1
EXHIBIT 10.8
OPTION AGREEMENT
THIS OPTION AGREEMENT, dated as of __________, 1997 between
Telepassport, a New York corporation (the "Grantee"), and Intelenet, Inc., a
Delaware corporation (the "Grantor).
WHEREAS, the parties are involved in various aspects of the
telephony service business; and
WHEREAS, the parties have agreed that Grantor shall grant to Grantee
the option referred to herein.
NOW, THEREFORE, it is hereby agreed as follows:
SECTION 1. Definitions. The following terms shall have the following
meanings:
"Closing" shall mean the closing of the Option granted hereunder
with respect to the Customers and the Equipment.
"Common Stock" shall mean the common capital stock of the entity
controlled by or under common control with Grantee which has been registered for
sale to the public with the Securities and Exchange Commission and which
completes an initial public offering of such common stock.
"Customers" shall mean those customers of Grantor listed on Exhibit
A, together with any additions thereto between the date hereof and the Closing.
"Customer Purchase Price" shall mean the sum of (i)(A) one times the
Retail Revenue generated by the Service during the third month following the
Node Installation Date and, (B) 75% of the Wholesale Revenue generated by the
Service during the third month following the Node Installation Date; (ii)(A) one
times the Retail Revenue generated by the Service during the sixth month
following the Node Installation Date, and (B) 75% of the Wholesale Revenue
generated by the Service during the sixth month following the Node Installation
Date, and (iii)(A) one times the Retail Revenue generated by the Service during
the ninth month following the Node Installation Date and (B) 75% of the
Wholesale Revenue generated by the Service during the ninth month following the
Node Installation Date. Each installment of the Customer Purchase Price may be
paid in such combination of cash/or in Common Stock (valued at the Valuation
Price) as Grantee may elect, provided that at least 40% of any installment must
be paid in cash.
2
"Equipment Purchase Price" shall mean the actual documented cost of
the Equipment, less $10,000.
"Equipment" shall mean those items of telecommunications and related
equipment installed and to be installed by Grantor in various locations in
Italy, other than Milan, listed on Exhibit B hereto together with any additions
thereto between the date hereof and the Closing.
"Exercise Notice" shall have the meaning set forth in Section 4
hereof.
"Node Installation Date" shall mean the date on which the node is
installed in Milan, Italy and becomes operational.
"Option" shall have the meaning set forth in Section 2 hereof.
"Retail Revenue" shall mean the aggregate monthly revenue paid by
end-user Customers of the Service for per minute voice and facsimile service
after giving effect to any allowances, discounts, fees and credits which may be
applied during such monthly period.
"Service" shall mean the telephony service provided by Grantor to
the Customers.
"Valuation Price" shall mean the average closing price of the Common
Stock during the 7 trading days immediately preceding each day on which Common
Stock is delivered to the Grantor.
"Wholesale Revenue" means the aggregate monthly revenue paid to
Grantor by other distributors of the Service for per minute voice and facsimile
service who are not the ultimate end-users thereof, after giving effect to any
allowances, discounts, fees, and credits which may be applied during such
monthly period.
SECTION 2. Grant of Option. In consideration of, among other things,
the sum of $35,000 paid by Grantee to Grantor on the execution and delivery
hereof, Grantor hereby grants to Grantee the right and option to purchase each
of the Equipment and the Customers upon the terms and conditions set forth
herein (collectively, the "Option").
SECTION 3. Term of Option. The term of the Option shall commence on
the execution and delivery hereof and shall terminate on the earlier of (i) the
first anniversary of the execution and delivery hereof, (ii) 30 days following
consummation of the initial public offering of the Common Stock.
-2-
3
SECTION 4. Exercise of Option. To be effective, the Option must be
exercised by written notice (an "Exercise Notice") from Grantee to Grantor at
the address of Grantor set forth herein.
SECTION 5. Closings. (a) The Closing shall be held at the offices of
counsel to the Grantee, at the time and date set forth in the Exercise Notice,
or at such other time or date as the parties may mutually agreed upon. At the
Closing, the Grantee shall deliver the Equipment Purchase Price in cash. The
Customer Purchase Price shall be paid within 10 days after the end of the third,
sixth or ninth month, respectively, following the Node Installation Date or the
Closing, whichever occurs later in such combination of cash and/or Common Stock
as is provided herein. The Customer Purchase Price shall be computed by Grantee,
and absent manifest error shall be binding upon the parties. Grantor agrees to
cooperate fully with Grantee and to promptly supply such information, from time
to time as is necessary in Grantee's reasonable opinion to prepare such
computation. Concurrent with the payment of each installment of the Customer
Purchase Price, Grantee shall deliver to Grantor a copy of its calculation of
the Customer Purchase Price during the applicable period.
