
Notary Public of Madrid, Mr. Xxxx Xxxxx Xxxxxxxx Sanchiz, with number 323 of his
records, entered into between TELECONNECT and OLACAPITAL S.L., which both
parties state they are aware of, and will terminate prior to December 5, 2002.
The maximum amount to be undertaken by ITS to terminate the aforementioned
Service Rendering Agreement is a total of 18,000 Euros.
III.2.14. - By-laws, Company books and Registration sheet: The Minutes Books of
TELECONNECT contain the full and suitable transcription of all the minutes of
the Board of Directors and General Shareholders' Meetings of TELECONNECT held up
to today's date, and faithfully reflect all the items dealt with and the
resolutions adopted there at. Likewise, TELECONNECT has paid all the costs, fees
and taxes related to the formalities and registration of such resolutions,
except those that are pending registration, stated in the Report on Legal
Aspects attached hereto as Schedule VI and that both parties state they are
aware of.
III.2.15. Industrial property: TELECONNECT is not party to any agreement
whatsoever, either as a licensor, licensee, assignee, distributor or in any
other position that could affect its Industrial Property rights or trade
secrets. TELECONNECT is authorized to use the trade names and trademarks it uses
in its commercial business and that it has been using to carry out all its
business activities, and such use is not in conflict nor does it infringe or
violate third party rights in any other manner.
III.2.16. Insurance policies: the insurance policies underwritten by TELECONNECT
are sufficient to cover the risks of its business activity as well as any
damages that could be caused to its offices, furnishings and other assets, and
any damage that TELECONNECT or its employees could cause to third parties. There
is no insurance claim pending by or against TELECONNECT and no circumstances are
known that could give rise to any claim.
III.3. Joint representations by ITS and the MAJORITY SHAREHOLDERS OF
TELECONNECT: ITS and the MAJORITY SHAREHOLDERS OF TELECONNECT jointly state the
following:
III.3.1. Appraisal of TELECONNECT: 100 per cent of the SHARES of TELECONNECT has
been valued at 1,378,759 Euros.
III.3.2. Appraisal of ITS: 12 per cent of the SHARES of ITS has been valued at
1,378,759 Euros.
III.3.3. Planned target results: the MAJORITY SHAREHOLDERS OF TELECONNECT wish
to swap 100 per cent of the SHARES representing the current stock capital of
TELECONNECT for 12 per cent of the SHARES representing the stock capital of ITS
once the transaction has been completed. At the same time, ITS also wishes to
swap 12 per cent of the SHARES representing its stock capital for 100 per cent
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of the SHARES representing the current stock capital of TELECONNECT. In fact,
THE PARTIES seek the target result consisting of ITS acquiring the business of
TELECONNECT by means of acquiring ownership of the SHARES representing 100 per
cent of the current stock capital and the voting rights of TELECONNECT, in
exchange for the shareholders of TELECONNECT acquiring the ownership of the
SHARES representing 12 per cent of the stock capital and the voting rights of
ITS.
The parties wish that the 12% of ITS' capital received by TELECONNECT's
shareholders in exchange for its shares, to be calculated after any increase in
ITS' capital related to financing this transaction, within the term of twelve
months as of the date this AGREEMENT is signed.
By entering into this AGREEMENT, in the case that there is any minority
shareholder of TELECONNECT that does not wish to swap its shares, this AGREEMENT
shall still be valid, providing that ITS acquires at least 96 per cent of the
SHARES and the political and economic rights of TELECONNECT before December 5,
2002, other wise that set forth in Clause 1.3 of this AGREEMENT shall be
applicable.
III.3.4. Financing of TELECONNECT: The commitment by ITS to contribute the
necessary financing to TELECONNECT shall be deemed an essential part of this
AGREEMENT. Such commitment must be valid, from the date this AGREEMENT is
signed, for the amounts and at the times that may be deemed appropriate, to
guarantee the successful future operation of the company. The MAJORITY
SHAREHOLDERS OF TELECONNECT state that they are convinced that financing of
3,000,000 Euros should be sufficient to ensure the good running of the company.
Should further financing be required, for a higher amount than that mentioned in
the previous paragraph, in order to ensure the good running of the company, the
MAJORITY SHAREHOLDERS OF TELECONNECT expressly undertake to take all the steps
in good faith that are within its reach at this time to obtain further financing
for TELECONNECT, up to the sum that may be required and in the shortest time
possible.
