NETWORK AGREEMENT
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THIS AGREEMENT is dated as of the 25th day of May, 2000, by and among
Network Consulting Group, Inc., ("Network") and VDC Communications, Inc.
("VDC").
WITNESSETH:
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WHEREAS, pursuant to a Merger Agreement by and among VDC, Voice & Data
Communications (Latin America), Inc. (the "Sub"), Rare Telephony, Inc., a Nevada
corporation (f/k/a Washoe Technology Corporation) ("Rare Telephony"), and the
holders of all of the outstanding shares of common stock of Rare Telephony dated
May 25, 2000 (the "Merger Agreement"), Rare Telephony will be merging with and
into the Sub (the "Merger") for shares of common stock of VDC (the "Shares");
WHEREAS, in connection with the Merger, VDC, the Sub, the Rare
Telephony Shareholders, and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Professional Corporation entered
into an Escrow Agreement, dated May 25, 2000 (the "Escrow Agreement");
WHEREAS, the terms of the Merger Agreement provide for the execution of
this Agreement.
WHEREAS, attached hereto as Exhibit "A" and incorporated herein by
reference is a list of certain leases to which Network is a party ("Leases").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. Additional Payments. VDC shall pay to Network TEN DOLLARS AND NO/100
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($10.00).
2. Performance Under Leases.
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(a) Network shall make each and every payment (other than end of
Lease fair market value or ONE DOLLAR AND NO/100 ($1.00) payments) due from
Network under the Leases.
(b) Network shall otherwise fully perform all of its agreements,
duties, responsibilities, obligations, and covenants under each of the Leases
(other than end of Lease fair market value or ONE DOLLAR AND NO/100 ($1.00)
payments).
3. End of Lease Payments. Within thirty (30) calendar days of the end of
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each Lease, Network shall notify VDC in writing of the fact that the Lease is
about to end. Upon the payment of the end of Lease payment (i.e. the FMV payment
or the ONE DOLLAR AND NO/100 ($1.00) payment) by VDC or one of its subsidiaries
or affiliates to either Network or the lessor under the Lease, in VDC's sole
discretion, Network shall immediately take any and all action necessary or
appropriate (including, without limitation the execution of document(s)
requested by VDC's counsel) to transfer all of Network's right, title, and
interest in and to the equipment or property that is the subject of the Lease to
VDC or one of its subsidiaries or affiliates, as directed by VDC. Additionally,
at any time thereafter, Network shall execute and deliver or cause to be
executed and delivered such further instruments of conveyance, assignment and
transfer and take such further action as VDC may request in order more
effectively to sell, assign, convey, transfer, reduce to possession and record
title to the equipment or property that is the subject of the Lease. Network
agrees to cooperate with VDC in all respects to assure the continued title to
and possession of such equipment and property in VDC or the VDC subsidiary or
affiliate of VDC's choosing.
4. Certain Remedies for VDC in the Event of Default. IF NETWORK BREACHES
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ANY MATERIAL TERM OF THIS AGREEMENT OR OF ANY ONE OF THE LEASES (AND ANY SUCH
BREACH REMAINS UNCURED FIFTEEN (15) CALENDAR DAYS AFTER NOTICE OF SUCH BREACH IS
GIVEN BY VDC OR THE LESSOR, OR ITS AGENT, FOR ANY LEASE) (EACH SUCH BREACH AND
FAILURE TO CURE CONSTITUTING A "NETWORK DEFAULT EVENT"), NETWORK SHALL FORFEIT
SHARES ISSUED IN ITS NAME PURSUANT TO THE MERGER AND MERGER AGREEMENT (THE
"NETWORK SHARES") UPON THE TERMS AND CONDITIONS SET FORTH IN THE ESCROW
AGREEMENT. TO THE EXTENT THERE ARE NOT ENOUGH NETWORK SHARES BEING HELD IN
ESCROW PURSUANT TO THE ESCROW AGREEMENT TO COVER THE FORFEITURES ABOVE, THEN,
WITHIN FIVE (5) CALENDAR DAYS OF RECEIVING NOTICE OF THIS FACT FROM VDC, NETWORK
SHALL DELIVER ADDITIONAL VDC SHARES TO VDC FOR CANCELLATION TO COVER ANY SUCH
DEFICIENCY. NETWORK ACKNOWLEDGES AND AGREES THAT THE FORFEITURE OF THE NETWORK
SHARES IS IN ADDITION TO ANY OTHER REMEDIES WHICH VDC MAY HAVE AT LAW, IN
EQUITY, OR OTHERWISE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE
PARTIES HEREBY AGREE THAT EVEN IN THE EVENT OF A NETWORK DEFAULT EVENT PURSUANT
TO WHICH THE NETWORK SHARES ARE FORFEITED IN ACCORDANCE WITH THE TERMS OF THE
ESCROW AGREEMENT, NETWORK SHALL STILL BE OBLIGATED TO PAY AND PERFORM UNDER THE
LEASES AND VDC SHALL BE ENTITLED TO RECOVER MONETARY DAMAGES AND ALL OTHER
REMEDIES AVAILABLE AT LAW, EQUITY, OR OTHERWISE.
