PHONETIME INC.
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement") is made as of March 26,
1997 (the "Effective Date"), by and among PHONETIME, INC., a New York
corporation (the "Corporation" or "Purchaser"), ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("Seller"),
▇▇▇▇▇ ▇▇▇▇▇▇ ("Tawfik"), ▇▇▇▇▇ ▇▇▇▇ ("Vita") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("Barley" and
together with Tawfik and Vita the "Management Shareholders").
RECITALS
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A. On April 21, 1995, the Corporation issued to Seller 10 shares of
the Corporation's common stock, no par value ("Common Shares"), in
consideration for a payment by Seller to the Corporation of one hundred
dollars ($100).
B. On April 6, 1996, the Corporation effected a 4.35-for-one stock
split (the "Stock Split"), such that each Common Share issued and outstanding
prior to April 6, 1996 thereafter entitled the holder thereof to 4.35 Common
Shares; after giving effect to the Stock Split, Seller owned 43.5 Common
Shares.
C. On April 6, 1996, immediately following the Stock Split, the
Corporation issued to Vita 9-2/7 Common Shares and issued to Barley 3-5/7
Common Shares (collectively, the "1996 Issuance").
D. On April 6, 1996, immediately following the Stock Split, Seller
sold to (i) Vita 3-3/14 Common Shares and (ii) Barley 1-4/14 Common Shares
(collectively, the "Shareholder Transfers").
E. Upon consummation of the Stock Split, the 1996 Issuance and the
Shareholder Transfers, the issued and outstanding Common Shares of the
Corporation have been held beneficially and of record as set forth on Schedule
1 attached hereto (and all parties hereto have set forth their initials next
to the number of Common Shares owned by such party).
F. Seller desires to sell to the Corporation and the Corporation
desires to redeem from Seller, 35-15/19 Common Shares (or as otherwise
adjusted pursuant to Section 6.2, the "Redeemed Shares"), on the terms and
subject to the conditions hereinafter set forth; and upon the consummation of
such redemption, the issued and outstanding Common Shares of the Corporation
will be held beneficially and of record as set forth on Schedule 1 attached
hereto (and all parties hereto have set forth their initials next to the
number of Common Shares owned by such party).
G. As a result of the Corporation redeeming the Redeemed Shares from
Seller, Seller will own 3-4/19 Common Shares (unless otherwise adjusted
pursuant to Section 6.2), which amount represents 5.00 percent of the issued
and outstanding Common Shares at the time of Closing (the "Initial Seller
Ownership Percentage").
AGREEMENTS
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In consideration of the recitals and the mutual promises, covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
REDEMPTION AND SALE OF REDEEMED SHARES
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1.1 Redemption of Redeemed Shares from Seller. Subject to the
satisfaction of the terms and conditions and in reliance upon the
representations and warranties set forth herein or in any document delivered
pursuant hereto, the Corporation agrees to redeem from Seller the Redeemed
Shares for an aggregate redemption price of fifteen million dollars
($15,000,000) payable by delivery at the Closing of (i) five million dollars
(the "Cash"), and (ii) a promissory note with a face value of ten million
dollars, a form of which is attached hereto as Exhibit A (the "Note," and
together with the Cash, the "Redemption Price").
1.2 Sale of Redeemed Shares to Corporation. Subject to the
satisfaction of the terms and conditions and in reliance upon the
representations and warranties set forth herein or in any document delivered
pursuant hereto, the Seller agrees to sell to the Corporation, at the Closing,
the Redeemed Shares for the Redemption Price.
ARTICLE II
CLOSING; DELIVERY
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2.1 Closing. Subject to the terms and conditions of this Agreement,
the Closing will be held at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, on March 26, 1997, at 10:00 a.m. (the
"Closing Date"), or at such other time, date and place as may be agreed to in
writing by the Corporation and the Seller.
2.2 Deliveries at Closing.
(a) Seller's Deliveries. At the Closing, the Seller will
deliver to the Corporation:
(i) certificates representing the Redeemed Shares
owned by Seller, together with duly executed stock
powers,
(ii) all books, records and property of the Corporation,
including without limitation any Confidential
Information (as defined below) in Seller's possession
or that the Seller knows the whereabouts and can
reasonably obtain,
(iii) all books, records, share certificates, stock powers
transferring any interest of Seller in Tempus
Worldwide Communications ("Tempus") and property,
including without limitation any Confidential
Information of Tempus (including without limitation
any documents or computer disks containing
information belonging to Tempus) in the Seller's
possession or that the Seller knows the whereabouts
and can reasonably obtain,
(iv) a duly executed Escrow Agreement in the form of
Exhibit B hereto,
(v) a duly executed Pledge Agreement in the form of
Exhibit C hereto,
(vi) a duly executed Co-Sale Agreement in the form of
Exhibit D hereto, and
(vii) a letter of resignation in the form of Exhibit E
hereto.
(b) Corporation's Deliveries. At the Closing, the Corporation will
deliver to the Seller:
(i) the Cash by certified check or at the option of the
Seller via wire transfer of immediately available funds
to an account of the Seller designated by the Seller,
(ii) the Note,
(iii) a duly executed Escrow Agreement,
(iv) a duly executed Pledge Agreement,
(v) a certificate evidencing that Seller holds beneficially
and of record 3-4/19 Common Shares,
(vi) all salary and benefits owing to Seller through the
Closing Date,
(vii) with respect to the Corporation's rights to the
"Tempus" tradename, an Assignment Agreement in the form
of Exhibit E hereto, and
(viii) subject to Article V, the payment of the fees and
expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇.
