<PAGE> 1
EXHIBIT 2.3
PURCHASE AND TRANSFER AGREEMENT
dated 14 June 2000
(the "SIGNING DATE")
between
<TABLE>
<S> <C> <C>
1. Dr. Henning F. Klose hereinafter "KLOSE"
2. Apax Germany II L.P. hereinafter "APAX II"
3. Apax Funds Nominees Ltd. fr "B" Account hereinafter "APAX B FUND"
4. Apax Funds Nominees Ltd. fr "D" Account hereinafter "APAX D FUND"
- Apax B Fund and Apax D
Fund together "APAX FUNDS
NOMINEES LIMITED" -
5. AP Vermogensverwaltung Gesellschaft
burgerlichen Rechts hereinafter "AP"
6. A + M GmbH & Co Vermogensverwaltung KG hereinafter "A+M"
- together the "SELLERS" -
and
7. World Access, Inc. - hereinafter the "PURCHASER" -
8. TelDaFax Aktiengesellschaft
Marburg/Lahn - hereinafter the "TELDAFAX" -
</TABLE>
<PAGE> 2
-2-
SECTION 1
DEFINITIONS
<TABLE>
<S> <C>
A+M Call Option ss 5.2
A+M Option Shares ss 5.2
A+M Put Option ss 5.2
AP Caption
Apax Funds Nominees Limited Assets Caption
Apax B Fund Caption
Apax D Fund Caption
Apax II Caption
A+M Caption
Breach of Warranty ss 12.1
Call Option Closing ss 17.2.3
Closing ss 9.1
Closing Conditions ss 8.1
Closing Date ss 9.1
Consideration Stock ss 6.1
Consolidated 1999 Financial Statements ss 11.3.2.1
Contribution Agreement ss 4.1
Disclosed Information ss 10.2
Exchange Ratio ss 16.4
Funds ss 11.1
Interim Financial Statements ss 11.3.2.4
Klose Caption
Klose Call Option ss 5.2
Klose Option Shares ss 5.2
Klose Put Option ss 5.2
Loss ss 12.1
Material Adverse Event ss 13.4
</TABLE>
<PAGE> 3
-3-
<TABLE>
<S> <C>
Material Agreement ss 11.3.12
Offeror ss 17.4.1
Option Shares ss 5.2
Put Option Closing ss 17.1.3
Purchaser Caption
Reasonable Purchaser ss 13.4.4
Registration Rights Agreement ss 5.5
Relevant Percentage ss 6.5
Sales Notice ss 17.4.1(a)
Sellers Caption
Signing Date Caption
Sold Shares ss 5.1
Stand-Alone Financial Statements ss 11.3.2.1
Subsidiaries ss 3.7
TelDaFax Caption/ss 2.1
TelDaFax Group ss 3.7
Tender Offer ss 16.4
</TABLE>
SECTION 2
TELDAFAX AKTIENGESELLSCHAFT
2.1 TelDaFax Aktiengesellschaft, is registered in the commercial register
of the local court Marburg under HR B 2174 ("TELDAFAX"). TelDaFax
provides telecommunication services, in particular voice telephony via
its fixed line network, internet services through its own platform and
other data and fax transmission services.
2.2 The share capital of TelDaFax currently amounts to 87,954,360, divided
into 33,828,600 non par value shares. TelDaFax has an authorised
capital (Genehmigtes Kapital) with an aggregate nominal amount of
42,900,000 and a conditional capital in the amount of 42,900,000 to
cover the issue of convertible bonds. The shares of TelDaFax are
admitted to the regular market of the Frankfurt Stock Exchange,
segment Neuer Markt, and on the EASDAQ.
<PAGE> 4
-4-
2.3 The Sellers presently hold the following shares in TelDaFax:
2.3.1 Klose holds 2,756,200 shares equal to 8.15% of the aggregate
share capital;
2.3.2 Apax II holds 3,587,312 shares equal to 10,60% of the
aggregate share capital;
2.3.3 Apax B holds 2,508,076 share equal to 7,41% of the aggregate
share capital;
2.3.4 Apax D holds 3,755,988 shares equal to 11.10% of the
aggregate share capital;
2.3.5 AP holds 1,326,800 shares equal to 3.92% of the aggregate
share capital.
2.3.6 A+M holds 143,492 shares equal to 0,42% of the aggregate
share capital.
SECTION 3
PARTICIPATIONS OF TELDAFAX
TelDaFax holds shares in the following corporations:
3.1 BNC Kommunikationssysteme GmbH & Co. KG, Bonn, registered in the
commercial register of the local court in Bonn under HR A 4286,
Share capital: DM 50,000
Participation of TelDaFax: 100%
3.2 BNC Kommunikationssysteme Verwaltungs GmbH, Bonn, registered in the
commercial register of the local court in Bonn under HR B 7295,
<PAGE> 5
-5-
Share capital: DM 50,000
Participation of TelDaFax: 100%
3.3 TelDaFax Telefon, Daten und Fax Transfer Vertriebs GmbH, Marburg,
registered under HR B 2137 in the commercial register of the local
court in Marburg,
Share capital: DM 50,000
Participation of TelDaFax: 100%
3.4 GeoNet Systems GmbH, Marburg, registered in the commercial register of
Marburg under HR B 2265,
Share capital: DM 100,000
Participation of TelDaFax: 95%
3.5 Demuth, Dietl & Co. Kommunikationselektronik GmbH, Wetzlar, registered
in the commercial register of Wetzlar under HR B 1579,
Share capital: DM 462,200
Participation of TelDaFax: 50,95%
3.6 Internet AG, Global Network, Birkenau, registered in the commercial
register of Furth/Odenwald under HR B 879,
Share capital: (euro) 13,500,000
Participation of TelDaFax: 65% (after registration of capital
increases against cash
contributions and contributions in
kind registration is still pending)
3.7 Netztel Plus AG, Heppenheim a.d. BergstraBe, registered in the
commercial register under HR B5096,
Share capital: (euro) 6.925.000.200
<PAGE> 6
-6-
Participation of TelDaFax: 81,94%
The companies listed in 3.1, 3.2 and 3.3 are not engaged in any
commercial activity. The companies listed in this 3 are collectively
referred to as the "SUBSIDIARIES". TelDaFax and the Subsidiaries are
together referred to as the "TELDAFAX GROUP".
SECTION 4
COMBINATION OF GERMAN BUSINESSES OF PURCHASER AND THE BUSINESS OF TELDAFAX
Purchaser and TelDaFax agree to use good faith efforts to pursue the combination
of their respective businesses in Germany in order to realise synergies to the
largest extent practically possible. The business combination shall be
implemented by taking the following actions:
4.1. Purchaser shall contribute the German activities of Netnet
Telekommunikationssysteme GmbH, and NewTel Communications GmbH to
TelDaFax by way of a capital increase against contribution in kind out
of authorised capital. TelDaFax and Purchaser and/or affiliates of
Purchaser shall enter into a contribution agreement by June 30, 2000
substantially in the form of Exhibit 4.1.2 (the "Contribution
Agreement") once agreement on the evaluation of the contributed assets
and the number of shares to be issued has been reached.
4.2. The management board (Vorstand) of TelDaFax with the consent of the
supervisory board (Aufsichtsrat) of TelDaFax is entitled to increase
the capital of TelDaFax by the amount of the authorised capital to the
exclusion of subscription rights of the existing shareholders if,
inter alia, the newly issued shares are used to acquire other
businesses. TelDaFax and the Sellers undertake to the extent permitted
under applicable law that Vorstand and Aufsichtsrat will adopt the
necessary resolution to effec t the capital increase is effected.
<PAGE> 7
-7-
4.3. As soon as and to the extent legally possible and consistent with the
best interest of their shareholders TelDaFax and the other German
businesses of Purchaser shall enter into such agreements of
combination or co-operation to achieve synergies in the most efficient
and beneficial way for all parties and the shareholders of Purchaser
and TelDaFax.
SECTION 5
SALE AND TRANSFER, PUT AND CALL OPTION
5.1 Subject to the terms and conditions of this agreement, the Funds
hereby agree to sell the shares in TelDaFax listed in ss 2.3.2 to 2.3.5
(the "SOLD SHARES").
5.2 Subject to the terms set forth in ss 17, Klose has the right to sell to
Purchaser and Purchaser is obliged to buy from Klose all of the shares
in TelDaFax listed in ss 2.3.1 or any portion thereof (the "KLOSE
OPTION SHARES"), in up to three instalments in the period beginning on
the Signing Date and ending on December 31, 2001 ("KLOSE PUT OPTION")
A + M has the right to sell to Purchaser and Purchaser is obliged to
buy from A + M all of the shares in TelDaFax listed in 2.3.6 (the
"A + M OPTION SHARES") in the period beginning on the Closing and
ending on April 30, 2001 (the "A + M Put Option") in one instalment.
Purchaser has the right to buy from Klose and Klose is obliged to sell
to Purchaser all of the Klose Option Shares owned by him at the time
when Purchaser makes use of this right in the period beginning on
July 1, 2002 and ending on December 31, 2002 (the "KLOSE CALL OPTION").
Purchaser has the right to buy from A + M and A + M is obliged to sell
to Purchaser all of the A+M Option Shares in the period beginning on
July 1, 2001 and ending on December 31, 2001 (the "A + M CALL
OPTION"). The shares which are subject to the put and call Options are
hereinafter together referred to as the "OPTION SHARES". Until the
options are exercised Klose and A+M will retain and may exercise all
rights attached to the Option Shares.
5.3 The Sold Shares and Option Shares are represented by global
certificates which are held in global custody by Clearstream AG. The
Sold Shares and Option
<PAGE> 8
-8-
Shares are only deliverable as fractional entitlements to the global
certificates held by Clearstream AG. The transfer of the Sold Shares
shall be effected as provided for in Exhibit 5.3 at the Closing. The
Sold Shares are booked to the following securities accounts:
5.3.1 The shares held by Apax II are booked to the securities
account No. 5 374 898 Bank Code 700 202 70 with Bayerische
Hypo- und Vereinsbank.
5.3.2 The shares held by Apax B are booked to the securities
account No. 555 910 44 Bank Code 702 202 00 with BHF Bank AG
Munchen.
5.3.3 The shares held by Apax D are booked to the securities
account No. 555 910 51 Bank Code 702 202 00 with BHF Bank AG
Munchen.
