Ex-10.30
STOCK PURCHASE AGREEMENT
AMONG
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.,
EFONICA FZ-LLC
AND
KARAMCO, INC.
-----------------------
JANUARY 11, 2005
STOCK PURCHASE AGREEMENT
THIS AGREEMENT dated as of January 11, 2005, is by and among Fusion
Telecommunications International, Inc., a Delaware corporation ("Buyer"),
Efonica, FZ-LLC, a company organized in Dubai Technology, Electric Commerce &
Media Free Zone, Dubai, United Arab Emirates (the "Company"), and Karamco, Inc.,
a company organized in the British Virgin Islands ("Karamco" or the
"Stockholder").
WITNESSETH
WHEREAS the Stockholder owns the number of the issued and outstanding
shares (collectively, the "Shares") of the common stock, no par value per share
(the "Common Stock"), of the Company set forth opposite such Stockholder's name
on Schedule 1 attached hereto, which Shares in the aggregate represent, on a
fully diluted basis, 49.8% of the authorized, issued and outstanding shares of
the capital stock of the Company;
WHEREAS Buyer desires to acquire all of the Shares from Karamco, and
Karamco desires to sell all of its Shares to Buyer, upon the terms and subject
to the conditions hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and of the covenants set
forth below, the parties hereby agree as follows:
SECTION
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PURCHASE AND SALE OF THE SHARES
1.1 Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, at the Closing (as defined below), Karamco agrees to sell to
Buyer, and Buyer agrees to purchase from Karamco, the number of Shares owned by
Karamco, as set forth opposite its name on Schedule 1 hereto ([ ] Shares). The
aggregate purchase price for the Shares (the "Final Purchase Price") shall be
set forth and payable as expressed on Section 1.2.
1.2 Valuation and Purchase Price
A. Valuation. The valuation of the Company shall equal 4.5
times the net income before taxes of the Company (the "Net Income") for the
12-month period ending February 28, 2006 (the "Computation Period"). The Net
Income of the Company shall be as set forth on the Company's financial
statements computed in accordance with generally accepted accounting principals,
provided however that in computing the Company's Net Income, there shall be
added back any administrative and xxxx-up fees paid or payable to the back
office service provider during the Computation Period (the "Valuation"). The
Valuation shall be computed within 60 days of the end of the Computation Period.
In no event shall the Valuation for the Company be less than $11.25 million or
greater than $29.25 million.
B. Base Purchase Price. The base purchase price for the Shares
(the "Base Purchase Price") shall be NINE MILLION SEVEN HUNDRED EIGHTY FIVE
THOUSAND SEVEN HUNDRED ($9,785,700) DOLLARS (49.8% of an initial estimated
valuation of
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$20,000,000 minus 49.8% of the promissory notes payable (including accrued
interest) that the Company owes to the Buyer as of [DATE] ("Efonica Debt")),
subject to adjustment pursuant to Section 1.2(C)(vii) and Section 8 of the
Agreement, and payable as set forth in Section 1.2(C).
C. Payment at Closing. At Closing, Buyer shall deliver to
Karamco:
(i) Stock. [NUMBER] shares of Buyer's common stock at
the IPO price (exact number of shares will be calculated on the
effective date of the IPO and will be equal to the Base Purchase
Price minus the cash payment as set forth in Section 1.2(C)(iii)
divided by the IPO price per share) (the aggregate number of
Shares under this Section shall be referred to as the "Base
Shares");
(ii) Escrow. From the Closing Date until March 30, 2006,
Buyer's attorney (the "Escrow Agent") shall hold [NUMBER] shares
of the Base Shares (not to include the Registered Stock) in escrow
(the "Escrowed Stock") and subject to an Escrow Agreement between
the parties and the Escrow Agent, a form of which is attached
hereto as Exhibit "D". The Escrowed Stock will be subject to
adjustment pursuant to Section 1.2(C)(vii);
(iii) Cash Payment. Within three (3) days of the Closing,
Buyer will pay Karamco an amount equal to FIVE HUNDRED THOUSAND
($500,000.00) DOLLARS as a credit to the Final Purchase Price;
(iv) Registration. The Buyer shall include in its
Registration Statement for its IPO, 150,000 shares of Common Stock
(the "Registered Shares"). The Registered Shares shall be part of
the Base Shares. During the 90 day period following the Closing,
the Buyer will either allow the Stockholder to sell up to $1
million in Registered Shares in ordinary brokerage transactions in
the public market or purchase the Registered Shares as set forth
herein. The Registered Shares will be subject to a lock-up that
will allow Karamco to sell 1/2 of the Registered Shares 45 days
following the effective date of an IPO and 1/2 of the Registered
Shares 90 days following the effective date of the IPO. In the
event Karamco elects to sell the Registered Shares in the public
market as set forth above, Karamco shall provide notice to Buyer
with at least two business days' notice prior to any sale, and
Buyer shall have the exclusive option to purchase the Registered
Shares from Karamco at the higher of the IPO price or the average
5 day bid price prior to the date of the sale to the Buyer. In the
event that Karamco's aggregate gross proceeds of a public sale of
the Registered Shares as set forth in this Section, in the
aggregate, and within 95 days following the effective date of the
IPO, does not equal $1,000,000, the Buyer will purchase from
Karamco an amount of Base Shares, at the IPO price, equal to the
difference between the aggregate gross proceeds of Karamco's sale
of the Registered Shares and $1,000,000;
(v) Lock-Up. The unregistered Base Shares issued to
Karamco will be subject to a lock-up for a one year period
following the effective date of the IPO ("Lock-Up Period").
Karamco agrees to execute an agreement to that effect in the form
attached hereto as Exhibit "B" (the "Lock-Up Agreement"). In the
event a significant shareholder (owner of 5% or more of the issued
and outstanding common stock ("Significant Shareholder")) is
allowed to register all or a portion of his common stock prior to
the expiration of the Lock-Up Period,
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Karamco will be allowed to register its shares on a pro rata basis
(will be allowed to sell the same % of shares the Significant
Shareholder sells). If any Significant Shareholder shall receive
and determine to accept any bona fide offer from a third party
(the "Offeror") to purchase all or substantially all of such
Significant Shareholders' Shares "a "Tag-Along Offer") prior to
expiration of the Lock-Up Period, Karamco shall have the right to
participate in such transaction in the manner set forth in this
Section. The Significant Shareholders shall, promptly after
receipt of a Tag-Along Offer, send a copy thereof or a summary of
the terms of any offer to Karamco. Karamco shall have the right to
cause the Significant Shareholder(s) to condition his or their
sale of Shares to an Offeror on the sale of all, or a pro-rata
amount (equal to the percentage of the selling Significant
Shareholder), of Shares of Karamco to Offeror (the "Tag-Along
Shareholder"). The purchase price and payment terms for the Shares
of the Tag-Along Shareholder shall be the same price per Share and
same payment terms for the Shares as the Significant Shareholders'
Shares and as set forth in the Tag-Along Offer. Should Karamco
choose to participate in a sale of Shares pursuant to this
Section, it shall pay its proportionate share of any expenses
attributable to the sale of Shares hereunder. In the event Karamco
sells any stock prior to expiration of the Lock-Up Period, it
shall cause the purchaser to be bound by the Lock-up Agreement.
(vi) Limitation on Sale Following Lock-Up Period. The
Lock-Up Agreement will further provide after the Lock-Up Period
sales by the Stockholder shall be subject to Rule 144. Both
parties acknowledge that the holding period for Karamco's
unregistered shares commences at the time of closing.
(vii) Post Closing Adjustments.
(a) Within 60 days of the Computation Period,
Buyer will determine the final purchase price which shall
equal 49.8% of the actual Valuation minus 49.8% of the
Efonica Debt less adjustments in Section 8 of the Agreement
(the "Final Purchase Price").
(b) In the event that the Final Purchase Price is
less than the Base Purchase Price, the excess Escrowed
Stock will be released from escrow to the Buyer, the
released shares being valued equal to the IPO price per
share. Provided, however, that the Final Purchase Price
shall not be less than $5,428,200;
(c) In the event that the Final Purchase Price
exceeds the Base Purchase Price (i) the Escrowed Stock will
be released from escrow to Karamco, and if applicable, (ii)
the Buyer will issue additional Stock to Buyer for the
difference between the Final Purchase Price and the Base
Purchase Price, the additional stock being valued at the
common stock closing price on March 30, 2006. Provided
however, that the Final Purchase Price shall not exceed
$14,392,200 ("Maximum Purchase Price").
1.3 Closing. The closing (the "Closing") of the purchase and sale of
the Shares hereunder shall take place at the Buyer's office located at 000
Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxx
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Xxxx, Xxx Xxxx 00000, at 2:00 p.m. (EST) on the closing of the Buyer's initial
public offering ("IPO"), or at such other time or place as Buyer and the
Stockholder agree (the "Closing Date"). If the IPO does not occur by March 1,
2005, Karamco will have the option to deem this Agreement null and void and
maintain its 49.8% equity interest in the Company.
1.4 Additional Stock. If between January 1, 2006 and February 28, 2006
(the "11th and 12th Month"), the Company receives a contract (or contracts as
the case may be) with pre-payment(s) that within 45 days from February 28, 2006,
the Company is able to record as revenue under GAAP, on May 15, 2006 Karamco
will be issued additional stock equal to (49.8% times (4.5 times the additional
net income before taxes)) (the "Additional Stock").The Additional Stock shall be
valued at the closing price of common stock on May 15, 2006.