ARTICLE III
CONDITIONS TO CLOSING BY THE CORPORATION
The obligation of the Corporation to redeem the Redeemed Shares at the
Closing is subject to the fulfillment or (to the extent permitted by law) the
express written waiver by the Corporation of each of the following conditions
on or before the Closing:
3.1 Representations and Warranties Correct. The representations and
warranties made by the Seller in Article V shall be true and correct in all
material respects when made, and shall be true and correct in all material
respects as of the Closing as if made at the Closing.
3.2 Performance. All covenants, agreements and conditions contained
in this Agreement to be performed or complied with by the Seller at or prior
to the Closing shall have been performed or complied with in all material
respects.
3.3 Co-Sale Agreement. The Co-Sale Agreement shall have been duly
executed and delivered by all of the parties thereto and such agreement shall
be in effect as of the Closing.
3.4 Receipt of Certificates. The Seller shall deliver to the
Corporation certificates representing the Redeemed Shares, together with duly
executed stock powers.
3.5 Delivery of Books and Records and Confidential Information. The
Seller shall deliver to the Corporation all books, records and property of the
Corporation (including without limitation any documents or computer disks
containing Confidential Information (as defined in Article VIII)) in Seller's
possession or that the Seller knows the whereabouts and can reasonably obtain,
and all books, records, share certificates, stock powers transferring any
interest of Seller in Tempus and property of Tempus (including without
limitation any documents or computer disks containing Confidential Information
relating or belonging to Tempus) in the Seller's possession or that the Seller
knows the whereabouts and can reasonably obtain.
3.6 Delivery of Resignation. The Seller shall deliver to the
Corporation a letter of resignation, in the form of Exhibit F hereto.
3.7 Delivery of Escrow Agreement. The Escrow Agreement shall have
been duly executed and delivered by all of the parties thereto and such
agreement shall be in effect as of the Closing.
3.8 Delivery of Pledge Agreement. The Pledge Agreement shall have
been duly executed and delivered by all of the parties thereto and such
agreement shall be in effect as of the Closing.
3.9 Delivery of Joint Written Consent of Shareholders and Directors.
The Joint Written Consent of Shareholders and Directors approving the
redemption by the Corporation of the Redeemed Shares shall have been duly
executed and delivered by Seller.
ARTICLE IV
CONDITIONS TO CLOSING BY THE SELLER
The obligation of Seller to consummate the sale of Redeemed Shares to the
Corporation at the Closing is subject to the fulfillment or (to the extent
permitted by law) the express written waiver by Seller of each of the
following conditions on or before the Closing:
4.1 Representations and Warranties Correct. The representations and
warranties made by the Corporation in Article V shall be true and correct in
all material respects when made, and shall be true and correct in all material
respects as of the Closing as if made at the Closing.
4.2 Performance. All covenants, agreements and conditions contained
in this Agreement to be performed or complied with by the Corporation at or
prior to the Closing shall have been performed or complied with in all
material respects.
4.3 Redemption Price. The Corporation shall deliver to Seller the
Redemption Price as specified in Section 2.2.
4.4 Certificate. The Corporation shall deliver to Seller a
certificate evidencing that Seller holds beneficially and of record 3-4/19
Common Shares.
4.5 Delivery of Escrow Agreement. The Escrow Agreement shall have
been duly executed and delivered by all of the parties thereto and such
agreement shall be in effect as of the Closing.
4.6 Delivery of Pledge Agreement. The Pledge Agreement shall have
been duly executed and delivered by all of the parties thereto and such
agreement shall be in effect as of the Closing.
4.7 Delivery of Assignment Agreement. The Assignment Agreement shall
have been duly executed and delivered by all of the parties thereto and such
agreement shall be in effect on the Closing Date.
4.8 Payment of Attorneys' Fees. The Corporation shall deliver to
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇ a check in the amount of $___________.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 Corporation. The Corporation represents and warrants to the
Seller as of the Closing that the Corporation has not executed any written
agreement or written letter of intent with respect to the merger, combination
or sale of all or substantially all of the outstanding voting securities of
the Corporation.
5.2 Seller. The Seller represents and warrants to the Corporation as
of the Closing as follows:
(a) Shares. The Redeemed Shares are now, and on the Closing
Date will be, owned of record and beneficially by Seller free and clear of any
security interest, pledge, option, lien, claim, commitment, proxy, equity
right, restriction on transfer, encumbrance of any nature whatsoever, interest
arising in connection with so-called community property laws or other laws
relating to the rights of spouses, charge, escrow, right of first refusal,
mortgage, indenture, security agreement or other agreement, arrangement,
contract, commitment, understanding or obligation, whether written or oral and
whether or not relating in any way to credit or the borrowing of money
(collectively, "Encumbrances"). Upon the Closing, the Corporation will
acquire good and valid title to all of the Redeemed Shares free and clear of
any Encumbrance.
(b) Access to Information. Seller and Seller's advisors
(including Seller's attorneys and financial advisors) have had the opportunity
to obtain from the Corporation any and all information necessary to evaluate
the merits and risks of a sale of the Redeemed Shares, and Seller (after
consultation with his attorneys and financial advisors) has concluded, in its
sole judgment and without reliance upon any representations or warranties of
the Corporation (except as set forth in Section 5.1), to sell the Redeemed
Shares pursuant to the terms of this Agreement.
