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Unassociated Document

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of the ___ day of __________, 2011, by and among Universal Business Payment Solutions Acquisition Corporation, a Delaware corporation (the “Company”), and the undersigned parties whose names appear listed under the heading “Investors” on the signature page hereto (each, an “Investor” and collectively, the “Investors”).

 

WHEREAS, the Investors currently hold 3,450,000 issued and outstanding shares of the Company’s Common Stock (as defined below), of which up to 450,000 shares are subject to forfeiture if the underwriters do not exercise their over-allotment option in full;

 

WHEREAS, certain of the Investors are purchasing Insider Warrants (as defined below) in a private placement occurring simultaneously with the consummation of the Company’s initial public offering;

 

WHEREAS, EarlyBirdCapital, Inc. or its designees (“EBC”) is purchasing EBC Warrants (as defined below) in a private placement occurring simultaneously with the consummation of the Company’s initial public offering;

 

WHEREAS, the Investors and the Company desire to enter into this Agreement to provide the Investors with certain rights relating to the Registration (as defined below) of Registrable Securities (as defined below) held by them;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.           DEFINITIONS.

 

1.1         Defined Terms.  The following capitalized terms used herein have the following meanings:

 

“Agreement” means this Agreement, as amended, restated, supplemented or otherwise modified from time to time.

 

“Business Combination” the consummation by the Company of a merger, share exchange, asset acquisition, stock purchase, plan of arrangement, recapitalization, reorganization or other similar business combination

 

“Commission” means the Securities and Exchange Commission, or any other federal agency then administering the Securities Act or the Exchange Act.

 

“Common Stock” means the common stock, par value $0.001 per share, of the Company.

 

“Company” is defined in the preamble to this Agreement.

 

“Demand Registration” is defined in Section 2.1.1.

 

 

 

 

 

“Demanding Holder” is defined in Section 2.1.1.

 

“EBC” is defined in the preamble to this Agreement.

 

“EBC Securities” means the EBC Warrants and the shares of Common Stock underlying the EBC Warrants.

  

“EBC Warrants” means the 720,000 Warrants being purchased by EBC in a private placement occurring simultaneously with the consummation of the Company’s initial public offering.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect from time to time.

 

“Form S-3” is defined in Section 2.3.

 

“Indemnified Party” is defined in Section 4.3.

 

“Indemnifying Party” is defined in Section 4.3.

 

“Initial Shares” refers to the 3,450,000 shares of Common Stock that the Investors purchased prior to the Company’s initial public offering.

 

“Insider Warrants” means the 6,240,000 Warrants being purchased by certain of the Investors in a private placement occurring simultaneously with the consummation of the Company’s initial public offering.

 

“Insider Securities” means the Insider Warrants and the shares of Common Stock underlying the Insider Warrants.

 

“Investor” is defined in the preamble to this Agreement.

 

“Investor Indemnified Party” is defined in Section 4.1.

 

“Maximum Number of Securities” is defined in Section 2.1.4.

 

“Notices” is defined in Section 6.4.

 

“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity or enterprise of whatever nature.

 

“Piggy-Back Registration” is defined in Section 2.2.1.

 

“Pro Rata” is defined in Section 2.1.4.

 

“Register,” “Registered” and “Registration” mean a registration effected by preparing and filing a Registration Statement or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such Registration Statement becoming effective.

 

 

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“Registrable Securities” mean (i) the Initial Shares (ii) the EBC Warrants and (iii) the Insider Securities.  Registrable Securities include any warrants, shares of capital stock or other securities of the Company issued as a dividend or other distribution with respect to or in exchange for or in replacement of such Initial Shares or Insider Securities.  As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when: (a) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (b) such securities shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require Registration under the Securities Act; or (c) such securities shall have ceased to be outstanding.

 

“Registration Statement” means a registration statement filed by the Company with the Commission in compliance with the Securities Act and the rules and regulations promulgated thereunder for a public offering and sale of securities (other than a registration statement on Form S-4 or Form S-8, or their successors, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another entity).

 

“Release Date” means, for any Initial Shares, the date on which such Initial Shares are disbursed from escrow pursuant to Sections 3.2 or 3.3 of that certain Stock Escrow Agreement dated as of ____________, 2011 by and among the Company, the Investors holding the Initial Shares and Continental Stock Transfer & Trust Company.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect from time to time.

 

“Underwriter” means a securities dealer who purchases any Registrable Securities as principal in an underwritten offering and not as part of such dealer’s market-making activities.

 

1.2           General Interpretive Principles.  Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders.  The name assigned to this Agreement and the section captions used herein are for convenience of reference only and shall not be construed to affect the meaning, construction or effect hereof.  Unless otherwise specified, the terms “hereof,” “herein,” hereunder” and similar terms refer to this Agreement as a whole (including exhibits, schedules and disclosure statements hereto), and references herein to Sections refer to Sections of this Agreement.

 

 

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2.           REGISTRATION RIGHTS.

 

2.1         Demand Registration.

 

2.1.1.       Request for Registration.  At any time and from time to time on or after the date that is (i) in the case of the Insider Securities or the EBC Securities, after the Company consummates a Business Combination or (ii) in the case of the Initial Shares, three months prior to the Release Date, the holders of a majority-in-interest of the Insider Securities, EBC Securities or the Initial Shares, as the case may be, may make a written demand for Registration under the Securities Act of all or part of their Insider Securities, EBC Securities the Initial Shares, as the case may be (a “Demand Registration”); provided that in no event may EBC make a Demand Registration after the fifth anniversary of this Agreement.  Any Demand Registration shall specify the number of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof.  The Company will notify all holders of Registrable Securities of the demand, and each holder of such Registrable Securities who wishes to include all or a portion of such holder’s Registrable Securities in the Demand Registration (each such holder including Registrable Securities in such Registration, a “Demanding Holder”) shall so notify the Company within fifteen (15) days after the receipt by the holder of the notice from the Company.  Upon any such request, the Demanding Holders shall be entitled to have their Registrable Securities included in the Demand Registration, subject to Section 2.1.4 and the provisos set forth in Section 3.1.1. The Company shall not be obligated to effect more than an aggregate of two (2) Demand Registrations under this Section 2.1.1 in respect of all Registrable Securities.

 

2.1.2.       Effective Registration.  A Registration will not count as a Demand Registration until the Registration Statement filed with the Commission with respect to such Demand Registration has been declared effective and the Company has complied with all of its obligations under this Agreement with respect thereto; provided, however, that if, after such Registration Statement has been declared effective, the offering of Registrable Securities pursuant to a Demand Registration is interfered with by any stop order or injunction of the Commission or any other governmental agency or court, the Registration Statement with respect to such Demand Registration will be deemed not to have been declared effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise terminated and (ii) a majority-in-interest of the Demanding Holders thereafter elect to continue the offering; provided, further, that the Company shall not be obligated to file a second Registration Statement until a Registration Statement that has been filed is counted as a Demand Registration or is terminated.

 

2.1.3.       Underwritten Offering.  If a majority-in-interest of the Demanding Holders so elect and such holders so advise the Company as part of their written demand for a Demand Registration, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering.  In such event, the right of any holder to include its Registrable Securities in such Registration shall be conditioned upon such holder’s participation in such underwriting and the inclusion of such holder’s Registrable Securities in the underwriting to the extent provided herein.  All Demanding Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such underwriting by a majority-in-interest of the holders initiating the Demand Registration.

 

2.1.4.       Reduction of Offering.  If the managing Underwriter or Underwriters for a Demand Registration that is to be an underwritten offering advises the Company and the Demanding Holders in writing that the dollar amount or number of Registrable Securities which the Demanding Holders desire to sell, taken together with all other shares of Common Stock or other securities which the Company desires to sell and the securities, if any, as to which Registration has been requested pursuant to written contractual piggy-back registration rights held by other securityholders of the Company who desire to sell, exceeds the maximum dollar amount or maximum number of securities that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method or the probability of success of such offering (such maximum dollar amount or maximum number of securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Registration:  (i) first, the Registrable Securities as to which Demand Registration has been requested by the Demanding Holders (pro rata in accordance with the number of securities that each such Person has requested be included in such Registration, regardless of the number of securities held by each such Person (such proportion is referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Securities; (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the shares of Common Stock or other securities registrable pursuant to the terms of the Unit Purchase Option to be issued to EBC or its designees in connection with the Company’s initial public offering on _________, 2011 (the “Unit Purchase Option” and such registrable securities, the “Option Securities”) as to which “piggy-back” registration has been requested by the holders thereof, Pro Rata, that can be sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that the Maximum Number of Securities have not been reached under the foregoing clauses (i), (ii) and (iii), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Securities.

 

 

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2.1.5.       Withdrawal.  If a majority-in-interest of the Demanding Holders disapprove of the terms of any underwriting or are not entitled to include all of their Registrable Securities in any offering, such majority-in-interest of the Demanding Holders may elect to withdraw from such offering by giving written notice to the Company and the Underwriter or Underwriters of their request to withdraw prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Demand Registration.  If the majority-in-interest of the Demanding Holders withdraws from a proposed offering relating to a Demand Registration, then such Registration shall not count as a Demand Registration provided for in Section 2.1.

