Document:

zmtp_ex101.htm

Exhibit 10.1

 

CONFIDENTIAL

 

 

SUBSCRIPTION AGREEMENT

FOR SHARES OF COMMON STOCK

 

(the “Common Stock Offering”)

 

by and between

 

ZOOM TELEPHONICS, INC.

a Delaware corporation (“Zoom” or the “Company”)

 

and the

 

SUBSCRIBER IDENTIFIED BELOW (“Subscriber”)

(Note:  If the Subscriber is a corporate entity, trust, joint account or

 

other than a single individual, the name, address, telephone number and social security

 

number or employer identification number of each beneficial owner, other than the Subscriber, should be set forth on a separate sheet.)

 

	
Name and Address of the Subscriber

	  
	  	  
	  	  
	
Tel. No. of the Subscriber

	  
	
Email Address of the Subscriber

	  
	
Soc. Sec. No. or EIN of the Subscriber

	  
	
$ Amount Subscribed.

	  

 

W I T N E S S E T H:

 

WHEREAS, Zoom is seeking to raise up to $4,000,000 through the sale of shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), at a per share purchase price equal to $0.70;

 

WHEREAS, the Company will provide certain registration rights and pre-emptive rights in connection with Subsequent Financings (as hereinafter defined) to the Subscriber as provided herein;

 

  

  

  

WHEREAS, Zoom has given the Subscriber the opportunity to conduct an independent investigation of the Company and ask pertinent questions regarding an investment in the Company, and officers of the Company have made themselves available to the Subscriber for such purposes;

 

WHEREAS, Subscriber has reviewed the Confidential Offering Memorandum dated September 2015, including all exhibits and attachments thereto, (the “Offering Memorandum”); and

 

WHEREAS, with full consideration of the risk factors set forth in the Offering Memorandum and otherwise involved in an investment in the Company, the Subscriber desires to acquire the shares of Common Stock as provided herein. 

 

1.         Subscriber’s Representations as to Status.  The Subscriber represents and warrants to the Company that it is an "Accredited Investor" within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), and Regulation D promulgated thereunder as follows (inapplicable statements should be crossed out.):

 

(a)         The Subscriber has consulted counsel to the extent it deems necessary concerning the propriety and appropriateness of making an investment in the Company.

 

REPRESENTATIONS FOR INDIVIDUALS

 

(b)(i)  If the Subscriber is an individual, all statements shall apply to you unless you cross them out:

 

	
●   

	
Your net worth (including assets jointly held with your spouse, if any) including homes, home furnishings and automobiles, but excluding the value of your primary residence and excluding the value of any indebtedness secured by your primary residence, exceeds $1,000,000 (valuing your assets on the basis of current market value).

 

	
●   

	
Your individual income (as defined in footnote 1) for each of the years 2012, 2013 and 2014 was, and your individual income for 2015 is expected to be, in excess of $200,000.

 

	
●   

	
Your joint income (as defined in footnote 1) of you and your spouse for each of the years 2012, 2013 and 2014 was, and the income of you and your spouse for 2015 is expected to be, in excess of $300,000.

 

 

1 For purposes of determining whether any of the statements apply to you, “individual income” means your individual adjusted gross income (not including that of your spouse) and “joint income” means the adjusted gross income of both you and your spouse (even if you file separate tax returns) in all cases increased by (i) any deduction for depletion under Section 611, et seq., of the Internal Revenue Code of 1986, as amended (the “Code”), (ii) any exclusion for interest under Section 103 of the Code, and (iii) any losses of a partnership allocated to you as an individual limited partner as reported on Schedule E of Form 1040. Notwithstanding the foregoing, if you are self-employed, deduct any operating expenses of your proprietorship from revenues. Also, if you are employed and incurred significant expenses in connection with earning your salary, deduct the amount of such expenses from your adjusted gross income when computing your income.

 

  

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●   

	
You do not expect your current level of income to significantly decrease in the foreseeable future.

 

	
●   

	
You do not have any other investments or contingent liabilities which you reasonably anticipate could cause you to need sudden cash requirements in excess of cash readily available to you.

 

REPRESENTATIONS FOR ENTITIES

 

(b)(ii)           If the Subscriber is an entity, trust, pension fund or IRA account (an “Entity”), the Entity and the person signing on its behalf  represent and warrant that: (A) such Entity is an existing entity, and has not been organized or reorganized for the purpose of making this investment (or if  not true, such fact shall be disclosed to the Company in writing along with information concerning the beneficial owners of the Entity), (B) the Subscriber has the authority to execute this Subscription Agreement, and any other documents in connection with an investment in shares of Common Stock, on the Entity's behalf, (C) the Entity has the power, right and authority to invest in shares of Common Stock and enter into the transactions contemplated thereby, and that the investment is suitable and appropriate for the Entity and its beneficiaries (given the risks and illiquid nature of the investment) and (D) all documents executed by the Entity in connection with its investment in the Company are valid and binding documents or agreements of the Entity enforceable in accordance  with their terms.

 

2.         Subscriber’s Non-Reliance. The Subscriber represents, warrants, acknowledges and agrees that (the use of “he,” “his,” “you” or “yours” shall be deemed to include “she,” “hers” and “it” where appropriate):

 

(a)         He is entering into this Subscription Agreement relying solely on the facts and terms set forth in this Subscription Agreement, and he has received the Offering Memorandum and copies of all documents requested and the Company has not made any representations of any kind or nature to induce the Subscriber to enter into this Subscription Agreement except as specifically set forth herein.

 

(b)         He has made an investigation of the pertinent facts relating to the operation of the Company and has reviewed the terms of this Subscription Agreement to the extent that he deems necessary in order to be fully informed with respect thereto.

 

(c)         He has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Company.   The Subscriber is able to bear the substantial economic risks of an investment in the Company for an indefinite period of time, has no need for liquidity in such investment and could afford a complete loss of such investment.  He understands that the purchase of the shares of Common Stock is a speculative investment that involves a high degree of risk.

 

(d)         He will be acquiring the shares of Common Stock for investment, for his own account and not for the interest of any other person and not for distribution or resale to others, and he will not permit any other person to acquire a beneficial interest in the shares of Common Stock being subscribed for without the consent of the Company.  He understands that the shares of Common Stock have not been registered under the Securities Act, and he agrees that his interest 

 

  

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in the Company may not be sold, transferred, or otherwise disposed of except pursuant to an effective registration statement or an exemption from registration under the Securities Act.  He understands and agrees that, until registered under the Securities Act or transferred pursuant to Rule 144 (as defined herein), all certificates evidencing any of the shares of Common Stock, whether upon initial issuance or upon any transfer thereof, shall bear and legend, prominently stamped or printed thereon, reading substantially as follows:

 

These securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or applicable state securities laws. These securities have been acquired for investment and not with a view to their distribution or resale, and may not be sold, pledged, or otherwise transferred without an effective registration statement for such securities under the Securities Act and applicable state securities laws, or an opinion of counsel satisfactory to the Company to the effect that such registration is not required.