The MAJORITY SHAREHOLDERS OF TELECONNECT state that the net debt of TELECONNECT
at the time of signing this agreement is no higher than 2,200,000 Euros;
however, in the event that, within the term of twelve months counted from the
date of such formalities, it is shown that the aforementioned net debt is
higher, the guarantee mechanisms stated in Clause 1.5 of this Agreement shall
come into force.
III.3.5.-Formalities of the Agreement: In consideration for the provisions,
representations, and guarantees stated above, and those appearing hereby
reciprocally acknowledging their legal capacity to enter into contract, and
undertake the obligations in the positions in which they act, THE PARTIES hereby
carry out the formalities for this AGREEMENT, which shall be governed by the
applicable rules in general and, in particular, by the following:
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CLAUSES
1. - Object of this AGREEMENT
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1.1. - SHARE swap
1.1.1. - Object:
a) By virtue of this Agreement, the MAJORITY SHAREHOLDERS OF TELECONNECT
irrevocably transfer the full ownership of their SHARES. Likewise, for such
purpose, they undertake to make all their best efforts so that ITS acquires 100
per cent of the shares representing the current stock capital of TELECONNECT.
b) ITS undertakes to transfer up to 3,000,000 of the shares representing 12 per
cent of its current stock capital to the MAJORITY SHAREHOLDERS OF TELECONNECT as
well as the rest of the purchasers of ITS shares, as a swap and as consideration
for acquiring the TELECONNECT shares, pursuant to that set forth in the
following Clauses.
The parties wish that the 12% of ITS' capital, received by TELECONNECT's
shareholders in exchange for its shares, be calculated after any increase in
ITS' capital related to this transaction, within the term of twelve months as of
the date this AGREEMENT is signed, in order to avoid the dilution effect caused
by such increase. After such term has elapsed, the parties must reach an
agreement to adjust the share swap if, as mentioned above, TELECONNECT's
shareholders must receive more ITS shares than those initially received in
performance of this Agreement.
1.1.2. - Swap ratio: The PARTIES have appraised the 3,000,000 shares
representing 12 per cent of the current stock capital of ITS at 1,378,759, at
a value of 0.4595 per share.
Likewise, the parties have appraised the 29,650,724 shares representing 100 per
cent of the current stock capital of TELECONNECT at 1,378,759 at a value of
0.000000033 Euro per share.
Due to the foregoing, the share swap ratio shall be determined at 9.88 shares of
TELECONNECT for each share of ITS.
This swap ratio has been determined bearing in mind the appraisal of ITS and
TELECONNECT applicable on today's date, therefore any change that could affect
the appraisal of any of such companies in the future shall be irrelevant for the
purpose of the share swap ratio agree hereby.
1.1.3. - Performance of the swap: the agreed share swap shall be performed by
authorizing public deed/s, the contents of which shall be adapted to the model
contained in Schedule X.1 in which the modifications required to adapt this
AGREEMENT shall be stated.
1.1.4.- Transfer of ITS' shares: The ITS shares that must be delivered thereby,
in exchange for TELECONNECT shares, must be issued thereby and transferred on
December 10, 2002 notwithstanding the guarantee consisting of the deposit
referred to in the following section.
12
1.1.5. - Deposit of ITS shares received by TELECONNECT's shareholders: All the
ITS shares that TELECONNECT's shareholders must receive in exchange must be
deposited with the attorney of the State of Oklahoma, Xx. Xxxxxx X. Xxxxxx until
December 5, 2003, for the purpose of the guarantee mentioned in clause 1.5.3 of
this Agreement. The deposit agreement, signed by the parties within a term of 48
hours from the date of signing this AGREEMENT, is attached as Schedule X.2.
Such deposit will be extended in the case of the circumstance arising set forth
in Clause 1.5.5
Should a prior claim for hidden liabilities not arise, the free transfer of the
ITS shares that TELECONNECT's shareholders must receive by means of the swap
shall be carried out in the following manner:
a) 10% of the ITS shares to be received may be freely transferred as of
December 6, 2003.
b) 25% of the ITS shares to be received may be freely transferred as of May
12, 2004.
c) 65% of the ITS shares to be received may be freely transferred as of May
12, 2005.
The shareholders of TELECONNECT that receive the ITS shares may only
encumber or grant such ITS shares in guarantee, under the aforementioned
terms, when they are used as a guarantee to obtain financing for ITS.
1.1.7. - Reserve of economic rights: the acquirers of ITS shares, by virtue of
this AGREEMENT, shall be entitled to all the economic proceeds resulting from
the ITS shares from the time the relevant public swap deed is authorized. This
right shall be valid on December 5, 2003, except for that set forth in Clause
1.5.3, when appropriate.
1.1.8. - Contributions made for increases in capital of TELECONNECT: the parties
and/or companies that had made monetary contributions in favor of TELECONNECT
charged to subscription of shares in future increases in capital of TELECONNECT,
which have not been carried out up to now, may receive, should they so wish, ITS
shares instead of TELECONNECT shares as consideration for their contributions.
The list of contributing parties, the amount of their respective contribution
and the number of TELECONNECT shares they are entitled to, due to the increase
in capital, is attached as Schedule XI.
In this manner, such contributors shall be provided with the direct result of
the final swap, consisting of acquiring ITS shares, thus avoiding unnecessary
delays and costs that could be incurred due to first subscribing to TELECONNECT
shares and then swapping them for ITS shares.
In the case regulated in this clause, the contributing parties shall receive as
many ITS shares as they are entitled to, in the case of having subscribed to
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TELECONNECT shares. Therefore, for the sole purpose of that set forth in this
clause, the contributors shall be considered as though they are TELECONNECT
shareholders and will thus be listed in the relevant section of Schedule XII. At
the same time, the swap list stipulated in clause 1.1.2. has been determined
taking into account the right of the contributors to receive ITS shares as
though they were TELECONNECT shareholders.
The public swap deeds authorized by the contributing parties shall have a
particular feature consisting of the fact that the contributors will swap their
right to future subscription of TELECONNECT shares for ITS shares.
1.1.9.- Loans convertible into TELECONNECT shares: The individuals and/or
companies that have made loans to TELECONNECT that must be paid by being
converted into shares of the company, may receive ITS shares in consideration
for this right instead of TELECONNECT shares, if they so wish; this is for the
same reasons as set forth in clause 1.1.8. The list of lenders, the amount of
their respective loans and the number of TELECONNECT shares they would be
entitled to receive, in the case of conversion into shares of such company, is
attached hereto as Schedule XIII.
In the case regulated in this clause, the lenders would receive the same amount
of ITS shares as they would have received in the case of their loan having been
settled with TELECONNECT shares. Therefore, for the sole purpose of that set
forth in this clause, the lenders shall be regarded as if they were TELECONNECT
shareholders and are therefore listed in the relevant section of Schedule XIV.
At the same time, the swap ratio set forth in clause 1.1.2. has been determined
taking into account the lenders' right to obtain ITS shares, as if they were
TELECONNECT shareholders.
1.1.10.- Exercising acquisition rights as a result of stock option plans: if the
current beneficiaries of TELECONNECT stock option plans (Schedule XV) exercise
their right to acquire TELECONNECT shares, they may receive ITS shares in
consideration for their right instead of TELECONNECT shares, if they so wish;
this is for the same reasons as set forth in clause 1.1.8.
In the case regulated in this clause, those exercising the stock option would
receive the same amount of ITS shares as they would receive in the case of
having subscribed to TELECONNECT shares. Therefore, for the sole purpose of that
set forth in this clause, those exercising the stock option would be regarded as
if they were TELECONNECT shareholders. At the same time, the swap ratio
determined in clause 1.1.2. will be readjusted, taking into account the right of
those exercising the stock option to obtain ITS shares, as if they were
TELECONNECT shareholders.
The public swap deeds authorized by those exercising the option would have the
particular feature of the fact that those exercising the option exchange their
right to subscribe to TELECONNECT shares for the right to ITS shares.
In the cases set forth in clauses 1.1.8 and 1.1.9, the ITS shares, provided as
consideration, are part of the shares representing 12% of the stock capital of
ITS to be swapped. As a result, in order to comply with this AGREEMENT, ITS need
not issue any more shares in favor of THE MAJORITY SHAREHOLDERS OF TELECONNECT,
14
or any other TELECONNECT shareholder, or even any interested third party.