 

2.2         Piggy-Back Registration.

 

2.2.1.       Piggy-Back Rights.  If at any time on or after the date the Company consummates a Business Combination, the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for securityholders of the Company for their account (or by the Company and by securityholders of the Company including, without limitation, pursuant to Section 2.1), other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing securityholders, (iii) for an offering of debt that is convertible into equity securities of the Company  (iv) for a dividend reinvestment plan, or (v) solely in connection with a merger, consolidation or non-capital raising bona fide business transaction, then the Company shall (x) give written notice of such proposed filing to the holders of Registrable Securities as soon as practicable but in no event less than ten (10) days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution and the name of the proposed managing Underwriter or Underwriters, if any, of the offering, and (y) offer to the holders of Registrable Securities in such notice the opportunity to register the sale of such number of Registrable Securities as such holders may request in writing within five (5) days following receipt of such notice (a “Piggy-Back Registration”); provided that the Company shall not be obligated to provide such notice to EBC after the seventh anniversary of the date of this Agreement.  The Company shall cause such Registrable Securities to be included in such Registration and shall use its reasonable best efforts to cause the managing Underwriter or Underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof.  All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that involves an Underwriter or Underwriters shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such Piggy-Back Registration.

 

 

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2.2.2.       Reduction of Offering.  If the managing Underwriter or Underwriters for a Piggy-Back Registration that is to be an underwritten offering advises the Company and the holders of Registrable Securities in writing that the dollar amount or number of securities which the Company desires to sell, taken together with the securities, if any, as to which Registration has been demanded pursuant to written contractual arrangements with Persons other than the holders of Registrable Securities hereunder, the Registrable Securities as to which Registration has been requested under this Section 2.2, and the securities, if any, as to which Registration has been requested pursuant to the written contractual Piggy-Back Registration rights of other securityholders of the Company, exceeds the Maximum Number of Securities, then the Company shall include in any such Registration:

 

a)           If the Registration is undertaken for the Company’s account: (A) first, the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the shares of Common Stock or other securities, if any, comprised of Registrable Securities, as to which Registration has been requested pursuant to the applicable written contractual piggy-back registration rights of such security holders, Pro Rata, that can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other securities for the account of other Persons that the Company is obligated to register pursuant to written contractual piggy-back registration rights with such Persons, Pro Rata, that can be sold without exceeding the Maximum Number of Securities; and

  

b)           If the registration is a “demand” registration undertaken at the demand of holders of Option Securities, (A) first, the shares of Common Stock or other securities for the account of the demanding persons, Pro Rata, that can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other Registrable Securities, Pro Rata, as to which registration has been requested pursuant to the terms hereof, that can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons, that can be sold without exceeding the Maximum Number of Securities; and

  

c)           If the registration is a “demand” registration undertaken at the demand of persons other than either the holders of Registrable Securities or of Option Securities, (A) first, the shares of Common Stock or other securities for the account of the demanding persons that can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), collectively the shares of Common Stock or other securities comprised of Registrable Securities and Option Securities Pro Rata, as to which registration has been requested pursuant to the terms hereof and of the Unit Purchase Option, as applicable, that can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons, Pro Rata, that can be sold without exceeding the Maximum Number of Securities.

 

 

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2.2.3.       Withdrawal.  Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness of the Registration Statement.  The Company (whether on its own determination or as the result of a withdrawal by Persons making a demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness of the Registration Statement.  Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 3.3.

 

2.3          Registrations on Form S-3.  Pursuant to a Demand Registration under Section 2.1, the holders of Registrable Securities may at any time and from time to time, request in writing that the Company register the resale of any or all of such Registrable Securities on Form S-3 or any similar short-form Registration which may be available at such time (“Form S-3”); provided, however, that the Company shall not be obligated to effect such request through an underwritten offering. Upon receipt of such written request, the Company will promptly give written notice of the proposed Registration to all other holders of Registrable Securities, and, as soon as practicable thereafter, effect the Registration of all or such portion of such holder’s or holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities or other securities of the Company, if any, of any other holder or holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such Registration pursuant to this Section 2.3: (i) if Form S-3 is not available for such offering; or (ii) if the holders of the Registrable Securities, together with the holders of any other securities of the Company entitled to inclusion in such Registration, propose to sell Registrable Securities and such other securities (if any) at any aggregate price to the public of less than $500,000.  Registrations effected pursuant to this Section 2.3 shall not be counted as Demand Registrations effected pursuant to Section 2.1.

 

3.             REGISTRATION PROCEDURES.

 

3.1           Filings; Information.  Whenever the Company is required to effect the Registration of any Registrable Securities pursuant to Section 2, the Company shall use its reasonable best efforts to effect the Registration and sale of such Registrable Securities in accordance with the intended method(s) of distribution thereof as expeditiously as practicable, and in connection with any such request:

 

 3.1.1.       Filing Registration Statement.  The Company shall, as expeditiously as possible and in any event within sixty (60) days after receipt of a request for a Demand Registration pursuant to Section 2.1, prepare and file with the Commission a Registration Statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of all Registrable Securities to be registered thereunder in accordance with the intended method(s) of distribution thereof, and shall use its reasonable best efforts to cause such Registration Statement to become and remain effective for the period required by Section 3.1.3; provided, however, that the Company shall have the right to defer any Demand Registration for up to thirty (30) days, and any Piggy-Back Registration for such period as may be applicable to deferment of any Demand Registration to which such Piggy-Back Registration relates, in each case if the Company shall furnish to the holders a certificate signed by the Chief Executive Officer or the Chairman of the Board of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would be materially detrimental to the Company and its securityholders for such Registration Statement to be effected at such time; provided further, that the Company shall not have the right to exercise the right set forth in the immediately preceding proviso more than once in any 365-day period in respect of a Demand Registration hereunder.

 

 

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3.1.2.       Copies.  The Company shall, prior to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish without charge to the holders of Registrable Securities included in such Registration, and such holders’ legal counsel, copies of the Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such Registration Statement (including each preliminary prospectus), and such other documents as the holders of Registrable Securities included in such Registration or legal counsel for any such holders may request in order to facilitate the disposition of the Registrable Securities owned by such holders.

 

3.1.3.       Amendments and Supplements.  The Company shall prepare and file with the Commission such amendments, including post-effective amendments, and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and in compliance with the provisions of the Securities Act until all Registrable Securities and other securities covered by such Registration Statement have been disposed of in accordance with the intended method(s) of distribution set forth in such Registration Statement (which period shall not exceed the sum of one hundred eighty (180) days plus any period during which any such disposition is interfered with by any stop order or injunction of the Commission or any governmental agency or court) or such securities have been withdrawn.

 

3.1.4.       Notification.  After the filing of a Registration Statement, the Company shall promptly, and in no event more than two (2) business days after such filing, notify the holders of Registrable Securities included in such Registration Statement of such filing, and shall further notify such holders promptly and confirm such advice in writing within two (2) business days of the occurrence of any of the following: (i) when such Registration Statement becomes effective; (ii) when any post-effective amendment to such Registration Statement becomes effective; (iii) the issuance or threatened issuance by the Commission of any stop order (and the Company shall take all actions required to prevent the entry of such stop order or to remove it if entered); and (iv) any request by the Commission for any amendment or supplement to such Registration Statement or any prospectus relating thereto or for additional information or of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of the securities covered by such Registration Statement, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and promptly make available to the holders of Registrable Securities included in such Registration Statement any such supplement or amendment; except that before filing with the Commission a Registration Statement or prospectus or any amendment or supplement thereto, including documents incorporated by reference, the Company shall furnish to the holders of Registrable Securities included in such Registration Statement and to the legal counsel for any such holders, copies of all such documents proposed to be filed sufficiently in advance of filing to provide such holders and legal counsel with a reasonable opportunity to review such documents and comment thereon, and the Company shall not file any Registration Statement or prospectus or amendment or supplement thereto, including documents incorporated by reference, to which such holders or their legal counsel shall object.

 

 

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3.1.5.       State Securities Laws Compliance.  The Company shall use its reasonable best efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement as necessary under such securities or “blue sky” laws of such jurisdictions in the United States as the holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph or subject itself to taxation in any such jurisdiction.

 

3.1.6.       Agreements for Disposition.  The Company shall enter into customary agreements (including, if applicable, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities.  The representations, warranties and covenants of the Company in any underwriting agreement which are made to or for the benefit of any Underwriters, to the extent applicable, shall also be made to and for the benefit of the holders of Registrable Securities included in such Registration Statement.  No holder of Registrable Securities included in such Registration Statement shall be required to make any representations or warranties in the underwriting agreement except, if applicable, with respect to such holder’s organization, good standing, authority, title to Registrable Securities, lack of conflict of such sale with such holder’s material agreements and organizational documents, and with respect to written information relating to such holder that such holder has furnished in writing expressly for inclusion in such Registration Statement.

 

3.1.7.       Cooperation.  Officers and members of the management of the Company shall cooperate fully in any offering of Registrable Securities hereunder, which cooperation shall include the preparation of the Registration Statement with respect to such offering and all other offering materials and related documents, and participation in meetings with Underwriters, attorneys, accountants and potential investors.

 

3.1.8.       Records.  The Company shall make available for inspection by the holders of Registrable Securities included in such Registration Statement, any Underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other professional retained by any holder of Registrable Securities included in such Registration Statement or any Underwriter, all financial and other records, pertinent corporate documents and properties of the Company, as shall be necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information requested by any of them in connection with such Registration Statement.

