SHAREHOLDING INTEREST SALE AND PURCHASE
AND
LOAN ASSIGNMENT
AGREEMENT
BETWEEN
EUROWEB INTERNATIONAL CORPORATION
(THE "SELLER")
AND
GLOBIX COMMUNICATIONS LIMITED
(THE "PURCHASER")
DATED AS OF NOVEMBER 29, 2004
THIS SHAREHOLDING INTEREST SALE AND PURCHASE AND LOAN ASSIGNMENT AGREEMENT
(hereinafter referred to as the "Agreement") was made by and between
(1) EUROWEB INTERNATIONAL CORPORATION, a company registered under the laws
of the State of Delaware, having its registered office at c/o United
Corporate Services Inc. 00 Xxxx Xxxxx Xxxxxx Xxxxx, 00000 Xxxxxxxx,
XXX, having its IRS no. of 133696015 and represented by Xxxxx Xxxx,
Chief Executive Officer; of the first part; and
(2) GLOBIX COMMUNICATIONS LIMITED, a company registered under the laws of
the Isle of Man, having its registered office at Jubilee Buildings,
Victoria Street, Xxxxxxx, Isle of Man IM1 2SH, registration number
087423C and represented by Xxxxxxx Xxxxxx; of the second part;
on the place and date specified below with the terms and conditions as follows.
The party of the first part hereinafter referred to as the "Seller". The party
of the second part hereinafter referred to as the "Purchaser".
The above Seller and Purchaser hereinafter collectively referred to as the
"Parties" and individually as a "Party".
PREAMBLE
WHEREAS the Seller is the sole owner of 100% (one hundred per cent) shareholding
interest in EuroWeb Czech Republic, spol. s.r.o., a limited liability company
incorporated and existing under the laws of the Czech Republic, identification
number: 48591319, having its registered seat at Praha 7, Xxxxxxxxxxx 00, 000 00
Xxxxx Xxxxxxxx (hereinafter referred to as the "Target Company") represented by
the contribution in nominal value in the amount of CZK 11,977,000 that is eleven
million nine hundred seventy-seven thousand Czech Crown (hereinafter referred to
as the "Shareholding Interest"), and the Seller desires to sell to the Purchaser
the Shareholding Interest held in the Target Company (the specification and
details of the Shareholding Interest and the Target Company are included in
Schedule 1 of this Agreement); and
WHEREAS the Seller provided certain loans under two loan agreements to the
Target Company which loans are still outstanding in the principal amount of USD
400,000 that is four hundred thousand United States Dollars (hereinafter
referred to as the "Loan Agreements") , and the Seller desires to assign to the
Purchaser all of its claims deriving from the Loan Agreements in the principal
amount of USD 400.000 together with all accrued rights (the copies of the Loan
Agreements are included in Schedule 2 of this Agreement); and
WHEREAS in the course of the legal and financial due diligence exercises the
Seller has provided the Purchaser with any and all information regarding the
Target Company and the Loan Agreements requested by the Purchaser and the
Purchaser has thoroughly reviewed and has evaluated such information in the
course of the legal and financial due diligence exercises; and
WHEREAS the Seller desires to sell to the Purchaser and the Purchaser desires to
purchase from the Seller the Shareholding Interest, upon the terms and subject
to the conditions set out below;
WHEREAS as an inseparable transaction from the sale and purchase of the
Shareholding Interest the Seller desires to assign to the Purchaser and the
Purchaser desires to assume from the Seller all the lender's claims deriving
from the Loan Agreements, upon the terms and subject to the conditions set out
below;
NOW THEREFORE THE PARTIES AGREE as follows:
1. THE SUBJECT OF THIS AGREEMENT
1.1 The Parties agree that upon the terms and subject to conditions set
out herein, Seller shall sell the Shareholding Interest to the
Purchaser and the Purchaser shall purchase the same Shareholding
Interest together with all rights attaching or accruing thereto with
effect from the date of Completion in accordance with Section 3 below.