Therefore, ITS is not bound to issue any more shares other than those stipulated
in this AGREEMENT, except in the case set forth in Clause 1.1.1
1.1.11. - Responsibility for remedy: ITS, the MAJORITY SHAREHOLDERS OF
TELECONNECT and TELECONNECT's other shareholders shall hold unlimited liability
in relation to the SHARES they own, for any damages or losses that the other
party may suffer due to any remedy that may be required regarding some or all of
the shares transferred, in compliance with and through performance of this
agreement.
1.2. - Agreement regarding the TELECONNECT payments that must be made by
December 5, 2002.
As of the date this document is signed, ITS shall undertake TELECONNECT's
payments and liabilities up to the maximum amount of 2,200,000 Euros, providing
that by December 5, 2002, shares representing 96% of TELECONNECT's stock capital
have been swapped.
1.3. - Withdrawal right
1.3.1. - ITS shall be entitled to withdraw from this AGREEMENT if any of the
following facts and circumstances have taken place at the times stated below:
a) As of the date this AGREEMENT is signed and up to December 5, 2002, it
is proven that the net debt of TELECONNECT on the date of signing this
AGREEMENT exceeds the amount of 4,000,000 Euros. This shall not include
the debts incurred due to the management by the directors or
attorneys-in-fact appointed by virtue of this AGREEMENT.
b) By December 6, 2002, shares representing at least 96% of TELECONNECT's
stock capital have not been transferred to ITS.
In order to exercise its withdrawal right, ITS must send notification of its
withdrawal to the MAJORITY SHAREHOLDERS OF TELECONNECT by December 10, 2002. In
such case, the MAJORITY SHAREHOLDERS OF TELECONNECT must notify the other
TELECONNECT shareholders of the aforementioned withdrawal. In addition, in the
case of withdrawal, the SHARES transferred to ITS up to December 5, 2002 shall
be returned by ITS, which shall bear the costs incurred by the relevant
transfer/s for the TELECONNECT shareholders to whom the aforementioned return
must be made.
In the event of ITS not exercising its withdrawal right within the stipulated
term, it shall continue to be fully bound to comply with this AGREEMENT.
1.3.2.- Pursuant to that stated in section 1.5.1., in the event of TELECONNECT's
aggregate net debt exceeding 2,200,000 Euros and ITS deciding not to withdraw
from this AGREEMENT, the amounts owed by TELECONNECT that imply that the total
debt exceeds 2,200,000 Euros shall be regarded as HIDDEN LIABILITIES, providing
they originate prior to the date this AGREEMENT is signed.
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1.4. - Taking over control of TELECONNECT by ITS.
The current members of TELECONNECT's Board of Directors, made up of Xx. Xxxxxxxx
Xxxxx Xxxx, Xxxxx Xxx Xxxxxxxx (Chairman and C.E.O.), Xx. Xxxx Xxxxxxxx Xxxx
Xxxx, Xxxxx Xxx Xxxxxxxx (board member) and Xx. Xxxx Xxxxx Xxxxxx (board member)
undertake to irrevocably resign from their posts, once this document has been
signed, by means of a letter of resignation signed in their own hand, dated
November 11, 2002.
However, the current members of TELECONNECT's Board of Directors undertake to
summon an extraordinary General Shareholders' Meeting of TELECONNECT's
shareholders, prior to resigning from their posts, so that they may agree on the
replacement of the Company's current Board of Directors with a Sole Director,
appointing Mr. Xxxxxxx Xxxxx Xxxxxxx to this post, whose personal details are
set forth in section I ("appearing") of this AGREEMENT, modifying TELECONNECT's
current by-laws insofar as may be necessary for such purpose, to be held on
December 10 on the first summons, or the next day on the second summons.
The current members of TELECONNECT's Board of Directors undertake that such body
shall agree to revoke all the powers-of-attorney granted by TELECONNECT that are
currently in force, as well as to dismiss the current Non-executive Secretary
(Mr. Jordi Bellvehi Xxxxx). In addition, they undertake to appoint Mr. Xxxxxxx
Xxxxx, as attorney-in-fact of TELECONNECT, S.A., with as wide embracing
commercial powers of attorney as may be required by law.