 

 

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3.1.9.       Opinions and Comfort Letters.  The Company shall furnish to each holder of Registrable Securities included in any Registration Statement a signed counterpart, addressed to such holder, of (i) any opinion of counsel to the Company delivered to any Underwriter and (ii) any comfort letter from the Company’s independent public accountants delivered to any Underwriter.  In the event no legal opinion is delivered to any Underwriter, the Company shall furnish to each holder of Registrable Securities included in such Registration Statement, at any time that such holder elects to use a prospectus, an opinion of counsel to the Company to the effect that the Registration Statement containing such prospectus has been declared effective and that no stop order is in effect.

 

3.1.10.     Earnings Statement.  The Company shall comply with all applicable rules and regulations of the Commission and the Securities Act, and also make available to its stockholders, as soon as practicable, an earnings statement covering a period of twelve (12) months, beginning within three (3) months after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

 

3.1.11.     Listing.  The Company shall use its reasonable best efforts to cause all Registrable Securities included in any Registration to be listed on such exchanges or otherwise designated for trading in the same manner as similar securities issued by the Company are then listed or designated or, if no such similar securities are then listed or designated, in a manner satisfactory to the holders of a majority of the Registrable Securities included in such Registration.

 

3.1.12.     Post-Effective Amendment.  The Company shall promptly incorporate in a prospectus supplement or post-effective amendment to the applicable Registration Statement such information as the managing Underwriter or Underwriters, if any, or the holders of a majority of the Registrable Securities of the class being sold agree should be included therein relating to the plan of distribution with respect to such Registrable Securities; and make all required filings of such prospectus supplement or post-effective amendment as soon as reasonably practicable after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment;

 

3.2           Obligation to Suspend Distribution.  Upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.1.4(iv), or, in the case of a resale Registration on Form S-3 pursuant to Section 2.3 hereof, upon any suspension by the Company, pursuant to a written insider trading compliance program adopted by the Company’s Board of Directors or otherwise, of the ability of all insiders covered by such program to transact in the Company’s securities because of the existence of material non-public information, each holder of Registrable Securities included in any Registration shall discontinue disposition of such Registrable Securities pursuant to the Registration Statement covering such Registrable Securities immediately until such holder receives the supplemented or amended prospectus contemplated by Section 3.1.4(iv) or the restriction on the ability of insiders to transact in the Company’s securities is removed, as applicable, and, if so directed by the Company, each such holder will deliver to the Company all copies, other than permanent file copies then in such holder’s possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice.

 

 

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3.3           Registration Expenses.  The Company shall bear all costs and expenses incurred in connection with any Demand Registration pursuant to Section 2.1 (limited to one Demand Registration initiated by EBC), any Piggy-Back Registration pursuant to Section 2.2, any Registration on Form S-3 effected pursuant to Section 2.3 and all expenses incurred in performing or complying with its other obligations under this Agreement, whether or not the Registration Statement becomes effective, including, without limitation: (i) all Registration and filing fees; (ii) fees and expenses of compliance with securities or “blue sky” laws (including fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities); (iii) printing expenses; (iv) the Company’s internal expenses (including all salaries and expenses of its officers and employees); (v) the fees and expenses incurred in connection with the listing of the Registrable Securities as required by Section 3.1.11; (vi) Financial Industry Regulatory Authority fees; (vii) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including the expenses or costs associated with the delivery of any opinions or comfort letters requested pursuant to Section 3.1.9); (viii) the fees and expenses of any special experts retained by the Company in connection with such Registration; and (ix) the fees and expenses of one legal counsel selected by the holders of a majority-in-interest of the Registrable Securities included in such Registration.  The Company shall have no obligation to pay any underwriting discounts or selling commissions attributable to the Registrable Securities being sold by the holders thereof, which underwriting discounts or selling commissions shall be borne by such holders.  In addition, in an underwritten offering, all selling holders of Registrable Securities and the Company shall bear any expenses of the Underwriter required to be borne by the selling securityholders or the company pursuant to the underwriting agreement pro rata in proportion to the respective amount of securities each is selling in such offering.

 

3.4           Information.  The holders of Registrable Securities shall provide such information as may reasonably be requested by the Company, or the managing Underwriter, if any, in connection with the preparation of any Registration Statement, including amendments and supplements thereto, in order to effect the Registration of any Registrable Securities under the Securities Act pursuant to Section 2 and in connection with the Company’s obligation to comply with federal and applicable state securities laws.

 

3.5           Underwritten Offerings.

 

 3.5.1.       Underwriting Agreements.  If requested by the Underwriters for any underwritten offering requested by holders pursuant to Sections 2.1 or 2.3, the Company and the holders of Registrable Securities to be included therein shall enter into an underwriting agreement with such Underwriters, such agreement to be reasonably satisfactory in substance and form to the Company, the holders of a majority of each class of the Registrable Securities to be included in such underwritten offering and the underwriters, and to contain such terms and conditions as are generally prevailing in agreements of that type, including indemnities no less favorable to the recipient thereof than those provided in Section 4. The holders of any Registrable Securities to be included in any underwritten offering pursuant to Section 2.2 shall enter into such an underwriting agreement at the request of the Company. All of the representations and warranties and the other agreements by and on the part of the Company to and for the benefit of the underwriters included in any such underwriting agreement shall also be made to and for the benefit of such holders, and any or all of the conditions precedent to the obligations of the underwriters under such underwriting agreement shall be conditions precedent to the obligations of such holders. No holder shall be required in any such underwriting agreement to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such holder, such holder’s Registrable Securities, such holder’s intended method of distribution and any other representations required by law.

 

 

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3.5.2.       Price and Underwriting Discounts. In the case of an underwritten offering requested by holders pursuant to Sections 2.1 or 2.3, the price, underwriting discount and other financial terms of the related underwriting agreement for each class of Registrable Securities shall be determined by the holders of a majority of such class of Registrable Securities. In the case of any underwritten offering pursuant to Section 2.2, such price, discount and other terms shall be determined by the Company, subject to the right of the holders to withdraw their request to participate in the Registration pursuant to Section 2.2.3 after being advised of such price, discount and other terms.

 

3.5.3.       Participation in Underwritten Offerings.  No Person may participate in an underwritten offering unless such Person (i) agrees to sell such Person’s securities on the basis provided in the underwriting arrangements approved by the Persons entitled to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

 

3.6          No Inconsistent Agreements; Additional Rights.  The Company will not enter into, and is not currently a party to, any agreement that is inconsistent with the rights granted to the holders of Registrable Securities by this Agreement.

 

4.            INDEMNIFICATION AND CONTRIBUTION.

 

4.1          Indemnification by the Company.  The Company agrees to indemnify and hold harmless each Investor and each other holder of Registrable Securities, and each of their respective officers, employees, affiliates, directors, partners, members, attorneys and agents and each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) an Investor and each other holder of Registrable Securities (each, an “Investor Indemnified Party”) from and against any expenses, losses, judgments, claims, damages or liabilities, whether joint or several, arising out of or based upon any untrue statement (or allegedly untrue statement) of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to such Registration Statement, or arising out of or based upon any omission (or alleged omission) to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such Registration; and the Company shall promptly reimburse the Investor Indemnified Party for any legal and any other expenses reasonably incurred by such Investor Indemnified Party in connection with investigating and defending any such expense, loss, judgment, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such expense, loss, claim, damage or liability arises out of or is based upon any untrue statement or allegedly untrue statement or omission or alleged omission made in such Registration Statement, preliminary prospectus, final prospectus or summary prospectus, or any such amendment or supplement, in reliance upon and in conformity with information furnished to the Company, in writing, by such selling holder expressly for use therein.  The Company also shall indemnify any Underwriter of the Registrable Securities, their officers, affiliates, directors, partners, members and agents and each Person who controls such Underwriter on substantially the same basis as that of the indemnification provided above in this Section 4.1.

 

 

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4.2           Indemnification by Holders of Registrable Securities.  Each selling holder of Registrable Securities will, in the event that any Registration is being effected under the Securities Act pursuant to this Agreement of any Registrable Securities held by such selling holder, indemnify and hold harmless the Company, each of its directors and officers and each Underwriter (if any), and each other selling holder and each other Person, if any, who controls another selling holder or such Underwriter within the meaning of the Securities Act, against any losses, claims, judgments, damages or liabilities, whether joint or several, insofar as such losses, claims, judgments, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or allegedly untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to the Registration Statement, or arise out of or are based upon any omission or the alleged omission to state a material fact required to be stated therein or necessary to make the statement therein not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by such selling holder expressly for use therein, and shall reimburse the Company, its directors and officers, and each other selling holder or controlling Person for any legal or other expenses reasonably incurred by any of them in connection with investigation or defending any such loss, claim, damage, liability or action.  Each selling holder’s indemnification obligations hereunder shall be several and not joint and shall be limited to the amount of any net proceeds actually received by such selling holder.

 

 

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4.3           Conduct of Indemnification Proceedings.  Promptly after receipt by any Person of any notice of any loss, claim, damage or liability or any action in respect of which indemnity may be sought pursuant to Section 4.1 or 4.2, such Person (the “Indemnified Party”) shall, if a claim in respect thereof is to be made against any other Person for indemnification hereunder, notify such other Person (the “Indemnifying Party”) in writing of the loss, claim, judgment, damage, liability or action; provided, however, that the failure by the Indemnified Party to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability which the Indemnifying Party may have to such Indemnified Party hereunder, except and solely to the extent the Indemnifying Party is actually prejudiced by such failure.  If the Indemnified Party is seeking indemnification with respect to any claim or action brought against the Indemnified Party, then the Indemnifying Party shall be entitled to participate in such claim or action, and, to the extent that it wishes, jointly with all other Indemnifying Parties, to assume control of the defense thereof with counsel satisfactory to the Indemnified Party.  After notice from the Indemnifying Party to the Indemnified Party of its election to assume control of the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that in any action in which both the Indemnified Party and the Indemnifying Party are named as defendants, the Indemnified Party shall have the right to employ separate counsel (but no more than one such separate counsel) to represent the Indemnified Party and its controlling Persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, with the fees and expenses of such counsel to be paid by such Indemnifying Party if, based upon the written opinion of counsel of such Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, consent to entry of judgment or effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such judgment or settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding.