 

(e)         He understands the effect of the limitations on disposition and of his representation that his interest in the Company will not be sold, transferred or otherwise disposed of except pursuant to an effective registration statement or an exemption from registration under the Securities Act.  He understands that in certain circumstances transfers can be made only with the consent of the Company, in its sole discretion.

 

(f)         No person is acting or authorized to act as his representative in connection with his subscription.

 

(g)         He did not learn of the investment in the shares of Common Stock as a result of any public advertising or general solicitation.

 

3.         Subscriber’s Authority.  If the Subscriber is a corporation, partnership, trust or other Entity, the person executing this Subscription Agreement has the full power and authority under the Subscriber's governing instruments to do so and the Subscriber has the full power and authority under its governing instruments to become a stockholder of the Company.

 

4.         Tax Matters.  If the Subscriber is a pension plan, IRA or other tax-exempt entity, it is aware that it may be subject to federal income tax on any unrelated business taxable income from its investment in the Company.

 

5.         Confirmatory Representations.  The Subscriber hereby agrees that any representation made hereunder will be deemed to be reaffirmed at any time the Subscriber makes an additional capital contribution to the Company and the act of making such additional contribution will be evidence of such reaffirmation.

 

6.           Registration Rights.

 

(a) Shelf Registration.  No later than thirty (30) days after the date on which the Company has closed on an aggregate of at least $3,000,000 in the Common Stock Offering (the “Closing Date”), the Company shall prepare and file with the Securities and Exchange Commission (the “SEC”)  a registration statement (“Registration Statement”) covering the resale of all of the shares of Common Stock sold in the Common Stock Offering (the “Registrable 

 

  

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Securities”) for an offering to be made on a continuous basis pursuant to Rule 415 of the Securities Act. The Registration Statement filed hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith).  The Company shall use its commercially reasonable efforts to cause such Registration Statement to be declared effective under the Securities Act not later than 120 days after the Closing Date.  The Company shall use its commercially reasonable efforts to keep such Registration Statement continuously effective under the Securities Act until the earliest of: (i) such time as all Registrable Securities covered by such Registration Statement have been sold, thereunder or pursuant to Rule 144, (ii) such time as all Registrable Securities covered by such Registration Statement (other than Registrable Securities held by persons who are affiliates of the Company) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144; or (iii) one year from the Closing Date.  The Company shall promptly notify the Subscriber of the effectiveness of a Registration Statement.

 

(b)  Limitation of Registration.  Notwithstanding the registration obligations set forth in Section 6(a), if the SEC informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly inform the Subscriber thereof and use its commercially reasonable efforts to file amendments to the Registration Statement as required by the SEC, covering the maximum number of Registrable Securities permitted to be registered by the SEC, on Form S-3 or such other form as is available to register for resale the Registrable Securities as a secondary offering.

 

(c) Indemnification.

 

(i) Indemnification by the Company.  The Company will indemnify and hold harmless Subscriber and its officers, directors, members, shareholders, partners, representatives, employees and agents, successors and assigns, and each other person, if any, who controls such Subscriber within the meaning of the Securities Act, against any losses, obligations, claims, damages, liabilities, contingencies, judgments, fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys’ fees and costs of defense and investigation), amounts paid in settlement or expenses, joint or several, (collectively, “Claims”) incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto, to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof; (ii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities laws thereof (any such application, document or information herein called a “Blue Sky Application”); (iii) the omission or alleged omission to state therein a material fact required to be stated therein or 

 

  

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necessary to make the statements therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated under the Securities Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration; or (v) any failure to register or qualify the Registrable Securities included in any such Registration Statement in any state where the Company or its agents has affirmatively undertaken or agreed in writing that the Company will undertake such registration or qualification on Subscriber’s behalf and will reimburse Subscriber, and each such officer, director or member and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by Subscriber or any such controlling person in writing specifically for use in such Registration Statement or prospectus.

 

(ii) Indemnification by Subscriber.  Subscriber agrees to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, stockholders, partner, representatives and each person who controls the Company (within the meaning of the Securities Act) against any Claims resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement or prospectus or preliminary prospectus or amendment or supplement thereto or necessary to make the statements therein not misleading, to the extent, but only to the extent that such untrue statement or omission is contained in any information furnished in writing by Subscriber to the Company specifically for inclusion in such Registration Statement or prospectus or amendment or supplement thereto.  In no event shall the liability of Subscriber be greater in amount than the dollar amount of the proceeds (net of all expense paid by Subscriber in connection with any claim relating to this Section 6(c) and the amount of any damages Subscriber has otherwise been required to pay by reason of such untrue statement or omission) received by Subscriber upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.

 

(iii) Conduct of Indemnification Proceedings.  Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim or employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially 

 

  

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adversely affect the indemnifying party in the defense of any such claim or litigation.  It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties.  No indemnifying party will, except with the consent of the indemnified party, which consent shall not be unreasonably withheld or delayed, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation.

 

(iv) Contribution.  If for any reason the indemnification provided for in the preceding paragraphs (i) and (ii) is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Claim in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations.  No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation.  In no event shall the contribution obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 6(c) and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.

 

(d) Obligations of the Subscriber.  It shall be a condition precedent to the obligations of the Company to register the shares of Common Stock subscribed for under this Subscription Agreement that the Subscriber furnish to the Company such information regarding the Subscriber, the shares of Common Stock subscribed for under this Subscription Agreement and the intended method of disposition of the shares of Common Stock subscribed for under this Subscription Agreement as shall be reasonably required to effect the registration of the shares of Common Stock subscribed for under this Subscription Agreement and shall execute such documents and agreements in connection with such registration as the Company may reasonably request.  Subscriber shall cooperate as reasonably requested by the Company in connection with the preparation of the registration statement with respect to such registration, and for so long as the Company is obligated to file and keep effective such registration statement, shall provide to the Company, in writing, for use in the registration statement, all such information regarding the Subscriber and its plan of distribution of the Registrable Securities included in such registration as may be reasonably necessary to enable the Company to prepare such registration statement, to maintain the currency and effectiveness thereof and otherwise to comply with all applicable requirements of law in connection therewith.  At least ten (10) Business Days (as hereinafter defined) prior to the first anticipated filing date of the Registration Statement, the Company shall notify the Subscriber of the information the Company requires from him (the “Requested Information”) to have the shares of Common Stock subscribed for under this Subscription Agreement included in the Registration Statement.  If within three (3) Business Days of the filing date the Company has not received the Requested Information from the Subscriber, then the Company may file the Registration Statement without including the shares of Common Stock subscribed for under this Subscription Agreement by the Subscriber.  Subscriber shall furnish to 

 

  

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the Company or the underwriter, as applicable, such information regarding the Subscriber and the distribution proposed by it as the Company may reasonably request in connection with any registration or offering referred to in this Section 6.  For the purposes of this Subscription Agreement, the term “Business Day” means any day other than a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the Commonwealth of Massachusetts.