(c) Tempus.
(i) attached hereto as Exhibit G is all of the
organizational documents of Tempus, which documents
Seller has not subsequently caused to be amended or
supplemented;
(ii) Seller has not caused Tempus to issue and, to the
best of Seller's knowledge, Tempus has not issued any
securities to any person, corporation, partnership,
association, trust, joint venture, joint stock
company, or other unincorporated entity (each, a
"Person") other than the Corporation;
(iii) Seller does not hold beneficially or of record any
securities of Tempus, Seller hereby transfers,
assigns and conveys to the Corporation any and all
interest (legal, beneficial, equitable or other) in
Tempus that Seller has and agrees that it will
execute any documents and make any filings necessary
to effect the transfer of such interest(s) to the
Corporation, and to best of Seller's knowledge the
Corporation is, and as of the Closing Date will be,
the sole shareholder of all of the outstanding
securities of Tempus;
(iv) Attached hereto as Exhibit H is the a current balance
sheet of Tempus which shows all liabilities of Tempus
as of the date thereof and as of the Closing Date;
(v) Seller has not entered into on behalf of Tempus or
caused Tempus to enter into, and to the best of
Seller's knowledge Tempus is not a party to any
agreement, contract, deed, lease, mortgage,
indenture, note, license, franchise, obligation,
instrument or other commitment, arrangement or
understanding of any kind, whether written or oral;
(vi) There is no Encumbrance on any property or asset of
Tempus and any securities issued by Tempus are now,
and as of Closing will be, free of any Encumbrance.
5.3 Covenant of the Corporation.
(a) Use of Tempus Name. At the request of Seller, the
Corporation agrees that it will execute any documents and make any filings
necessary to effect the transfer of the name "Tempus" to Seller.
(b) Payment of Seller's Attorneys' Fees. The Corporation agrees
to reimburse Seller at the Closing for any reasonable attorneys' fees and
expenses incurred by Seller in connection with the consummation of this
Agreement and the transactions contemplated hereby, which reimbursement shall
not exceed thirty five thousand dollars ($35,000).
(c) Indemnification of Seller in Connection with Lease. The
Corporation hereby agrees to indemnify and hold Seller harmless from, against
and in respect of, any and all claims, demands, lawsuits, proceedings, losses,
assessments, fines, penalties, liabilities, and damages, including interest,
penalties, reasonable attorneys' fees and costs of investigation which arise
or result from and to the extent that they are attributable to Seller's
personal guaranty given with respect to that certain Lease dated as of
______________, 199_ between [name parties], a copy of which guarantee is
attached hereto as Exhibit I.
5.4 No Other Representations. The Parties to this Agreement
acknowledge that the representations and warranties set forth in this Article
V are made as of the Effective Date and as of the Closing Date and the
representations and warranties set forth in this Article V and in Article X
are the only representations made pursuant to this Agreement.
ARTICLE VI
SELLER'S RIGHTS IN THE EVENT OF A
SUBSEQUENT FINANCING BY THE CORPORATION
6.1 Additional Financing. Subject to the conditions set forth in
this Article VI, the Corporation shall not be restricted in any manner from
soliciting and/or raising additional funds for use by the Corporation,
including but not limited to any financing involving the issuance by the
Corporation of Common Shares or other equity or debt securities of the
Corporation or any combination thereof, or any financing obtained by entering
into long-term debt arrangements ("Future Financing"), and Seller shall not
have any right to participate, preemptive right, anti-dilution protection or
any other statutory or contractual right to receive additional Common Shares
or other equity or debt securities of the Corporation or any combination
thereof in connection with any Future Financing.
6.2 Financing Related to Redemption Price. If (i) the Corporation
issues additional Common Shares or any other debt or equity securities of the
Corporation or any securities convertible into or exchangeable for Common
Shares or other debt or equity securities of the Corporation in a Future
Financing and the proceeds received by the Corporation from such Future
Financing are used as the Cash to redeem the Redeemed Shares from Seller or to
repay a note or other evidence of indebtedness from one or more of the
Management Shareholders to the Corporation that was made by the Corporation to
obtain the Cash to redeem the Redeemed Shares from Seller, then (ii) in
connection with such Future Financing the Corporation shall issue to Seller a
certificate representing the number of Common Shares which, when added to the
3-4/19 Common Shares held by Seller following the Closing, restores (or, if at
the time of the Future Financing which causes this Section 6.2 to take effect,
the Seller no longer owns 3-4/19 Common Shares, would have restored) to Seller
the Initial Seller Ownership Percentage.
6.3 Prepayment of Note. Other than proceeds received by the
Corporation from one or more Management Shareholders to obtain all or a part
of the Cash to redeem the Redeemed Shares from Seller, which proceeds shall
not be included in the Financing Amount (defined below), if the Corporation
receives proceeds from one or more Future Financings above a certain specified
amount (aggregated, the "Financing Amount"), the Corporation shall use a
certain percentage (the "Prepayment Percentage") of the proceeds received in
connection with such Future Financing ("Repayment Proceeds") to prepay a
portion of the Note as follows:
(a) until the Financing Amount exceeds $7,500,000, the Prepayment
Percentage shall be zero;
(b) if the Financing Amount exceeds $7,500,000 but does not exceed
$10,000,000, the Prepayment Percentage shall be twenty five
percent (25 percent) of such proceeds that exceed $7,500,000 but
do not exceed $10,000,000 or such lesser amount that will result
in the full prepayment of the Note (and any accrued but unpaid
interest);
(c) if the Financing Amount exceeds $10,000,000, the Prepayment
Percentage shall be fifty percent (50 percent) of such proceeds
above $10,000,000 or such lesser amount that will result in the
full prepayment of the Note (and any accrued but unpaid
interest).