5.3.4 The shares held by AP are booked to the securities account
No. 2 733 951 Bank Code 700 202 70 with Bayerische Hypo- und
Vereinsbank.
5.3.5 The Klose Option Shares are booked to the securities account
No 035 81672 7 with Goldman Sachs & Co., New York.
5.3.6 The A+M Option Shares are booked to the securities account
No. 241925700 with Commerzbank AG.
5.4 The sale and transfer of the Sold Shares and Option Shares hereunder
shall include all rights and obligations attached to the Sold Shares
at the Closing or the relevant Option Closing.
5.5 It is understood and agreed that Purchaser will use its reasonable
best efforts to effect the registration under the Securities Act of
1933, as amended, of the portion of the Consideration Stock (as
defined below) to be issued as consideration for the Sold Shares on
the Form S-4 registration statement to be filed in connection with the
Tender Offer. If this portion of the Consideration Stock is not
included on this Form S-4, or if, even if such Consideration Stock can
be so included on such
<PAGE> 9
-9-
Form S-4, Purchaser and the Funds determine, based on the advice of
legal counsel, that the Funds' acquisition of Consideration Stock is
subject to Rule 145 under the Securities Act of 1933, as amended, or
that the Funds would be deemed an affiliate (as defined in Rule 144
under the Securities Act of 1933, as amended) of Purchaser, Purchaser
and the Funds shall, not later than the Closing Date, enter into a
registration rights agreement with respect to the Consideration Stock
with terms substantially similar to the terms in the registration
rights term sheet attached as Exhibit 5.5.
Purchaser, Klose and AM, as the case may be, shall, not later than the
Closing Date, enter into a registration rights agreement with respect
to the Consideration Stock to be issued as consideration for the
Option Shares with terms substantially similar to the terms in the
registration rights agreement term sheet attached as Exhibit 5.4. In
the event that the Purchaser and the Funds enter into a registration
rights agreement as contemplated by the foregoing paragraph, such
Consideration Stock shall, to the extent legally practicable, be
registered on the same registration statement on Form S-3 contemplated
by such registration rights agreement and Klose and A+M shall be a
party to such registration rights agreement in lieu of a separate
agreement between Purchaser and Klose or A+M.
SECTION 6
CONSIDERATION
6.1 The consideration for the Sold Shares and for the sale of the Option
Shares shall be the issue to the Sellers of World Access Common Stock
(the "CONSIDERATION STOCK").
6.2 In exchange for each of the Sold Shares and the Option Shares the
Purchaser shall issue such number of shares of the World Access Common
Stock resulting from applying the Exchange Ratio offered in the Tender
Offer to the Sold Shares, or Option Shares, as the case may be, but in
no event less than 1.025 shares of World Access Common Stock for one
TelDaFax share.
<PAGE> 10
-10-
6.3 In the event the Purchaser changes the number or kind of shares of
World Access Common Stock as a result of a stock split, stock
dividend, recapitalization, reclassification, reorganisation of
similar transaction with respect to the outstanding World Access
Common Stock, and the record date therefore shall be after the date
hereof and prior to the Closing, the Exchange Ratio shall be
proportionately adjusted to such manner as Purchaser and the Sellers
shall agree, which adjustment may include, as appropriate, the
issuance of securities, property or cash on the same basis as that on
which any of the foregoing shall have been issued, distributed or paid
to the holders of World Access Common Stock generally.
6.4 The Consideration Stock shall (save as provided below) be transferred
to the following securities accounts of Sellers:
6.4.1 Klose securities account No. 035-81672-7 with Goldman, Sachs
& Co., New York;
6.4.2 Apax II securities account No. 5 374 898 Bank Code 700 202 70
with Bayerische Hypo- und Vereinsbank;
6.4.3 Apax B securities account No. 555 910 44 Bank Code 702 202 00
with BHF Bank AG Munchen;
6.4.4 Apax D securities account No. 555 910 51 Bank Code 702 202 00
with BHF Bank AG Munchen;
6.4.5 AP securities account No. 2 733 951 Bank Code 700 202 70 with
Bayerische Hypo- und Vereinsbank;
6.4.6 A+M securities account No. 2 419 257 00 Bank Code 700 400 41
with Commerzbank AG.
6.5 Sellers are entitled to the following percentage of the total
Consideration Stock (the "Relevant Percentage").
<PAGE> 11
-11-
The Relevant Percentage is for
<TABLE>
<S> <C>
Apax II 25,5%
Apax B 17,8%
Apax D 26,7%
AP 9,4%
A+M 1,0%
Klose 19,6%
----- -----
Total 100,0%
</TABLE>
SECTION 7
DIVIDENDS
7.1 TelDaFax has no distributable profits for the fiscal year 1999.
7.2 In respect of the profit distribution of the Subsidiaries listed in ss
3, Sellers undertake to procure that no profit distribution shall take
place in the period between the Signing Date and the Closing.
SECTION 8
CLOSING CONDITIONS
8.1 The closing of the sale of the Sold Shares shall be subject to the
following conditions (the "CLOSING CONDITIONS"):
8.1.1 Clearance by the Federal Cartel Office of all the transactions
contemplated by this Agreement pursuant to ss 20 (Merger
Control) has been obtained.
<PAGE> 12
-12-
8.1.2 In Tender Offer enough shares having been tendered so that
following the Closing Purchaser will own more than 50% of the
then outstanding TelDaFax shares;
8.1.3 The capital increase to effect the contributions contemplated
by the Contribution Agreement having been registered in the
commercial register of TelDaFax;
8.1.4 No Material Adverse Event having occurred and no party having
exercised the right to withdraw pursuant to ss 13.
8.1.5 The shareholders of Purchaser having approved the
transactions contemplated by this Agreement including the
Tender Offer and the merger agreements of the Purchaser with
Communications Telesystems International Inc and Star
Telecommunications Inc.
8.1.6 No laws shall have been adopted or promulgated and no court
order of whatsoever nature shall be in effect which prohibits
the consummation of the transactions contemplated by this
Agreement or having the effect of making the transactions
illegal.
8.1.7 All material consents, approvals and actions of, filing with
and notices to any third party or governmental authority
required to consummate the transactions contemplated by this
Agreement shall have been obtained including, to the extent
required, under Hart-Scott Rodino Antitrust Improvements Act
of 1976, as amended.
8.2 Purchaser and Sellers shall have the right to withdraw (zurcktreten)
from this Agreement including the Klose and A+M Put and Call Options
provided for in ss.ss 5.2 and 17, if (i) the Closing Conditions have
not been satisfied by September 30, 2000 or (ii) the Supervisory Board
of TelDaFax does not resolve on the capital increase contemplated by
the Contribution Agreement, or (iii) the Supervisory Board of TelDaFax
changes its recommendation to the TelDaFax shareholders to
<PAGE> 13
-13-
accept the Tender Offer on the basis of its fiduciaries duties owed to
the outside shareholders in deviation from its resolution adopted on
June 14, 2000 attached as Exhibit 8.2. by which this Agreement and the
transactions contemplated herein were approved, or (iv) if the Closing
Condition in Section ss 8.1.2 becomes impossible due to the acquisition
by a third party of TelDaFax shares. If by September 30, 2000 all
Closing Conditions have been satisfied except for the Closing Condition
in 8.1.2 and 8.1.3, but the Tender Offer has been launched and is
pending, the right to withdraw may not be exercised prior to October
31, 2000. Sellers may only jointly exercise this right to withdraw by
notifying Purchaser accordingly.
8.3 Purchaser, but not Sellers have the right to withdraw from this
Agreement including the Klose and A+M Put and Call Option, if the
TelDaFax Supervisory Board fails to take any action required to
implement the contribution agreed in the Contribution Agreement
referred to in ss 4.1 or takes any action which makes such
implementation impossible.
8.4 If Purchaser and / or Sellers withdraw from this Agreement in
accordance with this ss 8, ss 13.4 or ss 13.5, they shall not be liable
to the other parties for any damages or for the fulfilment of any other
obligations under this agreement or in connection with this Agreement
irrespective of the legal basis on which any claim of such other
parties is based; provided, however, neither Purchaser nor Sellers
shall be relieved or released from any liabilities arising out of its
breach of this Agreement. Selle rs and Purchaser may agree in writing
on an extension of the periods set forth in ss 8.2.
8.5 If the competent antitrust authorities only clear the transaction
contemplated by this Agreement subject to modifications, the Closing
Condition set forth in ss 8.1 shall only be deemed to be satisfied if
(i) Sellers and Purchaser acting reasonably agree that the modification
shall be implemented in order to proceed with the Closing or (ii) in
the event that such modification significantly alters the financial
expectations of the Purchaser (in respect of the purchase of shares in
TelDaFax) Sellers ag ree to indemnify Purchaser in full against any
financial disadvantage resulting from such modification. Sellers and
Purchaser undertake to negotiate for
<PAGE> 14
-14-
at least three weeks in good faith with a view to reaching agreement
on the acceptance of such modification and, if relevant, the payment
of the appropriate indemnification.
8.6 If the Agreement is terminated in accordance with this ss 8, ss 13.4 or
ss 13.5 by withdrawal of Purchaser and / or Sellers, each party shall
be obliged to return all material received from the other side and to
keep secret and not to use for its purposes all confidential
information received in the context of this transaction.
SECTION 9
CLOSING
9.1 Representatives of the Funds and Purchaser shall meet on the fifth
banking day following the satisfaction of the Closing Conditions, or
on such other day as is mutually agreed between the Funds and
Purchaser (the "Closing Date"), in order to close the sale of the Sold
Shares contemplated herein in accordance with ss 9.3 ("CLOSING").
9.2 The Closing shall take place at the offices of Hengeler Mueller Weitzel
Wirtz in Frankfurt am Main, Bockenheimer Landstra(B)e ss 51, or as such
other place as is mutually agreed between the parties.
9.3 At the Closing, Purchaser shall procure evidence that the transfer of
the Consideration Stock will be completed, subject to, and
simultaneously with the following:
9.3.1 Delivery by the Funds to Purchaser of the share transfer
agreement (Exhibit 5.3) properly executed by the Funds
covering all Sold Shares;
9.3.2 delivery by the Funds of confirmations by their respective
custody banks that the Sold Shares are booked as of the
Closing Date to the securities accounts specified in ss 5.2
substantially in the form of Exhibit 9.3.2;
<PAGE> 15
-15-
9.3.3 delivery by Sellers to Purchaser of resignation letters of
all members of the Supervisory Board of TelDaFax except for
one representative for the outside shareholders to be
designated by Purchaser.