 

(e) Expenses of Registration.  In connection with any and all registrations pursuant to this Subscription Agreement, all expenses other than underwriting discounts and commissions incurred in connection with registration, filings or qualifications, including, without limitation, all registration, listing, filing and qualification fees, printing and accounting fees and costs, the fees and disbursements of counsel for the Company shall be borne by the Company.

 

(f) Reports Under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  With a view to making available to the Subscriber the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the security holders to sell securities of the Company to the public without registration (“Rule 144”), the Company shall at all times:

 

(i) make and keep public information available, as those terms are understood and defined in Rule 144; and

 

(ii) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act.

 

7.           Lock Up Agreement.  Subscriber acknowledges and agrees that he will not (1) offer, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, pledge, hypothecate, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, the shares of Common Stock subscribed for under this Subscription Agreement; or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the shares of Common Stock subscribed for under this Subscription Agreement, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of the shares of Common Stock, in cash or otherwise, for a period of 180 days subsequent to the Closing Date.  Subscriber further agrees not to enter into any private transaction involving the shares of Common Stock subscribed for under this Subscription Agreement unless (i) the Company receives an opinion of counsel acceptable in form and substance to the Company to the effect that the proposed transaction is exempt from the registration requirements of the Securities Act and (ii) the proposed transferee agrees to be bound by all the provisions in this Section 7 prior to any such private transaction.  Any waiver or termination by the Company of the requirements of this Section 7 shall apply to all Subscribers in the Common Stock Offering, pro rata, based on the number of shares of Common Stock purchased by such Subscriber in the Common Stock Offering.  Notwithstanding anything to the contrary contained herein, the restrictions contained herein shall not apply to the transfer of the shares of Common Stock subscribed for under this Subscription Agreement to any trust, partnership or limited liability company for the direct or indirect benefit of such Subscriber and/or the immediate family of such Subscriber for estate planning purposes, provided that (i) the trustee of the trust, partnership or the limited liability company, as the case may be, agrees in writing to be subject to the restrictions of this Section 7 and (ii) any such transfer shall not involve a disposition for value.

 

  

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8.           Subsequent Financings.  In the event that prior to the one year anniversary of the Closing Date, the Company proposes to issue Common Stock or common stock equivalents for cash consideration of $500,000 or greater, in one more transactions, with the primary purpose of raising capital (each, a “Subsequent Financing”), the Subscriber shall have the right to participate in each such Subsequent Financing in an amount necessary to maintain the Subscriber’s pro-rata ownership of the Company (calculated on a fully-diluted basis) on the same terms, conditions and price provided for in such Subsequent Financing (the “Participation Rights”).  The Company will provide the Subscriber written notice (the “Subsequent Financing Notice”) detailing the terms of the Subsequent Financing at least ten (10) trading days prior to the closing of a Subsequent Financing.  The Subscriber will have the option to participate in each Subsequent Financing for a period commencing on the date the Subsequent Financing Notice is received by the Subscriber and ending on the date that is five (5) trading days prior to the closing of a Subsequent Financing.  A Subsequent Financing shall not include Excluded Issuances (as defined below).  In the event any Subscriber in the Common Stock Offering shall elect not to exercise his Participation Rights in any Subsequent Financing (a “Nonparticipating Subscriber”), the Subscribers in the Common Stock Offering who have elected to exercise their Participation Rights in full in such Subsequent Financing (each a “Participating Subscriber”) shall have the right to participate in such Subsequent Financing, on a pro rata basis, to the extent of such Nonparticipating Subscriber’s Participation Rights (the “Over Subscription Rights”).  The Company will provide each Participating Subscriber written notice of such Over Subscription Rights (the “Over Subscription Notice”) at least four (4) trading days prior to the closing of a Subsequent Financing.  The Participating Subscribers will have the option to exercise such Over Subscription Rights for a period commencing on the date the Over Subscription Notice is received by the Subscriber and ending on the date that is two (2) trading days prior to the closing of a Subsequent Financing.  Notwithstanding the foregoing, in the event the Company determines in its reasonable discretion that the exercise by a Subscriber of his Participation Rights or Over Subscription Rights under this Section 8 would cause the Company to risk losing the benefit of any tax-loss carryforwards, then such Subscriber will automatically be deemed to have waived his Participation Rights and/or Over Subscription Rights, as applicable.  “Excluded Issuances” shall mean (i) equity securities (including options and other convertible securities) issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock; (ii) equity securities (including options and other convertible securities) issued to employees or directors of, or consultants or advisors to, the Company or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Company’s Board of Directors; (iii)  shares of Common Stock issued upon the exercise of options or shares of Common Stock issued upon the conversion or exchange of convertible securities, in each case provided such issuance is pursuant to the terms of such option or convertible security; (iv) equity securities (including options and other convertible securities) issued to banks, equipment lessors or other financial institution pursuant to a debt financing or equipment leasing transaction, approved by the Company’s Board of Directors; (v) equity securities (including options and other convertible securities) issued in connection with any sponsored research, collaboration, technology license, development, OEM, marketing or other similar agreements, joint ventures, corporate partnerships or strategic alliances, approved by the Company’s Board of Directors; or (vi) equity securities (including options and other convertible securities) issued in connection with a merger, acquisition, or consolidation involving the Company.

9.         Standstill.  Subscriber agrees that, without the prior written consent of the Board of Directors of the Company, for a period of 2 years from the date hereof, neither Subscriber nor any of its affiliates (as such term is defined in Rule 12b-2 of the Exchange Act), acting alone or 

 

  

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as part of a group, will acquire or offer or agree to acquire, directly or indirectly, by purchase or otherwise, any Common Stock or other voting securities (or direct or indirect rights or options to acquire any voting securities) of the Company (i) to the extent that, after such acquisition, Subscriber, together with its affiliates, would beneficially own in excess of 4.9% of the Common Stock of the Company, or (ii) if prior to such acquisition, Subscriber, together with its affiliates, beneficially owns in excess of 4.9% of the Common Stock of the Company.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by Subscriber and its affiliates shall include the number of shares of Common Stock issuable upon conversion or exercise of any outstanding convertible securities beneficially owned by Subscriber or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Agreement, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, as amended, and the rules and regulations promulgated thereunder.  For purposes of this Agreement, in determining the number of outstanding shares of Common Stock, Subscriber may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Corporation’s most recent periodic or annual report filed with the SEC, as the case may be, (ii) a more recent public announcement by the Company or (iii) a more recent written notice by the Company setting forth the number of shares of Common Stock outstanding.

