EXHIBIT 10.30
STOCK PURCHASE AGREEMENT
by and among
XXXXXXX XXXXXXXXXX,
XXXXXXXX XXXXXXXXX
and
GROUP LONG DISTANCE, INC.
August 11, 1997
10.30-1
STOCK PURCHASE AGREEMENT
AGREEMENT, dated as of August 11, 1997, by and among XXXXXXX
XXXXXXXXXX, an individual residing at 0000 Xxxxxx X, Xxxxxxxx, Xxx Xxxx 00000
("Oustatcher"), XXXXXXXX XXXXXXXXX, an individual residing at 0000 Xxxx 0xx
Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Goldstone") (Oustatcher and Goldstone are
sometimes hereinafter referred to collectively as "Sellers" and individually as
a "Seller"), and GROUP LONG DISTANCE, INC., a Florida corporation having its
principal office at 1451 West Cypress Creek Road, Suite 200, Ft. Xxxxxxxxxx,
Xxxxxxx 00000 ("Purchaser").
WITNESSETH:
WHEREAS, Sellers own an aggregate of 200 shares of the Common
Stock, no par value (the "Shares"), of Eastern Telecommunications Incorporated,
a New York corporation ("ETI" or the "Company"), which constitute all of the
issued and outstanding shares of capital stock of the Company; and
WHEREAS, Sellers desire to sell to Purchaser, and Purchaser
desires to purchase from Sellers, all of the Shares at the Price (as hereinafter
defined), upon the terms and subject to the conditions contained in this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Purchase and Sale of Shares, Delivery of Stock
Certificates.
(a) Subject to and upon the terms and conditions set forth in
this Agreement, each Seller agrees to sell, transfer, convey, assign and deliver
to Purchaser, and Purchaser agrees to purchase from each Seller, at the Closing
(as hereinafter defined), all of such Seller's right, title and interest in and
to the Shares owned by him, free and clear of all Encumbrances (as defined
below). As used in this Agreement, the term "Encumbrances" shall mean liens,
claims, charges, pledges, security interests, encumbrances, options, warrants,
agreements or restrictions of any kind, whether created in law or equity,
including any restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of ownership; provided, however, that the term
"Encumbrances" shall not include: (i) any lien, pledge, security interest or
encumbrance arising out of any of the Related Agreements (as hereinafter
defined); (ii) any claim, lien, encumbrance or restriction of any kind,
including without limitation any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership, arising out
of or relating to any failure to make any filing or registration, give any
notice or obtain any consent, approval or authorization as described in Section
6 below; or (iii) any restriction arising out of or relating to the failure to
obtain any consent or approval from Tel-Save Holdings, Inc. ("Tel-Save").
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(b) Each Seller shall deliver to Purchaser at the Closing,
certificates representing the Shares owned by him, duly endorsed or accompanied
by stock powers duly executed, with all necessary stock transfer stamps attached
thereto and canceled.
2. Purchase Price, Promissory Notes.
In consideration of the sale, transfer, conveyance, assignment
and delivery of the Shares to Purchaser by Sellers, upon the terms and subject
to the conditions of this Agreement and in reliance upon the representations and
warranties made herein by Sellers, Purchaser will, in full payment thereof, pay
to Sellers at the Closing a total purchase price of Seven Million Dollars
($7,000,000) (the "Price"), payable by the execution and delivery to each Seller
of Purchaser's Promissory Note in the principal amount of Three Million Five
Hundred Thousand Dollars ($3,500,000), each in the form of Exhibit A annexed
hereto (together, the "Promissory Notes").
3. Closing. (a) The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place simultaneously with the
execution of this Agreement at 10:00 A.M., local time, on August 11, 1997 at the
offices of Xxxxxx & Xxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxxxxxxxx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, or such other time and place as the parties may agree upon (the
"Closing Date"). Simultaneously with the Closing, the Sellers shall, subject to
this Agreement and the Related Agreements, put the Purchaser into full and
actual possession, enjoyment and operating control of the Shares, the Warrant
Documents (as hereinafter defined) and the assets and business of the Company.
(b) At the Closing, Purchaser will execute and deliver to
Sellers a pledge agreement in the form of Exhibit B annexed hereto (the "GLD
Pledge Agreement").
(c) At the Closing, Purchaser will execute and deliver to
Sellers a security agreement in the form of Exhibit C annexed hereto (the "GLD
Security Agreement").
(d) At the Closing, Purchaser will cause the Company to
execute and deliver to Sellers a guaranty in the form of Exhibit D annexed
hereto (the "Guaranty").
(e) At the Closing, Purchaser will cause the Company to
execute and deliver to Sellers a pledge agreement in the form of Exhibit E
annexed hereto (the "ETI Pledge Agreement").
(f) At the Closing, Purchaser will cause the Company to
execute and deliver to Sellers a security agreement in the form of Exhibit F
annexed hereto (the "ETI Security Agreement").
(g) At the Closing, Purchaser will cause the Company to
execute and deliver to Sellers a collateral assignment of contracts in the form
of Exhibit G annexed hereto (the "Assignment").
(h) At the Closing, Purchaser will cause the Company to
execute and deliver to Sellers a release in the form of Exhibit H annexed hereto
(the "Release").
(i) At the Closing, Purchaser will cause the Company to
execute and to deliver to Sellers an indemnification agreement in the form of
Exhibit I annexed hereto (the "Indemnification
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Agreement"). The GLD Pledge Agreement, the GLD Security Agreement, the Guaranty,
the ETI Pledge Agreement, the ETI Security Agreement, the Assignment, the
Release and the Indemnification Agreement are sometimes hereinafter collectively
referred to as the "Related Agreements".
4. Representations and Warranties by Sellers. Each of the
Sellers jointly and severally represent and warrant to Purchaser as follows:
(a) Organization, Standing, Corporate Documents and
Subsidiaries. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York. The Company has full
corporate power and corporate authority to own, lease or operate all of its
properties and assets and to carry on its business as and where it is being
conducted. Sellers have delivered to Purchaser true and complete copies of (i)
the Company's certificate of incorporation and all amendments thereto (the
"Certificate of Incorporation"), certified by the Secretary of State of the
State of New York, and (ii) the by-laws (the "By-Laws") of the Company as
presently in effect, certified as true and correct by the Company's Secretary.
Except as otherwise set forth in Section 4(a) of the Disclosure Schedule dated
as of the date hereof and delivered herewith to Purchaser by Sellers and forming
a part of this Agreement (the "Disclosure Schedule"), no amendment or other
document relating to or affecting the Certificate of Incorporation has been
filed since the date of the Certificate of Incorporation delivered herewith, and
there are no proceedings by the shareholders of the Company, pending or to each
of the Sellers' knowledge, threatened, either: (i) for the liquidation or
dissolution of the Company, or (ii) threatening its existence. The Company does
not have any subsidiaries or affiliated companies and does not otherwise own any
shares of capital stock or any interest in, or control, directly or indirectly,
any other corporation, partnership, limited liability company, trust or other
entity, other than ETI Telecommunications Inc. (the "Other Company"), a New York
corporation wholly-owned by the Sellers, the name of which will be changed by
the Sellers as soon as practicable to a name that is not similar to the name of
the Company and that does not contain the acronym "ETI". Sellers agree that they
shall not incorporate any new corporation whose name contains the acronym "ETI."
Sellers represent that the existence of the Other Company will not affect the
ability of the Company to conduct its business or to exercise the Warrant
Documents. Sellers acknowledge that nothing contained in this Agreement shall be
construed as an assumption by Purchaser or the Company of any of the liabilities
of the Other Company. The Company has no equity or debt investment in any
corporation, partnership, limited liability company, trust or other entity.
(b) Execution, Delivery and Performance of Agreement;
Authority. Subject to Section 6 herein, and except as otherwise set forth in
Section 4(b) of the Disclosure Schedule: (i) neither the execution, delivery nor
performance of this Agreement by the Sellers will violate or conflict with or
result in a default under any provision of the Company's Certificate of
Incorporation
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or By-Laws or any mortgage, deed of trust, indebtedness, lease, license,
authorization, agreement, law, rule or regulation or any order, judgment or
decree to which the Company or either Seller is a party or by which any of them
or their respective property may be bound or affected; (ii) Sellers have the
full power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby, and this Agreement constitutes a valid and
binding obligation of Sellers, enforceable in accordance with its terms, except
as such enforceability may be limited by principles of public policy and subject
to the laws of general application relating to bankruptcy, insolvency and the
relief of debtors and to rules of law governing specific performance, injunctive
relief or other equitable remedies; and (iii) upon consummation of the
transactions contemplated by this Agreement and registration of the Shares in
the name of Purchaser in the stock records of the Company, the Purchaser will
acquire all of the rights of the Sellers to the Shares free and clear of any
Encumbrance or "adverse claim" (as such term is defined in Section 8-302 of the
Uniform Commercial Code as in effect in the State of New York ) assuming the
Purchaser acquires such Shares in good faith and without notice of any "adverse
claim."
(c) Capitalization. The authorized capital of the Company
consists of 200 Shares, no par value, all of which shares are issued and
outstanding. There are no options, warrants, calls, rights, commitments or
agreements of any character, written or oral, to which the Company, the Sellers
or any affiliate thereof is a party or by which any of them might be bound
obligating any of them to issue, deliver, sell, repurchase or redeem, or cause
to be issued, delivered, sold, repurchased or redeemed, any shares of the
capital stock of the Company or any other security of the Company.
(d) Ownership of the Shares. Each Seller is the owner, of
record and beneficially, of 100 Shares, free and clear of all Encumbrances. All
of the Shares have been duly authorized and validly issued, and are fully-paid
and non-assessable. The Shares are not subject to any preemptive rights,
rescission rights or rights of first refusal created by statute, the Certificate
of Incorporation or By-laws or any agreement to which the Company, the Sellers
or any affiliate thereof is a party or by which any of them might be bound. Upon
Closing, Sellers will transfer all of their right, title and interest in and to
the Shares to Purchaser subject to the provisions of the GLD Pledge Agreement.
(e) Warrant Documents. Sellers have delivered to Purchaser
true and complete copies of: (i) Warrant Agreement #2 to Purchase Common Stock
of Tel-Save Holdings, Inc., dated January 12, 1996, between the Company and
Tel-Save ("Warrant Agreement #2"); (ii) Warrant Agreement #3 to Purchase Common
Stock of Tel-Save, Holdings, Inc., dated January 12, 1996, between the Company
and Tel-Save ("Warrant Agreement #3"); (iii) Registration Rights Agreement #2,
dated as of January 12, 1996, between the Company and Tel-Save; and (iv)
Registration Rights Agreement #3, dated as of January 12, 1996, between the
Company and Tel-Save (collectively, the "Warrant Documents"). The
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Company has not granted to any party other than Tel-Save any right of first
refusal with respect to the shares of Common Stock of Tel-Save issuable upon
exercise of the Warrant Documents.
(f) Except as disclosed in Section 4(f) of the Disclosure
Schedule, to the best knowledge of Sellers, the Sellers have not received any
written notice of any cease and desist order, legal action, lawsuit, or legal
proceeding which, in the case of any of the foregoing, is currently pending
against the Company or any of its properties or rights before any court or by or
before any governmental body or arbitration board or tribunal, which would be
reasonably likely to have a material adverse effect on the Company's financial
condition or the ability of the Company to exercise the Warrant Documents.
(g) As of the Closing Date the Company does not have: (i) any
liability for borrowed money; or (ii) any liability for commissions due to sales
representatives relating to telecommunications customer accounts of the Company
in existence as of the Closing Date; provided, however, that Sellers are not
making any representation or warranty with respect to any amounts that the
Company may owe to Tel-Save. Purchaser acknowledges that: (x) Sellers are not
making any representation or warranty whatsoever in connection with the results
of operations or financial condition of the Company; and (y) except as
specifically set forth in this Section 4(g) or elsewhere in this Agreement,
Sellers are not making any representation or warranty whatsoever in connection
with the assets or liabilities of the Company.
(h) The Company has correctly and properly filed an election
under Section 1362 of the Internal Revenue Code of 1986, as amended (the "Code")
to be an S corporation, effective its first taxable year, and has filed its
Federal Tax Returns in a manner consistent with such status. To the knowledge of
the Sellers, the Company has continually complied with the qualification
requirements to be so treated as an S corporation. The Company has filed or
caused to be filed with the appropriate "Taxing Authorities" (as defined below)
all Tax Returns (as defined below) required to be filed by the Company before
the Closing Date (taking extensions of filing deadlines into account), and has
paid all Taxes shown thereon; all such Tax Returns were correct and complete in
all material respects; and all Taxes required to be withheld and paid over by
the Company before the Closing Date have been so withheld and paid over. No
assessment, deficiency, adjustment or other claim for any Taxes has been
asserted, or to the knowledge of the Sellers and the Company proposed, with
respect to any Tax Return of the Company, other than asserted claims which have
been resolved. There are no Encumbrances on the assets or properties of the
Company relating to or attributable to Taxes, other than Encumbrances for Taxes
not yet due and payable. Each Seller is a citizen of the United States, and will
provide the appropriate affidavit required by Section 1445(b) of the Code to
enable the Purchaser not to withhold a Tax under Section 1445(a) of the Code.
(i) Since July 31, 1996, neither the Sellers, nor any employee
or agent of the Company acting on behalf of the Company
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or at the request or direction of the Sellers, submitted to any long-distance
carrier other than Tel-Save in excess of 100 new orders per month for activation
of long-distance telephone service.
(j) The Company is the record and beneficial owner of the
Warrant Documents, free and clear of all Encumbrances (other than Encumbrances
specifically referred to in the Warrant Documents), and upon the sale of the
Shares pursuant to this Agreement, the Company shall have good and valid title
to the Warrant Documents, free and clear of all Encumbrances (other than
Encumbrances specifically referred to in the Warrant Documents).
(k) The Company has good and marketable title to all of the
property listed in Section 4(k) of the Disclosure Schedule free and clear of all
Encumbrances, except as disclosed in such Section 4(k) of the Disclosure
Schedule. Purchaser acknowledges and agrees that it is acquiring all of such
property in its present "as is" condition and that Sellers are making no
representation or warranty whatsoever as to the condition of such property.
Notwithstanding anything to the contrary contained in this Agreement, Purchaser
further acknowledges and agrees that Sellers are not making any representation
or warranty whatsoever that, as of the Closing Date, the Company owns any of the
assets and properties owned by the Company at any time prior to the Closing
Date, except for the Warrant Documents and the property listed in Section 4(k)
of the Disclosure Schedule.
(l) To the best of Sellers' knowledge, subject to Section 6
herein, and except as otherwise set forth in Section 4(l) of the Disclosure
Schedule, no material consents, authorizations, approvals, filings,
registrations or notices are required to be obtained, made or given in
connection with the execution, delivery and performance of this Agreement by
either Seller.
(m) To the best of Sellers' knowledge, Section 4(m) of the
Disclosure Schedule sets forth a list of all material written agreements to
which the Company is a party (either in its own name or in any assumed name) or
by which it is bound which (a) restrict the Company's ability to do business;
(b) create an obligation on behalf of the Company; or (c) create a financial
commitment or liability on behalf of the Company; provided, however, that such
list does not set forth, and Sellers shall have no obligation to disclose to
Purchaser, any of the following: (i) any Letter of Authorization from or
contract with any telecommunications customers of the Company; (ii) any
agreement pursuant to which the Company's only obligation is the payment of
money not in excess of $10,000 in the aggregate; (iii) any agreement pursuant to
which the Company has no obligations unless it elects to utilize services or
receive benefits after the Closing Date pursuant to such agreement; (iv) any
agreement terminable by the Company without penalty on 60 days' notice or less,
provided that the aggregate liability of the Company pursuant to all such
agreements described in this clause (iv) does not exceed $5,000 per month; or
(v) any tariff. Except as otherwise noted in Section 4(m) of the Disclosure
Schedule, Sellers have delivered to Purchaser true, correct and complete
10.30-7
copies of all agreements listed on such Section 4(m) of the Disclosure Schedule.
(n) Section 4(n) of the Disclosure Schedule is a print-out of
information provided to the Company by Tel-Save with respect to the
telecommunications customer accounts of the Company who have been billed for the
billing period ended on or about July 5, 1997. Notwithstanding anything to the
contrary contained in this Agreement, Purchaser acknowledges and agrees that
Sellers are not making any representation or warranty whatsoever with respect to
the accuracy of such information or otherwise regarding the telecommunications
customer accounts of the Company. As of the Closing Date, any telecommunications
customer accounts receivable of the Company shall remain the property of the
Company; provided, however, that Sellers are not making any representations or
warranties with respect to such accounts receivable.
5. Representations and Warranties by Purchaser. Purchaser
represents and warrants to Sellers as follows:
(a) Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida and
has full corporate power and corporate authority to enter into this Agreement,
the Promissory Notes, the GLD Pledge Agreement, the GLD Security Agreement, and
the agreements relating hereto and thereto and to carry out the transactions
contemplated hereby and thereby.
(b) Execution, Delivery and Performance of Agreements by
Purchaser. Neither the execution, delivery nor performance by Purchaser of this
Agreement, the Promissory Notes, the GLD Pledge Agreement, the GLD Security
Agreement and the agreements relating hereto and thereto will violate or result
in a default under any provision of Purchaser's certificate of incorporation or
by-laws or any mortgage, deed of trust, lease, agreement, law, rule or
regulation or any order, judgment or decree to which Purchaser is a party or by
which Purchaser may be bound or affected. All proceedings required to be taken
by Purchaser to authorize the execution, delivery and performance of this
Agreement, the Promissory Notes, the GLD Pledge Agreement, the GLD Security
Agreement and the agreements relating hereto and thereto have been properly
taken; and each of this Agreement, the Promissory Notes, the GLD Pledge
Agreement, the GLD Security Agreement and the agreements relating hereto and
thereto constitutes, or when executed and delivered to Sellers pursuant to this
Agreement will constitute, a valid and binding obligation of Purchaser,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by principles of public policy and subject to the
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and to rules of law governing specific performance, injunctive relief or
other equitable remedies.
(c) Execution, Delivery and Performance of Agreements by the
Company. Upon execution of this Agreement and delivery of the Shares by the
Sellers to the Purchaser as contemplated
10.30-8
hereby, the Purchaser shall cause the Company to authorize the execution,
delivery and performance of the Related Agreements to which the Company is a
party and the agreements relating thereto; and in reliance on the accuracy of
the representations and warranties of the Sellers contained herein, each of the
Related Agreements to which the Company is a party, when executed and delivered
to Sellers pursuant to this Agreement, will constitute a valid and binding
obligation of ETI, enforceable in accordance with its terms.
(d) Investment Intent. Subject to the terms of the GLD Pledge
Agreement, Purchaser will acquire the Shares for its own account for investment
and not with a view to distribution, resale, subdivision or fractionalization
thereof. Purchaser has no present plans to enter into any contract, undertaking,
agreement or arrangement to sell, distribute, transfer, assign, pledge, encumber
or otherwise dispose of the Shares. No other person has a direct or indirect
interest in the Shares being acquired by Purchaser pursuant to this Agreement.
Purchaser further acknowledges that, in reliance upon applicable exemptions, the
sale of the Shares has not been registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities laws. Accordingly, the Shares may
not be sold, pledged, hypothecated or otherwise transferred unless registered
under the Act and state securities laws, or exemptions from such registration
are available.
6. Consents and Approvals. Purchaser agrees that Purchaser
shall make all filings and registrations with, give all notices to, and obtain
all material consents, approvals and authorizations from, any governmental or
regulatory authority required in connection with the transactions contemplated
by this Agreement, regardless of whether Purchaser, Sellers or the Company are
legally obligated to make any such filings and registrations, give any such
notices or obtain any such consents, approvals or authorizations, including
without limitation any filings, registrations, notices, consents, approvals or
authorizations required by any public utility commission or public service
commission or by the Federal Communications Commission. Sellers acknowledge that
as of the date of this Agreement, Purchaser has not yet fully complied with the
first sentence of this Section 6. Notwithstanding anything to the contrary
contained in this Agreement: (i) except as set forth in Section 4(h), Sellers
are making no representations or warranties with respect to any governmental or
regulatory filings, registrations, notices, consents, approvals or
authorizations, and Sellers shall have no liability to Purchaser as a result of
any failure to make any such filings and registrations, give any such notices or
obtain any such consents, approvals or authorizations; and (ii) Sellers are
making no representations or warranties with respect to the present or past
compliance by the Company with any applicable laws, rules or regulations of any
governmental authority relating to the conduct of the business of the Company,
including without limitation any required filings, registrations, notices,
consents, approvals, authorizations or licenses required by any public utility
commission or public
10.30-9
service commission or by the Federal Communications Commission, and Sellers
shall have no liability to Purchaser for any present or past failure by the
Company to comply with any such laws, rules or regulations. Nothing contained in
this Section 6 shall preclude Sellers, at their option and upon three (3) days
prior written notice to Purchaser, from taking any action in order to secure
such filings, registrations, notices, consents, approvals or authorizations;
provided, that Purchaser shall reimburse Sellers for all reasonable costs
incurred by Sellers in taking such action. Purchaser agrees that it shall not
permit the Company to market telecommunications services in any jurisdiction
unless and until all filings, registrations, notices, consents, approvals and
authorizations required to be made, given or obtained with respect to such
jurisdiction shall have been so made, given and obtained.
7. Expenses. Subject to Section 6, each party will pay all
fees and expenses incurred by it in connection with this Agreement, the Related
Agreements and the transactions contemplated hereby and thereby, including but
not limited to fees of each party's respective counsel, provided, however, that,
except as otherwise provided in Section 6, all documentary, stamp, excise,
transfer, filing, recordation and similar taxes and fees (including all real
estate transfer taxes and conveyance and recording fees) imposed by the State of
New York or any political subdivision thereof on Sellers or the Company by
reason of the sale of the Shares pursuant to this Agreement, and any accrued or
outstanding counsel fees and disbursements of the Company and the Sellers, if
any, incurred in connection with this Agreement and the transactions
contemplated hereby will be borne by the Sellers.
8. Indemnification. (a) Sellers hereby jointly and severally
agree to indemnify and hold harmless the Purchaser and its affiliates,
shareholders, officers, directors, employees, agents, subsidiaries, successors
and assigns from, against and in respect of any and all loss, claim, liability,
damage, cost, expense, interest, award, judgment, fine and penalties (including
reasonable legal fees and expenses) suffered or incurred by them (sometimes
hereinafter a "Purchaser Loss") arising out of or resulting from: (i) any untrue
representation, breach of warranty or nonfulfillment of any covenant or
agreement by Sellers contained in this Agreement, the Disclosure Schedule, or in
any certificate or other document which confirms the representations and
warranties made herein; (ii) any liability to any vendor for the purchase of
goods delivered or services rendered prior to the Closing; (iii) any liability
for wages, employee benefits or severance payments relating to the period prior
to the Closing, and any liability for Workers' Compensation premiums due with
respect to wages paid prior to the Closing; (iv) any liability for Taxes payable
by the Company for taxable periods ending on or prior to the Closing Date or
which begin before and end after the Closing Date (with respect to which taxable
periods the Tax for which indemnification is hereby provided shall be computed
on the basis of items of income, gain, loss and deduction (or, if relevant,
sales, employment or transactions) as though the
10.30-10
taxable period ended at Closing), other than any liability for Taxes
attributable to (A) a transaction entered into by the Company after the Closing,
or (B) any election made by the Company or Purchaser after the Closing; and (v)
any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses (including without limitation legal fees and
expenses) incident to any of the foregoing or incurred in enforcing this
indemnity. It is specifically acknowledged and agreed that, except as
specifically set forth in Section 7 or in this Section 8(a), Sellers shall have
no liability or obligation whatsoever to Purchaser or the Company for any debt,
liability or obligation of the Company, direct or indirect, fixed, contingent or
otherwise, whether arising or existing before or after the Closing Date. Without
limiting the generality of the foregoing: (i) Sellers shall have no liability or
obligation whatsoever with respect to any amounts that the Company may owe to
Tel-Save; (ii) except as specifically set forth in Section 7 or in this Section
8(a), Sellers shall have no liability or obligation whatsoever with respect to
any contracts or agreements of the Company; and (iii) Purchaser and the Company
shall be solely liable for all such amounts, contracts and agreements.