Klose undertakes to take all necessary action to have new
Supervisory Board members proposed by Purchaser appointed by
the competent court as soon as practically possible;
9.3.4 delivery by the Funds to Purchaser and by Purchaser to Funds
of certificates of Funds and Purchaser, respectively, that the
representations and warranties of each of them shall be true
and correct in all material respects as of the Closing, or, as
the case may be, as of any other point of time specifically
mentioned therein. If Funds cannot deliver the certificate
because one or more of the representations and warranties have
become incorrect, Purchaser is entitled to withdraw from this
agreement pursuant to ss 13.4. provided the breach of the
representation and warranties constitutes a Material Adverse
Event within the meaning of ss 13.4. If the breach does not
constitute a Material Adverse Event, Purchaser has the
remedies under ss 12;
9.3.5 execution of the Registration Rights Agreement.
SECTION 10
DUE DILIGENCE
10.1 Giving due consideration to the best interest of TelDaFax and the
other shareholders and complying with applicable legal restrictions
regarding confidentiality, Sellers prepared a data room which was open
for Purchaser in the period from April 25 to May 5, 2000, arranged for
a management presentation, allowed Purchaser to obtain certain other
information and documentation upon request, gave Purchaser to
opportunity to hold interviews with the management of TelDaFax as well
as to perform on site visits. Sellers undertake to provide Purchaser
with fur-
<PAGE> 16
-16-
ther information on the TelDaFax Group upon request after the Signing
Date of this Agreement to the extent permitted under applicable law.
10.2 For the avoidance of doubt, all information provided to Purchaser and
referred to in the due diligence reports of Ernst & Young, Frankfurt
and Clifford Chance Pnder, Frankfurt, as delivered and initialled by
the parties at the Signing Date or listed in Exhibit 10.2.1, in the
Business Plan attached as Exhibit 10.2.2 or explicitly disclosed in
this Agreement shall be deemed to have been disclosed to and being
known by Purchaser. (the "DISCLOSED INFORMATION").
SECTION 11
WARRANTIES AND REPRESENTATIONS
11.1 Funds' Warranties and Representations Regarding their Legal Status
Apax II, Apax B Fund, Apax D Fund, and AP (the "FUNDS") severally
warrant and represent at the Signing Date and at the Closing unless
explicitly stated otherwise:
11.1.1 Apax Funds Nominees Limited holds 6,264,064 shares of
TelDaFax as Nominee for B Account and D Account. Apax Funds
Nominees Limited has been duly formed and is validly existing
in England under the Companies Act 1985.
11.1.2 Apax II is a limited partnership duly formed and validly
existing under the laws of the State of Delaware.
11.1.3 AP is a partnership (Gesellschaft burgerlichen Rechts) duly
formed and validly existing under German Civil Law.
<PAGE> 17
-17-
11.1.4 The Funds have the capacity under the applicable laws and
their constitutional documents to enter into this Agreement
and to perform their obligations hereunder.
11.1.5 No approval, authorisation or consent under any contract,
applicable law and / or constitutional document is required
for the Funds to enter in this Agreement and to perform the
obligations hereunder. The execution of this Agreement and
the performance of the obligations hereunder will not result
in the violation of any contract, law applicable to the Funds
or provisions of the respective constitutional documents of
the Funds.
11.2 The Funds Representations Regarding U.S. Securities Laws
The Funds severally represent and warrant at the Signing and Closing
Date
11.2.1 The Funds are acquiring the Consideration Stock as
contemplated by this Agreement for investment purposes and
not with a view toward any distribution thereof.
11.2.2 No Fund will dispose of any of his or its Consideration
Stock, other that pursuant to an effective registration
statement of Rule 144 or Rule 144A promulgated by the U.S.
Securities Exchange Commission (the "SEC") under the U.S.
Securities Act of 1933, as amended (the "SECURITIES ACT") (or
any similar or analogous rule), unless and until (a) such
Fund shall have notified the Purchaser of the proposed
disposition and shall have furnished to Purchaser with a
statement of the circumstances surrounding the proposed
disposition, and (b) if requested by the Purchaser, such Fund
shall have furnished the Purchaser with an opinion of counsel
reasonably satisfactory in form and substance to the
Purchaser and Purchaser's counsel to the effect that (i) such
disposition will not require registration under the
Securities Act and (ii) appropriate action necessary for
compliance with the Securities Act and any applicable U.S.
state or local law or non-U.S. law has been taken.
<PAGE> 18
-18-
11.2.3 Each Fund: (a) is an "ACCREDITED INVESTOR" as that term is
defined in Regulation D promulgated by the SEC under the
Securities Act and has such knowledge and experience in
financial and business matters as to be capable of evaluating
the merits and risks of his or its prospective investment in
the Purchaser; (b) has received all the information requested
by him or it from the Purchaser and considered necessary or
appropriate for deciding whether to exchange his or its Sold
Shares for Consideration Stock; (c) has the ability to bear
the economic risks of such prospective investment; and (d) is
able, without materially impairing his or its financial
condition, to hold the Consideration Stock for an indefinite
period of time and to suffer a complete loss of its
investment.
11.3 The Funds' Warranties and Representations Regarding TelDaFax
The Funds warrant and represent severally as follows at the Signing
Date and at the Closing unless explicitly stated otherwise:
11.3.1 Legal Situation
11.3.1.1 TelDaFax and the Subsidiaries are corporations duly organised
and validly existing under the laws of Germany.
11.3.1.2 Funds have all necessary authority to enter into this
Agreement and to implement the transaction contemplated
herein.
11.3.1.3 The statements in ss 2 and ss 3 are correct, true and in no
way misleading. The Funds own and have the unrestricted right
to sell, vote and transfer the Sold Shares. The Funds do not
hold any further shares of, or interest of whatever nature
in, TelDaFax other than the Sold Shares and do not have any
rights or warrants to acquire further shares of, or interest
in, TelDaFax. To the best knowledge of the Funds, no
shareholder or group of
<PAGE> 19
-19-
shareholders exist which holdings exceed 5% of the issued
share capital of TelDaFax.
11.3.1.4 The Sold Shares are free of encumbrances and of all and any
rights or obligations whatsoever, which could be asserted by
third parties against the Purchaser and / or TelDaFax.
11.3.1.5 ss.2.2 correctly sets forth the number of shares of TelDaFax
issued and outstanding and the number of authorised but not
issued shares. There are no outstanding obligations of
TelDaFax to repurchase or otherwise acquire outstanding
shares. TelDaFax has not issued any securities convertible
into or exchangeable for shares of TelDaFax, or any warrants,
options or other rights to acquire shares in or from
TelDaFax. There are no outstanding obligations of TelDaFax to
issue, or any third party rig hts to call for or otherwise
acquire, any shares or securities convertible or exchangeable
for shares in TelDaFax.
11.3.1.6 The share capital of TelDaFax is fully paid in; and there are
no contributions in kind outstanding except the contributions
to be made under the Contribution Agreement. Cash
contributions have been made in full, and contributions in
kind have been made which fully cover the amount for which
the shares are issued, be it either the minimum amount
(geringster Ausgabebetrag) or, if the shares are issued for
an amount higher than the minimum amount, such higher amount.
Contributions have not bee n reduced by repayments.
11.3.1.7 TelDaFax has good legal title to the shares in the
Subsidiaries. The issued shares of the Subsidiaries are fully
paid in except as set forth in Exhibit in 11.3.1.7. The
shares are free of encumbrances and of any rights or
obligations whatsoever which could be asserted by third
parties against the Purchaser and /
<PAGE> 20
-20-
or TelDaFax and / or the respective Subsidiaries. None of the
Subsidiaries has distributed profits for the fiscal year 1999
to TelDaFax. To the best knowledge of the Funds, contrib
utions have not been reduced by repayments.
11.3.1.8 Exhibit 11.3.1.8. contains the Articles of Association as
presently in force. To the best of knowledge of the Funds no
agreements among the shareholders of any company of the
TelDaFax Group exist which relate to the constitution or
organisation of any company of the TelDaFax Group or the
voting of any shares or interests therein.
11.3.1.9 To the best knowledge of the Funds as of the Signing Date
TelDaFax and its Subsidiaries mentioned in ss 3 are not, and
have not agreed to become, a party to agreements in the sense
of ss 291 seq. AktG, joint venture agreements, co-operation
agreements, partnerships or silent partnership agreements or
any other similar contractual arrangement except as shown in
Exhibit 11.3.1.9.
11.3.1.10 As of the Signing Date TelDaFax does not have, and has not
agreed, to acquire any interest in any legal entity or
partnership other than the Subsidiaries. None of the
Subsidiaries has an interest in, or has agreed to acquire any
interest to any other legal entity or partnership except as
provided for in Exhibit 11.3.1.10.
11.3.1.11 To the best knowledge of the Funds nothing has occurred
(including any failure to act) which renders any company of
the TelDaFax Group liable to be struck off the commercial
register, and no proceedings have been commenced for its
liquidation.
<PAGE> 21
-21-
11.3.1.12 To the best knowledge of the Funds there exist no
shareholders' resolutions with respect to the TelDaFax Group
which amend the Articles of Association or other
shareholders' resolutions which require registration with the
commercial register which are not registered in the
commercial register except as set forth in Exhibit 11.3.1.12.
11.3.2 Financial Situation
11.3.2.1 TelDaFax has provided Purchaser with copies of the individual
financial statements of each member of the TelDaFax Group
(the "STAND-ALONE FINANCIAL STATEMENTS") and audited
consolidated statements of TelDaFax for the fiscal year
ending on December 31, 1999 (the "CONSOLIDATED 1999 FINANCIAL
STATEMENTS").
11.3.2.2 The Consolidated 1999 Financial Statements were prepared
according to U.S. GAAP, audited and provided with an
unqualified opinion by BDO Deutsche Warentreuhand
Aktiengesellschaft Wirtschaftsprfungsgesellschaft ("BDO").
The Stand-Alone Financial Statements are prepared according
to German GAAP.
11.3.2.3 The Consolidated 1999 Financial Statements and the 1999
Stand-Alone Financial Statements of TelDaFax show a true and
fair view of the assets, liabilities and state of affairs as
well as the profits and losses of each company of the
TelDaFax Group or, as the case may be, of TelDaFax and are
prepared on a consistent basis with prior years.
11.3.2.4 To the best knowledge of the Funds, except for normal and
recurring year-end adjustments that are not expected to be
material in amount, the unaudited interim financial
statements for the
<PAGE> 22
-22-
first quarter of the fiscal year 2000 (the "INTERIM FINANCIAL
STATEMENTS") which have been provided to Purchaser have been
prepared in accordance with U.S. GAAP with due care and
attention on a consistent basis with previously applied
accounting principles and show a reasonably accurate view of
the assets , liabilities and state of affairs as well as the
profits and losses of the TelDaFax Group as of March 31, 2000
and for the period of January 1, 2000 to March 31, 2000.
11.3.2.5 To the best knowledge of the Funds no insolvency proceedings
or composition proceedings with creditors in or out of court
have been applied for or initiated by any member of the
TelDaFax Group.
11.3.3 Assets
11.3.3.1 To the best knowledge of the Funds except for retention of
title and other collateral rights arising in the ordinary
course of business, and except from statutory liens
(gesetzliche Pfandrechte), TelDaFax and its Subsidiaries have
good legal title free and clear of any security rights,
liens, charges, encumbrances or similar rights (dingliche
Rechte) to all assets, reflected in the 1999 Financial
Statements plus or minus those assets acquired or disposed of
in the ordinary course of busines s since January 1, 2000
(the "ASSETS").
11.3.3.2 Subject to fair wear and tear and to Exhibit 11.3.3.2 the
Assets, taken as a whole, are to the best knowledge of
Sellers in good repair and full working order.
11.3.3.3 To the best knowledge of the Funds Exhibit 11.3.3.3 lists all
trademarks and patents and other material intellectual
property rights owned and used by the TelDaFax Group. Subject
to the
<PAGE> 23
-23-
best knowledge of the Funds, no employees of TelDaFax Group
or any third party has or shall have any rights in respect of
any trademarks, patents or other intellectual property rights
used by any company of the TelDaFax Group.
11.3.3.4 Subject to the best knowledge of the Funds, the rights,
properties and other assets (whether tangible or not)
presently owned or leased by or licensed to TelDaFax or any
Subsidiary include all rights, properties and other assets
necessary to permit them to properly conduct their business
according to usual business standards from companies in the
telecommunications industry in Germany. To the best knowledge
of the Funds, no tangible assets, including all real property
and premises used by t he TelDaFax Group in the conduct of
its business are charged with any environmental damage.
11.3.3.5 The TelDaFax Group does not own real property.
11.3.4 Liabilities
11.3.4.1 To the best knowledge of the Funds and except as set forth in
Exhibit 11.3.4.1 as of December 31, 1999 there were no
liabilities of TelDaFax and its Subsidiaries which were not
sufficiently provided for in the Consolidated 1999 Financial
Statements or the Stand-Alone Financial Statements and as of
March 31, 2000 there were no liabilities of TelDaFax and its
Subsidiaries which were not sufficiently provided for in the
Interim Financial Statements.
11.3.4.2 To the best knowledge of the Funds and except as set forth in
Exhibit 11.3.4.2, since March 31, 2000, TelDaFax and the
Subsidiaries have not incurred any liabilities or obligations
other
<PAGE> 24
-24-
than in the ordinary course of business consistent with past
practice.
11.3.5 Conduct of Business, Governmental approvals, licenses and permits
11.3.5.1 To the best knowledge of the Funds the business of TelDaFax
and its subsidiaries is and has been materially conducted in
accordance with all applicable laws, mandatory rules or
requirements of any governmental body or any other authority,
and it is and has been conducted in accordance with all
applicable laws, mandatory rules or requirements of any
governmental body or any other authority in the area of
telecommunications. To the best knowledge of the Funds
TelDaFax and its Subsidiaries a nd their respective entities
have been complied with and discharged all material
obligations (including for this purpose all and any
securities laws, regulations or ordinances as applicable to
TelDaFax, including without limitation the rules, regulations
and other requirements applicable to stocks listed on the
Frankfurt and EASDAQ stock exchanges, whether material or
otherwise) which they are subject to, whether arising under
the law, the Articles of Association, an agreement or
otherwise.
11.3.5.2 To the best knowledge of the Funds all members of TelDaFax
Group are in possession of all the governmental approvals,
licenses and permits necessary and relevant for operating its
respective business, as it currently exists. To the best
knowledge of the Funds there are presently no apparent
indications which could form the basis of a complete or
partial revocation of the approvals, licenses or permits. To
the best knowledge of the Funds the conditions (Auflagen)
accompanying those approvals have been complied with.
<PAGE> 25
-25-
11.3.5.3 To the best knowledge of the Funds all
members of TelDaFax Group have in place all
contractual agreements necessary to provide
the services which they are offering. Except
as provided for in Exhibit 11.3.5.3 and
subject the best knowledge of the Funds
during the 12 months ending on the Signing
Date, none of the contractual parties from
which TelDaFax is receiving services or
equipment for its operations has ceased, or
informed any member of the TelDaFax Group
that it shall cease, rendering the services
or supplying the equipment which it is
currently providing or delivering or
informed TelDaFax Group of its intention to
materially alter the terms for providing
such services or supplying the equipment.
11.3.5.4 To the best knowledge of the Funds all
members of TelDaFax Group have complied, in
all material respects, with all
requirements, including, but not limited to,
information requirements under any Material
Agreement. If such agreement also contains a
requirement of the other contractual party
to consent to the transaction contemplated
by this Agreement, all necessary consents
are listed in Exhibit 11.3.5.4 and will have
been obtained prior to the Closing. To the
best knowledge of the Funds neither the
execution of this Agreement nor the
conclusion of any other matter contemplated
herein constitutes a breach of any Material
Agreement or will entitle any contractual
party to a Material Agreement to terminate,
modify or to reduce any such Material
Agreement.
11.3.5.5 To the best knowledge of the Funds the
TelDaFax Group has not received any
investment grants or other subsidies from
any public authority which may become
repayable in case of failure to comply with
the conditions upon which they were granted.
<PAGE> 26
-26-
11.3.6 Litigation
11.3.6.1 To the best knowledge of the Funds and
except for litigation with a value
(Gegenstandswert) of less than(e)100,000
in the individual case or per series of
claims having the same cause or basis and
the litigation listed in Exhibit 11.3.6.1,
the companies of TelDaFax Group are not
involved in, nor do they have any knowledge
of any threatened or imminent court
proceedings (including arbitration) either
as plaintiff or defendant. Except for the
proceedings listed in Exhibit 11.3.6.1 and
subject to the best knowledge of the Funds,
there are no pending or threatened
administrative proceedings or investigations
of authorities against the companies of
TelDaFax Group. To the best knowledge of the
Funds there are no circumstances which could
give rise to such court or administrative
proceedings.
11.3.6.2 To the best knowledge of the Funds TelDaFax
and its Subsidiaries do not infringe
intellectual property rights of third
parties and third parties do not infringe
intellectual property rights owned by
TelDaFax Group.
11.3.7 Employees
11.3.7.1 To the best knowledge of the Funds and
except for the employees listed in Exhibit
11.3.7.4, the employment contracts of the
employees of TelDaFax correspond in all
material aspects to the standard forms
attached as Exhibit 11.3.7.1.
11.3.7.2 No employment agreement of TelDaFax
employees is subject to any collective
bargaining agreements (Tarifvertrage) and
shop agreements (Betriebsvereinbarungen).
There is no company pension scheme in force.
Except for the works council at the Bonn and
Marburg sites of TelDaFax, the employees of
<PAGE> 27
-27-
TelDaFax have not formed a works council
(Betriebsrat) as of the Signing Date.
11.3.7.3 During the last 12 months ending on the
Signing Date there were no works stoppages,
strikes or other disruptions by employees of
TelDaFax or of any of is Subsidiaries.
11.3.7.4 To the best knowledge of the Funds except
for the employees listed in Exhibit 11.3.7.4
there are no employment contracts with
employees, managing directors or board
members providing for a total annual
compensation of more than (e) 75,000. No
employees' stock option plan has been, or
will be implemented until Closing neither is
the Company under an obligation to implement
a stock option plan.
11.3.7.5 To the best knowledge of the Funds as of the
Signing Date no key employee has terminated
or has threatened to terminate his / her
employment with any company of the TelDaFax
Group since January 1, 2000 except for the
employee listed in Exhibit 11.3.7.5.
11.3.7.6 To the best knowledge of the Funds TelDaFax
has not more than 312 employees and the
Subsidiaries in the aggregate have not more
than 198 employees.
11.3.7.7 To the best knowledge of the Funds TelDaFax
and the Subsidiaries are not engaged in
temporary employment (Arbeitnehmeruberlas-
sung), neither as a firm hiring out
temporary workers nor as a firm borrowing
employees.
<PAGE> 28
-28-
11.3.8 Tax
To the best knowledge of the Funds the companies of
TelDaFax Group have and / or, as appropriate, will
have duly and timely filed all tax returns and all
other forms and documents relating to taxes or other
public levies (including, but not limited to,
notifications regarding social security
contributions) required under applicable law to be
filed on or before Closing. To the best knowledge of
the Funds no tax or social security authority has
notified the TelDaFax Group of any alleged inaccuracy
or incompleteness or proposed any rectification of
such forms or other documents or has threatened any
company of the TelDaFax Group with any legal or
administrative proceedings in relation thereto. All
taxes, ancillary fiscal obligations an all other
public levies, including, but not limited to, social
security contributions and withholding taxes levied
under any applicable law, due and payable on or
before Closing, whether on its own account or on
account of any third party, have and / or, as
appropriate, will have been timely paid. All taxes
due and payable on or before December 31, 1999 have
been appropriately recorded in the books and records
of the appropriate companies and are appropriately
reflected in the 1999 Consolidated Financial
Statements or any financial statements of the
relevant company in the TelDaFax Group and, where not
paid, have been reflected as provisions in the
Consolidated 1999 Financial Statements.