 

10.         Benefit of Agreement.  This Subscription Agreement shall inure to the benefit of and be binding upon each of the parties hereto, and their heirs, beneficiaries, successors, assignees and legal representatives, as may be applicable.

 

11.         Subscription for the Shares of Common Stock.  The Subscriber hereby subscribes for and agrees to purchase the number of shares of Common Stock that is equal to the quotient of the subscription amount set forth above, divided by the per share purchase price as determined in accordance with the terms of this Subscription Agreement, and has made a wire-transfer payment to the account set forth below in the subscription amount set forth above or has included a check for such amount herewith.

 

12.         Acceptance.  The Company shall not be obligated to accept the subscription for the shares of Common Stock, shall have the right, exercisable at its sole discretion, to reject the subscription at any time until the return of a copy of this Subscription Agreement duly executed by the Company and shall not be deemed to have accepted the subscription by the passage of time, by depositing the Subscriber’s check or by any other means except as expressly stated herein.  Upon rejection of the subscription, the payment tendered by the Subscriber herewith shall be promptly returned, without interest, and all provisions of this Subscription Agreement will become null and void except for Section 18.

 

13.         Restriction on Transfer and Resale.  The Subscriber shall not transfer, assign, hypothecate, pledge, sell or otherwise dispose of the shares of Common Stock to be purchased pursuant to this Subscription Agreement, except as may be permitted under the Securities Act and applicable state securities laws pursuant to registration or exemption therefrom.  The shares of Common Stock shall bear a legend to the effect that they have not been registered under the Securities Act, and may not be sold without registration or exemption therefrom.

 

14.         Adjustments for Stock Splits, Stock Dividends, Etc.  If from time to time while this Subscription Agreement shall remain in force and effect there is any stock split-up, stock 

 

  

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dividend, stock distribution or other reclassification of the capital stock of the Company, any and all new, substituted or additional securities to which the Subscriber is entitled by reason of his ownership of the shares of Common Stock shall be immediately subject to the restrictions on transfer and other provisions of this Subscription Agreement in the same manner and to the same extent as such shares of Common Stock purchased in the Common Stock Offering.

 

15.         Successors and Assigns.  Except as otherwise expressly provided herein, this Subscription Agreement shall bind and inure to the benefit of the Company and the Subscriber and their respective successors and assigns.  Notwithstanding the foregoing, the registration rights provided in Section 6 are personal to the Subscriber and are not transferable without the prior consent of the Company.  Any transfer of such rights without the consent of the Company shall be void.

 

16.         Entire Agreement. This Subscription Agreement is the complete and entire understanding between the parties as to the transactions contemplated hereby, and merges all prior agreements with respect thereto.  This Subscription Agreement may be executed in any number of counterparts and may not be altered or amended other than by written agreement signed by all the parties hereto.

 

17.         Amendments, Waivers and Consents.  Any provision in this Subscription Agreement to the contrary notwithstanding, amendments to, changes in or additions to this Subscription Agreement may be made, and compliance with any covenant or provision set forth herein may be omitted or waived, if the Company shall obtain consent thereto in writing from Subscribers purchasing at least a majority of the shares of Common Stock sold in the Common Stock Offering.

 

18.         Governing Law.  This Subscription Agreement shall be governed by the internal laws of the Commonwealth of Massachusetts.  The parties (a) agree that any legal suit, action or proceeding arising out of or relating to this Subscription Agreement shall be instituted exclusively in the Commonwealth of Massachusetts, Suffolk County, (b) waive any objection which such party may have now or hereafter to the venue of any such suit, action or proceeding, and (c) irrevocably consents to the jurisdiction of the Commonwealth of Massachusetts in any such suit, action or proceeding. The parties further agree to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the Commonwealth of Massachusetts.  THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SUBSCRIPTION AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.

 

19.         Confidential Information.  The information contained in this Subscription Agreement and in the Offering Memorandum is confidential and proprietary to the Company and is being submitted to prospective investors in the Company solely for such investors’ confidential use with the express understanding that, without the prior express written permission of the Company, such persons will not release this Subscription Agreement or the Offering Memorandum, discuss the information contained herein or in the Offering Memorandum or use this Subscription Agreement or the Offering Memorandum for any purpose other than evaluating a potential investment in the Company through the purchase of shares of Common Stock.

 

  

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A prospective investor, by accepting delivery of this Subscription Agreement, agrees to promptly return to the Company this Subscription Agreement, the Offering Memorandum and any other documents or information furnished by the Company if (a) the prospective investor elects not to purchase the shares of Common Stock offered hereby, (b) the prospective investor’s subscription is not accepted by the Company, or (c) the offering of the shares of Common Stock is terminated or withdrawn.

 

  

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IN WITNESS WHEREOF, the parties hereto have executed this Subscription Agreement as of the date provided below.

 

	 	ZOOM TELEPHONICS, INC.	 
	 	 	 	 
	
 

	
By: 

	/s/ 	 
	 	 	Frank B. Manning	 
	 	 	President and Chief Executive Officer	 
	 	 	 	 
	 	 	 	 
	 	
INVESTORS:

 

The Investors executing the Signature Page in the form attached hereto as Annex A and delivering the same to the Company or its agents shall be deemed to have executed this Agreement and agreed to the terms hereof.

	 
	 	 	 	 

  

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Annex A

Subscription Agreement

Investor Counterpart Signature Page

The undersigned, desiring to: (i) enter into this Subscription Agreement dated as of September  __, 2015 (the “Agreement”), with the undersigned, Zoom Telephonics, Inc., a Delaware corporation (the “Company”), in or substantially in the form furnished to the undersigned and (ii) purchase the shares of Common Stock as set forth below, hereby agrees to purchase such shares of Common Stock from the Company as of the Closing Date and further agrees to join the Subscription Agreement as a party thereto, with all the rights and privileges appertaining thereto, and to be bound in all respects by the terms and conditions thereof.  The undersigned specifically acknowledges having read the representations of the Subscribers in the Agreement and hereby represents that the statements contained therein are complete and accurate with respect to the undersigned as a Subscriber.

