Registration of Securities (General Form) — Form 10
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10SB12G Form 10 130 474K
2: EX-2.1 Stock Purchase Agreement 33 84K
3: EX-2.2 Agreement Dated Nov. 8, 1999 43 157K
4: EX-2.3 Agreement and Plan of Merger 2 18K
5: EX-2.4 Share Purchase Agreement Dated Aug. 9, 1999 45 147K
6: EX-2.5A Share Purchase Agreement Dated Oct. 22,1999 51 170K
7: EX-2.5B Share Purchase Agreement Dated Oct. 22, 1999 8 27K
8: EX-3.1A State of Delaware 5 25K
9: EX-3.1B Articles of Merger 2 14K
10: EX-3.2 By-Laws of Telemonde 15 65K
11: EX-4.1 Telemonde 2 13K
12: EX-4.2 Registration Rights Agreement 14 64K
13: EX-4.3 Registration Rights Agreement 10 50K
14: EX-10.1 Warrant 14 60K
26: EX-10.10 Composite Guarantee and Debenture 28 84K
27: EX-10.11 Loan Facility Agreement 26 72K
15: EX-10.2 Warrant 13 50K
16: EX-10.3 Consulting Agreement 4 26K
17: EX-10.4 Service Agreement for 13 57K
18: EX-10.4A Schedule of Employment Terms 1 11K
19: EX-10.5 Capacity Sales Agreement 29 73K
20: EX-10.5A Promissory Note 1 11K
21: EX-10.5B Promissory Note 1 11K
22: EX-10.6 Capacity Purchase Agreement 23 88K
23: EX-10.7 Transmission Capacity Agreement 19 64K
24: EX-10.8 Transmission Capacity Agreement 22 76K
25: EX-10.9 Transmission Capacity Agreement 23 65K
31: EX-21 List of Subsidiaries 1 10K
32: EX-27 Financial Data Schedule 2 12K
28: EX-99.1 Heads of Agreement 4 24K
29: EX-99.2 Agreement 17 69K
30: EX-99.3 Term Sheet 2 12K
EX-2.2 — Agreement Dated Nov. 8, 1999
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Exhibit 2.2
DATED NOVEMBER 8, 1999
----------------------
(1) TELCOWORLD LIMITED
and OTHERS
(2) TELEMONDE INC.
(3) HARRY POMEROY and
LARRY TRACHTENBERG
----------
AGREEMENT
relating to the sale and purchase
of shares in the capital of
Equitel Communications Limited
----------
Gouldens
22 Tudor Street
London, EC4Y OJJ
INDEX
PARTIES
RECITALS
CLAUSES
1. Interpretation
2. Conditions Precedent
3. Agreement to Sell and Purchase
4. Consideration and Earn-Out
5. Satisfaction of Consideration and Earn-Out
6. Completion
7. Rescission
8. Accounting Matters
9. Warranties
10. Limitations on Liability
11. Protections for Goodwill
12. Tax Affairs
13. Pensions
14. Warranties and Undertakings by Purchaser
15. Set Off
16. Further Assurance
17. Survival of Agreement
18. Costs
19. Successors and Assigns
20. Announcements
21. Notices and Representatives
22. General
SCHEDULES
1. Vendors
2. The Company
3. Properties
4. Warranties
AGREED DRAFT DOCUMENTS
Tax Deed
Powers of Attorney
Resignations
Confirmations of No Claim
Service Agreements x 4
AGREEMENT
DATED 1999
PARTIES
(1) THE SEVERAL PERSONS whose names and addresses are set out in Schedule 1
("the Vendors").
(2) TELEMONDE INC., a company incorporated with limited liability in the
State of Nevada, United States of America whose office is at 200 Madison
Avenue, Suite 520, New York, NY 10016 ("the Purchaser" which expression
shall include its successors and assigns).
(3) HARRY POMEROY of 60A Priory Road London N8 7EX ("Mr Pomeroy") and LARRY
TRACHTENBERG of 37 Crediton Hill London NW6 lHS ("Mr Trachtenberg")
RECITALS
(A) Equitel Communications Limited ("the Company") is a private company
further particulars of which are set out in Schedule 2.
(B) The Vendors have agreed to sell to the Purchaser the entire issued share
capital of the Company ("the Shares") on the terms and conditions
hereinafter contained.
OPERATIVE PROVISIONS
1 Interpretation
1.1 In this Agreement where the context so admits:-
1.1.1 references to the "Accounts" are references to the audited
accounts for the period ending 30 April 1999 of the Company and
the notes thereto and references to the "Accounting Date" are
references to 30 April 1999;
1.1.2 the expression "business day" shall mean a day (not being a
Saturday) on which banks generally are open for business in
London and New York;
1.1.3 the expression "Consideration Shares" means restricted shares of
common stock in the capital of the Purchaser with a par value of
US$0.001 per share fully paid;
1.1.4 the expression "Group" means the Company and its subsidiaries at
the date hereof;
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1.1.5 the expression "Interim Period" means the period commencing on
exchange of this Agreement and ending on the earlier of
Completion and the lapse or termination of this Agreement;
1.1.6 the expression "Pomeroy Loan" means the interest free loan made
by Janet Pomeroy and others to the Company of US$1,000,000
outstanding at today's date.
1.1.7 references to "the Purchaser" and "the Company" shall include
their respective successors in title and assigns and references
to "the Purchaser's Group" are references to the Purchaser and
any holding company from time to time of the Purchaser and any
subsidiary from time to time of the Purchaser or any such
holding company other than the Company;
1.1.8 references to "the Purchaser's Solicitors" are references to
Gouldens of 22 Tudor Street, London, EC4Y OJJ;
1.1.9 references to "the Service Agreements" are to the service
agreements between the Company and each of Mr Pomeroy, Mr
Trachtenberg, Mr Topham and Mr Willard in the agreed form;
1.10 references to the "Tax Deed" are to the Tax Deed in agreed form
to be entered into pursuant to this Agreement and the expression
"tax" or "taxation" shall have the meaning set out in the Tax
Deed;
1.1.11 references to Mr Topham" are references to Nick Topham of 38
Southdown Road Harpenden Herts AL5 1PG;
1.1.12 references to "US$" or "United States dollars" or "$" or
"dollar" are to the lawful currency of the United States of
America at the date hereof;
1.1.13 references to "the Vendors' Representative" are references to
Larry Trachtenberg or such other person with an address in the
United Kingdom as the Vendors or the Vendors' Solicitors shall
notify to the Purchaser by not less than ten business days prior
written notice with express reference to this Agreement;
1.1.14 references to "the Vendors' Solicitors" are references to Lass
Salt Garvin of 35 Piccadilly, London, W1V OLP;
1.1.15 references to "Mr Willard" are references to Mark Willard of 2b
Longdown Road Fleet Hampshire GU13 9UZ; and
1.1.16 words and expressions defined in particular Clauses or Schedules
shall bear the same meaning throughout.
1.2 References in this Agreement to "the Taxes Act", "the TCGA" and "the
Companies Act" are respectively references to the Income and Corporation
Taxes Act 1988, the
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Taxation of Chargeable Gains Act 1992 and the Companies Act 1985 (as
amended by the Companies Act 1989).
1.3 The ejusdem generis rule of construction shall not apply to this
Agreement and general words shall not be given a restrictive meaning by
reason of their being preceded or followed by words indicating a
particular class or examples of acts matters or things.
1.4 Words importing the singular shall include the plural and vice versa and
words importing any gender shall include all other genders and
references to persons shall include corporations and unincorporated
associations.
1.5 References in this Agreement to any "agreed draft document" or any
document "in agreed form" or "in agreed terms" are references to the
document described in the form of the draft agreed between the parties
and initialled by both the Purchaser's Solicitors and the Vendors'
Solicitors for identification purposes.
1.6 References in this Agreement to statutory provisions shall be construed
as references to those provisions as respectively amended consolidated
extended or re-enacted from time to time and shall include the
corresponding provisions of any earlier legislation (whether repealed or
not) and any orders regulations instruments or other subordinate
legislation made from time to time under the statute concerned.
1.7 References to this Agreement shall include the Schedules hereto which
shall form part hereof and shall have the same force and effect as if
expressly set out in the body of this Agreement.
1.8 References in this Agreement to "an associate" or to "a connected
person" in relation to another, are references to a person who is an
associate of the other or connected with the other within the meaning of
Section 417 or Section 839 of the Taxes Act as appropriate.
1.9 The Clause headings in this Agreement are for convenience only and shall
not affect the interpretation hereof.
2 Conditions Precedent
2.1 This Agreement is conditional upon the Vendors having received a
satisfactory clearance from the Inland Revenue under Section 138 of the
Taxation of Chargeable Gains Act 1992 and Section 707 of the Income and
Corporation Taxes Act 1988 in relation to the sale and purchase of the
Shares hereunder on or before midnight (GMT) 60 days from today's date.
2.2 The Vendors shall use all reasonable endeavours to procure that the
condition precedent contained in Clause 2.1. is satisfied as soon as
possible and in any event not later than the latest time provided in
Clause 2.1.
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2.3 The Vendors shall keep the Purchaser fully informed of all progress and
developments with regard to satisfaction of the said condition precedent
and in any event shall forthwith notify the Purchaser in writing as soon
as it becomes aware that the same has been satisfied or has become
incapable of satisfaction and produce to the other Purchaser such
documentation as it shall reasonably require to evidence any such
satisfaction.
2.4 If by the latest time prescribed by Clause 2.1 the said condition
precedent shall not have been satisfied or waived in writing by the
Vendors, this Agreement shall have no further force and effect and none
of the parties shall have any liability in respect of this Agreement,
except as regards any antecedent breach, save that this Clause and
Clauses 18 (Costs), 20 (Announcements), 21 (Notices and Representatives)
and 22 (General) shall continue in full force and effect.
2.5 During the Interim Period the Vendors shall procure that (except with
the prior written consent of the Purchaser):-
2.5.1 the Company will so far as it is able (in reasonable
consultation with the Purchaser) carry on business in the normal
course and with a view to profit and not do anything outside the
normal course of its day to day trading;
2.5.2 the Company shall not grant any options charges or securities
over its undertaking or assets or dispose of any material part
thereof and shall not take any action which would result or
would reasonably be considered likely to result in any material
breach of the Warranties (material breach as defined in Clause
7.3) if the Warranties were to have been repeated at Completion
with reference to the facts and circumstances appertaining at
Completion.