 

4.4          Contribution.

 

4.4.1.       If the indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in respect of any loss, claim, damage, liability or action referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnified Parties and the Indemnifying Parties in connection with the actions or omissions which resulted in such loss, claim, damage, liability or action, as well as any other relevant equitable considerations.  The relative fault of any Indemnified Party and any Indemnifying Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such Indemnified Party or such Indemnifying Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

4.4.2.       The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding Section.

 

4.4.3.       The amount paid or payable by an Indemnified Party as a result of any loss, claim, damage, liability or action referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 4.4, no holder of Registrable Securities shall be required to contribute any amount in excess of the dollar amount of the net proceeds (after payment of any underwriting fees, discounts, commissions or taxes) actually received by such holder from the sale of Registrable Securities which gave rise to such contribution obligation.  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 who was not guilty of such fraudulent misrepresentation.

 

 

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5.             UNDERWRITING AND DISTRIBUTION.

 

5.1           Rule 144.  The Company covenants that it shall file any reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as the holders of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holders to sell Registrable Securities without Registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such Rules may be amended from time to time, or any similar Rule or regulation hereafter adopted by the Commission.

 

6.             MISCELLANEOUS.

 

6.1           Term.  This Agreement shall terminate upon earlier of (i) the tenth anniversary of the date of this Agreement or (ii) the date as of which (A) all of the Registrable Securities have been sold pursuant to a Registration Statement (but in no event prior to the applicable period referred to in Section 4(3) of the Securities Act and Rule 174 thereunder) or (B) the holders of all Registrable Securities are permitted to sell the Registrable Securities under Rule 144 (or any similar provision) under the Securities Act without limitation on the amount of securities sold or the manner of sale.  The provisions of Section 4 and Section 5 shall survive any termination.

 

6.2           Other Registration Rights.  Except with respect to those securities issued or issuable upon exercise of that certain Unit Purchase Option to be issued to EBC or its designees in connection with the Company’s initial public offering on _________, 2011, the Company represents and warrants that no Person, other than a holder of the Registrable Securities, has any right to require the Company to register any shares of the Company’s capital stock for sale or to include shares of the Company’s capital stock in any Registration filed by the Company for the sale of any securities for its own account or for the account of any other Person.

 

6.3           Assignment; No Third Party Beneficiaries.  This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.  This Agreement and the rights, duties and obligations of the holders of Registrable Securities hereunder may be freely assigned or delegated by such holder of Registrable Securities in conjunction with and to the extent of any transfer of Registrable Securities by any such holder.  This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and the permitted assigns of the Investor or holder of Registrable Securities or of any assignee of the Investor or holder of Registrable Securities.  This Agreement is not intended to confer any rights or benefits on any Persons that are not party hereto other than as expressly set forth in Article 4 and this Section 6.3.

 

 

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6.4           Notices.  All notices, demands, requests, consents, approvals or other communications (collectively, “Notices”) required or permitted to be given hereunder or which are given with respect to this Agreement shall be in writing and shall be personally served, delivered by reputable air courier service with charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile, addressed as set forth below, or to such other address as such party shall have specified most recently by written notice.  Notice shall be deemed given on the date of service or transmission if personally served or transmitted by telegram, telex or facsimile; provided, that if such service or transmission is not on a business day or is after normal business hours, then such notice shall be deemed given on the next business day.  Notice otherwise sent as provided herein shall be deemed given on the next business day following timely delivery of such notice to a reputable air courier service with an order for next-day delivery.

 

To the Company:

 

Universal Business Payment Solutions Acquisition Corporation

c/o UBPS Services, LLC

Radnor Financial Center

150 North Radnor-Chester Road, Suite F-200

Radnor, Pennsylvania 19087

Attn: Bipin C. Shah

A copy of any notice sent hereunder shall be sent to:

 

Dechert LLP

1775 I Street, N.W.

Washington, D.C. 20006

Attn:  Thomas J. Friedmann

 

To EBC:

 

EarlyBirdCapital, Inc.

275 Madison Avenue

27th Floor

New York, NY 10016

Attn: Steve Levine

 

To any other Investor, to the address specified on Exhibit A.

 

6.5           Severability.  This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof.  Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible that is valid and enforceable.

 

6.6           Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument.

 

6.7           Entire Agreement.  This Agreement (including all agreements entered into pursuant hereto and all certificates and instruments delivered pursuant hereto and thereto) constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements, representations, understandings, negotiations and discussions between the parties, whether oral or written.

 

 

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6.8           Modifications and Amendments.  No amendment, modification or termination of this Agreement shall be binding upon any party unless executed in writing by such party.

 

6.9           Titles and Headings.  Titles and headings of sections of this Agreement are for convenience only and shall not affect the construction of any provision of this Agreement.

 

6.10         Waivers and Extensions.  Any party to this Agreement may waive any right, breach or default which such party has the right to waive, provided that such waiver will not be effective against the waiving party unless it is in writing, is signed by such party and specifically refers to this Agreement.  Waivers may be made in advance or after the right waived has arisen or the breach or default waived has occurred.  Any waiver may be conditional.  No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof nor of any other agreement or provision herein contained.  No waiver or extension of time for performance of any obligations or acts shall be deemed a waiver or extension of the time for performance of any other obligations or acts.

 

6.11         Remedies Cumulative.  In the event that the Company fails to observe or perform any covenant or agreement to be observed or performed under this Agreement, the Investor or any other holder of Registrable Securities may proceed to protect and enforce its rights by suit in equity or action at law, whether for specific performance of any term contained in this Agreement or for an injunction against the breach of any such term or in aid of the exercise of any power granted in this Agreement or to enforce any other legal or equitable right, or to take any one or more of such actions, without being required to post a bond.  None of the rights, powers or remedies conferred under this Agreement shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to any other right, power or remedy, whether conferred by this Agreement or now or hereafter available at law, in equity, by statute or otherwise.

 

6.12         Governing Law.  This Agreement shall be governed by, interpreted under and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed within the State of New York.

 

6.13         Waiver of Trial by Jury.  Each party hereby irrevocably and unconditionally waives the right to a trial by jury in any action, suit, counterclaim or other proceeding (whether based on contract, tort or otherwise) arising out of, connected with or relating to this Agreement, the transactions contemplated hereby, or the actions of the Investor in the negotiation, administration, performance or enforcement hereof.

 

 

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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be executed and delivered by their duly authorized representatives as of the date first written above.

 

	  	
UNIVERSAL BUSINESS PAYMENT

SOLUTIONS ACQUISITION CORPORATION

	 	 
	  	  
	  	
By: Bipin C. Shah

	  	
Title: Chairman of the Board

	  	  
	  	
INVESTORS:

	  	  
	  	  
	  	
BIPIN C. SHAH

	  	  
	  	  
	  	
PETER DAVIDSON

	  	  
	  	
[Investors]

	  	  
	  	
EARLYBIRDCAPITAL, INC.

	  	  
	  	
 

	  	
By:

	  	
Title:

 

 

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EXHIBIT A

Universal Business Payment Solutions Acquisition Corporation

c/o UPBS Services, LLC

Radnor Financial Center

150 North Radnor-Chester Road, Suite F-200

Radnor, Pennsylvania 19087

Attn: Bipin C. Shah

Universal Business Payment Solutions Acquisition Corporation

c/o UPBS Services, LLC

Radnor Financial Center

150 North Radnor-Chester Road, Suite F-200

Radnor, Pennsylvania 19087

Attn: Peter Davidson

 

 

19EXECUTION VERSION

 

INTRODUCER AGREEMENT

THIS AGREEMENT, dated as of April 13, 2011, by and between deltathree, Inc., a Delaware corporation ("Inc."), DME Solutions, Inc., a New York corporation (“DME”), and Delta Three Israel, Ltd., an Israeli corporation (“Delta Three Israel”) (Inc., DME and Delta Three Israel are collectively referred to herein as “deltathree”), and ACN Europe B.V., having its registered office at Thomas R. Malthusstraat 1-3, 1066 JR Amsterdam, The Netherlands (“ACN Europe”), represented by its Chief Executive Officer, Michael Tribolet.

EXPLANATORY STATEMENT

deltathree is a company that markets and sells telecommunications services throughout the world. ACN Europe has over the years marketed and sold telecommunications services in various geographic areas, both under its own brand and as a sales agent.

Inc. and ACN Europe wish to deploy ACN Europe’s sales and marketing experience and expertise in order to build Inc.’s business, and to that end, have agreed that they will enter into a definitive agreement for ACN Europe to act as a master promoter, and for ACN Europe’s network of independent sales representatives (the "Representatives") to act as promoters of Inc.’s  mobile application services (the "Mobile Applications") to retail residential and commercial consumers in the European countries in which ACN Europe and its subsidiaries and affiliates currently operate and may operate in the future.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration set forth herein, the sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

1. Defined Terms. The following terms used herein shall have the meaning ascribed to them below:

“ACN Europe Commission” shall have the meaning ascribed to such term in Section 6(a).