 

	 	
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The Subscriber hereby elects to purchase ____________ Shares (to be completed by Subscriber) at a purchase price of $0.70 per Share under the Subscription Agreement at a total Purchase Price of $_____________ (to be completed by Subscriber).

 

 

 

14EXPORTER SERVICES AGREEMENT

	      This Exporter Services Agreement (this "Agreement") is effective as of the date of the agreement is 9/25/2015 (the "Effective Date") and is by and between AmericaTowne, Inc., a Delaware corporation doing business at 353 E. Six Forks Road, Suite 270 in Raleigh, North Carolina 27609 ("AmericaTowne"), and  Mwaka Aircraft Services, LLC ( MAS) a North Carolina Corporation doing business at 1212 Bishopton Way Knightdale,  NC 27545 USA ("Exporter").  AmericaTowne and Exporter are collectively referred to as the "Parties" or each individually as a "Party".

      	WHEREAS, AmericaTowne is a publicly reporting company with the United States Securities and Exchange Commission (the "SEC"). Through those agreements disclosed in AmericaTowne's filings, it represents herein that it has the exclusive right, title and interest in certain intellectual property rights and other assets used in the introduction, maintenance and facilitation of the exportation of consumer goods into, amongst other countries, China, through the use of an international import trade platform ("AmericaTowne's Exporting Business").

      	WHEREAS, AmericaTowne's Exporting Business consists or will consist of exhibition, showroom and display facilities, support office(s) and staff located in the United States and China, and the platform consists or will consist of a buyer's network, and online websites either directly owned by AmericaTowne or in a partnership with third-parties in order to support the exhibition center, showroom and network to market imported goods and services to consumers in China (collectively referred to as the "AmericaTowne Platform").

      	WHEREAS, the AmericaTowne Platform is designed to save Exporter time, money, and other resources in testing the market to determine if a demand exists for their product or service in China. AmericaTowne will use its buyer's network, and staff in China and elsewhere to make its commercially reasonable best efforts to promote, distribute and market throughout the Exporter's goods and services and identify potential buyers and other business relationships for the Exporter's goods or services.

      	WHEREAS, AmericaTowne's Exporting Business compliments, in certain circumstances, specific businesses under separate agreement with AmericaTowne through Management Services and Lease Agreements ("Management Agreement").  The Parties agree that unless otherwise agreed, the Exporter is not subject to the rights, duties or obligations under the Management Agreement; rather, the rights, duties and obligations set forth herein are distinct from those under the Management Agreement.  The Parties agree that to the extent they are or shall become parties to a Management Agreement, this Agreement and the Management Agreement shall be merged forming a fully integrated agreement under Delaware law, and shall be read consistent with each other.

      	WHEREAS, the Parties agree that these recitals are not mere statements but statements in which they have each relied on in entering into this Agreement.

      	NOW, THEREFORE, for the consideration stated herein, the Parties agree as follows:

      	1. Term and Termination. This Agreement shall be effective on the Effective Date. This Agreement shall expire fifteen (15) years after the Effective Date, unless otherwise extended herein pursuant to Section 7, or terminated early as provided below for breach of a representation, warranty or term or condition of performance.  The Parties agree that termination of this Agreement does not terminate AmericaTowne's right to a Transaction Fee under Section 6(c).

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      	2. Good and Services Offered Through The AmericaTowne Platform. The goods and services covered by the AmericaTowne Platform, and the types of goods directed to wholesalers, agents, resellers or consumers, through online websites in China or physical locations, includes, but is not limited to, the following:

	(a)    	Imported food, agricultural, fishery and forestry products, personal care and daily necessities products, home decoration, accessories, and handicraft;

	(b)       Imported aviation industry, aircraft and helicopter and general aviation sales, training, maintenance, and parts, operations, club and financing, yachts; jewelry, and other luxury items;

	(c)    	Imported hospital equipment and supplies, and medical equipment and supplies; general machinery, computers, electronics, equipment and supplies;

	(d)    	Leisure community development, and senior care facilities, senior care products, and senior care services;

	(e)    	Imported high-end technology, other imported items and investment and financial services; and/or

	(f)    	Other goods or services deemed appropriate by AmericaTowne based on its expertise and experience in the target markets.

      	3. The AmericaTowne Platform Membership.  For the consideration set forth herein, and pursuant to the terms and conditions of this Agreement, AmericaTowne hereby grants a membership license to Exporter to test, market and sample the Exporter's goods and services in China and any other proper location. The Exporter membership solely pertains to exporting aircraft parts and services, and other areas as AmericaTowne Inc. designates.

      	4. Sample and Test Market Program. For the consideration set forth herein, AmericaTowne shall provide Exporter with access to and participation in a sample and test market program assessing market acceptance and demand of their products or services through its "Sample and Test Market Program," which incorporates the following terms and conditions (where expanded or contracted where deemed necessary):

 
	(a)    	Exporter may send samples or examples of products or services, respectively, to the AmericaTowne Platform, and if deemed strategically beneficial by AmericaTowne, Exporter may send specific videos, brochures and other promotional material to explain, show, and demonstrate the products or services features to the Chinese consumer and or wholesale customers;

	(b)    	AmericaTowne agrees that Exporter, other than the consideration set forth herein, shall not be charged any extra amounts for participation in the Sample and Test Market Program;

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	(c)    	Exporter agrees to be responsible for those costs associated with packaging, shipping and other reasonable and commercially acceptable costs to send the samples to the AmericaTowne Trading Platform, including where applicable, Value Added Tax (VAT) or custom costs;

	(d)    	Upon receipt of samples, brochures, and other promotional and marketing materials, AmericaTowne will be responsible for displaying Exporter's goods and services in its online portal, and/or exhibition and showroom facilities in China, as well as marketing Exporter's products through marketing channels. AmericaTowne, in conjunction with any representative of Exporter, will exercise commercially reasonable discretion in determining how Exporter's products and services are exhibited in the AmericaTowne Trading Platform;

	(e)    	AmericaTowne will use its best efforts to match Exporter with an end buyer of its products or services. Exporter agrees that there is no assurance that a demand for its product will exist or an end buyer will be found. The Sample and Test Market Program allows Exporter an opportunity to (i) test the demand and market for its products and service by exhibiting it products or service in the AmericaTowne Platform, and (ii) receive follow-on orders for its products or services, if a demand and buyers exist, without expending normal costs for exporting; and

	(f)    	Exporter has one-year from the Effective Date to participate in the Sample and Test Market Program. Afterwards, provided no transaction has occurred in the AmericaTowne Trading Platform, Exporter agrees to pay a fee equal to 25% of the original Service fee within thirty (30) days (the "Extension Fee").  To the extent the Extension Fee is not paid, Exporter's participation and membership in the Sample and Test Program terminates.  In the event of termination, the Parties agree that the balance of this Agreement remains in full force and effect.