The certificate of the resolution adopted by the Board of Directors of
TELECONNECT on November 9, 2002 and the respective letters of resignation of the
directors and the non-executive secretary are attached as Schedule XIV.
Mr. Xxxxxxx Xxxxx or any other person holding general authority for the
management and administration of TELECONNECT must act with the utmost diligence
in dealing with the net debt that TELECONNECT undertook on November 12, 2002, in
such a manner that this obligation does not harm the interests of the MAJORITY
SHAREHOLDERS of TELECONNECT.
1.5. Compensation for HIDDEN LIABILITIES and guarantees.
1.5.1.- Obligation to compensate: Those acquiring ITS shares, by virtue of this
AGREEMENT, shall compensate ITS for any HIDDEN LIABILITY, notwithstanding that
set forth in articles 1102, 1107 and related articles of the Civil Code.
1.5.2. - Amount of compensation: The amount of compensation shall be equivalent
to 100% of the amount of the HIDDEN LIABILITY, including, as well as the net
amount, all the costs, interests and, if any, the taxes and other economic
consequences that are related to such HIDDEN LIABILITY.
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1.5.3. - Guarantees:
a.- Guarantee of deposit of the ITS shares: Up to the December 5, 2003, the
shares of ITS received by the shareholders of TELECONNECT and deposited,
pursuant to section 1.1.5., shall be used as a guarantee for ITS for any
possible HIDDEN LIABILITIES claimed until such date.
For such purpose, follow-up actions, by the persons that the parties may deem
appropriate, shall be carried out by means of monthly meetings, in order to
detect and endeavor to find possible solutions for the HIDDEN LIABILITIES that
may arise.
On November 12, 2003, ITS must have determined and appraised the possible HIDDEN
LIABILITIES that may have been revealed and have notified them in a registered
manner to Xx. Xxxxxxxx Xxxxxxxx. The enforcement of the guarantee for HIDDEN
LIABILITIES may not be claimed before November 30, 2003.
b.- Personal guarantee of Xxxxxxxx Xxxxxxxx: In addition to the aforementioned
guarantee, in the case that it is not sufficient to cover the HIDDEN LIABILITIES
that may be determined, Xx. Xxxxxxxx Xxxxxxxx shall personally cover up to the
amount of 100,000 Euros.
c. - Guarantee only in the case of the debt of TELEGLOBE: Only in the specific
case of the debts held by TELECONNECT with the operator TELEGLOBE, in the case
that the latter does not accept a negotiated agreement to pay the debt by a
deduction, Xx. Xxxxxxxx Xxxxxxxx grants ITS the option to claim such debt up to
an amount of 250,000 Euros at the time that the whole payment of the debt must
be settled, for a term of twelve months, counted from the date this AGREEMENT is
signed. Such option shall depend on the fact that at the time of exercising such
option, ITS can prove that the net debt of TELECONNECT on the date of this
AGREEMENT is higher than 2,200,000 Euros and that the amount paid by Xx.
Xxxxxxxx Xxxxxxxx (either by an increase in capital, a loan or in any other
manner) is granted under the same terms and conditions as any other investor or
shareholder that makes a cash contribution to ITS.
d.- Guarantee of OLACAPITAL, S.L.: If within a term of 12 months, counted from
the date this AGREEMENT is signed, TELECONNECT needs financing, Xx. Xxxxxxxx
Xxxxxxxx, acting in the name and on behalf of OLACAPITAL S.L., shall grant ITS
an option to claim an amount of up to 250,000 Euros from this company, under the
following conditions: (i) there will be a term of three months counted from the
date this agreement is signed in which ITS may not claim such amount, (ii) the
amount must be claimed with at least 45 days prior notice, (iii) the amount
contributed by OLACAPITAL S.L. to ITS shall be provided under the same
conditions as to other investors and shareholders of ITS.
OLACAPITAL S.L. accepts that the guarantee is granted, as stated in the previous
paragraph, providing that, when 12 months have elapsed for the date this
AGREEMENT is signed, the actual net debt on the date it is signed is determined
as being less than 2,200,000 Euros, the resulting amount of 50 per cent of the
17
difference between the actual net debt and such figure of 2,200,000 Euros shall
be paid by ITS to OLACAPITAL, S.L. in cash or in exchange for ITS shares, within
a term of three months after the termination of such term of 12 months.