2.6 During the Interim Period the Vendors shall also provide the Purchaser,
its accountants, solicitors and all other persons authorised by it
promptly after request such facilities and information regarding the
business assets liabilities affairs and records of the Company as the
Purchaser may reasonably from time to time require including without
limitation for the purposes of satisfaction of the conditions precedent
referred to in Clause 2.1 or preparation of any circular or prospectus
or supplementary prospectus to be sent by the Purchaser to its
shareholders or any filing to be made with any regulatory authority in
the United Kingdom or the United States of America or any announcement
to be made by or on behalf of the Purchaser in connection herewith.
3 Agreement to Sell and Purchase
3.1 The Vendors hereby agree to sell or procure the sale of the Shares to
the Purchaser with full title guarantee together with the benefit of all
rights and profits attaching thereto including all rights to dividends
and other distributions declared made or paid thereon on before or after
the date hereof and the Purchaser hereby agrees to purchase the same on
and subject to the terms of this Agreement.
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3.2 Nothing in this Agreement shall oblige the Purchaser to buy any of the
Shares unless the sale and purchase of all of the Shares is completed
simultaneously in accordance with the terms hereof.
3.3 Each of the Vendors hereby irrevocably waives all rights of pre-emption
over the Shares or any of them to which he is or may be entitled in
relation to the sale and purchase of the same hereunder.
4 Consideration and Earn-Out
4.1 Subject to the provisions of this Agreement, the maximum aggregate value
of the consideration payable by the Purchaser to the Vendors will be
US$69,000,000 ("the Consideration")
4.2 The Consideration will be satisfied as follows:
4.2.1 on Completion by the sum of US$19,000,000 ("the Initial
Consideration") to be satisfied as set out in clause 5.1;
4.2.2 on or before 30th June 2001 or, if later, within 7 business days
of determination thereof by an additional sum calculated in
accordance with clause 4.3 and satisfied as set out in clause
5.2 not exceeding US$30,000,000 ("the First Earn-Out") payable
to the Vendors in proportion to their respective shareholdings
in the Company as set out in column (2) of Schedule 1 depending
upon the earnings of the Company before interest and tax
("EBIT") for the period of twelve months ending 31st December
2000; and
4.2.3 on or before the 30th June 2002 or, if later, within 7 business
days of determination thereof by a further additional sum
calculated in accordance with clause 4.3 below, not exceeding
US$50,000,000 less the amount paid to the Vendors under clause
4.2.2 for the period of 12 months ending 31st December 2001
("the Second Earn-Out") payable to the Vendors in proportion to
their respective shareholdings in the Company as set out in
column (2) of Schedule 1 depending on the EBIT for the period of
twelve months ending the 31st December 2001.
4.3 The First Earn-Out and the Second Earn-Out shall be calculated by
multiplying the EBIT for the periods of twelve months of the Company
ending 31st December 2000 and 31st December 2001 respectively by a
multiplier of 6 in the first such period and 5 in the case of the second
such period. If the EBIT for the period of twelve months ending 31st
December 2000 is negative the amount by which it is negative shall be
deducted from the EBIT for the period of twelve months ending 31st
December 2001 before the multiplier is applied. The EBIT for each of
these periods shall be calculated in accordance with clause 8.
6
5 Satisfaction of Initial Consideration, the First Earn-Out & the Second
Earn-Out
5.1 The initial Consideration will be satisfied at Completion by the issue
to the Vendors of Consideration Shares. The number of Consideration
Shares shall be calculated by dividing the amount of the Initial
Consideration by the average of the closing sale price per Consideration
Share as determined by reference to the exchange or inter-dealer
quotation system on which the Consideration Shares trade on each of the
10 dealing days prior to the date of this Agreement.
5.2 Each of the First Earn-Out and the Second Earn-Out will be satisfied by
the issue to the Vendors of Consideration Shares. The number of
Consideration Shares shall be calculated by dividing the amount of the
First Earn-Out or the Second Earn-Out, as the case may be, by the
average of the closing sale price per Consideration Share as determined
by reference to the exchange or inter-dealer quotation system on which
the Consideration Shares trade on each of the 10 dealing days ending on
31st December 2000 in respect of the First Earn-Out and 31st December
2001 in respect of the Second Earn-Out.
5.3 5.3.1 The Purchaser shall deliver certificates to the Vendors in the
proportion to which the Vendors are entitled to them
representing the Consideration Shares for the First Earn-Out as
soon as reasonably practical following 3Oth June 2001, or if
later, the date of determination of the First Earn-Out and for
the Second Earn-Out, as soon as reasonably practical following
the 30th June 2002 or if later, the date of determination of the
Second Earn-Out.
5.3.2 Each Vendor represents and warrants for himself that such Vendor
is acquiring the Consideration Shares for investment for the
Vendor's own account, with the intent of holding the
Consideration Shares for investment, without the present intent
of participating directly or indirectly in a distribution of the
Consideration Shares, and without the participation of any other
person in any part of the purchase.
5.3.3 The Vendors understand that the representations and warranties
contained herein are to be relied upon by the Purchaser as a
basis for the exemption of the issuance of the Consideration
Shares from the registration requirements of the Securities Act
of 1933, as amended (the "Act"), and the exemptions from
registration contained in applicable United States state
securities laws. The Vendors acknowledge that the issuance of
the Consideration Shares will not be registered under the Act or
under any United States state securities laws, and that the
Consideration Shares must be held by the Vendors until (and that
the Purchaser shall have no obligation to recognise any sale,
assignment or other transfer thereof to any person unless) they
are subsequently registered under the Act and under applicable
United States state securities laws, or unless exemptions from
the registration requirements of the Act and such laws are
available and approved by counsel satisfactory to the Purchaser.
7
5.3.4 The Vendors understand that the Purchaser is not obligated to
register the Consideration Shares under the Act or under any
United States state securities laws. Each of the Vendors further
understands that the Purchaser is not obligated to take any
action, except as may be required by law, necessary to make Rule
144 under the Act or any other method available for re-sales of
the Consideration Shares by the Vendors.
5.4 5.4.1 The Vendors acknowledge that the Purchaser has not prepared, and
that it has not been requested by the Vendors to prepare, a
comprehensive written prospectus or disclosure statement in
connection with the issuance of the Consideration Shares to the
Vendors covering the business, operations, management, financial
condition or prospects of the Purchasers of the nature that
otherwise might be required if the sale of the Consideration
Shares to the Vendors were required to be registered under the
Act. Each of the Vendors further acknowledges that the
Purchaser, prior to the date hereof, has furnished the Vendors
the opportunity to ask questions of and receive answers from the
Purchaser concerning the financial and business affairs of the
Purchaser and has afforded the Vendors the opportunity to verify
the accuracy of all information provided or made available to
the Vendors by the Purchaser.
5.4.2 The Vendors hereby agree that the following may legend may be
placed upon the certificate or certificated issued to the
Vendors to evidence the Consideration Shares:
The shares evidenced by this certificate have not been
registered under the Securities Act of 1933 or
comparable state statutes and may not be transferred,
nor will any assignee or endorsed hereof be recognised
as an owner hereof by the issuer for any purpose, unless
a registration statement with respect to such shares
shall then be in effect or unless the availability or an
exemption from registration with respect to any proposed
transfer or disposition of such shares shall be
established to the satisfaction of counsel for the
issuer.
5.5 The Vendors agree that prior to the expiration of a period of one year
from that date that the relevant Consideration Shares are issued to the
Vendors, the Vendors will not sell, transfer, assign or otherwise
dispose of all or any part of the relevant Consideration Shares,
provided that the Vendors may pledge or otherwise charge the relevant
Consideration Shares for the purpose of raising personal loans.
6 Completion
6.1 Completion of the sale and purchase of the Shares ("Completion") shall
take place at the offices of the Purchaser's Solicitors on the first
Business Day after the day upon which this Agreement shall become
unconditional for the purposes of clause 2 or at such other place and
time as shall be agreed ("the Completion Date").
8
6.2 On Completion the Vendors shall:
6.2.1 deliver to the Purchaser:
6.2.1.1 duly executed transfers of the Shares in favour of the
Purchaser or the Purchaser's nominee(s) together with
the share certificates therefor or an indemnity in a
form acceptable to the Purchaser in the case of any
missing share certificates;
6.2.1.2 the Certificate(s) of Incorporation, the Common Seal (if
any), Minute Book, Register of Members (duly written up
to date), and all other statutory records and other
documents and papers of the Company;
6.2.1.3 confirmations in agreed form duly executed by each of
the Vendors to the effect that (except as expressly
therein mentioned) he has no claim on any account
whatsoever against the Company and that it is not in any
way indebted to him;
6.2.1.4 a statement showing the balances on all bank accounts of
the Company at the latest practicable date prior to
Completion together with a list of all sums received and
cheques drawn in excess of (pound)250 for any one item
since the date of the relevant statement;
6.2.1.5 the Tax Deed duly executed by or on behalf of each of
the Covenantors therein mentioned;
6.2.1.6 the Service Agreements duly executed by each of Mr
Pomeroy, Mr Topham, Mr Trachtenberg and Mr Willard.
6.2.2 procure that there is repaid to the Company all amounts owing to
it by any of the Vendors and/or by any of its directors
shareholders or any connected persons or associates of them or
any of them and that all guarantees or indemnities given by or
binding on the Company in respect of liabilities or obligations
(whether actual or contingent) of any of the Vendors or any such
directors shareholders or connected persons or associates are
fully and effectually released without cost to the Company; and
6.2.3 procure that a meeting of the Board of Directors of the Company
shall be held at which:
6.2.3.1 the transfers of the Shares shall be approved for
registration subject only to their being duly stamped;
6.2.3.2 such persons as the Purchaser shall nominate shall be
appointed Directors and Secretary;
9
6.2.3.3 the Service Agreements shall be approved by the Company
and duly executed by the Company; and
6.2.3.4 such other business to implement the terms of this
Agreement shall be attended to as the Purchaser shall
reasonably require.
6.3 Subject to due perfomance of all of the matters referred to in Clause
6.2, the Purchaser shall thereupon deliver to the Vendors' Solicitors:
6.3.1 certificates for the Consideration Shares in proportion to the
respective shareholding in the company as set out in column (2)
of Schedule 1;
6.3.2 a counterpart of the Tax Deed duly executed by the Purchaser;
and
6.3.3 the Service Agreements duly executed by the Company.
7 Rescission
7.1 If on the Completion Date either the Purchaser or any of the Vendors are
unable to comply in any material respects with their respective
obligations under Clause 6 the non defaulting party may (a) defer
Completion to a date not more than 28 days following the Completion Date
(and the provisions of this Clause 6 shall apply to Completion as so
deferred) or (b) proceed to Completion so far as practicable but without
prejudice to its rights hereunder or otherwise or (c) by notice in
writing to the defaulting party rescind this Agreement.
7.2 If the Purchaser shall before Completion become aware of any matter
which would constitute a material breach (as defined in clause 7.3
below) of any of the warranties contained in this Agreement the
Purchaser may at any time before Completion by giving notice in writing
to the Vendors rescind this Agreement.
7.3 For the purposes of Clause 7.2 "material breach" shall mean a breach
which if this Agreement had been completed the Purchaser would in the
opinion of a member of the Commercial Bar in London of not less than 10
years standing be able to bring a valid claim under the Warranties for
not less than US$1 million and that in his reasonable opinion such claim
would be likely to succeed in all material respects.
7.4 If this Agreement is rescinded pursuant to this Clause 7, it shall have
no further force and effect and none of the parties shall have any
liability in respect thereof, except as regards any antecedent breach,
and except also that the provisions of Clauses 18 (Costs), 20
(Announcements), 21 (Notices and Representatives) and 22 (General) shall
continue in full force and effect.
8 Accounting Matters
8.1 The accounts of the Company for the period 1st May to the 31st December
1999 will be prepared by the Company and audited by the auditors of the
Company. Such accounts
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will be prepared in accordance with normal accounting policies and
principles in a form generally accepted and applicable in the United
Kingdom, and will be prepared and audited by not later than the 31st
March 2000.
8.2 Accounts for the Company for the period of twelve months ending on 31st
December 2000 ("the First Earn-Out Accounts") will be prepared by the
Company and audited by the auditors of the Company in a manner
consistent with the accounts for the Company for the financial period
ending 31st December 1999 not later than 31st March 2001. The Company's
auditors will certify the amount of EBIT and the calculation of the
First Earn-Out on the basis of the First Earn-Out Accounts which
certificate will be deemed to be accepted by all parties unless notice
in writing is served on the Purchaser by the Vendors within 31 days of
the auditors' certificate and calculation of the First Earn-Out being
received by the Vendors in which case the matter will be dealt with
under clause 8.4.
8.3 Accounts for the Company for the period of twelve months ending 31st
December 2001 ("the Second Earn-Out Accounts") will be prepared by the
Company and audited by the auditors of the Company in a manner
consistent with the First Earn-Out Accounts not later than 31st March
2002. The Company's auditors will certify the amount of EBIT and the
calculation of the amount of the Second Earn-Out calculated on the basis
of the Second Earn-Out Accounts which certificate will be deemed to be
accepted by all parties unless notice in writing is served on the
Purchaser by the Vendors within 31 days of the auditors' certificate and
calculation of the Second Earn-Out being received by the Vendors in
which case the matter will be dealt with under clause 8.4.
8.4 The auditors of the Company for the purpose of auditing the First
Earn-Out Accounts and the Second Earn-Out Accounts shall be the auditors
of the Company from time to time. The Vendors shall be entitled to
appoint their own firm of accountants to review the audit, the
certification of the EBIT and the calculation of the Earn-Out and if
notice in writing of any dispute as regards the same is served by the
Vendors in accordance with clause 8.2 or clause 8.3 and such dispute is
not resolved within 14 days of such notice then either the Purchaser or
the Vendors' Representative may refer such dispute for resolution to an
Independent Accountant who shall be instructed to report whether the
said certification and calculation of the EBIT for the relevant period
and the First or Second Earn-Out, as the case may be, have been prepared
in accordance with the provisions of this Agreement (and if not, to make
such adjustments thereto as he shall consider appropriate to comply
therewith) and to calculate the relevant EBIT and the First or Second
Earn-Out as appropriate acting as an expert and not as arbitrator and
whose decision shall be final and binding on all parties save in the
case of manifest error.
8.5 The First Earn-Out Accounts and the Second Earn-Out Accounts shall not
include any unusual or onerous overheads, management charges or expenses
imposed upon the Company by the Purchaser or any other company in the
Purchaser's Group to the extent that they have not been calculated on a
normal arms length commercial basis in a fair and reasonable manner or
in the case of any jointly used overhead apportioned in such a manner.
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8.6 For the purposes of this clause 8 the Independent Accountant shall be
such independent chartered accountant qualified as such for not less
than 10 years and engaged in private practice as is appointed jointly by
the Vendors' Representative and the Purchaser or (in default) by the
President for the time being of the Institute of Chartered Accountants
in England and Wales on the application of either the Vendors'
Representative or the Purchaser.
9 Warranties
9.1 The Vendors warrant to the Purchaser in the terms of Schedule 4 at the
date hereof ("the Warranties").
9.2 The Warranties are given subject only to those matters fairly disclosed
in the letter of even date from the Vendors' Solicitors to the
Purchaser's Solicitors disclosing exceptions to the same ("the
Disclosure Letter"). No information of which the Purchaser has actual or
constructive knowledge shall prejudice any claim under the Warranties
nor operate to reduce any amount recoverable thereunder.
9.3 Each of the Vendors shall as soon as reasonably practicable disclose to
the Purchaser in writing any matter or thing which may arise or become
known to him after the date hereof (prior to Completion) which is or
could be a material breach of any of the Warranties or of their
obligations under Clause 2.5.2..
9.4 The Purchaser may take action for any breach of the Warranties before or
after Completion notwithstanding that such breach was known to or
discoverable by the Purchaser before Completion.
9.5 Each of the Warranties is given independently from and shall, subject to
clause 9.2, not be limited by reference to any of the others of them or
anything else contained in this Agreement save in respect of the
warranty limitations contained in clause 10.
9.6 Each of the Vendors hereby irrevocably waives any right or claim which
he may have against the Company in respect of any misrepresentation
inaccuracy or omission in or from any information or advice given by it
or any of its officers or employees to the Vendors or the Vendors'
Solicitors or any of them to enable him to give any of the Warranties or
to prepare the Disclosure Letter or to assume any of the obligations
assumed or to be assumed by him under or pursuant to this Agreement.
10 Limitations on Liability
10.1 The liability of the Vendors under or in respect of the Warranties
and/or the indemnities on their part contained in Clause 2 of the Tax
Deed ("the Indemnities") shall be limited as follows:
10.1.1 no claim under the Warranties or the Indemnities ("a relevant
claim") may be made unless written notice of the claim concerned
has been given to the Vendors before the seventh anniversary of
Completion in the case of any claim
12
under the Indemnities and before the second anniversary of
Completion in any other case;
10.1.2 no claim under the Warranties may be made unless and until the
aggregate amount of all relevant claims exceeds US$350,000
although (subject to paragraph (D) of this Clause) once such
limit is exceeded the full amount of all such claims and any
other claims shall be recoverable;
10.1.3 no claim under the Warranties may be made in respect of an
individual breach unless it exceeds US$3,000; and
10.1.4 the maximum aggregate liability of all the Vendors under the
Warranties and the Indemnities shall not exceed an amount equal
to the total of the Consideration actually received by the
Vendors on or prior to the date on which any claim thereunder is
finally determined or agreed provided that if following such
determination or agreement further consideration is received
then such aggregate liability shall be increased by the further
amount so received.
10.2 No relevant claim may be made:
10.2.1 under the Indemnities or Warranties if the claim has previously
been satisfied in full pursuant to any other provision of this
Agreement or any agreement entered into pursuant hereto;
10.2.2 under the Indemnities or such of the Warranties as relate to
taxation ("Tax Warranties") if it would not have arisen but for
some voluntary act or transaction carried out or effected after
Completion (otherwise than as a consequence of any act or
omission on or before Completion of any of the Vendors or the
Company or any shareholder or officer thereof or any associate
or connected person of all or any of the foregoing) by or on
behalf of the Purchaser or the Company (not being an act or
transaction in the ordinary course of its business) provided
that the Purchaser or the Company were aware or ought reasonably
to have been aware from matters fairly disclosed in the
Disclosure Letter or from investigations carried out after
Completion by the Purchaser into matters arising before
Completion, at the time of such act or transaction that such
claim would arise therefrom;
10.2.3 under the Indemnities or Warranties to the extent that the
Company has previously received indemnity against any loss or
damage suffered by it arising out of the breach or claim under
the terms of any insurance policy of the Company in force at the
date hereof;
10.2.4 under the Warranties or Indemnities to the extent that specific
provision or specific reserve for the liability to which it
relates was made in the Accounts or in respect of any matter
fairly disclosed by way of a note to the Accounts;
13
10.2.5 under the Warranties or Indemnities if the matter giving rise to
the same is solely attributable to or consequent upon any change
of accounting policy of the Company on or after Completion,
except where effected in order to conform to generally accepted
accounting principles and policies in the United Kingdom not
previously adopted by the Company;
10.2.6 under the Warranties or Indemnities if it arises or is increased
by reason only of any legislation not in force at the date of
Completion which takes effect retrospectively to the period
before Completion or any increase after Completion in the rate
of taxation with retrospective effect to before Completion;
10.2.7 under the Tax Warranties or the Indemnities to the extent that
the loss arises only by reason of the transfer, winding-up or
cessation of the business of the Company after completion unless
such action was caused by the insolvency of the Company
resulting from a breach of warranty.
10.3 The Purchaser shall be entitled to claim both under the Warranties and
under the Indemnities by reference to the same subject matter. Any
payment in respect of a breach of Warranty shall to such extent satisfy
and discharge any claim made by the Purchaser under the Indemnities in
respect of the same subject matter and vice versa.
10.4 The provisions of Clauses 3 to 6 (inclusive) of the Tax Deed shall apply
mutatis mutandis to any claims under the Tax Warranties.
10.5 Where the Purchaser or the Company is legally entitled to recover from
some other person (not being the other of them or another member of the
Purchaser's Group or any employee or officer thereof or any Vendor or
under any insurance policy effected after Completion) any sum in respect
of any matter the subject of a claim under the Warranties (other than
the Tax Warranties as to which Clause 5 of the Tax Deed shall apply)
which the Vendors shall have previously satisfied on terms reasonably
satisfactory to the Purchaser or the Company (as appropriate) shall
(subject first to being indemnified and secured to its or their
reasonable satisfaction against all reasonable costs and expenses which
it or they may reasonably incur thereby) take all reasonable steps to
enforce such recovery (keeping the Vendors' Representative informed of
the progress of any action taken) and account to the Vendors originally
satisfying the claim for any amounts they recover, in accordance with
Clause 10.6 below.