      	5.  Accepted Market Program. Provided that AmericaTowne concludes that the Sample and Test Market Program has resulted in market demand and target consumers for Exporter's goods and services, AmericaTowne will notify Exporter within a commercially reasonable time of its opinions, conclusions and recommendations, and in turn, provide the following services (the "Accepted Market Program"):

	(a)    	Advise Exporter in the negotiation of price, and terms and conditions of sale of Exporter's goods and/or services;

	(b)    	Assist Exporter in all phases of the exporting process, including but not limited to, labeling and preparation for exporting, customs inspection and clearance, shipping, warehousing, and payment; and

	(c)    	Propose form and substance of purchase orders to be presented to the target buyer setting forth, amongst other things, terms and conditions of sale, costs, and payment to the Exporter (or its assignee or designee) with AmericaTowne being responsible for currency exchange into United States dollars;

	(d)    	AmericaTowne will advise Exporter of the various components of the selling price including, but not limited to, normal product costs, shipping costs, other related expenses, and customs and VAT.  Exporter will make the final determination of its sale price offered to the buyer;

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	(e)    	AmericaTowne will advise Exporter on available incentives and accommodations as a result of AmericaTowne operating out of a Bonded Port Zone in China, such as, but not limited to, making the determination that the buyer assumes VAT and customs costs by including such costs in the price of the product or service, and reduced warehousing and logistics product costs in China;

	(f)    	From time to time state and federal agencies will have marketing and promotional programs to assist small businesses in exporting their products and services.  AmericaTowne will work with Exporter, where warranted, to take advantage of the various funding, grants and promotional opportunities available;

	(g)    	In certain cases, special certification will be required from the appropriate authorities in China, prior to export of Exporter's goods and/or services in conjunction with an end buyer's purchase order.  In such a case, AmericaTowne will assist Exporter in securing the proper certification. Exporter agrees to be responsible for all costs of such certification. Prior to any such certification action, AmericaTowne will advise Exporter, and Exporter will have the sole discretion to determine if a certification is to be obtained, and understand if such certification is obtained, Exporter (or its assignee or designee) is responsible for the costs of certification.

      	6.  Consideration. Exporter agrees to pay the following consideration for the services set forth herein:

	
	(a)    	Service Fee and Deliverables. Subject to Section 6(c), Exporter agrees to pay AmericaTowne a nonrefundable service fee of $55,000.00 USD on the Effective Date (the "Service Fee"). The Service Fee is recognized when deliverables are provided. The Service Fee is paid for deliverables including a market analysis, review of proposed goods and services, expectations for supply and demand in the market, how to conduct export business in China, information on financing, the export tax savings programs, and selecting and assigning a sister tax saving company. The Service Fee is to be paid as follows: $3,000 upon signing this agreement; and monthly payments of $1,444 a month for thirty-six months. The first monthly payment will start on 30 October 2015, and run for 36 consecutive months. At the discretion of AmericaTowne Inc. the Exporter may be required to sign a note for outstanding service fees. In addition AmericaTowne Inc. at its sole discretion may exchange other assets or items of value for payments due.

	(b)    	Transaction Fee. Exporter agrees to pay a Transaction Fee for each transaction between Exporter and the end buyer arranged through or facilitated by AmericaTowne in the amount of 8% (the "Transaction Fee"). The Transaction Fee shall include the services provided by AmericaTowne in the AmericaTowne Platform, Sample and Test Market Program, and if applicable, Accepted Market Program. The Transaction Fee shall be recognized as revenue after the transactions is completed. The Transaction Fee shall be first deducted by AmericaTowne from the amount the end buyer owes Exporter, plus other fees, if any, agreed to by Exporter with the balance remitted to Exporter within two (2) days of receipt from the end buyer, unless commercial circumstances dictate additional time.

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	(c)    	Refund of Service Fee. From time to time there may be products or services that are on the restricted import list in China.  If Exporter's product or service is on this list, AmericaTowne will advise Exporter of such restriction and Exporter will be entitled to a refund of the Service Fee minus any setoffs due under this Agreement, i.e. outstanding Transaction Fee.  This Section 6(c) shall be null and void upon termination of this Agreement, as provided for in Section 1, above.

      	7. Extension of Term.  Provided Exporter's goods and services are in demand and Exporter is processing sales generating Transaction Fees, as set forth in Section 6, within fifteen (15) years from the Effective Date, Exporter shall have an option to (a) continue with its membership under Section 2 at no additional fee, or (b) option of developing single point of sales, distribution, networking, and logistics facilities separate and distinct from AmericaTowne for a mutually agreeable reduced rate, which shall be agreed upon in writing prior to thirty (30) days from the termination of fifteen (15) years from the Effective Date. The Exporter has the option of choosing option (b) above at its discretion.

      	8. Right to Use Promotional Material and Ownership of Samples. Exporter grants AmericaTowne exclusive rights to use the marketing and promotional material provided by Exporter and Exporter certifies that it has complied with any and all intellectual property rights pertaining to the material provided. Any and all Exporter samples sent to the AmericaTowne Platform shall become the property of AmericaTowne once received and will be solely used to promote and market Exporter's products or service within AmericaTowne Platform.

      	9. Country of Origin Taxes and Fees. Exporter agrees that it is solely responsible for paying any and all taxes, if required, to the country of origin of the goods and services. For purchase and sales orders received after the Sample and Test Market Program, Exporter agrees that any customs and VAT payable in China will be paid by either including any such taxes in the end buyer's purchase price in the purchase order, and paying such taxes upon payment by buyer or paying such taxes directly to customs prior to the goods being accepted by the buyer.

      	10. Liability and Claims. AmericaTowne shall in no circumstance be liable to Exporter or authorized users of the AmericaTowne Platform for any error, mistake, misuse, delay, loss or omission whatsoever and howsoever occurring in communications between them or the level of safety with which they are conducted. Exporter unconditionally and irrevocably undertakes that it will not make any claim either legal or equitable against the Company, its affiliates and/or agents for any losses, damages, costs or expenses that it may suffer or incur as a result of or otherwise in connection with such error, mistake, misuse, delay, loss or omission.