Repayment Proceeds shall be applied first to the payment of accrued but unpaid
interest on the Note and thereafter to the repayment of the principal balance
of the Note.
ARTICLE VII
REGISTRATION RIGHTS
7.1 Piggyback Registration. If the Corporation, at any time that
Seller owns any Common Shares, proposes to register any Common Shares under
the Securities Act of 1933, as amended (the "Securities Act"), it will give
prompt written notice to Seller of the Corporation's intention to effect such
a registration and include in such registration all Common Shares owned by
Seller with respect to which the Corporation has received written notice for
inclusion therein within 20 days after the date of the Corporation's notice;
provided, however, that:
(a) if, at any time after giving written notice of its intention to
register any shares and, prior to the effective date of the
Registration Statement filed in connection with such
registration, the Corporation shall determine for any reason not
to register such Common Shares, the Corporation may, at its
election, give written notice of such determination to Seller (if
Seller has requested inclusion therein), and, thereupon, the
Corporation shall be relieved of its obligation to register any
Common Shares owned by Seller in connection with such
registration;
(b) if such registration shall be in connection with an underwritten
public offering and the managing underwriter shall advise the
Corporation in writing that in its opinion the number of shares
requested to be included in such registration exceeds the number
of such securities which can be sold in such offering or would
have an adverse impact on the price of such securities, the
Corporation shall include in such registration as follows:
(i) the securities to be included therein by the Corporation;
(ii) the number (if any) of other securities of the Corporation
(including, without limitation, Common Shares owned by
Seller and Common Shares owed by Management Shareholders)
requested to be included pursuant to any piggyback or
incidental registration rights which in the written
opinion of such underwriter can be sold (and if, in such
opinion of such underwriter, some but not all of such
securities may be so included, all holders of Common
Shares requested to be included therein shall share pro
rata in the number of Common Shares included in such
underwritten public offering on the basis of the number of
shares of Common Shares requested to be included therein);
provided, however, if in the opinion of the underwriter
Common Shares owned by Management Shareholders must not be
included in the underwritten public offering or the
number of shares so included must be limited in either
case because of their status as "insiders," the Common
Shares owned by Seller shall nevertheless be included in
such offering to the extent permitted by this subsection
requested to be included pursuant to any piggyback or
incidental registration rights, pari passu.
For purposes of this Article VII, "Registration Statement" means any
registration statement or comparable document under the Securities Act through
which a public sale or disposition of the securities of the Corporation may be
registered, including the prospectus, amendments and supplements to such
registration statement, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such Registration
Statement.
7.2 Selection of Underwriters. If any registration pursuant to this
Article VII is an underwritten primary offering, the Corporation shall have
the right to select the managing underwriter to administer such offering.
7.3 Holdback Agreement. In the event of an underwritten public
distribution of Common Shares under a Registration Statement, whether or not
Common Shares owned by Seller or Management Shareholders are included, Seller
and each Management Shareholder, severally, agrees not to effect any public
sale or distribution of Common Shares (except as part of such underwritten
public distribution), including a sale pursuant to Rule 144 or Rule 144A under
the Securities Act, during a period designated by the Corporation in a written
notice duly given to Seller or such Management Shareholder(s), which period
shall commence approximately 14 days prior to the effective date of any such
post-effective amendment to the shelf registration statement filed on Form S-3
or filing of such prospectus supplement, as the case may be, or the
commencement of such underwritten public distribution of Common Shares under a
Registration Statement and shall continue for up to 104 consecutive days. The
foregoing shall not apply to Seller or any Management Shareholder to the
extent such person is prohibited by applicable law from agreeing to withhold
from sale.
ARTICLE VIII
SELLER'S AGREEMENT NOT TO COMPETE,
SOLICIT, OR DISCLOSE CERTAIN INFORMATION
Any and all references to the Corporation in this Article VIII shall be
deemed to include the Corporation and, where applicable, Tempus.
8.1 Confidential Information. As a director, officer and shareholder
of the Corporation, Seller acknowledges that he has occupied a position of
trust and confidence with the Corporation prior to the date hereof and has
become familiar with the following, any and all of which constitute
confidential information of the Corporation (collectively the "Confidential
Information"):
(a) Trade Secrets. Any and all trade secrets concerning the
business and affairs of the Corporation, product specifications, data, know-how,
formulae, compositions, processes, designs, graphs, past, current and
planned research and development, customer lists, current and anticipated
customer requirements, customer contacts, price lists, market studies,
business plans, computer software and programs (including object code and
source code), computer software and database technologies, systems,
structures, and architectures (and related processes, formulae, compositions,
improvements, devices, know-how, inventions, discoveries, concepts, ideas,
designs, methods and information), and any information, however documented, of
the Corporation that is a trade secret; and
(b) Business and Affairs. Any and all information concerning the
business and affairs of the Corporation, however documented, including, but
not limited to, historical financial statements, financial projections and
budgets, capital spending budgets and plans, the names and backgrounds of key
personnel, and personnel training and techniques and materials; and
(c) Other Information. Any and all notes, analysis, compilations,
studies, summaries, and other material prepared by or for the Corporation
containing or based, in whole or in part, on any information in the foregoing.