10.6 If the liability or loss or damage the subject of a claim under the
Warranties (other than the Tax Warranties as to which Clause 5 of the
Tax Deed shall apply) has been made good in full (including all
reasonable costs and expenses reasonably incurred) and the Purchaser or
the Company or any other member of the Purchaser's Group subsequently
recovers or receives from a third party (not being the other of them or
any other member of the Purchaser's Group or a Vendor) a sum which is
directly referable to the subject matter of such claim, the Purchaser or
the Company or any other member of the Purchaser's Group (as appropriate
having regard to which of them is the recipient) shall as soon as
reasonably practicable following receipt of such sum pay to the
Vendors' Solicitors on behalf of the Vendors originally satisfying the
claim the net amount
14
received after deducting any reasonable costs and expenses reasonably
incurred by the Purchaser or the Company in recovering such sum from the
third party (including without limitation any taxation payable by reason
of the receipt thereof) but not in any event exceeding the amount
originally paid to it in respect of the claim concerned.
10.7 Except in the case of a fraudulent misrepresentation, no party shall in
relation to the sale hereunder of the Shares or this Agreement be liable
in respect of any representations warranties or similar assurances which
are not contained and expressly given or assumed by them in this
Agreement.
10.8 Any amount paid by the Vendors to the Purchaser in satisfaction of any
relevant claim shall be treated as a reduction by that amount in the
Consideration for the Shares.
10.9 Nothing contained in this Agreement or the Tax Deed or otherwise shall
limit the liability of any party thereunder for fraudulent
misrepresentation and the limitations in this clause 10 shall not apply
to limit the liability of any of the Vendors in respect of any breach of
Warranty or any claim under the Indemnities to the extent that such
breach or claim arises by reason of any fraud or wilful concealment on
the part of such Vendor of facts known to such Vendor which constitutes
a breach of Warranty by such Vendor.
10.10 The limitations in this clause 10 shall not apply to any relevant claim
arising by reason of transactions effected between and/or loan benefits
and/or other transactions made or deemed for tax purposes to have been
made or provided on or before Completion by or to the Company to all or
any of the Vendors or any director, shareholder associate or connected
person of any or all of the foregoing.
10.11 The liability of each Vendor in respect of any claim under the
Warranties and under the Tax Deed shall be limited from time to time in
aggregate to the actual payments received by that Vendor in respect of
the consideration provided that if following the determination or
agreement of liability for any such claim further consideration is
received then such aggregate liability shall be increased the further
amount so received.
10.12 Where a breach of any of the Warranties shall be in respect of a matter
where the Company shall be insured against any loss or damage arising
therefrom, the Purchaser shall not make any claim (as distinct from
notice of claim) against the Vendors for breach of any such Warranty
without first allowing the Company to make a claim against its insurers
for compensation for the loss or damage suffered and any claim against
the Vendors shall be limited (in addition to the limitation on the
Vendors' liability elsewhere in this Agreement) to the amount by which
the loss or damage suffered by the Purchaser as a result of such breach
shall exceed the compensation paid by such insurers to the Company.
10.13 In the event that the Purchaser becomes aware of any matter which may
involve the Vendors in any liability for breach of any of the Warranties
the Purchaser shall within 14 days of such date notify the Vendors
giving details of such matter as are at the time or subsequently become
available to the Purchaser and the Company shall not settle or
compromise any claim by a third party relating to such matter in excess
of US$5,000
15
without the prior written consent of the Vendors such consent not to be
unreasonably withheld.
10.14 The benefit of the Warranties and the Tax Deed may not be assigned in
whole or in part by the Purchaser other than to another member of the
Purchaser's Group for the time being.
10.15 As between the Vendors, they hereby agree that any liability arising on
them under this Agreement shall be shared in proportion to their
respective interests as specified in Column 2 of Schedule 1 and they
shall accept liability and indemnify each other accordingly.
11 Protections for Goodwill
11.1 The Vendors and Mr Pomeroy and Mr Trachtenberg hereby undertake to and
with the Purchaser for itself and separately as trustee for and on
behalf of the Company, that none of them will at any time hereafter,
save in the proper performance of his duties as an employee or officer
of the Purchaser's Group or the Company:
11.1.1 take away make use of or disclose to any person firm or company
(save insofar as necessary to comply with any statutory
obligation or order of any Court or statutory tribunal of
competent jurisdiction) any confidential information or trade
secrets in his possession and which in any way relates to the
business or other affairs of the Group or to any manufacturer
supplier customer client agent or any other person who has or
who has had dealings with the Group; and/or
11.1.2 make use of the name "Equitel" or any other corporate or
business name which is identical or similar to or is likely to
be confused with the corporate name or any business name of the
Group or which might suggest a connection with the same.
11.2 For the purposes of protecting the goodwill of the Group and the value
of the Shares the Vendors hereby undertake to and covenant with the
Purchaser (separately for itself and as trustee for each member of the
Group and for each purchaser, assignee and shareholder from time to time
below mentioned) that (except in the proper performance of his duties as
an employee or officer of the Company or any member of the Purchaser's
Group) none of them will, whether for his own account or jointly with or
as manager agent officer employee consultant shareholder or otherwise on
behalf of any other person firm or corporation, and whether directly or
indirectly during the Relevant Period:
11.2.1 be engaged concerned or interested in or associated within the
Relevant Territory with any business which is the same as or in
direct or indirect competition with any Relevant Business;
and/or
11.2.2 within the Relevant Territory carry on or be engaged concerned
or interested in the sale of goods or provision of services, of
a kind supplied by the Group in connection with its Relevant
Business, to any person firm or company which has
16
at any time within the period of twelve months preceding the
Relevant Date been a customer of or in the habit of dealing with
the Group for such goods or Services; and/or
11.2.3 endeavour to procure the supply of goods or services from any
person firm or company which during the twelve months preceding
the Relevant Date has been a supplier of goods or services in
connection with any Relevant Business to the Group where such
supply may have an adverse effect on or cause loss to the Group;
and/or
11.2.4 solicit, interfere with or endeavour to entice away from the
Group any person, firm or company who to his knowledge is now or
has during the twelve months preceding the Relevant Date been a
client, customer, correspondent, agent of or in the habit of
dealing with the Group nor enter into a partnership or any
association whether directly or indirectly with any such person;
and/or
11.2.5 solicit interfere with or endeavour to entice away from the
Group or offer to employ or engage under a contract for services
or enter into partnership with any person who on or during the
twelve months preceding the Relevant Date is or was an officer
or employee of or full time consultant to the Group; and/or
11.2.6 knowingly do or say anything which is or is calculated to be
prejudicial to the interests of the Group or its business or
which results or may result in the discontinuance of any
contract or arrangement of benefit to the Group;
PROVIDED THAT nothing in this Clause 11.2 shall prohibit any Vendor from
holding directly or indirectly (for investment purposes only) not more
than 5% of the shares of a public company listed or dealt in on a
recognised investment exchange (as defined in the Financial Services Act
1986) provided that the Vendors shall between tern not hold more than
10% of the shares of any such company unless otherwise agreed by the
Purchaser in writing and provided further that Clauses 11.2.1, 11.2.2,
11.2.3, 11.2.4 and 11.2.6 shall not apply to Mr Joshua Mailman, one of
the Vendors.
11.3 Each Vendor undertakes for no additional consideration to execute and
deliver and do such documents deeds and things as the Purchaser may
reasonably require after Completion to vest in the Group, or such other
member of the Purchaser's Group as the Purchaser shall direct, ownership
and title and all rights of such Vendor in respect of all inventions and
intellectual property owned by or vested in him and which relate to
products of the Group or any manufacturing process used or intended at
Completion to be used by the Group in its business.
11.4 For the purposes of this Clause:
11.4.1 the expression "Relevant Business" shall mean:
11.4.1.1 the development of international telephony routes on a
low volume, high value basis acting as a carrier's
carrier and the
17
provision of associated value added services such as
pre-paid calling cards, pre-paid mobile telephone
services and intelligent networking.
11.4.1.2 any other business carried on by the Company on or at
any time during the period of twelve months ending on
the Relevant Date;
11.4.2 the expression "the Relevant Period" shall mean 2 years from the
Relevant Date.
11.4.3 the expression "the Relevant Date" means the date of this
Agreement.
11.4.4 the expression "the Relevant Territory" means (i) the United
Kingdom (ii) Europe (iii) Africa (iv) Asia (v) Australia (vi)
North America (vii) South America and (viii) any other
territory in which during the period of one year ended on the
Relevant Date the Company has undertaken any material business.
11.5 Each of the undertakings and covenants contained in the separate
paragraphs of Clauses 11.1 and 11.2 is and shall be a separate
undertaking and covenant by each Vendor.
11.6 It is hereby agreed and declared that the benefit of the covenants and
undertakings given in this Clause shall be assignable by the Purchaser
to and become enforceable by any purchaser or assignee or other holder
for the time being of the majority of the Shares or any purchaser or
assignee of all or any part of any Relevant Business.
12 Tax Affairs
12.1 If so requested by the Purchaser, the Vendors shall at the expense of
the Company, in consultation with the Purchaser's accountants (whose
costs shall be borne by the Purchaser) and otherwise in accordance with
this Clause, prepare all documentation and deal with all matters
(including correspondence) relating to the tax returns and affairs of
the Company for all accounting and fiscal periods ending on or prior to
Completion ("Relevant Accounting Periods") to the extent that the same
have not been prepared and agreed with the Inland Revenue or other
appropriate fiscal authority prior to Completion.
12.2 Insofar as within its power, the Purchaser shall procure that the
Company shall following Completion:
12.2.1 afford the Vendors and their duly authorised agents access to
its books, accounts and records and personnel and such other
assistance as may from time to time be reasonably required to
prepare and submit the said returns and/or in connection with
their dealings in relation thereto contemplated by this Clause;
and
18
12.2.2 complete and execute such documentation and render such
assistance to the Vendors and their duly authorised agents as
may from time to time be reasonably required in connection with
or for the purposes of the foregoing.
12.3 For the purposes of and in connection with the foregoing:
12.3.1 the Vendors and their agents shall keep the Purchaser fully and
promptly informed of all matters arising of their dealings with
the tax returns and affairs of the Company under this Clause and
in any event they shall provide for approval by the Purchaser
(or its agents) prior to submission to the Inland Revenue,
drafts of correspondence with the inland Revenue (including tax
computations) in relation to the Company for all of the Relevant
Accounting Period, and shall promptly provide the Purchaser with
any correspondence received from the Inland Revenue and any
other written information relevant to the tax affairs of the
Company for the periods in question, including advice from
professional advisers, and notes of meetings or discussions with
the authorities in question;
12.3.2 the Vendors shall procure that no agreement, settlement or
compromise of any tax or returns or affairs of the Group in
respect of any Relevant Accounting Periods or otherwise is
agreed with the relevant taxation authorities without the prior
written consent of the Purchaser, which shall not be
unreasonably withheld or delayed except that it shall be
regarded as reasonable for the Purchaser to withold its consent
to an agreement settlement or compromise which in its reasonable
opinion could be adverse or prejudicial to the taxation
liabilities or treatment of the Group or in respect of a tax
liability of the Group for which the Purchaser has no effective
indemnity under this indemnity.