5. Certain Representations and Warranties of Network.
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(a) Network represents and warrants to VDC as follows:
(1) If Network is a corporation or a company, it is
duly organized or duly formed, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation or formation and has the corporate
or company power and authority to own its property and carry on its business as
owned and carried on at the date hereof and as contemplated hereby. Network is
duly licensed or qualified to do business and in good standing in each of the
jurisdictions in which the failure to be so licensed or qualified would have a
material adverse effect on its financial condition or its ability to perform its
obligations hereunder. Network has the individual, corporate, or company power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder and the financial resources to perform its obligations
hereunder, if Network is a corporation or partnership, the execution, delivery,
and performance of this Agreement has been duly authorized by all necessary
corporate or partnership action. This Agreement constitutes the legal, valid,
and binding obligation of Network.
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(2) Neither the execution, delivery, and performance of
this Agreement nor the consummation by Network of the transactions contemplated
hereby (i) will conflict with, violate, or result in a breach of any of the
terms, conditions, or provisions of any law, regulation, order, writ,
injunction, decree, determination, or award of any court, any governmental
department, board, agency, or instrumentality, domestic or foreign, or any
arbitrator, applicable to Network or any of its wholly owned affiliates, (ii)
will conflict with, violate, result in a breach of, or constitute a default
under any of the terms, conditions, or provisions of the articles of
incorporation, bylaws, or company agreement of Network or any of its wholly
owned affiliates if Network is a corporation or company, or of any material
agreement or instrument to which Network or any of its wholly owned affiliates
is a party or by which Network or any of its wholly owned affiliates is or may
be bound or to which any of its material properties or assets is subject, (iii)
will conflict with, violate, result in a breach of, constitute a default under
(whether with notice or lapse of time or both), accelerate or permit the
acceleration of the performance required by, give to others any material
interests or rights, or require any consent, authorization, or approval under
any indenture, mortgage, lease agreement, or instrument to which Network or any
of its wholly owned affiliates is a party or by which Network or any of its
wholly owned affiliates is or may be bound, or (iv) will result in the creation
or imposition of any lien upon any of the material properties or assets of
Network or any of its wholly owned affiliates.
(3) There are no actions, suits, proceedings, or
investigations pending or, to the knowledge of Network or any of its wholly
owned affiliates, threatened against or affecting Network or any of its wholly
owned affiliates or any of their properties, assets, or businesses in any court
or before or by any governmental department, board, agency, or instrumentality,
domestic or foreign, or any arbitrator which could, if adversely determined (or,
in the case of an investigation could lead to any action, suit, or proceeding,
which if adversely determined could) reasonably be expected to materially impair
Network's ability to perform its obligations under this Agreement or to have a
material adverse effect on the consolidated financial condition of Network; and
Network or any of its wholly owned affiliates has not received any currently
effective notice of any default, and Network or any of its wholly owned
affiliates is not in default, under any applicable order, writ, injunction,
decree, permit, determination, or award of any court, any governmental
department, board, agency, or instrumentality, domestic or foreign, or any
arbitrator which could reasonably be expected to materially impair Network's
ability to perform its obligations under this Agreement or to have a material
adverse effect on the consolidated financial condition of Network.
(4) All parties to all of the Leases have performed all
obligations required to be performed to date under such Leases, and no party is
in default or in arrears under the terms thereof, and no condition exists or
event has occurred which, with the giving of notice or lapse of time or both,
would constitute a default thereunder.
(5) Under the terms of each Lease, at the end of each
Lease, Network has the right to obtain free and clear title to the equipment and
property that is the subject of each Lease upon payment of either an end of
Lease fair market value payment or ONE DOLLAR AND NO/100 ($1.00) payment.
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(6) Exhibit "A" hereto is a true and accurate summary
of the leases referenced therein. There are no leases to which Network is a
party for equipment used by Rare Telephony and/or its subsidiaries other than
those listed in Exhibit "A."
(b) Network shall indemnify, protect, defend (with counsel chosen
by VDC) and hold harmless VDC, and its officers, directors, employees, agents,
representatives, subsidiaries, affiliates, and controlling entities
(collectively, "Indemnified Persons") for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage, expense (including,
without limitation, attorneys' fees and an allocable portion of in-house counsel
fees) or the diminution of value, whether or not involving a third-party claim,
directly or indirectly from or in connection with any inaccuracy of, or
associated with, any representation or warranty made by Network in this
Agreement. The rights to indemnification hereunder shall not be affected by any
investigation conducted with respect to, or any knowledge acquired (or capable
of being acquired) at any time, whether before or after the execution and
delivery of this Agreement, with respect to the accuracy or inaccuracy of or
compliance with any such representation, warranty, or obligation.
6. Guaranty. The performance and payments of Network pursuant to this
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Agreement and the Leases are guaranteed by a Guaranty Agreement of even date
executed by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
7. Miscellaneous.
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(a) Except as otherwise provided in this Agreement (or otherwise
authorized by VDC in writing in advance), Network is not authorized to act as an
agent for, or legal representative of, VDC or its subsidiaries or affiliates and
Network shall not have the authority to assume or create any obligation on
behalf of, in the name of, or binding upon VDC or its subsidiaries or
affiliates. This Agreement does not create a joint venture or partnership of any
kind between the parties.
(b) The failure of either party at any time or times to require
performance of any provision hereof shall in no manner affect the right at a
later time to enforce the same. To be effective, any waiver must be contained in
a written instrument signed by the party waiving compliance by the other party
of the term or covenant as specified. The waiver by either party of the breach
of any term or covenant contained herein, whether by conduct or otherwise, in
any one or more instances, shall not be deemed to be, or construed as, a further
or continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
(c) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, successors and assigns.
(d) Network shall not assign this Agreement to any other
corporation, firm or person without the express and written prior consent of
VDC. VDC may assign this Agreement without Network's consent.
(e) This Agreement may not be amended except by an instrument
in writing, executed by the parties.
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(f) If any term or provision of this Agreement is determined to
be illegal, unenforceable, or invalid in whole or in part for any reason by an
arbitrator or court of competent jurisdiction, such illegal, unenforceable, or
invalid provisions or part(s) thereof shall be stricken from this Agreement and
such provision shall not affect the legality, enforceability, or validity of the
remainder of this section, then the stricken provision shall be replaced, to the
extent possible, with a legal, enforceable, and valid provision that is as
similar in tenor to the stricken provision as is legally possible.
(g) This Agreement may be executed in multiple counterparts each
of which shall be an original but all of which together shall constitute one and
the same instrument. This Agreement may also be executed and delivered by
exchange of facsimile copies showing the signatures of the parties, and those
signatures need not be affixed to the same copy. The facsimile copies showing
the signatures of the parties will constitute originally signed copies of the
Agreement requiring no further execution.
(h) Each right and remedy granted to VDC under this Agreement
shall be cumulative and in addition to any other right or remedy existing in
equity, at law, by virtue of statute or otherwise, and may be exercised by VDC
from time to time concurrently or independently and as often and in such order
as VDC may elect. Any failure or delay on the part of VDC in exercising any such
right or remedy shall not operate as a waiver thereof.
(i) The parties acknowledge that the execution and delivery of
this Agreement was a material inducement to VDC's decision to consummate the
Merger.
(j) The recitals to this Agreement constitute part of this
Agreement.
(k) All notices, requests, instructions, consents and other
communications to be given pursuant to this Agreement shall be in writing and
shall be deemed received (i) on the same day if delivered in person, by same-day
courier or by telegraph, telex or facsimile transmission (receipt confirmed)
(provided that telegraph, telex or facsimile notice shall be deemed received on
the next business day if received after 5:00 p.m. Eastern Standard Time), (ii)
on the next day if delivered by overnight mail or courier, or (iii) on the date
indicated on the return receipt, or if there is no such receipt, on the third
calendar day (excluding Sundays) if delivered by certified or registered mail,
postage prepaid, to the party for whom intended to the following addresses (or
to such other addresses and facsimile numbers as a party may designate by notice
to the other party):
(a) if to Network at:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Network Consulting Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if to VDC at:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
VDC Communications, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
VDC Communications, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(l) This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of Connecticut applicable
to contracts executed and to be performed entirely within said State. All
controversies or claims arising out of or relating to this Agreement shall be
determined by binding arbitration applying the laws of the State of Connecticut.