(b) Purchaser hereby agrees to indemnify and hold Sellers
harmless from, against and in respect of any and all loss, claim, liability,
damage, cost, expense, interest, award, judgment, fine and penalties (including
reasonable legal fees and expenses) suffered or incurred by them arising out of
or resulting from: (i) any untrue representation, breach of warranty or
non-fulfillment of any covenant or agreement by Purchaser or the Company
contained in this Agreement, any Related Agreement, any agreement relating
hereto or thereto, or in any certificate, document or instrument delivered to
Sellers hereunder or thereunder; (ii) the failure to make any filing or
registration, give any notice or obtain any consent, approval or authorization
of any governmental or regulatory authority or of Tel- Save in connection with
the transactions contemplated by this Agreement; (iii) any debts, liabilities or
obligations of the Company, direct or indirect, fixed, contingent or otherwise,
whether arising or existing before or after the Closing Date; provided, however,
that this clause (iii) shall not apply to any Purchaser Loss for which Purchaser
is entitled to be indemnified hereunder; (iv) without limiting clause (iii), any
liability for Taxes relating to the Company for taxable periods beginning on or
after the Closing Date or ending after the Closing Date (except Taxes that
Purchaser is entitled to be indemnified by the Sellers as provided in clause
(iii) of Section 8(a) above), including any liability for Taxes attributable to
(A) a transaction entered into by the Company after the Closing, or (B) any
election made by the Company or Purchaser after the Closing; and (v) any and all
actions, suits, proceedings, claims, demands, assessments, judgments, costs and
expenses (including without limitation reasonable legal fees and expenses)
incident to any of the foregoing or incurred in enforcing this indemnity.
(c) Whenever any claim shall arise for indemnification
hereunder, the party entitled to indemnification (the
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"Indemnified Party") shall provide written notice to the other party (the
"Indemnifying Party") as soon as possible but in no event later than thirty (30)
days of becoming aware of any such claim to indemnification and, as
expeditiously as possible thereafter, the facts constituting the basis for such
claim. In connection with any claim giving rise to indemnity hereunder resulting
from or arising out of any claim or legal proceeding by a person who is not a
party to this Agreement, the Indemnifying Party, at its sole cost and expense
and upon written notice to the Indemnified Party, may assume the defense of any
such claim or legal proceeding with counsel reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall be entitled to participate in the
defense of any such action, with its counsel and at its own expense. If the
Indemnifying Party does not assume the defense of any such claim or litigation
resulting therefrom, the Indemnified Party may defend against such claim or
litigation in such manner as it may deem appropriate, provided, however, that
the Indemnified Party may not settle any such claim or litigation without the
prior written consent of the Indemnifying Party.
(d) Notwithstanding anything to the contrary contained herein,
neither Seller shall have any liability to the Purchaser hereunder unless and
until the aggregate amount of losses, liabilities, damages, costs and expenses
for which the Purchaser is entitled to be indemnified under this Section 8 shall
exceed Fifty Thousand Dollars ($50,000), at which point Sellers shall be
obligated to indemnify Purchaser only for such losses, liabilities, damages,
costs and expenses in excess of Fifty Thousand Dollars ($50,000) pursuant to
this Section 8.
(e) Notwithstanding anything to the contrary contained herein:
(i) in no event shall either Seller have any responsibility, obligation or
liability to indemnify Purchaser for any amount in excess of the amount of
principal actually paid to such Seller pursuant to such Seller's Promissory
Note; (ii) in no event shall the Sellers collectively have any responsibility,
obligation or liability to indemnify Purchaser for any amount in excess of an
aggregate of Three Million Five Hundred Thousand Dollars ($3,500,000); and (iii)
in no event shall the Purchaser have any responsibility, obligation or liability
to indemnify the Sellers for any amount in excess of Three Million Five Hundred
Thousand Dollars ($3,500,000); provided, however, that clause (ii) above, shall
not apply to Purchaser's obligation to indemnify Sellers for any non-fulfillment
by Purchaser or the Company of Section 11(f) below.
(f) All statements, representations, warranties, indemnities,
covenants and agreements made by Sellers in this Agreement shall expire six
months from the date of the Closing; provided, however, that the statements,
representations, warranties, indemnities, covenants and agreements made by
Sellers with respect to Taxes shall continue in full force and effect until the
expiration of the applicable statute of limitations. All statements,
representations, warranties, indemnities, covenants and agreements made by the
Purchaser in this Agreement shall expire five (5) years from the date of the
Closing;
10.30-12
provided, however, that the statements, representations, warranties,
indemnities, covenants and agreements made by Purchaser with respect to Taxes
shall continue in full force and effect until the expiration of the applicable
statute of limitations. The right to indemnity under this Section 8 shall
survive such expiration if the Indemnified Party shall have notified the
Indemnifying Party in accordance with Section 8(c) of its claim for indemnity
and of the facts giving rise to such right to indemnity before the expiration of
the representation or warranty.
9. Notices. Any and all notices or other communications
required or permitted to be given under any of the provisions of this Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or mailed by first class registered mail, return receipt requested, or
by commercial courier or delivery service, addressed to the parties at the
addresses set forth below (or at such other address as any party may specify by
notice to all other parties given as aforesaid):
(a) If to Sellers, to:
Xxxxxxx Xxxxxxxxxx
0000 Xxxxxx X
Xxxxxxxx, Xxx Xxxx 00000
and
Xxxxxxxx Xxxxxxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxxx Xxxxxxx, Esq.
Xxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxx., 00xx Xx.
Xxx Xxxx, Xxx Xxxx 00000
(b) If to Purchaser, to:
Group Long Distance, Inc.
0000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx, Xx.
President
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx X. Xxxxx, Esq.
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
10. Brokers. (a) Purchaser represents and warrants to Sellers
that Purchaser has not incurred any obligation or liability, contingent or
otherwise, for brokerage or finder's fees or agent's commissions or other like
payment in connection with this Agreement or the transactions contemplated
hereby. Purchaser agrees to indemnify and hold Sellers harmless against and in
respect of any such obligation or liability based on agreements, arrangements or
understandings claimed to have been made by Purchaser with any third party not
disclosed herein.
(b) Sellers represent and warrant to Purchaser, jointly and
severally, that neither Seller has incurred any obligation or liability,
contingent or otherwise, for brokerage or finder's fees or agent's commissions
or other like payment in connection with this Agreement or the transactions
contemplated hereby. Sellers, jointly and severally, agree to indemnify and hold
Purchaser harmless against and in respect of any such obligation or liability
based on agreements, arrangements or
10.30-13
understandings claimed to have been made by Sellers, or any one of them, with
any third party not disclosed herein.
11. Taxes.
(a) Any Tax Return that is required to be filed by the Company
after the Closing Date and which includes the Closing Date or a period prior
thereto (other than Tax Returns relating to taxable periods which begin on the
Closing Date) will be prepared by the Sellers and their advisors at the Sellers'
expense and provided to the Company (together with the payment of the Sellers'
Tax liability for Taxes due and owing by the Company attributable to the taxable
period or portion thereof up to the Closing) for review by the Company; and the
Company shall execute and file such Tax Return and pay any Tax shown thereon.
Any Tax Return to be delivered to the Purchaser by the Sellers (together with
the required Tax payment) shall be delivered at least 10 days prior to the due
date of such Tax Return (determined with regard to extensions). In determining
the Taxes attributable to the portion of a period up to the Closing (with
respect to a taxable period beginning before and ending after the Closing), the
Taxes shall be calculated on the basis of items of income, gain, loss and
deduction (or, if relevant, sales, employment or transactions) as though the
taxable year of the Company terminated at the Closing. In no event shall any
amendment to such a Tax Return be filed without the prior written consent of the
Sellers, which consent shall be given provided such amendment does not result,
in the judgment of Sellers' tax counsel, in any additional Tax liability to the
Sellers. In the event that the Company, Purchaser, and the Sellers cannot agree
as to the treatment of any particular item on a Tax Return prepared by the
Sellers, as required above, such Tax Return shall reflect the treatment of that
item desired by the Sellers absent a determination by a nationally recognized
accounting firm (not otherwise utilized by any of the parties hereto) which is
retained at the expense of the Company to the effect that there is no reasonable
basis for the treatment desired by the Sellers. In the event of such a
determination, however, the Sellers may at their expense obtain a determination
from another such nationally recognized accounting firm (not otherwise utilized
by any of the parties hereto) regarding such treatment, and, if the latter
concludes that there is a reasonable basis for such treatment, the Tax Return
shall reflect the treatment desired by the Sellers.
(b) The Sellers shall have full responsibility and discretion
in the handling, at the Sellers' expense, of any Tax Controversy with respect to
any item that would give rise to a payment of Tax for which the Sellers would be
liable, under Section 8 hereof, including an audit, a protest to the Appeals
Division of the IRS, any other administrative proceeding and litigation in Tax
Court or any other court of competent jurisdiction (a "Tax Controversy"),
involving a Tax Return of the Company, provided that with respect to any item
that would give rise to a payment of Tax for which the Sellers would be liable,
the Sellers each deliver to the Company (if requested by the Company) a written
notice acknowledging the indemnification liability under Section 8. In the
course of any Tax Controversy described in
10.30-14
the preceding sentence, the Company and Purchaser shall act in accordance with
the reasonable directions of the Sellers and shall take any position or other
action reasonably requested by the Sellers. In the event there is a dispute as
to the reasonableness of any direction or action requested by Sellers, the
resolution of such dispute shall be made in accordance with the last two
sentences of Section 11(a). With respect to any such handling of a Tax
Controversy by the Sellers, the Company shall be entitled to consult in all
matters of the Tax Controversy, to be kept informed, and to attend settlement
discussions and other conferences and meetings. If the Sellers decline
(following reasonable notice by the Company) to address a Tax Controversy
involving a Tax Return of the Company for a taxable period ending before or
which includes the Closing, the Company shall have full responsibility and
discretion in the handling of such Tax Controversy. The Sellers shall consult in
good faith with the Company and Purchaser before agreeing to any adjustment in
Taxes which would cause the Company to be liable for any Tax for which the
Sellers have not indemnified the Purchaser and the Company under Section 8.
(c) If the Sellers shall so request, Purchaser or the Company,
as appropriate, shall file an amendment to a Tax Return with respect to any
Taxes for any taxable period of the Company ending on or before the Closing
Date, provided that there exists a reasonable basis (if the parties disagree as
to whether there exists such a reasonable basis, the question shall be resolved
in a manner described in the last two sentences in paragraph 11(a)) for the
positions to be taken on such amended Tax Return. The Sellers shall consult in
good faith with the Company and Purchaser before the filing of any such
amendment which would cause the Company to be liable for any Tax for which the
Sellers have not indemnified the Purchaser and the Company under Section 8.
(d) Each of the parties hereto shall provide the other parties
with such assistance as may reasonably be requested by such other parties in
connection with the preparation of any Tax Return (including an amendment
thereof), any audit or other examination by any taxing authority, and any
judicial or administrative proceedings relating to the liability of the Company
for Taxes with respect to taxable periods of the Company ending on or before the
Closing Date or which include the Closing, and each of the parties shall retain,
until the expiration of all applicable statutes of limitation (including
extensions), and provide the other parties with copies of, any records or
information which may be relevant to such return, claim for refund, audit or
examination, proceedings or determination.
(e) For purposes of this Agreement: (i) "Taxes" means all
taxes imposed by any United States federal, state or local taxing authority or
by any foreign taxing authority, including, but not limited to, income, gross
receipts, excise, property, sales, transfer, payroll, ad valorem, value added,
withholding, social security, national insurance (or other
10.30-15
similar contributions or payments), and franchise taxes, including any interest,
penalty, or additions thereto; (ii) "Tax Return" means any return, declaration,
report, claim for refund, information return or statement relating to Taxes,
including any schedule or attachment thereto and any amendment thereof; and
(iii) "Taxing Authority" means any governmental authority responsible for the
imposition or collection of any Tax.
(f) Purchaser and the Company shall not make any election
under Section 338 of the Code with respect to the sale of Shares pursuant to
this Agreement without the prior written consent of the Sellers.
12. Miscellaneous. (a) This Agreement and the Disclosure
Schedule and Exhibits hereto constitute the entire agreement of the parties with
respect to the subject matter hereof and may not be modified, amended or
terminated except by a written agreement specifically referring to this
Agreement signed by all of the parties hereto. This Agreement together with the
Disclosure Schedule and Exhibits hereto contains all of the representations,
warranties and indemnities relied upon by Sellers and Purchaser in entering into
this Agreement and the agreements relating hereto, and consummating the
transactions contemplated hereby and thereby. No party hereto may maintain any
action in respect of or relating to this Agreement or the agreements relating
hereto, or the transactions contemplated hereby or thereby, based on any
representation, written or oral, that is not contained in this Agreement
together with the Disclosure Schedules and Exhibits hereto.
(b) No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
of the same or similar nature.
(c) This Agreement shall be binding upon and inure to the
benefit of each corporate party hereto, and its successors and assigns, and each
individual party hereto and his heirs, personal representatives, successors and
assigns.
(d) The paragraph headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said paragraphs.
(e) For a period of one year after the Closing (or, with
respect to matters addressed in Sections 8 and 11, for such longer periods as
may be necessary under those Sections), each party hereto shall cooperate, shall
take such further action and shall execute and deliver such further documents as
may be reasonably requested by any other party in order to carry out the
provisions and purposes of this Agreement.
(f) This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed one original.
(g) This Agreement and all amendments thereof shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be
10.30-16
performed entirely therein, without regard to conflicts of law rules or
principles.
(h) If any provision of this Agreement shall be held invalid
or unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.
(i) Each party hereby irrevocably consents to the sole and
exclusive jurisdiction and venue of the courts of the State of New York located
in New York County and of any Federal court located in New York County in
connection with any action or proceeding arising out of or relating to this
Agreement, or the breach thereof. Each party hereby irrevocably waives any
objection, including without limitation any objection to the laying of venue or
based on the grounds of forum non conveniens, which such party may now or
hereafter have to the bringing of any action or proceeding in such jurisdiction
in respect of this Agreement.
(j) Without limiting the generality of the last sentence of
Section 4(k), Purchaser acknowledges and agrees that any and all cash on deposit
in the Company's bank account at Xxxxxxx Xxxxx (Xxxxxxx Xxxxx Account Number
00000000) and in any other bank accounts of the Company (collectively, the
"Transition Accounts") shall be distributed to Sellers immediately prior to the
Closing and, therefore, as of the Closing, such cash on deposit is not the
property of the Company and is the sole property of Sellers. Sellers shall
retain sole ownership, signing authority and control over the Transition
Accounts, and neither Purchaser nor the Company shall withdraw any funds from,
write any checks on, or take any other action with respect to, the Transition
Accounts. Purchaser shall, and shall cause the Company to, cooperate with
Sellers in connection with Sellers' actions with respect to the Transition
Accounts. As soon as practicable after the Closing, Sellers shall either close
the Transition Accounts or transfer such Transition Accounts to their individual
names.
(k) Purchaser and Sellers each acknowledge and agree that any
controversy which may arise under this Agreement would be based upon difficult
and complex issues and therefore, Purchaser and Sellers each agree that any
court proceeding arising out of any such controversy will be tried in a court of
competent jurisdiction by a judge sitting without a jury.
(l) This Agreement shall be construed and enforced without the
aid of any canon or rule of law requiring construction against the party drawing
or causing this Agreement to be drawn.
(m) Purchaser agrees that for a period of fifteen (15) days
after the Closing, Sellers shall be entitled to the continued use of their
respective offices at the Company's premises at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx,
Xxx Xxxx (including the use of telephones, copiers and other office supplies and
equipment); provided, however, that: (i) Sellers shall not use
10.30-17
such offices to market long-distance telecommunications services or solicit the
Company's customers; (ii) Sellers shall not use such offices to hold themselves
out as representatives or agents of the Company; and (iii) Sellers shall be
responsible for any expenses associated with the use of such offices in excess
of $1,000 upon written notice from the Company to Sellers reasonably detailing
such expenses.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
GROUP LONG DISTANCE, INC.
By:
----------------------------
Xxxxxx X. Xxxxx, Xx.
President
SELLERS:
---------------------------
Xxxxxxx Xxxxxxxxxx
---------------------------
Xxxxxxxx Xxxxxxxxx
10.30-18
INDEX OF EXHIBITS
Exhibit A Promissory Note
Exhibit B GLD Pledge Agreement
Exhibit C GLD Security Agreement
Exhibit D Guaranty
Exhibit E ETI Pledge Agreement
Exhibit F ETI Security Agreement
Exhibit G Assignment of Contracts
Exhibit H Release
Exhibit I Indemnification Agreement
10.30-19
Exhibit A
PROMISSORY NOTE
$3,500,000 August 11, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, the undersigned, GROUP LONG DISTANCE, INC., a
Florida corporation having its principal office at 1451 West Cypress Creek Road,
Suite 200, Ft. Xxxxxxxxxx, Xxxxxxx 00000 ("Maker"), hereby promises to pay to
the order of [XXXXXXX XXXXXXXXXX] [XXXXXXXX XXXXXXXXX], an individual residing
at [1002 Xxxxxx X, Xxxxxxxx, Xxx Xxxx 00000] [1259 Xxxx 0xx Xxxxxx, Xxxxxxxx,
Xxx Xxxx 00000] ("Payee"), at such address or at such other place as shall be
designated by Payee in writing, the principal amount of Three Million Five
Hundred Thousand Dollars ($3,500,000) in lawful money of the United States of
America and in immediately available funds, payable in full, together with all
accrued and unpaid interest thereon, on August 11, 1998.
Maker further promises to pay interest, in like money and funds, on the
unpaid principal amount hereof outstanding from time to time to Payee at the
address set forth above, at a rate of 10% per annum (calculated on the basis of
a 360-day year of 30-day months), payable monthly on the first day of each
calendar month, commencing September 1, 1997, at maturity and upon payment
(including prepayment) in full of the unpaid principal amount hereof, including
upon acceleration of the principal balance of this Note pursuant to
10.30-20
Section 2 below. After maturity (whether as stated, by acceleration or
otherwise), interest on the unpaid principal amount hereof shall be payable on
demand at the rate of 21% per annum. If at any time the rate of interest
provided for in this Note would exceed the maximum rate of interest permitted by
any applicable law, then the rate provided for in this Note shall be suspended
and there shall be charged, in lieu thereof, the maximum rate of interest
permissible under applicable law.
1. Prepayment. Maker may at any time, in its sole discretion,
prepay in whole or in part the principal amount of, and accrued interest on,
this Note without penalty or premium of any kind. Maker shall be required to
prepay the principal amount of this Note from time to time to the full extent of
any proceeds from the sale of any capital stock of Tel-Save (as defined below)
issued upon the exercise of either of the Warrants (as defined below), after
deducting the purchase price paid by Maker for such shares upon such exercise.
2. Events of Default. (a) Upon the occurrence of any of the
following:
(i) Maker shall fail to pay any of the principal of or
interest on this Note when due and payable, whether at maturity thereof
or by acceleration or otherwise, which failure shall continue for a
period of twenty (20) business days from the date thereof; or
(ii) Maker shall fail to perform in any material
respect any other covenant, agreement or promise contained in this Note
or in the GLD Pledge Agreement or the GLD Security Agreement (each as
defined in Section 4 below) or in the Stock Purchase Agreement, dated
as of August 11, 1997, among Xxxxxxx Xxxxxxxxxx, Xxxxxxxx Xxxxxxxxx and
Maker, and, if such default is of a nature that it is susceptible of
being cured, such default shall continue uncured for a period of ten
(10) days after receipt of written notice to Maker from Payee stating
the specific default or defaults; provided, however, that if Payee
determines that such default is not of a nature that it is susceptible
of being cured, then Payee shall have given Maker three (3) days prior
written notice of such determination; or
(iii) Eastern Telecommunications Incorporated, as
guarantor of Maker's obligations under this Note ("Guarantor"), shall
materially fail to perform
10.30-2
any covenant, agreement or promise contained in the Guaranty, dated as
of August 11, 1997, made by Guarantor in favor of Payee and [Xxxxxxxx
Xxxxxxxxx] [Xxxxxxx Xxxxxxxxxx], and, if such default is of a nature
that it is susceptible of being cured, such default shall continue
uncured for a period of ten (10) days after receipt of written notice
to Guarantor from Payee stating the specific default or defaults
(provided, however, that if Payee determines that such default is not
of a nature that it is susceptible of being cured, then Payee shall
have given Maker three (3) days prior written notice of such
determination), or if an Event of Default shall occur under the Pledge
Agreement, dated as of August 11, 1997, made by Guarantor in favor of
Payee and [Xxxxxxxx Xxxxxxxxx] [Xxxxxxx Xxxxxxxxxx] (after giving
effect to any applicable grace periods contained therein), or under the
Security Agreement, dated as of August 11, 1997, made by Guarantor in
favor of Payee and [Xxxxxxxx Xxxxxxxxx] [Xxxxxxx Xxxxxxxxxx] (after
giving effect to any applicable grace periods contained therein), or
under the Collateral Assignment of Contracts, dated as of August 11,
1997, made by Guarantor in favor of Payee and [Xxxxxxxx Xxxxxxxxx]
[Xxxxxxx Xxxxxxxxxx] (after giving effect to any applicable grace
periods contained therein);
(iv) Maker shall fail to pay any of the principal of
or interest on the Promissory Note, dated the date hereof, in the
principal amount of Three Million Five Hundred Thousand Dollars
($3,500,000), made by Maker in favor of [Xxxxxxxx Xxxxxxxxx] [Xxxxxxx
Xxxxxxxxxx] (after giving effect to any applicable grace periods
contained therein);
(v) Maker or Guarantor shall (a) become insolvent or
generally fail to pay, or admit in writing its inability to pay, its
debts as they become due, subject to applicable grace periods, if any,
whether at stated maturity or otherwise, (b) voluntarily cease to
conduct its business in the ordinary course, (c) commence any
proceeding or file any petition or answer under any liquidation or
reorganization with creditors or any other relief under any bankruptcy,
reorganization, arrangement, insolvency, or other proceeding, whether
Federal or state, relating to the relief of debtors, (d) acquiesce in
the appointment of a receiver, trustee, custodian or liquidator for
itself or a substantial portion of its property, assets or business or
effect a plan or other arrangement with its creditors, (e) admit the
material allegations of a petition filed against it in any bankruptcy,
reorganization, arrangement, insolvency or other proceeding, whether
Federal or state, relating to the relief of debtors, or (f) take action
to effectuate any of the foregoing;
(vi) involuntary proceedings or any involuntary
petition shall be commenced or filed against Maker or Guarantor under
any bankruptcy, insolvency or similar law or seeking the dissolution,
liquidation or reorganization of Maker or Guarantor or the appointment
of a receiver, trustee, custodian or liquidator for Maker or Guarantor
or any writ, judgment, warrant of attachment, execution or similar
process, shall be issued or levied against a substantial part of
Maker's or Guarantor's
10.30-22
assets and any such proceedings or petition shall not be dismissed, or
such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within sixty
(60) days after commencement, filing or levy;
(vii) Guarantor shall sell, assign, transfer or
otherwise convey (other than pursuant to the Purchase Agreement or any
of the Related Agreements) any interest in, or waive, alter, modify,
change the terms of, cancel or terminate: (A) Warrant Agreement #2 to
Purchase Common Stock of Tel-Save Holdings, Inc., dated January 12,
1996, between Tel-Save Holdings, Inc. ("Tel-Save") and Guarantor, or
Warrant Agreement #3 to Purchase Common Stock of Tel-Save Holdings,
Inc., dated January 12, 1996, between Tel-Save and Guarantor
(collectively, the "Warrants"); or (B) Registration Rights Agreement
#2, dated as of January 12, 1996, by and between Tel-Save and
Guarantor, or Registration Rights Agreement #3, dated as of January 12,
1996, by and between Tel-Save and Guarantor (collectively, the
"Registration Rights Agreements") (the Warrants and the Registration
Rights Agreements are sometimes hereinafter referred to collectively as
the "Warrant Documents") (provided, however, that Guarantor may agree
to a thirty (30) day extension of Warrant Agreement #2 referred to
above); or
(viii) Maker shall sell or otherwise transfer more
than seventy-five percent (75%) of its assets or business, or Guarantor
shall sell or otherwise transfer all or any substantial part of its
assets or business, or Maker shall sell or otherwise transfer a
controlling interest in the capital stock of Guarantor, or there shall
occur a change of control of Maker, which shall mean a change in a
majority of the members of the Board of Directors of Maker;
then, in any of those events, after giving effect to any applicable grace period
provided above (each such event being hereinafter referred to as an "Event of
Default"), this Note, although not yet due, shall, upon written notice of
acceleration from the Payee of this Note to Maker (or automatically in the case
of an Event of Default described in paragraph (v) or (vi) above) become and
immediately be due and payable both as to principal and accrued interest,
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived, anything contained in this Note to the contrary
notwithstanding.