PROVIDED ALWAYS THAT nothing done or permitted by the Company or the
Purchaser pursuant to this Clause shall in any way restrict or reduce
any rights any of them may have under the Warranties and/or Tax Deed.
13 Pensions
13.1 Each Vendor hereby confirms to the Purchaser (for itself and separately
on behalf of the Group and each trustee below mentioned) that such
Vendor irrevocably waives their rights at today's date (for himself and
his spouse and dependants) all claims or rights he or they or any of
them may have against the Group and/or the trustees of any pension or
retirement benefit scheme operated at the date of this Agreement or
formerly (if any) operated by the Group by reason of any failure by the
Group or the trustees of any such scheme or any of them to comply with
its or their obligations, before Completion, in respect of such pension
and retirement benefits scheme(s) including (without limitation) in
relation to the funding thereof and making of contributions thereto
and/or the investment of assets thereof.
19
14 Warranties and Undertakings by Purchaser
14.1 The Purchaser warrants to each of the Vendors that:
14.1.1 It has and will have at the relevant times sufficient authorised
but unissued share capital to enable it to allot and issue
shares in itself to be allotted and issued by it under this
Agreement.
14.1.2 It will have sufficient cash funds or arrangements in place at
Completion to meet its obligations in full under Clauses 14.3.2
and 17.1 of this Agreement without recourse to raising funds on
any relevant stock exchange.
14.1.3 it does not require any consent or approval by its shareholders
or any relevant stock exchange or any other body to enter into
this Agreement or to allot and issue shares in itself fully paid
under it
14.1.4 The Board of Directors of the Purchaser has approved this
Agreement and authorised the signatories to execute and exchange
this Agreement with the Vendors.
14.2 The Purchaser undertakes to the Vendors and each of them that the
Purchaser will deliver as directed by the Vendors to the vendors of the
whole of the issued share capital of Callaway Continental Limited ("the
Callaway Shares") at completion of the acquisition by the Company of the
Callaway Shares 3,929,411 restricted shares of common stock in the
capital of the Purchaser with a par value of US$0.001 per share fully
paid to enable the Company to acquire the Callaway Shares on production
of evidence reasonably satisfactory to the Purchaser that its Europe
S.L. is a wholly owned subsidiary of Callaway Continental Limited.
14.3 The Purchaser undertakes to the Vendors and each of them that the
Purchaser will provide to the Company an interest free loan facility on
demand of US$3,000,000 repayable at the Purchaser's election after 31st
December 2001 upon the following terms:
14.3.1 no amount may be drawn by the Company after 31st December 2000
without the written consent of the Purchaser;
14.3.2 the Purchaser shall not be obliged to advance to the Company
more than US$1,000,000 before 15 December 1999.
14.4 The Purchaser acknowledges and agrees with the Vendors and each of them
that if there is a material breach of the undertaking contained in
clause 14.3 the foreseeable loss to the Vendors and each of them flowing
from that breach will include without limitation the reduced ability to
the Company to earn profits and the subsequent reduction of the amounts
of the First and Second Earn-Outs.
14.5 If the Purchaser shall commit a breach of the undertaking contained in
clause 14.3 in a material respect and fails to remedy such breach within
a reasonable period then any of
20
the Vendors may prior to the 1st December 2000 serve written notice to
that effect on the Purchaser whereupon:
14.5.1 the Purchaser shall forthwith release the relevant Vendor and if
that relevant Vendor is Janet Pomeroy and/or Ingrid
Henningson, the Purchaser shall procure forthwith the release
by the Company of Mr Pomeroy and/or Mr Trachtenberg (the spouse
of Ingrid Henningson) as the case may be from any obligation
under relevant Service Agreements upon receipt of the
appropriate release by the relevant Vendor or Mr Pomeroy and/or
Mr Trachtenberg of the Company's obligations under such Service
Agreement;
14.5.2 the Purchaser shall forthwith release the relevant Vendor and if
that relevant Vendor is Janet Pomeroy and/or Ingrid
Henningson, Mr Pomeroy and/or Mr Trachtenberg as the case may
be from the Restrictive Covenants contained in clause 11.2 of
this Agreement; and
14.5.3 the relevant Vendor shall release the Purchaser from any
obligation to the relevant Vendor in respect of the First
Earn-Out and Second Earn-Out.
14.6 The Purchaser undertakes and covenants with the Vendors and in
particular Janet Pomeroy to repay the Pomeroy Loan not later than 31st
December 2001 and if it fails to do so will pay interest on the Pomeroy
Loan at the rate of 4% above the base lending rate of Lloyds TSB Bank
plc from time to time from that date until repaid in full.
15. Set Off
15.1 If at any time prior to the date on which any Consideration Shares to be
issued in respect of the First or Second Earn-Out or any part thereof
are due to be issued the Purchaser has made any valid claim under this
Agreement or the Tax Deed (a "Claim") and the Claim has not at that date
been paid or satisfied by the Vendors in accordance with the terms of
this Agreement or the Tax Deed (as appropriate) then:
15.1.1 if the Claim has been finally decided the Purchaser shall be
entitled to reduce the number of the Consideration Shares to be
so issued by a number of Consideration Shares calculated by
dividing the amount of the Claim by the price used to calculate
the number of Consideration Shares for the First or Second
Earn-Out as the case may be ("the Price")
15.2.2 if the amount of the Claim has not been finally decided the
Purchaser shall on the due date for the issue of the
Consideration Shares, issue to joint nominees, one of whom has
been nominated by the Purchaser and one of whom has been
nominated by the Vendors' Representative) a number of the
Consideration Shares calculated by dividing the amount of the
Claim, which a barrister of at least 10 years standing nominated
jointly by the Purchaser and the Vendors' Representative (or
failing such appointment within 28 days, then by the Purchaser
alone) as being the amount which in the reasonable opinion of
the barrister is the bona fide amount of the Claim, by the
Price.
21
15.2 When any Claim in respect of which any Consideration Shares have been
issued to the nominees has been finally decided the nominees shall sell
such number of the Consideration Shares (if any) as are required to
satisfy the Claim pro tanto and shall transfer the balance of the
Consideration Shares (if any) to the Vendors.
15.3 Unless the Purchaser has commenced legal proceedings in respect of any
Claim before the first anniversary of the date on which the Claim is
notified to the Vendors or if later prior to the date ("the next payment
date") on which the next issue of Consideration Shares becomes due it
shall not be entitled to continue to exercise its rights under Clause
15.1.1 in respect of such Claim and if pursuant to that Clause
Consideration Shares have been issued to the nominees in respect of the
Claim those Consideration Shares shall be released to the Vendors within
five business days of such anniversary or (if later) next issue date, as
appropriate.
15.4 For the purposes of this Clause 15 only, a Claim shall be deemed to be
"finally decided" if either:
15.4.1 it has been so determined by a court of competent jurisdiction
from which there is no appeal or from whose judgment the Vendors
or the Purchaser (as the case may be) do or does not appeal
within any applicable time limit; or
15.4.2 the Vendors and the Purchaser shall so agree in writing.
15.5 For the purposes of this Agreement neither the value of the
Consideration Shares issued to the nominees nor the other provisions of
this Clause shall be regarded as imposing any limit on the amount of any
proper claims under this Agreement or the Tax Deed.
15.6 The provisions of this Clause 15 shall be without prejudice to any other
rights the Purchaser may have in respect of the claim(s) concerned
provided that the Purchaser shall not be entitled to recover more than
once in respect of the same subject matter under this Agreement and the
Tax Deed
16 Further Assurance
16.1 Each of the Vendors hereby agrees at his own cost to do any such further
reasonable acts documents and things as the Purchaser may reasonably
require to vest the beneficial ownership of the Shares in the Purchaser
free from all charges liens and other adverse interests and to vest the
benefit of this Agreement in the Purchaser.
16.2 Each Vendor hereby irrevocably and unconditionally appoints the
Purchaser with effect on and from Completion as his Attorney with full
powers of substitution in his name and for him and on his behalf (and to
the complete exclusion of any rights he may have in such regard)
lawfully to exercise all voting and other rights and receive all the
benefits and entitlements which may now or at any time hereafter attach
to his Shares or any of the Shares registered in his name (whether alone
or jointly with any other person) and to transfer and deal with such
shares, rights, benefits and entitlements and execute such
22
documents under hand or as a deed and do such acts and things in
connection with the foregoing or as are required for the purposes above
described in this Clause as the Purchaser shall from time to time think
fit in all respects as if the Purchaser were the absolute legal and
beneficial owner thereof.
16.3 The powers of attorney granted in this Clause are given by way of
security for the due performance by each Vendor of his obligations
thereby contemplated.
17 Survival of Agreement
This Agreement (and in particular but without limitation the warranties
of the Vendors hereunder) shall insofar as the terms thereof remain to
be performed or are capable of subsisting remain in full force and
effect after and notwithstanding Completion.
18 Costs
18.1 Unless the Purchaser shall lawfully exercise any right of recission of
the Agreement, the Purchaser will be responsible for and will pay on
Completion (or if the Agreement does not complete on its lapsing) all
reasonable costs and expenses (plus disbursements and VAT) properly
incurred by the Vendors in relation to this transaction with effect from
the 1st April 1999, whether or not this matter proceeds to completion
limited (pound)100,000 plus disbursements and VAT.
18.2 If either party shall lawfully exercise any right of rescission of this
Agreement the other party shall pay and indemnify that party against all
expenses and costs incurred in investigating the affairs of the Company
and in the preparation of this Agreement and in arranging or seeking to
arrange finance to purchase the Shares and for the Company.
19 Successors and Assigns
This Agreement shall not be assignable by any of the Vendors but shall
be binding upon and enure for the benefit of each party's successors and
on each Vendor's personal representatives.
20 Announcements
Save in respect of statutory returns or matters or announcements
required to be disclosed or publicly made by law or any recognised
investment exchange (as defined in the Financial Services Act 1986) or
other governmental or regulatory authority, none of the parties hereto
shall make any press statement or other public announcement in
connection with this Agreement without the prior written approval of the
text of such statement or announcement (in the case of any Vendor) by
the Purchaser or (in the case of the Purchaser) by the Vendors'
Representative or by the Vendors' Solicitors.