“ACN Europe Costs” shall mean the total of the (i) Commissions to be paid by ACN Europe, estimated to be equal to 9.5% of Revenues and subject to adjustment as set forth in Section 6(b) below, and (ii) reasonable costs incurred by ACN Europe in providing the call center and services to be provided under Section 4(b) below, estimated to be equal to 6.0% of Revenues and subject to adjustment as set forth in Section 6(b) below.

"ACN Europe Indemnified Person" shall have the meaning ascribed to such term in Section 10(b).

“ACN Website” shall mean www.acnmobileworld.eu.

  

 

  

“Business” shall have the meaning given to it in Section 2(a), below.

"Customers" shall mean customers of deltathree who have been introduced to the Mobile Applications by the Representatives and whose orders are entered into the Online Portal and accepted by Inc. For the avoidance of doubt, Customers shall be customers of deltathree and not of ACN Europe or the Representatives.

“deltathree Costs” shall mean the total of the (i) network costs, estimated to be equal to 2.5% of Revenues and subject to adjustment as set forth in Section 6(b) below, (ii) termination costs, as calculated by deltathree on a monthly basis, (iii) credit card service and credit card vendor costs incurred by deltathree in providing the service hereunder to the  Customers, estimated to be equal to 4.5% of Revenues and subject to adjustment as set forth in Section 6(b) below, (iv) all reasonable direct and indirect costs of deltathree for obtaining and maintaining any electronic communications services registrations, authorizations, or licenses that are required to provide the Mobile Applications; and (v) all reasonable direct and indirect costs of deltathree for registering with tax authorities in respect of the collection and  remittance of value-added taxes for the Mobile Applications. Should deltathree, during the Initial Term, offer the Mobile Applications or any other service covered by the telecommunications or value-added tax registrations through a third party, to Customers in any country in which ACN Europe operates, such costs shall not be included in the deltathree Costs and deltathree shall pay to ACN Europe the full amounts that ACN Europe would have received if these items had not been included in the deltathree Costs. For the avoidance of doubt, any costs incurred by deltathree in connection with fraudulent or other improper usage of the Mobile Applications and for which Revenues are not received shall not be considered deltathree Costs for purposes of calculating Gross Margin or the ACN Europe Commission.

“deltathree Website” shall mean the Order Portal and any other website areas owned, controlled, or maintained by deltathree in connection with the provision of the Mobile Applications.

 

“Gross Margin” shall mean the difference between Revenue minus (i) the deltathree Costs and (ii) the ACN Europe Costs.

"Inc. Indemnified Person" shall have the meaning ascribed to such term in Section 10(a).

"Initial Term” shall have the meaning ascribed to such term in Section 3(a).

“Insolvency Event” shall mean that Inc., DME or Delta Three Israel:

(a) files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law, or any other law for the relief of, or relating to, debtors, now or hereafter in effect;

  

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(b)  applies for or consents to the appointment of a custodian, receiver, trustee, sequestrator, conservator or similar official for Inc., DME or Delta Three Israel or for a substantial part of their assets;

(c) makes a general assignment for the benefit of creditors;

(d) becomes unable to, or admits in writing its inability to, pay its debts generally as they come due;

(e) takes any action in furtherance of any of the foregoing; or

(f) has filed against them an involuntary petition, which petition is not dismissed or discharged within 60 days of its filing, under any bankruptcy statute now or hereafter in effect, of custodian, receiver, trustee, sequestrator, conservator, assignee for the benefit of creditors or other similar official is appointed to take possession, custody or control of the property of Inc., DME or Delta Three Israel.

“Mobile Applications" shall have the meaning ascribed to such term in the Explanatory Statement

“Online Portal” shall mean the web-based order entry portal created and maintained by Inc. pursuant to Section 5(i).

"Representative Commission" shall mean the compensation that ACN Europe pays to the Representatives for producing Customers.

"Representatives" shall have the meaning ascribed to such term in the Explanatory Statement.

“Revenues” shall mean the total revenue from Customers in connection with deltathree providing the services hereunder, including any processing, administrative, or other fees, recognized by deltathree for financial reporting purposes under generally accepted accounting principles.

"Standards" shall have the meaning ascribed to such term in Section 2(a).

"Term" shall have the meaning ascribed to such term in Section 3(a).

“Termination Date” shall have the meaning given to it in Section 3(b).

  

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2. Sales Promotion.

(a) During the Term, ACN Europe shall provide, or cause to be provided, to Inc. ACN Europe’s network of Representatives to act as promoters for Inc. to sell Mobile Applications on behalf of and for the benefit of Inc. ACN Europe shall use its commercially reasonable efforts to cause the Representatives: (i) to promote Mobile Applications and  Inc.’s mobile application business (the “Business”), and (ii) to act as promoters for the sale of Mobile Applications, for and on behalf of Inc. Inc. shall have the right to cause ACN Europe to direct the Representatives with respect to promotion of Mobile Applications, customer service and regulatory matters in accordance with Inc.'s licenses or certificates, the statutes, rules, regulations, or policies of the applicable jurisdictions in which Inc. has authorized ACN Europe and the Representatives to conduct customer acquisition activities (the "Standards"), but in no event shall it have the right to cause ACN Europe to take any actions (or inaction) with respect to management and oversight of the Representative Commissions or other fees paid or payable to the Representatives.

(b) ACN Europe shall be responsible for directing the Representatives to adhere to the Standards in promoting the Mobile Applications and otherwise in connection with the performance of any obligations of ACN Europe under this Agreement. Neither ACN Europe nor the Representatives shall have the power or authority to act as attorney-in-fact of Inc. or bind Inc. in any way without the prior written consent of Inc. All customers acquired by the Representatives shall be subject to acceptance by Inc. and shall become customers of Inc. and not of ACN Europe or the Representatives.

(c) ACN Europe's and the Representatives’ promotion on behalf of Inc. shall be limited to the following acts: (i) solicitation of customers, (ii) the offering of Inc.'s Mobile Applications as set forth in Inc.’s marketing materials, applications, and sales agreements, and/or (iii) recommending Inc.'s Mobile Applications to retail residential and commercial customers.

(d) ACN Europe's and the Representatives' promotion shall not include (i) the negotiation of prices or rates, terms or conditions of service for Inc.'s Mobile Applications, (ii) taking title to Mobile Applications, (iii) arranging for the purchase, transportation, scheduling or delivery of Mobile Applications, or (iv) execution of contracts or agreements on behalf of Inc.

(e) Inc. shall have the right to cause ACN Europe to take appropriate actions with respect to the conduct of a Representative in order to comply with a notice or inquiry of any applicable Governmental Authority by providing at least 5 days' prior written notice (or such lesser period of notice as may be required by such Governmental Authority) to ACN Europe specifying the applicable remedial or corrective actions required by the Governmental Authority.

 

(f) ACN Europe shall provide Inc. with true and complete copies of independent representative agreements and updates thereto from time to time, upon Inc.’s request for same.

 

(g) In performing this Agreement, ACN Europe agrees to (i)(A) not take any actions that it knows would be harmful in any material respect to the Business of Inc., (B) use its commercially reasonable efforts to promote the Business, and (C) comply with all applicable laws, the Standards, and Inc.'s policies and procedures established in accordance with Section 5(a) hereof as in effect from time to time, and (ii) recognizing that ACN Europe’s legal relationship with the Representatives is that of independent contractor, use its commercially reasonable efforts to cause the Representatives to do (or not to do, as applicable) the same.

  

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3. Term and Termination; Wind Down Phase.

(a) This Agreement is effective as of the date hereof and shall continue for a period of two (2) years (the "Initial Term") or until earlier terminated as provided herein. Upon the expiration of the Initial Term, this Agreement shall automatically renew on a year-to-year basis (each a “Renewal Term”) unless terminated by either Inc. or ACN Europe by the giving of written notice of termination to the other party hereto at least three (3) months prior to the expiration of the Initial Term or Renewal Term, as the case may be. The Initial Term and any Renewal Term(s) shall be together referred to herein as the "Term."

(b) This Agreement may be terminated at any time prior to the expiration of the Term by any of the following:

(i)       by mutual written agreement of the parties;

(ii)      by either party upon the occurrence of a material breach by the other party that remains uncured for a period of thirty (30) days after the breaching party receives written notice describing the breach in reasonable detail from the non-breaching party; or

(iii)     by the giving of proper notice as set forth in Section 3(a), above.

In all cases of notice given to terminate under this Section 3(b), the party giving notice shall specify the date on which this Agreement shall terminate (the “Termination Date”).

(c) In the case of termination other than as provided in Section 3(b)(ii), notwithstanding any other provision of this Agreement, any such termination shall be without liability to either party, and shall be managed in compliance with the provisions of Section 3(d), below. Any termination as provided in Section 3(b)(ii) shall be without prejudice to the non-breaching party's right to seek damages for such breach.