11.3.9 Insurance Policies
Sellers have given Purchaser the opportunity to
verify the contents of the insurance policies. To the
best knowledge of the Funds there are no other
insurance policies than those contained in the
disclosing information. To the best knowledge of the
Funds all insurance premiums under the insurance
policies have at all times been paid fully and in a
timely manner. To the best knowledge of the Funds
there are no outstanding claims in excess of (e)
250,000 by the TelDaFax Group against any insurance.
To the best
<PAGE> 29
-29-
knowledge of the Funds no insurance company has
threatened to terminate or initiated termination of
the insurance policies.
11.3.10 Changes since January 1, 2000
To the best knowledge of the Funds the business of
TelDaFax Group has been managed and run using the
same methods and in a manner consistent with former
management techniques so as to ensure continuity of
the business and none of the following events haven
occurred since January 1, 2000 (except for the events
listed in Exhibit 11.3.10):
11.3.10.1 A material adverse change in the
financial situation and / or in the
assets and liabilities shown in the
Consolidated 1999 Financial
Statements of the TelDaFax Group and
the Interim Financials Statements or
any event that could cause or
constitute a material adverse change
(including, but not limited to,
contingent liabilities);
11.3.10.2 damages or losses being incurred or
suffered by any company of the
TelDaFax Group the amount of which
exceeds (e) 250,000 in the
individual case or (e) 1,000,000
in the aggregate;
11.3.10.3 transactions outside the ordinary
course of business;
11.3.10.4 payments of hidden dividends
(verdeckte Gewinnausschuttung).
11.3.11 Relations to the Funds
11.3.11.1 Neither any of the Funds nor any
affiliates or related parties
thereof has granted any loans to
TelDaFax or any of the Subsidiaries
which are still outstanding and
there are no other
<PAGE> 30
-30-
agreements between any of the Funds,
affiliates or related parties
thereof with TelDaFax or any of the
Subsidiaries.
11.3.11.2 Neither TelDaFax nor any of the
Subsidiaries has any outstanding
payment claims against, or payment
obligations to any of the Funds or
any affiliates or related parties
thereof.
11.3.11.3 Neither TelDaFax nor any of the
Subsidiaries has assumed or is
liable for any obligations of any of
the Funds or any affiliates or
related parties thereof.
11.3.12 Material Agreements
To the best knowledge of the Funds all Material
Agreements have been disclosed as part of the
due diligence process as described in Section
10.1. For the purposes of this provision, the
term "MATERIAL AGREEMENTS" shall refer to any
agreement, contract or commitment relating to
or binding upon any company of the TelDaFax
Group, its business or its properties which (i)
calls, whether as an actual or contingent
liability, for the payment or re-payment by any
company of the TelDaFax Group of (e) 500,000
or more in any 12 month period, or (ii) the
delivery by any company of the TelDaFax Group
of goods or services with a fair market value
of (e) 500,000 or more in any 12 month
period, or (iii) provides for any company of
the TelDaFax Group to receive any payments, or
any property with a fair market value of
(e) 500,000 or more in any 12 month period,
or (iv) which is not terminable by the relevant
company in the TelDaFax Group, without payment,
on less than 12 months' period or (v) which can
be adversely or terminated as an effect of any
of the transactions contemplated herein or (vi)
which restricts the ability of any company in
the TelDaFax Group to compete geographically or
in any particular line of business or (vii)
which must be deemed, using a sound commercial
judgement, material for the business of the
TelDaFax Group. To the best knowledge of
Sellers none of the companies of the TelDaFax
Group is in violation or breach of or default
<PAGE> 31
-31-
under any Material Agreement, is any other
party to any such contract in violation or
breach or other default under any such contract
except for Deutsche Telekom.
11.4 Purchaser's Warranties and Representations
Purchaser warrants and represents as follows:
11.4.1 Purchaser has been duly incorporated and is an
existing corporation under the laws of Delaware.
11.4.2 Purchaser has all necessary authority to enter into
this Agreement and the Registration Rights Agreement
and to implement the transactions contemplated herein
and therein.
11.4.3 All of the issued shares of capital stock of the
Purchaser have been duly and validly authorised and
issued and are fully paid and non-assessable.
11.4.4 The Consideration Stock has been duly and validly
authorised and, when issued and delivered as provided
herein, will be duly and validly issued and fully
paid and non-assessable and upon effectiveness of the
shelf registration statement, duly listed and
admitted for trading on the Nasdaq Stock Market's
National Market.
11.4.5 The holders of the issued and outstanding shares of
capital stock of Purchaser are not entitled to
pre-emptive or other rights to acquire the shares of
Consideration Stock to be acquired by Sellers
pursuant to this Agreement.
11.4.6 In issuing and selling the Consideration Stock to the
Sellers as contemplated herein, complying with all of
the provisions of this Agreement and consummating the
transactions contemplated herein, Purchaser has
complied with and discharged all material obligations
to which it is subject,
<PAGE> 32
-32-
whether arising under law, its Articles of
Incorporation, an agreement or otherwise subject to
the matters set forth on Exhibit 11.4.7 and obtaining
the consents listed on Exhibit 11.4.6.
11.4.7 Except as provided for in Exhibit 11.4.7, no consent,
approval or filing of or with any U.S. federal or
state governmental agency is required for the issue
and sale of the Consideration Stock to the Sellers or
consummation of the transactions contemplated herein
other than the registration of the Consideration
Stock under the Securities Act.
11.5 Klose's Warranties and Representations
Klose warrants and represents at the Signing Date in the form
of an independent guarantee:
11.5.1 Klose holds 2,756,200 shares of TelDaFax.
11.5.2 No approval, authorisation or consent under any
contract and / or applicable law is required for
Klose to enter in this Agreement and to perform the
obligations hereunder. The execution of this
Agreement and the performance of the obligations
hereunder will not result in the violation of any
contract and / or law applicable to Klose.
SECTION 12
REMEDIES
12.1 If a warranty or representation given by the Funds in ss. 11
is incorrect at the Signing Date or at the Closing ("BREACH OF
WARRANTY"), the Funds shall indemnify Purchaser against the
loss, damage, cost or expense (the "LOSS") suffered or
incurred by Purchaser as follows: (i) in the event the Loss
suffered is attributable to a diminution in the value of the
TelDaFax Group, the amount of the Loss for which the Purchaser
shall be indemnified by the Sellers shall equal 33.05% of the
aggregate
<PAGE> 33
-33-
diminution in the value of the TelDaFax Group; and (ii) in the
event that Purchaser is able to show that the Loss suffered by
Purchaser is attributable to other than diminution in the
value of the TelDaFax Group then Sellers shall indemnify
Purchaser against 100% of such Loss. As long as and to the
extent that Sellers are holders of the shares of Consideration
Stock received pursuant hereto indemnification within the
meaning of this section shall be satisfied by transferring
such shares of Consideration Stock back to Purchaser having a
value equal to the loss. Thereafter or to the extent Losses
are not covered by retransfer of such shares of Consideration
Stock Sellers shall indemnify Purchaser by way of a cash
payment. For purposes of discharging the indemnification
obligation the shares of Consideration Stock shall be deemed
to have a value which is equal to the closing quotation on the
Nasdaq National Market on the Signing Date.
12.2 The Purchaser shall only be entitled to assert claims under
this ss. 12 if they exceed (together with any claims for
indemnification under ss. 13.4) the amount of (e) 1,750,000
in the aggregate, but then only for the exceeding amount.
12.3 All claims under this ss. 12 based on a Breach of Warranty
shall be limited in the aggregate to an amount equal to 33% of
the Consideration Stock or, in case of indemnification by way
of payment in cash, its value as of the Signing Date.
12.4 The foregoing basket (ss. 12.2) and cap (ss. 12.3) shall not
apply to a Breach of Warranty of ss.ss. 11.1, 11.2, 11.3.1.3,
11.3.1.4, 11.3.1.5, 11.3.1.7 and 11.5 or in cases where
Purchaser is able to show that a Breach of Warranty was known
to the Funds at the Signing Date, but not disclosed, provided
however that the liability of the Funds can never exceed the
value of the Consideration Stock received as of the Signing
Date.
12.5 Any claim of the Purchaser under this ss. 12 is excluded if
and to the extent that:
12.5.1 the Loss has been compensated to the Purchaser or to
the applicable company of the TelDaFax Group, as the
case may be, by virtue of an existing
<PAGE> 34
-34-
insurance policy net of any increase in premiums
arising, or likely to arise, out of the payment of
such compensation;
12.5.2 the damage arising from the Breach of Warranty has
been compensated to the Purchaser or to the
applicable company of the TelDaFax Group, as the case
may be, by a third party other than an insurance
company;
12.5.3 the circumstances constituting the Breach of Warranty
have been known to the Purchaser before the Signing
Date by means of the Disclosed Information;
12.5.4 the Breach of Warranty is directly and adequately
caused by a change after the Closing of the corporate
or tax structure or the accounting policies of
TelDaFax and its Subsidiaries;
12.5.5 the Breach of Warranty is directly and adequately
caused by an action or omission (in both cases
outside the ordinary course of business) after the
Closing of the Purchaser, TelDaFax or its
Subsidiaries or any other person whose action or
omission is attributable to the Purchaser within the
meaning of Section 278 BGB;
12.5.6 the Breach of Warranty has the effect of decreasing
the tax burden of the Purchaser or TelDaFax or its
Subsidiaries, by way of any final tax savings,
provided that there are no offsetting tax detriments;
12.5.7 reserves contained in the Consolidated 1999 Financial
Statements expressly and specifically identified and
established for purposes of such Loss - to the extent
not reduced or otherwise used prior to the Closing -,
which are used or can be used pursuant to U.S. GAAP
to offset such Loss provided however that if risk
materialises for which such reserves were made, but
such reserves were not sufficient to offset the Loss
incurred, Purchaser is entitled to claim the
exceeding amount as Loss.
<PAGE> 35
-35-
12.6 In case of a claim under ss. 11.3.8 (Tax), the following
limitations apply in addition to the provisions of the
preceding subsections 12.1 to 12.5:
12.6.1 If and to the extent that in a tax audit (Steuerliche
Au(beta)enprufung) the profits for tax purposes are
increased (for example as a result of non-recognition
of deprecations or provisions), but such increase
will lead to a decrease of profits for tax purposes
in later years (tax accelerations), the amount
payable to Purchaser under 12.1 shall be limited to
the financing cost of the additional tax liability
beginning on the date on which the additional tax
liability becomes due pursuant to the relevant tax
assessment up to the time when the tax decreasing
effects - if applicable on a pro rata basis -
realises, whereby the financing cost shall be
calculated on the basis of an interest rate of 5%
p.a. above the - basic interest rate (Basiszinssatz)
relevant for that period of time.