(d) Exception. Confidential Information shall not include
information that becomes generally known to, and available for, use by the
public other than as a result of Seller's disclosure of such Confidential
Information or the disclosure of such Confidential Information by any other
Person bound by a duty of nondisclosure to the Corporation.
8.2 Reasonable and Necessary. Seller acknowledges that the
provisions of this Article VIII are reasonable and necessary to protect and
preserve the Corporation's business and that the Corporation would be
irreparably damaged if Seller were to breach the any of the covenants set
forth in this Article VIII.
8.3 Confidential Information Is Property of the Corporation. Seller
acknowledges and agrees that all the Confidential Information known or
obtained by Seller, whether before or after the date hereof, is the property
of the Corporation.
8.4 Nondisclosure. Seller agrees that he will not, at any time,
disclose to any unauthorized person or use for his own account or for the
benefit of any third party any of the Confidential Information, whether Seller
has such information in his memory or it is embodied in writing or other
physical form, without the Corporation's prior written consent.
8.5 Documents. Seller agrees to deliver to the Corporation at the
time of execution of this Agreement, and at any other time the Corporation may
request, all documents, memoranda, notes, plans, records, reports, and other
documentation, models, components, devices, or computer software, whether
embodied in a disk or other form (and all copies of the foregoing), relating
to the business, operations, or affairs of the Corporation and any other
Confidential Information that Seller may then possess or have under his
control.
8.6 Non-Solicitation. For a period of one year following the Closing
Date, Seller agrees that he will not, directly or indirectly, either for
himself or any other Person, (i) induce or attempt to induce any employee of
the Corporation to leave the employ of the Corporation, (ii) in any way
interfere with the relationship between the Corporation and an employee of the
Corporation, or (iii) employ, or otherwise engage as an employee, independent
contractor, or otherwise, any employee of the Corporation.
8.7 Non-Competition. For a period of one year following the Closing
Date, Seller agrees that he will not, singly, jointly, or as a partner,
member, employee, agent, officer, director, stockholder (except as a holder of
not more than five percent (5 percent) of any class of the outstanding stock
of any company listed on a national securities exchange, or actively traded in
a national over-the-counter market), investor, consultant, independent
contractor, or joint venturer of any other Person, or in any other capacity,
directly, indirectly or beneficially, (i) own, manage, operate, join, control,
or participate in the ownership, management, operation or control of, or
permit the use of his name by, or work for, or provide consulting, financial
or other assistance to, or be connected in any manner with, any business
located in the continental United States that is engaged in providing long
distance telephone services through the use of prepaid calling cards or any
business that intends to engage in the same anywhere in the world, or (ii)
induce or attempt to induce any Person which is a customer of the Corporation,
or which otherwise is a contracting party with the Corporation, as of the date
hereof, to terminate any written or oral agreement or understanding or
business relationship with the Corporation.
8.8 Remedies for Breach. If Seller breaches any covenant set forth
in this Article VIII, the Corporation will be entitled to the following
remedies: (i) damages from Seller; and (ii) in addition to its right to
damages and any other rights it may have, to obtain injunctive or other
equitable relief to restrain any breach or threatened breach or otherwise
specifically enforce the provision of this Article VIII. Seller acknowledges
that the rights of the Corporation set forth in this Agreement are special,
unique and of extraordinary character, and that, in the event Seller violates
or fails or refuses to perform any covenant set forth in this Agreement, then
the Corporation may be without adequate remedy at law. Seller therefore
agrees that if he violates or fails and refuses to perform any covenant or
agreement made in this Agreement, then the Corporation may, in addition to any
remedies at law for damages or other relief, institute and prosecute an action
in any court of competent jurisdiction to enforce specific performance of such
covenant or agreement or seek any other equitable relief.
ARTICLE IX
TAWFIK'S AGREEMENT NOT TO COMPETE,
SOLICIT, OR DISCLOSE CERTAIN INFORMATION
Any and all references to the Corporation in this Article IX shall be
deemed to include the Corporation and, where applicable, Tempus.
9.1 Confidential Information. As a director, officer and shareholder
of the Corporation, Tawfik acknowledges that he has occupied a position of
trust and confidence with the Corporation prior to the date hereof and has
become familiar with the Confidential Information of the Corporation.
9.2 Reasonable and Necessary. Tawfik acknowledges that the
provisions of this Article IX are reasonable and necessary to protect and
preserve the Corporation's business and that the Corporation would be
irreparably damaged if Tawfik were to breach the any of the covenants set
forth in this Article IX.
9.3 Confidential Information Is Property of the Corporation. Tawfik
acknowledges and agrees that all the Confidential Information known or
obtained by Tawfik, whether before or after the date hereof, is the property
of the Corporation.
9.4 Nondisclosure. Tawfik agrees that he will not, at any time,
disclose to any unauthorized person or use for his own account or for the
benefit of any third party any of the Confidential Information, whether Tawfik
has such information in his memory or it is embodied in writing or other
physical form, without the Corporation's prior written consent, unless, and
only to the extent that, the Confidential Information is or becomes generally
known to, and available for, use by the public other than as a result of
Tawfik's disclosure of such Confidential Information or the disclosure of such
Confidential Information by any other Person bound by a duty of nondisclosure
to the Corporation.