Provided however, cash pre-payments collected in the 11th and 12th Month that
exceed 25 % of the average pre-payments for the period of November 1, 2005 to
December 31, 2005, shall not be included in the Additional Stock calculation and
the Additional Stock shall be subject to the Maximum Purchase Price in Section
1.2(vii)(c). This Section shall survive Closing of the Agreement.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDER WITH RESPECT TO THE COMPANY
The Stockholder represents and warrants to Buyer as of the date hereof
and on and as of the Closing Date as follows:
2.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the country
of Dubai, UAE and has all requisite corporate power and lawful authority to own,
lease and operate its assets, properties and business and to conduct its
business as and in the places where such properties are now owned, leased or
operated or such business is now conducted or proposed to be conducted.
2.2 Capitalization; Voting Rights. The authorized capital of the
Company consists of [ ] shares of Common Stock, of which [ ]
shares have been validly subscribed and issued, are outstanding as fully paid
and non-assessable shares as of the date hereof, and represent all of the issued
and outstanding shares of capital stock of the Company, on a fully diluted
basis, as set forth on Schedule 1. There is no: (i) outstanding security of the
Company convertible into or exchangeable for any share or shares of the capital
of the Company; (ii) outstanding subscription, option, warrant, call,
commitment, agreement or understanding (oral or written) obligating the Company
to issue any share or shares of its capital stock or any security or securities
of any class or kind which in any way relate to the authorized or issued capital
stock of the Company or any interest therein; (iii) agreement or understanding
(oral or written) (other than this Agreement) which grants to any Person (as
hereinafter defined) the right to purchase or otherwise acquire any share or
shares of the issued and outstanding shares of the capital stock of the Company
or any interest therein, including without limitation any preemptive right,
right of first refusal or co-sale right; (iv) voting trust or voting agreement
or pooling agreement or proxy (oral or written) with respect to any issued and
outstanding shares of the capital stock of the
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Company; or (v) obligation of the Company (oral or written) to purchase, redeem,
or otherwise acquire any shares of its capital stock or any interest therein or
to pay any dividend or distribution with respect thereto.
2.3 Consents. No consent, approval, waiver or other action by any
individual, corporation, company, partnership, association, trust or other
entity or organization, including any government or political subdivision or
agency or instrumentality thereof (each, a "Person"), under any contract,
agreement, understanding, indenture, lease, instrument or other document (oral
or written) to which the Company is a party or by which it or any of the assets
of the Company is bound, is required or necessary for (i) the execution,
delivery and performance of this Agreement or any Related Agreement by the
Stockholder or the Company or the consummation of the transactions contemplated
hereby or thereby or (ii) the continuation after the consummation of the
transactions contemplated hereby or thereby of any contract, agreement,
indenture, lease, instrument or other document to which the Company is a party
or by which it or its assets are bound.
2.4 Authorization; No Breach. The execution and delivery by the
Company of this Agreement and all the agreements contemplated herein (the
"Related Agreements"), and the consummation by the Company of all transactions
contemplated hereunder and thereunder by the Company, have been duly authorized
by all requisite corporate action. This Agreement and the Related Agreements
have been duly executed by the Company and the Stockholder (where applicable)
and each other party thereto. This Agreement and the Related Agreements and all
other agreements and obligations entered into and undertaken in connection with
the transactions contemplated hereby or thereby to which the Company or the
Stockholder is a party constitute the valid and legally binding obligations of
the Company and the Stockholder, enforceable against each of them in accordance
with their respective terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights; and (ii) general principles of
equity that restrict the availability of equitable remedies. The execution,
delivery and performance of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby will not: (i)
violate, contravene or breach any provision of the Articles of Incorporation or
By-laws of the Company; (ii) violate, conflict with, contravene, or result in
the breach of any of the terms or conditions of, result in modification of the
effect of, or otherwise give any other contracting party the right to terminate,
accelerate or cancel any right or obligation of the Company or constitute (or
with notice or lapse of time or both constitute) a default under, any
instrument, contract or other agreement to which the Company is a party or by
which it or its assets or properties may be bound or subject; (iii) violate,
contravene or breach any constitution, treaty, law, statute, code, ordinance,
decree, rule, regulation, or municipal by-law, whether domestic, foreign or
international, any judgment, order, writ, injunction, decision, ruling, decree
or award of any governmental authority or body, or any provision of any of the
foregoing applicable to or binding upon, the Company or its properties, assets
or business (each, a "Law," and collectively, "Laws"); (iv) violate any license,
permit, franchise, or order or other approval of any federal, provincial, state,
local or foreign governmental or regulatory body (each, a "Permit", and
collectively, "Permits"); or (v) result in the creation of any mortgage, pledge,
charge, security interest, lien or other encumbrance (each, a "Lien") on the
Shares or on any of the assets or properties of the Company.
2.5 Subsidiaries and Other Affiliates. The Company has no
subsidiaries. The Company does not directly or indirectly own or have any
investment in any shares of the capital stock of, or any other proprietary
interest in (including without limitation, any partnership or joint venture
interest other than with the Buyer), any other Person. For this purpose, "joint
venture"
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means any entity or contractual relationship (written or oral) pursuant to which
the Company shares with any Person the profits and/or losses of any undertaking
or pursuant to which the Company may be liable for the acts or undertakings of
any Person.
2.6 Corporate Records. The Company has previously delivered to Buyer
true and complete copies of its Articles of Incorporation, as amended, and
By-laws as currently in effect. The minute books of the Company, which have been
furnished to Buyer, are complete and accurate, and contain copies of all by-laws
and resolutions passed by the shareholders and directors of the Company since
the date of its incorporation, all of which by-laws and resolutions have been
duly passed. The share certificate books, register of shareholders, register of
transfers and register of directors of the Company are complete and accurate.
The financial books and records of the Company have been maintained in
accordance with sound business practices and fairly, accurately and completely
present and disclose consistently applied (i) the financial position of the
Company, and (ii) all transactions of the Company.
2.7 Financial Statements. The Company has delivered to Buyer drafts
dated November 30, 2004 of the unaudited financial statements of the Company for
the fiscal year ended December 31, 2004 (the "Unaudited Financial Statements"),
the unaudited balance sheet (the "Current Balance Sheet") of the Company as of
November 30, 2004 (the "Current Balance Sheet Date") collectively with the
Unaudited Financial Statements and the Current Balance Sheet, the "Financial
Statements"). The Unaudited Financial Statements together with the notes thereto
have been prepared in accordance with past practices, and the Unaudited
Financial Statements together with the notes thereto have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout such period. Except as disclosed therein, such Unaudited
Financial Statements are true, correct and complete, and present fairly and
accurately the financial condition and position of the Company as of the dates
indicated.
2.8 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 2.8, as of the Closing Date, the Company had/has no liabilities of any
nature, whether direct, indirect, accrued, absolute, contingent or otherwise
(including, without limitation, liabilities as guarantor or otherwise with
respect to obligations of others or liabilities for Taxes due or then accrued or
to become due), that were not fully and adequately reflected or reserved against
on the Financial Statements of the Company. There is no existing condition,
situation or set of circumstances (excluding possible changes in the Tax laws of
any jurisdiction) that could reasonably be expected to result in any such
liability, other than liabilities (i) fully and adequately reflected or reserved
against on the Financial Statements or (ii) incurred since the Current Balance
Sheet Date in the ordinary course of business consistent with past practice,
which in the aggregate are not material to the Company. For purposes of this
Section 2.8, "material" shall mean any amount in excess of $5,000.00.
2.9 No Material Adverse Change. To the best knowledge of the Company,
since the Current Balance Sheet dated November 30, 2004, there have been no
changes in the assets, properties, business, operations, prospects or condition
(financial or otherwise) of the Company that, individually or in the aggregate,
materially and adversely affect the Company, nor does any Stockholder or
executive of the Company know of any such change that is reasonably likely to
occur, nor has there been any damage, destruction or loss materially and
adversely affecting the assets, properties, business, operations, prospects or
condition (financial or otherwise) of the Company, whether or not covered by
insurance. Without limiting the generality of the foregoing since the Current
Balance Sheet Date, the Company has not:
(i) incurred any indebtedness for borrowed money, assumed or
guaranteed or otherwise
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become responsible for the obligations of any Person, or otherwise made or
assumed any commitment, obligation or liability outside the ordinary course of
business;
(ii) declared or paid any dividend or declared or made any other
distribution of any kind to its shareholders, or made any direct or indirect
redemption, retirement, purchase or other acquisition of any shares of its
capital stock or entered into any agreement or made any commitment with respect
to the same;
(iii) made any loan, advance or capital contribution to or
investment in any Person;
(iv) made any payment or commitment to pay any severance or
termination pay to any of its officers, directors, shareholders, employees,
consultants, agents or other representatives;
(v) entered into any lease (as lessor or lessee), sold,
abandoned or made any other disposition of any of its assets, properties or
rights, granted or suffered any Lien or other encumbrance on any of its assets
or properties, or entered into or amended any contract or other arrangement to
do any of the foregoing or pursuant to which the Company agreed to indemnify any
party or to refrain from competing with any party;
(vi) except for inventory or equipment acquired in the ordinary
course of business, made any acquisition of all or any part of the assets,
properties, capital stock or business of any other Person or entered into or
amended any contract or other arrangement to do the same;
(vii) made any change in any method of accounting or accounting
practice, waived or cancelled any material claim, account receivable, or right,
or changed its pricing, credit, or payment policies;
(viii) paid any long-term liability otherwise than in accordance
with its terms;
(ix) (A) entered into any employment, deferred compensation
or other similar agreement (or any amendment to any such existing agreement)with
any director, officer, shareholder, consultant, agent or employee of the
Company, (B) increased the benefits payable under any existing severance or
termination pay policies or employment agreement or (C) increased the
compensation, bonus or other benefits payable to directors, officers or
employees of the Company;
(x) suffered any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company, which employees were not
subject to a collective bargaining agreement at the Current Balance Sheet Date,
or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or
with respect to any employees of the Company; or
(xi) failed to comply with any Law in any respect that,
individually or in the aggregate, has had or is reasonably likely to have a
material adverse effect on the assets, properties, business, operations,
prospects or conditions (financial or otherwise) of the Company.
