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EXHIBIT 10.3
CONSENT AND RELEASE AGREEMENT
This Consent and Release Agreement (this "Agreement") is entered into
this 29th day of March, 2000, by and among Citizens Telecommunications
Company, Inc., a Delaware corporation ("Citizens"), Sonus Communication
Holdings, Inc., a Delaware corporation ("Sonus"), EOT Acquisition Corporation,
a Delaware corporation and wholly-owned subsidiary of Sonus ("New EOT"),
Empire One Telecommunications, Inc., a New York corporation ("Old EOT"), W.
Todd Coffin ("Coffin"), and John K. Friedman ("Friedman").
WHEREAS, on April 4, 1997, Old EOT entered into a Collateral Note (the
"Old Note") and Security Agreement (the "Old Security Agreement") with
Citizens;
WHEREAS, Friedman, Paul A. Butler ("Butler") and Bradley D. Lewis
("Lewis" and, together with Butler, the "EOT Principals"), entered into a
Personal Guaranty (the "Old Guaranty") and Stock Pledge Agreement (the "Old
Stock Pledge") dated April 4, 1997 (the Old Note, Old Security Agreement, Old
Guaranty and Old Stock Pledge, together with any other ancillary and/or
predecessor documents, are sometimes collectively referred to herein as the
Old Loan Documents);
WHEREAS, Old EOT entered into a merger agreement (the "Merger
Agreement") with Sonus dated November 15, 1999, pursuant to which Old EOT
proposes to merge with and into New EOT;
WHEREAS, in consideration for the consent and approval granted herein
and as part of the transactions contemplated hereby, the Old Loan Documents,
including but not limited to the Old Note, will be terminated and deemed
satisfied and Sonus and New EOT will enter into the New Loan Documents (as
defined below) including but not limited to the New Note (as defined below)
with Citizens with new collateral to be substituted for the collateral given
to secure the Old Note.
WHEREAS, New EOT will be the surviving corporation following the
merger
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and, as part of the merger, may change its name to "Empire One
Telecommunications, Inc."; and
WHEREAS, the Old Loan Documents require the consent of Citizens to
consummate the transactions contemplated by the Merger Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, each of the parties hereto
agree as follows:
1. Citizens hereby provides its consent to and approval of the
consummation of the transactions contemplated by the Merger Agreement
and the ancillary documents to be entered into in connection
therewith, including but not limited to the consummation of the merger
of Old EOT with and into New EOT, with New EOT to be the surviving
corporation following the merger, and waives any and all defaults,
violations, conflicts and other breaches, if any, of the Old Loan
Documents in connection therewith.
2. As soon as practicable following receipt by Sonus of proof of filing
and acceptance of the Articles of Merger to be filed with the State of
New York and the Certificate of Merger to be filed with the State of
Delaware pursuant to the Merger Agreement (i) Sonus, New EOT and
Citizens shall execute and deliver to one another that certain
Collateral Note attached hereto as Exhibit A (the "New Note") and
Security Agreement attached hereto as Exhibit B (the "New Security
Agreement"); and (ii) Coffin, Friedman and Citizens shall execute and
deliver to one another that certain Personal Guaranty attached hereto
as Exhibit C (the "New Guaranty") and Stock Pledge Agreement attached
hereto as Exhibit D (the "New Stock Pledge" and, together with the New
Note, New Security Agreement and New Guaranty, collectively, the "New
Loan Documents").
3. Upon the execution and delivery of the New Loan Documents as described
in Section 2 hereof (i) each of the Old Loan Documents, together with
any and all other documents, agreements (oral or written), notes,
guarantees or other writings evidencing or purporting to evidence any
obligations of Old EOT or any of the EOT Principals (or any of their
respective successors, affiliates or assigns), including but not
limited to the Old Guaranty, shall immediately terminate and
thereafter become null and void, and all obligations and liabilities
thereunder shall be fully and unconditionally released and deemed
satisfied in full, it being understood that Citizens' rights with
respect to the parties hereto shall thereafter be pursuant to the New
Loan Documents only; (ii) Citizens shall release from escrow or cause
to be released from escrow any and all Old EOT shares held pursuant to
the Old Stock Pledge Agreement, and cause the same to be delivered to
Cecil E. Martin, III, Esquire, on or prior to the closing date of the
transactions contemplated by the Merger Agreement, to be held in
escrow by Mr. Martin until the New Loan Documents have been executed
and delivered to Citizens; and (iii) Citizens shall file a UCC-3 to
terminate the financing statement bearing number 972562 94 and listing
Citizens Telecommunications Company as secured party and Empire One
Telecommunications, Inc. as Debtor, and take all such further action
as may be necessary to terminate its security interest in, and any and
all other rights to or financing statements filed covering, any assets
or other collateral in each jurisdiction (other than "now owned and
hereafter acquired accounts, including, but not limited to, accounts
receivable and contract rights, client base list, chattel paper,
documents and instruments and the right to receive payment under them"
of New EOT and/or Sonus); and (iv) Sonus and New EOT shall execute
and deliver to Citizens a UCC-1 financing statement covering Sonus'
and New EOT's "now owned and hereafter acquired accounts, including,
but not limited to, accounts receivable and contract rights, client
base list,
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chattel paper, documents and instruments and the right to receive
payment under them".