9.5 Documents. Tawfik agrees to deliver to the Corporation at the
time of execution of this Agreement, and at any other time the Corporation may
request, all documents, memoranda, notes, plans, records, reports, and other
documentation, models, components, devices, or computer software, whether
embodied in a disk or other form (and all copies of the foregoing), relating
to the business, operations, or affairs of the Corporation and any other
Confidential Information that Tawfik may then possess or have under his
control.
9.6 Non-Solicitation. Tawfik agrees that he will not, directly or
indirectly, either for himself or any other Person, (i) induce or attempt to
induce any employee of the Corporation to leave the employ of the Corporation,
(ii) in any way interfere with the relationship between the Corporation and an
employee of the Corporation, or (iii) employ, or otherwise engage as an
employee, independent contractor, or otherwise, any employee of the
Corporation.
9.7 Non-Competition. Tawfik agrees that he will not, singly,
jointly, or as a partner, member, employee, agent, officer, director,
stockholder (except as a holder of not more than five percent (5 percent) of
any class of the outstanding stock of any company listed on a national
securities exchange, or actively traded in a national over-the-counter
market), investor, consultant, independent contractor, or joint venturer of
any other Person, or in any other capacity, directly, indirectly or
beneficially, (i) own, manage, operate, join, control, or participate in the
ownership, management, operation or control of, or permit the use of his name
by, or work for, or provide consulting, financial or other assistance to, or
be connected in any manner with, any business engaged in providing long
distance telephone services through the use of prepaid calling cards or any
business that intends to engage in the same anywhere in the world, or (ii)
induce or attempt to induce any Person which is a customer of the Corporation,
or which otherwise is a contracting party with the Corporation, as of the date
hereof, to terminate any written or oral agreement or understanding or
business relationship with the Corporation.
9.8 Remedies for Breach. If Tawfik breaches any covenant set forth
in this Article IX, the Corporation will be entitled to the following
remedies: (i) damages from Tawfik; and (ii) in addition to its right to
damages and any other rights it may have, to obtain injunctive or other
equitable relief to restrain any breach or threatened breach or otherwise
specifically enforce the provision of this Article IX. Tawfik acknowledges
that the rights of the Corporation set forth in this Agreement are special,
unique and of extraordinary character, and that, in the event Tawfik violates
or fails or refuses to perform any covenant set forth in this Agreement, then
the Corporation may be without adequate remedy at law. Tawfik therefore
agrees that if he violates or fails and refuses to perform any covenant or
agreement made in this Agreement, then the Corporation may, in addition to any
remedies at law for damages or other relief, institute and prosecute an action
in any court of competent jurisdiction to enforce specific performance of such
covenant or agreement or seek any other equitable relief.
9.9 Term. The term of this Article IX shall commence on the Closing
Date and shall continue until the earlier of: (i) three months from the date
that Tawfik ceases to be an employee, officer and director of the Corporation
or (ii) the date that the Note is paid (or prepaid) in full.
9.10 Third Party Beneficiary. The Corporation and Tawfik acknowledge
and agree that Seller, as holder of the Note, is a third party beneficiary of
the provisions of this Article IX.
ARTICLE X
DISMISSAL OF PENDING LITIGATION; RELEASES
The provisions of this Article X shall be effective as of the Closing
Date (if Closing occurs):
10.1 Seller Release and Waiver. Seller, on behalf of himself and his
respective predecessors, successors, affiliates, assigns, agents, attorneys,
heirs, executors, beneficiaries, representatives and any other person or
entity who has or could potentially derive rights through him (individually
and collectively, "Seller Releasors"), hereby irrevocably and unconditionally
releases, waives, acquits and forever discharges, and agrees to indemnify,
defend and hold harmless, (i) the Corporation and its respective affiliates,
predecessors, successors, assigns, officers, employees, directors,
shareholders, agents, representatives and attorneys, whether past, present or
future, (ii) Tawfik and his Successors, (iii) Vita and his Successors and (iv)
Barley and his Successors (individually and collectively, the "Seller
Releasees"), from and against any and all claims, demand, costs, contracts,
liabilities, objections, actions and causes of action of any nature, type or
description, whether at law or in equity, in contract or tort, or otherwise,
known or unknown, or suspected or unsuspected (collectively, "Claims") which
arise in whole or in part, directly or indirectly, contemporaneously with or
prior to the Closing, that any of the Seller Releasors ever had or now has or
may claim to have or hereafter has or claim to have against any of the Seller
Releasees pertaining to any matter or event occurring contemporaneously with
or prior to Closing, including but not limited to the ownership, management or
operation of the Corporation or to salaries or benefits owing to Seller;
provided, however, that this Section 10.1 shall not apply to any Claims
against the Corporation arising from breaches by the Corporation or the
Management Shareholders under this Agreement, the Pledge Agreement, the Escrow
Agreement or the Note (the "Transaction Documents").
For purposes of this Article X, "Successors" shall mean predecessors,
successors, affiliates, assigns, agents, attorneys, heirs, executors,
beneficiaries, and representatives of such person.
