SHARE TRANSFER AGREEMENT
This SHARE TRANSFER AGREEMENT (this “Agreement”) is made as of February 25, 2011 (the “Effective Date”), by and among MediaNet Group Technologies, Inc., a Nevada corporation (the “Company”), Michael Hansen (“Hansen”) and DubLi.Com, LLC, a Delaware limited liability company (“DubLi.com”).
WHEREAS, pursuant to that certain Amended and Restated Agreement and Plan of Merger (the “Merger Agreement”), dated as of September 25, 2009, by and among the Company, CG Holdings Limited (“CG”) and MediaNet Merger Sub, Inc. (“Merger Sub”), Merger Sub merged with and into CG (the “Merger”), with CG surviving the Merger as a wholly-owned subsidiary of the Company;
WHEREAS , in connection with the Merger, Zen Holding Group Limited (“Zen”), as the sole shareholder of CG, was issued a total of 5 million shares (the “Zen Preferred Shares”) of the Company’s Series A Convertible Preferred Stock (the “Preferred Stock”);
WHEREAS , each share of Preferred Stock is convertible into approximately 55.51 shares of the Company’s common stock (the “Common Stock”) and, accordingly, until May 24, 2010, Zen owned of record approximately 90% of the outstanding Common Stock on an as-converted basis;
WHEREAS , the Company and Mr. Michael Hansen had previously expected that Mr. Hansen, other investors in DubLi.com, LLC (such other investors are defined as the “DubLi.com Beneficiaries”) and various employees of Lenox Resources, LLC (the “Lenox Beneficiaries”) would receive from Zen certain shares of “restricted” Common Stock;
WHEREAS , with the acceleration of the merger closing and merger restructuring, the DubLi.com Beneficiaries and Lenox Beneficiaries, substantially all of which are non-U.S. persons, were expected to receive from Zen an aggregate of 63,393,933 shares of restricted Common Stock (the “Loyalty Shares”) upon the Preferred Stock Conversion (the 62,679,116 shares proposed to be issued to the DubLi.com Beneficiaries are individually referred to as the “DubLi Shares”; the 714,817 shares proposed to be issued to the Lenox Beneficiaries are individually referred to as the “Lenox Shares”);
WHEREAS , in May 2010, Zen determined not to transfer Common Stock to the DubLi.com Beneficiaries and Lenox Beneficiaries as previously anticipated, (i) Zen returned to the Company 1,141,933 shares of Preferred Stock which were convertible into 63,393,933 shares of Common Stock pursuant to the terms of an agreement between the Company and Zen dated May 24, 2010 (the “Share Return Agreement”); (ii) the Company indicated its intent to commence a tender offer (the ‘Tender Offer”) to purchase from the DubLi.com Beneficiaries all of their right, title and interest in Dubli.com, LLC using shares of Common Stock as consideration following the Company’s registration with the Securities and Exchange Commission (“SEC”) of the issuance in the Tender Offer of shares of Common Stock to the holders of the Outstanding Dubli Interests (the “Tender Offer Registration”); and (iii) the Company indicated an intent to register with the SEC a transfer of the Lenox Shares to the Lenox Beneficiaries;
WHEREAS , although the financial statements of DubLi.com, LLC have been and are expected to continue to be consolidated with Company’s financial statements in accordance with U. S. generally accepted accounting principles, the Company no longer intends to seek to acquire any interests of DubLi.com, LLC;
WHEREAS , the Company would still like to provide the Beneficiaries a significant ownership interest in the Company since: (i) virtually all of the DubLi.com Beneficiaries are former business associates of DubLi Network, LLC, a wholly owned subsidiary of DubLi.com, LLC, and current business associates of DUBLI NETWORK LIMITED, a wholly owned subsidiary of the Company; (ii) virtually all of the Lenox Beneficiaries have been and are currently employees or consultants of the Company, (iii) notwithstanding the financial failure of DubLi.com, LLC, the Company believes that the DubLi Network, LLC business associates assisted the Company build brand awareness for the DubLi.com trade name; and (iv) consistent with many of their expectations, the Company likes the Beneficiaries to have a significant ownership interest in the entity which owns and is further developing the DubLi brand;
WHEREAS , the Company hereby proposes to transfer the Loyalty Shares to a trust (the “Trust”) and, after a holding period and certain conditions are met, have the Trust transfer the Loyalty Shares to the Dubli.com Beneficiaries and the Lenox Beneficiaries (the “Two Step Transfer”);
WHEREAS , although the Company believes the transfer of the Loyalty Shares to the Dubli.com Beneficiaries and Lenox Beneficiaries (collectively, the “Beneficiaries”) could be effectuated in either a single step or two transaction exempt from registration with the SEC, for a variety of administrative reasons and cost considerations, the Company has proposed the Two Step Transfer, which is not expected to be registered with the SEC;
NOW, THEREFORE , in consideration of the foregoing and the mutual promises contained in this Agreement, and intending to be legally bound hereby, the parties agree as follows:
(a) The “Information Memorandum” shall be a memorandum that includes all of the information the Company would then be required to be provided to a non-accredited investor pursuant to Rule 502 promulgated pursuant to the Securities Act if the Loyalty Shares were being sold for cash at then prevailing market prices.