2.10 Accounts and Notes Receivable. All accounts and notes receivable
reflected in the Financial Statements and all accounts receivable arising after
the Current Balance Sheet Date (collectively, the "Accounts Receivable") have
arisen in the ordinary course of business of the Company, represent valid and
enforceable obligations due to the Company, and are not subject to any discount,
set-off or counter-claim. All such Accounts Receivable have been collected or,
to
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the best knowledge of the Company, are fully collectible in the ordinary course
of business of the Company in the aggregate recorded amounts thereof in
accordance with their terms.
2.11 Tax Matters.
(a) As used in this Agreement, "Taxes" shall mean all taxes, including
without limitation income taxes, corporation taxes, capital taxes, excise taxes,
value added and sales taxes, use taxes, gross receipts taxes, franchise taxes,
employment and payroll related taxes, goods and services taxes, stamp taxes,
transfer taxes, withholding taxes, property taxes and import duties, whether or
not measured in whole or in part by net income, all imposts, levies, duties,
deductions, withholdings, charges, public and private pension plan
contributions, social security contributions, workmen's compensation, public
health contributions, regulatory fees and taxes, assessments, reassessments or
fees of any nature, and all deficiencies or other additions to tax, interest and
penalties owed by it; and "Tax" shall mean any one of them. The Company has paid
all Taxes required to be paid by it through the date hereof (other than Taxes
not yet due and payable the liability for which is adequately reserved for by
the Company in the Financial Statements and other than possible adjustments as
set forth in Schedule 2.8). The provisions for Taxes reflected in the Financial
Statements are adequate to cover any and all Tax liabilities of the Company in
respect of their respective assets, properties, business and operations during
the periods covered by said Financial Statements and all prior periods.
(b) The Company has timely filed all Tax returns required to be filed
by it through the date hereof. Each of the Tax returns filed by the Company
completely, correctly and accurately reflects the amount of the Company's Tax
liability for the period covered thereby.
(c) There has not been any audit of any Tax return filed by the
Company, no audit of any Tax return of the Company is in progress, and the
Company has not been notified by any Tax authority that any such audit is
contemplated or pending. No taxing authority is now asserting or, to the best
knowledge of any Stockholder, threatening to assert any Tax deficiency or claim
for additional Taxes or interest thereon or penalties in connection therewith.
All Tax returns of the Company have been assessed through and including the date
hereof, and there are no outstanding waivers of any limitation periods or
agreements providing for an extension of time for the filing of any Tax return
or the payment of any Tax or for the issue of an assessment or reassessment
against the Company. All deficiencies proposed as a result of such assessments
of the Tax returns have been paid and settled.
(d) The Company has withheld from each payment made to any of its past
and present shareholders, directors, officers, employees and agents the amount
of all Taxes and other deductions required to be withheld and has paid or made
adequate provision for the payment of such amounts to the proper receiving
authorities.
(e) The Company is not subject to and shall not be subject after the
Closing Date to any assessments, levies, penalties or interest with respect to
Taxes which shall result in any liability on its part in respect of any period
ending on or prior to the Closing Date in excess of the amount provided for and
reserved against in the Financial Statements.
2.12 Compliance with Laws; Permits.
(a) The Company is not in violation or default of any term of its
Articles of Incorporation or Bylaws, or of any provision of any mortgage,
indenture, contract, agreement, instrument or contract to which it is party or
by which it is bound or of any judgment, decree,
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order, writ or, to its knowledge, any Law applicable to the Company which would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company.
(b) Schedule 2.12 sets forth a complete list (including detailed
description of the authority granted under each) of (i) all Permits and Licenses
(collectively referred to as "Permits") that are material to the conduct of the
Company's business (including but not limited to all telecommunications and
Voice over Internet Protocol ("VoIP") licenses))
(c) The Company has, is in full compliance with, and is entitled to
all the benefits under, all Permits that are material to the conduct of its
business and the uses of its assets; such Permits have been validly issued and
are in full force and effect and will continue in full force and effect upon
consummation of the transactions contemplated hereunder; no violations are or
have been recorded with any governmental or regulatory body in respect of any
Permit; and no proceeding is pending or, to the best knowledge of the
Stockholder threatened to revoke or limit any Permit.
2.13 Actions and Proceedings. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, governmental or
regulatory body or arbitration tribunal against or involving the Company or any
of its securities, assets, or properties or any Stockholder or Employee of the
Company. There are no actions, proceedings (or any basis therefor), suits or
claims or legal, administrative or arbitral proceedings pending against or, to
the best knowledge of the Company, threatened against or affecting (whether or
not the defense thereof or liabilities in respect thereof are covered by
insurance) the Company or any of its securities, assets or properties, or any
Stockholder or Employee of the Company, nor, to the best knowledge of the
Company, is there any investigation pending or threatened against or affecting
the Company or any Stockholder or Employee of the Company, that questions the
validity of this Agreement, or any of the Related Agreements or any of the
Schedules or Exhibits attached hereto or the right of the Company or any
Stockholder or other party to enter into any of such agreements, or to
consummate the transactions contemplated hereby or thereby, or which might
result, either individually or in the aggregate, in any material adverse change
in the business, assets, intellectual property rights, liabilities, financial
condition, operations, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company. To the
best knowledge of the Company, there is no fact, event or circumstance that may
give rise to any suit, action, claim, investigation or proceeding that
individually or in the aggregate could have a material adverse effect on the
transactions contemplated hereby or on the assets, properties, business,
operations, prospects or condition (financial or otherwise) of the Company.
2.14 Contracts and Other Agreements.
(a) Schedule 2.14 sets forth a list of all of the following contracts
and other agreements (oral or written) to which the Company is a party or by or
to which it or its assets or properties are bound or subject (collectively, the
"Material Contracts"): (i) contracts and other agreements with any current or
former officer, director, shareholder, employee, consultant, agent or other
representative of the Company and contracts and other agreements for the payment
of fees or other consideration to any entity in which any officer or director of
the Company has an interest; (ii) contracts and other agreements with any labor
union or association representing any employee of the Company or otherwise
providing for any form of collective bargaining; (iii) contracts and other
agreements for the purchase or sale of materials, supplies, equipment,
merchandise, products or services providing in each instance for a purchase or
sale price exceeding $10,000;
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(iv) contracts and other agreements for the sale of any of the assets or
properties of the Company other than in the ordinary course of business or for
the grant to any person of any options, rights of first refusal, or referential
or similar rights to purchase any of such assets or properties; (v) partnership
or joint venture agreements; (vi) contracts or other agreements under which the
Company agrees to indemnify any party or to share the tax liability of any
party; (vii) contracts, options and other agreements for the purchase of any
asset, tangible or intangible, calling for an aggregate purchase price or
payments in any one year of more than $25,000 in any one case (or in the
aggregate, in the case of any related series of contracts and other agreements;
(viii) contracts and other agreements that cannot by their terms be canceled by
the Company and any successor or assignee of the Company without liability,
premium or penalty on no less than thirty (30) days' notice and which provide
for payments in any one year in excess of $5,000 and $10,000 in the aggregate;
(ix) contracts and other agreements with customers or suppliers for the sharing
of fees, the rebating of charges or other similar arrangements; (x) contracts
and other agreements containing obligations or liabilities of any kind to
holders of the securities of the Company as such (including, without limitation,
an obligation to register any of such securities under any federal or state
securities laws); (xi) contracts and other agreements containing covenants of
the Company not to compete in any line of business or with any person or
covenants of any other person not to compete with the Company in any line of
business; (xii) contracts and other agreements relating to the acquisition by
the Company of any operating business or the capital stock of any other person;
(xiii) contracts and other agreements requiring the payment to any person of a
commission or fee, including contracts or other agreements with consultants
which provide for aggregate payments in excess of $10,000; (xiv) contracts,
indentures, mortgages, promissory notes, loan agreements, guaranties, security
agreements, pledge agreements, and other agreements relating to the borrowing of
money or securing any such liability; (xv) distributorship or licensing
agreements; (xvi) contracts under which the Company will acquire or has acquired
ownership of, or license to, intangible property, including software (other than
software licensed by the Company as an end user for less than $10,000 and not
distributed by it); (xvii) leases, subleases or other agreements under which the
Company is lessor or lessee of any real property or personal property and which
provide for payments in any one year in excess of $5,000 and $10,000 in the
aggregate; (xviii) any other material contracts or other agreements whether or
not made in the ordinary course of business that are in each instance material
to the Company or the terms of which in each instance would have a material
adverse effect on the Company's business or prospects, condition, financial or
otherwise, or any of its assets or properties of the Company; or (xix) contracts
or agreements for any pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive, bonus, sales commission,
vacation, severance, disability, life insurance, group insurance, multi-employer
or other employee benefit plans, programs or other contractual arrangements, in
respect of, or that otherwise cover, any of the current or former officers or
employees of the Company, or their heirs or beneficiaries.