21 Notices and Representatives
21.1 Without prejudice to any other method available for the giving of
notice, any notice or other communication desired to be given or made
hereunder or under the Tax Deed may
23
be given or made by personally delivering the same or by sending the
same by first class post (airmail if sent to or from abroad) or legible
facsimile in the case of the Purchaser to its registered office for the
time being and in the case of any other party to his address shown
herein (or as subsequently notified in writing by or on behalf of such
party to the Purchaser or the Purchaser's Solicitors) and if sent by
post aforesaid shall be deemed to have been received on the second
business day after the posting of the same (or on third business day if
sent to or from abroad) and if personally delivered or sent by legible
facsimile shall be deemed to have been received on despatch if delivered
or sent on a business day or (if not so delivered or sent) on the first
business day thereafter.
21.2 For the purposes of this Agreement and/or the Tax Deed any proceedings
arising in connection therewith service by the Purchaser of notice or
proceedings on the Vendors' Solicitors shall be deemed to be sufficient
and proper notice to or service on all of the Vendors.
21.3 For the purposes of this Agreement and/or the Tax Deed any proceedings
arising in connection therewith service by the Vendor of notice or
proceedings on the Purchaser's Solicitors shall be deemed to be
sufficient and proper notice to or service on the Purchasers.
21.4 Delivery of any document or payment required to be made to the Vendors
or any of them hereunder may be made to the Vendors' Solicitors whose
receipt for such delivery or payment shall be an absolute discharge of
the party making the same who shall not be concerned as to the
application thereof.
21.5 Delivery of any document or payment required to be made to the Purchaser
hereunder may be made to the Purchaser's Solicitors whose receipt for
such delivery or payment shall be an absolute discharge of the party
making the same who shall not be concerned as to the application
thereof.
22 General
22.1 This Agreement together with all documents in agreed form represents the
entire agreement between the parties and it may only be varied by
written document signed by all the parties.
22.2 The obligations and liabilities of the Vendors assumed or undertaken
under or pursuant to this Agreement are joint and several subject to the
provisions of Clause 10.11 and save for the representation and warranty
contained in Clause 5.3.2 where the obligations and liabilities are
those of the relevant Vendor alone.
22.3 The obligations and liabilities of any party hereto shall not be
prejudiced released or affected by any time or forbearance or indulgence
release or compromise given or granted by any person to whom such
obligations and liabilities are owed or by any other person to such
party or any other party so obliged or liable nor by any other matter or
circumstance which (but for this provision) would operate to prejudice
release or affect
24
any such obligations except an express written release by all the
parties to whom the relevant obligations and liabilities are owed or
due.
22.4 If any party fails to pay by the due time any sum due hereunder or under
any agreement or deed entered into pursuant hereto, such sum shall for
so long as it remains outstanding bear interest calculated on a daily
basis from the date it was due until the date it is paid (both dates
inclusive) at a rate (as well after as before judgment or demand) equal
to three percent above the base rate for the time being of Barclays Bank
PLC and such interest shall be payable on demand.
22.5 Any party may take action for any breach or nonfulfillment of any
warranties undertakings agreements and representations on behalf of any
other party or parties before or after Completion notwithstanding that
such breach or nonfulfillment was known to or discoverable by such
party before Completion and notwithstanding that such party shall delay
or otherwise fail to exercise its rights hereunder or generally in such
regard.
22.6 The rights and remedies reserved to the Vendors and/or the Purchaser
herein or under any provision of this Agreement or in any document to be
executed pursuant hereto shall be in addition and without prejudice to
any other rights or remedies available to the Vendors or the Purchaser
(as the case may be) whether under this Agreement or any such document
by statute common law or otherwise.
22.7 Where any covenant undertaking agreement representation warranty or
indemnity is given herein or stated to be for the benefit of the Company
the same shall be directly enforceable by the Company or by the
Purchaser on its behalf as if it were named as a party hereto and had
duly executed this Agreement.
22.8 Each of the agreements undertakings covenants warranties indemnities and
other obligations of the parties entered into pursuant hereto (including
without limitation under Clause 11) is considered reasonable by the
parties but if any provision or part thereof shall be held void or
unenforceable or in conflict with the law of any state or jurisdiction
any provision or part so held void or unenforceable or in conflict as
aforesaid shall be severed from this Agreement or other document in
which it is contained or otherwise modified to become valid and
enforceable insofar as it relates to that state or jurisdiction only and
the enforceability and validity of any other parts or provisions of this
Agreement and such document shall not be affected by such severance or
modification.
22.9 The Purchaser hereby expressly acknowledges and confirms that it has not
been induced to enter into this Agreement nor has it relied on any
warranty statement fact or other thing other than the Warranties and the
Purchaser hereby expressly excludes all and any liability or claims
arising from or trough a misrepresentation howsoever caused by the
Company or the Vendors or any of them or their agents and the parties to
this Agreement expressly hereby expressly agree that any liability
arising under this Agreement is restricted to any competent claim
brought under the Warranties in accordance with the terms of this
Agreement
25
22.10 This Agreement shall be governed by and construed in accordance with
English Law and the parties hereby irrevocably submit themselves to the
non-exclusive jurisdiction of the English Courts.
IN WITNESS whereof this Agreement has been duly executed and delivered as a deed
by parties the day and year first before written.
26
SCHEDULE I
(Particulars of the Vendors)
(1) (2)
Number of
Name and Address Shares held
---------------- -----------
1. Janet Pomeroy 2,000
60A Priory Road
London N8 7EX
2. Adam Bishop 2,000
44 Kenilworth Road
London W5 3UH
3. Telcoworld Limited 2,582
16 St John Street
London
EC1M 4AY
4. Nicholas Topharn 1,380
38 Southdown Road
Harpenden
Herts AL5 lPG
5. Ingrid Henningson 979
37 Crediton Hill
London NW6 lHS
6. Mark Willard 859
2b Longdown Road
Fleet
Hampshire GU13 9UZ
7. Joshua Mailman 200
c/o Serious Business Corporation
150 East Street
14th Floor
New York NY 10155
USA
------
TOTALS 10,000
======
27
SCHEDULE 2
Part I
(The Company)
1. Date of Incorporation : 17 September 1998
2. Registered Number : 3633818
3. Authorised Share Capital : (pound)10,000 divided into 10,000
ordinary shares of(pound)1 each
4. Issued Share Capital : 10,000 ordinary shares all fully paid
or credited as fully paid
5. Directors : Harry Pomeroy (Chairman)
Larry Trachtenberg
Nick Topharn
Mark Willard
6. Secretary : Susan Connabeer
7. Registered Office : 5th Floor, 7-10 Chandos Street
Cavendish Square, London W1M 9DE
8. Accounting Reference Date : 31st December
28
Part 2
(The Subsidiary Companies)
Telesource Limited (Company No. 3633814)
Teleroute Limited (Company No. 3633810)
Equitel Card Services Limited (Company No. 3633806)
29
SCHEDULE 3
(The Properties)
[Download Table]
Description of Owner/Occupier Description Permitted Current Rental
Premises -------------- of tenure Use --------------
-------------- Title --------
Number, etc.
------------
Fourth Floor Equitel Leasehold Offices - Until 16 April 1999
and Parking Communications for a term, Class B1 a peppercorn.
Space Limited commencing From 17th April
39/40 Portman 24th March 1999 until the
Square 1999 and expiration of the
London W1 expiring 22nd term (pound)175,718
March 2004
Parking Space Equitel Licence for Parking (pound)3,000 per annum
Communications one year then Space
Limited determinable
Parking Space Equitel Licence for (pound)3,000 per annum
Communications one year then Parking
Limited determinable Space
30
SCHEDULE 4
(Warranties)
1 INTERPRETATION
1.1 Where any of the following paragraphs of this Schedule or any provision
or disclosure made or referred to in the Disclosure Letter is qualified
by the expression "to the best of the knowledge, information and belief
of the Vendors" or "so far as the Vendors are aware" or any similar
expression, that paragraph shall be deemed to include an additional
warranty to the effect that the statement has been made after such
reasonable enquiry as would be appropriate in the circumstances.
1.2 References to "the Company" shall be deemed to include references to the
Subsidiaries and each of the warranties set out in this Schedule shall
be deemed given in respect of both the Company and the Subsidiaries.
2 DISCLOSED INFORMATION
2.1 All information contained or referred to in the Disclosure Letter and in
the Schedules to this Agreement and supplied by the Vendors' solicitors
to the Purchaser's solicitors ("Disclosed Information") was (save to the
extent already corrected or updated in the Disclosure Letter) when given
and is now so far as the Vendors are aware accurate in all material
respects.
2.2 So far as the Vendors are aware there is nothing omitted from the
Disclosure Letter which would make any of the statements set out therein
materially inaccurate.
3 ACCOUNTS
3.1 The Accounts a copy of which is annexed to the Disclosure Letter have
been prepared in accordance with generally accepted accounting practice
and principles reflect in all material respects the assets and
liabilities of the Company (whether actual or contingent or otherwise)
and the state of the affairs of the Company at such date and its results
for the period since the date of its incorporation.
3.2 All proper and necessary books of account and records have been fully
and accurately kept and completed by the Company, and the same contain
full and correct information relating to all transactions to which the
Company has been a party in accordance with law and generally accepted
accounting practice and principles and all such books and records are in
the possession or control of the Company.
4 POSITION SINCE ACCOUNTING DATE
4.1 Since the Accounting Date (i) there has been no adverse change in the
financial or trading position or prospects of the Company (ii) the
business of the Company has been carried on in the normal course (iii)
the Company has not declared or paid any dividends or
31
effected any distribution (for tax purposes or otherwise) of or in
respect of its assets or share capital (iv) the Company has not acquired
or disposed of any business or material assets other than in the
ordinary course of day to day trading and (v) the Company has not made
or agreed to make any loan or payment or entered into any transaction or
assumed or incurred any liabilities (including contingent liabilities)
except in the ordinary course of day to day trading and for full value
and in the case of capital commitments such commitments do not exceed
(pound)10,000 in aggregate.
4.2 No order has been made or petition presented or resolution passed for
the winding-up or other dissolution of the Company and no receiver or
manager or administrator has been appointed over any of its assets and
there are no grounds on which any such appointment may be made.