(b) At the Closing, Grantor shall deliver to Grantee a duly
executed xxxx of sale and other instruments of conveyance in form and substance
satisfactory to Grantor whereby Grantee shall transfer title to the Customers
and/or the Equipment free and clear of all liens, claims and encumbrances.
SECTION 6. Price Protection on Common Stock. Provided that Common
Stock has been issued in connection with payment of the Customer Purchase Price,
if, on the day following the second anniversary after the issuance thereof, the
average closing price during the 7 trading days immediately preceding such date
of such Common Stock is less than 70% of the Valuation Price, then Grantor shall
be entitled to receive in cash or additional shares of Common Stock (valued at
such closing price) at Grantee's option, the difference between such average
closing price and the Valuation Price.
SECTION 7. Representations and Warranties of Grantor. Grantor
represents and warrants to Grantee as follows:
(a) Grantor has duly taken all action required to be
taken by it to authorize the execution and delivery of this Agreement by it and
each other agreement to be executed in connection herewith and the consummation
of the transactions contemplated hereby to be performed by it, and this
Agreement is and when executed and delivered such other agreements will be,
valid and binding agreements of Grantor enforceable against Grantor in
accordance with their terms.
-3-
4
(b) Neither the execution and delivery of this Agreement
or any agreement contemplated hereby nor the consummation of the transactions
contemplated hereby or thereby will (i) violate any provision of Grantor's
articles of incorporation or bylaws, or (ii) violate, or be in conflict with, or
constitute a default under, or result in the termination of, or accelerate the
performance required by any contract to which Grantor is a party or by which it
is bound, or (iii) violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental authority.
(c) Grantor has and will at the Closing, have, good
title to the Equipment and the Customers, free and clear of all liens, security
interests or other encumbrances of any nature.
(d) No consent, approval, license or authorization of
any governmental or regulatory authority or any other person is required to be
obtained by Grantor or Grantee in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby.
(e) The aggregate monthly gross revenues generated by
sales of the Service in Italy by Grantor is no less than $160,000 per month.
SECTION 8. Covenants of Grantor and Grantee.
(a) From and after the execution and delivery hereof
through the Closing, Grantor covenants and agrees to operate its business and
affairs and the Service in the ordinary course, consistent with past practices,
and in furtherance of the foregoing, shall not, without Grantee's consent, make
any changes in its sales, marketing, commission, pricing or operating practices.
Grantor further covenants and agrees that it shall not at any time sell,
transfer or encumber in any manner whatsoever any of the Customers or the
Equipment or its interest therein.
(b) Until the end of the third month following the
Closing, (i) pricing and commission practices with respect to the Service may be
modified upon mutual agreement of Grantor and Grantee, (ii) DID's may be changed
upon mutual agreement of Grantor and Grantee, and (iii) the name of the product
marketed in connection with the Service shall remain "Intelenet".
(c) From and after the end of the third month following
the Closing, (i) at Grantee's request, the name of the product marketed in
connection with the Service shall become "TelePassport" (or another name
selected by Grantee) in each jurisdiction in which the product is marketed, (ii)
DID's may be changed in the sole discretion of Grantee, and (iii) pricing and
commission practices with respect to the Service may be changed in the sole
discretion of Grantee.
-4-
5
(d) Grantee agrees to use its reasonable efforts to
promptly complete the installation of the node in Milan, Italy. Grantor agrees
to cooperate fully with the Grantee in identifying a suitable location in Milan
and in completing such installation.
(e) Grantor agrees that it shall not install any
equipment in more than two cities in Italy without Grantee's consent which shall
not be unreasonably withheld. The equipment installed in such two cities shall
be included in and deemed part of the "Equipment".
(f) From and after the execution and delivery hereof
through the Closing, Grantor covenants and agrees (i) to cooperate fully with
Grantee in connection with its due diligence activities performed in connection
with the transactions contemplated hereby, including the furnishing of such
information as Grantee may reasonably request from time to time; and (ii) to
consult with Grantee with respect to the purchasing of equipment for, site
selection and installation of all node sites to be selected and/or constructed
by Grantor in Italy.