(b) There have been delivered or made available to Buyer true and
complete copies of all such Material Contracts (and all amendments, waivers or
other modifications thereto) and, with respect to any oral Material Contracts,
complete and accurate summaries thereof. Except as set forth on Schedule 2.14,
making specific reference to the Material Contract as to which exception is
taken and explaining the exception, all of such Material Contracts are valid,
subsisting, in full force and effect, binding upon the Company, and to the best
knowledge of the Company, binding upon the other parties thereto in accordance
with their terms. The Company, and to the best knowledge of each employee of the
Company each other party thereto has in all material respects performed all the
obligations required to be performed by them to date, has received no notice of
default and is not in default under any such Material Contracts. The Company has
no present expectation or intention of not fully performing all its obligations
under
11
each Material Contract, and no employee of the Company has any knowledge of any
breach or anticipated breach by the Company or any other party to any such
Material Contract.
(c) Except as set forth on Schedule 2.14(c), the Company has not (i)
declared or paid any dividends, or authorized or made any distribution upon or
with respect to any class or series of its capital stock, (ii) incurred any
indebtedness for money borrowed or any other liabilities or mortgaged or
pledged, or otherwise placed or agreed to place a lien or security interest on
any asset of the Company individually in excess of $10,000.00, (iii) made any
loans or advances to any person, other than ordinary advances for travel or
other expenses, or (iv) sold, exchanged, licensed, encumbered, mortgaged,
pledged or otherwise disposed of any of its assets or rights, other than in the
ordinary course of business.
2.15 Real Estate. The Company does not own any real property or any
buildings or other structures and does not have any options or any contractual
obligations to purchase or acquire any interest in real property. The leasehold
interests of the Company set forth in Schedule 2.15 are subject to no Lien
(other than Liens on the interests of the respective lessors that indirectly
burden such leasehold interests). All such leases are in good standing and in
full force and effect without amendment thereto, and the Company is entitled to
all benefits under such leases.
2.16 Personal Property. Schedule 2.16 attached hereto sets forth (i) a
true, correct and complete list of all items of tangible personal property (A)
owned by the Company as of the date hereof having either a net book value per
unit or an estimated fair market value per unit in excess of $5,000 or (B) not
owned by the Company but in the possession of or used or useful in the business
of the Company and having rental payments therefor in excess of $250 per month
or $3,000 per year (collectively, the "Personal Property") as well as other
assets (i.e. cash, etc.); and (ii) a description of the owner of, and any
agreement relating to the use of, each item of Personal Property not owned by
the Company and the circumstances under which such Personal Property is used.
Except as disclosed in Schedule 2.16:
(a) no officer, director, stockholder or employee of the Company, nor
any spouse, child or other relative or affiliate thereof, owns directly or
indirectly, in whole or in part, any of the Personal Property;
(b) each item of Personal Property not owned by the Company is in such
condition that upon the return of such Personal Property to its owner in its
present condition at the end of the relevant lease term or as otherwise
contemplated by the applicable agreement between the Company and the owner or
lessor thereof, the obligations of the Company to such owner or lessor will be
discharged;
(c) the Personal Property is in good operating condition and repair,
normal wear and tear excepted, is currently used by the Company in the ordinary
course of its business and normal maintenance has been consistently performed
with respect to the Personal Property; and
(d) the Company owns or otherwise has the right to use all of the
Personal Property now used or useful in the operation of its business or the use
of which is necessary for or useful in the performance of any material contract,
letter of intent or proposal to which the Company is a party.
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2.17 Proprietary Rights.
(i) As used in this Agreement, the term "Proprietary Rights" means
all:
(a) trademarks, service marks, trade names, franchises and
copyrights and all registrations and applications to register any of the
foregoing with any agency or authority;
(b) patents, patent applications, inventions and designs, and
any registration thereof with any agency or authority;
(c) trade secrets, including all processes, know-how, technical
data, shop rights, and any media or other tangible embodiment thereof and all
descriptions thereof; and
(d) other technology and intangible property, including without
limitation computer programs, databases, and documentation and flow charts.
(ii) The Company's Proprietary Rights are listed on Schedule 2.17.
(a) (i) None of the present activities or, to the best
knowledge of the Company, the proposed activities, of the Company or its
products or assets infringe on any Proprietary Rights of others, (ii) the
Company has not received any claim or notice of any claim to that effect, and
(iii) to the best knowledge of the Company, there is no existing or threatened
infringement or violation by others of the Proprietary Rights of the Company.
(b) To the best knowledge of the Company, there is no existing
or threatened violation of the confidentiality of the Company's confidential
information or trade secrets. The Company is not making unauthorized use of any
confidential information or trade secrets of any Person, including without
limitation any former employer of any past or present employees or consultants
of the Company.
(c) To the best knowledge of the Company, none of the
activities of the employees or consultants of the Company on behalf of the
Company violates or has violated any agreements or arrangements that any such
employees or consultants have or have had with former employers. Each of the
employees and consultants who contributed to the discovery or development of any
of the Proprietary Rights (other than Proprietary Rights licensed to the Company
by any party other than a consultant to the Company) did so in each case within
the scope of his or her employment or contractual relationship with the Company.
2.18 Title to Assets; Liens. Except as set forth on Schedule 2.18, the
Company owns outright and has good, valid and marketable title to all of its
assets and properties of every nature whatsoever, including Proprietary Rights
and Personal Property, used in the business, including, without limitation, all
of the assets and properties reflected in the Financial Statements, free and
clear of any Lien, except for (i) assets and properties disposed of, or subject
to purchase or sales orders, in the ordinary course of business consistent with
past practice since the Current Balance Sheet Date or (ii) liens or other
encumbrances securing the claims of materialmen, carriers, landlords and like
persons, all of which are not yet due and payable. There are no developments
affecting any of such properties or assets pending or, to the best knowledge of
the Company, threatened, that might materially detract from the value of such
property or assets, materially interfere with any present or intended use of any
such property or assets or materially and adversely affect the marketability of
such properties or assets.
2.19 Employees and Consultants. Set forth on Schedule 2.19 is a
complete list of the Company's (i) employees, (ii) consultants and (iii)
independent contractors who spend at least
13
fifty percent (50%) of their professional time working for the Company, with
names, current salaries and, with respect to employees, current positions with
the Company. The Company generally enjoys a good employer-employee relationship
with its employees. The Company is not delinquent in payments to any of its
employees or consultants for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed by them to the date hereof or
amounts required to be reimbursed to such employees and the Company enjoys good
relations with its employees.
2.20 Insurance. Schedule 2.20 sets forth a list of all policies or
binders of fire, liability, product liability, workmen's compensation,
vehicular, directors and officers and other insurance held by or on behalf of
the Company. Such policies and binders are in full force and effect, are
reasonably believed to be adequate for the businesses engaged in by the Company
and are in conformity with the requirements of all leases to which the Company
is a party and, to the best knowledge of the Company, are valid and enforceable
in accordance with their terms. The Company is not in default with respect to
any provision contained in any such policy or binder, nor has the Company failed
to give any notice or present any claim under any such policy or binder in due
and timely fashion. There are no outstanding unpaid claims in excess of $1,000
in the aggregate under all such policies and binders. The Company has not
received notice of cancellation or non-renewal of any such policy or binder.
2.21 Banks, Brokers and Proxies. Schedule 2.21 sets forth (i) the name
of each bank, trust company, securities or other broker or other financial
institution with which the Company has an account, credit line, or safe deposit
box or vault or otherwise maintains relations; (ii) the name of each person
authorized by the Company to draw on any such account or credit line, to
transfer securities, or to have access to any safe deposit box or vault; (iii)
the purpose of each such account, safe deposit box or vault; and (iv) the names
of all persons authorized by proxies, powers of attorney or other like
instruments to act on behalf of the Company in matters concerning its business
or affairs. All such accounts, credit lines, safe deposit boxes and vaults are
maintained by the Company for normal business purposes, and no such proxies,
powers of attorney or other like instruments are irrevocable.
2.22 Brokerage. No broker, finder, agent or similar intermediary has
acted on behalf of the Company in connection with this Agreement or the
transactions contemplated hereby, and there are no brokerage commissions,
finders fees or similar fees or commissions payable by the Company, Buyer or any
subsidiary that acquires the Shares in connection therewith based on any
agreement, arrangement or understanding with the Company or any Stockholder or
any action taken by it or any of them.