(b) Notwithstanding anything contained in Section 2(a) above,
the grace periods provided in paragraph (i) of such Section 2(a) shall only be
available to Maker with
10.30-23
respect to the first two defaults by Maker under such paragraph (i), and the
third default (or any subsequent default) by Maker pursuant to such paragraph
(i) shall be immediately deemed an Event of Default without the benefit of any
grace period.
3. Late Payment Charges. (a) If Maker fails to pay in full, as
and when due (after giving effect to the grace period provided in Section 2
above), any amount payable under this Note, then, in addition to all other
amounts payable under this Note, and without limiting any other remedy of Payee
under this Note, Maker shall pay to Payee, as a late payment charge (the "Late
Charge") the amount set forth below, which amount may, at the option of Payee,
be added to the principal amount hereof:
(a) if such failure shall occur at any time prior to August
11, 1998, then the amount of the Late Charge shall be Five Hundred
Thousand Dollars ($500,000); and
(b) if such failure shall occur on or after August 11, 1998,
or if any failure that occurs prior to August 11, 1998 shall not have
been cured prior to August 11, 1998, then the amount of the Late Charge
shall be One Million Dollars ($1,000,000).
4. GLD Pledge Agreement; GLD Security Agreement. This Note is
secured by a Pledge Agreement, dated as of August 11, 1997 (the "GLD Pledge
Agreement"), made by Maker in favor of Payee and [Xxxxxxxx Xxxxxxxxx] [Xxxxxxx
Xxxxxxxxxx] covering certain collateral, all as more particularly described and
provided therein, and is entitled to the benefits thereof. This Note is also
secured by a Security Agreement, dated as of August 11, 1997 (the "GLD Security
Agreement"), made by Maker
10.30-24
in favor of Payee and [Xxxxxxxx Xxxxxxxxx] [Xxxxxxx Xxxxxxxxxx] covering certain
collateral, all as more particularly described and provided therein, and is
entitled to the benefits thereof.
5. Obligations Unconditional. The obligations to make the
payments provided for in this Note are absolute and unconditional and not
subject to any defense, set-off, counterclaim, rescission, recoupment or
adjustment whatever, whether or not the holder of this Note is a holder in due
course. Without limiting the generality of the foregoing, Maker shall not be
entitled to set off against any amounts payable under this Note any claims of
any nature whatsoever which Maker may assert against Payee, including without
limitation any claims arising under or relating to (i) the Stock Purchase
Agreement, dated as of August 11, 1997, by and among Xxxxxxx Xxxxxxxxxx,
Xxxxxxxx Xxxxxxxxx and Maker (the "Purchase Agreement"), or (ii) any of the
Related Agreements (as defined in the Purchase Agreement), or (iii) any
agreements or documents delivered in connection with the Purchase Agreement or
any of the Related Agreements. No forbearance, indulgence, delay or failure by
Payee to exercise any right or remedy with respect to this Note, nor any course
of dealing between Maker and Payee, shall operate as a waiver, nor as an
acquiescence in any default, nor shall any single or partial exercise of any
right or remedy preclude any other or further exercise thereof or the exercise
of any other right or remedy. This Note may not be modified or discharged
orally, but only in a writing duly executed by Maker and Payee.
6. Waiver. Maker hereby expressly waives (i) any presentment,
demand, protest or notice of any kind now or hereafter required by law in
connection with this Note and (ii) in any litigation (whether arising out of or
relating to this Note or otherwise) in
10.30-25
which Maker and Payee shall be adverse parties, the right to trial by jury and
the right to interpose any defense based upon any statute of limitations or any
claims of estoppel or laches.
7. Costs of Collection. In the event that Payee shall refer
this Note to an attorney for collection, Maker agrees to pay, in addition to the
unpaid principal amount and interest, all the reasonable costs and expenses
incurred in attempting or effecting collection hereunder, including reasonable
attorneys' fees and expenses, whether or not suit is instituted, which amounts
may, at the holder's option, be added to the principal amount hereof.
8. Remedies. No right or remedy conferred upon Payee herein is
intended to be exclusive of any other right or remedy, and each and every such
right or remedy shall be cumulative and shall be in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. Without limiting the generality of the
foregoing, if this Note shall not be paid when due (after giving effect to any
applicable grace periods), whether at the due date hereof, by acceleration or
otherwise, Payee shall not be required to resort to any particular right or
remedy or to proceed in any particular order of priority, and Payee shall have
the right at any time and from time to time, in any manner and in any order, to
enforce its rights and remedies, or any of them, as it deems appropriate in the
circumstances.
9. Binding Effect. This Note shall be binding upon Maker and
its successors and assigns and shall inure to the benefit of Payee and his
successors, endorsees
10.30-26
and assigns. The provisions of this Note are intended to be for the benefit of
the holder, from time to time, of this Note and shall be enforceable by such
holder.
10. Payment. If any payment of principal or interest on this
Note becomes due and payable on a Saturday, Sunday or any other day on which
commercial banks in New York City are authorized or required by law to close,
the due date of such payment shall be extended to the next succeeding business
day, without penalty or premium of any kind. If the last day of any grace period
provided for in this Note falls on a Saturday, Sunday or any other day on which
commercial banks in New York City are authorized or required by law to close,
then such grace period shall be extended to the next succeeding business day.
11. Notices. Any and all notices or other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when personally delivered or mailed by first
class registered mail, return receipt requested, or by commercial courier or
delivery service, addressed to the parties at the addresses set forth below (or
at such other address as any party may specify by notice to all other parties
given as aforesaid):
(a) If to Maker, to:
Group Long Distance, Inc.
0000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx, Xx.
President
10.30-26
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx X. Xxxxx, Esq.
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(b) If to Payee, to:
[Xxxxxxx Xxxxxxxxxx] [Xxxxxxxx Xxxxxxxxx]
[1002 Avenue K] [1259 Xxxx 0xx Xxxxxx]
Xxxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxxx Xxxxxxx, Esq.
Xxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
12. No Implied Waiver. No waiver of any breach or default
hereunder shall be considered valid unless in writing and signed by Payee, and
no such waiver shall be deemed a waiver of any subsequent breach or default of
the same or similar nature.
13. Paragraph Headings. The paragraph headings contained
herein are for the purposes of convenience only and are not intended to define
or limit the contents of said paragraphs.
14. Governing Law. This Note shall be governed by and
construed and enforced in accordance with the laws of the State of New York
applicable to promissory notes issued and delivered within such State, without
giving effect to choice of law principles of such State.
10.30-28
15. Severability. If any provision of this Note shall be held
invalid or unenforceable, such invalidity or unenforceability shall attach only
to such provision and shall not in any manner affect or render invalid or
unenforceable any other severable provision of this Note, and this Note shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.
16. Consent To Jurisdiction; Service of Process. Maker hereby
irrevocably consents to the sole and exclusive jurisdiction and venue of the
courts of the State of New York located in New York County and of any Federal
court located in New York County in connection with any action or proceeding
arising out of or relating to this Note, or the breach thereof. Maker hereby
irrevocably waives any objection, including without limitation any objection to
the laying of venue or based on the grounds of forum non conveniens, which Maker
may now or hereafter have to the bringing of any action or proceeding in such
jurisdiction in respect of this Note.
17. Instrument For Payment of Money Only. Maker acknowledges
that this Note is an instrument for the payment of money only.
18. Waiver of Right to Jury Trial. Maker acknowledges and
agrees that any controversy which may arise under this Note would be based upon
difficult and complex issues and therefore, Maker agrees that any court
proceeding arising out of any such controversy will be tried in a court of
competent jurisdiction by a judge sitting without a jury.
10.30-29
19. Rights Cumulative. All rights and remedies of Payee
pursuant to this Note or otherwise, shall be cumulative and non-exclusive, and
may be exercised singularly or concurrently.
20. No Construction Against Drafting Party. This Note shall be
construed and enforced without the aid of any canon or rule of law requiring
construction against the party drawing or causing this Note to be drawn.
IN WITNESS WHEREOF, Maker has caused this instrument to be executed by
its duly authorized officer by authority of its Board of Directors on the date
first written above.
GROUP LONG DISTANCE, INC.
By:
---------------------------
Xxxxxx X. Xxxxx, Xx.
President
10.30-30
Exhibit B
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of August 11, 1997, made by GROUP LONG
DISTANCE, INC., a Florida corporation ("Pledgor"), in favor of XXXXXXX
XXXXXXXXXX, an individual residing at 0000 Xxxxxx X, Xxxxxxxx, Xxx Xxxx 00000
("Oustatcher"), and XXXXXXXX XXXXXXXXX, an individual residing at 0000 Xxxx 0xx
Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Goldstone"), and XXXXXXX XXXXXXXXXX, as agent
(in such capacity, "Agent") for Oustatcher and Goldstone (Oustatcher and
Goldstone are hereinafter sometimes referred to collectively as "Pledgees").
W I T N E S S E T H:
WHEREAS, Pledgor and Pledgees have entered into a Stock Purchase
Agreement, dated as of August 11, 1997 (the "Purchase Agreement"), pursuant to
which Pledgees have agreed to sell to Pledgor all of the issued and outstanding
capital stock of Eastern Telecommunications Incorporated, a New York corporation
(the "Company");
WHEREAS, in connection with the Purchase Agreement, Pledgor has
executed and delivered to each Pledgee a promissory note, of even date herewith,
in the principal amount of Three Million Five Hundred Thousand Dollars
($3,500,000) (collectively, the "Promissory Notes");
WHEREAS, Pledgees would be unwilling to execute and deliver the
Purchase Agreement and consummate the transactions contemplated thereby but for
the execution and delivery by Pledgor of this Pledge Agreement;
NOW, THEREFORE, in order to induce Pledgees to consummate the
transactions contemplated by the Purchase Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgor agrees as follows:
1. Pledge and Security Interest. Pledgor hereby grants to
Pledgees a security interest in the following property (collectively, the
"Pledged Collateral"):
(a) Two hundred (200) shares of the Common Stock, no par
value, of the Company (the "Pledged Shares"), and the certificates or the
instruments, if any, representing the Pledged Shares and all dividends,
interest, cash, instruments and other property from time to time received,
receivable, or otherwise distributed or distributable in respect of or in
exchange for any or all of the Pledged Shares;
(b) all additional securities, financial assets or instruments
received by Pledgor or payable to Pledgor by the Company with respect to the
Pledged Shares or otherwise issued or issuable by the Company to Pledgor, and
all dividends, interest, cash, instruments, and other property from time to time
received, receivable, or otherwise distributed or distributable in respect of or
in exchange for any or all of such additional securities, financial assets or
instruments; and
10.30-31
(c) all proceeds of any of the foregoing, including without
limitation, all investment property or financial assets.
2. Security for Obligations. The security interest granted by
this Agreement secures the payment and performance by Pledgor of all of the
following (collectively, the "Obligations"): (i) the principal amount of each
Promissory Note when due and the interest thereon, when due and payable,
according to the terms of the respective Promissory Note; (ii) all other sums
and charges which may at any time be due and payable in accordance with, or
under the terms of, the Promissory Notes; and (iii) all other amounts which may
at any time be due and payable by Pledgor to either Pledgee pursuant to the
Purchase Agreement, any Related Agreement (as defined in the Purchase Agreement)
or any document, instrument or agreement delivered pursuant thereto or in
connection therewith. The security interest granted herein shall continue in
full force and effect until all of the Obligations are satisfied in full;
provided, however, that such security interests shall terminate upon payment in
full of all of the amounts described in clauses (i) and (ii) of Section 1 above,
as long as, at such time, there is not an unsatisfied amount then due and
payable by Pledgor to either Pledgee pursuant to clause (iii) above.
3. Appointment of Agent. Each Pledgee hereby makes,
constitutes and appoints Agent his attorney-in-fact, with full power of
substitution, to take possession of and hold the Pledged Collateral in
accordance with the terms and conditions of this Agreement, and to take all such
action and to execute and deliver all such instruments, notices, demands and
other documents with respect to this Agreement in the name of and on behalf of
each Pledgee as fully and with the same effect as if such action were taken and
such instruments, notices, demands and other documents were executed by such
Pledgee, and Agent hereby accepts such appointment. If Oustatcher is unable to
serve as Agent due to death, disability, incapacity or for any other reason,
then Goldstone shall serve as successor Agent. If both Oustatcher and Goldstone
are unable to serve as Agent due to death, disability, incapacity or for any
other reason, the representatives or successors of Oustatcher and Goldstone
shall appoint a successor Agent.
4. Delivery of Pledged Collateral.
(a) All certificates or instruments representing or evidencing
the Pledged Collateral shall be held by Agent or shall be delivered to and held
by Agent pursuant hereto and shall be duly endorsed to Agent or shall be
otherwise in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to Pledgees. Upon the occurrence of an Event
of Default, Pledgees shall have the right to register in their names or the
names of their nominees any or all of the Pledged Collateral.
(b) This Agreement shall terminate and all certificates or
instruments representing or evidencing the Pledged Collateral shall be promptly
delivered to Pledgor upon payment in full of the Obligations. Pledgees will take
all action reasonably requested
10.30-32
by Pledgor to transfer the certificates and instruments representing the Pledged
Collateral to Pledgor, to register the certificates and instruments in Pledgor's
name and any other action necessary to effectuate this Section.
5. Further Assurances. Pledgor agrees that at any time and
from time to time, at the expense of Pledgor, Pledgor will promptly execute and
deliver all further instruments and documents, and take all further action that
Pledgees may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Pledgees to
exercise and enforce the rights and remedies hereunder with respect to any of
the Pledged Collateral and to any property subsequently constituting Pledged
Collateral pursuant to the terms hereof.
6. Representations and Warranties. Pledgor represents and
warrants to Pledgees that:
(a) Pledgor is the record and beneficial owner of the Pledged
Collateral, it has all right, title and interest in and to the Pledged
Collateral, and Pledgor will have all right, title and interest in and to any
property subsequently constituting Pledged Collateral pursuant to the terms
hereof, in each case free and clear of any liens, claims, security interests,
and other encumbrances and free and clear of any warrants, options, and other
rights of third parties;
(b) the pledge, assignment and delivery of the Pledged
Collateral pursuant to this Agreement creates a valid first lien on and a first
perfected security interest in such Pledged Collateral and the proceeds thereof,
subject to no prior lien or any agreement purporting to grant to any third party
a lien on the property or assets of Pledgor which would include the Pledged
Collateral;
(c) Pledgor is a corporation duly formed, validly existing,
and in good standing under the laws of the State of Florida, and the execution,
delivery, and performance of this Pledge Agreement by Pledgor has been duly
authorized by all necessary action.
In no event shall Pledgor be deemed to be in breach of any of the
representations or warranties contained in this Section 6 if such representation
or warranty would not have been false but for a breach of any representation or
warranty made by Pledgees in the Purchase Agreement.
7. Voting Rights. So long as no Event of Default (as defined
below) shall have occurred and be continuing:
(a) Pledgor shall be entitled to exercise any and all of its
voting and other consensual rights pertaining to the Pledged Collateral which it
owns or any part thereof for any purpose not inconsistent with the terms of this
Agreement or the Purchase Agreement; provided, however, that Pledgor shall give
Pledgees at least fifteen (15) days prior written
10.30-33
notice of the manner in which it intends to exercise any such right, or the
reasons for refraining from exercising a right to vote on any matter on which
Pledgor is entitled to vote with respect to such Pledged Collateral, in either
case if such exercise or refrain from exercising such right to vote would have a
material adverse effect on the value of the Pledged Collateral; and, provided
further that Pledgor shall not exercise any such right or refrain from
exercising such right to vote if Pledgees advise Pledgor, in Pledgees'
reasonable judgment, such action would have a material adverse effect on the
value of the Pledged Collateral or any part thereof.
(b) Agent shall promptly execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies and other instruments as
Pledgor may reasonably request for the purpose of enabling Pledgor to exercise
the voting and other rights which it is entitled to exercise pursuant to
subsection (a) above.
8. Covenants.
(a) Until all of the Obligations are paid and performed in
full, Pledgor agrees that it will not:
(i) sell, assign, transfer, grant any option with respect to,
or otherwise convey any interest in any of the Pledged Collateral;
(ii) modify in any respect whatsoever any of the terms of or
rights relating to the Pledged Collateral, including reclassification or
recapitalization thereof, without the prior written consent of Agent; or
(iii) create or permit to exist any lien, security interest,
or other charge or encumbrance upon or with respect to any of the Pledged
Collateral.
(b) Pledgor further agrees that, until all of the Obligations
are paid and performed in full, Pledgor will not cause or permit the Company to:
(i) declare or make any payment or distribution on, or
acquire, any of its outstanding capital stock, or make any other payment to its
stockholders;
(ii) issue any additional shares of its authorized but
unissued capital stock;
(iii) authorize the issuance of any additional classes or
series of capital stock or any other securities;
(iv) incur any indebtedness for borrowed money, purchase any
assets or property on an installment or other deferred payment basis, enter into
capitalized leases or sell and lease back any property or assets;
10.30-34
(v) guarantee or otherwise become liable for the obligation of
any other person or entity, except for the Guaranty given to Pledgees in
connection with the Promissory Notes; or
(vi) sell, assign, transfer or otherwise convey any interest
in, or waive, alter, modify, change the terms of, cancel or terminate: (A)
Warrant Agreement #2 to Purchase Common Stock of Tel-Save Holdings, Inc., dated
January 12, 1996, between Tel-Save Holdings, Inc. ("Tel-Save") and the Company,
or Warrant Agreement #3 to Purchase Common Stock of Tel-Save Holdings, Inc.,
dated January 12, 1996, between Tel-Save and the Company (collectively, the
"Warrants"); or (B) Registration Rights Agreement #2, dated as of January 12,
1996, by and between Tel-Save and the Company, or Registration Rights Agreement
#3, dated as of January 12, 1996, by and between Tel-Save and the Company
(collectively, the "Registration Rights Agreements") (the Warrants and the
Registration Rights Agreements are sometimes hereinafter referred to
collectively as the "Warrant Documents"); provided, however, that the Company
may agree to a thirty (30) day extension of Warrant Agreement #2 referred to
above.
(c) Pledgor further agrees that, until all of the Obligations are paid
and performed in full, Pledgor will, and will cause the Company to, before the
respective expiration dates, or any extensions thereof, of the Warrants:
(i) exercise and enforce, to the fullest extent possible, all
of the material rights, privileges and/or remedies available to the Company
pursuant to the Warrant Documents; and
(ii) perform and comply with in all material respects, on a
timely basis, all of the duties and obligations of the Company under the Warrant
Documents, and take all action necessary to ensure that the vesting
contingencies referred to in paragraph 1(b)(2) of each of the Warrants are met
on a timely basis so that the Company's rights under each of the Warrants shall
be fully vested.
9. Agent Appointed Attorney-in-Fact. To effectuate the rights
and remedies of Pledgees under this Agreement, Pledgor hereby irrevocably
appoints Agent as Pledgor's attorney-in-fact, with full power of substitution,
in the name of Pledgor or in the name of Pledgees, and from time to time, after
an Event of Default, in Agent's discretion to take any action and to execute any
instrument which Agent may deem necessary or advisable to accomplish the
purposes of this Agreement. In his capacity as such attorney-in-fact, Agent
shall not be liable for any acts or omissions, nor for any error of judgment or
mistake of fact or law, but only for bad faith, willful misconduct or gross
negligence. The power of attorney granted to Agent pursuant to this Section 9 is
coupled with an interest and shall be irrevocable for as long as the security
interests granted herein continue in full force and effect, as provided in
Section 2 above. Thereafter, this power of attorney shall be null and
10.30-35
void and Pledgees will deliver, at their own expense, any certificate or
documentation reasonably requested by Pledgor to this effect.
10. Agent May Perform. If Pledgor fails to perform any
agreement contained herein, and, if such default is of a nature that it is
susceptible of being cured, such failure to perform shall continue uncured for a
period of ten (10) days after receipt of written notice to Pledgor from Agent
stating the specific non-performance, then Agent may himself perform, or cause
performance of, such agreement, and the reasonable expenses of Agent incurred in
connection therewith shall be payable by Pledgor under Section 15 hereof;
provided, however, that if Pledgees determine that such default is not of a
nature that it is susceptible of being cured, then Pledgees shall have given
Pledgor three (3) days prior written notice of such determination.
11. Agent and Pledgees' Duties. The powers conferred on Agent
and Pledgees hereunder are solely to protect their interests in the Pledged
Collateral and shall not impose any duty to exercise any such powers. Except for
the safe custody of any Pledged Collateral in its possession and the accounting
for moneys actually received by them hereunder, Agent and Pledgees shall not
have any duty hereunder as to any Pledged Collateral or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Pledged Collateral. Without limiting the generality of the
foregoing, neither Agent nor Pledgees shall have any responsibility for
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged Collateral, whether
or not Agent or Pledgees have or are deemed to have knowledge of such matters.
12. Events of Default. Pledgor shall be in default under this
Agreement upon the occurrence of one or more of the following (each, an "Event
of Default"):
(i) If there occurs an Event of Default (after giving effect
to any applicable grace periods) as defined in: (A) either Promissory Note, (B)
the Security Agreement of even date herewith, made by Pledgor in favor of
Oustatcher and Goldstone, (C) the Security Agreement of even date herewith, made
by the Company in favor of Oustatcher and Goldstone, (D) the Pledge Agreement of
even date herewith, made by the Company in favor of Oustatcher and Goldstone, or
(E) the Collateral Assignment of Contracts of even date herewith, made by the
Company in favor of Oustatcher and Goldstone; or if Pledgor or the Company shall
be in default of, or shall fail to comply with, in any material respect, any of
its covenants, agreements or obligations contained in the Guaranty of even date
herewith made by the Company in favor of Oustatcher and Goldstone, or any other
document, instrument, agreement or contract executed by Pledgor or the Company
evidencing, securing or otherwise relating to the Obligations or any of them;
(ii) If any statement, representation or warranty made in this
Agreement or contained in any exhibit, statement, certificate or other document
executed or delivered pursuant to or in connection with this Agreement shall
have been incorrect in any material
10.30-36
respect when made, unless Pledgees shall not have been materially prejudiced
thereby; provided, however, that Pledgees shall have given three (3) days prior
written notice to Pledgor of such incorrect statement, representation or
warranty;
(iii) If Pledgor shall be in default of, or shall fail to
comply with, in any material respect, any of its covenants, agreements or
obligations contained in this Agreement and, if such default is of a nature that
it is susceptible of being cured, such default shall continue uncured for a
period of ten (10) days after receipt of written notice to Pledgor from Pledgees
stating the specific default or defaults; provided, however, that if Pledgees
determine that such default is not of a nature that it is susceptible of being
cured, then Pledgees shall have given Pledgor three (3) days prior written
notice of such determination; or
(iv) If the Pledged Collateral or any rights therein shall be
subject to a judgment in excess of $2,000,000.
13. Remedies Upon Default. Upon the occurrence of an Event of
Default:
(i) Pledgees may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to them, all the rights and remedies of a secured party on
default under the Uniform Commercial Code as in effect in the State of New York
(the "Code") or under the applicable laws of any other jurisdiction and
agreements and also may, without notice except as specified below, sell the
Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, brokers' board or elsewhere, for cash, on credit,
or for future delivery, and upon such other terms as Pledgees may deem
commercially reasonable. Pledgor agrees that at least ten days' notice to
Pledgor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Pledgees
shall not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given. Pledgees may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned.
(ii) Any and all cash proceeds received by Pledgees in respect
of any collection from, or other realization upon, all or any part of the
Pledged Collateral, in the discretion of Pledgees, may be held by Pledgees as
collateral for, and/or then or at any time thereafter applied (after payment of
any amounts payable to Pledgees pursuant to Section 15 hereof) in whole or in
part by Pledgees against, all or any part of the Obligations in such order as
Pledgees shall elect. Any surplus of such cash or cash proceeds held by Pledgees
and remaining after payment in full of all the Obligations shall be paid over to
Pledgor or to whomsoever may be lawfully entitled to receive such surplus.
14. Private Sale. Pledgor acknowledges and recognizes that
Pledgees may be unable to effect a public sale of all or a part of the Pledged
Collateral and may be
10.30-37
compelled to resort to one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire the
Pledged Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. Pledgor acknowledges that any such private
sales may be at prices and on terms less favorable to Pledgees than those of
public sales, and agrees that such private sales shall be deemed to have been
made in a commercially reasonable manner and that Pledgees have no obligation to
delay sale of any Pledged Collateral to permit the issuer thereof to register it
for public sale under the Securities Act of 1933, as from time to time amended,
even if the issuer is willing to do so.
15. Indemnity and Expenses. Pledgor agrees to indemnify and
hold Pledgees harmless from, against and in respect of any and all loss,
liability, damage, cost or expense (including reasonable attorneys' fees and
expenses) suffered or incurred by Pledgees under or by reason of this Agreement
(including, without limitation, enforcement of this Agreement). Pledgor will
upon demand pay to Pledgees the amount of any and all expenses, including the
reasonable fees and expenses of counsel and of any experts and agents, which
Pledgees may incur in connection with (i) the enforcement of this Agreement,
(ii) the custody or preservation of, collection from, or other realization upon,
any of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of Pledgees hereunder, or (iv) the failure by Pledgor to perform or
observe any of the provisions hereof.
16. No Delay; Single or Partial Exercise Permitted. No delay
or omission on the part of Pledgees in exercising any rights or remedies
contained herein shall operate as a waiver of such right or remedy or of any
other right or remedy, and no single or partial exercise of any right or remedy
shall preclude any other or further exercise thereof, or the exercise of any
other right or remedy. No waiver of any rights and remedies hereunder shall be
deemed made by Pledgees unless in writing and duly executed. A waiver of any
right or remedy on any one occasion shall not be construed as a bar or waiver of
any right or remedy on future occasions, and no delay, omission, waiver or
single or partial exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties hereto.
17. Rights Cumulative. All rights and remedies of Pledgees
pursuant to this Agreement shall be cumulative and non-exclusive, and may be
exercised singularly or concurrently.
18. Severability. In the event that any provision of this
Agreement is deemed to be invalid by reason of the operation of any law, or by
reason of the interpretation placed thereon by any court or any other
governmental body or regulatory authority, this Agreement shall be construed as
not containing such provision and the invalidity of such provision shall not
affect the validity of any other provisions hereof, and any and all other
provisions hereof which otherwise are lawful and valid shall remain in full
force and effect.
10.30-37
19. Notices. Any and all notices or other communications
required or permitted to be given under any of the provisions of this Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or mailed by first class registered mail, return receipt requested, or
by commercial courier or delivery service, addressed to the parties at the
addresses set forth below (or at such other address as any party may specify by
notice to all other parties given as aforesaid):
If to Pledgor, to:
Group Long Distance, Inc.
0000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx, Xx.
President
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx X. Xxxxx, Esq.
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Agent or Pledgees, to:
Xxxxxxx Xxxxxxxxxx
0000 Xxxxxx X
Xxxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxxx Xxxxxxx, Esq.
Xxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
20. Continuing Security Interest. This Agreement creates a
continuing security interest in the Pledged Collateral and shall (a) be binding
upon Pledgor and its successors and assigns, and (b) inure to the benefit of
Pledgees and their heirs, personal representatives, successors, transferees and
assigns. The execution and delivery of this Agreement shall in no manner impair
or affect any other security (by endorsement or otherwise) for the payment or
performance of the Obligations and no security taken hereafter as security for
payment or performance of the Obligations shall impair in any manner or
10.30-39
affect this Agreement or the security interest granted hereby, all such present
and future additional security to be considered as cumulative security. Any of
the Pledged Collateral may be released from this Agreement without altering,
varying, or diminishing in any way this Agreement or the security interest
granted hereby as to the Pledged Collateral not expressly released, and this
Agreement and such security interest shall continue in full force and effect as
to all of the Pledged Collateral not expressly released.
21. Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof, supersedes
any previous agreements or understandings among the parties with respect to such
subject matter, and may not be modified, amended or terminated except by a
written agreement specifically referring to this Agreement signed by all of the
parties hereto.
22. Captions. The headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
23. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which, when taken together, shall be one and the same instrument.
24. Survival of Agreement. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of the Promissory Notes and shall continue in full force and effect
until the Obligations are paid and performed in full.
25. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely therein, without regard to conflicts
of law rules or principles.
26. Jurisdiction and Venue. Each party hereby irrevocably
consents to the sole and exclusive jurisdiction and venue of the courts of the
State of New York located in New York County and of any Federal court located in
New York County in connection with any action or proceeding arising out of or
relating to this Agreement, or the breach thereof. Each party hereby irrevocably
waives any objection to the laying of venue in New York County or based on the
grounds of forum non conveniens, which such party may now or hereafter have to
the bringing of any action or proceeding in such jurisdiction in respect of this
Agreement.
27. Waiver of Right to Jury Trial. Pledgees and Pledgor each
acknowledge and agree that any controversy which may arise under this Agreement
would be based upon difficult and complex issues and therefore, Pledgees and
Pledgor each agree that any court proceeding arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting without a
jury.
28. No Construction Against Drafting Party. This Agreement
shall be construed and enforced without the aid of any canon or rule of law
requiring construction against the party drawing or causing this Agreement to be
drawn.
10.30-40
IN WITNESS WHEREOF, Pledgor, intending to be legally bound, has
executed this Agreement as of the date first above written.
GROUP LONG DISTANCE, INC.
By:
-------------------------------
Xxxxxx X. Xxxxx, Xx.
President
-----------------------------------
Xxxxxxx Xxxxxxxxxx
-----------------------------------
Xxxxxxxx Xxxxxxxxx
10.30-41
Exhibit C
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of August 11, 1997, made by GROUP LONG
DISTANCE, INC., a Florida corporation having an office at 0000 Xxxx Xxxxxxx
Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 ("Debtor"), in favor of
XXXXXXX XXXXXXXXXX, an individual residing at 0000 Xxxxxx X, Xxxxxxxx, Xxx Xxxx
00000 ("Oustatcher"), and XXXXXXXX XXXXXXXXX, an individual residing at 0000
Xxxx 0xx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Goldstone"), and XXXXXXX XXXXXXXXXX,
as agent (in such capacity, "Agent") for Oustatcher and Goldstone (Oustatcher
and Goldstone are hereinafter sometimes referred to collectively as "Secured
Party").
W I T N E S S E T H:
WHEREAS, Oustatcher, Goldstone and Debtor have entered into a Stock
Purchase Agreement, dated as of August 11, 1997 (the "Purchase Agreement"),
pursuant to which Oustatcher and Goldstone have agreed to sell to Debtor all of
the issued and outstanding capital stock of Eastern Telecommunications
Incorporated, a New York corporation ("ETI");
WHEREAS, in connection with the Purchase Agreement, Debtor has executed
and delivered to each of Oustatcher and Goldstone a promissory note, of even
date herewith, in the principal amount of $3,500,000 (collectively, the
"Promissory Notes");
WHEREAS, Oustatcher and Goldstone would be unwilling to execute and
deliver the Purchase Agreement and consummate the transactions contemplated
thereby but for the execution and delivery by Debtor of this Security Agreement
to secure the payment and performance of Debtor's obligations under the
Promissory Notes;
NOW, THEREFORE, in order to induce Oustatcher and Goldstone to
consummate the transactions contemplated by the Purchase Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Security Interest. In order to secure the performance and payment of
the Obligations (as defined below), Debtor hereby grants to Secured Party a
security interest in all property of Debtor, whether now owned or hereafter
acquired, and all additions and accessions thereto, including, without
limitation, the property described below:
1.1 Machinery, Equipment and Inventory. All of Debtor's machinery,
equipment and inventory and other goods, wherever located, and all additions and
accessions thereto or replacements thereof (collectively, the "Tangible
Collateral");
1.2 Accounts, General Intangibles. All of Debtor's accounts, contract
rights, chattel paper, instruments, documents and general intangibles, and all
additions and
10.30-42
accessions thereto and replacements thereof, including, but not limited to, all
licenses, franchises, permits and authorizations heretofore or hereafter granted
or issued to Debtor under federal, state or local laws which permit or pertain
to the operation of the business of Debtor, and all agreements relating to the
operation of the business of Debtor, copyrights, patents, trademarks, trade
names, trade styles, goodwill and going concern value (collectively, the
"Intangible Collateral");
1.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 1.1 and 1.2 above; and
1.4 Books and Records. All of the books and records pertaining to the
property described in Sections 1.1, 1.2 and 1.3 above.
All of the property described above is referred to collectively as the
"Collateral." The security interest of Secured Party in the Collateral shall be
superior and prior to all other liens, claims, encumbrances and security
interests (collectively, "Liens"), except for Permitted Liens (as defined in
Section 4.1 below).
2. Obligations Secured. The Collateral secures the payment and
performance by Debtor of all of the following (collectively, the "Obligations"):
(i) the principal amount of each Promissory Note when due and the interest
thereon, when due and payable, according to the terms of the respective
Promissory Note; (ii) all other sums and charges which may at any time be due
and payable in accordance with, or under the terms of, the Promissory Notes; and
(iii) all other amounts which may at any time be due and payable by Debtor to
either Secured Party pursuant to the Purchase Agreement, any Related Agreement
(as defined in the Purchase Agreement) or any document, instrument or agreement
delivered pursuant thereto or in connection therewith. The security interests
granted herein shall continue in full force and effect until all of the
Obligations are satisfied in full; provided, however, that such security
interests shall terminate upon payment in full of all of the amounts described
in clauses (i) and (ii) above, as long as, at such time, there is not due and
payable by Pledgor to either Pledgee any of the amounts described in clause
(iii) above.
3. Appointment of Agent. Each Secured Party hereby makes, constitutes
and appoints Agent his attorney-in-fact, with full power of substitution, to
take all such action and to execute and deliver all such instruments, notices,
demands and other documents with respect to this Security Agreement in the name
of and on behalf of each Secured Party as fully and with the same effect as if
such action were taken and such instruments, notices, demands and other
documents were executed by such Secured Party, and Agent hereby accepts such
appointment. If Oustatcher is unable to serve as Agent due to death, disability,
incapacity or for any other reason, then Goldstone shall serve as successor
Agent. If both Oustatcher and Goldstone are unable to serve as Agent due to
death, disability, incapacity or for any other reason, the representatives or
successors of Oustatcher and Goldstone shall appoint a successor Agent.
10.30-43
4. Representations and Warranties. Debtor hereby represents and
warrants to Secured Party as follows:
4.1 Ownership of Collateral. Debtor is the owner of all of the
Collateral, except the portion thereof consisting of after-acquired
property, and Debtor will be the owner of such after-acquired property,
free from any Liens, except for Permitted Liens. For purposes of this
Security Agreement, "Permitted Liens" means (A) liens for taxes not yet
delinquent; (B) statutory inchoate liens in connection with workmen's
compensation, unemployment insurance, or other social security
obligations; (C) mechanic's, xxxxxxx'x, materialman's, landlord's,
carrier's, or other similar liens arising in the ordinary course of
business with respect to obligations that are not due; (D) any
purchase-money lien or security interest to a person financing the
purchase of assets, goods or equipment if such lien or security
interest encumbers only the specific assets, goods or equipment so
purchased; and (E) Liens described on Schedule 1 attached hereto.
4.2 Places of Business. The chief executive office of Debtor
is located at 0000 Xxxx Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx,
Xxxxxxx 00000 and Debtor does not conduct business at any other
location. All of the Tangible Collateral and the books and records of
Debtor are kept at such location. Debtor shall not, without the prior
written consent of Secured Party, change the location of Debtor's chief
executive office, or books and records, or any Tangible Collateral.
Debtor shall give Secured Party at least 15 days' prior notice in the
event Debtor commences operations or causes any Tangible Collateral to
be located in any location other than the chief executive office
specified above.
4.3 Financing Statements. Except for the financing statements
of Secured Party, and except for financing statements with respect to
the Liens described on Schedule 1 hereto, no financing statement
covering any Collateral or any proceeds thereof is on file in any
public office.
4.4 Intangible Collateral. The Intangible Collateral
represents bona fide and existing indebtedness, obligations,
liabilities, rights and privileges owed or belonging to Debtor to
which, to the best of Debtor's knowledge, there is no valid defense,
set-off or counterclaim against Debtor and in connection with which
there is no default with respect to any payment or performance on the
part of Debtor, or, to the best of Debtor's knowledge, any other party.
4.5 Tangible Collateral. All Tangible Collateral at all times
shall be considered personal property.
In no event shall Debtor be deemed to be in breach of any of the representations
or warranties contained in this Section 4 if such representation or warranty
would not have been
10.30-44
false but for a breach of any representation or warranty made by Secured Party
in the Purchase Agreement.
5. Affirmative Covenants. Until all of the Obligations are paid and
performed in full, Debtor agrees that it will:
5.1 Taxes. Pay promptly when due all taxes, levies,
assessments and governmental charges upon and relating to any of the
property, income or receipts of Debtor or otherwise for which Debtor is
or may be liable.
5.2 Insurance. At its sole expense, keep the Collateral
insured against loss or damage by insurance policies which shall be in
such form, with such companies and in such amounts as may be reasonably
satisfactory to Secured Party.
5.3 Tangible Collateral.
5.3.1 Good Repair. Keep the Tangible Collateral in
good working order and repair and make all necessary
replacements thereof and renewals thereto so that the value
and operating efficiency thereof at all times shall be
materially maintained and preserved.
5.3.2 Insurance Requirements. Maintain the Tangible
Collateral at all times in accordance with the requirements of
all insurance carriers which provide insurance with respect to
such Tangible Collateral so that such insurance shall remain
in full force and effect.
5.3.3 Certificates of Title. Subject to any Permitted
Liens, upon the request of Agent (i) promptly deliver to Agent
all certificates of title pertaining to the Tangible
Collateral and (ii) take all actions reasonably requested by
Secured Party to cause the Lien granted to Secured Party
hereunder to be noted on such certificates of title.
5.3.4 Use of Collateral. Use the Tangible Collateral
in material compliance with all statutes, regulations,
ordinances, requirements and regulations and all judgments,
orders, injunctions and decrees applicable thereto, and all
other federal and state laws.
5.4 Intangible Collateral.
5.4.1 Payments. Make all payments and perform all
acts reasonably necessary to maintain and preserve the
Intangible Collateral, including, without limitation, filing
of documents, renewals or other information with any
governmental or regulatory authority or any other entity.
10.30-45
5.4.2 Delivery of Instruments. Subject to any
Permitted Liens, upon the request of Agent, promptly deliver
to Agent the original executed copies of all instruments which
constitute part of the Intangible Collateral, together with
such endorsements, assignments and other agreements as Agent
may request in order to perfect the security interests created
pursuant to this Security Agreement (collectively, the
"Security Interests").
5.4.3 Accurate Records. At all times keep accurate
and complete records in all material respects of payment and
performance by Debtor and other Persons of their respective
obligations with respect to the Intangible Collateral and
permit Secured Party or any of its agents to call at Debtor's
place of business without hindrance or delay to inspect,
audit, check or make extracts from the books, records,
correspondence or other data relating to the Intangible
Collateral.
5.4.4 Verification of Indebtedness. Upon request of
Agent after the occurrence and during the continuation of an
Event of Default (after giving effect to any applicable grace
periods), permit Agent himself, at any time, in the name of
Secured Party or Debtor, to verify directly with the obligors
the indebtedness due Debtor on any account or other item of
Intangible Collateral.
5.4.5 Defaults, Other Claims. Promptly inform Agent
of any default in payment or performance by Debtor or any
other person of any obligation with respect to the Intangible
Collateral or of claims made by others in regard to the
Intangible Collateral, if either could have a material adverse
effect on the business of Debtor.
5.5 Collection of Proceeds. Collect the proceeds of
indebtedness owing to Debtor by any person under any instrument or by
any account debtor with respect to any account, contract right, chattel
paper or general intangible.
5.6 Financing Statements; Further Assurances. Concurrently
with the execution of this Security Agreement, and from time to time
hereafter as requested by Agent, execute and deliver to Agent such
financing statements, continuation statements, termination statements,
amendments to any of the foregoing and other documents, in form
reasonably satisfactory to Secured Party, as Secured Party may require
to perfect and continue in effect the Security Interests, to carry out
the purposes of this Security Agreement and to protect Secured Party's
rights hereunder. Debtor, upon demand, shall pay the cost of filing all
such financing statements, continuation statements, termination
statements, amendments to any of the foregoing and other documents.
6. Negative Covenants. Until all of the Obligations are paid and
performed in full, Debtor agrees that it will not sell, lease, assign or
otherwise dispose of any of the
10.30-46
Collateral, except in the ordinary course of business and except for property
which is not material to the continued operation of Debtor's business.
7. Protection of Collateral. In the event of any failure of Debtor to
(i) maintain in force and pay for any insurance or bond which Debtor is required
to provide pursuant to this Security Agreement, (ii) keep the Tangible
Collateral in good repair and operating condition, (iii) keep the Collateral
free from all Liens except for Permitted Liens, (iv) pay when due all taxes,
levies and assessments on or in respect of the Collateral, (v) make all payments
and perform all acts on the part of Debtor to be paid or performed with respect
to any of the Collateral, including, without limitation, all expenses of
protecting, storing, warehousing, insuring, handling and maintaining the
Collateral or (vi) keep fully and perform promptly any other of the obligations
of Debtor under this Security Agreement, then, in any such event, Agent, at its
option, after three (3) days prior written notice to Debtor of such failure, may
(but shall not be required to) procure and pay for such insurance, place such
Collateral in good repair and operating condition, pay or contest or settle such
Liens or taxes or any judgments based thereon or otherwise make good any other
aforesaid failure of Debtor. Debtor shall reimburse Agent immediately upon
demand for all sums paid or advanced on behalf of Debtor for any such purpose,
together with all costs, expenses and attorneys' fees paid or incurred by Agent
in connection therewith and interest at the rate of 21% per annum on all sums so
paid or advanced from the date of such payment or advancement until repaid to
Agent. All such sums paid or advanced by Agent, with interest thereon,
immediately upon payment or advancement thereof, shall be deemed to be part of
the Obligations secured hereby.
8. Event of Default. Debtor shall be in default under this Security
Agreement upon the occurrence of one or more of the following (each, an "Event
of Default"):
8.1 Default under other Agreements. If there occurs an Event
of Default (after giving effect to any applicable grace periods) as
defined in: (A) either Promissory Note, (B) the Pledge Agreement of
even date herewith, made by Debtor in favor of Secured Party, (C) the
Security Agreement of even date herewith, made by the Company in favor
of Oustatcher and Goldstone, (D) the Pledge Agreement of even date
herewith, made by the Company in favor of Oustatcher and Goldstone, or
(E) the Collateral Assignment of Contracts of even date herewith, made
by the Company in favor of Oustatcher and Goldstone; or if Debtor or
the Company shall be in default of, or shall fail to comply with, any
of its covenants, agreements or obligations contained in the Guaranty
of even date herewith made by the Company in favor of Oustatcher and
Goldstone, or any other document, instrument, agreement or contract
executed by Debtor or the Company evidencing, securing or otherwise
relating to the Obligations or any of them.
8.2 Incorrect Statement, Representation or Warranty. If any
statement, representation or warranty made in this Security Agreement
or contained in any
10.30-47
exhibit, statement, certificate or other document executed or delivered
pursuant to or in connection with this Security Agreement shall have
been incorrect in any material respect when made, unless Secured Party
shall not have been materially prejudiced thereby; provided, however,
that the Secured Party shall have given three (3) days prior written
notice to Debtor of such incorrect statement, representation or
warranty.
8.3 Breach of Covenants. If Debtor fails to comply, in any
material respect, with any of its covenants or agreements contained in
this Security Agreement when and as such compliance is due and, if such
default is of a nature that it is susceptible of being cured, such
default shall continue uncured for a period of ten (10) days after
receipt of written notice to Debtor from Secured Party stating the
specific default or defaults; provided, however, that if Secured Party
determines that such default is not of a nature that it is susceptible
of being cured, then Secured Party shall have given Debtor three (3)
days prior written notice of such determination.
8.4 Proceedings Against the Collateral. If the Collateral or
any rights therein shall be subject to any judgment in excess of Two
Million Dollars ($2,000,000).