      	11. Indemnity. Exporter agrees to fully and unconditionally indemnify and hold AmericaTowne, and its agents, representatives, contractors, attorneys and employees harmless against any claims, damages, penalties, losses or any expenses howsoever incurred as a result of or in connection with (i) any breach or alleged breach of representation, warranty or undertaking given by the exporter herein; (ii) any infringement or alleged infringement of intellectual property rights, including but not limited to patents, registered designs, copyrights or trade mark infringement arising as a result of the insertion of any material by Exporter or any agent of Exporter in AmericaTowne's website and/or AmericaTowne Platform; (iii) any claim that the material involves false or deceptive advertising or sale practices; (iv) any claim arising or in connection with proof of quality and/or (v) any third party claims whatsoever arising in or derived from or as a result of the insertion or providing any material by Exporter.

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      	12. Proof of Quality. All statements, claims or representations ("Claims") in material submitted by Exporter for its products or services regarding the quality of its products or services must be (a) accompanied by a clear and written reference in the material to the independent survey, research or other source upon which the Claims are based; and (b) supported by the relevant independent survey, research or other source, a copy of which must be provided to AmericaTowne.

      	13. Representations and Warranties of Exporter. Exporter hereby represents and warrants to AmericaTowne as follows:

	(a)    	This Agreement has been duly and validly executed and delivered by an authorized person and constitutes Exporter's legal, valid and binding obligation, enforceable against it in accordance with its terms; and that the execution, delivery and performance of this Agreement is within the signator's legal capacity and power; has been duly authorized by all requisite action on the signator's part; requires the approval or consent of no other persons; and neither violates nor constitutes a default under the (a) provision of any law, rule, regulation, order, judgment or decree to which Exporter is subject or which is binding upon Exporter, or (ii) the terms of any other agreement, document or instrument applicable to Exporter or binding upon it.

	(b)    	That, in the event of any breach by Exporter of any of its warranties, undertakings and/or other provisions of this Agreement, AmericaTowne shall have the right at its sole and absolute discretion to remove from the AmericaTowne Platform any material or samples placed by Exporter and/or to terminate this Agreement immediately without notice, in which case AmericaTowne shall not be liable to refund the Service Fee or any earned, but yet paid, Transaction Fee for such material so removed and Exporter hereby undertakes that it will not make any claims both legal or equitable against AmericaTowne, its employees, contractors, attorneys and/or agents for any losses, damages, costs or expenses that it may suffer or incur as a result of or otherwise in connection with such removal.

	(c)    	Exporter represents and warrants that it shall act in good faith in all respects and undertakes that (i) no third party intellectual property rights or any other rights will be infringed as a result of the publication of any listing on the AmericaTowne Platform or any website utilized by AmericaTowne in featuring Exporter's products or services and/or in any material supplied by Exporter to AmericaTowne in relation to or otherwise in connection with Exporter's products or services; (ii) all of Exporter's products or services comply with and will comply with all applicable laws and regulations, including without limitation, those relating to advertising; (iii) Exporter has obtained all necessary consents and licenses for using the products or services; and (iv) Exporter, if exporting US origin automobiles, will only export used automobiles, at no time will the Exporter attempt to export new automobiles from the US to China through the AmericaTowne Platform.

	(d)    	Exporter agrees that AmericaTowne reserves the sole and absolute discretion to decline to publish any material if it reasonably suspects that Exporter may involve the infringement of intellectual property rights or other rights of any third party, unless Exporter can, within three (3) business days of being requested to do so, provide evidence to the satisfaction of the AmericaTowne that it has the right to place use the material in question and/or the material does not infringe any intellectual property rights of any third party. Exporter agrees that AmericaTowne shall remove the material immediately if it reasonably suspects that the material may involve the infringement of intellectual property rights or other rights of any third party, unless it subsequently determines, using its own discretion, that the material does not infringe any intellectual property rights of any third party.

	
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	(e)    	"While engaged in exporting, the Exporter warrants and agrees that it will use the services of an Interest Charge - Domestic International Sales Corporation (IC-DISC) to maximize its tax savings. AmericaTowne Inc. at its sole discretion will determine the IC-DISC the Exporter (Licensee) will use. The costs and tax savings for utilizing the services of the IC-DISC shall be determined and agreed to by the Exporter and the assigned IC-DISC.  Failure to use a IC-DISC designated by AmericaTowne will result in a default under the agreement."

	(f)    	EXPORTER ACKNOWLEDGES AND AGREES THAT IT HAS READ THIS AGREEMENT AND AGREE TO ALL ITS TERMS AND CONDITIONS. EXPORTER HAS INDEPENDENTLY EVALUATED THE DESIRABILITY OF PARTICIPATING IN THE AMERICATOWNE PLATFORM, SAMPLE AND TEST MARKET PROGRAM, AND IF APPLICABLE, ACCEPTED MARKET PROGRAM AND IS NOT RELYING ON ANY REPRESENTATION, GUARANTEE, OR STATEMENT OTHER THAN AS SET FORTH IN THIS AGREEMENT.

      	14. Representations and Warranties of AmericaTowne. AmericaTowne hereby represents and warrants to Exporter as follows:

	(a)    	It shall provide Exporter to a full-time staff in China to provide support and assistance, and to identify a network of potential buyers in China for Exporter's products and services;

	(b)    	It shall provide and coordinate any and all actions and procedures for customs and inspection clearance procedures and methods for Exporter that will allow them to clear customs and inspection in China in a prompt manner;

	(c)    	It shall provide methods and procedures for Exporter's products and services to be sampled and displayed in the AmericaTowne Platform;

	(d)    	It shall exercise commercially reasonable efforts to ensure that Exporter shall pay the least amount of VAT and other taxes required by the laws of China in full compliance with the laws of China;

	(e)    	It shall exercise commercially reasonable efforts in providing various financial programs to assist and support buyers in purchasing products from Exporter; and

	(f)    	It shall exercise commercially reasonable efforts to ensure high-level government officials from the Africa, USA and China in commerce, trade, investments and policy are invited to review and participate in the AmericaTowne Platform.

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      	15. Relationship of Parties. The Parties agree that AmericaTowne is an independent contractor, and nothing in this Agreement will create any partnership, joint venture, agency, franchise, or employment relationship between them.

      	16.  Limitation of Liability. Exporter agrees that AmericaTowne will not be liable for any indirect, incidental, special, or consequential punitive or multiple damages, including without limitation any damages resulting from loss of use, loss of business, loss of revenue, loss of profits, or loss of data, arising in connection with this Agreement, AmericaTowne's performance of services or of any other obligations relating to this Agreement, even if AmericaTowne has been advised of the possibility of such damages. The foregoing limitation of liability shall apply regardless of the cause of action under which such damages are sought.