In the case that OLACAPITAL S.L. does not provide the aforementioned guarantee,
when it is bound to do so by virtue of this AGREEMENT, Xxxxxxxx Xxxxxxxx shall
personally accept the fulfillment of such obligation.
1.5.4.- Terms for claims: In a general manner, the purchasers of ITS shares by
virtue of this AGREEMENT shall be liable, in the manner stated in section 1.5.3,
for all the HIDDEN LIABILITIES that are claimed by ITS.
1.5.5. - Continuing obligation to compensate: Any claim made due to HIDDEN
LIABILITIES, within the term set forth in section 1.5.3, shall imply that the
calculation of the term to claim and the obligation to compensate shall be
suspended. If there is no agreement reached between the parties, it shall
continue, when appropriate, until the final and absolute settlement of the claim
in question. Similarly, in this case, the deposit of the ITS shares used as a
guarantee of HIDDEN LIABILITIES shall be extended until the aforementioned final
and absolute settlement of the claim in question.
1.5.6.- Claim by ITS to the acquirers of ITS shares by virtue of this FRAMEWORK
AGREEMENT: In the case that ITS must claim liability of the acquirers of the ITS
shares, by virtue of this FRAMEWORK AGREEMENT, for HIDDEN LIABILITIES that do
not stem from a claim by a third party, the following procedure shall be carried
out:
a) When ITS becomes aware that there is a HIDDEN LIABILITY, it shall make
the relevant notification in writing to the MAJORITY SHAREHOLDERS OF
TELECONNECT, stating the reasons and the amount, and attach, if any,
copies of the documents on which it is based. The MAJORITY SHAREHOLDERS
OF TELECONNECT must notify the other acquirers of ITS shares, by virtue
of this FRAMEWORK AGREEMENT, of the aforementioned claim by ITS.
b) If such claim is not expressly accepted by all the MAJORITY
SHAREHOLDERS OF TELECONNECT, within fifteen (15) calendar days
after the notification thereof, the claim shall be deemed to have
been rejected.
c) In the case of no reply or an opposition by any of the MAJORITY
SHAREHOLDERS OF TELECONNECT to the claim made, the dispute arising
shall be settled by the relevant arbitration procedure.
1.5.7.- Claim by a third party: In the case that any third party, including the
Public Authorities, brings a claim against TELECONNECT for any reason that could
give rise to an obligation to compensate HIDDEN LIABILITIES, the MAJORITY
SHAREHOLDERS OF TELECONNECT may undertake the defense of TELECONNECT regarding
such claim. For such purpose:
18
a) ITS or TELECONNECT shall notify the MAJORITY SHAREHOLDERS OF
TELECONNECT of any such claims within the shortest of the following terms:
(i) the first quarter (1/4) of the working term set forth by law for
replying to the claim or (ii) five working days.
b) If any claim is made, the MAJORITY SHAREHOLDERS OF TELECONNECT
shall notify ITS or TELECONNECT, within the following three working days,
stating whether they wish to oppose the claim.
c) In the case of the MAJORITY SHAREHOLDERS OF TELECONNECT deciding to
opt for judicial, arbitration or administrative channels, they must appoint
the Legal Counsel, bearing all the costs and fees that may be incurred, if
any, and ITS and TELECONNECT shall be held harmless; however they shall be
entitled to be notified of all the information regarding the action and to
be consulted regarding the means of defense to be used.
d) If the MAJORITY SHAREHOLDERS OF TELECONNECT refuse to undertake the
defense or do not reply to the notification by ITS or TELECONNECT within
the stipulated term, as well as in cases of urgent need, ITS or TELECONNECT
must act, in good faith and with due diligence, in the most suitable manner
to defend all the interests involved, including those of the MAJORITY
SHAREHOLDERS OF TELECONNECT, and must notify them of any the decisions,
actions and measures to be adopted. Such circumstances shall not limit the
liability of those acquiring ITS shares, by virtue of this AGREEMENT,
which, except in the case of bad faith by ITS or TELECONNECT, shall accept
the result of the actions, including the legal or administrative costs, if
any. Notwithstanding the foregoing, in the case of urgent need, the actions
of ITS or TELECONNECT shall be limited to avoiding any harm to their
interests and it must send the MAJORITY SHAREHOLDERS OF TELECONNECT all the
relevant information concerning the claim in question as soon as possible.