5 TAXATION
5.1 The Company has within the requisite time limits duly made all returns,
given all notices, and supplied all other information required to be
supplied to the Inland Revenue HM Commissioners of Custom and Excise
and/or any other competent fiscal authority in any part of the world and
all such information returns and notices were when given or supplied and
are now accurate in all material respects and made on a proper basis and
are not, so far as the Vendors are aware, likely to be the subject of
any dispute with any of the relevant authorities concerned.
5.2 The Disclosure Letter gives full details of all matters relating to
taxation in respect of which the Company (either alone or jointly with
any other person) has or on the basis of law and practice presently
operative has an outstanding entitlement:-
5.2.1 to make any claim (including a supplementary claim) for any
Relief (as defined in the Tax Deed);
5.2.2 to make any election for one type of Relief, or one basis,
system or method of taxation as opposed to another;
5.2.3 to make any appeal (including a further appeal) against any
assessment to taxation; or
5.2.4 to make any application for the postponement of taxation.
5.3 The Company has duly deducted withheld paid and accounted for all tax
due to have been deducted withheld paid or accounted for by it before
the date of this Agreement and is not and has not at any time since the
Accounting Date been liable to pay interest on any unpaid taxation.
5.4 Since the Accounting Date the Company has not made and the Company is
not subject to any present or future liability to make or provide any
payment or consideration which could be disallowed as a deduction in
computing the profits of the Company or as a charge on the Company's
income for taxation purposes.
32
5.5 The book value of each of the capital or fixed assets of the Company in
or adopted for the purposes of the Accounts does not exceed the amount
(if any) deductible under Section 38 TCGA and is such that on a disposal
or deemed disposal of such assets or any of the same at that value no
balancing charge or chargeable gain will arise accrue or crystallise.
5.6 The Company has never reduced its share capital or repurchased repaid or
redeemed any share capital nor capitalised any profits reserves or share
premium account in the form of or in paying up any amounts unpaid on any
shares debentures or other securities nor agreed or resolved to do any
of the foregoing.
5.7 The Company is a registered and taxable person for the purposes of value
added tax and (i) has complied with all the requirements of the value
added tax legislation and all applicable regulations; (ii) is not in
arrears with any payment or returns thereunder and is not liable to any
abnormal or non-routine payment for value added tax purposes; (iii) has
maintained complete correct and up to date value added tax records
invoices and other necessary documents; (iv) has not been required by HM
Commissioners of Customs and Excise to give any security; and (v) is not
and has never been or agreed to be an agent manager or factor for the
purposes of Section 47 or 48 of the Value Added Tax Act 1994.
5.8 The Company is not bound and has not agreed to become bound by any
lease, tenancy or licence in the case of which under its terms or by
statute that Company is or could become liable to pay an amount in
respect of value added tax chargeable as a result of the making of an
election to waive exemption under Schedule 10 to the Value Added Tax Act
1994.
5.9 The Company is not under any liability to taxation, contingent or
otherwise, in respect of any other company which at any time has been a
member of the same group or consortium as the Company or an associated
company of the Company for taxation purposes or in respect of any
transaction effected with or asset or benefit received from or given by
the Company to any such other company.
5.10 The Company is not under any liability to taxation or additional
taxation, contingent or otherwise, under any of the provisions of Part
XI of the Taxes Act (close companies) or any failure by the Company to
distribute sufficient of its profits in any accounting year or period.
5.11 The Company has not entered into or been a party to any scheme or
arrangement designed partly or wholly for the purposes of avoiding or
deferring taxation, and no scheme or transaction of any nature has been
carried out by or proposed in relation to the Company which has given
rise or could give rise to a charge to taxation under Part XVII of the
Taxes Act.
5.12 All of the documents relating to or necessary to prove the title of the
Company to its assets (including, without limitation, any leasehold or
freehold property) have been properly stamped.
5.13 The Company has only ever been tax resident in the United Kingdom.
33
5.14 No event has occurred which could give rise to a claim under the Tax
Deed if it were now in force.
6 ASSETS
6.1 The Company was at the Accounting Date and (subject only to sales of
current assets in the ordinary course of its day to day trading) now is
the owner of and has good and marketable title to all of the assets
included in the Accounts and all assets (including plant and equipment
furniture and motor vehicles) now owned or used by it or in its
possession.
6.2 All debts owing to the Company at Completion will realise their full
face value within four months of their due date and no amount included
in the Accounts as owing to the Company at the Accounting Date has
realised an amount less than the value for which it was included in the
Accounts or is now regarded as irrecoverable in whole or in part.
7 MORTGAGES AND CHARGES
The Company has not created nor has it agreed to create and nor is there
subsisting any mortgage debenture lien charge or other similar
encumbrance or security interest over all or any of its property assets
undertaking goodwill reserves or share capital, whether present or
future.
8 GUARANTEES
The Company is not and has not agreed to become bound by any guarantee
bond, warranty, or indemnity or suretyship or similar commitment and
there is not now outstanding any such guarantee bond, warranty indemnity
suretyship or similar commitment given for the accommodation of or in
respect of any obligation or liability of the Company.
9 BORROWING ARRANGEMENTS
9.1 The Disclosure Letter contains full particulars of and there are annexed
thereto true copies of all material documents (including facility
letters bank mandates and any documents executed by the Company to
secure its borrowing obligations) in relation to all borrowings of the
Company and all arrangements in the nature of borrowing or loan
facilities including without limitation factoring or invoice discounting
arrangements.
9.2 The Company is not in breach of the terms of any of its borrowing
obligations and in particular of any document governing the terms of or
securing such borrowings and no event has occurred which will or might
give any person the right to call for the immediate or early repayment
of any of its borrowings or to terminate any loan facilities placed at
its disposal or which is likely to cause a demand for the immediate
repayment of any of its borrowings which are repayable on demand.
9.3 There is no indebtedness of the Company exceeding (pound)10,000 in
aggregate which is overdue for payment or discharge by more than three
months and (assuming continuance
34
of its existing bank and other financial facilities disclosed in the
Disclosure Letter) the Company has sufficient working capital for the
purposes of carrying on its business in its present form for the period
of twelve months after Completion.
10 MATERIAL COMMITMENTS AND AGREEMENTS
10.1 The Company is not party to nor liable in respect of and none of the
assets of or used by the Company is affected by:
10.1.1 any bill of sale pledge or hypothecation or any hiring or
leasing agreement hire purchase agreement credit or conditional
sale agreement or agreement for payment on deferred terms or any
other similar agreement;
10.1.2 any contract covenant commitment or arrangement (i) of an
onerous or unusual nature or which is likely to be unprofitable
or (ii) which is not terminable by the Company without
compensation by three months notice or less or which is unlikely
to be fully performed within three months from the date hereof
or (iii) made otherwise than in the ordinary and usual course of
the business of the Company as now carried on or (iv) in respect
of which any party thereto has not performed and complied in all
material respects with its obligations;
10.1.3 any partnership joint venture consortium trade association or
society or any agreement or arrangement relating thereto;
10.1.4 any selling purchasing manufacturing licensing franchising
agency distribution or other similar agreement or arrangement
relating to the sale of goods or services by or to the Company;
10.1.5 any contract covenant commitment or arrangement which in any way
restricts the freedom of the Company to carry on its business or
any part thereof in any part of the world in such a manner as it
thinks fit;
10.1.6 any contact covenant commitment or arrangement which is or is
liable to be terminated or altered by another party as a result
of any change in the control management or shareholders of the
Company; or
10.1.7 particulars of all contracts to which the Company is a party and
which relate to the acquisition or disposal or licensing of
telecommunication capacity are contained in the Disclosure
Letter.
10.2 No person is authorised to act as agent or attorney for the Company or
to bind the Company otherwise than its Directors acting as a Board.
11 PROPERTIES
11.1 Save for the properties referred to in Schedule 3 ("the Properties") the
Company does not use own or occupy or have any interest in any freehold
leasehold or other real
35
property and the Company is under no liability (actual contingent or
otherwise) in respect of the Properties or any such property or interest
which it has used owned or occupied or had any interest in prior to the
date hereof.
11.2 The particulars of each of the Properties shown in Schedule 3 are true
and correct, copies of all material documents relating to the Properties
have been supplied to the Purchaser's Solicitors prior to the date
hereof and the written replies of the Vendors' Solicitors to the written
enquiries of the Purchaser's Solicitors relating to the Properties are
true complete and accurate in all respects.
11.3 The Company has good and marketable title to each of the Properties and
is the beneficial and legal owner in exclusive possession of the estate
or interest in each Property specified in Schedule 3 free from any
mortgage, charge, lien, debenture, lease, underlease, tenancy adverse
right, condition, privilege, easement, overriding claim, option, right
of pre-emption, covenant, restriction, acceptance, reservation or
interest claim and any matters or things registered or capable of
registration in any Registry and the Company is in a position without
incurring any liabilities thereby to sell each property as Beneficial
Owner with a full title guarantee for the purposes of the Law of
Property (Miscellaneous Provisions) Act 1994.
11.4 The Company is entitled, without restriction and without breaching the
terms of any lease or other rights of occupation or the provisions of
any legislation to use each of the Properties for the purpose specified
in Schedule 3 and every other use for which it presently uses the same
or any part thereof.
11.5 No notices orders proposals applications requests or schedules of
dilapidations affecting or relating to any of the Properties have been
served or made by any authority or other person or by the Company and,
so far as the Vendors are aware, there are no circumstances which are
likely to result in any being served or made.
11.6 In the case of any Property occupied by the Company under a lease
tenancy licence or similar right, the Company has fully complied in all
material respects with all its obligations in respect of such occupation
and no notice has been received to terminate the right of the Company to
continue the same and, so far as the Vendors are aware, there are no
circumstances which could result in such right of occupation being
determined otherwise than by the Company.
11.7 All persons occupying the Properties or any part thereof under any lease
tenancy licence or similar right from the Company have fully complied
with all their obligations in respect of such occupation.
12 ENVIRONMENTAL AND HEALTH MATTERS
12.1 The Company has complied in all material respects with its obligations
under all statutes and/or regulations and/or orders or other provisions
of law and/or codes of practice (including without limitation the laws
of tort which protect or relate to the protection of
36
the environment and/or the health and well being of individuals and/or
other living creatures.
12.2 None of the products sold or otherwise supplied by or through the
Company have at any time infringed, at the time of their supply or (if
later) installation by the Company, any statutes, regulations, order or
other provisions of law referred to in Warranty (12)(a) above.
13 BUSINESS OF THE COMPANY
13.1 The Company does not carry on any business other than the business
described in the Disclosure Letter with specific reference to this
Warranty.