12.6.2 If and to the extent that additional corporate income
tax is payable by TelDaFax or any of its Subsidiaries
and as a result the equity available for distribution
which is subject to corporate income tax (mit
Korperschaftsteuer belastetes verwendbares
Eigenkapital) is increased, such additional taxes are
not deemed to constitute a damage to the extent of
the corresponding corporate tax credit including the
reduction amount (Minderungsbetrag) which is realised
at the time of distribution; this restriction shall
only apply if and to the extent that the Sold Shares
are held by an entity which is entitled to the
corporate income tax credit.
12.7 Notwithstanding the foregoing subsections 12.1 and 12.5 and
12.6, the general principles pursuant to ss.ss. 249 seq. and
254 BGB regarding the calculation and assessment of
reimbursable damages and the duty to mitigate damages remain
unaffected.
12.8 To the extent that representations and warranties are
qualified by reference to the best knowledge of the Funds, the
knowledge has to be established of the Funds separately.
<PAGE> 36
-36-
To establish knowledge of the Funds: the knowledge of the
following members of the Supervisory Board of TelDaFax:
Messrs. Halusa and McMonigall.
12.9 The Funds are not jointly liable for any damage payable to the
Purchaser, but only severally on a pro rata basis according to
the Relevant Percentage of the Consideration in ss. 6.4
(Consideration Stock). The cap pursuant to ss. 12.3 shall be
allocated in the same manner and applied on a pro rata basis
for each the Funds.
12.10 The statute of limitations for claims for Breach of Warranty
shall be as follows:
12.10.1 Claims for legal defects (Rechtsmangel) within the
meaning of section 434 German Civil Code relating to
the Sold Shares shall be barred in accordance with
the applicable provisions of German law;
12.10.2 all other claims excepts under ss. 11.2.8 (Tax) shall
be barred after eighteen months from Closing;
12.10.3 claims under ss. 11.2.8 (Tax) shall be barred six
months after the right of the competent authority to
asses or to change the relevant tax assessment for
the period up to December 31, 1999 ended, however, in
any case not prior to the end of the time limits set
forth in sub-section 12.10.1 and 12.10.2 with the
exception of claims under ss. 11.2.8 resulting from
the fact that persons who were treated by TelDaFax
at the Signing Date as free agents (Handelsvertreter)
have to be treated as employees for tax and/or social
security purposes pursuant to binding decisions of
competent authorities shall be barred after twelve
months from Closing.
The statute of limitations shall be interrupted (unterbrochen)
or extended (gehemmt) in accordance with the applicable
provisions of German law. In case of interruption the new
statute of limitations beginning after the end of the
interruption (section 217 German Civil Code) shall be 6
months; provided, however, that the
<PAGE> 37
-37-
period prior and after the interruption in the aggregate shall
not be less than eighteen months.
12.11 Indemnifications by the Funds made according to this ss. 12
constitute in the relationship between Funds and Purchaser a
reduction of the value of the Consideration Stock and, to the
extent they are made directly to a corporation belonging to
the TelDaFax Group, in the relationship between Purchaser and
the relevant corporation a capital contribution (Einlage).
12.12 The Funds intend to take out insurance policies providing
coverage for such amounts as could be payable by the relevant
Fund to Purchaser in respect of any breach and warranties set
forth in ss. 11. The Funds herewith assigns any claims under
such insurance policies, provided that the mere fact of the
assignment of such claims does not affect the obligations of
the Funds under this Section 12. The Funds undertake to
provide Purchaser with the relevant information and
documentation, if they take out the insurance policies and to
make all necessary payments thereunder and keep them in full
force and effect as long as payment obligations of the Funds
to Purchaser subsist. To the extent Purchaser receives
payments under the insurance policies, its claims for Breach
of Warranties are reduced by such payments. Any limitations on
claims of Purchaser as set forth in ss. 12 remain uneffected.
SECTION 13
EXCLUSION OF FURTHER CLAIMS
13.1 The provisions of ss.ss. 11 and 12 of this Agreement represent
the full and entire agreement of the parties with regard to
the consequences of a violation of any representations and
warranties of the Sellers.
13.2 Any further claims of the Purchaser and the Sellers relating
to this Agreement and the transactions contemplated herein for
a reduction of the Purchase Price, rescission of the
Agreement, payment of damages or otherwise, whether on the
basis
<PAGE> 38
-38-
of violation of pre-contractual duties of care (culpa in
contrahendo), voidability (Anfechtbarkeit) at any other cause
of action, shall be excluded.
13.3 Claims based on deliberate misconduct (vorsatzliches Handeln)
are not limited by any of the provisions of this Agreement.
13.4 Subject to ss. 13.6 below, Purchaser shall be entitled
(without penalty or liability) to withdraw from this Agreement
including the Klose and A+M Put and Call Optionprior to
Closing if any of (but limited to) the following material
adverse events ("MATERIAL ADVERSE EVENT") should occur:
13.4.1 any of the representations of warranties given in
ss.ss. 11.1, 11.2, 11.3.1, 11.3.2.3, 11.3.2.4,
11.3.2.5, 11.3.12 and 11.5 being or becoming
incorrect;
13.4.2 any of the approvals, licences or permits necessary
and relevant for TelDaFax to continue the business
activities as they existed on the Signing Date being
revoked after the Signing Date;
13.4.3 TelDaFax entering into a Material Agreement outside
the ordinary course of business consistent with past
practice, or entering into or agreeing to enter into
any contracts or arrangements or the type referred to
in ss.ss. 11.2.1.9 and 11.2.1.10. without consent of
Purchaser after the Signing Date;
13.4.4 there having occurred after the Signing Date any
event, fact or circumstance that, individually or
when considered with any other matter or event, fact
or circumstance (including, without limitation, any
of the other matters listed in this subsection 13.4),
would make or be likely to make a reasonable
purchaser, willing to buy the Sold Shares for the
consideration and on the terms set out in this
Agreement taking into account any diminution in the
value of the Consideration Stock from the Signing
Date (the "REASONABLE PURCHASER"), to seek a
reduction in the value of such consideration in an
amount equal to or exceeding 33% of the value of the
Consideration Stock as of the Signing Date, provided
however that in themselves none of
<PAGE> 39
-39-
the following events will (in and of themselves) be
considered as constituting a material adverse event
for these purposes: (i) a fall in the listed stock
price of TelDaFax on the Neuer Markt of the Frankfurt
Stock Exchange and / or EASDAQ, (ii) a change in the
economic situation in Germany or the condition of the
financial markets in general (iii) a change in the
services and pricing of competitors of TelDaFax to
any third party and (iv) changes in applicable laws
and/or regulations.
13.4.5 failure of Sellers and /or TelDaFax to perform or
comply with any of the covenants or agreements
contained herein required to be performed, or
complied with, at or prior to the Closing, which
failure, individually or when considered with any
other such failures or any of the other matters
listed in this subsection 13.4, would make or be
likely to make a Reasonable Purchaser to seek a
reduction in the value of such consideration in an
amount equal to or exceeding 33% of the Consideration
Stock as of the Signing Date; provided, however, that
in the event that a matter or matters of the type
described in this ss. 13.4.5 (notwithstanding the 33%
qualification contained therein) arises or occurs
and, due to the fact that such 33% qualification has
not been satisfied. Purchaser is not entitled to
withdraw from this Agreement pursuant to this ss.
13.4, then Sellers and/or TelDaFax as applicable
undertake to indemnify Purchaser against such Loss.
13.5 Subject ss. 13.6 below, the Sellers shall be entitled (without
penalty or liability) to withdraw from this Agreement prior to
the Closing if any of (but limited to) the following material
adverse events should occur after the Signing Date which
should be deemed for the purpose of ss. 8.1.4 to also
constitute Material Adverse Events:
13.5.1 any of the warranties given in ss. 11.4 being or
becoming incorrect in any material respects;
13.5.2 any of the material approvals, licences or permits
necessary and relevant for Purchaser and its
affiliates to continue the business activities as
they existed on the Signing Date being revoked;
<PAGE> 40
-40-
13.5.3 there having occurred after the Signing Date any
event that, individually or when considered with any
other matter or event, would make or be likely to
make a reasonable purchaser, willing to buy the
Consideration Stock in exchange for the Sold Shares
and on the terms set out in this Agreement taking
into account any diminution in the value of the Sold
Shares from the Signing Date, to seek a reduction in
the value of such consideration in an amount equal to
or exceeding 33% of the value of the Consideration
Stock as of the Signing Date, provided however that
in themselves none of the following events will be
considered as constituting a material adverse event
for these purposes: (i) a fall in the listed stock
price of World Access on the Nasdaq National Market,
(ii) a change in the economic situation in the United
States or the condition of the financial markets in
general or (iii) changes in applicable laws and/or
regulations.
13.6 In case of any of the above material adverse events, each
party upon becoming aware of the same shall forthwith inform
all other parties. The parties undertake to negotiate in good
faith for two weeks to amend this Agreement so that it becomes
acceptable to both Sellers and Purchaser under the changed
circumstances before exercising its right to withdraw. Sellers
may only jointly exercise the right to withdraw pursuant to
ss. 13.5 by notifying Purchasers accordingly.
SECTION 14
INFORMATION
CONDUCT OF PROCEEDINGS
ACCESS TO FILES
14.1 Upon making a claim under this Agreement, Purchaser shall use
all reasonable endeavours to procure that the Funds are
informed, and are kept informed, promptly and fully of all
circumstances involving such claim of Purchaser against the
Funds hereunder, and shall make available to the Funds copies
of all relevant documents. Purchaser shall give the Funds
opportunity to take part at their own expense in all relevant
meetings and negotiations. As between Purchaser and
<PAGE> 41
-41-
the Funds, a settlement (Vergleich), waiver (Verzicht) or
acknowledgement (Anerkenntnis) by Purchaser or any corporation
belonging to TelDaFax Group shall not contribute evidence for
the factual situation or legal position underlying the
compromise, waiver or acknowledgement.