10.2 Tawfik Release and Waiver. Tawfik, on behalf of himself and his
respective predecessors, successors, affiliates, assigns, agents, attorneys,
heirs, executors, beneficiaries, representatives and any other person or
entity who has or could potentially derive rights through him (individually
and collectively, "Tawfik Releasors"), hereby irrevocably and unconditionally
releases, waives, acquits and forever discharges, and agrees to indemnify,
defend and hold harmless, Seller and his Successors (individually and
collectively, the "Tawfik Releasees"), from and against any and all Claims
which arise in whole or in part, directly or indirectly, contemporaneously
with or prior to the Closing, that any of the Tawfik Releasors ever had or now
has or may claim to have or hereafter has of claims to have against any of the
Tawfik Releasees pertaining to any matter or event occurring contemporaneously
with or prior to Closing; provided, however, that this Section 10.2 shall not
apply to any Claims against Seller arising from breaches by Seller under the
Transaction Documents.
10.3 Vita Release and Waiver. Vita, on behalf of himself and his
respective predecessors, successors, affiliates, assigns, agents, attorneys,
heirs, executors, beneficiaries, representatives and any other person or
entity who has or could potentially derive rights through him (individually
and collectively, "Vita Releasors"), hereby irrevocably and unconditionally
releases, waives, acquits and forever discharges, and agrees to indemnify,
defend and hold harmless, Seller and his Successors (individually and
collectively, the "Vita Releasees"), from and against any and all Claims which
arise in whole or in part, directly or indirectly, contemporaneously with or
prior to the Closing, that any of the Vita Releasors ever had or now has or
may claim to have or hereafter has of claims to have against any of the Vita
Releasees pertaining to any matter or event occurring contemporaneously with
or prior to Closing; provided, however, that this Section 10.3 shall not apply
to any Claims against Seller arising from breaches by the Seller under the
Transaction Documents.
10.4 Barley Release and Waiver. Barley, on behalf of himself and his
respective predecessors, successors, affiliates, assigns, agents, attorneys,
heirs, executors, beneficiaries, representatives and any other person or
entity who has or could potentially derive rights through him (individually
and collectively, "Barley Releasors"), hereby irrevocably and unconditionally
releases, waives, acquits and forever discharges, and agrees to indemnify,
defend and hold harmless, Seller and his Successors (individually and
collectively, the "Barley Releasees"), from and against any and all Claims
which arise in whole or in part, directly or indirectly, contemporaneously
with or prior to the Closing, that any of the Barley Releasors ever had or now
has or may claim to have or hereafter has of claims to have against any of the
Barley Releasees pertaining to any matter or event occurring contemporaneously
with or prior to Closing; provided, however, that this Section 10.4 shall not
apply to any Claims against Seller arising from breaches by the Seller under
the Transaction Documents.
10.5 Corporation Release and Waiver. The Corporation, on behalf of
itself and its respective affiliates, predecessors, successors, assigns,
officers, employees, directors, agents, representatives and attorneys, whether
past, present or future (individually and collectively, "Corporation
Releasors"), hereby irrevocably and unconditionally releases, waives, acquits
and forever discharges, and agrees to indemnify, defend and hold harmless
Seller and his Successors (individually and collectively, the "Corporation
Releasees"), from and against any and all Claims which arise in whole or in
part, directly or indirectly, contemporaneously with or prior to the Closing,
that any of the Corporation Releasors ever had or now has or may claim to have
or hereafter has of claims to have against any of the Corporation Releasees
pertaining to any matter or event occurring contemporaneously with or prior to
Closing; provided, however, that this Section 10.5 shall not apply to any
Claims against Seller arising from breaches by the Seller under the
Transaction Documents.
10.6 Dismissal of Pending Litigation.
(a) Vita. Vita hereby agrees to take all necessary actions to
dismiss with prejudice that certain action commenced by Vita against the
Corporation, Tawfik and Seller, docket No. ___________ within five (5) days
after the Closing Date.
(b) Barley. Barley hereby agrees to take all necessary actions
to dismiss with prejudice that certain action commenced by Barley against the
Corporation, Tawfik and Seller, docket No. ___________ within five (5) days
after the Closing Date.
10.7 Management Shareholder Subordination. Each of the Management
Shareholders agrees that, so long as the Note is outstanding, any indebtedness
or other money obligation of the Corporation owing to such Management
Shareholders (other than monies due with respect to salaries and bonuses not
to exceed in the aggregate one million dollars per year and commissions)
shall, by virtue hereof, be subordinated in all respects to the Note;
provided, however, that Tawfik shall be permitted to make a non-subordinated
loan to the Corporation, not to exceed five million dollars ($5,000,000), for
the purpose of consummating the transactions set forth in this Agreement. Any
grant of a security interest that is inconsistent with this Section 10.7 shall
be deemed void ab initio.
ARTICLE XI
MISCELLANEOUS
11.1 Waivers. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any provisions or conditions of this
Agreement must be made in writing and shall be effective only to the extent
specifically set forth in such writing.
11.2 [Intentionally omitted.]
11.3 Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto, whether so expressed
or not.
11.4 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
11.5 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience of reference only and do not constitute
a part of and shall not be utilized in interpreting this Agreement.