The arbitration shall be conducted at VDC's offices in Greenwich, Connecticut,
or at such other location designated by VDC, before the American Arbitration
Association. The decision of the arbitrator(s) shall be final and binding upon
the parties, and judgment may be obtained thereon in any court of competent
jurisdiction. Except as provided in Section 7(m), each party shall bear the cost
of preparing and presenting its own case. Except as provided in Section 7(m),
the cost of the arbitration, including the fees and expenses of the
arbitrator(s), shall be shared equally by the parties hereto unless the award
otherwise provides. Nothing herein shall preclude a party from seeking
injunctive relief to restrain any breach or threatened breach of the covenants
and agreements set forth in this Agreement or otherwise to obtain specific
performance of any such covenant or agreement, without the necessity of posting
bond or security in connection therewith.
(m) Network agrees unconditionally upon demand to pay or reimburse
VDC and to hold VDC harmless against liability for the payment of all reasonable
out-of-pocket costs, expenses and disbursements, including but not limited to
fees and expenses of counsel, incurred by VDC in connection with the enforcement
of this Agreement or collection of amounts due hereunder or the proof and
allowability of any claim arising under this Agreement.
(n) This Agreement will not be construed more strictly against
one party then against the other by virtue of the fact that drafts may have been
prepared by counsel for one of the parties, it being recognized that this
Agreement is the product of negotiations between the parties and that the
parties have contributed to the final preparation of this Agreement.
(o) The following sections (including all subsections thereto) of
the Agreement, without limitation, shall be deemed material: Section 2, Section
3, Section 4, ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇(▇), ▇▇▇▇▇▇▇ ▇(▇), and Section 7(p).
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(p) Within ten (10) calendar days of receipt of a written request
from VDC, Network shall provide VDC with a statement (sworn to by the President
or CEO of Network before a Notary Public and signed by said Notary Public and
said President or CEO) that, as of the date of said statement, Network has
complied with all material terms of this Agreement. Network shall provide VDC
with a copy of any notice of default, breach, or late or missed payment received
by Network for any Lease within two (2) calendar days of receipt by Network.
Within ten (10) calendar days of receipt of a written request from VDC, Network
shall provide VDC with such unaudited financial or other statements regarding
the condition and operations of Network as VDC may from time to time reasonably
request.
(q) Upon Network's failure to pay any amount or perform any
obligation under any Lease when due, VDC (or any subsidiary or affiliate of its
choosing) shall have the right, but shall not be obligated, to pay such sum or
perform such obligation, whereupon such sum or cost of such performance shall be
due from Network and payable to VDC (or the subsidiary or affiliate thereof
performing), with interest thereon at fifteen percent (15%) per annum from the
date such payment or performance was made.
(r) Each party represents and warrants that (i) it has carefully
read this Agreement, (ii) it has had the assistance of legal counsel of its
choosing (and such other professionals and advisors as it has deemed necessary)
in the review and execution hereof, (iii) the meaning and effect of the various
terms and provision hereof have been fully explained to it by such counsel, (iv)
it has conducted such investigation, review and analysis as it has deemed
necessary to understand the provisions of this Agreement and the transactions
contemplated hereby, and (v) it has executed this Agreement of its own free
will.
(s) This Agreement shall become effective as of the "Effective
Time" of the Merger (as defined in the Merger Agreement). The "Effective Time"
of the Merger for purposes of this Agreement shall be the "Effective Time"
indicated on an "Effective Time Certificate" executed by VDC at the closing of
the Merger.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
ATTEST: VDC:
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ VDC COMMUNICATIONS, INC.
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Signature
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------ Chief Executive Officer
Print Name
ATTEST: NETWORK:
/s/ ▇▇▇▇▇ Santa Lucia NETWORK CONSULTING GROUP, INC.
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Signature
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Pres
---------------------------------
▇▇▇▇▇ Santa Lucia ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------ President
Print Name
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