(b) The “Initial Transfer Date” shall be the date that the Loyalty Shares are transferred from the Company to the Trust.
(c) The “Trust” is defined to be that Trust evidenced by the trust agreement, a draft of which is attached hereto as Annex A , established in accordance with the laws of the Republic of Panama for the benefit of the DubLi.com Beneficiaries and administered by BATISTA GUERRA Y ASOCIADOS Calle 34 y Avenida Cuba, Edificio Victoria Oficina 506, Panama, Republic of Panama as the trustee of the Trust.
(d) A “Qualified Trustee” is defined to be an entity which: (i) is authorized to provide trustee services in its locus of domicile; (ii) is not affiliated, as such term is defined under the U.S. securities laws, with the Company, Zen, any director or executive officer of the Company and/or any person who had filed or should file a Section 16 or Section 13 report with respect to the Company; and (iii) would be deemed “independent” if, prior to serving as a trustee of the Trust, was serving as a director of the Company.
(e) The “Restricted Period” shall be the period beginning on the Initial Transfer Date and ending on or about March 28, 2012.
(a) The Company agrees to publicly disclose the execution and delivery of this agreement within four (4) business days of the execution and delivery of this agreement by all the parties hereto.
(b) The Company agrees to use it reasonable commercial efforts to establish the Trust described in Section 3(a) below.
(c) On the Initial Transfer Date, the Company hereby agrees with DubLi.com, LLC to, upon satisfaction of the Conditions Precedent described below (the Conditions Precedent”), issue to the Trust the Loyalty Shares, and, thereafter, the Company agrees to take any and all action reasonably necessary to cause its transfer agent to issue to the Trust a certificate (the “Loyalty Share Certificate”) evidencing the Loyalty Shares.
The Loyalty Share Certificate shall bear the following restrictive legends:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IF REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS OR (D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION, IN EACH CASE ONLY AFTER PROVIDING THE COMPANY WITH AN OPINION FROM COUNSEL ACCEPTABLE TO THE COMPANY STATING THAT AN EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE AT THE TIME OF SUCH TRANSFER. NOTWITHSTANDING THE FOREGOING, THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD, PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE TRUST AGREEMENT DATED ___________________ HEDGING TRANSACTIONS INVOLVING THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT AND ALL APPLICABLE STATE SECURITIES LAWS.
(d) The Company agrees to prepare the Information Memorandum and provide it to the Qualified Trustee and/or its administrative agent a reasonable period time prior to its proposed transmission to the Beneficiaries.
The Company’s obligations under Section 2 above are subject to the prior satisfaction of all of the following conditions:
(a) The Company’s establishment of a Trust on the following terms and conditions:
The Company reserves the right to waive any of the foregoing conditions precedent in its sole and absolute discretion.
(a) DubLi.com Representations . DubLi.com, hereby represent and warrants to the Company as follows:
With the exception of less than 15 persons (the “U.S. DubLi.com Beneficiaries”), all of the DubLi.com Beneficiaries are non-U.S. persons as such term is defined in Regulation S promulgated pursuant to the Securities Act of 1933, as amended (the ‘Securities Act”). With the exception of the U.S. DubLi.com Beneficiaries, all of the DubLi.com Beneficiaries acquired interests in DubLi.com in transactions that were exempt from registration pursuant to the provisions of Regulation S. The U.S. DubLi.com Beneficiaries acquired interests in DubLi.com in transactions that were exempt from registration pursuant to Section 4(2) of the Securities Act. All of the information that DubLi.com provides to the Company and the Trusts with respect to the DubLi.com Beneficiaries shall be accurate as of the date such information is provided.