1.2 The Parties agree that upon the terms and subject to conditions set
out herein, Seller shall assign and the Purchaser shall assume all the
lender's claims deriving from the Loan Agreements with effect from the
date of Completion in accordance with Section 3 below. The Purchaser
hereby expressly accepts and acknowledges that the Seller shall not be
liable for the fulfillment of the obligations of the Target Company as
borrower under the Loan Agreements.
1.3 Save where the Parties otherwise agree in writing, neither Party shall
be obliged to complete the transaction contemplated herein unless the
sale and purchase of the Shareholding Interest and the assignment and
assumption of all lender's claims deriving from the Loan Agreements
are completed simultaneously.
2. PURCHASE PRICE, PAYMENT CONDITIONS
2.1 The Parties hereby agree that the total purchase price for the
Shareholding Interest shall be USD 500,000 that is five hundred
thousand United States Dollars (hereinafter referred to as the
"Purchase Price").
2.2 The Parties hereby agree that the total consideration for the
assignment and assumption of all lender's claims deriving from the
Loan Agreements shall be USD 1 that is one United States Dollars
(hereinafter referred to as the "Assignment Consideration").
2.3 The Parties agree that, unless otherwise agreed in writing, the
payment of the Purchase Price and the Assignment Consideration shall
be effected by telegraphic transfer of funds, for same day value, to
the bank account of the Seller. The details of the bank account to
which the Purchase Price and the Assignment Consideration shall be
transferred by the Purchaser are the following:
Bank name: JPMorgan Chase Bank
Bank address: 000 Xxxxxxx Xxxxxx Xxx Xxxx, XX 00000
Bank account number: 116-084367
ABA routing number: 000-000-000
SWIFT code: XXXXXX00
3. COMPLETION OF THE TRANSACTIONS
3.1 The completion of the sale and purchase of the Shareholding Interest
and the assignment and assumption of all lender's claims deriving from
the Loan Agreements contemplated herein (hereinafter referred to as
the "Completion") shall take place within five working days from the
signing of the date of this Agreement.
3.2 On Completion:
(i) the Purchaser shall pay the Purchase Price and the Assignment
Consideration to the Seller pursuant to Section 2 of this
Agreement and, unless otherwise agreed in writing, shall deliver
written confirmation from its bank that the Purchase Price and
the Assignment Consideration has been irrevocably transferred to
the Seller's bank account as specified in Section 2.3 hereof (for
the avoidance of doubt, the Parties confirm that the payment by
the Purchaser of the Purchase Price and the Assignment
Consideration to the Seller's bank account as specified in
Section 2.3 hereof shall be deemed an effective discharge of the
requirement to pay such sums if and when the relevant sums shall
have been received for the credit of the Seller's bank account);
and
(ii) following receipt of confirmation from the Seller's bank that the
sums of the Purchase Price and the Assignment Consideration have
been credited to the Seller's bank account as specified in
Section 2.3 hereof, the Seller and Purchaser shall sign the
transfer instrument in the form and substance attached to this
Agreement as Schedule 3 (hereinafter referred to as the "Transfer
Instrument"), the powers of attorney in the form and substance
attached to this Agreement as Schedule 4 (both Transfer
Instrument and the powers of attorney have to be signed with
signatures of both Parties verified by a notary public with the
explicit exception of power of attorney to be granted by the
current Target Company executive, which can be signed without
verified signature) and any other certificates or documents
corresponding to the Shareholding Interest (if any) and any other
certificates or documents necessary for the effective transfer of
the Shareholding Interest according to the applicable Czech legal
regulations; and
(iii)the Purchaser shall deliver the Transfer Instrument signed by
the Parties to the Target Company; and
(iv) the Seller shall deliver written confirmation to the Purchaser
that the Seller as lender has notified the Target Company as
borrower of the assignment and assumption of all lender's claims
deriving from the Loan Agreements in accordance with this
Agreement.
3.3 The Parties acknowledge that, subject to the due and effective payment
by the Purchaser of the Purchase Price and the Assignment
Consideration and signing by the Parties of the Transfer Instrument in
accordance with this Agreement, the title to the Shareholding Interest
shall pass to the Purchaser as of the date of the Completion.