9. Remedies Upon Default. Upon the occurrence of an Event of Default:
9.1 Rights of Secured Party. Secured Party shall have all of
the rights and remedies of a secured party under the New York Uniform
Commercial Code (the "UCC") and under the applicable law of any other
jurisdiction, including without limitation any jurisdiction where any
of the Collateral is located, and all other rights and remedies
accorded to Secured Party at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Debtor and to collect
all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than 10 days prior to such
proposed action shall constitute reasonable and fair notice of such
action. To the extent permitted by applicable law, Secured Party may
postpone or adjourn any such sale from time to time by announcement at
the time and place of sale stated in the notice of sale or by
announcement of any adjourned sale, without being required to give a
further notice of sale. Any such sale may be for cash or, unless
prohibited by applicable law, upon such credit or installment terms as
Secured Party shall determine. To the extent permitted by applicable
law, Debtor shall be credited with the net proceeds of such sale only
when such proceeds actually are received by Secured Party. Despite the
consummation of any such sale, Debtor shall remain liable for any
deficiency on the Obligations which remains outstanding following any
such sale.
9.2 Assembly of Collateral. Upon the request of Agent, Debtor
shall assemble and make the Collateral available to Agent at a place
designated by Agent.
10.30-48
9.3 Proceeds. Debtor shall hold all proceeds of the Collateral
collected by Debtor in trust for Secured Party, and promptly upon
receipt thereof, turn over such proceeds to Secured Party in the exact
form in which they were received.
9.4 Other Rights. Secured Party, at its election, and without
notice to Debtor, may:
9.4.1 Terminate Right of Collection. Terminate the
right of Debtor to collect the proceeds described in Section
9.3.
9.4.2 Notification. Notify the obligors under any
instruments and the account debtors of any account, contract
right, chattel paper or general intangible to make all
payments directly to Agent.
9.4.3 Collection of Payments. Demand, xxx for,
collect or receive, in the name of Debtor or Secured Party,
any money or Property payable or receivable on any item of
Collateral.
9.4.4 Settlement. Settle, release, compromise,
adjust, xxx upon or otherwise enforce any item of Collateral
as Secured Party may determine.
9.4.5 Mail of Debtor; Endorsement of Checks. For the
purpose of enforcing Secured Party's rights under this
Security Agreement, receive and open mail addressed to Debtor,
and endorse notes, checks, drafts, money orders, documents of
title or other forms of payment on behalf and in the name of
Debtor.
10. Power of Attorney. To effectuate the rights and remedies of Secured
Party under this Security Agreement, Debtor hereby irrevocably appoints Agent as
Debtor's attorney in-fact, with full power of substitution, in the name of
Debtor or in the name of Secured Party, to:
10.1 Execution of Financing Statements. Execute and file from
time to time financing statements, continuation statements, termination
statements and amendments thereto, covering the Collateral, in form
satisfactory to Secured Party.
10.2 Execution of Other Documents. Take all action and execute
all documents reasonably necessary to enable Secured Party to obtain
and enjoy the full rights and benefits granted to Secured Party
hereunder to the extent permitted by law.
The power of attorney granted pursuant to this Section 10 is coupled with an
interest and shall be irrevocable until all of the Obligations have been paid
and performed in full. Upon the fulfillment of all of the Obligations, this
power of attorney shall be null and void and
10.30-49
Secured Party will deliver, at its own expense, any certificate or documentation
reasonably requested by Debtor to this effect.
11. Certain Agreements of Debtor.
11.1 Waiver of Notice. Debtor hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 above, all other notices, demands
or protests to which Debtor otherwise might be entitled by law (and
which lawfully may be waived) with respect to this Security Agreement,
the Obligations and the Collateral.
11.2 Rights of Secured Party. Debtor agrees that Secured Party
(i) shall have no duty as to the collection or protection of the
Collateral or any income thereon, (ii) may exercise the rights and
remedies of Secured Party with respect to the Collateral without resort
or regard to other security or sources for payment and (iii) shall not
be deemed to have waived any of the rights or remedies granted to
Secured Party hereunder unless such waiver shall be in writing and
shall be signed by Secured Party. Debtor and Secured Party acknowledge
their intent that, upon the occurrence of an Event of Default (after
giving effect to any applicable grace periods), Secured Party shall
receive, to the fullest extent permitted by law and governmental
policy, all rights necessary or desirable to obtain, use or sell the
Collateral, and to exercise all remedies available to Secured Party
under the Promissory Notes and the UCC or under the applicable law of
any other jurisdiction, including without limitation any jurisdiction
where any of the Collateral is located. Debtor and Secured Party
further acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that affect
in any manner Secured Party's rights of access to, or use or sale of,
the Collateral, or the procedures necessary to enable Secured Party to
obtain such rights of access, use or sale, Secured Party and Debtor
shall amend this Security Agreement, in such manner as Secured Party
reasonably shall request, in order to provide Secured Party such rights
to the greatest extent possible consistent with then applicable law and
governmental policy.
11.3 No Delay: Single or Partial Exercise Permitted. No delay
or omission on the part of Secured Party in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. No
waiver of any rights and remedies hereunder shall be deemed made by
Secured Party unless in writing and duly executed. A waiver of any
right or remedy on any one occasion shall not be construed as a bar or
waiver of any right or remedy on future occasions, and no delay,
omission, waiver or single or partial exercise of any right or remedy
shall be deemed to establish a custom or course of dealing or
performance between the parties hereto.
10.30-50
12. Rights Cumulative. All rights and remedies of Secured Party
pursuant to this Security Agreement or otherwise, shall be cumulative and
non-exclusive, and may be exercised singularly or concurrently.
13. Severability. In the event that any provision of this Security
Agreement is deemed to be invalid by reason of the operation of any law, or by
reason of the interpretation placed thereon by any court or any other
governmental or regulatory authority, this Security Agreement shall be construed
as not containing such provision and the invalidity of such provision shall not
affect the validity of any other provisions hereof, and any and all other
provisions hereof which otherwise are lawful and valid shall remain in full
force and effect.
14. Notices. Any and all notices or other communications required or
permitted to be given under any of the provisions of this Security Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or mailed by first class registered mail, return receipt requested, or
by commercial courier or delivery service, addressed to the parties at the
addresses set forth below (or at such other address as any party may specify by
notice to all other parties given as aforesaid):
If to Debtor, to:
Group Long Distance, Inc.
0000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx, Xx.
President
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx X. Xxxxx, Esq.
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Secured Party or Agent, to:
Xxxxxxx Xxxxxxxxxx
0000 Xxxxxx X
Xxxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxxx Xxxxxxx, Esq.
10.30-51
Xxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
15. Entire Agreement. This Security Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof, supersedes
any previous agreements or understandings among the parties with respect to such
subject matter, and may not be modified, amended or terminated except by a
written agreement specifically referring to this Security Agreement signed by
all of the parties hereto.
16. Successors and Assigns. This Security Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of Secured Party and Debtor.
17. Captions. The headings in this Security Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
18. Counterparts. This Security Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which, when taken together, shall be one and the same instrument.
19. Survival of Security Agreement. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of the Promissory Notes and shall continue in full force and effect
until the Obligations are paid and performed in full.
20. Governing Law. This Security Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely therein, without regard to conflicts
of law rules or principles.
21. Jurisdiction and Venue. Each party hereby irrevocably consents to
the sole and exclusive jurisdiction and venue of the courts of the State of New
York located in New York County and of any Federal court located in New York
County in connection with any action or proceeding arising out of or relating to
this Security Agreement, or the breach thereof. Each party hereby irrevocably
waives any objection to the laying of venue in New York County or based on the
grounds of forum non conveniens, which such party may now or hereafter have to
the bringing of any action or proceeding in such jurisdiction in respect of this
Security Agreement.
22. Waiver of Right to Jury Trial. Secured Party and Debtor each
acknowledge and agree that any controversy which may arise under this Security
Agreement would be based upon difficult and complex issues and therefore,
Secured Party and Debtor each agree
10.30-52
that any court proceeding arising out of any such controversy will be tried in a
court of competent jurisdiction by a judge sitting without a jury.
23. No Construction Against Drafting Party. This Security Agreement
shall be construed and enforced without the aid of any canon or rule of law
requiring construction against the party drawing or causing this Security
Agreement to be drawn.
24. Time of the Essence. Time for the performance of Debtor's
obligations under this Security Agreement is of the essence.
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by Secured Party and by a duly authorized officer of Debtor on the
date first set forth above.
GROUP LONG DISTANCE, INC.
By:
------------------------------
Xxxxxx X. Xxxxx, Xx.
President
----------------------------------
Xxxxxxx Xxxxxxxxxx
----------------------------------
Xxxxxxxx Xxxxxxxxx
10.30-53
Schedule 1
Liens
10.30-54
Exhibit D
GUARANTY
GUARANTY, dated as of August 11, 1997, made by EASTERN
TELECOMMUNICATIONS INCORPORATED, a New York corporation having an office at 0000
Xxxx Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000
("Guarantor"), in favor of XXXXXXX XXXXXXXXXX, an individual residing at 0000
Xxxxxx X, Xxxxxxxx, Xxx Xxxx 00000, and XXXXXXXX XXXXXXXXX, an individual
residing at 0000 Xxxx 0xx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (collectively, the
"Obligees").
W I T N E S S E T H:
WHEREAS, Obligees and Group Long Distance, Inc., a Florida corporation
("GLD"), have entered into a Stock Purchase Agreement dated as of August 11,
1997 (the "Purchase Agreement"), pursuant to which Obligees have agreed to sell
to GLD all of the issued and outstanding capital stock of Guarantor;
WHEREAS, in connection with the Purchase Agreement, GLD has executed
and delivered to each Obligee a promissory note, of even date herewith, in the
principal amount of Three Million Five Hundred Thousand Dollars ($3,500,000)
(collectively, the "Promissory Notes");
WHEREAS, Guarantor will be benefitted by the execution and delivery of
the Purchase Agreement and the consummation of the transactions contemplated
thereby; and
WHEREAS, Obligees would be unwilling to execute and deliver the
Purchase Agreement and consummate the transactions contemplated thereby but for
the execution and delivery by Guarantor of this Guaranty;
NOW, THEREFORE, in order to induce Obligees to consummate the
transactions contemplated by the Purchase Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor agrees as follows:
1. Guarantor hereby unconditionally and irrevocably guarantees the due
and punctual payment in full (and not merely the collectibility) of all of the
following (after giving effect to any applicable grace periods) (collectively,
the "Obligations"): (i) the principal amount of each Promissory Note when due
and the interest thereon, when due and payable, according to the terms of the
respective Promissory Note; (ii) all other sums and charges which may at any
time be due and payable in accordance with, or under the terms of, the
Promissory Notes; and (iii) all other amounts which may at any time be due and
payable by GLD to either Obligee pursuant to the Purchase Agreement, any Related
Agreement (as defined in the Purchase Agreement) or any document, instrument or
agreement delivered pursuant thereto or in connection therewith; provided,
however, that this Guaranty shall terminate upon payment in full of the amounts
described in clauses (i) and
10.30-56
(ii) above, as long as, at such time, there is not an unsatisfied amount then
due and payable by GLD to either Obligee pursuant to clause (iii) above.
2. Guarantor expressly agrees that Obligees may jointly, in their sole
and absolute discretion, without notice to or further assent of Guarantor, and
without in any way releasing, affecting or impairing the obligations and
liabilities of Guarantor hereunder: (i) waive compliance with, or any default
under, or grant any other indulgences with respect to, all or any part of the
Obligations or any agreement or instrument securing the Obligations; (ii)
modify, amend or change any provisions of any of the Obligations; (iii) grant
extensions or renewals of or with respect to all or any part of the Obligations,
and/or effect any release, compromise or settlement in connection therewith;
(iv) agree to the sale, substitution, exchange, release or other disposition of
all or any part of the collateral securing the Obligations; (v) make advances
for the purposes of performing any term or covenant contained in the
Obligations, or any instrument or agreement securing the Obligations, with
respect to which GLD shall be in default; (vi) assign or otherwise transfer all
or any part of the Obligations and any instrument or agreement securing the
Obligations, including without limitation this Guaranty, or any interest
therein; (vii) settle, adjust or compromise any claim against GLD or any other
person or entity; and (viii) deal in all respects with GLD as if this Guaranty
were not in effect. Guarantor hereby ratifies and confirms any such action and
agrees that the same shall be binding upon Guarantor, and hereby waives any and
all defenses, counterclaims or offsets which Guarantor might or could have by
reason thereof. The obligations of Guarantor under this Guaranty shall be
unconditional, irrespective of the genuineness, validity, regularity or
enforceability of the Obligations or any other circumstances which might
otherwise constitute a legal or equitable discharge of a surety or a guarantor.
3. The liability of Guarantor under this Guaranty shall be primary and
immediate as to each Obligee, separately and individually, and shall not be
conditional or contingent upon pursuit by either Obligee of any remedies he may
have against GLD or any other party with respect to the Obligations or any
instrument or agreement securing the Obligations, whether pursuant to the terms
thereof or otherwise. No exercise or non-exercise by Obligees of any right given
to them hereunder, or under the Obligations or any instrument or agreement
securing the Obligations, and no change, impairment or suspension of any right
or remedy of Obligees shall in any way affect any of Guarantor's obligations
hereunder or give Guarantor any recourse against Obligees. Without limiting the
generality of the foregoing, Obligees shall not be required to make any demand
on GLD and/or any other party, or otherwise pursue or exhaust their remedies
against GLD or any other party, or apply any cash or other property of GLD held
by them to GLD's obligations, or exercise any right of set-off, before,
simultaneously with or after enforcing their rights and remedies hereunder
against Guarantor. Any one or more successive and/or concurrent actions may be
brought hereon against Guarantor either in the same action, if any, brought
against GLD and/or any other party, or in separate actions, as often as
Obligees, in their sole discretion, may deem advisable.
10.30-56
4. Guarantor hereby expressly waives: (i) presentment and demand for
payment and protest of nonpayment; (ii) notice of acceptance of this Guaranty
and of presentment, demand and protest; (iii) notice of any default hereunder or
under the Obligations or under any other agreement executed in connection with
the Obligations and of all indulgences; (iv) all other notices and demands
otherwise required by law which Guarantor may lawfully waive; and (v) any
defenses, set-offs or counterclaims of any nature to which Guarantor might be
entitled by law or otherwise.
5. If Guarantor shall advance any sums to GLD or its successors or
assigns, or if GLD or its successors or assigns shall be or shall hereafter
become indebted to Guarantor, such sums and indebtedness shall be subordinate,
and all such indebtedness, whether now existing or hereafter arising, is hereby
expressly subordinated in all respects to the amounts now or hereafter due and
owing to Obligees. Guarantor shall take no security for any such indebtedness,
shall take no action to enforce any such indebtedness and shall not accept any
payment from GLD with respect to such indebtedness while any of the Obligations
is outstanding. Nothing herein contained shall be construed to give Guarantor
any right of subrogation in and to the rights of Obligees under the Obligations
or any instrument or agreement securing the Obligations until the payment in
full of all amounts owing to Obligees under the Obligations and the expiration
of any and all applicable preference periods during which the payments credited
to the satisfaction of the Obligations may be required to be returned to the
payor thereof or such persons' trustee, receiver or other representative.
6. Any and all notices or other communications required or permitted to
be given under any of the provisions of this Guaranty shall be in writing and
shall be deemed to have been duly given when personally delivered or mailed by
first class registered mail, return receipt requested, or by commercial courier
or delivery service, addressed to the parties at the addresses set forth below
(or at such other address as any party may specify by notice to all other
parties given as aforesaid):
If to Guarantor, to:
Eastern Telecommunications Incorporated
0000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx.
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx X. Xxxxx, Esq.
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
10.30-57
If to Obligees, to:
Xxxxxxx Xxxxxxxxxx
0000 Xxxxxx X
Xxxxxxxx, Xxx Xxxx 00000
and
Xxxxxxxx Xxxxxxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxxx Xxxxxxx, Esq.
Xxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
7. All rights and remedies afforded to Obligees by reason of this
Guaranty and the Obligations and any instrument or agreement securing the
Obligations, or by law, are separate and cumulative and the exercise of one
shall not in any way limit or prejudice the exercise of any other such rights or
remedies. No delay or omission on the part of Obligees in exercising any rights
or remedies contained herein shall operate as a waiver of such right or remedy
or of any other right or remedy, and no single or partial exercise of any right
or remedy shall preclude any other or further exercise thereof, or the exercise
of any other right or remedy. No waiver of any rights and remedies hereunder
shall be deemed made by Obligees unless in writing and duly executed. A waiver
of any right or remedy on any one occasion shall not be construed as a bar or
waiver of any right or remedy on future occasions, and no delay, omission,
waiver or single or partial exercise of any right or remedy shall be deemed to
establish a custom or course of dealing or performance between the parties
hereto.
8. The obligation of Guarantor to make payment in accordance with the
terms of this Guaranty shall not be impaired, modified, changed, released or
limited in any manner whatsoever by any impairment, modification, change,
release or limitation of the liability of GLD or its estate in bankruptcy or
reorganization resulting from the operation of any present or future provision
of the Federal Bankruptcy Act or other statute or from the decision of any
court.
10.30-58
9. The liability of Guarantor under this Guaranty shall be reinstated
with respect to any amount paid to Obligees by GLD which is thereafter required
to be returned to GLD or any trustee, receiver or other representative of or for
GLD, upon or by reason of the bankruptcy, insolvency, reorganization, or
dissolution of GLD, or for any other reason, all as though such amount had never
been paid by GLD.
10. Guarantor hereby represents and warrants to, and covenants with,
Obligees that:
(A) The execution and performance by Guarantor of the terms
and provisions of this Guaranty have been duly authorized by all requisite
corporate action, and neither the execution nor the performance of this Guaranty
will violate any provision of law, any order of any court or other agency of
government, the articles of incorporation or by-laws of Guarantor, or any
indenture, agreement or other instrument to which it is a party, or by which it
is bound, or be in conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the property or assets of Guarantor pursuant to, any such indenture,
agreement or instrument. In no event shall Guarantor be deemed to be in breach
of any of the representations or warranties contained in this Section 10(A) if
such representation or warranty would not have been false but for a breach of
any representation or warranty made by Obligees in the Purchase Agreement.
(B) Guarantor will furnish to Obligees within ninety (90) days
following the end of each fiscal year, unaudited statements of income of
Guarantor for such fiscal year and an unaudited balance sheet of Guarantor as at
the end of such fiscal year; provided, however, that Guarantor's obligations
under this Section 10(B) shall terminate upon payment by GLD in full of all of
the amounts described in clauses (i) and (ii) of Section 1 hereof, as long as,
at such time, there is not an unsatisfied amount then due and payable by GLD to
either Obligee, pursuant to clause (iii) of Section 1 hereof. All such financial
statements shall be prepared in accordance with generally accepted accounting
principles.
11. Obligees and Guarantor each acknowledge and agree that any
controversy which may arise under this Guaranty would be based upon difficult
and complex issues and therefore, Obligees and Guarantor each agree that any
court proceeding arising out of any such controversy will be tried in a court of
competent jurisdiction by a judge sitting without a jury.
12. Guarantor agrees that in the event this Guaranty shall be enforced
by suit or otherwise, or if Obligees shall exercise or endeavor to exercise any
of their remedies under the Obligations, Guarantor will reimburse Obligees, upon
demand, for all expenses incurred in connection therewith, including, without
limitation, reasonable attorneys' fees and expenses.
10.30-59
13. This Guaranty shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed entirely therein, without regard to conflicts of law rules or
principles.
14. Guarantor hereby irrevocably consents to the sole and exclusive
jurisdiction and venue of the courts of the State of New York located in New
York County and of any Federal court located in New York County in connection
with any action or proceeding arising out of or relating to this Guaranty, or
the breach thereof. Guarantor hereby irrevocably waives any objection to the
laying of venue in New York County or based on the grounds of forum non
conveniens, which Guarantor may now or hereafter have to the bringing of any
action or proceeding in such jurisdiction in respect of this Guaranty.
15. This Guaranty shall be construed and enforced without the aid of
any canon or rule of law requiring construction against the party drawing or
causing this Guaranty to be drawn.
16. If any provision of this Guaranty shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Guaranty, and this Guaranty shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.
17. This Guaranty shall inure to the benefit of, and be enforceable by,
Obligees and their successors and assigns, and shall be binding upon, and
enforceable against, Guarantor and Guarantor's successors and assigns.
18. This Guaranty constitutes the entire agreement of the parties with
respect to the subject matter hereof, supersedes any previous agreements or
understandings among the parties with respect to such subject matter, and may
not be modified, amended or terminated except by a written agreement
specifically referring to this Guaranty signed by Guarantor and Obligees.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
by its duly authorized officer as of the day and year first above written.
EASTERN TELECOMMUNICATIONS
INCORPORATED
By:______________________________
Name: Xxxxxx X. Xxxxx, Xx.
Title: President
10.30-60
Exhibit E
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of August 11, 1997, made by EASTERN
TELECOMMUNICATIONS INCORPORATED, a New York corporation ("Pledgor"), in favor of
XXXXXXX XXXXXXXXXX, an individual residing at 0000 Xxxxxx X, Xxxxxxxx, Xxx Xxxx
00000 ("Oustatcher"), and XXXXXXXX XXXXXXXXX, an individual residing at 0000
Xxxx 0xx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Goldstone"), and XXXXXXX XXXXXXXXXX,
as agent (in such capacity, "Agent") for Oustatcher and Goldstone (Oustatcher
and Goldstone are hereinafter sometimes referred to collectively as "Pledgees").
W I T N E S S E T H:
WHEREAS, Pledgees and Group Long Distance, Inc., a Florida corporation
("GLD"), have entered into a Stock Purchase Agreement, dated as of August 11,
1997 (the "Purchase Agreement"), pursuant to which Pledgees have agreed to sell
to GLD all of the issued and outstanding capital stock of Pledgor;
WHEREAS, in connection with the Purchase Agreement, GLD has executed
and delivered to each Pledgee a promissory note, of even date herewith, in the
principal amount of Three Million Five Hundred Thousand Dollars ($3,500,000)
(collectively, the "Promissory Notes"), and Pledgor has guaranteed the
obligations of GLD under the Promissory Notes and the Purchase Agreement
pursuant to a Guaranty, of even date herewith, made by Pledgor in favor of
Pledgees (the "Guaranty");
WHEREAS, Pledgor will be benefitted by the execution and delivery of
the Purchase Agreement and the consummation of the transactions contemplated
thereby; and
WHEREAS, Pledgees would be unwilling to execute and deliver the
Purchase Agreement and consummate the transactions contemplated thereby but for
the execution and delivery by Pledgor of this Pledge Agreement;
NOW, THEREFORE, in order to induce Pledgees to consummate the
transactions contemplated by the Purchase Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgor agrees as follows:
1. Pledge and Security Interest. Pledgor hereby grants to
Pledgees a security interest in the following property (collectively, the
"Pledged Collateral"):
(a) Warrant Agreement #2 to Purchase Common Stock of Tel-Save
Holdings, Inc., dated January 12, 1996, between Pledgor and Tel-Save Holdings,
Inc. ("Tel-Save"), and Warrant Agreement #3 to Purchase Common Stock of
Tel-Save Holdings, Inc., dated January 12, 1996, between Pledgor and Tel-Save
(collectively, the "Warrants"), and the certificates or the instruments, if any,
representing the Warrants and all cash and other
10.30-61
property from time to time received, receivable, or otherwise distributed or
distributable in respect of or in exchange for any or all of the Warrants;
(b) Any and all shares of the Common Stock of Tel-Save
received or receivable upon exercise of any of the Warrants, in whole or in part
(the "Exercise Shares"), and the certificates or instruments, if any,
representing the Exercise Shares and all dividends, interest, cash, instruments
and other property from time to time received, receivable, or otherwise
distributed or distributable in respect of or in exchange for any of the
Exercise Shares;
(c) all additional securities, financial assets or instruments
received by Pledgor or payable to Pledgor by Tel-Save with respect to the
Warrants or the Exercise Shares, and all dividends, interest, cash, instruments,
and other property from time to time received, receivable, or otherwise
distributed or distributable in respect of or in exchange for any or all of such
additional securities, financial assets or instruments; and
(d) all proceeds of any of the foregoing, including without
limitation, all investment property or financial assets.