(b) DubLi.com’s Actions and Covenants . DubLi.com hereby covenants with the Company and the Trust as follows: DubLi.com hereby agrees to use its best efforts to, as may be reasonably requested by the Company or Trust from time to time, assist the Trust complete the Loyalty Share Transfers on the terms and conditions contemplated by this Agreement, which assistance is expected to include, but not be limited to the provision to the Trust and/or its administrative agent all of the following information with respect to each DubLi.com Beneficiary: name, current contact information, including phone number and email (if available), and percentage interest in DubLi.com, LLC.
DubLi.com and Hansen shall indemnify, defend and hold harmless the Company, the Company’s subsidiaries and their respective directors, officers, employees, agents, affiliates and assigns (collectively, the “Company Indemnified Parties”) from, against and in respect of any claim, demand, judgment, loss, liability, action, proceeding, assessment, penalty, fee, fine, cost, damage or expense (including reasonable fees, disbursements and expenses of attorneys, accountants and other professional advisors) which any of the Company Indemnified Parties shall suffer, sustain or become subject to by virtue of or which arise out of or result from any breach of, or inaccuracy in, the representations and warranties of DubLi.com set forth in this Agreement.
(a) Counterparts . This Agreement may be executed in two or more counterparts by facsimile or otherwise, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
(b) Complete Agreement . This Agreement constitutes the complete agreement of the parties with respect to the subject matter referred to herein and shall supersede all prior or contemporaneous negotiations, promises, covenants, agreements and representations of every kind or nature whatsoever with respect thereto (all of which have become merged and finally integrated into this Agreement), except as provided herein. Any modifications and amendments to this Agreement must be in writing and executed by all of the parties.
(c) Severability of Provisions . It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, which shall continue in full force and effect.
(d) Further Assurances . The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.
(e) Headings . The titles, subtitles and headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
(f) Governing Law . This Agreement shall be governed by the internal laws of the State of Florida as to all matters, including but not limited to matters of validity, construction, effect and performance, without regard to conflicts of laws principles.
(g) Notices. All notices, requests, demands and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given when telecopied or by overnight receipted courier service to the addresses set forth on the signature page hereto. Any party, including the Company, may change the address to which notices, requests, demands and other communications hereunder are to be delivered by giving the other parties notice in the manner herein set forth.
(h) Consent to Jurisdiction; Service of Process; Prevailing Party . Each party to this Agreement hereby irrevocably submit to the jurisdiction of the state or federal courts located in Palm Beach County, Florida in connection with any suit, action or other proceeding arising out of or relating to this Agreement and the transactions contemplated hereby, and hereby agree not to assert, by way of motion, as a defense, or otherwise in any such suit, action or proceeding that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced by such courts. Each party shall be responsible for its own costs and expenses of any such suit, action or proceeding; provided, however, that the non-prevailing party shall reimburse the prevailing party’s actual reasonable costs and expenses (including, without limitation, attorneys’ fees) incurred in connection with such suit, action or proceeding or any effort to enforce this Agreement.
(i) Waiver of Jury Trial . EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF HEREOF. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY EACH PARTY HERETO.
(j) No Third Party Beneficiaries . This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person or entity any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
IN WITNESS WHEREOF , the parties hereto have made and entered into this Agreement as of the Effective Date.
FORM OF TRUST AGREEMENT
CONTRATO DE FIDEICOMISO
Este Contrato de Fideicomiso (el “Contrato” o “Fideicomiso de Dubli.com y Lenox”), de fecha veinticinco (25) de febrero de 2011, celebrado por MediaNet Group Technologies, Inc., una corporación de Nevada (la “Compañía”) quien actúa en calidad de Fideicomitente, y BATISTA GUERRA Y ASOCIADOS, quien actúa en calidad de fiduciario (el “Fiduciario”).
CONSIDERANDO, que la Compañía desea otorgar a los inversionistas de DubLi.com, LLC (los “Fideicomisarios DubLi.com”) y a varios empleados de Lenox Resources, LLC (los “Fideicomisarios Lenox”, conjuntamente con los Fideicomisarios de DubLi.c