13.2 The Company has at all material times held and continues to hold all
licences covenants and permissions required for the carrying on of its
business both in the United Kingdom and abroad and is not in material
breach of the terms or conditions of such licences covenants and
permissions; there are no pending or threatened proceedings which might
in any way adversely affect such licences covenants or permissions; and
the Vendors are not aware of any circumstances whereby any of the same
is likely to be suspended cancelled revoked or not renewed in the
ordinary course.
13.3 All goods and services manufactured and/or supplied and/or promoted by
the Company whether for sale or distribution or otherwise comply in all
material respects with all applicable legislation in the territories in
which they are promoted or sold or distributed and no such goods are in
any way unsaleable or defective so as to give a right of action against
the Company which is likely to have a material adverse effect on the
Company or its business.
13.4 None of the business practices of the Company is or has been the subject
of or susceptible to or affected by any investigation, reference, report
or order made by and the Company has not received any process notice or
communication (formal or informal) from any governmental legislative
regulatory consumer protection or like authority of any jurisdiction or
competence.
14 LITIGATION
The Company is not engaged in any litigation arbitration prosecution or
other legal proceedings (whether as plaintiff defendant or third party)
and there are no such proceedings pending or threatened or any
proceedings in respect of which the Company is or might be liable to
indemnify or compensate any other person concerned therein and to the
best of the knowledge information and belief of the Vendors there are no
claims facts event or other circumstances which are likely to give rise
to any such proceedings.
15 BREACHES OF OBLIGATIONS
Neither the Company nor any person for whom it is vicariously
responsible has committed any breach of or failed to perform or observe
any provision of its
37
Memorandum or Articles of Association or of any legislation in any part
of the world or any covenant or agreement or the terms or conditions of
any consent or licence or any judgment or order of a Court or other
competent tribunal or authority by which the Company is bound or to
which it is a party or which affects any of the assets owned or used by
it.
16 INSURANCE
16.1 The Company is and at all material times has been fully covered by valid
insurances against all normal risks having regard to the type of
business carried on and assets owned or used by it.
16.2 The policies of insurance to which the Company is a party are valid and
enforceable and true copies of the same are attached to the Disclosure
Letter all premiums due have been paid; there are no outstanding claims
or circumstances likely to give rise to a claim thereunder; and nothing
has been done or omitted to be done which has made or could make any
such policy void or voidable or whereby the renewal of any such policy
might be affected or the premiums due in respect thereof are likely to
be increased.
17 EMPLOYEES ETC
17.1 The Disclosure Letter details the names and full particulars of all
officers employees consultants and agents of the Company and their
respective ages, length of service with or engagement by the Company and
their terms of employment or engagement including (without limitation)
their notice periods and emoluments, including bonuses, profit sharing
arrangements and benefits in kind, commissions, fees, remuneration,
periods of notice, usual dates and terms of review of salary, fees and
other benefits.
17.2 No present officer employee consultant or agent of the Company has given
or received notice terminating his employment or engagement or is
entitled (without giving proper notice) to terminate his employment or
engagement with the Company.
17.3 The Company is not party to any agreement or arrangement (save in the
case of any contract of employment to the extent fairly disclosed in the
Disclosure Letter) imposing an obligation on it to increase the rates of
remuneration of or to make any bonus or incentive payments or any
benefits in kind or any payments under a profit sharing scheme to or on
behalf of any of its former present or fixture officers employees
consultants or agents, whether now or at any future date.
17.4 There is not in existence any share incentive scheme share option scheme
or profit sharing scheme for all or any of the Company's officers or
employees and no proposals for any such scheme or arrangement are under
consideration by the Company.
18 PENSIONS
18.1 There has been and is no arrangement to which the Company contributes or
may become liable to contribute under which benefits of any kind are
payable to or in respect of any
38
employee or director of the Company (or to any spouse or dependant of
any of them) on retirement on death or in the event of disability or
sickness or in other similar circumstances (including permanent health
insurance and medical insurance).
19 INTELLECTUAL PROPERTY RIGHTS
19.1 The business of the Company has at all material times been carried on
without infringing any intellectual property right of any third party.
19.2 Particulars of all intellectual property rights used and/or owned by the
Company are set out in the Disclosure Letter and all of the same are
duly registered (where possible) and valid and enforceable and free from
any licence, sub-licence or royalty obligations and, so far as the
Vendors are aware, no third party is infringing or has at any time
infringed the same.
19.3 The Company has not disclosed or permitted to be disclosed or undertaken
or arranged to disclose to any person any of its know how secrets
confidential information technical processes or lists of customers or
suppliers.
19.4 The Company uses no name other than its corporate name for any purpose.
19.5 References herein to "intellectual property" and "intellectual property
rights" shall include patents, patent applications, trade marks,
registered designs, design rights, copyrights, moral fights, business
names, trade marks, service marks, computer software programs and
systems, know how, confidential information and other industrial or
commercial intellectual property rights whether registered or applied
for or not.
20 ASSOCIATES AND CONNECTED PERSONS
20.1 None of the Vendors nor any director or shareholder of the Company nor
any connected person or associate of any of them has any interest,
direct or indirect, in any agreement or arrangement to which the Company
is a party or in any business which has a close trading relationship
with that of the Company or which is or is likely to become competitive
with the business of the Company.
20.2 Save for remuneration and expenses properly due to its directors in the
ordinary course, there are no amounts owing by or to the Company to or
by any of the Vendors or any shareholder or director of the Company or
any connected person or associate of any of them respectively and the
Company is not under any liability (contingent or otherwise) in respect
of any guarantee suretyship indemnity or like obligation given by or
binding on the Company in respect of any liabilities or obligations of
any of the Vendors such shareholders directors or connected persons or
associates.
39
21 THE COMPANY
21.1 The Company is a private company limited by shares and the information
set out in Schedule 2 is correct.
21.2 The Shares have been issued in proper legal form and are fully paid or
credited as fully paid and the Vendors are between them the legal and
beneficial owners of the Shares and have full power right and authority
to sell all of the Shares hereunder to the Purchaser, free from all
claims liens encumbrances and equities.
21.3 There is not now any debenture or loan capital or any agreement to
create or issue any debenture or loan or share capital of the Company or
any option to subscribe for or acquire or any agreement to put under
option any debenture or loan or share capital of the Company and no
person has the right (whether pursuant to conversion or otherwise) to
call for the issue of any debenture or share or loan capital of the
Company under any agreement or other arrangement presently in force.
21.4 Save as disclosed herein, the Company does not have and has never had
any nor been a subsidiary and nor has it ever been the legal or
beneficial owner of any share or loan capital of any company.
21.5 The register of members of the Company is correct and properly written
up to date and there has been no notice of any proceedings to correct or
rectify any such register.
21.6 Since the date of the incorporation of the Company neither the Company
nor any class of its members has passed any Resolution.
21.7 A copy of the Memorandum and Articles of Association of the Company is
attached to the Disclosure Letter, is true and complete and has embodied
therein or annexed thereto a copy of every such Resolution or Agreement
as is referred to in Section 380 (2) of the Companies Act.
22 GENERAL
22.1 Each Vendor has requisite powers to enter into and perform this
Agreement and the obligations to be assumed or performed by him pursuant
thereto and the execution and delivery and completion of this Agreement:
22.1.1 does not and will not cause the Company or the Vendors or any of
them to be in breach of any of the terms and provisions of any
agreement or arrangement or order or injunction of any Court or
competent tribunal;
22.1.2 does not and will not relieve any person of or entitle any
person to terminate any contractual or other obligation to the
Company; and
22.1.3 will not so far as the Vendors are aware result in any customer
or supplier of the Company ceasing to deal or substantially
reducing the existing level of his
40
dealings with the Company or terminate or result in the
termination of any present or future benefit or privilege
enjoyed by the Company.
22.2 No person is entitled to receive from the Company any finders fee
brokerage or commission in connection with the sale of Shares under this
Agreement and no representation has been made to any of the Vendors or
any other person in connection with this Agreement or the Disclosure
Letter or otherwise for which the Company might be liable.
EXECUTED
as her deed by the said ) /s/ Michael H. Garvin
JANET POMEROY ) Duly Authorized Attorney
in the presence of:- ) for and on behalf of Janet Pomeroy
/s/ David Cran )
Trainee Soliciter
Gouldens
Tudar St., London
EXECUTED ) /s/ Michael H. Garvin
as his deed by the said ) Duly Authorized Attorney
ADAM BISHOP ) for and on behalf of Adam Bishop
in the presence of:- )
/s/ David Cran
(as above)
EXECUTED as a Deed )
by two duly authorised officers )
for and on behalf of )
TELCOWORLD LIMITED )
/s/ Ray Harris
-------------------------------------
Director
/s/ P. Norris
-------------------------------------
Director/Secretary
EXECUTED )
as his deed by the said )
NICHOLAS TOPHAM ) /s/ N. Tophum
in the presence of:- )
/s/ David Pollacchi
Soliciter
35 Piccadilly, London
41
EXECUTED )
as her deed by the said ) /s/ Michael H. Garvin
INGRID HENNINGSSON ) duly authorized attorney
in the presence of:- ) for and on behalf of Ingrid Henningsson
/s/ David Cran
(as above)
EXECUTED )
as his deed by the said ) /s/ Michael H. Garvin
MARK WILLARD ) duly authorized attorney
in the presence of:- ) for and on behalf of Mark Willard
/s/ David Cran
(as above)
EXECUTED )
as his deed by the said ) /s/ Michael H. Garvin
JOSHUA MAILMAN ) duly authorized attorney
in the presence of:- ) for and on behalf of Joshua Mailman
/s/ David Cran
(as above)
EXECUTED as a Deed )
by two duly authorised officers )
for and on behalf of )
TELEMONDE INC. )
/s/ Adam Bishop
--------------------------------------
Director
/s/ Gottfried von Bismarck
-------------------------------------
Director/Secretary
EXECUTED )
as his deed by the said ) /s/ Michael H. Garvin
HARRY POMEROY ) duly authorized attorney
in the presence of:- ) for and on behalf of Harry Pomeroy
/s/ David Cran
(as above)
EXECUTED )
as his deed by the said ) /s/ Michael H. Garvin
LARRY TRACHTENBERG ) duly authorized attorney
in the presence of:- ) for and on behalf of Larry Trachtenberg
/s/ David Cran
(as above)
Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘10-12G’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| Corrected on: | | 3/6/00 | | | | | | | None on these Dates |
| Filed on: | | 11/15/99 |
| | 11/8/99 | | 1 |
| List all Filings |
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Filing Submission 0000950130-99-006504 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
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