2.23 FCPA. The Stockholder represents and warrants to Buyer that it is
are familiar with the U.S. Foreign Corrupt Practices Act, as amended, and the
regulations adopted thereunder (the ""ct"), and that the Company has conducted
all of its activities in full compliance with such Act and regulations. The
Company, nor anyone acting on its behalf, has made or offered any payment or
given anything of value directly or indirectly to any government official or to
any official of a political party or candidate for public office in violation of
the Act.
2.24 Full Disclosure. Now and as of the date of Closing, the Schedules
hereto and all documents and other papers listed therein or required to be
delivered pursuant to this Agreement and the Related Agreements are true,
complete, correct and authentic. No representation or warranty of the
Stockholder contained in this Agreement, and, to the best knowledge of the
Company and the Stockholder or executive of the Company, no document or other
paper furnished by or on behalf of the Company to Buyer (or any of its agents)
pursuant to this
14
Agreement or in connection with the transactions contemplated hereby, taken as a
whole, contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
made, in the context in which made, not false or misleading. There is no fact
known to the Stockholder or executive of the Company that has not been disclosed
to Buyer in this Agreement and the Related Agreements or the Schedules hereto
and thereto that has or will have a material adverse effect on the Company or
its assets, properties, business, operations, prospects or condition (financial
or otherwise), or is reasonably likely to have such an effect.
2.28 Best Knowledge. As used herein, an individual will be deemed to
have "best knowledge" of a particular fact or other matter if:
(a) such individual is actually aware of such fact or other matter;
(b) a reasonable individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such fact or
other matter; or
(c) it relates to any matter of Law.
A corporation or entity (other than an individual) will be deemed to have
"best knowledge" of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer, employee, agent,
partner, executor, or trustee of such corporation or entity (or in any similar
capacity) has, or at any time had, knowledge of such fact or other matter.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder represents and warrants to Buyer as of the date hereof
and on and as of the Closing Date as follows:
3.1 Title to Shares.
(a) The Stockholder is and will be at the Closing the holder of
record and the owner of the entire beneficial interest in the Shares set forth
opposite such Stockholder's name on Schedule 1 hereto, free and clear of any
Lien whatsoever and without any exception whatsoever.
(b) The Stockholder will transfer and deliver to Buyer or its
designee at the Closing a good and valid title to all of the Shares set forth
opposite its name on Schedule 1, free and clear of any Lien or claim of any
kind, and the entire beneficial interest therein without any exception
whatsoever.
3.2 Authority to Execute and Perform Agreements. The Stockholder has
full legal right and power to enter into, execute and deliver this Agreement and
to perform in full such Stockholder's obligations hereunder. The execution,
delivery and performance of this Agreement or any Related Agreement (where
applicable) by the Stockholder requires no consent, approval, waiver or other
action by or in respect of, or filing with, any governmental body, agency,
official or authority, the landlord or any other Person. This Agreement or any
Related Agreement (where
15
applicable) has been duly executed and delivered and is the valid and binding
obligation of each Stockholder, enforceable against each Stockholder in
accordance with its terms.
3.3 No Breach. The execution, delivery and performance of this
Agreement and the Related Agreements and the consummation of the transactions
contemplated hereby and thereby will not violate, conflict with, contravene, or
result in the breach of or constitute (or with notice or lapse of time or both
constitute) a default under, any instrument, contract or other agreement to
which each Stockholder is a party or to which each Stockholder or each
Stockholder's Shares may be bound or subject; or violate, conflict with or
contravene any order, judgment, injunction, award or decree or other requirement
of any court, arbitrator or governmental or regulatory body against, or binding
upon, each Stockholder or each Stockholder's Shares; or violate, contravene or
conflict with any statute, law, ordinance or regulation of any jurisdiction
binding upon or applicable to each Stockholder or each Stockholder's Shares.
3.4 Actions and Proceedings. There are no actions, investigations,
proceedings (or any basis therefor), suits or claims or legal, administrative or
arbitral proceedings pending against or, to the best knowledge of the
Stockholder, threatened against or affecting the Stockholder or the
Stockholder's Shares that have or may have (a) the effect of restraining,
modifying or preventing the consummation of the transactions contemplated hereby
or (b) a materially adverse effect on the assets, properties, business,
operations, prospects, or condition (financial or otherwise) of the Company or
Buyer
3.5 Brokerage. There are no brokerage commissions, finders' fees or
similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with the Stockholder or any action taken
by such Stockholder, the liability for which is or will be on the Company or
Buyer.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Stockholder as follows:
4.1 Organization. Buyer is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and has the
corporate power and lawful authority to own, lease and operate its assets,
properties and business and to carry on its business as now being and as
heretofore conducted.
4.2 Authority to Execute and Perform Agreements. Buyer has the full
legal right and power and all authority required to enter into, execute and
deliver this Agreement and to perform fully its respective obligations
hereunder, and this Agreement has been duly executed and delivered and is the
valid and binding obligation of Buyer enforceable in accordance with its terms
except, (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; and (ii) general principles of equity that restrict the
availability of equitable remedies.
4.3 No Breach. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not
(i) violate any provision of the respective charter or By-laws of Buyer; (ii)
violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon,
16
Buyer or upon the securities, properties, assets or business of Buyer; (iii)
violate any Law which relates to Buyer or to the securities, properties, assets
or business of Buyer; (iv) violate any Permit of the Buyer; or (v) except as set
forth on Schedule 4.3, require any filing with, notice to, or permit, approval
or consent of any foreign, federal, state, local or other governmental or
regulatory body or of any other person.
SECTION 5
COVENANTS AND AGREEMENTS
The parties covenant and agree as follows:
5.1 Consummation of Agreement. Buyer and the Stockholder shall use
their best efforts to perform and fulfill all conditions and obligations to be
performed and fulfilled by it under this Agreement and the Stockholder shall use
its best efforts further to ensure that to the extent within the Stockholder's
control, no breach of any of the Stockholder's representations, warranties, and
agreements hereunder or contemplated hereby occurs or exists on or before the
Closing Date to the end that the transactions contemplated by this Agreement
shall be fully carried out.
5.2 Further Assurances. Each of the parties shall execute such
documents, further instruments and other papers and take such further actions as
may be reasonably required or desirable to carry out the provisions hereof and
the transactions contemplated hereby.
5.3 Survival. Each of the parties agrees that following Closing, the
following action shall be taken:
(i) The back office service provider administrative and xxxx-up
fees (if any) shall be added to the Company's net income starting March 1, 2005;
(ii) Beginning [DATE], Buyer will not impose any additional
expenses on the Company and its management without prior mutual agreement with
the Company. Prior to Closing, Buyer and the Company will mutually determine
what the anticipated cost elements are and incorporate these costs into the
Company's financial statements;
(iii) Xxxxx Xxxxx shall enter into an employment agreement with
the Buyer for a period of three years. Xx. Xxxxx shall be appointed CEO of
Efonica and President of VoIP. A form of Employment Agreement is attached hereto
as Exhibit "A".
(iv) The Stockholder agrees to execute a lock up agreement
covering the Base Shares (as defined in Section 1.2(c)(i)) in form and substance
satisfactory to Xxxxxx Securities. A form of Lock-Up Agreement is attached
hereto as Exhibit "B".
(v) The Stockholder agrees to execute a lock up agreement
covering the Registered Shares as defined in Section 1.2(c)(iv).. A form of
Lock-Up Agreement for Registered Shares is attached hereto as Exhibit "C".
17
SECTION 6
CONDITIONS PRECEDENT TO THE OBLIGATION OF BUYER TO CLOSE
The obligations of Buyer to enter into and complete the Closing is
subject, at the option of Buyer acting in accordance with the provisions of this
Agreement with respect to termination hereof, to the fulfillment of the
following conditions, each of which is for the exclusive benefit of Buyer and
not of the Stockholder and any one or more of which may be waived by Buyer
alone:
6.1 Representations, Warranties and Covenants. The representations and
warranties of the Company and the Stockholder contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date with
the same force and effect as though made on and as of the Closing Date. The
Company and each Stockholder shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by it on or before the Closing Date. The Company and
each Stockholder shall have delivered to Buyer a certificate, dated the Closing
Date, to the foregoing effect and stating that all conditions to Buyer's
obligations hereunder have been satisfied.
6.2 Consents and Approvals. All consents, Permits and approvals from
all Persons, including without limitation all governmental authorities and all
parties to contracts or other agreements with any Stockholder or the Company,
that may be required in connection with the performance by each Stockholder of
his or her obligations under this Agreement, the continuance (without
modification, amendment, variation or renegotiation) after the Closing of such
contracts or other agreements with the Company or Buyer or any subsidiary of
Buyer that acquires the Shares, and/or the acquisition and ownership of the
Shares by Buyer or its subsidiary shall have been obtained.
6.3 Litigation. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body or instituted or
threatened by any governmental or regulatory body to restrain, modify or prevent
the consummation of the transactions contemplated hereby, or to seek damages or
a discovery order in connection with such transactions, or that has or may have,
in the reasonable opinion of the Buyer, (a) the effect of restraining, modifying
or preventing the consummation of such transactions or (b) a materially adverse
effect on the assets, properties, business, operations or condition (financial
or otherwise) of the Company or Buyer.