3.4 The Parties acknowledge that, subject to the due and effective payment
by the Purchaser of the Purchase Price and the Assignment
Consideration in accordance with this Agreement, the lender's claims
deriving from the Loan Agreements shall be assigned to the Purchaser
pursuant to Section 524 of the Civil Code No. 40/1964 Coll., in its
valid wording as of the date of the Completion.
3.5 Subject to the due and effective payment by the Purchaser of the
Purchase Price and the Assignment Consideration in accordance with
this Agreement, at the cost of the Purchaser the Parties shall make
any reasonable action or steps that are required by the laws of the
Czech Republic to contractually complete the due transfer of the
ownership title of the Shareholding Interest in accordance with the
terms and conditions of this Agreement.
3.6 The Parties acknowledge that the transfer of the Shareholding Interest
becomes effective towards the Target Company upon the delivery of the
Transfer Instrument signed by the Parties to the Target Company.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Seller represents and warrants to the Purchaser all of the
representations and warranties stated in Schedule 6 hereto are true,
correct and not misleading as of the date of this Agreement, except as
disclosed in the Disclosure Letter attached as Schedule 7 hereto. 4.2
The Purchaser represents and warrants that
(i) it is entitled to enter into this Agreement and to perform any
and all obligations undertaken herein or prescribed by the
applicable legal regulations. The conclusion of this Agreement by
the Purchaser complies with the applicable legal regulations and
does not violate any of the obligations undertaken by the
Purchaser toward any third persons. The Purchaser obtained all
the approvals or permissions of any third parties or any
authorities that are necessary to conclude this Agreement and to
perform his/its obligations undertaken herein;
(ii) it has been acquainted with the terms and conditions of the
Memorandum of Association currently in effect of the Target
Company;
(iii)it has the appropriate financial capacity to pay the Purchase
Price and the Assignment Consideration;
(iv) it has carried out all the legal and financial due diligence
exercises as it thought to be necessary and sufficient to enable
it to decide upon entering into this Agreement and completing the
transactions contemplated by this Agreement.
4.3 The Purchaser hereby declares that it accedes to the Memorandum of
Association of the Target Company in accordance with Section 115.
Paragraph 3 of the Act Xx. 000/0000 Xxxx., Xxxxxxxxxx Xxxx xx xxx
Xxxxx Xxxxxxxx, currently in effect.
4.4 The Parties agree that the foregoing warranties shall be fulfilled
down to and shall be true and accurate in all respects at the
execution of this Agreement.
4.5 The Purchaser acknowledges that no representation or warranty, express
or implied, has been given by the Seller in relation to the Target
Company other than those specified in Schedule 6 hereto and the
Purchaser acknowledges that the Seller shall not be liable in any way
whatsoever for any representations or warranties not specified in
Schedule 6 hereto.
4.6 The Parties agree that the Seller is not liable in respect of a claim
under the representations and warranties specified in Schedule 6
hereto unless and until liability determined in respect of any such
claim, when aggregated with any other amount or amounts of liability
determined in respect of other claims under such representations and
warranties, exceeds USD 5,000 that is five thousand United States
Dollars (excluding interest, costs etc.) in which event the claims
beyond the USD 5,000 that is five thousand United States Dollars
threshold shall be recoverable hereunder.
4.7 The Parties agree that the Seller's total liability in respect of all
claims under the representations and warranties specified in Schedule
6 hereto is limited to USD 200,000 that is two hundred thousand United
States Dollars.
4.8 The Seller is not liable for a claim under the representations and
warranties specified in Section 4.1 hereof unless the Purchaser has
given the Seller notice of the claim setting out full particulars of
the grounds on which such claim is based within 12 (twelve) months of
the date of Completion.