2. Security for Obligations. The security interests granted by
this Agreement secure the payment and performance of the liabilities,
obligations, covenants and agreements of Pledgor to Pledgees arising out of or
incurred in connection with the Guaranty, as such liabilities, obligations,
covenants and agreements may be hereafter amended, increased, decreased,
supplemented or extended by any and all renewals, extensions, replacements or
modifications of such Guaranty hereafter entered into. All of the liabilities
and obligations secured hereby are collectively referred to as the
"Obligations." The security interests granted herein shall continue in full
force and effect until all of the Obligations are satisfied in full; provided,
however, that such security interests shall terminate upon payment in full of
all of the amounts described in clauses (i) and (ii) of Section 1 of the
Guaranty, as long as, at such time, there is not an unsatisfied amount then due
and payable by Pledgor to either Pledgee pursuant to clause (iii) of Section 1
of the Guaranty.
3. Appointment of Agent. Each Pledgee hereby makes,
constitutes and appoints Agent his attorney-in-fact, with full power of
substitution, to take possession of and hold the Pledged Collateral in
accordance with the terms and conditions of this Agreement, and to take all such
action and to execute and deliver all such instruments, notices, demands and
other documents with respect to this Agreement in the name of and on behalf of
each Pledgee as fully and with the same effect as if such action were taken and
such instruments, notices, demands and other documents were executed by such
Pledgee, and Agent hereby accepts such appointment. If Oustatcher is unable to
serve as Agent due to death, disability, incapacity or for any other reason,
then Goldstone shall serve as successor Agent. If both Oustatcher and Goldstone
are unable to serve as Agent due to death, disability, incapacity or
10.30-62
for any other reason, the representatives or successors of Oustatcher and
Goldstone shall appoint a successor Agent.
4. Delivery of Pledged Collateral.
(a) All certificates or instruments representing or evidencing
the Pledged Collateral, including all certificates or instruments representing
or evidencing Exercise Shares, shall be held by Agent or shall be delivered to
and held by Agent pursuant hereto and shall be duly endorsed to Agent or shall
be otherwise in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to Pledgees. Upon the occurrence of an Event
of Default, Pledgees shall have the right to register in their names or the
names of their nominees any or all of the Pledged Collateral.
(b) This Agreement shall terminate and all certificates or
instruments representing or evidencing the Pledged Collateral shall be promptly
delivered to Pledgor upon payment in full of the Obligations. Pledgees will take
all action reasonably requested by Pledgor to effectuate this Section 4(b).
5. Exercise of Warrants. Pledgor covenants and agrees that it
shall not exercise any of the Warrants, in whole or in part, except in
accordance with this Section 5. If Pledgor desires to exercise any Warrant, in
whole or in part, it shall so notify Agent in writing, and shall deliver to
Agent (i) payment, made out to Tel-Save, of the applicable exercise price for
the amount of Exercise Shares which Pledgor desires to purchase, (ii) an
executed Notice of Warrant Exercise in the form attached as Appendix A to the
applicable Warrant(s), and (iii) written instructions (which specifically refer
to this Agreement), in form and substance satisfactory to Pledgees, directing
Tel-Save to deliver the Exercise Shares to Agent. Upon receipt of such items,
Agent will promptly submit the same, together with the applicable Warrant(s), to
Tel-Save in exchange for the Exercise Shares. The Exercise Shares shall
constitute Pledged Collateral and shall be held by Agent in accordance with the
terms and conditions of this Agreement. Upon any sale by Pledgor of the Exercise
Shares, Agent shall deliver the Exercise Shares in accordance with Pledgor's
written instructions, provided that GLD shall have made arrangements
satisfactory to Agent in his sole discretion to pay to Oustatcher and Goldstone
the full amount due and payable under the Promissory Notes immediately upon
receipt by Pledgor of the purchase price for the Exercise Shares.
6. Further Assurances. Pledgor agrees that at any time and
from time to time, at the expense of Pledgor, Pledgor will promptly execute and
deliver all further instruments and documents, and take all further action that
Pledgees may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Pledgees to
exercise and enforce the rights and remedies hereunder with respect to any of
the Pledged Collateral and to any property subsequently constituting Pledged
Collateral pursuant to the terms hereof.
10.30-63
7. Representations and Warranties. Pledgor represents and
warrants to Pledgees that:
(a) Pledgor is the legal record and beneficial owner of the
Pledged Collateral, it has all right, title and interest in and to the Pledged
Collateral, and Pledgor will have all right, title and interest in and to any
property subsequently constituting Pledged Collateral pursuant to the terms
hereof, in each case free and clear of any liens, claims, security interests,
and other encumbrances and free and clear of any warrants, options, and other
rights of third parties;
(b) the pledge, assignment and delivery of the Pledged
Collateral pursuant to this Agreement creates a valid first lien on and a first
perfected security interest in such Pledged Collateral and the proceeds thereof,
subject to no prior lien or any agreement purporting to grant to any third party
a lien on the property or assets of Pledgor which would include the Pledged
Collateral;
(c) the execution, delivery, and performance of this Pledge
Agreement by Pledgor has been duly authorized by all necessary action, and
Pledgor has received the consent of Tel-Save to the pledge of the Pledged
Collateral pursuant to this Agreement.
In no event shall Pledgor be deemed to be in breach of any of the
representations or warranties contained in this Section 7 if such representation
or warranty would not have been false but for a breach of any representation or
warranty made by Pledgees in the Purchase Agreement.
8. Covenants.
(a) Until all of the Obligations are paid and performed in
full, Pledgor agrees that it will not:
(i) sell, assign, transfer, grant any option with respect to,
or otherwise convey any interest in any of the Pledged Collateral;
(ii) modify in any respect whatsoever, or cancel or terminate,
any of the terms of or rights relating to the Pledged Collateral, without the
prior written consent of Agent (provided, however, that Pledgor may agree to a
thirty (30) day extension of Warrant Agreement #2 referred to in Section 1(a)
above);
(iii) create or permit to exist any lien, security interest,
or other charge or encumbrance upon or with respect to any of the Pledged
Collateral;
(iv) declare or make any payment or distribution on, or
acquire, any of its outstanding capital stock, or make any other payment to its
stockholders;
10.30-64
(v) issue any additional shares of its authorized but unissued
capital stock;
(vi) authorize the issuance of any additional classes or
series of capital stock or any other securities;
(vii) incur any indebtedness for borrowed money, purchase any
assets or property on an installment or other deferred payment basis, enter into
capitalized leases or sell and lease back any property or assets; or
(viii) guarantee or otherwise become liable for the obligation
of any other person or entity, except for the Guaranty given to Pledgees in
connection with the Promissory Notes.
(b) Pledgor further agrees that, until all of the Obligations are paid
and performed in full, Pledgor will, before the respective expiration dates, or
any extension thereof, of the Warrants:
(i) exercise and enforce, to the fullest extent possible, all
of the material rights, privileges and remedies available to Pledgor pursuant to
the Warrants;
(ii) exercise and enforce, to the fullest extent possible, all
of the material rights, privileges and remedies available to Pledgor pursuant to
(A) Registration Rights Agreement #2, dated as of January 12, 1996, by and
between Tel-Save and Pledgor, and (B) Registration Rights Agreement #3, dated as
of January 12, 1996, by and between Tel-Save and Pledgor (collectively, the
"Registration Rights Agreements"); and
(iii) perform and comply with in all material respects, on a
timely basis, all of the duties and obligations of Pledgor under the Warrants
and the Registration Rights Agreements, and take all action necessary to ensure
that the vesting contingencies referred to in paragraph 1(b)(2) of each of the
Warrants are met on a timely basis so that Pledgor's rights under each of the
Warrants shall be fully vested.
9. Agent Appointed Attorney-in-Fact. To effectuate the rights
and remedies of Pledgees under this Agreement, Pledgor hereby irrevocably
appoints Agent as Pledgor's attorney-in-fact, with full power of substitution,
in the name of Pledgor or in the name of Pledgees, and from time to time, after
an Event of Default (as defined below), in Agent's discretion to take any action
and to execute any instrument which Agent may deem necessary or advisable to
accomplish the purposes of this Agreement. In his capacity as such
attorney-in-fact, Agent shall not be liable for any acts or omissions, nor for
any error of judgment or mistake of fact or law, but only for bad faith, willful
misconduct or gross negligence. The power of attorney granted to Agent pursuant
to this Section 9 is coupled with an interest and shall be irrevocable for as
long as the security interests granted herein
10.30-65
continue in full force and effect, as provided in Section 2 above. Thereafter,
this power of attorney shall be null and void and Pledgees will deliver, at
their own expense, any certificate or documentation reasonably requested by
Pledgor to this effect.
10. Agent May Perform. If Pledgor fails to perform any
agreement contained herein, and, if such failure is of a nature that it is
susceptible of being cured, such failure shall continue uncured for a period of
ten (10) days after receipt of written notice to Pledgor from Agent stating the
specific non-performance, Agent may himself perform, or cause performance of,
such agreement, and the reasonable expenses of Agent incurred in connection
therewith shall be payable by Pledgor under Section 15 hereof; provided,
however, that if Pledgees determine that such default is not of a nature that it
is susceptible of being cured, then Pledgees shall have given Pledgor three (3)
days prior written notice of such determination.
11. Agent and Pledgees' Duties. The powers conferred on Agent
and Pledgees hereunder are solely to protect their interests in the Pledged
Collateral and shall not impose any duty to exercise any such powers. Except for
the safe custody of any Pledged Collateral in its possession and the accounting
for moneys actually received by them hereunder, Agent and Pledgees shall not
have any duty hereunder as to any Pledged Collateral or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Pledged Collateral. Without limiting the generality of the
foregoing, neither Agent nor Pledgees shall have any responsibility for
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged Collateral, whether
or not Agent or Pledgees have or are deemed to have knowledge of such matters.
12. Events of Default. Pledgor shall be in default under this
Agreement upon the occurrence of one or more of the following (each, an "Event
of Default"):
(i) If there occurs an Event of Default (after giving effect
to any applicable grace periods) as defined in: (a) either Promissory Note, (b)
the Pledge Agreement of even date herewith, made by GLD in favor of Oustatcher
and Goldstone, (c) the Security Agreement of even date herewith, made by GLD in
favor of Oustatcher and Goldstone, (d) the Collateral Assignment of Contracts of
even date herewith, made by Pledgor in favor of Oustatcher and Goldstone, or (e)
the Security Agreement of even date herewith, made by Pledgor in favor of
Oustatcher and Goldstone; or if Pledgor shall be in default of, or shall fail to
comply with, any of its covenants, agreements or obligations contained in the
Guaranty or any other document, instrument, agreement or contract executed by
Pledgor evidencing, securing or otherwise relating to the Obligations or any of
them;
(ii) If any statement, representation or warranty made in this
Agreement or contained in any exhibit, statement, certificate or other document
executed or delivered pursuant to or in connection with this Agreement shall
have been incorrect in any material respect when made, unless Pledgees shall not
have been materially prejudiced thereby;
10.30-65
provided, however, that Pledgees shall have given three (3) days prior written
notice to Pledgor of such incorrect statement, representation or warranty;
(iii) If Pledgor shall be in default of, or shall fail to
comply with, in any material respect, any of its covenants, agreements or
obligations contained in this Agreement and, if such default is of a nature that
it is susceptible of being cured, such default shall continue uncured for a
period of ten (10) days after receipt of written notice to Pledgor from Pledgees
stating the specific default or defaults; provided, however, that if Pledgees
determine that such default is not of a nature that it is susceptible of being
cured, then Pledgees shall have given Pledgor three (3) days prior written
notice of such determination; or
(iv) If the Pledged Collateral or any rights therein shall be
subject to any judgment in excess of $2,000,000.
13. Remedies Upon Default. Upon the occurrence of an Event of
Default:
(i) Pledgees may exercise any or all of the Warrants, in whole
or in part, in their sole discretion.
(ii) Pledgees may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to them, all the rights and remedies of a secured party on
default under the Uniform Commercial Code as in effect in the State of New York
(the "Code") or under the applicable laws of any other jurisdiction and
agreements and also may, without notice except as specified below, sell the
Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, brokers' board or elsewhere, for cash, on credit,
or for future delivery, and upon such other terms as Pledgees may deem
commercially reasonable. Pledgor agrees that at least ten days' notice to
Pledgor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Pledgees
shall not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given. Pledgees may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned.
(iii) Any and all cash proceeds received by Pledgees in
respect of any exercise of the Warrants or any collection from, or other
realization upon, all or any part of the Pledged Collateral, in the discretion
of Pledgees, may be held by Pledgees as collateral for, and/or then or at any
time thereafter applied (after payment of any amounts payable to Pledgees
pursuant to Section 15 hereof) in whole or in part by Pledgees against, all or
any part of the Obligations in such order as Pledgees shall elect. Any surplus
of such cash or cash proceeds held by Pledgees and remaining after payment in
full of all the Obligations shall be paid over to Pledgor or to whomsoever may
be lawfully entitled to receive such surplus.
10.30-66
14. Private Sale. Pledgor acknowledges and recognizes that
Pledgees may be unable to effect a public sale of all or a part of the Pledged
Collateral and may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire the Pledged Collateral for their own account, for investment
and not with a view to the distribution or resale thereof. Pledgor acknowledges
that any such private sales may be at prices and on terms less favorable to
Pledgees than those of public sales, and agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner and that Pledgees
have no obligation to delay sale of any Pledged Collateral to permit the issuer
thereof to register it for public sale under the Securities Act of 1933, as from
time to time amended, even if the issuer is willing to do so.
15. Indemnity and Expenses. Pledgor agrees to indemnify and
hold Pledgees harmless from, against and in respect of any and all loss,
liability, damage, cost or expense (including reasonable attorneys' fees and
expenses) suffered or incurred by Pledgees under or by reason of this Agreement
(including, without limitation, enforcement of this Agreement). Pledgor will
upon demand pay to Pledgees the amount of any and all expenses, including the
reasonable fees and expenses of counsel and of any experts and agents, which
Pledgees may incur in connection with (i) the enforcement of this Agreement,
(ii) the custody or preservation of, collection from, or other realization upon,
any of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of Pledgees hereunder, or (iv) the failure by Pledgor to perform or
observe any of the provisions hereof.
16. No Delay; Single or Partial Exercise Permitted. No delay
or omission on the part of Pledgees in exercising any rights or remedies
contained herein shall operate as a waiver of such right or remedy or of any
other right or remedy, and no single or partial exercise of any right or remedy
shall preclude any other or further exercise thereof, or the exercise of any
other right or remedy. No waiver of any rights and remedies hereunder shall be
deemed made by Pledgees unless in writing and duly executed. A waiver of any
right or remedy on any one occasion shall not be construed as a bar or waiver of
any right or remedy on future occasions, and no delay, omission, waiver or
single or partial exercise of any right or remedy shall be deemed to establish a
custom or course of dealing or performance between the parties hereto.
17. Rights Cumulative. All rights and remedies of Pledgees
pursuant to this Agreement shall be cumulative and non-exclusive, and may be
exercised singularly or concurrently.
18. Severability. In the event that any provision of this
Agreement is deemed to be invalid by reason of the operation of any law, or by
reason of the interpretation placed thereon by any court or any other
governmental body or regulatory authority, this Agreement shall be construed as
not containing such provision and the invalidity of such provision shall not
affect the validity of any other provisions hereof, and any and all other
provisions hereof which otherwise are lawful and valid shall remain in full
force and effect.
10.30-67
19. Notices. Any and all notices or other communications
required or permitted to be given under any of the provisions of this Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or mailed by first class registered mail, return receipt requested, or
by commercial courier or delivery service, addressed to the parties at the
addresses set forth below (or at such other address as any party may specify by
notice to all other parties given as aforesaid):
If to Pledgor, to:
Eastern Telecommunications Incorporated
0000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx.
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx X. Xxxxx, Esq.
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Agent or Pledgees, to:
Xxxxxxx Xxxxxxxxxx
0000 Xxxxxx X
Xxxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxxx Xxxxxxx, Esq.
Xxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
20. Continuing Security Interest. This Agreement creates a
continuing security interest in the Pledged Collateral and shall (a) be binding
upon Pledgor and its successors and assigns, and (b) inure to the benefit of
Pledgees and their heirs, personal representatives, successors, transferees and
assigns. The execution and delivery of this Agreement shall in no manner impair
or affect any other security (by endorsement or otherwise) for the payment or
performance of the Obligations and no security taken hereafter as security for
payment or performance of the Obligations shall impair in any manner or affect
this Agreement or the security interest granted hereby, all such present and
future
10.30-69
additional security to be considered as cumulative security. Any of the Pledged
Collateral may be released from this Agreement without altering, varying, or
diminishing in any way this Agreement or the security interest granted hereby as
to the Pledged Collateral not expressly released, and this Agreement and such
security interest shall continue in full force and effect as to all of the
Pledged Collateral not expressly released.
21. Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof, supersedes
any previous agreements or understandings among the parties with respect to such
subject matter, and may not be modified, amended or terminated except by a
written agreement specifically referring to this Agreement signed by all of the
parties hereto.
22. Successors and Assigns. This Agreement shall be binding
upon Pledgor and its successors and assigns, and shall inure to the benefit of
and be enforceable by each Pledgee and his heirs, personal representatives,
successors and assigns.
23. Captions. The headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
24. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which, when taken together, shall be one and the same instrument.
25. Survival of Agreement. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of the Promissory Notes and shall continue in full force and effect
until the Obligations are paid and performed in full.
26. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely therein, without regard to conflicts
of law rules or principles.
27. Jurisdiction and Venue. Each party hereby irrevocably
consents to the sole and exclusive jurisdiction and venue of the courts of the
State of New York located in New York County and of any Federal court located in
New York County in connection with any action or proceeding arising out of or
relating to this Agreement, or the breach thereof. Each party hereby irrevocably
waives any objection to the laying of venue in New York County or based on the
grounds of forum non conveniens, which such party may now or hereafter have to
the bringing of any action or proceeding in such jurisdiction in respect of this
Agreement.
28. Waiver of Right to Jury Trial. Pledgees and Pledgor each
acknowledge and agree that any controversy which may arise under this Agreement
would be based upon difficult and complex issues and therefore, Pledgees and
Pledgor each agree that any court proceeding arising out of any such controversy
will be tried in a court of competent jurisdiction by a judge sitting without a
jury.
10.30-70
29. No Construction Against Drafting Party. This Agreement
shall be construed and enforced without the aid of any canon or rule of law
requiring construction against the party drawing or causing this Agreement to be
drawn.
IN WITNESS WHEREOF, Pledgor, intending to be legally bound,
has executed this Agreement as of the date first above written.
EASTERN TELECOMMUNICATIONS
INCORPORATED
By:
-----------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: President
------------------------------
Xxxxxxx Xxxxxxxxxx
------------------------------
Xxxxxxxx Xxxxxxxxx
10.30-71
Exhibit F
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of August 11, 1997, made by EASTERN
TELECOMMUNICATIONS INCORPORATED, a New York corporation having an office at 0000
Xxxx Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 ("Debtor"),
in favor of XXXXXXX XXXXXXXXXX, an individual residing at 0000 Xxxxxx X,
Xxxxxxxx, Xxx Xxxx 00000 ("Oustatcher"), and XXXXXXXX XXXXXXXXX, an individual
residing at 0000 Xxxx 0xx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Goldstone"), and
XXXXXXX XXXXXXXXXX, as agent (in such capacity, "Agent") for Oustatcher and
Goldstone (Oustatcher and Goldstone are hereinafter sometimes referred to
collectively as "Secured Party").
W I T N E S S E T H:
WHEREAS, Oustatcher, Goldstone and Group Long Distance, Inc., a Florida
corporation ("GLD"), have entered into a Stock Purchase Agreement, dated as of
August 11, 1997 (the "Purchase Agreement"), pursuant to which Oustatcher and
Goldstone have agreed to sell to GLD all of the issued and outstanding capital
stock of Debtor;
WHEREAS, in connection with the Purchase Agreement, GLD has executed
and delivered to each of Oustatcher and Goldstone a promissory note, of even
date herewith, in the principal amount of Three Million Five Hundred Thousand
Dollars ($3,500,000) (collectively, the "Promissory Notes"), and Debtor has
guaranteed the obligations of GLD under the Promissory Notes and the Purchase
Agreement pursuant to a Guaranty, of even date herewith, made by Debtor in favor
of Oustatcher and Goldstone (the "Guaranty");
WHEREAS, Debtor will be benefitted by the execution and delivery of the
Purchase Agreement and the consummation of the transactions contemplated
thereby; and
WHEREAS, Oustatcher and Goldstone would be unwilling to execute and
deliver the Purchase Agreement and consummate the transactions contemplated
thereby but for the execution and delivery by Debtor of this Security Agreement
to secure the payment and performance of Debtor's obligations under the
Guaranty;
NOW, THEREFORE, in order to induce Oustatcher and Goldstone to
consummate the transactions contemplated by the Purchase Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Security Interest. In order to secure the performance and payment of
the Obligations (as defined below), Debtor hereby grants to Secured Party a
security interest in all property of Debtor, whether now owned or hereafter
acquired, and all additions and accessions thereto, including, without
limitation, the property described below:
10.30-72
1.1 Machinery, Equipment and Inventory. All of Debtor's machinery,
equipment and inventory and other goods, wherever located, and all additions and
accessions thereto or replacements thereof (collectively, the "Tangible
Collateral");
1.2 Accounts, General Intangibles. All of Debtor's accounts, contract
rights, chattel paper, instruments, documents and general intangibles, and all
additions and accessions thereto and replacements thereof, including, but not
limited to, all licenses, franchises, permits and authorizations heretofore or
hereafter granted or issued to Debtor under federal, state or local laws which
permit or pertain to the operation of the business of Debtor, and all agreements
relating to the operation of the business of Debtor, copyrights, patents,
trademarks, trade names, trade styles, goodwill and going concern value
(collectively, the "Intangible Collateral");
1.3 Proceeds. All proceeds (including proceeds of insurance, eminent
domain and other governmental taking and tort claims) and products of the
Property described in Sections 1.1 and 1.2 above; and
1.4 Books and Records. All of the books and records pertaining to the
property described in Sections 1.1, 1.2 and 1.3 above.
All of the property described above is referred to collectively as the
"Collateral." The security interest of Secured Party in the Collateral shall be
superior and prior to all other liens, claims, encumbrances and security
interests (collectively, "Liens") except for Permitted Liens (as defined in
Section 4.1 below).