6.4 Delivery of Share Certificates. The Stockholder shall have
delivered or caused to be delivered to Buyer or its designee the certificates
for all of the Shares, which shall be all of the issued and outstanding capital
shares of the Company not owned by the Buyer, duly endorsed for transfer to
Buyer or its designee, free and clear of any Liens or beneficial interests of
any party.
6.5 Releases. The Stockholder shall, in form satisfactory to Buyer's
counsel, have released and discharged the Company from any and all claims,
demands and liabilities whatsoever arising or accruing before the Closing under
each and every agreement, arrangement, Law or other state of facts.
6.6 Certificates as to Representations and Warranties. The Stockholder
shall have delivered to Buyer a certificate in form and substance reasonably
satisfactory to Buyer certifying as to his or her knowledge of certain
representations and warranties of the Company.
6.7 Documents. The Stockholder shall have delivered or caused the
Company to deliver such documents as are set forth in Section 5.
18
6.8 Additional Action. The Stockholder shall have delivered or caused
the Company to deliver such additional certificates, and shall have taken such
additional actions, as Buyer shall reasonably require to evidence and confirm
the authorization and approval of the sale of the Shares, their assignment and
transfer to Buyer or its designee, and their registration in the name of the
Buyer or its designee.
6.9 Board Approval. This Agreement and the transactions contemplated
hereby shall have been approved by the Board of Directors of Buyer.
6.10 Government Approval. In the event that governmental approval is
required, the government of Dubai, UAE shall have provided Buyer counsel with
approval of the transactions contemplated herein.
6.11 Attorney Approval. The Buyer receives approval from its [ ]
counsel that this Agreement meets the requirements of the government of Dubai,
UAE and the United States of America and contains the necessary terms and
conditions of similar stock sales transactions within Dubai, UAE and the United
States of America.
SECTION 7
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE STOCKHOLDER TO CLOSE
The obligation of the Stockholder to enter into and complete the Closing
is subject to the fulfillment of the following conditions, each of which is for
the exclusive benefit of the Stockholder and not of Buyer and any one or more of
which may be waived by the Stockholder:
7.1 Representations, Warranties and Covenants. The representations and
warranties of Buyer contained in this Agreement shall be true in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date. Buyer shall have performed and complied in
all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by it on or before the Closing Date.
Buyer shall have delivered to the Stockholder a certificate, dated the Closing
Date and signed by an officer of the Buyer, to the foregoing effect and stating
that all conditions to the obligations of the Stockholder hereunder have been
satisfied.
7.2 Litigation. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or instituted by
any governmental or regulatory body, to restrain, modify or prevent the carrying
out of the transactions contemplated hereby, which such action, suit or
proceeding shall not have been stayed.
7.3 Consents and Approvals. All consents, permits and approvals from
parties to contracts or other agreements with Buyer that may be required in
connection with the performance by Buyer of its obligations under this Agreement
shall have been obtained
7.4 Board Approval. This Agreement and the transactions contemplated
hereby shall have been approved by the Board of Directors of the Company.
7.5 Delivery of Share Certificates. As soon as practicable after the
Closing, the Buyer shall have delivered or caused to be delivered to
Stockholder, its designee or the Escrow Agent, as the case may be, the
certificates for all of the Base Shares, duly endorsed for transfer to
19
Stockholder or its designee, free and clear of any Liens or beneficial interests
of any party (provided however, this Section 7.5 is not a condition to Close).
SECTION 8
INDEMNIFICATION
8.1 Survival. Notwithstanding any right of any party to
investigate fully the affairs of the other party and notwithstanding any
knowledge of facts determined or determinable by such party pursuant to such
investigation or right of investigation, each party has the right to rely fully
upon the representations, warranties, covenants and agreements of each other
party in this Agreement or in any Schedule, certificate or financial statement
delivered by any party pursuant hereto. All such representations, warranties,
covenants and agreements shall survive the execution and delivery hereof and the
Closing hereunder and be indemnified in accordance with this Section 8, and,
except as otherwise specifically provided in this Agreement, shall thereafter:
(a) except as provided in clauses (b) and (c) hereof, terminate and
expire at the end of the twelfth (12th) full calendar month after the Closing
Date with respect to any claim based upon, arising out of or otherwise in
respect of any inaccuracy in or any breach of any representation or warranty of
the Stockholder contained in Sections 2 or 3 hereof or of Buyer contained in
Section 4 hereof, of which the party asserting such claim shall have given no
notice on or before the end of such twelfth (12th) month, except for any claim
based upon fraud willfulful misconduct by the Stockholder or the Company, which
shall survive until the end of the twenty- fourth (24th) full calendar month
after the Closing Date;
(b) survive forever, with respect to the representations and
warranties of the Stockholder contained in Section 2.24 hereof and the
representations and warranties of the Stockholder contained in Sections 3.1
hereof; and
(c) terminate and expire, with respect to any Tax Claim (as
hereinafter defined), on the later of (i) the date upon which the assessment of
any taxes to which any such Tax Claim may relate is barred by all applicable
statutes of limitations and (ii) the date upon which any claim for refund or
credit related to such Tax Claim is barred by all applicable statutes of
limitations. As used herein, "Tax Claim" means any claim based upon, arising out
of or otherwise in respect of (A) issues raised on audit of the Company by
taxing authorities with respect to any period ending on or before the Closing
Date, (B) any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of the Stockholder contained in this Agreement related to
Taxes or (C) any other Tax liabilities of the Company other than Taxes of the
Company that are properly allocable to periods of time beginning after the
Closing Date; provided that the "Tax Claim" shall exclude any such claim arising
out of any Tax return filed by the Company after the Closing which claim (x) is
not based on incorrect or incomplete information compiled by the Company before
the Closing and (y) does not result from any misconduct or bad faith of the
Stockholder or of the Company prior to the Closing.
8.2 Obligation of the Stockholder to Indemnify. Subject to the
limitations set forth below and to the termination provisions set forth in
Section 8.1, the Stockholder agrees, jointly and severally, to indemnify, defend
and hold harmless Buyer (and its subsidiaries, directors, officers, employees,
affiliates and assigns) from and against all losses, liabilities, damages, costs
or expenses (including interest and penalties imposed or assessed by any
judicial or administrative body and reasonable attorneys fee" ("Losses") based
upon, arising out of or otherwise in respect of any inaccuracy in or any breach
of any representation, warranty,
20
covenant or agreement of any Stockholder contained in this Agreement or in any
Schedule delivered pursuant hereto;
(ii) any Tax Claim, whether or not included in clause (i);
compensation by any broker, finder, agent or similar intermediary claiming to
have been employed or retained by or on behalf of the Company or the
Stockholder, whether or not included in clause (i), (b) based upon any fraud
willful misconduct by the Stockholder.
8.3 Obligation of Buyer to Indemnify. Subject to the
limitations set forth below and to the termination provisions set forth in
Section 8.1, Buyer agrees to indemnify, defend and hold harmless the Stockholder
from and against any Losses based upon, arising out of or otherwise in respect
of (i) any material inaccuracy in or breach of any representation, warranty,
covenant or agreement of Buyer contained in this Agreement or in any Schedule,
certificate, document or other papers delivered pursuant hereto, or (ii) any
claim or demand for commission or other compensation by any broker, finder,
agent or similar intermediary claiming to have been employed by or on behalf of
Buyer.
8.4 Notice and Opportunity to Defend.
(a) Notice of Asserted Liability. Promptly after receipt by any party
entitled to indemnification (the "Indemnitee") of notice of any demand, claim or
circumstances that, with or without the lapse of time, would give rise to a
claim or the commencement (or threatened commencement) of any action, proceeding
or investigation ("Asserted Liability") that may result in a Loss, the
Indemnitee shall give notice thereof (the "Claims Notice") to any other party or
parties obligated to provide indemnification pursuant to Sections 8.2 or 8.3
hereof (the "Indemnifying Party"). The Claims Notice shall describe the Asserted
Liability in reasonable detail, and shall indicate the amount (estimated, if
necessary) of the Loss that has been or may be suffered by the Indemnitee. If
the Indemnitee fails to give the Indemnifying Party timely and reasonable notice
of an Asserted Liability that might result in a Loss, such failure to so notify
Indemnitee shall relieve the Indemnifying Party from liability hereunder with
respect to such claim if such failure to so notify the Indemnifying Party
results in the forfeiture by the Indemnifying Party of any material rights and
defenses otherwise available to the Indemnifying Party with respect to such
Asserted Liability.
(b) Opportunity to Defend. The Indemnifying Party may elect to
compromise or defend, and control the defense of, at its own expense and by
counsel reasonably satisfactory to the Indemnitee, any Asserted Liability,
provided that the Indemnitee shall have no liability or obligation, and shall be
subject to no restriction, under any compromise or settlement agreed to by the
Indemnifying Party that it has not approved in writing.
SECTION 9
MISCELLANEOUS
9.1 Publicity. No public release or announcement concerning
this Agreement or the transactions contemplated hereby shall be made without
advance approval thereof by the Stockholder Representative and Buyer. No party
shall disclose any term or terms of this Agreement to any third party without
advance approval thereof by the other party except as necessary or desirable for
either party to enforce its rights hereunder or as may otherwise be required by
law, or as contemplated by the Confidentiality Agreement.