5 TERMINATION
5.1 This Agreement may be terminated and the transactions contemplated
hereby may be abandoned under the following circumstances:
(a) by mutual consent of the Purchaser and the Seller; or
(b) by the Seller unilaterally, if the confirmation from the Seller's
bank that the sums of the Purchase Price and the Assignment
Consideration have been credited to the Seller's bank account as
specified in Section 2.3 hereof shall not have been received by
the Seller within five working days from the day after the
execution of this Agreement;
5.2 In the event of the termination of this Agreement pursuant to Section
5.1 by a Party hereto, written notice thereof specifying the cause of
such termination shall promptly be given to the other Party hereto and
this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned without further action by any of the Parties
hereto, save that if the Seller terminates this Agreement pursuant to
Section 5.1 (b), the Purchaser shall be obliged to pay to the Seller
compensation of USD 20,000 that is twenty thousand United States
Dollars for the time, effort and expenses of the Seller spent or
incurred on the transactions contemplated by this Agreement. The
payment of the total amount of the compensation specified in this
Section 5.2 shall be effected by telegraphic transfer of funds, for
same day value, to the bank account of the Seller as specified in
Section 2.3 hereof within 5 (five) days of the receipt by the
Purchaser of the termination notice given by the Seller pursuant to
Section 5.1 (b) hereof.
5.3 The respective obligations of the Parties hereto pursuant to Sections
5.2, 5.3, 6.1, 6.2, 6.3, 6.4, 6.7 and 6.11 shall survive any
termination of this Agreement.
6 MISCELLANEOUS
6.1 Costs: Except where this Agreement provides otherwise, each Party
hereto shall pay its own costs relating to the negotiation,
preparation execution and performance of this Agreement and of each
document referred to in it.
6.2 Notices: All notices or requests provided for or permitted to be given
pursuant to this Agreement must be in writing and may be given or
served by depositing the same in the mail, addressed to the party to
be notified, post-paid and registered or certified with return receipt
requested or by delivering such notice in person to such Party.
Notices given or served pursuant hereto shall be effective upon
receipt by the Party to be notified. All notices to be sent to the
Parties or any one or more of the assignees of the interest of the
Parties pursuant hereto shall be sent to or made at the following
addresses:
a) if to the Seller, at:
Euroweb International Corporation
Vaci ut 141.
Xxxxxxxx
X-0000 Xxxxxxx
Fax No.: x00 0 000 0000
Attention: Xxxxx Xxxx, CEO
b) if to the Purchaser, at
Globix Communications Limited
Jubilee Xxxxxxxxx
Xxxxxxxx Xxxxxx
Xxxxxxx
Xxxx xx Xxx XX0 0XX
Fax No.: x00 0000 000 000
Attention: Xxxxxxx Xxxxxx, Director
By giving to the other Party a five-day written notice thereof, the Parties
hereto and their respective successors and assignees shall have the right
from time to time and at any time during the term of this Agreement to
change their respective addresses and each shall have the right to specify
as its address any other address.
Notices may also be sent by (a) facsimile copy or telecopy, in which case
notice shall be deemed to be received on the date of transmission, if
transmitted during normal business hours at the place of receipt and on a
business day and, if not, shall be deemed to be received on the next
business day, or (b) an internationally recognized courier service, in
which case notice shall be deemed to be received upon the earlier of (i)
two business days after delivery of the notice to the courier service, or
(ii) actual receipt by the Party to be notified.
6.3 Governing Law: This Agreement and the obligations of the Parties
hereunder shall be interpreted, construed and enforced in accordance
with the laws of the Czech Republic.
6.4 Jurisdiction: The Parties will attempt to resolve all disputes
deriving from this Agreement in an amicable manner through
negotiations. If the negotiations cannot resolve the dispute, either
Party will be entitled to refer the dispute to arbitration. The
Parties hereby agree to irrevocably submit themselves to the exclusive
jurisdiction of the Permanent Arbitration Court attached to the Czech
Chamber of Commerce and Industry which will proceed according to its
own procedural rules. The arbitration panel will consist of three
members. The language of the proceedings will be English. The award of
the Arbitration Court will be final, binding and non-appealable. The
Parties waive their right to any form of appeal or recourse from such
arbitral proceedings to a court of law or other judicial authority.
6.5 Other Fees and Commissions: Each Party hereby represents and warrants
to the other that there are no claims for brokerage or other
commissions or finder's or other similar fees in connection with the
transactions covered by this Agreement and each Party hereby agrees to
indemnify and hold harmless the others from and against all liability,
costs, damages and expenses from any such claims as are attributable
to it. Furthermore the Parties acknowledge and agree that unless
otherwise provided herein any and all costs, expenses or fees relating
to the conclusion of this Agreement or any of the transactions
contemplated herein shall be covered by the Parties in a manner that
each Party shall pay its respective cost, expense or fee.
6.6 Severability: If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein is
not affected in any manner materially adverse to any Party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the Parties shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that
the transactions contemplated herein are fulfilled to the extent
possible.
6.7 Confidentiality: The Parties agree to treat all information relating
to the business of the other, and the Target Company in strict
confidence and agree not to disclose or permit their employees to
disclose any such information to others (other than the professional
advisors of the Parties) unless and to the extent the same shall be in
the public domain or be required by law otherwise than as a result of
a breach of this Section 6.7 or of any other confidentiality agreement
to which any such information may be subject. Notwithstanding the
foregoing, a Party may convey information of a general nature to its
equity investors in the ordinary course of reporting to such
investors.
Except to the extent required by law or stock exchange regulation, no
public announcement of this Agreement or the terms and conditions
hereof shall be made by either Party without the consent of the other
and then only an a coordinated basis.
The Parties may disclose the existence and the terms and conditions of
this Agreement to the extent required by law, including securities
legislation and stock exchange requirements or by the public
authorities having jurisdiction over them, after advising the other
Party in advance of the purpose and extent of such disclosure and,
wherever possible, providing an advance copy of same and incorporating
the comments of the other Party, and the same shall apply, under the
same conditions, to any disclosure required in connection with the
obtaining of any governmental consent or approval necessary for the
proper implementation of the transactions contemplated hereby or the
conduct of the business of the Target Company.
The obligations of the Parties pursuant to this Section 6.7 shall
continue until five years after this Agreement shall have been
terminated.
6.8 Non-competition: The Seller hereby undertakes that for the period of
two years following the Completion it will not:
perform business activities within the territory of the Czech Republic
for its own benefit or for the benefit of third parties and in its own
name or in the name of a third party that would coincide with the
scope of business activities of the Target Company or the Purchaser;
arrange business for third persons within the territory of the Czech
Republic to the detriment of the Target Company or the Purchaser;
participate as a partner or a shareholder in the business activities
of other companies within the territory of the Czech Republic with a
similar or the same scope of business activities as the Target Company
or the Purchaser; offer the customers of the Target Company any
services or products; abuse the reputation of the Target Company or
the Purchaser, their products or services to secure for itself or
third persons a benefit which otherwise would not be achieved.
If the Seller breaches this non-competition obligation, it will be
obliged to pay the Purchaser a contractual penalty in the amount of
USD 200,000 that is two hundred thousand United States Dollars. The
payment of the contractual penalty does not affect the right of the
Purchaser to claim for the compensation of damages.
6.9 Further Assurances: The Parties hereto agree that they will from time
to time at the reasonable request of the other execute and deliver
such instruments, conveyances and assignments and take such further
action as may be required pursuant to the terms hereof to accomplish
the purpose of this Agreement.
6.10 Amendment of Agreement: This Agreement may be amended at any time and
from time to time by an amending agreement signed by each of the
Parties.
6.11 Entire Agreement: This Agreement and the Schedules attached hereto
constitute the entire agreement between the Parties pertaining to the
subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written,
of the Parties. The Parties agree that if any inconsistencies and/or
discrepancies exist between the provisions this Agreement and its
Schedules (including but not limited to the Transfer Instrument) then
the provisions of this Agreement shall prevail.
6.12 Assignment: Except as herein otherwise provided to the contrary, this
Agreement shall be binding upon and ensure to the benefit of the
Parties hereto and their respective successors and assignees. Except
as specifically provided herein, no Party may assign its rights
hereunder.
IN WITNESS WHEREOF the Parties have caused this Agreement to be executed by
their respective duly authorized representatives as follows:
EUROWEB INTERNATIONAL CORPORATION
/s/ Xxxxx Xxxx
--------------
name: Xxxxx Xxxx
title: Chief Executive Officer
GLOBIX COMMUNICATIONS Limited
/s/Xxxxxxx Xxxxxx
-----------------
name: Xxxxxxx Xxxxxx
title: Director