  

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(d) Upon termination of this Agreement, this Agreement will enter a wind down phase in which the parties will cooperate to achieve an orderly and gradual cessation (in whatever Term remains) of the Representatives’ marketing and making sales of the Mobile Applications, including the joint and mutually agreeable development of the messaging of such event to the Representatives, and the management of their expectations regarding receiving the Representative Commissions, which will remain ACN Europe’s obligation to remit. ACN Europe will cause the Representatives to cease marketing and selling the Mobile Applications on the Termination Date, but Inc. agrees that it will continue to accept, process, provision and make ACN Europe Commission payments to ACN Europe, and continue customary .xml file reporting, on all orders entered through the Online Portal up through and including the Termination Date.  After the Termination Date, Inc. will continue to pay the ACN Europe Commission payments under Section 6 of this Agreement, and provide the customary .xml file required by Section 5(e), below, for as long as Customers continue to purchase the Mobile Applications, and this Agreement will continue in effect as to the remaining ‘tail’ of these Customers’ usage, until there remain no Customers using Mobile Applications.

(e) Inc. agrees that during the time this Agreement remains in effect, including the time during any wind down period and/or after the Termination Date while there remain active  Customers, regardless of what Mobile Application they consume, regardless of who sold such Mobile Application to them, Inc. will pay to the ACN Europe Commission payments and, if applicable by circumstances, the Commissions ramp down on their aggregate usage, and will continue to provide the customary .xml file required by Section 5(e).  Inc. will not actively seek to cause  Customers to change the Mobile Applications they purchase (with ‘upselling’ to additional Mobile Applications being permitted, but ACN Europe Commission and Commission ramp down payments, if applicable by circumstances, being due thereon), will not change the account numbers or other unique identifier developed inside of Inc.’s systems to identify customers as  Customers, or otherwise attempt to disguise or cull out of the ranks of  Customers any faster than they would otherwise out of normal customer-initiated attrition.

4. Duties of ACN Europe. ACN Europe will use its commercially reasonable efforts to cause the Representatives to promote standard offer contracts of the Business as approved by Inc. to potential retail customers; and will perform the following functions:

(a) ACN Europe will process, reconcile, and make payments of Representative Commissions out of ACN Europe’s Commission.

(b) ACN Europe will maintain, for the benefit of Inc. and in accordance with its customary operating procedures, a call center facility with an adequate number of trained customer service representatives to respond to enquiries (i) from Representatives relating to Representative Commissions and other Representative issues and (ii) from Customers for Tier 1 and Tier 2 support relating to the Mobile Applications.

(c) ACN Europe will give Inc. access to ACN Europe's Representative training events and gatherings at which ACN Europe's other training and product/service familiarization is scheduled to occur, as Inc. and ACN Europe may mutually agree, so that Inc. may assist ACN Europe in training the Representatives about the Mobile Applications, on Inc.’s processes and procedures to sell the Mobile Applications, and in showcasing the Mobile Applications to the Representatives.

  

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(d) ACN Europe and Inc. will from time to time develop together, and Inc. will provide to the Representatives, material for presentation through ANC Europe’s website areas serving the Representatives, including potential links to Inc.’s website area(s), designed to inform and educate the Representatives about the Mobile Applications available for Representatives to sell. Such materials will be made available to Representatives through the ACN Website, other ACN website areas, and one or more deltathree Websites.

(e) ACN Europe shall translate Inc.’s training and promotional materials provided to ACN Europe into one or more European languages to be determined by ACN and shall make such translations available to Inc. ACN Europe shall also be responsible for translating the deltathree Website and providing the translations to Inc. In the event of changes to the Inc. materials or the deltathree Website, ACN Europe shall translate the changes promptly upon receipt.

(f) ACN Europe will use its commercially reasonable efforts to promote the relationship created hereunder to the Representatives.

(g) ACN Europe will designate an individual to be the primary interface between ACN Europe and Inc. on all issues relating to this Agreement, including understanding the Mobile Applications, answering mobile applications sales questions and generally assisting with the relationship between the two organizations (ACN Europe and Inc.) with respect to activities under this Agreement.

(h) ACN Europe and Inc. will together prepare a training package suitable for ACN Europe to use in educating the Representatives on the Mobile Applications so as to enable them to represent Inc. well.

(i) ACN Europe will obtain and maintain any licenses or certificates required to perform its obligations under this Agreement.

(j) ACN Europe shall establish and maintain the ACN Website in good working order, in English and other languages as ACN Europe may determine. Upon accessing the ACN Website and entering the Representative’s Team ID, a Customer shall be directed to the deltathree Website to complete the ordering process.

5. Duties of Inc. Inc. shall provide Mobile Applications for the Representatives to sell in accordance with the following terms:

(a) Inc. shall determine all Mobile Applications, their terms of service, as well as establish the policies and procedures for the Representatives to sell the Mobile Applications, with all of the foregoing being subject to ACN Europe’s input and suggestions.

  

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(b) Inc. shall price the Mobile Applications for retail sale competitively and keep same current in all markets in which ACN Europe operates. Inc. shall consult with ACN Europe regarding pricing but shall have final authority over pricing decisions, provided, however, that Inc. shall price the Mobile Applications in the local currencies of all countries in which ACN Europe and the Representatives are entitled to promote the Mobile Applications. Inc. shall ensure that the prices offered to ACN Europe and Customers under this agreement are no higher than the prices offered to customers directly by deltathree or through other resellers of the Mobile Applications.

(c) Inc. shall be contractually and legally responsible for the provision of the Mobile Applications to Customers and Customers shall not be considered customers of ACN Europe or the Representatives. Inc. shall undertake, be solely responsible for, and bear all risk on, all business functions relating to Customers, including, but not limited to, order entry, provisioning, quality of service, billing (including imposition, collection, and payment of any applicable taxes), fraud detection and management, collections, supply, scheduling and balancing and customer tracking.

(d) Inc. shall assist ACN Europe in preparing (i) English-language training and promotional materials suitable for ACN Europe to use in informing and educating the Representatives on the Mobile Applications so as to enable them to represent Inc. well and (ii) English-language versions of all product literature, contractual forms, and any other materials (including web-based information) needed for the Representatives to market and sell the Mobile Applications.

(e) Inc. shall provide ACN Europe with an .xml electronic file of ACN  Customer activity and status, including disconnects, no less frequently than once daily, in a format reasonably satisfactory to ACN Europe and designed by Inc. and ACN Europe together to allow ACN Europe access to the information it needs to calculate and verify properly the Commissions, and administer its programs with the Representative, which file will remain extant and accessible even after an  Customer’s contract termination and for as long as there remain active Customers.

(f) Inc. shall be entitled to provide training for Representatives at such times as may be reasonably acceptable to ACN Europe at ACN Europe's Representative training events and gatherings at which ACN Europe's other training and product/service familiarization is scheduled to occur.

(g) Inc. will designate an individual to be the primary interface between ACN Europe and Inc. on all issues relating to this Agreement, including understanding the Mobile Applications, answering mobile application questions and generally assisting with the relationship between the two organizations (ACN Europe and Inc.) with respect to activities under this Agreement.

  

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(h) Inc. will design, provide and host a mutually agreeable co-branded online order entry portal that Customers will use to place orders for acceptance by Inc., which orders shall bear some unique identifier inside of Inc.’s systems as ACN Europe-sourced as well as the unique identifier or team identification number inside ACN Europe’s systems of the Representative submitting or responsible for such order. The deltathree Website shall be accessed via the ACN Website. The deltathree Website shall be available in English and such other languages as the parties agree. Inc. shall be solely responsible for the accuracy, completeness, and legal and regulatory compliance of all information and documents presented on or accessed through the deltathree Website.

(i) Inc. will design, to the mutual satisfaction of Inc. and ACN Europe, a ‘Commission Report’ that details the information called for by Section 6(a), below.

(j) Inc. will maintain an adequate number of trained Network Operation Center representatives for the purpose of providing Tier 3 and Tier 4 support to ACN Europe’s CSRs to call to obtain answers to technical and/or billing questions relating to the Mobile Applications.

(k) Inc. will use its best efforts to promptly provision the Mobile Applications to Customers.

(l) Inc. will use its best efforts to cause its Mobile Applications to be available for sale to potential Customers by June 15 in English and other languages as agreed by the parties. Additional languages shall be added after June 15 as agreed by the parties. The parties will jointly determine the delivery schedule for all languages.

(m) Inc. shall be responsible for compliance with all applicable laws in the countries where the Mobile Applications are offered and sold, including, but not limited to distance selling rules, data protection, telecommunications, and tax laws (including value-added, corporate income, and other taxes that may apply to the provision of the Mobile Applications by deltathree).

(n) Inc. will not block the phone number (the “Number”) entered by a Customer when signing up for the Mobile Applications as the phone number for the mobile phone (the “Phone”) on which such Customer will download and utilize the Mobile Applications from appearing to a recipient of a call from the Phone as the phone number for such Phone, until such time as deltathree receives written notification from ACN Europe requesting that deltathree so block the Number or deactivate an account.

(o) Inc. shall use its best efforts to assist ACN Europe with resolving customer service issues, provided that deltathree reasonably determines that such resolutions requested by ACN Europe are not unreasonable or unduly burdensome (either financially or in regards to the amount of time and effort that would be required) for Inc.  To the extent that the cost, expense and/or other burden that deltathree would incur for a resolution is what Inc. deems to be unduly burdensome, Inc. shall notify ACN Europe of the cost, expense and/or other burden and allow ACN Europe the opportunity to elect to compensate Inc. for such cost, expense and/or other burden.

  

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6. ACN Europe’s Commission.