      	17.  Disclaimers of Warranty. AmericaTowne makes no express or implied warranties or representations with respect to the AmericaTowne Platform, Sample and Test Market Program, or Accepted Market Program (including, without limitation, warranties of fitness for a particular purpose, merchantability, non-infringement, or any implied warranties arising out of a course of performance, dealing, or trade usage).  In addition, AmericaTowne makes no representation that the operation of the AmericaTowne Platform (including exhibition showrooms, websites and other network properties) will be uninterrupted or error-free, and AmericaTowne will not be liable for the consequences of any interruptions or errors.

      	18.  Settlement of Disputes. The Parties agree to use their best efforts to settle any dispute arising from the interpretation or performance in connection with this Agreement through negotiations.  In case no settlement can be reached, subject to Section 25 or Section 26, below, either Party may submit such matter to the American Arbitration Association ("AAA").The proceedings shall be conducted in English and be conducted in Mecklenburg County, North Carolina, the United States of America. The arbitration award shall be final and binding upon the Parties. This Section shall not be influenced by the termination or elimination of this Agreement. Each Party shall continue to perform its obligations in good faith according to the provisions of this Agreement except for the matters in dispute.

      	19. Force Majeure. Force Majeure, which includes but is not limited to, acts of governments, acts of nature, fire, explosion, typhoon, flood, earthquake, tide, lightning, war, means any event that is beyond the Party's reasonable control and cannot be prevented with reasonable care. However, any shortage of credit, capital or finance shall not be regarded as an event of Force Majeure. The affected Party who is claiming to be not liable to its failure of fulfilling this Agreement by Force Majeure shall inform the other Party, without delay.

      	20. Notices. Notices or other communications required to be given by any Party pursuant to this Agreement shall be written in English and shall be deemed to be duly given when it is delivered by email to the address stated below, or as subsequently supplemented, or by regular United States mail to the addresses identified in the introductory paragraph of this Agreement.

      	21.  Severability. Any provision of this Agreement that is invalid or unenforceable because of any inconsistency with relevant law shall be ineffective or unenforceable within such jurisdiction where the relevant law governs, without affecting in any way the remaining provisions hereof.

      	22.  Amendments and Supplement. Any amendment and supplement of this Agreement shall come into force only after Parties sign a written document.

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      	23.  Governing Law; Consent to Jurisdiction. This Agreement will be governed, construed and enforced in accordance with and governed by the laws of the United States and the State of Delaware applicable to agreements made and to be performed in such jurisdiction without reference to conflicts of law principles.

      	24. Attorney's Fees.  If a Party shall commit a material breach of a term hereof, such party shall pay to the successful party all of the successful party's costs and expenses, including, without limitation, attorneys' and expert witness fees, incurred by such party in enforcing the terms of this Agreement.

      	25. Confidentiality. The Parties agree that, by virtue of this Agreement, they may receive or become aware of information belonging or relating to the other, its business, business plans, affairs or activities, which information is confidential and proprietary to the other party and/or its suppliers and/or customers and in respect of which they are bound by a strict duty of confidence ("Confidential Information").

      	In consideration of such Confidential Information being disclosed or otherwise made available to either Party for the purposes of the performance of this Agreement, the Parties agree that they will not at any time, either before or after the termination of this Agreement, and either directly or indirectly, disclose, divulge or make unauthorized use of any Confidential Information, except to the extent to which such Confidential Information, is publicly known at the time of its disclosure or being made available to them; (b) after such disclosure or being made available to them, becomes publicly known otherwise than through a breach of this provision; and/or (c) disclosure is required by law, regulation or order of a competent authority (including any regulatory or governmental body or securities exchange) by a Party, provided that, where practicable, the other Party is given reasonable advance notice of the intended disclosure. The Parties agree that upon the earlier of a request from the other party or the termination of this Agreement, each Party shall return to the other or destroy all documents or records in any medium or format containing any Confidential Information that are in its possession or control and will not retain any copies of them, and the provisions of this Section 24 will continue without limit of time, notwithstanding the termination of this Agreement for any reason.

      	This Section 25 does not apply to AmericaTowne's reporting obligations as a publicly-reporting company under the rules promulgated by the SEC.

      	The Parties irrevocably consent that any legal action or proceeding against them under, arising out of or in any manner relating to this Section 24, may be brought only in a court with jurisdiction located in, or the federal district court the district of which includes, Mecklenburg County, North Carolina and the Parties each irrevocably consent to that venue and to the personal jurisdiction thereof. The Parties hereby expressly and irrevocably waive any claim or defense in any action or proceeding based on any alleged lack of personal jurisdiction, improper venue or forum non conveniens or any similar basis.

      	26.  Noncompetition and Noncircumvention. The Parties agree that each will refrain, directly or indirectly from utilizing information gained from the other in a way other than as contemplated hereunder. Further, neither Party will circumvent the other by attempting to take advantage of research and development performed by the other. The Parties agree that this Section 26 is an essential and material part of this Agreement.  As of the Effective Date, Exporter agrees that it will take no action to compete with or adversely affect AmericaTowne's efforts to secure funding, where necessary, primarily through Exim Bank and elsewhere under the guidance and the direction of AmericaTowne.  As such, no Party to this Agreement shall attempt to compete or circumvent in any way at any time the purpose of this Agreement or those including the entities and people that have been charged to carry out this Agreement.

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      	The Parties irrevocably consent that any legal action or proceeding against them under, arising out of or in any manner relating to this Section 26, may be brought only in a court with jurisdiction located in, or the federal district court the district of which includes, Mecklenburg County, North Carolina and the Parties each irrevocably consent to that venue and to the personal jurisdiction thereof. The Parties hereby expressly and irrevocably waive any claim or defense in any action or proceeding based on any alleged lack of personal jurisdiction, improper venue or forum non conveniens or any similar basis.

      	27.  Successors and Assigns.  This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and assigns. Nothing in this Agreement shall be construed to create any rights in third parties as third-party beneficiaries or otherwise. This Agreement shall not be assigned to any party.

      	28.  Counterpart Signatures. This Agreement may be executed in numerous counterparts, all of which shall be considered one and the same agreement. For purposes of this Agreement, facsimile or electronic signatures shall be considered original signatures.

      	29. Assignment and Subcontracting. This Agreement is personal to the Parties and, except to the extent necessary for the collection of outstanding bills through a factoring agent, Exporter shall not without the prior written approval of the Company: (a) assign, mortgage, charge or otherwise transfer or deal in, or create any trust over, any of its rights; or (b) subcontract or otherwise delegate the whole or any part of its rights or obligations under this contract to another person.

      	IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed on their behalf by a duly authorized representative.

AMERICATOWNE

	
By /s/ Alton Perkins                

	
Date: 9/24/2015

	
Alton Perkins, CEO

	

EXPORTER 

	
By /s/ Leonard Mwaka                

	
Date: 9/24/2015

	
Leonard Mwaka, President

	

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