2. Obligations Secured. The Collateral secures the payment and
performance of the liabilities, obligations, covenants and agreements of Debtor
to Secured Party arising out of or incurred in connection with the Guaranty, as
such liabilities, obligations, covenants and agreements may be hereafter
amended, increased, decreased, supplemented or extended by any and all renewals,
extensions, replacements or modifications of such Guaranty hereafter entered
into. All of the liabilities and obligations secured hereby are collectively
referred to as the "Obligations." The security interests granted herein shall
continue in full force and effect until all of the Obligations are satisfied in
full; provided, however, that such security interests shall terminate upon
payment in full of all of the amounts described in clauses (i) and (ii) of
Section 1 of the Guaranty, as long as, at such time, there is not an unsatisfied
amount then due and payable by Debtor to Secured Party pursuant to clause (iii)
of Section 1 of the Guaranty.
3. Appointment of Agent. Each Secured Party hereby makes, constitutes
and appoints Agent his attorney-in-fact, with full power of substitution, to
take all such action and to execute and deliver all such instruments, notices,
demands and other documents with respect to this Security Agreement in the name
of and on behalf of each Secured Party as fully and with the same effect as if
such action were taken and such instruments, notices, demands and other
documents were executed by such Secured Party, and Agent hereby
10.30-73
accepts such appointment. If Oustatcher is unable to serve as Agent due to
death, disability, incapacity or for any other reason, then Goldstone shall
serve as successor Agent. If both Oustatcher and Goldstone are unable to serve
as Agent due to death, disability, incapacity or for any other reason, the
representatives or successors of Oustatcher and Goldstone shall appoint a
successor Agent.
4. Representations and Warranties. Debtor hereby represents and
warrants to Secured Party as follows:
4.1 Ownership of Collateral. All of the Collateral is and
shall be free from any Lien except for Permitted Liens. For purposes of
this Security Agreement, "Permitted Liens" means (A) liens for taxes
not yet delinquent; (B) statutory inchoate liens in connection with
workmen's compensation, unemployment insurance, or other social
security obligations; (C) mechanic's, xxxxxxx'x, materialman's,
landlord's, carrier's, or other similar liens arising in the ordinary
course of business with respect to obligations that are not due; and
(D) Liens existing prior to the date hereof.
4.2 Places of Business. The chief executive office of Debtor
is located at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000, and
Debtor does not conduct business at any other location. All of the
Tangible Collateral and the books and records of Debtor are kept at
such location. Debtor shall not, without the prior written consent of
Secured Party, change the location of Debtor's chief executive office,
or books and records, or any Tangible Collateral to any locations other
than offices of Debtor at 0000 Xxxx Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xx.
Xxxxxxxxxx, Xxxxxxx 00000. Debtor shall give Secured Party at least 15
days' prior notice in the event Debtor commences operations or causes
any Tangible Collateral to be located in any location other than the
chief executive office or the other address specified above.
4.3 Financing Statements. Subject to the representations and
warranties of Secured Party in the Purchase Agreement and except for
the financing statements of Secured Party, no financing statement
covering any Collateral or any proceeds thereof is on file in any
public office.
4.4 Intangible Collateral. Subject to the Disclosure Schedule
attached to the Purchase Agreement, the Intangible Collateral
represents bona fide and existing indebtedness, obligations,
liabilities, rights and privileges owed or belonging to Debtor to
which, to the best of Debtor's knowledge, there is no valid defense,
set-off or counterclaim against Debtor and in connection with which
there is no default with respect to any payment or performance on the
part of Debtor, or, to the best of Debtor's knowledge, any other party.
4.5 Tangible Collateral. All Tangible Collateral at all times
shall be considered personal property.
10.30-74
In no event shall Debtor be deemed to be in breach of any of the representations
or warranties contained in this Section 4 if such representation or warranty
would not have been false but for a breach of any representation or warranty
made by Secured Party in the Purchase Agreement.
5. Affirmative Covenants. Until all of the Obligations are paid and
performed in full, Debtor agrees that it will:
5.1 Taxes. Subject to the tax sharing provisions in the
Purchase Agreement, pay promptly when due all taxes, levies,
assessments and governmental charges upon and relating to any of the
property, income or receipts of Debtor or otherwise for which Debtor is
or may be liable.
5.2 Insurance. At its sole expense, keep the Collateral
insured against loss or damage by insurance policies which shall be in
such form, with such companies and in such amounts as may be reasonably
satisfactory to Secured Party.
5.3 Tangible Collateral.
5.3.1 Good Repair. Keep the Tangible Collateral in
good working order and repair and make all necessary
replacements thereof and renewals thereto so that the value
and operating efficiency thereof at all times shall be
materially maintained and preserved.
5.3.2 Insurance Requirements. Maintain the Tangible
Collateral at all times in accordance with the requirements of
all insurance carriers which provide insurance with respect to
such Tangible Collateral so that such insurance shall remain
in full force and effect.
5.3.3 Certificates of Title. Upon the request of
Agent (i) promptly deliver to Agent all certificates of title
pertaining to any Tangible Collateral acquired after the date
hereof and (ii) take all actions reasonably requested by
Secured Party to cause the Lien granted to Secured Party
hereunder to be noted on such certificates of title.
5.3.4 Use of Collateral. Use the Tangible Collateral
in material compliance with all statutes, regulations,
ordinances, requirements and regulations and all judgments,
orders, injunctions and decrees applicable thereto, and all
other federal and state laws.
5.4 Intangible Collateral.
10.30-75
5.4.1 Payments. Make all payments and perform all
acts reasonably necessary to maintain and preserve the
Intangible Collateral, including, without limitation, filing
of documents, renewals or other information with any
governmental or regulatory authority or any other entity.
5.4.2 Delivery of Instruments. Upon the request of
Agent, promptly deliver to Agent the original executed copies
of all instruments which constitute part of the Intangible
Collateral, together with such endorsements, assignments and
other agreements as Agent may request in order to perfect the
security interests created pursuant to this Security Agreement
(collectively, the "Security Interests").
5.4.3 Accurate Records. At all times keep accurate
and complete records in all material respects of payment and
performance by Debtor and other Persons of their respective
obligations with respect to the Intangible Collateral and
permit Secured Party or any of its agents to call at Debtor's
place of business without hindrance or delay to inspect,
audit, check or make extracts from the books, records,
correspondence or other data relating to the Intangible
Collateral.
5.4.4 Verification of Indebtedness. Upon request of
Agent after the occurrence and during the continuation of an
Event of Default (after giving effect to any applicable grace
periods), permit Agent himself, at any time, in the name of
Secured Party or Debtor, to verify directly with the obligors
the indebtedness due Debtor on any account or other item of
Intangible Collateral.
5.4.5 Defaults, Other Claims. Promptly inform Agent
of any default in payment or performance by Debtor or any
other person of any obligation with respect to the Intangible
Collateral or of claims made by others in regard to the
Intangible Collateral, if either could have a material adverse
effect on the business of Debtor.
5.5 Collection of Proceeds. Collect the proceeds of
indebtedness owing to Debtor by any person under any instrument or by
any account debtor with respect to any account, contract right, chattel
paper or general intangible.
5.6 Financing Statements; Further Assurances. Concurrently
with the execution of this Security Agreement, and from time to time
hereafter as requested by Agent, execute and deliver to Agent such
financing statements, continuation statements, termination statements,
amendments to any of the foregoing and other documents, in form
reasonably satisfactory to Secured Party, as Secured Party may require
to perfect and continue in effect the Security Interests, to carry out
the purposes of this Security Agreement and to protect Secured Party's
rights hereunder. Debtor, upon demand, shall pay the cost of filing all
such financing statements,
10.36-76
continuation statements, termination statements, amendments to any of
the foregoing and other documents.
6. Negative Covenants. Until all of the Obligations are paid and
performed in full, Debtor agrees that it will not:
6.1 Sale or Transfer of Collateral. Sell, lease, assign or
otherwise dispose of any of the Collateral, except for property which
is not material to the continued operation of Debtor's business.
6.2 Modification. Except in the ordinary course of business,
materially change the terms of payment or performance of any material
obligation with respect to the Intangible Collateral without the prior
written consent of Agent.
6.3 Installation of Tangible Collateral. Permit any of the
Tangible Collateral to be installed, affixed or attached to the real
estate of Debtor or any other person so as to become a part thereof or
become in any sense a fixture not otherwise pledged to Secured Party.
6.4 Dividends and Distributions. Declare or make any payment
or distribution on, or acquire, any of its outstanding capital stock,
or make any other payment to its stockholders.
6.5 Indebtedness. Incur any indebtedness for borrowed money,
purchase any assets or property on an installment or other deferred
payment basis, enter into capitalized leases or sell and lease back any
property or assets.
6.6 Guarantees. Guarantee or otherwise become liable for the
obligation of any other person or entity, except for the Guaranty given
to Secured Party.
6.7 Warrant Agreements. Sell, assign, transfer or otherwise
convey any interest in (other than as provided in the Purchase
Agreement or any Related Agreement, as defined in the Purchase
Agreement), or waive, alter, modify, change the terms of, cancel or
terminate: (i) Warrant Agreement #2 to Purchase Common Stock of
Tel-Save Holdings, Inc., dated January 12, 1996, between Tel-Save
Holdings, Inc. ("Tel-Save") and Debtor, or Warrant Agreement #3 to
Purchase Common Stock of Tel-Save Holdings, Inc., dated January 12,
1996, between Tel- Save and Debtor; or (ii) Registration Rights
Agreement #2, dated as of January 12, 1996, by and between Tel-Save and
Debtor, or Registration Rights Agreement #3, dated as of January 12,
1996, by and between Tel-Save and Debtor (provided, however, that
Debtor may agree to a thirty (30) day extension of Warrant Agreement #2
referred to above).
10.30-77
7. Protection of Collateral. In the event of any failure of
Debtor to (i) maintain in force and pay for any insurance or bond which Debtor
is required to provide pursuant to this Security Agreement, (ii) keep the
Tangible Collateral in good repair and operating condition, (iii) keep the
Collateral free from all Liens except for Permitted Liens, (iv) pay when due all
taxes, levies and assessments on or in respect of the Collateral, (v) make all
payments and perform all acts on the part of Debtor to be paid or performed with
respect to any of the Collateral, including, without limitation, all expenses of
protecting, storing, warehousing, insuring, handling and maintaining the
Collateral or (vi) keep fully and perform promptly any other of the obligations
of Debtor under this Security Agreement or the Guaranty, then, in any such
event, Agent, at its option, after three (3) days prior written notice to Debtor
of such failure, may (but shall not be required to) procure and pay for such
insurance, place such Collateral in good repair and operating condition, pay or
contest or settle such Liens or taxes or any judgments based thereon or
otherwise make good any other aforesaid failure of Debtor. Debtor shall
reimburse Agent immediately upon demand for all sums paid or advanced on behalf
of Debtor for any such purpose, together with all costs, expenses and attorneys'
fees paid or incurred by Agent in connection therewith and interest at the rate
of 21% per annum on all sums so paid or advanced from the date of such payment
or advancement until repaid to Agent. All such sums paid or advanced by Agent,
with interest thereon, immediately upon payment or advancement thereof, shall be
deemed to be part of the Obligations secured hereby.
8. Event of Default. Debtor shall be in default under this
Security Agreement upon the occurrence of one or more of the following (each, an
"Event of Default"):
8.1 Default under other Agreements. If there occurs an Event
of Default (after giving effect to any applicable grace periods) as
defined in (i) either Promissory Note, (ii) the Pledge Agreement of
even date herewith, made by GLD in favor of Oustatcher and Goldstone,
(iii) the Security Agreement of even date herewith, made by GLD in
favor of Oustatcher and Goldstone, (iv) the Pledge Agreement of even
date herewith, made by Debtor in favor of Oustatcher and Goldstone, or
(v) the Collateral Assignment of Contracts of even date herewith, made
by Debtor in favor of Oustatcher and Goldstone; or if there occurs a
default under the Guaranty or any other document, instrument, agreement
or contract executed by Debtor evidencing, securing or otherwise
relating to the Obligations or any of them.
8.2 Incorrect Statement, Representation or Warranty. If any
statement, representation or warranty made in this Security Agreement
or contained in any exhibit, statement, certificate or other document
executed or delivered pursuant to or in connection with this Security
Agreement shall have been incorrect in any material respect when made,
unless Secured Party shall not have been materially prejudiced thereby;
provided, however, that the Secured Party shall have given three (3)
days prior written notice to Debtor of such incorrect statement,
representation or warranty.
10.30-78
8.3 Breach of Covenants. If Debtor fails to comply, in any
material respect, with any of its covenants or agreements contained in
this Security Agreement when and as such compliance is due and, if such
default is of a nature that it is susceptible of being cured, such
default shall continue uncured for a period of ten (10) days after
receipt of written notice to Debtor from Secured Party stating the
specific default or defaults; provided, however, that if Secured Party
determines that such default is not of a nature that it is susceptible
of being cured, then Secured Party shall have given Debtor three (3)
days prior written notice of such determination.
8.4 Proceedings Against the Collateral. If the Collateral or
any rights therein shall be subject to any judgment in excess of
$2,000,000.
9. Remedies Upon Default. Upon the occurrence of an Event of Default:
9.1 Rights of Secured Party. Secured Party shall have all of
the rights and remedies of a secured party under the New York Uniform
Commercial Code (the "UCC") and under the applicable laws of any other
jurisdiction, including without limitation any jurisdiction where any
of the Collateral is located, and all other rights and remedies
accorded to Secured Party at equity or law, including, without
limitation, the right to apply for and have a receiver appointed by a
court of competent jurisdiction to manage, protect and preserve the
Collateral, to continue operating the business of Debtor and to collect
all revenues and profits thereof. Any notice of sale or other
disposition of Collateral given not less than 10 days prior to such
proposed action shall constitute reasonable and fair notice of such
action. To the extent permitted by applicable law, Secured Party may
postpone or adjourn any such sale from time to time by announcement at
the time and place of sale stated in the notice of sale or by
announcement of any adjourned sale, without being required to give a
further notice of sale. Any such sale may be for cash or, unless
prohibited by applicable law, upon such credit or installment terms as
Secured Party shall determine. To the extent permitted by applicable
law, Debtor shall be credited with the net proceeds of such sale only
when such proceeds actually are received by Secured Party. Despite the
consummation of any such sale, Debtor shall remain liable for any
deficiency on the Obligations which remains outstanding following any
such sale.
9.2 Assembly of Collateral. Upon the request of Agent, Debtor
shall assemble and make the Collateral available to Agent at a place
designated by Agent.
9.3 Proceeds. Debtor shall hold all proceeds of the Collateral
collected by Debtor in trust for Secured Party, and promptly upon
receipt thereof, turn over such proceeds to Secured Party in the exact
form in which they were received.
9.4 Other Rights. Secured Party, at its election, and without
notice to Debtor, may:
10.30-79
9.4.1 Terminate Right of Collection. Terminate the
right of Debtor to collect the proceeds described in Section
9.3.
9.4.2 Notification. Notify the obligors under any
instruments and the account debtors of any account, contract
right, chattel paper or general intangible to make all
payments directly to Agent.
9.4.3 Collection of Payments. Demand, xxx for,
collect or receive, in the name of Debtor or Secured Party,
any money or Property payable or receivable on any item of
Collateral.
9.4.4 Settlement. Settle, release, compromise,
adjust, xxx upon or otherwise enforce any item of Collateral
as Secured Party may determine.
9.4.5 Mail of Debtor; Endorsement of Checks. For the
purpose of enforcing Secured Party's rights under this
Security Agreement, receive and open mail addressed to Debtor,
and endorse notes, checks, drafts, money orders, documents of
title or other forms of payment on behalf and in the name of
Debtor.
10. Power of Attorney. To effectuate the rights and remedies of Secured
Party under this Security Agreement, Debtor hereby irrevocably appoints Agent as
Debtor's attorney in-fact, with full power of substitution, in the name of
Debtor or in the name of Secured Party, to:
10.1 Execution of Financing Statements. Execute and file from
time to time financing statements, continuation statements, termination
statements and amendments thereto, covering the Collateral, in form
satisfactory to Secured Party.
10.2 Execution of Other Documents. Take all action and execute
all documents reasonably necessary to enable Secured Party to obtain
and enjoy the full rights and benefits granted to Secured Party
hereunder to the extent permitted by law.
The power of attorney granted pursuant to this Section 10 is coupled with an
interest and shall be irrevocable until all of the Obligations have been paid
and performed in full. Upon the fulfillment of all of the Obligations, this
power of attorney shall be null and void and Secured Party will deliver, at its
own expense, any certificate or documentation reasonably requested by Debtor to
this effect.
11. Certain Agreements of Debtor.
11.1 Waiver of Notice. Debtor hereby waives notice of the
acceptance of this Security Agreement and, except as otherwise
specifically provided in Section 9.1 above, all other notices, demands
or protests to which Debtor otherwise might be
10.30-80
entitled by law (and which lawfully may be waived) with respect to this
Security Agreement, the Obligations and the Collateral.
11.2 Rights of Secured Party. Debtor agrees that Secured Party
(i) shall have no duty as to the collection or protection of the
Collateral or any income thereon, (ii) may exercise the rights and
remedies of Secured Party with respect to the Collateral without resort
or regard to other security or sources for payment and (iii) shall not
be deemed to have waived any of the rights or remedies granted to
Secured Party hereunder unless such waiver shall be in writing and
shall be signed by Secured Party. Debtor and Secured Party acknowledge
their intent that, upon the occurrence of an Event of Default (after
giving effect to any applicable grace periods) Secured Party shall
receive, to the fullest extent permitted by law and governmental
policy, all rights necessary or desirable to obtain, use or sell the
Collateral, and to exercise all remedies available to Secured Party
under the Promissory Notes, the Guaranty, and the UCC or under the
applicable law of any other jurisdiction, including without limitation
any jurisdiction where any of the Collateral is located. Debtor and
Secured Party further acknowledge and agree that, in the event of
changes in law or governmental policy occurring subsequent to the date
hereof that affect in any manner Secured Party's rights of access to,
or use or sale of, the Collateral, or the procedures necessary to
enable Secured Party to obtain such rights of access, use or sale,
Secured Party and Debtor shall amend this Security Agreement, in such
manner as Secured Party reasonably shall request, in order to provide
Secured Party such rights to the greatest extent possible consistent
with then applicable law and governmental policy.
11.3 No Delay; Single or Partial Exercise Permitted. No delay
or omission on the part of Secured Party in exercising any rights or
remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial
exercise of any right or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right or remedy. No
waiver of any rights and remedies hereunder shall be deemed made by
Secured Party unless in writing and duly executed. A waiver of any
right or remedy on any one occasion shall not be construed as a bar or
waiver of any right or remedy on future occasions, and no delay,
omission, waiver or single or partial exercise of any right or remedy
shall be deemed to establish a custom or course of dealing or
performance between the parties hereto.
12. Rights Cumulative. All rights and remedies of Secured
Party pursuant to this Security Agreement, the Guaranty or otherwise, shall be
cumulative and non-exclusive, and may be exercised singularly or concurrently.
13. Severability. In the event that any provision of this
Security Agreement is deemed to be invalid by reason of the operation of any
law, or by reason of the interpretation placed thereon by any court or any other
governmental or regulatory authority, this Security Agreement shall be construed
as not containing such provision and the invalidity of such
10.30-81
provision shall not affect the validity of any other provisions hereof, and any
and all other provisions hereof which otherwise are lawful and valid shall
remain in full force and effect.
14. Notices. Any and all notices or other communications required or
permitted to be given under any of the provisions of this Security Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or mailed by first class registered mail, return receipt requested, or
by commercial courier or delivery service, addressed to the parties at the
addresses set forth below (or at such other address as any party may specify by
notice to all other parties given as aforesaid):
If to Debtor, to:
Eastern Telecommunications Incorporated
0000 Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx.
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx X. Xxxxx, Esq.
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Secured Party or Agent, to:
Xxxxxxx Xxxxxxxxxx
0000 Xxxxxx X
Xxxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxxx Xxxxxxx, Esq.
Xxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
15. Entire Agreement. This Security Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof, supersedes
any previous agreements or understandings among the parties with respect to such
subject matter, and may not be modified, amended or terminated except by a
written agreement specifically referring to this Security Agreement signed by
all of the parties hereto.
10.30-82
16. Successors and Assigns. This Security Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of Secured Party and Debtor.
17. Captions. The headings in this Security Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
18. Counterparts. This Security Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which, when taken together, shall be one and the same instrument.
19. Survival of Security Agreement. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of the Promissory Notes and shall continue in full force and effect
until the Obligations are paid and performed in full.
20. Governing Law. This Security Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely therein, without regard to conflicts
of law rules or principles.
21. Jurisdiction and Venue. Each party hereby irrevocably consents to
the sole and exclusive jurisdiction and venue of the courts of the State of New
York located in New York County and of any Federal court located in New York
County in connection with any action or proceeding arising out of or relating to
this Security Agreement, or the breach thereof. Each party hereby irrevocably
waives any objection to the laying of venue in New York County or based on the
grounds of forum non conveniens, which such party may now or hereafter have to
the bringing of any action or proceeding in such jurisdiction in respect of this
Security Agreement.
22. Waiver of Right to Jury Trial. Secured Party and Debtor each
acknowledge and agree that any controversy which may arise under this Security
Agreement would be based upon difficult and complex issues and therefore,
Secured Party and Debtor each agree that any court proceeding arising out of any
such controversy will be tried in a court of competent jurisdiction by a judge
sitting without a jury.
23. No Construction Against Drafting Party. This Security Agreement
shall be construed and enforced without the aid of any canon or rule of law
requiring construction against the party drawing or causing this Security
Agreement to be drawn.
24. Time of the Essence. Time for the performance of Debtor's
obligations under this Security Agreement is of the essence.
10.30-83
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered by Secured Party and by a duly authorized officer of Debtor on the
date first set forth above.
EASTERN TELECOMMUNICATIONS
INCORPORATED
By:-----------------------------
Name:
Title:
----------------------------------
Xxxxxxx Xxxxxxxxxx
------------------------------
Xxxxxxxx Xxxxxxxxx
10.30-84
EXHIBIT G
COLLATERAL ASSIGNMENT OF CONTRACTS
COLLATERAL ASSIGNMENT OF CONTRACTS ("Assignment"), dated as of August
11, 1997, made by EASTERN TELECOMMUNICATIONS INCORPORATED, a New York
corporation, having an office at 0000 Xxxx Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxx
Xxxxxxxxxx, Xxxxxxx 00000 ("Assignor"), in favor of XXXXXXX XXXXXXXXXX, an
individual residing at 0000 Xxxxxx X, Xxxxxxxx, Xxx Xxxx 00000 ("Oustatcher"),
and XXXXXXXX XXXXXXXXX, an individual residing at 0000 Xxxx 0xx Xxxxxx,
Xxxxxxxx, Xxx Xxxx 00000 ("Goldstone"), and XXXXXXX XXXXXXXXXX, as agent (in
such capacity, "Agent") for Oustatcher and Goldstone (Agent and Goldstone are
hereinafter sometimes referred to collectively as "Assignees").