(a)  Inc., in consultation with ACN Europe, shall agree upon the retail prices at which Mobile Applications will be offered by ACN Europe to potential Customers (the “Retail Price”).  For purposes of this agreement, the Retail Price shall not include any value-added tax that may be applicable to deltathree’s sale of Mobile Applications to Customers. The parties shall meet on a regular basis to determine whether the Retail Price of any particular Mobile Application(s) is/are appropriate for market conditions and deltathree may decide (in consultation with ACN Europe) to increase or decrease (i) the Retail Price for any product(s) and/or (ii) the ACN Europe Commission set forth below. All retail prices shall be set in the local currency of the country in which the Mobile Applications are offered.

Inc. shall pay to ACN Europe as consideration for ACN Europe’s performance of its duties and obligations under this Agreement an amount of money in Euros equal to fifty percent (50%) of the Gross Margin (the “ACN Europe Commission”). At the conclusion of each calendar month, Inc. shall calculate the ACN Europe Commission and pay to ACN Europe by wire transfer, on or before the 15th day of the end of such month, an amount of money equal to the ACN Europe Commission.  For the purpose of calculating the ACN Europe Commission, Inc. shall convert to Euros all ACN Costs, deltathree Costs and Revenues incurred or received or paid in currencies other than Euros on the last day of such month using the then-current currency conversion rates as posted on http://www.oanda.com/currency/converter or other such source as the Parties shall agree.

(b) Within thirty (30) days following the completion of each six-month period, ACN Europe shall calculate the ACN Europe Costs and deltathree shall calculate the deltathree Costs for the preceding six-month period and each of the parties shall forward to the other party a report setting forth in reasonable detail such calculation. In the event that any adjustment to the ACN Europe Costs and/or the deltathree Costs and, accordingly, the aggregate amount paid by deltathree to ACN Europe for such six-month period is required, deltathree shall include such adjustment in the calculation of the monthly payment (or, if necessary, payments) it is required to make to ACN Europe immediately following the completion of such calculation.  Such revised calculation of the ACN Europe Costs and/or the deltathree Costs (as applicable) shall serve as the estimate of the ACN Europe Costs and/or the deltathree Costs (as applicable) for the following six-month period.

(c) All ACN Europe Commission payments shall be made by Inc. directly to ACN Europe. ACN Europe shall be solely liable for the payment of any and all compensation of whatever kind to the Representatives.

  

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(d) If a Customer disputes the validity of a contract, Inc. shall continue to pay ACN Europe Commission payments while that Customer continues to pay for the Mobile services; provided, however, if the basis of the dispute relates to or is connected with the conduct of ACN Europe or its representatives in securing that Customer contract, then Inc. shall withhold any ACN Europe Commission payments until such time as it is determined that that Customer contract is valid.

7.   Audit Rights.

ACN Europe shall have the right, at any time upon reasonable advance notice to Inc., and during customary business hours, to audit Inc.’s customer and sales revenue accounting records and applicable transaction documents in order: (i) to verify any report provided to ACN Europe by Inc. in connection with this Agreement or (ii) to verify any calculation, payment of, or proposed payment of, ACN Europe Commission to ACN Europe, and Inc. shall have the right, at any time upon reasonable advance notice to ACN Europe, and during customary business hours, to audit ACN Europe’s Commission and call center accounting records and applicable transaction documents in order to verify any report provided to Inc. by ACN Europe in connection with this Agreement.  Subject to any restrictions imposed by applicable law, ACN Europe shall also have the right to request customer detail records, and Inc. shall promptly provide the same to ACN Europe.  Neither party shall delay unduly or otherwise attempt to frustrate the other party’s verification efforts.  All information provided to a party by the other party, whether under this Section 7 or otherwise under this Agreement, shall be prepared with full transparency by the providing party, and shall be full, complete, truthful and not misleading when delivered to the receiving party.  Each of the party’s rights under this section shall continue and remain in effect until there are no longer any active ACN Europe Customers.

ACN Europe acknowledges that certain of the information that Inc. may provide in respect of ACN Europe’s audit rights may contain personal information of the ACN Europe Customers and ACN Europe agrees to use its reasonable commercial efforts to protect and maintain the confidentiality of such information, not to disclose the information to any third parties and use such information for the sole and limited purpose of the verifications set out in (i) through (iii) above; and in any event, ACN Europe agrees to treat such confidential information with the same care that it treats the information of its own, non-Inc. related customers similar information.

8.  Representations and Warranties.

Each of the parties hereto represents and warrants to the other that:

(a) it is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has the requisite power and authority to execute, deliver, and perform this Agreement;

(b) this Agreement, once executed, will constitute a valid and binding agreement of each party, enforceable in accordance with its terms, subject to bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights in general, and subject to general principles of equity;

  

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(c) this Agreement has been duly authorized by all necessary action on the part of each party;

(d) it possesses all licenses, certificates, permits or other similar permissions necessary to perform its obligations under this Agreement; and

(e) neither the execution and delivery of this Agreement, nor each of the parties’ performance hereunder, will violate any injunction, judgment, order, decree, ruling charge, government restriction, rule or law, nor will they conflict with, result in a material breach of, constitute a default under, or cause or create any acceleration, cancellation, or modification of any other agreement or arrangement to which each party is a party.

9. Confidential Information.

The parties agree that the provisions of the Nondisclosure Agreement between LKN Communications Inc. and deltathree dated as of September 2, 2010 shall apply to them and shall be deemed incorporated herein.

10. Indemnification.

(a) ACN Europe hereby agrees to indemnify and hold Inc. and its directors, officers, employees, stockholders, affiliates and agents (each, an “Inc. Indemnified Person”) harmless from and against all damages which any Inc. Indemnified Person may sustain, incur or assume as a result of any allegation, claim, civil or criminal action, proceeding, charge or prosecution which may be alleged, made, instituted or maintained against any Inc. Indemnified Person arising out of, resulting from or based upon (i) any breach by ACN Europe of any of its representations, warranties, covenants or agreements contained in this Agreement, or (ii) any claim asserted or threatened to be asserted by any third party in connection with ACN Europe, its affiliates or the Representatives, promoting the Mobile Applications or serving or having served pursuant to this Agreement; provided, however, ACN Europe shall not be liable to indemnify and hold any Inc. Indemnified Person harmless from any such damages to the extent it is the result of the gross negligence, bad faith, willful misconduct or criminal conduct of, or the breach of this Agreement by, the party seeking indemnification hereunder.

(b) Inc. hereby agrees to indemnify and hold ACN Europe and its directors, officers, employees, stockholders, affiliates and agents (each, an "ACN Europe Indemnified Person" and collectively, the "ACN Europe Indemnified Persons") harmless from and against all damages which any ACN Europe Indemnified Person may sustain, incur or assume as a result of any allegation, claim, civil or criminal action, proceeding, charge or prosecution which may be alleged, made, instituted or maintained against any ACN Europe arising out of, resulting from or based upon (i) any breach by Inc. of any of its representations, warranties, covenants or agreements contained in this Agreement, (ii) any claim asserted or threatened to be asserted by any third party in connection with Inc.'s obligations pursuant to this Agreement, in each case solely to the extent that any such damages is the direct result of the gross negligence, bad faith, willful misconduct or criminal conduct with respect to any training, sales materials, literature, forms or documents provided by Inc. for use by the Representatives of, or the breach of this Agreement by, any of the Inc. Indemnified Persons; or (iii) claims by any tax or other governmental authority in any of the European countries in which the Mobile Applications are offered that ACN Europe is responsible for the imposition, payment, or collection of value-added tax with respect to the provision of the Mobile Applications to Customers.

  

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(c) Inc. acknowledges that the Representatives are third party beneficiaries of this Agreement, and that ACN Europe is permitted to bring any claim under this Agreement that may arise on their behalf.

(d) ACN Europe hereby agrees to indemnify and hold harmless each Inc. Indemnified Person from and against all liability and damages which any Inc. Indemnified Person may sustain, incur or assume as a result of any allegation, claim, civil or criminal action, proceeding, charge or prosecution which may be alleged, made, instituted or maintained against any Inc. Indemnified Person arising out of, resulting from or based upon deltathree not blocking the Numbers from appearing to a recipient of a call from a Phone as the phone number for such Phone, except where such allegation, claim, action, proceeding, charge or prosecution is the result of deltathree’s gross negligence, including but not limited to deltathree’s failure to comply with Section 5(n) above.

11. Independent Contractors. The parties acknowledge that they are entering into this Agreement as independent contractors and that this Agreement shall not create nor be construed to create a relationship of joint venturers, co-partners, employer and employee, master and servant or any similar relationship among the parties.

12. Expenses. Except as otherwise provided for herein, each party will pay its own expenses in connection with this Agreement and the completion of the transactions contemplated hereby.

13. Expenses Related to Audit Rights. Wherever either party has an audit right, the party exercising its audit right shall be entitled to reimbursement of its reasonable and customary expenses associated with such audit from the other party in the event such audit results in a determination that there was a material inaccuracy adverse to the party conducting the audit. Further, the party being audited shall be entitled to reimbursement of its reasonable and customary expenses associated with supporting such audit from the party conducting the audit in the event such audit results in a determination that the subject matter audited was materially accurate. Any inaccuracies determined by any such audit shall be corrected in the favor of the party to whom the inaccuracy was adverse.

  

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14. Force Majeure. In the event that war, fire, explosion, flood, accident, strike, riot, act of governmental authority, act of terrorism, act of God or other contingency beyond the reasonable control of either party causes cessation or interruption of that party’s or the Representatives' performance hereunder, performance shall be temporarily excused for the period of the disability, without liability, provided that the party seeking excuse shall promptly, after it has actual knowledge of the beginning of any excusable delay, notify the other party of such delay, the reason therefore, and the probable duration and consequence thereof.  The party seeking excuse shall use its reasonable commercial efforts to resume performance of its obligations hereunder with the least possible delay.