SECTION 9. Conditions to Obligations of Grantee. Each and every
obligation of Grantee under this Agreement to be performed at or before Closing
shall be subject to the satisfaction, at or before Closing, of each of the
following conditions, unless waived in writing by Grantee:
(a) Grantor shall have performed and complied in all
material respects with all agreements, obligations and covenants required by
this Agreement to be performed or complied with by Grantor at or prior to
Closing and Grantor shall have delivered to Grantee a certificate dated the date
of Closing to such effect.
(b) The representations and warranties of Grantor
contained herein shall be true and accurate in all respects (i) on and as of the
date of this Agreement, and (ii) on and as of the date of Closing as though such
representations and warranties were made on and as of the date of Closing and
Grantor shall have delivered to Grantee a certificate of Grantor dated the date
of Closing to such effect.
(c) No suit, action, or other legal or administrative
proceeding by any governmental body or other person shall have been instituted
which questions the validity or legality of the transactions contemplated hereby
and on the date of Closing there shall be no effective injunction, writ,
temporary restraining order or any other order of any nature issued by a court
of competent jurisdiction directing that the transactions provided for herein or
any of them not be consummated as so provided.
-5-
6
SECTION 10. Conditions to Obligations of Grantor. Each and every
obligation of Grantor under this Agreement to be performed at or before Closing
shall be subject to the satisfaction, at or before Closing, of each of the
following conditions unless waived in writing by Grantor:
(a) Grantee shall have performed and complied with in
all material respects with all agreements, obligations and covenants required by
this Agreement to be performed and complied with by Grantee at or prior to
Closing and Grantee shall have delivered to Grantor a certificate dated the date
of Closing to such effect.
(b) At the Closing, Grantee and Xxxxx Xxxxxxxxxx shall
have entered into an Employment Agreement substantially in the form of Exhibit C
hereto.
SECTION 11. Notices. (a) All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
addressed to the parties at their addresses set forth below or at such other
addresses as may be designated by notice given pursuant hereto:
If to Grantor, to:
____________________________
____________________________
____________________________
If to Grantee, to:
Telepassport, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx
(b) Any notice addressed as aforesaid shall be deemed to have
been given: (i) on the date of delivery, if delivered by hand or by overnight
courier service, (ii) on the date of transmission, if transmitted by telecopier,
telex or cable, provided that if transmitted by telex or cable such transmittal
is confirmed in writing, or (iii) five days after deposit of same in the mails
if dispatched by registered mail. Notwithstanding the foregoing, notice of a
change of address shall be effective only upon receipt.
SECTION 12. Entire Agreement. Each party hereto agrees that this
Agreement constitutes the entire agreement between them with respect to the
subject matter hereof and supersedes all prior agreements and understandings
between them as to such subject matter; and there are no agreements,
arrangement, oral or written, between the parties relating to the subject matter
hereof which are not fully expressed or referred to herein.
-6-
7
SECTION 13. Waiver. Failure by one party to insist upon strict
compliance with any of the terms, covenants or conditions of this Agreement
shall not be deemed a waiver by such party of such term, covenant or condition,
nor shall any waiver of any term, covenant or condition hereunder by one party
at any one time be deemed a waiver or relinquishment by such party of that or
any other term, covenant or condition at any other time.
SECTION 14. Amendment. This Agreement may not be amended nor shall
any waiver, change, modification, consent or discharge be effected except by an
instrument in writing executed by or on behalf of the party seeking or against
whom enforcement of any amendment, waiver, change, modification, consent or
discharge is sought.
SECTION 15. Assignment; Binding Effect. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective legal representatives, successors and permitted assigns. This
Agreement and the Option granted pursuant hereto may be assigned by Grantee to
an affiliate of Grantee but may not be assigned by Grantor without the written
consent of Grantee.
SECTION 16. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York.
SECTION 17. Headings. The headings of this Agreement are for
convenience only and shall not in any way affect the meaning or interpretation
of this Agreement.
SECTION 18. Counterparts. This Agreement may executed in one or more
counterparts but all such separate counterparts shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have each executed this
Agreement as of the date and year first above written.
Intelenet, Inc.
________________________________ By:________________________________
WITNESS Name:
Title:
Telepassport, Inc.
________________________________ By:________________________________
WITNESS Name:
Title:
-7-