In addition, in cases in which the MAJORITY SHAREHOLDERS OF TELECONNECT
have abstained from acting in their defense, any agreement for settlement
received by TELECONNECT or, if any, ITS, shall be subject to authorization
by the MAJORITY SHAREHOLDERS OF TELECONNECT. Such authorization by the
MAJORITY SHAREHOLDERS OF TELECONNECT may not be refused without a
justifiable reason.
e) In the case of the defense against a certain claim requiring
guarantees to be provided in order for the proceedings to be suspended,
such guarantee shall be provided or the cost thereof shall be borne by the
MAJORITY SHAREHOLDERS OF TELECONNECT in the case of them having undertaken
the defense.
f) The MAJORITY SHAREHOLDERS OF TELECONNECT, by themselves or by means
of the advisors appointed thereby, shall be allowed free and full access to
all the information and documents concerning the claim in question that is
in ITS' or TELECONNECT's possession.
g) Reciprocally, ITS, by itself or through TELECONNECT, must provide
all the necessary information so that the MAJORITY SHAREHOLDERS OF
TELECONNECT may exercise the rights to defend their interests, referred to
19
in this clause, as well as to provide the appropriate cooperation,
including granting powers of attorney in favor of any Legal Counsel
appointed by the MAJORITY SHAREHOLDERS OF TELECONNECT.
h) The breach of its obligation to notify or deliver the required
documents for their defense under the responsibility of ITS or TELECONNECT,
shall give rise to the acquirers of ITS shares, by virtue of this
AGREEMENT, being released from their obligation to compensate the HIDDEN
LIABILITY in question and it shall not be deemed as a HIDDEN LIABILITY for
the purpose of this AGREEMENT.
1.6. Other obligations of the Parties
Contractual performance: In accordance with the terms and conditions of this
AGREEMENT, the MAJORITY SHAREHOLDERS OF TELECONNECT and ITS shall take all the
steps necessary to complete this AGREEMENT, avoiding performance or omission of
any act that may affect the validity of that stipulated in this AGREEMENT or the
enforceability thereof.
Authorization of the Public Deed: Should ITS deem it appropriate, the MAJORITY
SHAREHOLDERS OF TELECONNECT undertake to carry out all the procedures necessary
to authorize this AGREEMENT in a public deed.
2. - Final provisions.
------------------
2.1. - Binding nature of this AGREEMENT: This AGREEMENT shall bind the parties,
in other words ITS and the MAJORITY SHAREHOLDERS OF TELECONNECT, from the time
it is signed, in all its terms, notwithstanding any actions they may be pending
in performance thereof.
Likewise, this AGREEMENT shall bind the rest of the acquirers of ITS shares as
of the time they sign the swap deed mentioned in Clause 1.1.3.
2.2. - Taxes: Any taxes derived from performance of this AGREEMENT shall be paid
by the individuals or companies that are the payers thereof, pursuant to
applicable tax legislation.
2.3.- Costs: Any costs incurred from negotiating, carrying out the formalities
and performance of this AGREEMENT, including the fees of the advisors involved,
shall be fully paid by the PARTY that contracted or requested them and the
common expenses - including the Notary Public's fees - shall be paid in equal
parts. The costs incurred for carrying out the Due Diligence report on
TELECONNECT shall be exclusively borne by ITS.
2.4. - Notice: Any notice, instruction, question or other document that must be
delivered to any of the Parties must be carried out by registered fax or any
other means by which a record may be kept of receipt thereof, with delivery to
the addressee, acknowledgement of receipt and certification of the contents, to
the following addresses:
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THE MAJORITY SHAREHOLDERS OF TELECONNECT:
The contact person representing all the foregoing shall be Xx. Xxxxxxxx
Xxxxxxxx, who shall immediately undertake to inform them. His details are as
follows:
Address: Finca Xxx. Xxxxxxx, Xxxxxxxx Xxxx, 00000 Xxxxxxxx
Telephone: 000000000
Fax: 000000000
E-mail: xxxxxxxxx@xxxxxxxxxxx.xx
ITS:
The contact person representing all the foregoing shall be Mr. Xxxxxxx Xxxxx
Xxxxxxx, who shall immediately undertake to inform them. His details are as
follows:
Address: Xxxxx Xxxxxxxxxx, x 00, 0 Xxxxxx, 00000, Xxxxxx.