15. Contractual Nature of Obligations.  ACN Europe acknowledges that its rights to ACN Europe Commission payments are contractual in nature, are not traditional security interests and do not specifically attach to or encumber any assets of Inc., DME or Delta Three Israel, including, without limitation, to the Customer contracts. ACN Europe agrees that it will not assert or attempt to assert these rights via any UCC-1 or similar filings.

16.  Insolvency of Inc.  In the event that an Insolvency Event occurs, Inc. acknowledges that ACN Europe is a general unsecured creditor of Inc., and agrees that, in consideration for ACN Europe having acknowledged herein that its rights to ACN Europe Commission payments is unsecured and not attached to any specific assets, Inc. will use its best efforts to protect ACN Europe’s twin rights to the fullest extent possible in both the case where the Insolvency Event is instigated by Inc. or is suffered by Inc. at the hands of any third party.  Examples of the best efforts that Inc. could use in this instance would include, but not be limited to, obtaining protection for payments to ACN Europe in any negotiations with other or secured creditors or debtor-in-possession or other post-filing lenders, placing this Agreement high upon the list of contracts to be assumed in any reorganization proceeding offering that option, or otherwise acting to preserve both the relationship created by this Agreement, the payments to ACN Europe hereunder and the ability for ACN Europe to realize the value and equity that its efforts hereunder have created.  Inc. specifically agrees that ACN Europe shall have the right to intervene in any Insolvency Event proceeding to that same end.

17.           Intellectual Property.

(a)           ACN Europe and deltathree agree that all right, title, and interest in any trademarks, trade names, copyrighted material, patents, and other intellectual property (the “IP”) in existence before the date of this agreement shall remain owned by that party and that this agreement shall not cause the transfer of any IP rights held by either party.

   

(b)           For the avoidance of doubt, ACN Europe shall be the owner of all IP in the ACN Website and the www.acnmobileworld.eu domain name. Inc. shall be the owner of the Online Portal and all content contained on the deltathree Website except for translated material provided by ACN Europe, which shall remain the property of ACN Europe.

 

(c)           ACN Europe hereby grants to Inc., subject to the terms of this Agreement, a limited non-exclusive, non-transferable, non-sublicensable, license to use and display the  IP identified by ACN Europe in connection with the promotion and provision of the Mobile Services, provided such use is necessary to perform as contemplated by this Agreement. The license granted by ACN does not include the right to modify or alter in any way any of the IP. Any benefits accruing from use of the IP shall automatically vest with ACN Europe. Subject to Sections 3(d) and 3(e) above, this limited license shall terminate immediately in the event this Agreement is terminated, and use of any IP must cease immediately upon termination of this agreement.

  

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18.  Miscellaneous.

(a) Entire Agreement; Amendment; Waiver. This Agreement contains the entire understanding of the parties as to the subject matter hereof and fully supersedes all prior agreements and understandings between the parties as to such subject matter. This Agreement may not be amended, supplemented, canceled or discharged, except by a written instrument executed by the party as to whom enforcement is sought. No failure to exercise, and no delay in exercising, any right, power or privilege hereunder shall operate as a waiver thereof. No waiver of any breach of this Agreement shall be deemed to be a waiver of any preceding or succeeding breach of this Agreement.

(b) Severability. The parties acknowledge that the terms of this Agreement are fair and reasonable at the date signed by them. However, in light of the possibility of a change of conditions or differing interpretations by a court of what is fair and reasonable, the parties stipulate as follows: if any one or more of the terms, provisions, covenants or restrictions of this Agreement shall be determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; further, if any one or more of the terms, provisions, covenants, and restrictions contained in this Agreement shall for any reason be determined by a court of competent jurisdiction to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed, by limiting or reducing it, so as to be enforceable to the maximum extent compatible with then applicable law.

(c) Notices. All notices, requests, demands and other communications provided for by this Agreement shall be in writing and delivered by confirmed email and overnight courier service to the addresses of the respective parties as set forth below, or to such changed addresses as the parties may fix by notice in accordance therewith:

To Inc.:

   

deltathree, Inc.

Jerusalem Technology Park – Bldg. #9

P.O. Box 48265, Jerusalem 91481, Israel

Attn:  Chief Executive Officer

Attn:  General Counsel

	
  

	
Email:

	
effi.baruch@deltathree.com;

peter.friedman@deltathree.com

  

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To ACN Europe:

ACN Europe BV

Thomas R. Malthusstraat 1-3

1066 JR Amsterdam, Netherlands

Attn:  Chief Executive Officer

Attn:  General Counsel

	
  

	
Email:

	
mtribole@acneuro.com

	
  

	
Email:

	
amslegal@acneuro.com

(d) Successors and Assigns. Neither party may assign this Agreement without the prior written consent of the other party; however, either party may assign this Agreement to any affiliate without such consent.  Any attempt to assign this Agreement not in conformance with the foregoing sentence shall be void.  This Agreement shall be binding upon and inure to the benefit of Inc. and its successors and assigns and upon and to the benefit of ACN Europe and its successors and assigns.

(e) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of The Netherlands, without giving effect to principles of conflict of laws.  In the event that any dispute shall have issues needing resolution that arise out of the formation of an ACN Customer Contract, then the laws of the province in which the ACN  Customer resides may be applied by a court of competent jurisdiction, in its sole discretion, solely to answer questions regarding the validity of that  Customer Contract, but all other issues shall be governed by and construed in accordance with the laws of The Netherlands, without giving effect to principles of conflict of laws.

(f) Arbitration. Any claim, controversy or dispute between the parties shall be resolved by binding arbitration of the issue in accordance with the following procedures:

(i)         Either party may request arbitration by giving the other involved party written notice, which notice shall describe, in reasonable detail, the nature of the dispute, controversy or claim. The arbitration shall be governed by the rules of the American Arbitration Association ("AAA") and held in Amsterdam, The Netherlands or other mutually agreed upon location.

(ii)        If both parties agree to an arbitrator within 30 days after a request for arbitration is made hereunder, that arbitrator shall be selected to hear the dispute in accordance with AAA rules. If the parties are not able to agree upon an arbitrator within such 30 day period, then that party who requested arbitration may request that the AAA select an arbitrator who has business experience in the sales industry and the selected arbitrator shall hear the dispute in accordance with AAA rules.

  

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(iii)      Each of the parties shall bear its own fees, costs and expenses of the arbitration and its own legal expenses, attorneys' fees and costs of all experts and witnesses; provided, however, that if the claim of either party is upheld by the arbitrator in all material respects, the arbitrator may apportion between the parties as the arbitrator may deem equitable the costs incurred by the prevailing party. The fees and expenses of the arbitration procedures, including the fees of the arbitrator, will be shared equally by the parties.

(iv)      Any award rendered pursuant to an arbitration proceeding shall be final, conclusive, non-appealable and binding upon the parties, and any judgment thereon may be entered and enforced in any court of competent jurisdiction

(g) Headings. The headings in this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of this Agreement.

(h) Further Assurances. Each party agrees at any time, and from time to time, to execute, acknowledge, deliver and perform, and/or cause to be executed, acknowledged, delivered and performed, all such further acts, deeds, assignments, transfers, conveyances, powers of attorney and/or assurances as may be necessary, and/or proper to carry out the provisions and/or intent of this Agreement.

(i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all such counterparts shall constitute one and the same instrument.

(j) Survival.  The provisions of Sections 3(d), 3(e), 4(b), 4(h), 5(c)-(e), 5(k), 5(n), 7, 9, 10, 17 and 18 shall survive the termination of this Agreement for as long as there are active Customers.

(k) Trademark License.  ACN Europe, on behalf of ACN, Inc., hereby grants to Inc., subject to the terms of this Agreement, a limited, non-exclusive, non-transferable, non-sublicensable, license to use and display ACN Europe trademarks and tradenames (together, the “Marks”), as identified by ACN Europe, in or on promotional material and the on-line branded web site, provided such use is reasonably necessary to perform as contemplated by this Agreement and has been approved by ACN Europe.

 

Title to and ownership of the Marks shall not be affected by this Agreement.  The license granted by ACN Europe does not include any ownership interest in the Marks and does not include the right to modify or alter in any way any of the Marks.  Any benefits accruing from use of the Marks shall automatically vest with ACN Europe or ACN Inc. This limited license shall terminate immediately in the event this Agreement is terminated and use of any Marks must cease immediately upon termination, subject to Section 3(d) above.

  

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the day and year first above written.

	
DELTATHREE, INC.

	  
	
By:

	
/s/ Effi Baruch

	  
	
Name:

	
Effi Baruch

	
Title:

	
CEO and President

	  	  
	
DME SOLUTIONS, INC.

	  
	
By:

	
/s/ Effi Baruch

	  
	
Name:

	
Effi Baruch

	
Title:

	
CEO and President

	  
	
DELTA THREE ISRAEL, LTD.

	  
	
By:

	
/s/ Effi Baruch

	  
	
Name:

	
Effi Baruch

	
Title:

	
CEO and President

	  
	
ACN EUROPE B.V.

	  
	
By:

	
/s/ Michael Tribolet

	  
	
Name:

	
Michael Tribolet

	
Title:

	
CEO

 

  

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