14.2 If and as far as circumstances could give rise to a claim of
Purchaser against the Funds hereunder, Purchaser shall use all
reasonable endeavours to procure that the Funds are informed
of any reports, written opinions given by the tax authorities
in connection with the tax audit before the final meeting
(Schlu(beta)bericht) and are given the opportunity to take
part at their own expense in all meetings with the tax
authorities in the context of tax audits and tax assessments
relating to period until December 31, 2000, as well as to
present their position to the tax authorities in writing. If
Purchaser or TelDaFax or any of its Subsidiaries intend to
give any written statements to tax authorities referring to
periods until December 31, 2000 and relevant for the Funds'
position, Purchaser undertakes to inform the Funds in time of
such intent so that the Funds can review the intended
statements and comment thereon.
Upon request and at cost of the Funds, Purchaser shall use all
reasonable efforts to procure that all available remedies are
used against tax assessments assessing taxes for the period
until December 31, 2000, which could result in a claim of
Purchaser against the Funds. To the extent remedies cannot be
sought in time for reasons of delayed transmission of tax
assessments and other documents to the Funds, claims of the
Purchaser in respect of the additional tax liability which was
to be contested by such remedy shall be excluded. Court
proceedings shall be conduced jointly by Purchaser and the
Funds, and sentences 1 and 2 of this subsection 14.2 shall
apply mutatis mutandis. Purchaser shall use all reasonable
efforts to procure that a settlement, waiver or
acknowledgement is not entered or not declared into except
with the consent of the Funds.
14.3 Purchaser shall procure that the Funds are granted reasonable
access on reasonable notice to all files, documents and
information directly relating to tax assessments
<PAGE> 42
-42-
against the Funds or affiliates of the Funds, or which are
otherwise reasonably required by the Funds.
14.4 It is agreed that the provisions of this ss. 14 shall not
apply so as to require the Purchaser to provide any
information or documentation or allow the Funds access to any
meetings or negotiations where, to do so, would in Purchaser's
reasonable opinion be, or might be, unlawful or detrimental to
its legitimate commercial interest or those of any affiliated
company (including all and any members of the TelDaFax Group).
SECTION 15
CONDUCT OF THE BUSINESS UNTIL TRANSFER OF SHARES
15.1. The Funds, A+M and Klose shall use their best endeavours to
procure (including, without limitation, by voting any shares
over which they have control) that (i) the business of
TelDaFax Group is continued in the ordinary course of business
in the period between signing of this Agreement and the
Closing and the Purchaser has appropriate access to the
management of TelDaFax Group during this period of time, that
(ii) no steps are taken by TelDaFax which are, or could be,
using a sound commercial judgement, detrimental to the
transaction contemplated by this Agreement and that (iii) no
action is taken by TelDaFax which would require shareholders'
or supervisory board's approval.
15.2 TelDaFax undertakes not to acquire directly or indirectly any
interest in any legal entity or partnership other than the
Subsidiaries without the consent of the Purchaser which shall
not be unreasonably withheld.
15.3 TelDaFax undertakes not to become a party to agreements in the
sense of ss.ss. 291 seq. AktG, joint venture agreements,
co-operation agreements, partnerships or silent partnership
agreements or any other similar contractual arrangement and to
procure that the Subsidiaries do not enter into any of those
agreements without the consent if the Purchaser which shall
not be unreasonably withheld.
<PAGE> 43
-43-
15.4 TelDaFax undertakes not to enter into, or terminate or
materially amend, any Material Agreement without the consent
of Purchaser which shall not be unreasonably withheld.
SECTION 16
CONFIDENTIALITY/PUBLIC ANNOUNCEMENT/TAKE-OVER CODE
16.1 The parties will keep the contents of this Agreement and any
information provided in connection with the transaction
contemplated hereunder confidential. Any public announcement
including, but not limited to an announcement pursuant to the
WpHG (Wertpapierhandelsgesetz = Securities Trading Act) and /
or press statement to be made after the Signing Date shall be
agreed between the parties in advance.
16.2 Notwithstanding the foregoing, the Purchaser shall be entitled
to make, without the consent of any Seller, any such
disclosures or announcements as may be required by law or by
any regulatory, governmental or other authority (including the
U.S. Securities Exchange Commission and Nasdaq National
Market) in connection with the transactions contemplated
hereunder.
16.3 After the Closing, the Funds and Purchaser will comply with
the notification duties pursuant to ss. 20 Stock Corporation
Act and ss. 21 Securities Trading Act, to the extent
applicable.
16.4 It is the current intention of the Purchaser to comply with
the Take-Over Code of the Exchange Expert Commission, as
amended. Purchaser agrees subject to ss. 8 to launch a tender
offer (the "TENDER OFFER") for all the shares of TelDaFax as
soon as reasonably practicable pursuant to which each share of
TelDaFax would receive 1.025 shares of World Access Common
Stock ("EXCHANGE RATIO") conditioned upon receipt of all
necessary approvals (including, without limitation, approval
<PAGE> 44
-44-
of the shareholders of Purchaser) and registration of the
shares of the World Access Common Stock to be issued in the
Tender Offer.
16.5 The Funds and A+M undertake not to sell, pledge, hypothecate,
or otherwise transfer any shares of TelDaFax stock owned or
controlled by them directly or indirectly (including any
shares acquired after the date hereof), except pursuant to
this Agreement. If, after the Closing, the Funds decide to
sell their shares in Purchaser, Purchaser and the Funds agree
to co-operate in an effort to have such shares sold
institutionally rather than on the open market.
SECTION 17
PUT AND CALL OPTION
17.1 Klose can exercise the Klose Put Option in up to three
instalments by giving written notice to Purchaser in
accordance with ss. 26 in the period beginning on the signing
Date and ending on December 31, 2001. Upon receipt of the
notice a purchase contract is deemed to be entered into with
the following terms:
17.1.1 In exchange for each Option Share sold, the Purchaser
shall issue the number of World Access Common Stock
as provided for in ss. 6.2.
17.1.2 If the Put Option is exercised prior to the Closing
Klose shall be deemed to give the same
representations and warranties as the Funds in ss.
11, provided that all references to the Funds are
deemed to be refer to Klose and all references to the
Sold Shares are deemed to refer to the Klose Option
Shares. ss.ss. 12, 13.1 to 13.3 and 14 shall apply
accordingly, in particular (i) the relevant
percentage in ss. 12.1 shall be equal to the
percentage of the share capital sold, (ii) and the
statute of limitations shall run from the Option
Closing and (iii) the knowledge of all members of the
Board of Management of TelDaFax Messrs. Klose,
Legner, Meier shall be attributed to Klose. If the
Put Option is exercised after the Closing Klose
<PAGE> 45
-45-
shall be deemed to give only the representation in
ss. ss. 11.3.1.2, 11.3.1.3 sentence 2, 11.3.1.4 and
ss. 11.2.
17.1.3 The sale under the Put Option shall be closed as soon
as the Purchaser can deliver the Consideration Stock
but in no event earlier than the Closing (the "PUT
OPTION CLOSING"). If the Purchaser has enough
authorized shares the Put Option Closing shall take
place within three business days after receipt of the
exercise notice.
17.1.4 At the Put Option Closing Purchaser shall procure
evidence that the transfer of the Consideration Stock
for the respective number of Option Shares will be
completed, subject to, and simultaneously with the
following:
17.1.4.1 Delivery by Klose to Purchaser of
the share transfer agreement in the
form of Exhibit 5.3 properly
executed by the Klose covering all
Option Shares sold;
17.1.4.2 Delivery of Klose of confirmation by
its custody banks that the sold
Option Shares are booked as of the
Put Option Closing to the securities
account specified in ss. 5.2
substantially in the form of Exhibit
9.3.2;
17.1.4.3 If the Put Option is exercised prior
to the Closing, delivery by Klose to
Purchaser and by Purchaser to Klose
of certificates of the Funds and
Purchaser, respectively, that the
representations and warranties of
each of them shall be true and
correct in all material respects as
of the Put Option Closing, or, as
the case may be, as of any other
point of time specifically mentioned
therein.
17.2 Purchaser can exercise the Klose Call Option in the period
between July 1, 2002 until December 31, 2002. To exercise the
Klose Call Option Purchaser has to give
<PAGE> 46
-46-
written notice to Klose. The Klose Call Option can only be
exercised once. If exercised, an agreement to sell all Klose
Option Shares Klose is holding at the time of receipt of the
notice shall be deemed to be entered into between Klose and
the Purchaser upon the following terms:
17.2.1 In exchange for each Option Share sold the Purchaser
shall issue the number World Access Common Stock as
provided in ss. 6.2.
17.2.2 Klose shall be deemed to give the representations in
ss.ss. 11.3.1.2, 11.3.1.3 sentence 2, 11.3.1.4, 11.2
and 11.5 and to represent that he holds no shares in
TelDaFax other than the Option Shares he is selling
as of the Call Option Closing.
17.2.3 The sale under the Call Option shall be closed as
soon as the Purchaser can deliver the Consideration
Stock (the "CALL OPTION CLOSING"). If the Purchaser
has enough authorized shares, the Call Option Closing
shall take place within five business days after
receipt of the exercise notice.
17.2.4 At the Call Option Closing Purchaser shall procure
evidence that the transfer of the Consideration Stock
for the respective number of Option Shares will be
completed, subject to, and simultaneously with the
following:
17.2.4.1 Delivery by Klose to Purchaser of
the share transfer agreement in the
form of Exhibit 5.2 properly
executed by the Klose covering all
Option Shares sold;
17.2.4.2 delivery of Klose of confirmation by
its custody banks that the sold
Option Shares are booked as of the
Call Option Closing date to the
securities account specified in ss.
5.2 substantially in the form of
Exhibit 9.2.2;
<PAGE> 47
-47-
17.3 Purchaser undertakes to use reasonable efforts to assist Klose
with finding buyers for the Consideration Stock owned by him
following the Put Option or Call Option Closing in order to
obtain liquid means to cover Klose's personal tax arising from
such sales.
17.4 Klose may not, and will not enter into any Agreement to, sell,
pledge, hypothecate or otherwise transfer any of the Option
Shares except in accordance with the terms of this Section
17.4.