Telephone: 000000000
Fax: 000000000
E-mail: xxxxxxx.xxxxx@xxxxxxxxx.xx
That set forth in this Clause does not excuse or justify lack of verbal
notification in order to inform the other party, when appropriate, but such
verbal notification is notwithstanding the obligation to provide notification in
writing.
3. - General Clauses
----------------
3.1. - Modifications and addendums: Any modification or addendum to this
AGREEMENT shall only be valid if it is expressly stated to be so and is signed
by both parties. In such cases, except for the clauses that are expressly
modified, all the rest of the clauses that make up the AGREEMENT shall continue
to be valid and therefore fully binding and enforceable.
3.2. - Replacement of previous agreements: This AGREEMENT is the final and most
complete expression of the parties' wishes, concerning the envisaged
transaction. As a result, the parties agree to render any previous agreements
concerning this transaction null and void, whether these are verbal or in
writing, and to replace them with the contents of this agreement.
3.3. - Severability: The nullity and therefore the inapplicability of any of the
clauses that are part of this AGREEMENT shall not invalidate the remaining
clauses, which shall remain fully valid and in force.
21
3.4. - Entire agreement: This AGREEMENT is the full contents of that negotiated
and agreed by the PARTIES and any modification or amendment thereto must be
recorded in writing and the remaining formalities required for signing this
AGREEMENT must be complied with. The PARTIES expressly state that there is no
undertaking, statement or guarantee other than those contained herein.
3.5. Shareholders Agreement: A "shareholders agreement" is attached as Schedule
VI to this AGREEMENT, which regulates the relationship between the ITS
shareholders, and will be signed by the parties within a term of 48 hours after
this AGREEMENT is duly signed.
3.6. - Version in English: This AGREEMENT shall be translated into English with
the stamp of an official translator in the shortest time possible.
3.7. - Post on the Board of Directors of ITS: ITS reserves a post on the Board
of Directors as a representative of the MAJORITY SHAREHOLDERS OF TELECONNECT.
4. - Applicable Law
---------------
Legislation: This AGREEMENT shall be governed by that set forth in the clauses
contained herein and, in a subsidiary manner, by that set forth in Spanish
common law, and it must be interpreted and performed in accordance therewith.
5. - Jurisdiction
------------
5.1.- Arbitration: THE PARTIES agree that any legal proceedings, disputes,
questions or claims that may arise due to the interpretation or performance of
this AGREEMENT, or directly or indirectly related thereto, shall be finally
resolved by means of legal arbitration by one (1) arbitrator appointed by a
mutual agreement between the Parties from among those on the list of arbitrators
of the Madrid Arbitration Court or, in the case of disagreement, whichever may
be appointed by the Bar Association of Madrid, within the framework of the
Madrid Arbitration Court of the Official Chamber of Commerce and Industry of
Madrid to which the management of the Arbitration shall be entrusted, in
accordance with its regulations and by-laws. The arbitrator must rule on the
relevant costs of the arbitration, which shall be borne in accordance with that
stated in this Agreement. The parties expressly state that they will abide by
any arbitration ruling that may be decreed.
5.2. - Jurisdiction: In particular, and as necessary, insofar as the judicial
formalities of the arbitration, judicial protection or judicial enforcement of
the ruling may be required, the parties expressly submit to the Courts and
Tribunals of the city of Madrid, expressly waiving any other jurisdiction that
may be applicable.
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In witness whereof, having carefully read this AGREEMENT, the PARTIES sign it in
four (4) copies, two in English and two in Spanish, with no amendments,
corrections or erasures, all with identical binding validity, in the place and
on the date set forth ut supra.
ITS
Mr. Xxxxxxx Xxxxx Xxxxxxx
MAJORITY SHAREHOLDERS OF TELECONNECT
Xx. Xxxxxxxx Xxxxx Xxxx, Xxxxx Xxx Xxxxxxxx
Xx. Xxxxxxx Xxxxxxx xx Xxxxxx Xxxxx
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