W I T N E S S E T H:
WHEREAS, Oustatcher, Goldstone and Group Long Distance, Inc., a Florida
corporation ("GLD"), have entered into a Stock Purchase Agreement, dated as of
August 11, 1997 (the "Purchase Agreement"), pursuant to which Oustatcher and
Goldstone have agreed to sell to GLD all of the issued and outstanding capital
stock of Assignor;
WHEREAS, in connection with the Purchase Agreement, GLD has executed
and delivered to each of Oustatcher and Goldstone a promissory note, of even
date herewith, in the principal amount of Three Million Five Hundred Thousand
Dollars ($3,500,000) (collectively, the "Promissory Notes"), and Assignor has
guaranteed the obligations of GLD under the Promissory Notes pursuant to a
Guaranty, of even date herewith, made by Guarantor in favor of Oustatcher and
Goldstone (the "Guaranty");
WHEREAS, Assignor will be benefitted by the execution and delivery of
the Purchase Agreement and the consummation of the transactions contemplated
thereby; and
WHEREAS, Oustatcher and Goldstone would be unwilling to execute and
deliver the Purchase Agreement and consummate the transactions contemplated
thereby but for the execution and delivery by Assignor of this Assignment to
secure the payment and performance of Assignor's obligations under the Guaranty;
NOW, THEREFORE, in order to induce Oustatcher and Goldstone to
consummate the transactions contemplated by the Purchase Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Assignment. In order to secure the performance and payment of the
Obligations (as defined below), Assignor hereby grants to Assignees a security
interest in, and collaterally assigns to Assignees all of Assignor's right,
title and interest in and to: (i) Registration Rights Agreement #2, dated as of
January 12, 1996, by and between Tel-Save
10.30-85
Holdings, Inc. ("Tel-Save") and Assignor; (ii) Registration Rights Agreement #3,
dated as of January 12, 1996, by and between Tel-Save and Assignor; and (iii)
all other future agreements entered into between Tel-Save and Assignor relating
to (A) the foregoing agreements, or (B) any securities of Tel-Save now or
hereafter owned by Assignor. The agreements described in clauses (i) through
(iii) above are referred to individually as a "Contract" and collectively as the
"Contracts."
2. Obligations Secured. The security interests and collateral
assignments granted pursuant to Section 1 above secure the payment and
performance of the liabilities, obligations, covenants and agreements of
Assignor to Assignees arising out of or incurred in connection with the
Guaranty, as such liabilities, obligations, covenants and agreements may be
hereafter amended, increased, decreased, supplemented or extended by any and all
renewals, extensions, replacements or modifications of such Guaranty hereafter
entered into. All of the liabilities and obligations secured hereby are
collectively referred to as the "Obligations." The security interests and
collateral assignments granted herein shall continue in full force and effect
until all of the Obligations are satisfied in full; provided, however, that such
security interests shall terminate upon payment in full of all of the amounts
described in clauses (i) and (ii) of Section 1 of the Guaranty, as long as, at
such time, there is not an unsatisfied amount then due and payable by Pledgor to
either Pledgee pursuant to clause (iii) of Section 1 of the Guaranty.
3. Appointment of Agent. Each Assignee hereby makes, constitutes and
appoints Agent his attorney-in-fact, with full power of substitution, to take
possession of and hold the Contracts in accordance with the terms and conditions
of this Assignment, and to take all such action and to execute and deliver all
such instruments, notices, demands and other documents with respect to this
Assignment in the name of and on behalf of each Assignee as fully and with the
same effect as if such action were taken and such instruments, notices, demands
and other documents were executed by such Assignee, and Agent hereby accepts
such appointment. If Oustatcher is unable to serve as Agent due to death,
disability, incapacity or for any other reason, then Goldstone shall serve as
successor Agent. If both Oustatcher and Goldstone are unable to serve as Agent
due to death, disability, incapacity or for any other reason, the
representatives or successors of Oustatcher and Goldstone shall appoint a
successor Agent.
4. Representations and Warranties. Assignor represents and warrants to
Assignees that:
(a) The Contracts are valid and binding, enforceable in
accordance with their terms, and in full force and effect and, after the
assignment thereof to Assignees pursuant to this Assignment, Assignees will be
entitled to the full benefits thereof;
(b) the security interests and collateral assignments created
pursuant to this Assignment create a valid first lien on and a first perfected
security interest in the Contracts
10.30-86
and the proceeds thereof, subject to no prior lien or any agreement purporting
to grant to any third party a lien on the property or assets of Assignor which
would include the Contracts; and
(c) The execution, delivery, and performance of this
Assignment by Assignor has been duly authorized by all necessary action, and
Assignor has received the Consent of Tel-Save to the collateral assignment of
the Contracts pursuant to this Assignment.
In no event shall Assignor be deemed to be in breach of any of the
representations or warranties contained in this Section 4 if such representation
or warranty would not have been false but for a breach of any representation or
warranty made by Assignees in the Purchase Agreement.
5. Covenants. Assignor covenants to and agrees with Assignees: (a) to
observe and perform all material obligations imposed upon Assignor under each
Contract and not to do, or permit to be done, anything to impair Assignor's
rights thereunder; (b) not to assign, transfer or otherwise convey any interest
in or under any Contract; (c) not to waive, alter, modify or change the terms of
any Contract, or cancel or terminate the same, without the prior written consent
of Assignees; and (d) to enforce the performance by Tel-Save under each Contract
of all of Tel-Save's material obligations under such Contract.
6. Security. This Assignment is for collateral security purposes only.
So long as no Event of Default (as defined in Section 7 below) has occurred and
is continuing, Assignor shall have the right to retain, use and enjoy all rights
under each Contract.
7. Events of Default. Debtor shall be in default under this Assignment
upon the occurrence of one or more of the following (each, an "Event of
Default"):
(i) If there occurs an Event of Default (after giving effect
to any applicable grace periods) as defined in: (A) either Promissory
Note, (B) the Security Agreement of even date herewith, made by
Assignor in favor of Oustatcher and Goldstone, (C) the Pledge Agreement
of even date herewith, made by GLD in favor of Oustatcher and
Goldstone, (D) the Security Agreement of even date herewith, made by
GLD in favor of Oustatcher and Goldstone, or (E) the Pledge Agreement
of even date herewith, made by Assignor in favor of Oustatcher and
Goldstone; or if Assignor shall be in default of, or shall fail to
comply with, any of its covenants, agreements or obligations contained
in the Guaranty or any other document, instrument, agreement or
contract executed by Assignor evidencing, securing or otherwise
relating to the Obligations or any of them;
(ii) If any statement, representation or warranty made in this
Assignment or contained in any exhibit, statement, certificate or other
document executed or delivered pursuant to or in connection with this
Assignment shall have been incorrect
10.30-87
in any material respect when made, unless Assignees shall not have been
materially prejudiced thereby; provided, however, that Assignees shall
have given three (3) days prior written notice to Assignor of such
incorrect statement, representation or warranty; or
(iii) If Assignor fails to comply in any material respect with
any of its covenants, agreements or obligations contained in this
Assignment and, if such default is of a nature that it is susceptible
of being cured, such default shall continue uncured for a period of ten
(10) days after receipt of written notice to Assignor from Assignees
stating the specific default or defaults provided, however, that if
Assignees determine that such default is not of a nature that it is
susceptible of being cured, then Assignees shall have given Assignor
three (3) days written notice of such determination.
8. Remedies Upon Default. Upon the occurrence of an Event of Default
(after giving effect to any applicable grace periods), if Assignees in their
sole discretion so elect by giving written notice to Assignor and Tel-Save, the
collateral assignment of the Contracts hereunder shall become absolute,
whereupon Assignor's rights under the Contracts shall cease and terminate, and
Assignees shall become the holders of the Contracts and shall be entitled to all
of the rights and benefits thereof.
9. Power of Attorney. To effectuate the rights and remedies of
Assignees under this Assignment, Assignor hereby irrevocably appoints Agent as
Assignor's attorney in-fact, with full power and substitution, in the name of
Assignor or in the name of Assignees:
(i) to do and perform any or all of the actions which Assignor is
entitled to perform in connection with the Contracts, as fully, to all intents
and purposes, as it could do if personally present; and
(ii) to execute any instruments and to do or perform such further acts
as may be reasonably required to evidence the termination of Assignor's rights
with respect to the Contracts,
hereby ratifying and confirming all that its said attorney or its substitute
shall lawfully do or cause to be done by virtue hereof. The power of attorney
granted pursuant to this Section 9 is coupled with an interest and shall be
irrevocable for as long as the security interests and collateral assignments
granted herein continue in full force and effect, as provided in Section 2
above. Thereafter, this power of attorney shall be null and void and Assignees
will deliver, at their own expense, any certificate or documentation reasonably
requested by Assignor to this effect.
10. Indemnification. Assignees may, but shall not be obligated to,
perform or discharge any obligation, duty or liability of Assignor under any
contract or under or by reason of this Assignment, and Assignor agrees to
indemnify and hold Assignees harmless
10.30-88
from, against and in respect of any and all loss, liability, damage, cost or
expense (including reasonable attorneys' fees and expenses) suffered or incurred
by Assignees, directly or indirectly, under any Contract or under or by reason
of this Assignment and from any and all claims and demands whatsoever which may
be asserted against Assignees by reason of any alleged obligations or
undertakings on their part to perform or discharge any of the covenants or
agreements contained in any Contract. If Assignees incur any such liability
under any Contract or under or by reason of this Assignment or in defense of any
such claims or demands, the amount thereof, including all costs, expenses and
reasonable attorneys' fees and expenses, shall be added to the Obligations and
Assignor shall reimburse Assignees therefor immediately upon demand.
11. Financing Statements; Further Assurances. Until all of the
Obligations are paid and performed in full, Assignor agrees that it will,
concurrently with the execution of this Assignment, and from time to time
hereafter as requested by Agent, execute and deliver to Agent such financing
statements, continuation statements, termination statements, amendments to any
of the foregoing and other documents, in form reasonably satisfactory to
Assignees, as Assignees may require to perfect and continue in effect the
security interests created hereunder, to carry out the purposes of this
Assignment and to protect Assignees' rights hereunder. Assignor, upon demand,
shall pay the cost of filing all such financing statements, continuation
statements, termination statements, amendments to any of the foregoing and other
documents.
12. Release of Assignment. Upon payment, performance and observance in
full of the Obligations and the termination of the obligations of Assignor under
the Guaranty, this Assignment shall be void and of no further force or effect
and Assignees, upon the written request of Assignor, shall execute such
documents as reasonably may be requested by Assignor to confirm the same;
provided, however, that a certificate of Assignees, accompanied by documentation
evidencing any unfulfilled Obligation and certifying that any of the Obligations
then owing remain unsatisfied, shall constitute conclusive evidence of the
validity, effectiveness and continuing force of this Assignment and any person
may, and hereby is authorized to, rely thereon.
13. No Delay; Single or Partial Exercise Permitted. No delay or
omission on the part of Assignees in exercising any rights or remedies contained
herein shall operate as a waiver of such right or remedy or of any other right
or remedy, and no single or partial exercise of any right or remedy shall
preclude any other or further exercise thereof, or the exercise of any other
right or remedy. No waiver of any rights and remedies hereunder shall be deemed
made by Assignees unless in writing and duly executed. A waiver of any right or
remedy on any one occasion shall not be construed as a bar or waiver of any
right or remedy on future occasions, and no delay, omission, waiver or single or
partial exercise of any right or remedy shall be deemed to establish a custom or
course of dealing or performance between the parties hereto.
10.30-89
14. Rights Cumulative. All rights and remedies of Assignees pursuant to
this Assignment, the Guaranty or otherwise, shall be cumulative and
non-exclusive, and may be exercised singularly or concurrently.
15. Severability. In the event that any provision of this Assignment is
deemed to be invalid by reason of the operation of any law, or by reason of the
interpretation placed thereon by any court or any other governmental or
regulatory authority, this Assignment shall be construed as not containing such
provision and the invalidity of such provision shall not affect the validity of
any other provisions hereof, and any and all other provisions hereof which
otherwise are lawful and valid shall remain in full force and effect.
16. Notices. Any and all notices or other communications required or
permitted to be given under any of the provisions of this Assignment shall be in
writing and shall be deemed to have been duly given when personally delivered or
mailed by first class registered mail, return receipt requested, or by
commercial courier or delivery service, addressed to the parties at the
addresses set forth below (or at such other address as any party may specify by
notice to all other parties given as aforesaid):
If to Assignor, to:
Eastern Telecommunications Incorporated
0000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx.
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx X. Xxxxx, Esq.
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Assignees or Agent, to:
Xxxxxxx Xxxxxxxxxx
0000 Xxxxxx X
Xxxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxxx Xxxxxxx, Esq.
Xxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
10.30-90
17. Entire Agreement. This Assignment constitutes the entire agreement
of the parties with respect to the subject matter hereof, supersedes any
previous agreements or understandings among the parties with respect to such
subject matter, and may not be modified, amended or terminated except by a
written agreement specifically referring to this Assignment signed by all of the
parties hereto.
18. Successors and Assigns. This Assignment shall be binding upon and
inure to the benefit of and be enforceable by the each corporate party hereto
and its successors and assigns, and each individual party hereto and his heirs,
personal representatives, successors and assigns.
19. Captions. The headings in this Assignment are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
20. Counterparts. This Assignment may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which,
when taken together, shall be one and the same instrument.
21. Survival. All covenants, agreements, representations and warranties
made herein shall survive the execution and delivery of the Promissory Notes and
shall continue in full force and effect until the Obligations are paid and
performed in full.
22. Governing Law. This Assignment shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed entirely therein, without regard to conflicts of law
rules or principles.
23. Jurisdiction and Venue. Each party hereby irrevocably consents to
the sole and exclusive jurisdiction and venue of the courts of the State of New
York located in New York County and of any Federal court located in New York
County in connection with any action or proceeding arising out of or relating to
this Assignment, or the breach thereof. Each party hereby irrevocably waives any
objection to the laying of venue in New York County or based on the grounds of
forum non conveniens, which such party may now or hereafter have to the bringing
of any action or proceeding in such jurisdiction in respect of this Assignment.
24. Waiver of Right to Jury Trial. Assignees and Assignor each
acknowledge and agree that any controversy which may arise under this Assignment
would be based upon difficult and complex issues and therefore, Assignees and
Assignor each agree that any court proceeding arising out of any such
controversy will be tried in a court of competent jurisdiction by a judge
sitting without a jury.
10.30-91
25. No Construction Against Drafting Party. This Assignment shall be
construed and enforced without the aid of any canon or rule of law requiring
construction against the party drawing or causing this Assignment to be drawn.
IN WITNESS WHEREOF, this Assignment has been executed and delivered by
Assignees and by a duly authorized officer of Assignor on the date first set
forth above.
EASTERN TELECOMMUNICATIONS
INCORPORATED
By:
--------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: President
----------------------------------
Xxxxxxx Xxxxxxxxxx
----------------------------------
Xxxxxxxx Xxxxxxxxx
10.30-92
Exhibit H
GENERAL RELEASE
TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN,
KNOW THAT the undersigned, EASTERN TELECOMMUNICATIONS INCORPORATED,
a New York corporation having its principal place of business at 0000 Xxxx
Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000, as RELEASOR, in
consideration of the sum of Ten Dollars ($10.00), received from XXXXXXX
XXXXXXXXXX, XXXXXXXX XXXXXXXXX and ETI TELECOMMUNICATIONS INC., a New York
corporation, as RELEASEES, receipt whereof is hereby acknowledged, releases and
discharges each RELEASEE, and each RELEASEE's heirs, executors, administrators,
personal representatives, successors and assigns, from all actions, causes of
action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims, and
demands whatsoever, in law, admiralty or equity, which against each RELEASEE,
the RELEASOR or RELEASOR's successors and assigns ever had, now have or
hereafter can, shall or may have, for, upon, or by reason of any matter, cause
or thing whatsoever from the beginning of the world to the day of the date of
this RELEASE; provided, however, that nothing contained in this RELEASE shall be
construed to release either Xxxxxxx Xxxxxxxxxx or Xxxxxxxx Xxxxxxxxx from any
obligations that either of them may have to RELEASOR under any of the Related
Agreements, as such term is defined in the Stock Purchase Agreement, dated as of
August 11, 1997, among Xxxxxxx Xxxxxxxxxx, Xxxxxxxx Xxxxxxxxx and Group Long
Distance, Inc. The words "RELEASOR" and "RELEASEES" include all releasors and
all releasees under this RELEASE. This RELEASE may not be changed orally.
IN WITNESS WHEREOF, the RELEASOR has caused this RELEASE to be
executed by its duly authorized officer on August 11, 1997.
EASTERN TELECOMMUNICATIONS
INCORPORATED
By:
----------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: President
10.30-93
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On this 10th day of August 1997, before me personally appeared
Xxxxxx X. Xxxxx, Xx., to me known, who, by me duly sworn, did depose and say
that deponent resides at , , , that deponent is the President of Eastern
Telecommunications Incorporated, the corporation described in and which executed
the foregoing RELEASE, that deponent knows the seal of the corporation, that the
seal affixed to the RELEASE is the corporate seal, that it was affixed by order
of the board of directors of the corporation; and that deponent signed
deponent's name by like order.
---------------------------------
Notary Public
10.30-94
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of August 11, 1997, made by EASTERN
TELECOMMUNICATIONS INCORPORATED, a New York corporation having an office at 0000
Xxxx Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000
("Indemnitor"), in favor of XXXXXXX XXXXXXXXXX, an individual residing at 0000
Xxxxxx X, Xxxxxxxx, Xxx Xxxx 00000, and XXXXXXXX XXXXXXXXX, an individual
residing at 0000 Xxxx 0xx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (individually, an
"Indemnitee" and collectively, the "Indemnitees").
W I T N E S S E T H:
WHEREAS, Indemnitees and Group Long Distance, Inc., a Florida
corporation ("GLD"), have entered into a Stock Purchase Agreement dated as of
August 11, 1997 (the "Purchase Agreement"), pursuant to which Indemnitees have
agreed to sell to GLD all of the issued and outstanding capital stock of
Indemnitor;
WHEREAS, Indemnitees would be unwilling to execute and deliver the
Purchase Agreement and consummate the transactions contemplated thereby but for
the execution and delivery by Indemnitor of this Indemnification Agreement; and
WHEREAS, Indemnitor will be benefitted by the execution and delivery of
the Purchase Agreement and the consummation of the transactions contemplated
thereby;
NOW, THEREFORE, in order to induce Indemnitees to execute and deliver
the Purchase Agreement and consummate the transactions contemplated thereby, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Indemnitor agrees as follows:
1. Indemnitor hereby agrees to indemnify and hold Indemnitees harmless
from, against and in respect of any and all loss, claim, liability, damage,
cost, expense, interest, award, judgment, fine and penalties (including
reasonable legal fees and expenses) resulting from (i) any debts, liabilities,
or obligations of Indemnitor, direct or indirect, fixed, contingent or
otherwise, whether arising or existing before or after the date of the Purchase
Agreement, and (ii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including without limitation legal
fees and expenses) incident to any of the foregoing or incurred in enforcing
this indemnity; provided, however, this indemnity shall not apply to any
Purchaser Loss (as defined in the Purchase Agreement) for which GLD is entitled
to be indemnified by Indemnitees under the Purchase Agreement.
10.30-95
2. Whenever any claim shall arise for indemnification hereunder,
Indemnitees shall provide written notice to Indemnitor as soon as possible but
in no event later than thirty (30) days of becoming aware of any such claim to
indemnification and, as expeditiously as possible thereafter, the facts
constituting the basis for such claim. In connection with any claim giving rise
to indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, Indemnitor, at its
sole cost and expense and upon written notice to Indemnitees, may assume the
defense of any such claim or legal proceeding with counsel reasonably
satisfactory to Indemnitees. Indemnitees shall be entitled to participate in the
defense of any such action, with their own counsel and at their own expense. If
Indemnitor does not assume the defense of any such claim or litigation resulting
therefrom, Indemnitees may defend against such claim or litigation in such
manner as they may deem appropriate.
3. All covenants, agreements, representations and warranties made
herein shall survive the execution and delivery of this Agreement and shall
continue in full force and effect indefinitely.
4. Any and all notices or other communications required or permitted to
be given under any of the provisions of this Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or mailed by
first class registered mail, return receipt requested, or by commercial courier
or delivery service, addressed to the parties at the addresses set forth below
(or at such other address as any party may specify by notice to all other
parties given as aforesaid):
If to Indemnitor, to:
Eastern Telecommunications Incorporated
0000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx.
with a copy to:
Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx X. Xxxxx, Esq.
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
10.30-96
If to Indemnitees, to:
Xxxxxxx Xxxxxxxxxx
0000 Xxxxxx X
Xxxxxxxx, Xxx Xxxx 00000
and
Xxxxxxxx Xxxxxxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxxx Xxxxxxx, Esq.
Xxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
5. All rights and remedies afforded to Indemnitees by reason of this
Agreement, or by law, are separate and cumulative and the exercise of one shall
not in any way limit or prejudice the exercise of any other such rights or
remedies. No delay or omission on the part of Indemnitees in exercising any
rights or remedies contained herein shall operate as a waiver of such right or
remedy or of any other right or remedy, and no single or partial exercise of any
right or remedy shall preclude any other or further exercise thereof, or the
exercise of any other right or remedy. No waiver of any rights and remedies
hereunder shall be deemed made by Indemnitees unless in writing and duly
executed. A waiver of any right or remedy on any one occasion shall not be
construed as a bar or waiver of any right or remedy on future occasions, and no
delay, omission, waiver or single or partial exercise of any right or remedy
shall be deemed to establish a custom or course of dealing or performance
between the parties hereto.
6. Indemnitor hereby represents and warrants to Indemnitees that the
execution and performance by Indemnitor of the terms and provisions of this
Agreement have been duly authorized by all requisite corporate action, and
neither the execution nor the performance of this Agreement will violate any
provision of law, any order of any court or other agency of government, the
articles of incorporation or by-laws of Indemnitor, or any indenture, agreement
or other instrument to which it is a party or by which it is bound.
10.30-97
7. Indemnitees and Indemnitor each acknowledge and agree that any
controversy which may arise under this Agreement would be based upon difficult
and complex issues and therefore, Indemnitees and Indemnitor each agree that any
court proceeding arising out of any such controversy will be tried in a court of
competent jurisdiction by a judge sitting without a jury.
8. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed entirely therein, without regard to conflicts of law rules or
principles.
9. Each party hereby irrevocably consents to the sole and exclusive
jurisdiction and venue of the courts of the State of New York located in New
York County and of any Federal court located in New York County in connection
with any action or proceeding arising out of or relating to this Agreement, or
the breach thereof. Each party hereby irrevocably waives any objection to the
laying of venue in New York County or based on the grounds of forum non
conveniens, which such party may now or hereafter have to the bringing of any
action or proceeding in such jurisdiction in respect of this Agreement.
10. This Agreement shall be construed and enforced without the aid of
any canon or rule of law requiring construction against the party drawing or
causing this Agreement to be drawn.
11. If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.
12. This Agreement shall inure to the benefit of, and be enforceable
by, Indemnitees and their heirs, representatives, successors and assigns, and
shall be binding upon, and enforceable against, Indemnitor and Indemnitor's
successors and assigns.
13. This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof, supersedes any previous agreements or
understandings among the parties with respect to such subject matter, and may
not be modified, amended or terminated except by a written agreement
specifically referring to this Agreement signed by Indemnitor and Indemnitees.
14. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which, when taken together,
shall be one and the same instrument.
10.30-98
IN WITNESS WHEREOF, Indemnitor has caused this Agreement to be executed
by its duly authorized officer as of the day and year first above written.
EASTERN TELECOMMUNICATIONS
INCORPORATED
By:
-----------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: President
-------------------------------
Xxxxxxx Xxxxxxxxxx
-------------------------------
Xxxxxxxx Xxxxxxxxx
10.30-99