11.6 Notices. Any notices required or permitted to be sent hereunder
shall be delivered personally or mailed, certified mail, return receipt
requested, or delivered by overnight courier service, charges prepaid, to the
following addresses, or such other address as any party hereto designates by
written notice to the Corporation, and shall be deemed to have been given upon
delivery, if delivered personally, five days after mailing, if mailed, or one
business day after delivery to the courier, if delivered by overnight courier
service:
If to the Corporation to:
PhoneTime, Inc.
▇▇-▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ & Berlin, Chartered
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to Seller, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇
[Address]
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇ P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq
If to Tawfik, to:
▇▇▇▇▇ ▇▇▇▇▇▇
c/o PhoneTime, Inc.
▇▇-▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
with a copy (which shall not constitute notice) to:
[name and address, if any]
If to Vita to:
▇▇▇▇▇ ▇▇▇▇
c/o PhoneTime, Inc.
▇▇-▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
with a copy (which shall not constitute notice) to:
[name and address, if any]
If to Barely, to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
c/o PhoneTime, Inc.
▇▇-▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
with a copy (which shall not constitute notice) to:
[name and address, if any]
11.7 Governing Law. All questions concerning the construction,
validity and interpretation of, and the performance of the obligations imposed
by, this Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and wholly to be
performed in that state.
11.8 Additional Actions and Documents. Each of the parties hereto
hereby agrees to take or cause to be taken such further actions, to execute,
deliver and file or cause to be executed, delivered and filed such further
documents and instruments, and to use best reasonable efforts to obtain such
consents, as may be necessary or as may be reasonably requested in order to
fully effectuate the purposes, terms and conditions of this Agreement, whether
before, at or after the Closing of the transactions contemplated by this
Agreement.
11.9 Breach of Covenant. Each of the parties to this Agreement will
be entitled to enforce its rights under this Agreement specifically, to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in its favor. The parties hereto agree
and acknowledge that money damages may not be an adequate remedy for any
breach of the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
The rights and remedies specified in any provision of this Agreement are
in addition to all other rights and remedies a party may have under any other
agreement or applicable law, including any right to equitable relief and any
right to ▇▇▇ for damages as a result of a breach of this Agreement (whether or
not it elects to terminate this Agreement), and all such rights and remedies
are cumulative. Without limiting the foregoing, no exercise of a remedy shall
be deemed an election excluding any other remedy (any such claim by any other
party being hereby waived). A party who prevails in enforcing rights or
remedies under this Agreement shall (in addition to any other relief
hereunder) be paid by the other party all costs, fees and expenses, including
reasonable attorneys' fees, incurred by the prevailing party in enforcing such
rights and remedies.
11.10 Final Agreement. This Agreement constitutes the final
agreement of the parties concerning the matters referred to herein, and
supersedes all prior oral and written agreements and understandings.
11.11 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed an original, and such counterparts together shall constitute one
instrument.
11.12 Legend. Until (a) the securities represented by the
certificate to be delivered to Seller pursuant to Section 2.2 of this
Agreement are effectively registered under the Securities Act, and applicable
state securities laws, or (b) the holder of such securities delivers to the
Corporation a written opinion of counsel to such holder reasonably acceptable
to the Corporation to the effect that such legend is no longer necessary under
the Securities Act and such state securities laws, the Corporation will cause
each certificate representing Common Shares to be stamped or otherwise
imprinted with a legend to substantially the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER THE SECURITIES LAWS OF ANY STATE, AND THUS MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SO
REGISTERED OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE
UNDER SUCH ACT AND UNDER ANY SUCH APPLICABLE STATE SECURITIES LAWS."
11.13 Termination. If each of the conditions set forth in Articles
III and IV have not been satisfied or waived (by the person entitled
thereunder to make such waivers), by 5:00 p.m. New York City time on April 1,
1997, for whatever reason, the Agreement shall terminate.
[SIGNATURE PAGE FOLLOWS.]
IN WITNESS WHEREOF, this Agreement was executed and delivered or caused to
be executed and delivered in the name and on behalf of the parties hereto as
of the date first set forth above.
PHONETIME, INC., a New York corporation
WITNESS:
--------------------- ---------------------------------------
Name: By:
--------------------------------
Title:
----------------------------
WITNESS:
----------------------- -----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Solely With Respect to Article IX and Article X and XI:
WITNESS:
----------------------- -----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Solely With Respect to Article X and XI:
WITNESS:
----------------------- -----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Solely With Respect to Article X and XI:
WITNESS:
----------------------- -----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
EXHIBITS
A Form of Promissory Note
B Form of Escrow Agreement
C Form of Pledge Agreement
D Form of Co-Sale Agreement
E Form of Assignment Agreement
F Letter of Resignation of ▇▇▇▇▇▇ ▇▇▇▇▇▇ (for both Tempus and PTI)
G Organizational Documents of Tempus Worldwide Communications
H Current Balance Sheet of Tempus Showing all Outstanding
Liabilities
I Copy of Lease to which ▇▇▇▇▇▇ ▇▇▇▇▇▇ is personal guarantor
Schedule 1
Number of Common Shares Number of Common Shares
Owned Beneficially and of Owned Beneficially and of
Name of Shareholder Record Prior Redemption Record After Redemption
------------------- ------------------------- ------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ 43-1/2 _______ 43-1/2 _______
▇▇▇▇▇▇ ▇▇▇▇▇▇ 39 _______ 3-4/19 _______
▇▇▇▇▇ ▇▇▇▇ 12-1/2 _______ 12-1/2 _______
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 5 _______ 5 _______