4. Each party hereto shall take such further action including but not
limited to the execution of such further documents, releases, consents
and other agreements as may be reasonably requested by the other party
or parties to evidence the effect and effectuate the intent of this
Agreement.
5. All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission or
mailed by prepaid first class certified mail, return receipt
requested, or delivered by a nationally recognized overnight courier
service prepaid, to the parties at the following addresses or
facsimile numbers:
(a) If to Sonus or EOT Acquisition, to:
Sonus Communication Holdings, Inc.
1600 Wilson Boulevard, Suite 1008
Arlington, Virginia 22209
Attention: Richard D. Rose
Telecopier: 703-527-8865
with a copy to:
Cecil E. Martin, III, Esquire
McGuire, Woods, Battle & Boothe LLP
7 St. Paul Street, Suite 1000
Baltimore, Maryland 21202
Telecopier: 410-659-4535
(b) If to the EOT Principals, to:
Empire One Telecommunications, Inc.
254 West 31st Street
New York, New York 10001
Attention: John K. Friedman
Telecopier: 212-904-1032
with a copy to:
David E. Bronston, Esquire
Wolf, Block, Schorr and Solis-Cohen LLP
250 Park Avenue
New York, New York 10177
Telecopier: 212-986-0604
(c) If to Citizens, to:
Richard Tettelbaum, Esquire
Citizens Communications
1400 16th Street, NW
Washington, DC 20036
Telecopier: 202-483-9277
with a copy to:
Suzann Duffy
Citizens Communication
3 High Ridge Park
Stamford, CT 06905
Telecopier: 203-614-6633
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All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section, be
deemed given upon delivery, (ii) if delivered by facsimile
transmission to the facsimile number as provided for in this Section,
be deemed given upon receipt, (iii) if delivered by mail in the manner
described above to the address as provided in this Section, be deemed
given on the earlier of the third business day following mailing or
upon receipt and (iv) if delivered by overnight courier to the address
as provided for in this Section, be deemed given on the earlier of the
first business day following the date sent by such overnight courier
or upon receipt (in each case regardless of whether such notice,
request or other communication is received by any other person to whom
a copy of such notice is to be delivered pursuant to this Section).
Any party from time to time may change its address, facsimile number
or other information for the purpose of notices to that party by
giving notice specifying such change to the other parties hereto.
6. This Agreement and the Exhibits hereto supersede all prior discussions
and agreements between the parties with respect to the subject matter
hereof and thereof and contain the sole and entire agreement between
the parties hereto with respect to the subject matter hereof. This
Agreement may be amended, supplemented or modified only by a written
instrument duly executed by or on behalf of each of the parties
hereto.
7. Any term or condition of this Agreement may be waived at any time by
the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term.
8. Neither this Agreement nor any right, interest or obligation hereunder
may be voluntarily assigned by any party hereto without the prior
written consent of the other parties hereto, and any attempt to do so
will be void. Subject to the preceding sentence, this Agreement is
binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective heirs, executors, personal
representatives, successors and assigns.
9. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law, and if the rights or
obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as
if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (c) the remaining provisions of this
Agreement will remain in full force and effect and will not be
affected by the illegal, invalid or unenforceable provision or by its
severance here from and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part
of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be
possible.
10. This Agreement shall be governed by and construed in accordance with
the domestic laws of the State of New York, without giving effect to
any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
New York.
11. This Agreement may be executed in any number of counterparts, each of
which will be deemed an original, but all of which together will
constitute one and the same instrument. This Agreement may be executed
and delivered by facsimile transmission.
12. Butler and Lewis shall be deemed to be third-party beneficiaries of
this
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Agreement and shall be entitled to the benefit of and to enforce their
rights hereunder to the same extent as if they had been made a party
hereto.
IN WITNESS WHEREOF, the parties have executed this Consent and Release
Agreement by their duly authorized representatives on the date first set forth
above:
CITIZENS TELECOMMUNICATIONS CO., INC.
By: /s/ Charles J. Weiss
-----------------------------------------
Name: Charles J. Weiss
Title: Secretary
EOT ACQUISITION CORP.
By: /s/ W. Todd Coffin
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Name: W. Todd Coffin
Title: President and Chief Executive Officer
SONUS COMMUNICATION HOLDINGS, INC.
By: /s/ W. Todd Coffin
-----------------------------------------
Name: W. Todd Coffin
Title: President and Chief Executive Officer
EMPIRE ONE TELECOMMUNICATIONS, INC.
By: /s/ John K. Friedman
-----------------------------------------
Name: John K. Friedman
Title: Chief Executive Officer
/s/ John K. Friedman
--------------------------------------------
John K. Friedman
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