21
9.2 Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such cost or expense.
9.3 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, two days after the date of deposit in the mails, as
follows:
If to Buyer:
Fusion Telecommunications International, Inc.
c/o Xxxxxxx X. Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Xxxxx & Associates, P.C.
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 585-387-0130
If to Stockholder or the Company:
Efonica FZ-LLC
X.X.Xxx: 000000 Xxxxx, XXX
Dubai Internet City, DIC Xxxx. 0, Xxxxxxx X00 & X00,
Xxxxx, XXX
Telephone: x000.0.0000000
Facsimile: x000.0.0000000
Any party may by notice given in accordance with this Section 9.3 to the other
parties designate another address or person for receipt of notices hereunder.
9.4 Entire Agreement. This Agreement (including the Related
Agreements, Exhibits and Schedules) and the Confidentiality Agreement contain
the entire agreement among the parties with respect to the transactions
contemplated hereby, and supersedes all prior agreements, written or oral, with
respect thereto.
9.5 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Agreement may be amended, superseded, cancelled,
renewed or extended, and any term hereof may be waived, only by a written
instrument signed by Buyer and the Stockholder or, in the case of a waiver, by
Buyer or the Stockholder, as the case may be, waiving compliance. No delay on
the part of any party in exercising any right, power or privilege
22
hereunder shall operate as a waiver thereof nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. The rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies that any party may otherwise have at law or in equity. The rights
and remedies of any party based upon, arising out of or otherwise in respect of
any inaccuracy in or breach of any representation, warranty, covenant or
agreement contained in this Agreement shall in no way be limited by the fact
that the act, omission, occurrence or other state of facts upon which any claim
of any such inaccuracy or breach is based may also be the subject matter of any
other representation, warranty, covenant or agreement contained in this
Agreement (or in any other agreement between the parties) as to which there is
no inaccuracy or breach.
9.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York without regard to
its conflict of laws provisions. The parties hereto specifically submit to the
exclusive jurisdiction of the courts of the State of New York in respect of any
litigation arising out of this Agreement or the nonperformance hereof. The
prevailing party of any litigation shall be entitled to receive from the losing
party reasonable attorneys' fees and costs.
9.7 Binding Effect; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and legal representatives. This Agreement is not assignable except by
operation of law or by Buyer to any of its affiliates.
9.8 Variations in Pronouns. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
context may require.
9.9 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
9.10 Exhibits and Schedules. The Exhibits and Schedules are a
part of this Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
9.11 Headings. The headings in this Agreement are for reference
only, and shall not affect the interpretation of this Agreement.
9.12 Severability. Any Section, subsection or other subdivision
of this Agreement or any other provision of this Agreement which is, or becomes,
illegal, invalid or unenforceable shall be severed herefrom and shall be
ineffective to the extent of such illegality, invalidity or unenforceability and
shall not affect or impair the remaining provisions hereof, which provisions
shall (a) be severed from any illegal, invalid or unenforceable Section or other
subdivision of this Agreement, and (b) otherwise remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
23
BUYER
FUSION
TELECOMMUNICATIONS
INTERNATIONAL, INC.
By:
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
STOCKHOLDER:
KARAMCO, INC.
By:
---------------------------------------
Name:
COMPANY
EFONICA FZ-LLC
By:
---------------------------------------
Name:
By:
---------------------------------------
Name:
24
SCHEDULE 1
SELLING STOCKHOLDER PERCENTAGE OWNERSHIP (PRE-SALE) NUMBER OF SHARES
--------------------------------------------------------------------------------
Karamco, Inc. 49.8% [ ]
25
SCHEDULE 2.17
Proprietary Rights
Pending applications to register Trademarks:
1. Xxxx: Efonica
Serial Number: 76/572173.
2. Xxxx: O Efonica (drawing)
Serial Number: 76/572172
Software Licenses:
1.
2.
26
SCHEDULE 2.14
MATERIAL CONTRACTS
ALL CUSTOMERS WERE PREVIOUSLY DISCLOSED TO BUYER
27
SCHEDULE 2.14(C)
28
SCHEDULE 2.19
EMPLOYEES
29
SCHEDULE 2.20
INSURANCE
30
EXHIBIT "A"
Form of Employment Agreement
(TO BE PROVIDED AT A LATER DATE)
31
EXHIBIT "B"
FORM OF LOCK-UP AGREEMENT
12 MONTH LOCK-UP
Fusion Telecommunications International, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
The undersigned, a beneficial owner(1) of the common stock, no par value
(the "Common Stock"), of Fusion Telecommunications International, Inc. (the
"Company") aagrees, for the benefit of the Company and Xxxxxx, that the
undersigned will not, without Xxxxxx'x prior written consent (and, if required
by applicable state blue sky laws, the securities commissions in any such
states), offer, sell, assign, hypothecate, pledge, transfer or otherwise dispose
of, directly or indirectly, any shares of Common Stock owned by him/her, or
subsequently acquired through the exercise of any options, warrants or other
rights, or the conversion of any other security, or by reason of any stock split
or other distribution of stock, or grant options, warrants or other rights with
respect to any such securities, all during the 12-month period commencing on the
"Effective Date" of the Company's Registration Statement. This lock-up will not
be applicable to any shares of Common Stock in the Registration Statement.
Furthermore, the undersigned will permit all certificates evidencing any such
securities to be endorsed with the appropriate restrictive legends, and consents
to the placement of appropriate stop transfer orders with the transfer agent for
the Company. A copy of this Agreement will be available from the Company or the
Company's transfer agent upon request and without charge.
The undersigned hereby agrees to be bound by the applicable provisions of
the Underwriting Agreement.
The terms and conditions of this Agreement only can be modified (including
premature termination of this Agreement) with the prior written consent of
Xxxxxx.
--------------------------------------- ------------------------------------
Number of shares beneficially owned Shareholder Name
---------------------------------------
Number of shares subject to options, By:
warrants, rights and/or convertible ------------------------------------
securities Signature
------------------------------------
Printed Name
* sales by the Stockholder will be subject to rule 144.
Both parties acknowledge that the holding period for Karamco's unregistered
shares commence at the time of the closing
----------
(1) It is agreed that, for purposes of this letter, the undersigned beneficially
owns, among other shares, any shares owned by (i) members of his or her family
and (ii) any person or entity controlled by the undersigned or under common
control with the undersigned.
32
Exhibit "C"
Form of Lock-Up Agreement for Registered Shares
Fusion Telecommunications International, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
During the 90 day period following the Closing of the Stock Purchase
Agreement (as defined herein), the Company (as defined herein) will either allow
the Stockholder to sell up to $1 million in Registered Shares in ordinary
brokerage transactions in the public market or purchase the Registered Shares as
more particularly set forth in the Stock Purchase Agreement.
The undersigned, a beneficial owner(2) of the registered common stock,
no par value (the "Registered Shares"), of Fusion Telecommunications
International, Inc. (the "Company") issued pursuant to Section 1.2(C)(iv) of the
Stock Purchase Agreement dated January 10, 2005 ("Stock Purchase Agreement")
agrees, for the benefit of the Company, it will not, without the Company's prior
written consent, offer, sell, assign, hypothecate, pledge, transfer or otherwise
dispose of, directly or indirectly, any of the Registered Shares other than as
set forth in the following schedule:
(i) 0-44 days following the effective date of an IPO- 0 Registered
Shares;
(ii) 45-89 days following the effective date of an IPO- up to 1/2 of
the Registered Shares; and
(iii) 90 days following the effective date of the IPO- the remaining
Registered Shares.
The undersigned hereby agrees to be bound by the applicable provisions
of the Stock Purchase Agreement.
The terms and conditions of this Agreement only can be modified with the
prior written consent of the Company.
--------------------------------------- ------------------------------------
Number of shares beneficially owned Shareholder Name
---------------------------------------
By:
------------------------------------
Signature
------------------------------------
Printed Name
----------
(2) It is agreed that, for purposes of this letter, the undersigned
beneficially owns, among other shares, any shares owned by (i) members of his or
her family and (ii) any person or entity controlled by the undersigned or under
common control with the undersigned.
33
EXHIBIT "D"
Form of Escrow Agreement
ESCROW AGREEMENT
This Escrow Agreement ("Escrow Agreement") is made and entered into this
_______ day of __________, 2005 ("Effective Date"), by and between Fusion
Telecommunications International, Inc. ("Fusion"), Karamco, Inc. ("Karamco") and
Xxxxx & Associates, P.C., a professional corporation in good standing in the
state of New York ("Disbursement Manager").
WHEREAS, Fusion, Karamco and Efonica FL-LLC entered into a Stock
Purchase Agreement dated __________, 2005 (the "Agreement"); and
WHEREAS, Pursuant to the Agreement, Fusion is required to place
__________ Escrowed Shares (as defined in the Agreement) in escrow to be held by
Disbursement Manager under the terms of the Agreement and this Escrow Agreement;
WHEREAS, Fusion and Karamco hereby employ Disbursement Manager to escrow
the Escrowed Stock pursuant to the Agreement which is attached hereto and made a
part hereof as EXHIBIT 1;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ITEM 1 SERVICE. Disbursement Manager will provide to Fusion and Karamco
the escrow services as hereinafter set forth.
ITEM 2 EXHIBITS. In the event of a conflict between the provisions of
any Exhibit attached hereto and the provisions of the body of this Escrow
Agreement, the provisions of such Exhibit shall control and prevail.
ITEM 3 TERM. The term of this Escrow Agreement shall commence on the
Effective Date and expire subsequent to the Agreement.
ITEM 4 SECURITY/PRE-PAYMENT. Upon Closing of the Agreement, Fusion
shall deliver to the Disbursement Manager the Escrowed Stock. The Disbursement
Manager will hold the Escrowed Stock in escrow.
ITEM 5 ARBITRATION. The parties agree to binding arbitration in the
state of New York, County of New York, with respect to any issue. Any proceeding
shall be by and pursuant to the Commercial Arbitration Rules then in effect of
the American Arbitration Association. Either party may make a demand for
arbitration by delivering a written demand for arbitration to the other
party(s), provided, however, such written demand shall not be delivered earlier
than twenty (23) days, nor later than thirty-five (35) days, following the date
of the invoice in question. The parties may agree on one arbitrator, but in the
event they cannot so agree, the arbitrator shall be named by the American
Arbitration Association. The hearing before the arbitrator of the matter to
arbitrate may be selected by the arbitrator, at a time and place in New York
County, New York. The arbitrator shall determine the matter, execute and
acknowledge their award in writing,
34
and deliver a copy of the award to each of the parties by registered or
certified mail. Any court having jurisdiction may enter a judgment confirming
the award, or the court may vacate, modify or correct the award as provided by
law. If the arbitrator shall fail to reach an agreement within thirty (30) days
following the arbitration hearing, they shall be discharged, and a new
arbitrator shall be appointed and shall proceed in the same manner, and the
process shall be repeated until a decision is finally reached. All cost and
expense of arbitration, including the fees of arbitration, shall be borne by
each party(s) or in such proportions, as the arbitrator shall determine.
ITEM 6 OBLIGATION OF DISBURSEMENT MANAGER.
x. XXXXXX. Fusion and Karamco hereby authorize and direct
Disbursement Manager to receive, hold, pay and disburse the Escrowed Stock in
accordance with the provisions of the Agreement and this Escrow Agreement.
ITEM 7 MISCELLANEOUS.
a. NO AGENCY. This Agreement does not in any way create the
relationship of principal and agency, joint, venture, partner or employer and
employee between Customer, Disbursement Manager and Supplier.
b. NOTICES. Any notice required or permitted to be given
hereunder shall be in writing and shall be deemed given and effective when
delivered personally, or by private express service such as, without limitation,
Federal Express and addressed to the parties as follows:
As to Fusion:
Fusion Telecommunications International, Inc.
c/o Xxxxxxx X. Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
As to Karamco:
Efonica FZ-LLC
X.X.Xxx: 000000 Xxxxx, XXX
Dubai Internet City, DIC Xxxx. 0, Xxxxxxx X00 & X00
Xxxxx, XXX
Telephone: x000.0.0000000
Facsimile: x000.0.0000000
As to Disbursement Manager:
Xxxxx & Associates, P.C.
c/o Xxxxxxx X. Xxxxx, Esq.
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
35
c. WAIVER. No failure on the part of any party hereto to
exercise, and no delay in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or remedy by any such party preclude any other right, power or
remedy. No express waiver or assent is given by any party hereto to any breach
of or default in the same or any other term or condition hereof.
d. HEADINGS. The captions heading the various paragraphs of
this Agreement are for convenience of reference only and shall not be deemed to
limit, expand, or define the contents of the respective paragraphs.
e. GOVERNING LAW. This Agreement shall be construed in
accordance with and be governed by the laws of the State of New York.
f. ENTIRE AGREEMENT. This Agreement supersedes all prior
discussions, negotiations and agreements between the parties with respect to the
subject matter hereof and this Agreement contains the sole and entire agreement
between the parties with respect to the matters covered hereby. There are no
promises, agreements, conditions or undertakings, either oral or written,
between the parties and relating to the subject matter of this Agreement other
than those set forth or referred to herein.
g. SEVERABILITY. In the event any portion of this Agreement
may be determined by a court of competent jurisdiction to be unenforceable, the
balance of the Agreement shall be severed therefrom and shall remain in full
force and effect unless a failure of consideration would thereby result.
h. MODIFICATIONS. No amendment or modifications of the
terms or provisions of this Agreement shall be valid, unless same shall be in
writing and signed by both of the parties hereto.
i. INTERPRETATION. Should any provision of this Agreement
require judicial interpretation, it is agreed that the court interpreting or
construing the same shall not apply a presumption that the terms hereof shall be
more strictly construed against one party be reason of the rule of construction
that a document is to be construed more strictly against the party who itself or
through its agent prepared the same, it being agreed that the agents of all
parties have participated in the preparation hereof.
j. AUTHORITY TO EXECUTE. Each person executing this
Agreement on behalf of such person or organization represents and warrants that
he or she is fully authorized to execute and deliver this Agreement on behalf of
such person or organization. Each member of each party represents and warrants
to all members of all other parties that no consent of any person not a party to
this Agreement is necessary in order for this Agreement to be fully and
completely binding upon each member of the parties hereto.
36
k. NO THIRD-PARTY BENEFICIARIES. This Agreement is not
intended nor shall be construed to create, vest or convert any right in or upon
any entity or person not a party to this Agreement.
l. ASSIGNMENT. Fusion or Karamco may assign, in whole or in
part, its rights and/or duties under this Agreement, with notice to Disbursement
Manager. Disbursement Manager may not assign this Agreement.
m. ATTORNEYS' FEES. If any action or other proceeding is
brought for the enforcement or interpretation of this Agreement, or because of
any alleged dispute, breach or default in connection with any of the provisions
of this Agreement, the successful or prevailing party and the Disbursement
Manager shall be entitled to recover reasonable attorneys' fees and other costs
incurred in that action or proceeding (including, without limitation, reasonable
attorneys' fees and costs incurred in all appellate proceedings), in addition to
any other relief to which it may be entitled.
n. COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
o. GENDER. Word or any gender used in this Agreement shall
be held and construed to include the other gender, and words in the singular
shall be held to include the plural and vice versa, unless the context requires
otherwise.
p. SURVIVAL. Any obligations and covenants of the Customer
hereunder which, by their nature, would continue beyond the termination,
cancellation or expiration of the Agreement, shall survive such termination,
cancellation or expiration.
q. BINDING EFFECT. This Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
heirs, legal representatives, executors, administrators, successors and
permitted assigns.
r. INDUSTRY TERMS. Words having well-known technical or
trade meanings shall be so construed.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals the day
and year first above-written.
Fusion:
By:
---------------------------------------
Date
Name:
Title: President
Karamco:
By:
---------------------------------------
Date
Name:
Title:
Disbursement Manager:
By:
---------------------------------------
Date
Name:
Title:
38
AMENDMENT TO THE STOCK PURCHASE AGREEMENT
THIS AMENDMENT ("Amendment") to the Stock Purchase Agreement is made
and entered into as of February 9, 2005 (the "Effective Date"), by and between
Fusion Telecommunications International, Inc., a Delaware corporation ("Fusion")
and Efonica, FZ-LLC, a company organized in Dubai Technology, Electronic
Commerce & Media Free Zone, Dubai, United Arab Emirates ("Efonica") and Karamco,
Inc., a company organized in the British Virgin Islands ("Karamco").
WHEREAS, on or about January 11, 2005, Fusion entered into a Stock
Purchase Agreement with Efonica and Karamco (the "Agreement") a copy of which is
attached to and made a part of this Amendment as Schedule A ; and
WHEREAS, Fusion, Efonica and Karamco desire to enter into this
Amendment for the purpose of amending the Agreement.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt, adequacy and sufficiency of which is
acknowledged, the parties agree as follows:
1. Beginning the Effective Date, the Agreement shall be amended so as
to amend paragraph 1.2(C)(iv) as follows:
Buyer shall use its reasonable efforts to cause 150,000 of the Base
Shares to be registered (the "Registered Shares") within 60 days of the Buyer's
initial public offering, unless said date is extended with Karamco's consent.
The date the Registered Shares are effectively registered shall be defined as
the "Registration Date." Following registration, Karamco may sell up to an
aggregate of $1 million in Registered Shares in ordinary brokerage transactions
in the public market (1/2 of the Registered Shares on the Registration Date and
1/2 90 days following the effective date of the initial public offering). In the
event Buyer is unable to cause the Registered Shares to be registered as set
forth above, Buyer shall purchase the Registered Shares from Karamco (in the
amount Karamco would have been otherwise entitled to sell in the public market
as set forth above) at the higher of the IPO price or the average 5 day bid
price prior to the date Buyer notifies Karamco that is unable to cause the
Registered Shares to be registered. Any provision in Paragraph 1.2(C)(iv) not
changed herein will remain the same (Buyer's right to buy back and Seller's
right to cause Buyer to purchase).
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first written.
FUSION TELECOMMUNICATIONS INTERNATIONAL, INC.
By:_________________________
Xxxxxxx X. Xxxxx, as its President
EFONICA, FZ-LLC
BY:_________________________
KARAMCO, INC.
BY:_________________________