17.4.1 In the event Klose desires to sell any of the Option
Shares and has received a bona fide written offer
from an unrelated third party (the "OFFEROR") Klose
shall be entitled to sell such Option Shares to the
Offeror only in accordance with this Section 17.4.1:
(a) Klose shall give written notice (the "SALES
NOTICE") of his intention to sell such
Options Shares to the Purchaser. The Sales
Notice shall be accompanied by a copy of the
written offer from the offeror containing
the terms of the proposed purchase. The
Sales Notice shall include the identity of
the Offeror, the number of Option Shares to
be sold, the purchase price and the terms of
payment. The Purchaser may elect to purchase
all of such Option Shares on the terms set
forth in the Sales Notice by giving written
notice to Klose within ten days from the
date of the receipt of the Sales Notice.
(b) If Purchaser does not elect to purchase such
Option Shares, then Klose shall be free to
sell such Option Shares to the Offerer in
accordance with the terms of the Sales
Notice. If such sale does not occur within
ninety (90) days of the original mailing of
the Sales Notice then such Option Shares
will once again become fully subject to this
Section 17.4.
<PAGE> 48
-48-
17.4.2 In the event Klose desires to sell Option Shares on
the Frankfurt Stock Exchange Klose shall be entitled
to sell such Option Shares only in accordance with
this ss. 17.4.2:
(a) Klose shall give a Sales Notice to
Purchaser. The Sales Notice shall specify
the number of Option Shares to be sold.
Purchaser may elect to purchase all of such
Option Shares by giving written notice to
Klose within ten days from the date of the
receipt of the Sales Notice for a price per
Option Share equal to the average price
quoted on the Frankfurt Stock Exchange on
the five trading days prior the date of the
Sales Notice.
(b) If Purchaser does not elect to purchase such
Option Shares, Klose is free to sell such
Option Shares during a period of 30 days
following the expiry of the ten days period
or the notice given by Purchaser not to
purchase such Option Shares, whichever is
earlier.
17.5 The terms set forth in ss.ss. 17.1 - 17.3 shall apply mutatis
mutandis to the A+M Put and Call Option with the following
differences.
17.5.1 The A+M Put Option can only be exercised in one
instalment during the period beginning after the
Closing and ending on April 30, 2001.
17.5.2 The A+M Call Option can only be exercised during the
period beginning on July 1, 2001 and ending on
December 31, 2001.
17.5.3 A+M shall be deemed to represent that A+M is a
limited partnership (Kommanditgesellschaft) duly
formed and validly existing under German law and to
give the representations in ss.ss. 11.1.4 and 11.1.5.
<PAGE> 49
-49-
SECTION 18
NON-COMPETITION COVENANT
18.1 For a period of one year after the termination of the
respective term of any employment or service agreement with
TelDaFax or any affiliate, Klose and those companies
affiliated with him within the meaning of ss. 15 et seq.
Aktiengesetz (Stock Corporation Act) undertake not to engage
directly or indirectly in any activity, enterprise or company
having activities similar to the telecommunication activities
of the TelDaFax Group from time to time in the current
geographical area of the activities of TelDaFax Group.
18.2 The acquisition or the holding of any participation of up to
5% in stock of exchange listed corporations shall not
constitute a violation of the non-competition covenant
pursuant to ss. 18.1.
18.3 In case of any violation of the non-competition covenant
pursuant to ss. 18.1 Klose shall be obliged to pay to
Purchaser a contractual penalty (Vertragsstrafe) in the amount
of (e) 250,000 (in words: two hundred fifty thousand). If
the violation continues (andauert), Klose shall be obliged to
pay for each further month of the violation a further
contractual penalty in the amount of (e) 100,000 (in words:
one hundred thousand). Further claims of Purchaser for cease
and desist (Unterlassung) and for damages remain unaffected.
The contractual penalty shall be deducted from any damage
payments, if any.
SECTION 19
ASSIGNMENT
Neither the Sellers nor the Purchaser are entitled to transfer without
the consent of the other contracting parties rights, except rights for
payment, or obligations arising out of this Agreement to a third party.
<PAGE> 50
-50-
SECTION 20
MERGER CONTROL CLEARANCE
20.1 Sellers and Purchaser shall co-operate and provide each other
with all necessary assistance to notify all transactions
contemplated herein (including, without limitation, the
contribution by Purchaser in accordance with ss. 4.2 of this
Agreement) to the Federal Cartel Office ("FCO").
20.2 Purchaser shall take responsibility for drafting and
formulating a joint notification to, and full communications
with, the FCO. Such actions shall be taken by Purchaser in
consultation with Sellers. The Purchaser shall use its best
endeavours to notify the Agreement as soon as is practically
possible after the Signing Date, provided that the Sellers
provide the pre-requisite information for the completion of
the notification. Representatives of Sellers shall be informed
of, and are entitled at their own expense to be present at,
meetings with representatives of the FCO in the context of the
transaction contemplated hereunder. Purchaser shall keep
Sellers informed of contacts which it may have with such FCO
representatives. In the event that any of the Sellers should
have any contact with the FCO, it shall so inform the
Purchaser.
SECTION 21
SERVICE CONTRACT WITH KLOSE
Klose undertakes to continue to work for TelDaFax under a two year
fixed term contract to be on such terms as agreed between Purchaser and
Klose prior to Closing provided that the compensation available to
Klose under such contract shall not be less favourable than that
currently available to him under the existing employment contract as
disclosed to Purchaser.
<PAGE> 51
-51-
SECTION 22
COSTS
Each Party shall bear its own costs and transfer taxes arising in the
context of this Agreement and the implementation of the transaction
contemplated herein.
SECTION 23
MUTUAL ASSISTANCE/FILINGS
Sellers and TelDaFax undertake to co-operate with and to provide
Purchaser with all necessary information required for any regulatory
filings, in particular, but not limited to, all filings with the
Securities Exchange Commission.
SECTION 24
COMPLETE AGREEMENT/WRITTEN FORM
This Agreement, together with the agreements mentioned herein and the
documents referred to in ss. 10.2, sets forth the complete agreement
reached by the parties on the subject matters dealt with herein.
Changes of this Agreement, including a change of this written form
clause, shall require written form, except where a stronger form
requirement applies.
SECTION 25
SEVERABILITY
25.1 Should any provision of this Agreement be or become in whole
or in part invalid, this shall not affect the validity of the
rest of the Agreement. In this event, the invalid provision
shall be deemed to be replaced by a valid provision which
corresponds
<PAGE> 52
-52-
to the economic purpose of the invalid provisions to the
largest extent possible. This shall also apply in the case of
any gaps in this Agreement.
25.2 Should any provision of this Agreement be invalid to its
geographical or substantive areas of application or the period
of application, the respective provision shall be deemed
reduced to the maximum permissible scope.
SECTION 26
NOTICES, SERVICES OF PROCESS
26.1 Notices or declarations to Sellers made in the context of this
Agreement shall be deemed to be validly given if sent by
registered mail, courier or fax to the following address or
such other address as is notified in writing by Sellers to
Purchaser:
26.1.1 If to Klose:
Dr. Henning F. Klose
Augsburger Stra(beta)e 25
D-10789 Berlin
Fax-No.: ++49 6423-1798
26.1.2 If to the Funds:
Pollath + Partner
Lilienthalstra(beta)e 7
D-85399 Munchen - Hallbergmoos
Fax-No.: ++49 89 223 325
26.2 Notices or declarations to Purchaser made in the context of
this Agreement shall be deemed to be validly given if sent by
registered mail, courier or fax to the following address or
such other address as is notified in writing by Purchaser to
Sellers:
GAEDERTZ, Frankfurt office
Bockenheimer Landstra(beta)e 98 - 100
D-60323 Frankfurt am Main
Fax-No.: ++49 69 7941 100
<PAGE> 53
-53-
with a copy to:
World Access, Inc.
Attn.: W. Tod Chmar, Executive Vice President,
945 East Paces Ferry Road, Suite 2200
Atlanta, GA 30326 U.S.A.
Fax-No.: ++1 404 233 2280
26.3 Purchaser appoints GAEDERTZ, Frankfurt office, Bockenheimer
Landstra(beta)e 98 - 100, D-60323 Frankfurt am Main, as its
authorised agent for accepting services of process with
respect to any legal proceedings in Germany. The Funds appoint
Pollath + Partner, attention Dr. Matthias Bruse, Munchen, as
its authorised agent for accepting services of process.
26.4 Notices or declarations to TelDaFax made in the context of
this Agreement shall be deemed to be validly given if sent by
registered mail, courier or fax to the following address or
such other address as is notified in writing by TelDaFax to
Purchaser:
TelDaFax Aktiengesellschaft
Rudolf-Breitscheid-Str. 1-5
35037 Marburg
Fax-No.: ++49 6421-181-1210
SECTION 27
LANGUAGE/COUNTERPARTS/CHOICE OF LAW/JURISDICTION
27.1 This Agreement except for Exhibits 10.2.1,11.3.1.8, 11.3.1.12,
11.3.3.2, 11.3.4.1, 11.3.4.2, 11.3.7.1, 11.3.10.1 is in the
English language only. Purchaser confirms that he is fully
aware of the contents of those Exhibits which are in the
German language.
27.2 This Agreement will be executed in four counterparts.
<PAGE> 54
-54-
27.3 This Agreement shall be governed by the laws of the Federal
Republic of Germany.
27.4 The courts in Frankfurt am Main shall have non-exclusive
jurisdiction.
<TABLE>
<S> <C>
-------------------------------------------
TelDaFax AG
by Klose und by Legner
------------------------------------------- -------------------------------------------
World Access, Inc. Otto Haberstock by proxy dated June 7, 2000
By: W. Tod Chmar for Apax Funds Nominee Ltd. fur "B" Account
Title: Executive Vice President
------------------------------------------- -------------------------------------------
Dr. Henning F. Klose Otto Haberstock by proxy dated June 7, 2000
for Apax Funds Nominee Ltd. fur "D" Account
------------------------------------------- -------------------------------------------
Otto Haberstock by proxy dated June 5, 2000 Otto Haberstock by proxy dated June 6, 2000
for Apax Germany II L.P. for AP Vermogensverwaltung
Gesellschaft burgerlichen Rechts
--------------------------------------
A + M GmbH & Co Vermogensverwaltung KG
</TABLE>
