TERMINATION AGREEMENT
This TERMINATION AGREEMENT (this "Agreement"), dated as of October __,
2000 (the "Effective Date"), by and among Capsule Communications, Inc. (along
with its predecessor U.S. WATS, Inc., the "Company"), Walt Anderson
("Anderson"), Gold & Appel Transfer, S.A. ("G&A") and Foundation for the
International Non-Governmental Development of Space ("FINDS" and together with
G&A, the "Investors").
RECITALS
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WHEREAS, the Company and the Investors have entered into a certain
Investment Agreement dated May 19, 2000 (as amended, the "Investment
Agreement"), pursuant to which the Investors jointly and severally agreed to
purchase from the Company, and the Company agreed to sell to the Investors,
additional shares of the Company's common stock, par value $.001 per share
("Common Stock"), in two installments for an aggregate purchase price of $3.0
million (the "Agreement").
WHEREAS, as of June 30, 2000, the Company and the Investors entered into
Amendment No. 1 to the Investment Agreement whereby they amended the terms and
conditions of the Investment Agreement to provide for a modified installment
payment schedule.
WHEREAS, the Company and G&A have entered into a certain Stock Purchase
Agreement (the "SPA") dated as of March 23, 1999, pursuant to which G&A
purchased 900,000 shares of Common Stock.
WHEREAS, the Company and G&A have entered into a certain Registration
Rights Agreement (the "RRA") dated as of March 23, 1999, pursuant to which the
Company granted G&A certain registration rights with respect to the 900,000
shares of Common Stock purchased on March 23, 1999.
WHEREAS, the Company borrowed and incurred an obligation to repay an
aggregate of $1,000,000 pursuant to agreements with G&A dated March 22, 2000
and April 9, 2000, and borrowed and incurred an obligation to repay an
aggregate of $500,000 pursuant to agreements with FINDS dated March 22, 2000
and April 9, 2000 (such obligations and agreements, collectively, the
"Indebtedness"), which Indebtedness was satisfied in full, cancelled and
converted into Common Stock on May 19, 2000.
WHEREAS, contemporaneously herewith, the Company and the Investors are
entering into an Agreement and Plan of Reorganization (the "Reorganization
Agreement") with Startec Global Communications Corporation ("Acquiror") and
Stars Acquisition Corp. ("Merger Sub"), pursuant to which Merger Sub will be
merged with and into the Company, and the Company will become a wholly owned
subsidiary of Acquiror.
WHEREAS, as a condition to their willingness to enter into the
Reorganization Agreement, Acquiror and Merger Sub have required that the
parties hereto terminate the Investment Agreement, the SPA, the RRA, and all
other agreements, contracts, obligations or other arrangements (written or
oral) between or among any of G&A, FINDS, Anderson, any predecessor entity of
G&A or FINDS, or any "affiliates" or "associates" of G&A, FINDS or Anderson,
and the Company or any of the Company's predecessors, "affiliates" or
"associates" (any such agreement, an "Additional Agreement"), and have
required confirmation that the Indebtedness has been cancelled. For the
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purposes of this Agreement the terms "affiliates" and "associates" shall have
the meanings assigned to them in Rule 405 promulgated under the Securities Act
of 1933, as amended.
WHEREAS, the parties hereto have agreed to terminate the Investment
Agreement, the SPA, the RRA, and each Additional Agreement and to confirm
cancellation of the Indebtedness, and to release each other from their
respective remaining obligations under the Investment Agreement, the SPA, the
RRA, the Indebtedness, and each Additional Agreement, subject to and in
accordance with the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual releases, promises and
covenants set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Recitals. The recitals set forth above are incorporated in and
are made a part of this Agreement as if more fully restated below.
2. Termination. Effective as of the Effective Date, the parties
hereto acknowledge and agree that the Investment Agreement is terminated, that
no further action is required by any party to effect such termination, and
that none of the rights, obligations or other provisions of the Investment
Agreement shall survive the Effective Date, and the parties hereto hereby
confirm and acknowledge that the Indebtedness has been satisfied in full and
cancelled and that no obligations remain outstanding thereunder. Each of G&A
and the Company acknowledge and agree that, as of the Effective Date, each of
the SPA and the RRA is terminated, that no further action is required by any
party to effect such termination, and that none of the rights, obligations or
other provisions of the SPA or the RRA shall survive the Effective Date. Each
party hereto acknowledges and agrees that, effective as of the Effective Date,
each Additional Agreement is terminated, that no further action is required by
any party to effect such termination, and that none of the rights, obligations
or other provisions of any Additional Agreement shall survive the Effective
Date.
3. Release. The parties hereto, on their own behalf and on behalf
of their respective personal representatives, successors and assigns, hereby
mutually release and forever discharge each other, together with any and all
of their respective directors, officers, agents, employees, attorneys,
subsidiaries, affiliates, controlling persons, successors and assigns, from
any and all claims, liabilities, obligations, debts, demands, actions, causes
of action, suits, covenants, promises, judgments, contracts, damages,
defenses, responsibilities, proceedings, omissions, trespasses and claims for
relief of any kind or nature whatsoever, known or unknown, foreseen or
unforeseen, tangible or intangible, fixed or contingent, foreseeable or
unforeseeable, and liquidated or unliquidated, whether at law or in equity,
that any party may now have, have ever had or may in the future have, by
reason of any matter, cause or thing whatsoever, arising under or in
connection with the Investment Agreement, the SPA, the RRA, the Indebtedness
and each Additional Agreement and the transactions contemplated thereby.
4. Miscellaneous.
(a) Binding Effect; Entire Agreement; Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. This Agreement
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof, and supersedes all other prior agreements and
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understandings, both written and oral, among the parties hereto with respect
to the subject matter hereof.
(b) Governing Law. The validity, construction and enforceability
of this Agreement shall be governed by and construed in accordance with the
substantive laws of the State of Delaware.
(c) Modifications. No amendment or modification to this
Agreement shall be effective, unless the same is in writing signed by all
parties hereto.
(d) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the other provisions hereof. If
any provision of this Agreement is held to be invalid, such provision shall
not be severed from this Agreement; instead, the scope of the rights and
duties created thereby shall be reduced by the smallest extent necessary to
conform such provision to applicable law, preserving to the greatest lawful
extent the intent of the parties hereto to create such rights and duties as
set out herein.
(e) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the duly authorized representatives of Capsule
Communications, Inc., Walt Anderson, Gold & Appel Transfer, S.A., and
Foundation for the International Non-Governmental Development of Space have
executed this Termination Agreement as of the date first written above.
CAPSULE COMMUNICATIONS, INC.
By
Name:
Title:
GOLD & APPEL TRANSFER, S.A.
By:___________________________________
Name:
Title:
WALT ANDERSON
By:
Name:
Title:
FOUNDATION FOR THE NON-
GOVERNMENTAL DEVELOPMENT OF SPACE
By:___________________________________
Name:
Title:
