<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 2, 1998.
CTI GROUP (HOLDINGS) INC.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 0-10560 51-0308583
- ------------------------- ------------------------ ---------------------
(State or other jurisdic- (Commission File Number) (IRS Employer
tion of incorporation) Identification No.)
901 South Trooper Road, Valley Forge, PA 19484
- ---------------------------------------- ----------
(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code 610-666-1700
------------
N/A
--------------------------------------------------------------
(Former name or former address, if changed since last report.)
---------------------------------
Exhibit Index appears on Page 5.
<PAGE>
Item 2. Acquisition or Disposition of Assets
On February 2, 1998 (the "Closing Date"), pursuant to the terms of
that certain Asset Purchase Agreement (the "Agreement"), dated as of
February 2, 1998, by and among CTI Group (Holdings) Inc. (the
"Company"), CTI Data Solutions (International) Ltd., an English
company and a wholly-owned subsidiary of the Company ("CTI
International") and Siemens plc, an English company ("Siemens"), CTI
International acquired the assets and substantially all the
liabilities of Siemens' Databit business division ("Databit").
Databit is engaged in the business of the design, development,
marketing, distribution, licensing, maintenance and support of
telecommunications call management software and services and owns
various license and contract rights, copyrights, trademarks, trade
secrets and other intellectual property and assets relating to these
products and services.
The purchase price was paid by CTI International in the form of a
$2,000,000 Secured Promissory Note (the "Note") executed by CTI
International in favor of Siemens. The Note calls for CTI
International to pay annual interest of ten percent (10%) quarterly in
arrears until February 2, 2001 (the "Maturity Date"). The principal
amount of the Note is due on the Maturity Date. The Company executed
a Guaranty (the "Guaranty") in favor of Siemens to guarantee CTI
International's performance under the Note. Siemens was also granted
a security interest in the assets of Databit purchased by CTI
International, pursuant to a Debenture (the "Debenture") executed by
CTI International in favor of Siemens, and all of the assets of the
Company, including the Company's ownership interest in each of the
Company's wholly-owned subsidiaries, pursuant to a Security Agreement
(the "Security Agreement") and a Collateral Pledge Agreement (the
"Pledge Agreement") executed by the Company in favor of Siemens.
Copies of the Agreement, the Note, the Guaranty, the Debenture, the
Security Agreement and the Pledge Agreement are attached hereto as
Exhibits 2.1, 10.1, 10.2, 10.3, 10.4 and 10.5, respectively.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired.
It is impracticable for the Company to provide the required
financial statements for Databit at the time of the filing of
this report. The Company undertakes to file such financial
statements as an amendment of this Form 8-K as soon as
practicable after the date hereof, but in no event later than 60
days after the date on which this report on Form 8-K is required
to be filed.
(b) Pro Forma Financial Information.
It is impracticable for the Company to provide the required pro
forma
-2-
<PAGE>
financial information relating to the acquisition at the time of
the filing of this report. The Company undertakes to file such
pro forma financial information as an amendment to this Form 8-K
as soon as practicable after the date hereof, but in no event
later than 60 days after the date on which this report on Form
8-K is required to be filed.
(c) Exhibits
2.1 Form of Asset Purchase Agreement by and among CTI Group
(Holdings), Inc., CTI Data Solutions (International)
Ltd. and Siemens plc dated February 2, 1998 (excluding
any exhibits and schedules thereto).
10.1 Form of $2,000,000 Secured Promissory Note executed by
CTI Data Solutions (International) Ltd. in favor of
Siemens plc dated February 2, 1998 (excluding any
exhibits and schedules thereto).
10.2 Form of Guaranty executed by CTI Group (Holdings), Inc.
in favor of Siemens plc dated February 2, 1998
(excluding any exhibits and schedules thereto).
10.3 Form of Debenture executed by CTI Data Solutions
(International) Ltd. in favor of Siemens plc dated
February 2, 1998 (excluding any exhibits and schedules
thereto).
10.4 Form of Security Agreement between CTI Group
(Holdings), Inc. and Siemens plc dated February 2, 1998
(excluding any exhibits and schedules thereto).
10.5 Form of Collateral Pledge Agreement executed by CTI
Group (Holdings), Inc. in favor of Siemens plc dated
February 2, 1998 (excluding any exhibits and schedules
thereto).
99.1 Press Release, dated February 3, 1998.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CTI GROUP (HOLDINGS) INC.
(Registrant)
Date: February 17, 1998 By: /s/ Mark H. Daugherty
---------------------------------------
Name: Mark H. Daugherty
Title: Chief Financial Officer
-4-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.
- -----------
<S> <C>
2.1 Form of Asset Purchase Agreement by and among CTI Group (Holdings),
Inc., CTI Data Solutions (International) Ltd. and Siemens plc dated
February 2, 1998 (excluding any exhibits and schedules thereto).
10.1 Form of $2,000,000 Secured Promissory Note executed by CTI Data
Solutions (International) Ltd. in favor of Siemens plc dated
February 2, 1998 (excluding any exhibits and schedules thereto).
10.2 Form of Guaranty executed by CTI Group (Holdings), Inc. in favor
of Siemens plc dated February 2, 1998 (excluding any exhibits and
schedules thereto).
10.3 Form of Debenture executed by CTI Data Solutions (International) Ltd.
in favor of Siemens plc dated February 2, 1998 (excluding any exhibits
and schedules thereto).
10.4 Form of Security Agreement between CTI Group (Holdings), Inc. and
Siemens plc dated February 2, 1998 (excluding any exhibits and
schedules thereto).
10.5 Form of Collateral Pledge Agreement executed by CTI Group (Holdings),
Inc. in favor of Siemens plc dated February 2, 1998 (excluding any
exhibits and schedules thereto).
99.1 Press Release, dated February 3, 1998.
</TABLE>
<PAGE>
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
Between
SIEMENS PLC
and
CTI DATA SOLUTIONS (INTERNATIONAL) LTD.
Dated as of
February 2, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
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ARTICLE I - TRANSFER OF ASSETS AND LIABILITIES . . . . . . . . . . . . . . . .1
1.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
1.3 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . .5
1.4 Allocation of Purchase Price. . . . . . . . . . . . . . . . . . . . . . .6
1.5 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . .6
ARTICLE II - CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2 Deliveries by Seller; Payment of Taxes. . . . . . . . . . . . . . . . . .7
2.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . .8
ARTICLE III - RELATED MATTERS. . . . . . . . . . . . . . . . . . . . . . . . .8
3.1 Use of Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.2 Transitional Management . . . . . . . . . . . . . . . . . . . . . . . . .8
3.3 Employee Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.4 Actions Prior to Closing Date . . . . . . . . . . . . . . . . . . . . . .9
3.5 Actions After Closing Date. . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Pensions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . 10
4.1 Organization, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.5 No Undisclosed or Contingent Liabilities. . . . . . . . . . . . . . . . 12
4.6 Litigation, Orders. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.7 Title to Assets; Encumbrances . . . . . . . . . . . . . . . . . . . . . 12
4.8 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.9 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.10 Assets, Liabilities and Operations of the Company . . . . . . . . . . . 13
4.11 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . 13
4.12 Good Title Conveyed, Etc. . . . . . . . . . . . . . . . . . . . . . . . 13
4.13 Assets Necessary to Business. . . . . . . . . . . . . . . . . . . . . . 13
4.14 Books and Records Necessary to Business . . . . . . . . . . . . . . . . 14
4.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.16 Contracts, Commitments and Returns. . . . . . . . . . . . . . . . . . . 14
4.17 Certain Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
i
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<TABLE>
<CAPTION>
Page
<S> <C>
4.18 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.19 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.20 Product Recalls . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.21 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.22 Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.23 Pensions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.24 Real Estate.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.25 Competition and Trade Regulation Law. . . . . . . . . . . . . . . . . 19
4.26 Foreign Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.27 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.28 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . . 20
5.1 Organization, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.3 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.4 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.5 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI - SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION . . . . . . . . . 21
6.1 Survival of Representations . . . . . . . . . . . . . . . . . . . . . . 21
6.2 Indemnification.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.3 Conditions of Indemnification . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII - OTHER OBLIGATIONS OF SELLERS AND BUYER . . . . . . . . . . . 23
7.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Mail Received After Closing . . . . . . . . . . . . . . . . . . . . . . 23
7.3 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.4 Value Added Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.5 Directorship. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF BUYER . . . . . . . . . . . . . 25
8.1 Representations and Warranties. . . . . . . . . . . . . . . . . . . . . 25
8.2 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.3 No Proceeding or Litigation . . . . . . . . . . . . . . . . . . . . . . 26
8.4 No Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.5 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.6 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . 26
8.7 Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IX - CONDITIONS TO OBLIGATIONS OF SELLERS . . . . . . . . . . . . . 26
9.1 Representations and Warranties. . . . . . . . . . . . . . . . . . . . . 26
9.2 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.3 No Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
ii
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<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE X - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.1 Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.2 Expenses; Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.3 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.4 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.5 Entire Agreement, Amendments and Waiver . . . . . . . . . . . . . . . . 27
10.6 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.9 Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.11 Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XI - PROPERTY PROVISIONS. . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
EXHIBIT A Assignment
EXHIBIT B Stock Transfer Form
EXHIBIT C Promissory Note
EXHIBIT D Security Agreement
EXHIBIT E Pledge Agreement
iii
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of February 2, 1998, between Siemens
plc, an English company ("Seller") and CTI Data Solutions (International)
Ltd., an English company and a wholly-owned subsidiary of CTI Group
(Holdings) Inc., a Delaware corporation ("CTIG").
Seller is engaged in the design, development, marketing, distribution,
licensing, maintenance and support of telecommunications call management
software and services through its Databit division (the "Business") and owns
various license and contract rights, copyrights, trademarks, trade secrets
and other intellectual property and assets relating to the Business. Buyer
desires to purchase, and Seller desires to sell, the Business as a going
concern and all of the assets of the Business, including such intellectual
property, upon the terms and conditions set forth herein. The Seller owns
the entire issued share capital in Databit Limited, an English company (the
"Company"), with the exception of one nominee share owned by Juergen Gehrels
(the "Nominee Share"). As set forth herein, the Seller shall use its best
efforts to cause the Nominee Share to be transferred to the Buyer as soon as
practicable after the date of this Agreement. The Seller desires to sell,
and the Buyer desires to purchase the entire issued share capital of the
Company.
Accordingly, in consideration of the mutual agreements contained herein,
and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE 1.
TRANSFER OF ASSETS AND LIABILITIES
1.1 Purchase and Sale.
(a) Subject to the terms and conditions of this Agreement, on the
Closing Date (as defined below), Seller will sell, convey, transfer, assign
and deliver to Buyer with full title guarantee subject to any express
disclosure under this Agreement, and Buyer will purchase from Seller, all of
Seller's right, title and interest in and to the following assets to the
extent that they are used in or relate to the operations of the Business (the
"Assets"), as the same shall exist on the Closing Date:
(i) All tangible personal property, including, but not
limited to, equipment, furniture, supplies and inventory, finished goods,
work-in-process and raw materials used in connection with the Business, a
list of which is set forth in Schedule 1(a)(i);
(ii) All accounts receivable and notes receivable of
Seller on the Closing Date arising from the operation of the Business and the
benefit of all prepaid items and deposits paid by Seller to third parties as
of the Closing Date in connection with the Business, a list of which as of
the date hereof, is set forth in Schedule 1(a)(ii);
(iii) All catalogues, brochures, sales literature,
promotional material and other selling material relating to the products of
the Business;
<PAGE>
(iv) All books and records and all files, documents,
papers and agreements pertaining to the Assets, the Assumed Liabilities or
otherwise to the Business that are material to continuing the operating of
the Business as a going concern which are held at the premises of the
Business at 854 Brighton Road, Purley, Surrey;
(v) The rights of Seller under all Contracts relating to the
Business, including but not limited to the Contracts listed on any of the
schedules hereto (including all Material Contracts listed in Schedule 4.17)
and those entered into in the ordinary course of the Business through the
Closing Date;
(vi) All insurance proceeds from any insurance provider for
any Asset that is destroyed or damaged after the date hereof and prior to the
Closing, or any replacement property or asset actually acquired for such
destroyed or damaged Asset unless the damage to such Asset has been taken
into account in the Adjusted Closing Data Balance Sheet;
(vii) All transferable business licenses, permits and
equivalent documents relating to the Business;
(viii) All issued and outstanding shares of capital stock of
the Company, with the exception of the Nominee Share which the Seller shall
use its best efforts to cause to be transferred to the Buyer, at Seller's
sole cost and expense, as soon as practicable after Closing, and, in
connection therewith, a Stock Transfer Form executed by the Seller;
(ix) The goodwill of the Seller in relation to the Business
together with the exclusive right for the Buyer and any assignee of Buyer to
use the names "Databit" and/or any other name or style and to represent
itself as carrying on the Business in succession to the Seller ("Goodwill");
(x) The know-how and the marketing information (including
that comprised in or derived from formulae, designs, specifications,
drawings, component lists, manuals, instructions and catalogues) in whatever
form held or used by or in the Business and relating to:
(1) the production of goods or the provision of services;
(2) the design, selection, procurement, construction,
installation or use of any plant, machinery or other equipment or process;
(3) tooling design;
(4) the repair, service or rectification of products or
plant;
(5) the procurement, processing, manufacturing, supply,
storage, assembly or packing of raw materials, components or
part-manufactured or finished products;
(6) quality control, testing or certification;
(7) the use and programming of any computer hardware and
software; and
2
<PAGE>
(8) all information relating to the marketing of any
products or services (including customer names and lists, price lists, sales
targets, sales statistics, market share statistics, marketing surveys and
reports, marketing research and any advertising or other promotional materials)
used by or in the Business.
(xi) All the Seller's rights against third parties (including but
not limited to rights under or in respect of warranties, representations,
guarantees and indemnities) in respect of the Business of any of the Assets;
(xii) Cash or cash equivalents in an amount equal to the
amount necessary so that the Total Assets (as defined below) of the Business
as of the Closing Date shall equal the Total Liabilities (as defined below)
of the Business as of the Closing Date (the "Required Cash Amount").
Notwithstanding the foregoing sentence, the Required Cash Amount shall not be
less than UKL 287,000. "Total Assets" and "Total Liabilities" shall have the
meanings normally ascribed to such terms under United Kingdom generally
accepted accounting principles; and
(xiii) All of Seller's right, title and interest in and to all
patents, trademarks and trade names, trademark and trade name registrations,
service marks and service mark registrations, copyrights and copyright
registrations, the applications therefor and the licenses with respect
thereto relating exclusively to the Business, a list of which is set forth in
Schedule 1.1(a)(xiii), and all technology, proprietary information and
know-how relating exclusively to the Business, together with the goodwill of
the Business appurtenant thereto and any rights, claims or choses of action
relating to or deriving from any of the foregoing together with any
unregistered intellectual property used exclusively in the Business, other
than the name and logo "Siemens".
(b) Subject to Section 1.1(c), the Seller shall assign to the
Buyer and the Buyer shall accept an assignment of and shall take over from
the Seller at and with effect from Closing the benefit and burden of all
contracts relating to the Business (the "Contracts") and the Seller will if
so requested by the Buyer on or after Closing join with the Buyer in sending
out a notice of assignment thereof to such of the other parties to the
Contracts as the Buyer may so request, provided that nothing in this
agreement:
(1) Shall require the Buyer to satisfy any obligation
requiring performance before Closing other than those obligations expressly
assumed by the Buyer pursuant to this Agreement;
(2) Shall make the Buyer liable for any act, neglect, default
or omission in respect of any of the Contracts prior to Closing or for any
claim, expense, loss or damages arising from any failure to obtain the
consent or agreement of any third party to this Agreement or for any breach
of any of the Contracts caused by this Agreement or its completion.
Notwithstanding the foregoing, in the event any such third party requires a
novation fee with respect to any Contract, the parties hereto hereby agree to
consult with one another and to determine a mutually agreeable course of
action with respect to the payment of such novation fee; or
(3) Shall impose any obligation on the Buyer for or in
respect of any product delivered by the Seller or any service performed by
Seller prior to Closing other than normal warranty repairs in the ordinary
course of business.
3
<PAGE>
(c) Insofar as the benefit or burden of the Contracts cannot be
assigned to the Buyer except by an agreement of novation with, or consent to
the assignment from, the person, firm or company concerned:
(1) The Seller shall at the Buyer's request use all
commercially reasonable efforts with the co-operation of the Buyer to procure
such novation or consent;
(2) Unless and until such Contracts shall be novated or
assigned, the Seller shall hold the same in trust for the Buyer absolutely
and the Buyer shall, (if such sub-contracting is permissible and lawful under
the Contracts) as the Seller's agent or sub-contractor, perform all the
obligations of the Seller thereunder; and
(3) Unless and until such Contracts shall be novated or
assigned, the Seller will (so far as it lawfully may) give all reasonable
assistance to the Buyer to enable the Buyer to enforce its rights under such
Contracts.
1.2 Purchase Price.
(a) The purchase price (the "Purchase Price") for the Assets shall
be US $2,000,000.
(b) As of the Closing Date, Seller shall make a good faith
estimate of the Required Cash Amount. Promptly after the Closing Date, Buyer
with the assistance and cooperation of personnel of the Business employed by
Seller after the Closing Date (who, for these purposes, will be under the
direction and supervision of Buyer), will prepare and present to Seller a
balance sheet of the Business as of the Closing Date, which balance sheet
shall be audited by public accountants selected by Buyer and approved by
Seller, which approval shall not be unreasonably withheld (the "Adjusted
Closing Date Balance Sheet"). The Adjusted Closing Date Balance Sheet shall
be prepared in accordance with the same accounting methods, practices,
procedures and policies, and using the same methods of estimates and
judgments, used by Seller in preparing financial statements for the Business
prior to Closing and shall be prepared as though the parties had not
consummated the transactions contemplated by this Agreement save for the
settlement of intercompany creditors which have been discharged. The
Adjusted Closing Date Balance Sheet shall be delivered to Seller no later
than 30 days after the Closing Date.
(c) For the purpose of preparing the Adjusted Closing Date Balance
Sheet, Buyer and its accountants shall have the right to review the work
papers of Seller and its accountant utilized in preparing the financial
statements related to the Business. The Adjusted Closing Date Balance Sheet
shall be binding on Seller unless Seller presents to Buyer within 30 days
after its receipt of the Adjusted Closing Date Balance Sheet from Buyer
written notice of disagreement specifying in reasonable detail the nature and
extent of the disagreement.
(d) If Buyer and Seller are unable to resolve any disagreement
with respect to the Adjusted Closing Date Balance Sheet within 15 days after
Buyer receives a timely notice of disagreement, which shall be no later than
30 days after receipt by the Seller of the Adjusted Closing Date Balance
Sheet, the items of disagreement alone shall be referred for final
determination to KPMG, or if KPMG is unable or unwilling to make such final
determination, to such other independent accounting firm as the parties shall
mutually agree or, in the absence of agreement, to such other independent
accounting firm as shall be
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nominated by the Institute of Chartered Accountants at the request of either
party (KPMG or such other accounting firm is referred to herein as the
"Independent Accountants"). Absent manifest error, the determination of the
Independent Accountants shall be final and binding upon all parties to this
Agreement. The Adjusted Closing Date Balance Sheet (or, in the event of the
Adjusted Date Balance Sheet requires amendment pursuant to Section 1.2(d)(ii)
and (iii) below, the Adjusted Closing Date Balance Sheet as so amended) shall
be deemed to be binding on Buyer and Seller upon (i) Seller's failure to
deliver to Buyer a notice of disagreement within 30 days of its receipts of
the Adjusted Closing Date Balance Sheet prepared by Buyer, (ii) resolution of
any disagreement by mutual agreement of the parties after a timely notice of
disagreement has been delivered, or (iii) notification by the Independent
Accountants of their final determination of the items of disagreement
submitted to them. The fees and disbursements of the Independent Accountants
shall be borne equally, one-half by Buyer and one-half by Seller.
(e) In the event that the Required Cash Amount as reflected on the
Adjusted Closing Date Balance Sheet is less than the amount of cash and cash
equivalents transferred at Closing pursuant to Section 1.1(a)(xii) (the
"Transferred Cash"), Buyer shall pay to Seller an amount equal to the
Transferred Cash less the Required Cash Amount. In the event the Transferred
Cash is less than the Required Cash Amount, the Seller shall promptly pay to
Buyer an amount equal to the Required Cash Amount less the Transferred Cash.
1.3 Payment of Purchase Price. At Closing, Buyer shall execute
and deliver to Seller a promissory note (the "Note"), in substantially the
form attached hereto as Exhibit C. Buyer's performance under the Note shall
be guaranteed by CTIG. The principal amount of the Note shall be an amount
equal to the Purchase Price. Interest on the principal amount of the Note
shall be calculated at the rate of ten percent (10%) per annum and shall be
paid quarterly in arrears. The principal amount of the Note shall be due and
payable three (3) years from the date of the Closing; provided, however, that
CTIG shall use commercially reasonable efforts to sell, within twelve (12)
months of Closing, its United States telemanagement service bureau and that
the net cash proceeds from such sale whenever concluded up to an amount equal
to the Required Cash Amount shall be immediately paid to the Seller and
shall, as soon as practicable following the date of such sale, be applied to
reduce the then outstanding principal amount of the Note. Contemporaneously
with the execution and delivery of the Note, the Buyer shall cause CTIG to
execute and deliver to the Seller a security agreement (the "Security
Agreement") and Pledge Agreement (the "Pledge Agreement"), in substantially
the form attached hereto as Exhibits E and F, respectively. The Security
Agreement shall grant the Seller a security interest (the "Security
Interest") in the assets of CTIG subject and subordinate in priority only to
any then existing security interests with respect to such assets and the
security interests to be granted to a banking institution in connection with
debt financing of the Business or CTIG. The Pledge Agreement shall pledge
CTIG's ownership interest in the equity securities of the Buyer and of each
of the following wholly-owned subsidiaries of CTIG: (i) CTI Delaware
Holdings, Inc., (ii) CTI Soft-Com, Inc., (iii) Plymouth Communications, Inc.,
and (iv) Telephone Budgeting Systems, Inc. Buyer shall also execute and
deliver to Seller a debenture (the "Debenture") and any other document
necessary to grant the Seller a charge over the Assets under the laws of the
United Kingdom.
1.4 Allocation of Purchase Price. The consideration provided for
in Section 1.2 of this Agreement and the Assumed Liabilities shall be
allocated among the Assets as set forth on Schedule 1.4 subject to subsequent
verification by the Buyer's independent auditors.
1.5 Assumption of Liabilities. Subject to the terms and
conditions of this Agreement, at the
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Closing, Buyer shall assume and agree to perform, pay or discharge the
liabilities and obligations of the Seller and the Company related to the
Business set forth on Schedule 1.5 including all liabilities associated with
the Contracts and all accounts payable set forth on the Adjusted Closing Date
Balance Sheet (as defined below) (the "Assumed Liabilities"). Except as set
forth in this Section 1.5, Buyer shall not assume or be responsible for any
liabilities or obligations of Seller or the Company. Following the Closing,
Seller shall perform, pay or discharge all liabilities and obligations
relating to the Business, other than the Assumed Liabilities, that arose or
relate to events occurring prior to the Closing, including (i) all claims
relating to products sold or distributed by the Company prior to the Closing
Date with the exception of warranty repairs in the ordinary course of
business and (ii) all liabilities and obligations of Seller or the Company to
employees, agents, representatives or similar persons under any oral or
written agreement, arrangement, benefit plan, insurance policy or other
program except as provided in the Transfer of Undertakings (Protection of
Employment) Regulations 1981, as amended. Other than the Assumed
Liabilities, the Seller shall continue to be responsible for all debts
payable by and claims outstanding against the Business at Closing or arising
by reason of anything done or omitted to be done prior to Closing including
all moneys, wages (including accrued holiday pay), taxes, rent and other
expenses accrued as at Closing or in respect of any deed, matter, act or
thing done or occurring up to that time, and, other than the Assumed
Liabilities, this Agreement shall not operate to transfer to the Buyer or
shall be construed as an acceptance by the Buyer or shall make the Buyer
liable for any debts, liabilities or obligations in respect of any assets of
the business not purchased by the Buyer or in respect or anything done or
omitted to be done before Closing in the course of or in connection with the
Business or otherwise in respect of any asset of the Business not transferred
under this Agreement. All amounts payable or receivable in respect of the
Business which are of a periodical nature including rents, rates, insurance
premiums, petrol, gas, water, electricity and telephone charges, royalties
and other outgoings or receipts relating to the Business shall (unless
otherwise expressly agreed) be apportioned between the Seller and the Buyer
as at Closing on the day to day basis.
ARTICLE 2.
CLOSING
2.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Seller at
Siemens House, Oldbury, Bracknell, Berkshire, UK, RG12 8FZ on February 2,
1998 or such other time and date as Buyer and Seller may agree. The date on
which the Closing actually occurs is referred to herein as the "Closing Date."
2.2 Deliveries by Seller; Payment of Taxes.
(a) At the Closing, Seller shall deliver to Buyer (unless
delivered previously), the following:
(1) executed counterparts of any consents referred to in
Section 8.6;
(2) all books and records (including all computerized records
and other computerized storage media and the software used in connection
therewith) of the Business (collectively, "Books and Records") which are
located at the premises of the Business at 854 Brighton Road, Purley, Surrey
including all Books and Records relating to the purchase of materials,
supplies and services for the
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Company or Business, dealings with customers and distributors of the Company
or Business, and employees of the Company or Business;
(3) a Stock Transfer Form, in the form attached hereto as
Exhibit B, relating to the share capital of the Company, certificates
representing all outstanding share capital of the Company, with the exception
of the Nominee Share which the Seller shall use its best efforts to cause to
be transferred to the Buyer, at Seller's sole cost and expense, as soon as
practicable after Closing, and the resignations of all members of the Board
of Directors of the Company at the time immediately prior to Closing;
(4) assignments with respect to the trademarks, trade or
service names and marks, assumed names and copyrights and all applications
therefor as set forth on Schedule 1.1(a)(xii) in substantially in form of
Exhibit A hereto (collectively, the "Assignment"); and
(5) all documents containing or relating to intellectual
property to be purchased by CTI Delaware pursuant to this Agreement.
(6) such other good and sufficient instruments of conveyance
and transfer as shall be necessary to vest in Buyer good and valid title to
the Assets (collectively, the "Other Instruments"), free and clear of all
liabilities, obligations, claims, liens and encumbrances (whether absolute,
accrued, contingent or otherwise) , except the Assumed Liabilities (as
defined below) and all other previously undelivered documents, instruments
and writings required to be delivered by Seller or the Company to Buyer at or
prior to the Closing pursuant to this Agreement or otherwise required in
connection herewith.
2.3 Deliveries by Buyer.
(a) At the Closing, Buyer shall deliver to Seller (unless
delivered previously), the following:
(1) the Note, the Security Agreement, the Pledge Agreement
and the Charge Agreement; and
(2) all other previously undelivered documents, instruments
and writings required to be delivered by Buyer to Seller at or prior to the
Closing pursuant to this Agreement or otherwise required in connection
herewith.
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ARTICLE 3.
RELATED MATTERS
3.1 Use of Names. After the Closing, the Seller shall not use the name
"Databit" or any variant or derivative thereof. Buyer shall not, after the
Closing Date, use the name or logo "Siemens" with the exception that the
Buyer shall be permitted, for a period of three months from the Closing Date
only, to use documentation which contains the name or logo "Siemens" provided
that such documentation was generated prior to Closing and the Buyer made it
clear to third parties to whom such documentation may be submitted that the
Business and the Company are no longer owned or operated by Seller.
3.2 Transitional Management. The Seller shall use all reasonable
efforts to ensure that Robin Williams, Managing Director shall provide
consulting services to the Business for the 30 days immediately following the
Closing Date. The Seller shall not be under any liability, whether arising in
contract, tort or otherwise, for the acts or omissions of Robin Williams for
such period with the exception that the Seller shall indemnify Buyer for any
loss, damage or expense resulting from any claim made or proceeding brought
by Robin Williams in connection with the consulting services provided by
Robin Williams to the Buyer or his employment with the Seller. The Seller
shall also use its best efforts to cause Robin Williams to deliver a letter
to the Buyer prior to Closing affirmatively representing that, as of Closing,
Robin Williams is no longer employed by the Business.
3.3 Employee Matters.
(a) It is hereby agreed by the parties that this Agreement is
governed by the Transfer of Undertakings (Protection of Employment)
Regulations 1981, as amended, (the "Regulations") and that in accordance with
the Regulations the contracts of employment of each of the persons employed
by the Seller in the Business at Closing, being those whose names are set out
in Schedule 4.2.3 ("Employee") shall have effect after Closing as if
originally made between each of the Employees and the Buyer respectively
(save to the extent that such contracts relates to any occupational pension
scheme).
(b) The parties hereby acknowledge that each of the Seller and the
Buyer will comply with and fulfill their respective obligations under the
Regulations including (but not limited to) their obligations to provide
information to and consult with all relevant trade union bodies (if any).
(c) Immediately following Closing the Seller will, at the cost of
the Buyer, join with the Buyer in sending out a notice in a form agreed
between them to the Employees confirming the transfer of their contracts of
employment to the Buyer and stating that, save as to the identity of their
employer (and save in respect of any occupational pension scheme rights) and
such other amendments to which the Employees may expressly have agreed, all
the terms of their employment shall remain the same.
(d) Subject to Section 3.3(e):
(1) All liabilities in relation to the Employees in respect
of the period prior to Closing shall be discharged by the Seller and the
Seller shall indemnify the Buyer in respect thereof; and
(2) All liabilities in relation to the Employees in respect
of the period after
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Closing shall be discharged by the Buyer and the Buyer shall indemnify the
Seller in respect thereof.
(e) The Seller hereby undertakes to and covenants with the Buyer
to indemnify and keep indemnified the Buyer from and against all and any
liabilities, damages, costs, claims, charges and expenses incurred by the
Buyer in connection with or arising out of the transfer or purported transfer
of the contracts of employment or other employment related rights of:
(1) the Employees, to the extent that such liabilities arise
from any matters relating to the period prior to Closing, except as provided
in the Transfer of Undertakings (Protection of Employment) Regulations 1981,
as amended.; and
(2) any persons employed in the Business other than the
Employees including (but without prejudice to the generality of the
foregoing) any claims brought by such persons for wrongful or unfair
dismissal or redundancy arising therefrom or in connection therewith or at
any time thereafter.
3.4 Actions Prior to Closing Date. Between the date of this Agreement
and the Closing Date:
(a) Seller shall conduct the Business in the ordinary course,
consistent with past practices, and will use all reasonable efforts to
preserve the present relationships of Seller with persons having
relationships related to the Assets;
(b) Seller will not, without Buyer's written consent, (i) sell or
dispose of (or agree to sell or dispose of) any Assets having a value of UK
L5,000 or more, or (ii) negotiate, modify, terminate or renew any material
term or condition of any Contract or enter into any agreement which as of the
Closing Date will be a Contract;
(c) Seller and Buyer will use their respective best efforts to
cause their respective obligations hereunder to be satisfied;
(d) Seller and Buyer shall promptly notify the other of any breach
by either of them of any of their representations, warranties, covenants or
agreement contained herein; and
(e) Seller shall not create, assume, incur or suffer, or cause to
exist, or permit to be created, assumed, incurred or suffered any pledge,
mortgage, lien, assignment or other claim or encumbrance of any kind
whatsoever upon any of the Assets except as expressly disclosed to the Buyer
under the Agreement.
3.5 Actions After Closing Date.
(a) Upon or as soon as possible after Closing the Seller will at
the request of the Buyer join with the Buyer in sending out a notice in such
form as may be agreed between them to all the suppliers, clients and
customers of the Business and such other persons as the Buyer may require
informing them of the transfer of the Business.
(b) On receiving on or after Closing any notices, correspondence,
information, orders or enquiries relating to the Business or any monies or
other items relating to the Business, the Seller will
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immediately pass them to the Buyer and title in them shall vest in the Buyer.
(c) The Seller will take all reasonable steps, for two years after
the Closing, to encourage any and all customers of the Business, who will
also be affiliates of the Seller after Closing, to deal with the Buyer in
place of the Seller in relation to the Business.
3.6 Pensions. The provisions of Schedule 3.6 shall have effect as if
set out herein in full.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Seller represents and warrants to Buyer as follows:
4.1 Organization, Etc. The Company is a company duly organized,
validly existing in good standing under the laws of the United Kingdom. Set
forth on Schedule 4.1 is a true, correct and complete description of the
authorized and issued shares of capital stock of the Company, including the
number of shares owned by Seller and any other parties. The Seller has the
corporate power and authority to conduct the Business as it is currently
being conducted and to own and lease the property and assets that it now owns
and leases. The copies of the organizational documents of Seller and the
Company, as previously delivered to Buyer by Seller are complete and correct
copies of such instruments as currently in effect.
4.2 Authorization.
(a) The Seller has all requisite corporate power and authority to
enter into, execute, deliver and consummate the transactions contemplated by
this Agreement and any instruments and agreements contemplated herein
required to be executed and delivered by it pursuant to this Agreement,
including the Assignment, the Stock Transfer Form and the Other Instruments,
as the case may be (collectively, the "Related Instruments"). The board of
directors and shareholders of the Seller have taken all action required, if
any, by law, the articles of incorporation, bylaws or other governing
documents of Seller or otherwise to authorize the execution and delivery of
this Agreement and the Related Instruments and the consummation of the
transactions contemplated hereby and thereby. No other corporate act or
proceeding on the part of Seller is necessary to authorize this Agreement or
any of the Related Instruments or the transactions contemplated hereby or
thereby. This Agreement is, and each of the Related Instruments, when
executed and delivered to Buyer by Seller at the Closing, will be, a valid
and binding obligation of Seller, enforceable against Seller in accordance
with its terms.
(b) The Seller has previously delivered to Buyer true and complete
copies, certified by the Secretary of the Seller, of the resolutions duly and
validly adopted by the board of directors of the Seller evidencing the
authorization of the execution and delivery of this Agreement and the Related
Instruments and the consummation of the transactions contemplated hereby and
thereby, which resolutions have not been modified, revoked or rescinded in
any respect.
4.3 No Violation. Neither the execution and delivery by Seller of this
Agreement or any of the
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Related Instruments, nor the consummation by Seller of the transactions
contemplated hereby or thereby, will violate any provision of the laws of the
United Kingdom or any other applicable law, or the articles of incorporation,
bylaws or other governing documents of Seller, or, except as set forth on
Schedule 4.3, violate, conflict with, or constitute a default (or an event or
condition which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or cause the acceleration of the maturity of any
liability or obligation pursuant to, or result in the creation or imposition
of any security interest, lien, charge or other encumbrance upon any of the
Assets under any note, bond, mortgage, indenture, deed of trust, license,
lease, contract, commitment, understanding, arrangement, agreement or
restriction of any kind to which Seller is a party or by which Seller may be
bound or affected or to which any of the Assets may be subject, or violate
any statute or law or any judgment, decree, order, writ, injunction,
regulation or rule of any court or governmental authority, except for
violations that would not have a material adverse effect on Seller's
business, assets, earnings or prospects; provided, however, that, subject to
the breach of any representation contained in Section 4.16 hereof, nothing in
this Agreement shall make Seller liable to Buyer for the termination of any
agreement by a third party where such termination was in compliance with such
agreement.
4.4 Financial Statements.
(a) The Seller has previously delivered to Buyer (i) a balance
sheet of the Business at September 30, 1997 (the "Balance Sheet") and (ii)
statements of income for each of the years ended September 30, 1994,
September 30, 1995, September 30, 1996 and September 30, 1997, which have
been incorporated into the financial statements of the Seller for the
applicable periods and certified by KPMG Peat Marwick or Price Waterhouse,
certified public accountants. Such financial statements fairly present the
assets, liabilities and financial condition of the Business as of the
respective dates thereof and such statements of income fairly present the
results of operations of the Business for the periods referred to therein,
all in accordance with United Kingdom generally accepted accounting
principles consistently applied throughout the periods involved, except as
otherwise specifically disclosed therein.
(b) The Seller has previously delivered to Buyer (i) an unaudited
balance sheet of the Business at December 30, 1997 (the "December Balance
Sheet") and (ii) unaudited statement of income for the two-month period then
ended, each certified by the chief financial officer of the Business to the
effect set forth in this Section 4.4(b). Such balance sheet fairly presents
the assets, liabilities and financial condition of the Business as of the
respective dates thereof and such statement of income fairly presents the
results of operations of the Business for the period referred to therein,
each in accordance with United Kingdom generally accepted accounting
principles consistently applied throughout the period involved, except as
otherwise specifically disclosed therein, in each case subject to normal
year-end-adjustments.
4.5 No Undisclosed or Contingent Liabilities. Except as disclosed in
this Agreement, Schedule 4.5 or any schedule hereto, Seller has no material
liabilities or obligations relating to the Assets or the Business of any
nature (whether absolute, accrued, contingent or otherwise and whether due or
to become due) that are not fully reflected on Schedule 1.5, and, to Seller's
knowledge, there is no basis for the assertion against either Seller of any
material liability or obligation of any nature whatsoever with respect to the
Assets or the Business not fully reflected on such Schedule.
4.6 Litigation, Orders. Except as set forth in Schedule 4.6, there are
no claims, actions, suits, proceedings, investigations or inquiries pending
before any court, arbitrator or governmental or regulatory
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official or office, or, to the knowledge of Seller, threatened against or
affecting the Business, the Assets or questioning the validity of this
Agreement, the transactions contemplated hereby, at law or in equity, before
or by any applicable governmental authority; nor, to the knowledge of Seller,
is there any valid basis for any such claim, action, suit, proceeding,
inquiry or investigation. Except as set forth in Schedule 4.6, no claim,
action, suit, proceeding, inquiry or investigation set forth in such section
would, if adversely decided, have a material adverse effect on the
operations, condition (financial or otherwise), liabilities, assets,
earnings, working capital or prospects of the Business. Seller is not
subject to any judgment, order or decree entered in any lawsuit or proceeding
that has had or may have a material adverse effect on the Assets or the
Business or on its ability to acquire any property for the use or benefit of
the Business or to conduct the Business in any area.
4.7 Title to Assets; Encumbrances. Except as disclosed on Schedule
4.7, Seller has good and valid title to all of the Assets. Since the Balance
Sheet Date, neither Seller nor the Company has purchased any material amount
of assets relating to the Business. All of the Assets are free and clear of
all title defects or objections, liens, claims, charges, security interests
or other encumbrances of any nature whatsoever, including leases, chattel
mortgages, conditional sales contracts, collateral security arrangements and
other title or interest retention arrangements.
4.8 Equipment. Except as set forth on Schedule 4.8, the tangible
Assets have no known material defects and all such Assets are in good
operating condition and repair (ordinary wear and tear excepted) and are
adequate for their current uses; and none of such Assets is in need of
maintenance or repairs except for ordinary routine maintenance and repairs
that are not material in nature or cost.
4.9 Compliance with Law. Seller and the Company are currently in
compliance in all material respects in respect of the operations, practices,
equipment and other assets relating to the Business, and all other material
aspects of the Business, with all applicable material laws (whether statutory
or otherwise), rules, regulations, orders, ordinances, judgments, decrees,
writs and injunctions of all applicable governmental authorities
(collectively, "Laws"), including all Laws relating to the safe conduct of
the Business, antitrust, taxes (except as otherwise noted in Schedule 1.5),
consumer protection, currency exchange, equal opportunity, pension,
securities and trademark and copyright; and Seller has not received
notification in the last three years of any asserted present or past failure
to so comply which have not been rectified.
4.10 Assets, Liabilities and Operations of the Company. As of the date
hereof, and at all times from the date hereof until the Closing Date, other
than as set forth on Schedule 4.10 or elsewhere in any schedule referred to
in this Agreement, the Company has no assets or liabilities, and will not
have any assets or liabilities, and is not currently, and will not be,
actively transacting business.
4.11 Consents and Approvals. Except for consents and approvals that
have been obtained as listed on Schedule 4.11, Seller is not required to
obtain, transfer or cause to be transferred any consent, approval, license,
permit or authorization of, or make any declaration, filing or registration
with, any third party or any governmental authority in connection with (a)
the execution and delivery by Seller of this Agreement or the Related
Instruments, (b) the consummation by Seller of the transactions contemplated
hereby or thereby, (c) the ownership and operation by Buyer of the Assets or
(d) the conduct by Buyer of the Business as conducted by the Seller and the
Company on the date hereof.
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4.12 Good Title Conveyed, Etc. Seller has complete and unrestricted
power and the unqualified right to sell, assign, transfer and deliver to
Buyer, and upon consummation of the transactions contemplated by this
Agreement, Buyer will acquire good and valid title to, the Assets, free and
clear of all mortgages, pledges, liens, security interests, conditional sales
agreements, encumbrances or charges of any kind, except as set forth on
Schedule 4.12. The Related Instruments, when duly executed and delivered by
Seller, as the case may be, to Buyer at the Closing, will effectively vest in
Buyer good and valid title to all of the Assets.
4.13 Assets Necessary to Business. The Assets constitute all of the
assets, properties, licenses, intellectual property and other agreements that
are currently being used in the Business and include all assets, properties,
licenses, and intellectual property and other agreements necessary to permit
Buyer to conduct the Business in the same manner that it has been conducted
during the six (6) months prior to the date hereof.
4.14 Books and Records Necessary to Business. The books and records of
the Business located at the premises of the Business at 854 Brighton Road,
Purley, Surrey, and which are to be delivered by Seller to Buyer pursuant to
this Agreement, constitute all of the books and records currently used in the
Business and include all books and records necessary to permit Buyer to
conduct the Business in the same manner that it has been conducted during the
six (6) months prior to the date hereof.
4.15 Insurance. Schedule 4.15 contains an accurate and complete list of
all policies of fire, medical, life, liability, product liability, workmen's
compensation, health and other forms of insurance currently in effect with
respect to the Business or the Assets. All such policies are in full force
and effect, all premiums with respect thereto covering all periods up to and
including the Closing Date have been paid, and no notice of cancellation,
termination or non-renewal has been received with respect to any such policy.
Such policies are sufficient for compliance with all requirements of law and
of all agreements to which the Seller is a party; are valid, outstanding and
enforceable policies; and provide adequate insurance coverage for the Assets
and the Business. Except as set forth in Schedule 4.15, no risks with
respect to the Business have been designated by Seller as being self-insured.
Seller has not been refused any insurance in connection with the Business
nor has its coverage been limited by any insurance carrier to which it has
applied for such insurance or with which it has carried such insurance in the
last three years.
4.16 Contracts, Commitments and Returns. Except as set forth in
Schedule 4.16:
(a) Seller is not a party to or bound by any material contracts or
commitments, including, without limitation, license, purchase, sale,
distribution, employment and maintenance agreements relating to the Business
(collectively the "Contracts"). Sellers have provided Buyer with, or access
to, true and complete copies of each Contract and true and accurate summaries
of any oral contract except as specifically set forth on Schedule 4.16. No
Contract requires payments in excess of UKL10,000 by any party thereto and
all contracts will be, following the Closing, cancelable by Buyer on notice
of no longer than thirty (30) days;
(b) Subject to obtaining any requisite consents of third parties,
the enforceability of the contracts and commitments referred to in Section
4.16(a) will not be affected in any manner by the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby;
(c) Except as with respect to employees of the Business, Seller is
not a party to or bound
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by any contracts or commitments relating to the Business with officers,
agents, consultants, advisors, salesmen, sales representatives, distributors
or dealers, except as provided in the Transfer of Undertakings (Protection of
Employment) Regulations 1981, as amended, that are not cancelable by it on
notice of not longer than 30 days and without liability, penalty or premium
or any agreement or arrangement providing for the payment of any bonus or
commission based on sales or earnings;
(d) Except as set forth on Schedule 4.16, Seller is not a party to
or bound by any employment agreement or any other agreement relating to the
Business that contains any severance or termination pay liabilities or
obligations;
(e) No breach or default or event or condition that, with the
giving of notice or, to the Seller's knowledge, the passage of time or both
would become a breach or default, exists under any contract, agreement or
commitment relating to the Business on the part of Seller or, to Seller's
knowledge, on the part of any other party thereto; and
(f) As of the date of this Agreement, the aggregate of all
accepted and unfilled orders for the sale of products entered into by the
Seller and related to the Business does not exceed UKL1,000,000, and the
aggregate of all contracts or commitments for the purchase of supplies by the
Seller related to the Business does not exceed UKL200,000, all of which
orders, contracts and commitments were made in the ordinary course of
business and consistent with past practice. As of the date of this
Agreement, there are no claims against the Seller with respect to the
Business to return products by reason of alleged overshipments, defective
products or otherwise, or of products in the hands of customers under an
understanding that such products would be returnable.
4.17 Certain Interests. Neither Seller nor the Company has (a) any
direct or indirect interest (other than the ownership of less than one
percent of the outstanding securities of a publicly held company) in any
corporation or business that is involved in or competes with the Business or
(b) any direct or indirect interest in any property or assets used by, or
relating to, the Business, except through the ownership of Seller's or the
Company's capital stock.
4.18 Intellectual Property. Except as set forth on Schedule 4.18:
(a) Seller owns, free and clear of all liens, mortgages, security
interests, charges and encumbrances and has good and merchantable title to,
or holds adequate licenses or otherwise possesses all rights to use all
patents, trademarks, service marks, trade names, copyrights (including any
applications for any of the foregoing), inventions, discoveries, processes,
know-how, trade secrets, scientific, technical, engineering and marketing
data, object and source codes, and techniques used or currently proposed to
be used in the conduct of the Business as now conducted or currently proposed
to be conducted, including, without limitation, any and all of the foregoing
related to "Claire Pro", "Claire Six", "Claire 2000", "CS6 Win", "Genilog
Pro", "Claire Trade" and "Call Finder" (collectively, the "Intellectual
Property").
(b) Schedule 1.1(a)(xiii) contains an accurate and complete list
of (i) all such material patents, trademarks, trade names, service marks and
copyrights, and all applications therefor and, with respect to registered
items, contains a list of all jurisdictions in which such items are
registered and all registration numbers; (ii) all licenses, permits and other
agreements relating thereto; and (iii) all agreements relating to any of the
Intellectual Property that Seller is licensed or authorized to use by others.
The patents,
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trademarks and copyrights constituting a part of the Intellectual Property
are valid, subsisting and enforceable, and are duly recorded in the name of
the Seller or the Company.
(c) To the Seller's knowledge, Seller has the sole and exclusive
right, except where the failure of such sole and exclusive right does not and
could not reasonably be expected to have a material adverse effect on the
Business, to use the patents, service marks and copyrights included in the
Intellectual Property and, to Seller's knowledge, the trademarks and
tradenames included in the Intellectual Property, in each case in all
jurisdictions in which the Business is conducted or currently proposed to be
conducted or in which any products of the Business are distributed or
proposed to be distributed, and the consummation of the transactions
contemplated hereby will not alter or impair any such rights.
(d) No claims which could reasonably be expected to have an
adverse effect on the Business have been asserted by any person challenging
or questioning the ownership, validity, enforceability or use by Seller of
any of the Intellectual Property and, to the knowledge of Seller, there is no
valid basis for any such claim, and, to the knowledge of Seller, the use or
other exploitation of the Intellectual Property by Seller does not infringe
on or dilute the rights of any person; and, to the knowledge of Seller,
except as identified on Schedule 4.18(d), no other person is infringing on
the rights of Sellers with respect to any of the Intellectual Property.
(e) Sellers have taken reasonable security measures to protect the
secrecy, confidentiality and value of their trade secrets and other
confidential information.
(f) Sellers have delivered or made available to Buyer all material
documents with respect to any invention process, design, computer program or
other know-how or trade secret included in the Intellectual Property.
4.19 Inventory. All inventory of the Business, whether reflected on the
Balance Sheet or subsequently acquired, consists of a quality and quantity
usable and salable in the ordinary course of business, except for inventory
that is obsolete or of substandard quality or excess quantity, all of which
has been written down on the December Balance Sheet to realizable market
value.
4.20 Product Recalls. There have been no product recalls, stop sales or
withdrawals with respect to any of the products of the Business during the
three-year period preceding the date of this Agreement and the Seller has no
reason to believe that such action would have been reasonably appropriate.
4.21 Labor Matters. Except as set forth in Schedule 4.21:
(a) The Seller, with respect to the Business, has for the past
three years and is currently complying in all material respects with all
applicable laws relating to employment and employment practices, terms and
conditions of employment, and wages and hours, and is not engaged in any
unfair labor practice or unlawful employment practice;
(b) There is no unfair labor practice charge or complaint against
the Seller, with respect to the Business, pending or, to the knowledge of
Seller, threatened before any governmental agency, body or regulatory
authority nor is there any basis for any such charge or complaint;
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(c) There is no labor strike, slowdown or work stoppage pending
or, to the knowledge of Seller, threatened against the Business;
(d) The Seller, with respect to the Business, has not experienced
any significant work stoppages or been a party to any proceedings before any
governmental agency, body or regulatory authority involving any significant
issues for the past three years or been a party to any arbitration proceeding
arising out of or under collective bargaining agreements for the past three
years; and
(e) There is no charge or complaint pending or, to the knowledge
of Seller, threatened against the Business before any governmental agency,
body or regulatory authority. No employees of the Business are represented
by any labor union and there is no collective bargaining agreement in effect
with respect to such employees. During the past two years, to the knowledge
of Seller, no labor union has engaged in any organizing activities with
respect to the employees of the Business.
(f) Schedule 4.21(f) contains the names of all present employees
employed in the undertaking comprising the Business, all of them are employed
by the Seller and Buyer has had access to accurate details of the
commencement date of their employment, their wages or salaries and the terms
of their employment and no such employee has given notice of termination of
his employment.
(g) The basis of the remuneration payable and benefits to be
provided to the Employees is and the other terms of their engagement are the
same as that or those in force at the date of the December Balance Sheet.
The Seller is under no contractual or other obligation, nor has it made any
provision, to increase the rates of remuneration of, any of the Employees at
any future date.
(h) All profit sharing, incentive and bonus or other similar
arrangements applicable to any of the Employees (whether legally binding or
not) are disclosed in Schedule 4.21(h)
(i) All outstanding contracts of service with the Employees may be
terminated by not more than three months notice, without giving rise to any
claim for damages or compensation (other than a statutory redundancy payment
or statutory compensation for unfair dismissal). There are no contracts of
service in existence which provide for compensation to be payable on a change
of ownership of the Business. The attention of all the Employees has been
drawn to those terms of their employment as requires by the Employment Rights
Act 1996.
(j) No moneys or benefits other than in respect of contractual
emoluments are payable to any of the Employees.
(k) The Seller has no agreement or arrangement (binding or
otherwise) with, or commitment to, any trade union, staff association or
other body representing the Employees or any of them, and does not recognize
any trade union or other body representing the Employees or any of them for
negotiating purposes.
(l) There are no express terms of employment other than as
recorded in the written contracts of employment detailed in Schedule 4.21(l)
and there exist no customs, practices, arrangements or agreements for the
payment to Employees of redundancy payments other than those due under the
Employment Rights Act 1996.
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4.22 Taxes.
(a) The Seller (with respect to the Business) and the Company have
complied with all their obligations under the legislation and regulations
relating to value added tax and is not and do not expect to be involved in
any dispute with HM Customs and Excise or other appropriate fiscal authority
concerning any matter likely to affect the Business or any of the Assets in
any way.
(b) All documents (other than those which have ceased to have any
legal effect) to which the Seller (with respect to the Business) or the
Company or any of their Affiliates is a party and which are material to the
title to the Assets have been duly stamped.
(c) All value added tax payable upon the importation of goods, and
all excise duties payable to HM Customs and Excise payable in respect of the
Assets (including the Inventory), have been paid in full, and none of the
Assets is liable to confiscation or forfeiture.
4.23 Pensions.
(a) Save in respect to the Siemens Benefits Scheme (the "Scheme"),
the Seller:
(1) has no obligation (whether legally binding or not):
(a) to pay any pension; or
(b) to make any other payment after retirement, death or
during periods of sickness or disability (whether of a temporary or permanent
nature); or
(c) otherwise to provide "relevant benefits" (within the
meaning of Section 612 of the Income and Corporation Taxes Act 1988 ("ICTA"))
to, or in respect of any Employee or wife or dependant of any Employee; and
(2) is not a party to or obliged to contribute to any scheme or
arrangement having as its purpose or one of its purposes the making of any such
payments or the provision of any such benefits.
(b) No change in the benefits currently being provided under the
Scheme has been announced by the Seller or is being considered by it.
(c) No undertaking or assurance has been given to any person who is
now or has been employed in the Business or wife or dependant of such person as
to the continuation or introduction or improvement of any benefits referred to
in this warranty which the Buyer or the Seller would be required to implement in
accordance with good industrial relations practice whether or not there is any
legal obligation to do so.
(d) Full details of the Scheme have been disclosed to the Buyer and
accurate, up-to-date and complete copies of the following documents are annexed
to this agreement:
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(1) all documents constituting or relating to the Scheme;
(2) a full list of all Employees who are active members;
(3) the names and addresses of the trustees and of the actuary
of the Scheme; and
(4) the latest actuarial valuation and report.
All information which has been made available to the Buyer or its advisers
on or before the date of this Agreement is true complete accurate and fairly
presented.
(e) The Scheme is an "exempt approved scheme" (within the meaning of
Chapter I of Part XIV of ICTA) and has at all times complied with and been
administered in accordance with all applicable laws, regulations and
requirements, including the requirements of the Inland Revenue for continued
approval as an exempt approved scheme and of trust law. There is no reason why
approval of the Scheme by the Board of Inland Revenue should be withdrawn.
(f) The provisions of the Scheme do not discriminate between male and
female members as regards eligibility, the rate of contributions, the amount of
any benefits provided or the date on or from which such benefits will or may be
provided.
4.24 Real Estate.
(a) The Properties in Article XI are the only properties presently
occupied or otherwise used as part of or in connection with the Business.
(b) The Properties are not subject to the payment of any outgoings
other than usual rates, water rates and sums reserved by the relevant lease.
(c) The Seller has not been involved in any disputes of any kind
affecting any of the Properties.
4.25 Competition and Trade Regulation Law.
(a) The Seller is not and has not been a party to, and is not and has
not been concerned in, any agreement or arrangement, and is not and has not been
conducting itself (whether by omission or otherwise), in connection with the
Business, in a manner which:
(1) has been or is required to be registered under, or in
respect of which any undertaking has been given by, or any order made against,
the Seller pursuant to, the Restrictive Trade Practices Act 1976;
(2) contravenes the provisions of the Resale Prices Act 1976 or
in respect of which an undertaking has been given by, or an order made against,
the Seller pursuant to that Act; or
(3) in any jurisdiction in which the Seller has business assets,
or carries or intends to carry on business, or where the activities of the
Business may have an effect, infringes Article 85 or 86 of
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the Treaty of Rome, or any other anti-trust, anti-cartel or similar legislation,
is registerable, unenforceable or void, or renders the Seller liable to civil,
criminal or administrative proceedings under such legislation, and the Seller
has not given any undertaking to or received any request for information from,
nor is it subject to any order of or investigation by, any court or governmental
authority (including without limitation any national competition authority and
the Commission of the European Economic Community) under such legislation.
4.26 Foreign Jurisdiction. Other than as set forth on Schedule 4.26, any
licenses, consents, authorizations, or approvals required to operate the
Business in the manner currently being operated in any jurisdiction where the
Business is currently conducting operations, and the failure of which would have
a material adverse effect on the Business, have been obtained by the Seller and
will continue in full force and effect notwithstanding the execution of this
Agreement and the sale of the Assets contemplated thereby.
4.27 Disclosure. No representation, or warranty or statement by Seller
contained in this Agreement (including the Schedules and Exhibits hereto)
contains or will at Closing contain any untrue statement of a material fact, or
omits or will at Closing omit to state any material fact necessary, in light of
the circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
4.28 Limitation of Liability. The parties hereto hereby agree that the
liability of the Seller under this Agreement is limited as set forth in Section
6.2 of this Agreement.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
5.1 Organization, Etc. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the United Kingdom. CTIG is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Copies of the organizational documents of
Buyer and CTIG have been delivered to Sellers, and such copies are complete
and correct and in full force and effect on the date of this Agreement.
Buyer is duly qualified to do business and is in good standing as a foreign
corporation in all jurisdictions where the character of its properties or the
nature of its activities makes such qualification necessary and where the
failure to be so qualified would have a material adverse effect on the
business or financial condition of Buyer and its subsidiaries on a
consolidated basis.
5.2 Authorization. Buyer has all requisite power and authority to
execute, deliver and consummate the transactions contemplated by this
Agreement. Buyer has taken all action required by law and their
organizational documents or otherwise to authorize the execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby and thereby. No other act or proceeding on the part of Buyer is
necessary to authorize this Agreement or the transactions contemplated hereby
or thereby. This Agreement is, when executed and delivered to Seller by
Buyer at the Closing, will be, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms.
5.3 No Violation. Neither the execution and delivery by Buyer of this
Agreement, nor the consummation by Buyer of the transactions contemplated
hereby or thereby, will violate any provision of the laws of the United
Kingdom or the organizational documents of Buyer or violate, conflict with,
or constitute
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a default (or an event or condition which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or cause the acceleration of the
maturity of any liability or obligation pursuant to, or result in the creation
or imposition of any security interest, lien, charge or other encumbrance upon
any of the property or assets of Buyer under any note, bond, mortgage,
indenture, deed of trust, license, lease, contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to which Buyer is
a party or by which Buyer may be bound or affected or to which any of the
property or assets of Buyer may be subject, or violate any statute or law or any
judgment, decree, order, writ, injunction, regulation or rule of any court or
governmental authority.
5.4 Disclosure. No representation, warranty or statement by Buyer
contained in this Agreement (including the Schedules and Exhibits hereto)
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements herein or
therein not misleading.
5.5 Limitation of Liability. The parties hereto hereby agree that the
liability of the Seller under this Agreement is limited as set forth in Section
6.2 of this Agreement.
ARTICLE 6.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
6.1 Survival of Representations. All representations, warranties and
agreements made by any party to this Agreement or pursuant hereto shall survive
the Closing hereunder and any investigation made by or on behalf of any party
hereto for a period of three years following the Closing Date.
6.2 Indemnification.
(a) Subject to the terms and conditions of this Article VI, Seller
shall indemnify, defend and hold harmless Buyer, at any time after consummation
of the Closing, from and against all demands, claims, actions or causes of
action, assessments, losses, damages, liabilities, costs and expenses, including
interest, penalties and reasonable attorneys' fees and expenses (collectively,
"Damages"), asserted against, resulting to, imposed upon or incurred by Buyer,
or any of their affiliates, directly or indirectly, by reason of or resulting
from (i) liabilities or obligations of Seller (whether absolute, accrued,
contingent or otherwise) existing as of the Closing or arising out of facts,
conditions or circumstances existing at or prior thereto (excluding the Assumed
Liabilities), whether or not such liabilities, obligations or claims were known
at the time of the Closing; (ii) a breach of any representation, warranty or
agreement of either Seller contained in or made pursuant to this Agreement;
(iii) any tax claim asserted against Buyer, with respect to any taxes relating
to Seller's operations or properties on or prior to the Closing Date, except to
the extent expressly included in the Assumed Liabilities; (iv) any liability,
except for the Assumed Liabilities under any plant closing, bulk sales or
similar law (collectively, "Claims"). Other than any Claim under (i) above, the
Seller's liability under this Section 6.2(a) shall not, in aggregate, exceed an
amount equal to the sum of all payments of principal and interest under the Note
made by the Buyer to the Seller. Seller shall not be liable for any Claim
unless it exceeds UKL5,000, and Buyer shall not bring a Claim for indemnity
under this Article VI until the aggregate of all Claims exceeds UKL50,000 at
which time Buyer may bring a claim for indemnity for all such Claims, including,
without limitation, the initial UKL50,000 of Claims.
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(b) Subject to the terms and conditions of this Article VI, Buyer
shall indemnify, defend and hold harmless Seller at any time after consummation
of the Closing, from and against all Damages asserted against, resulting to,
imposed upon or incurred by Seller, directly or indirectly, by reason of or
resulting from (i) the Assumed Liabilities, (ii) a breach of any representation,
warranty or agreement of Buyer contained in or made pursuant to this Agreement,
or (iii) any liabilities relating to the Business arising after the Closing Date
that relate solely to events occurring after such date.
6.3 Conditions of Indemnification. The obligations and liabilities of
Buyer and Seller as indemnifying parties (each, an "Indemnifying Party") to
indemnify Seller and Buyer, respectively (each, an "Indemnified Party"), under
Section 6.2 with respect to Claims made by third parties shall be subject to the
following terms and conditions:
(a) The Indemnified Party shall give the Indemnifying Party prompt
notice of any such Claim, and the Indemnifying Party shall have the sole right
to undertake the defense thereof by representatives chosen by it.
(b) If the Indemnifying Party, within a reasonable time after notice
of any such Claim, fails to defend any Indemnified Party against which such
Claim has been asserted, such Indemnified Party shall (upon further notice to
the Indemnifying Party) have the right to undertake the defense, compromise or
settlement of such Claim on behalf of and for the account and risk of the
Indemnifying Party, subject to the right of the Indemnifying Party to assume the
defense of such Claim at any time prior to settlement, compromise or final
determination thereof; and
(c) Anything in this Section 6.3 to the contrary notwithstanding, (i)
if there is a reasonable probability that a Claim may materially and adversely
affect an Indemnified Party other than as a result of money damages or other
money payments, such Indemnified Party shall have the right, at its own cost and
expense, to defend, compromise or settle such Claim; provided, however, that if
such Claim is settled without the Indemnifying Party's consent (which consent
shall not be unreasonably withheld) such Indemnified Party shall be deemed to
have waived all rights hereunder against such Indemnifying Party for money
damages arising out of such Claim, and (ii) such Indemnifying Party shall not,
without the written consent of such Indemnified Party, settle or compromise any
Claim or consent to the entry of any judgment that does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to such
Indemnified Party a release from all liability in respect to such Claim.
ARTICLE 7.
OTHER OBLIGATIONS OF SELLERS AND BUYER
7.1 Confidentiality. Seller and Buyer shall hold, and shall cause their
respective consultants and advisors to hold, in strict confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all documents and information concerning the other parties
furnished to it by any other party or its representatives in connection with the
transactions contemplated by this Agreement (except
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to the extent that such information shall be shown to have been (a) previously
known by the party to which it was furnished, (b) in the public domain through
no fault of such party or (c) later lawfully acquired from other sources by the
party to which it was furnished) , and each party shall not release or disclose
such information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors in connection with the
transactions contemplated by this Agreement. Each party shall be deemed to have
satisfied its obligation to hold confidential information concerning or supplied
by the other party if it exercises the same care as it takes to preserve
confidentiality for its own similar information.
7.2 Mail Received After Closing. On and after the Closing, Buyer may
receive and open all mail addressed to Seller and deal with the contents thereof
in its sole discretion to the extent that such mail and contents relate to the
Assets, the Business or any of the Assumed Liabilities. Buyer shall deliver to
Seller, as applicable, all other mail received that is addressed to Seller or
the Company and does not relate to the Assets, the Business or the Assumed
Liabilities.
7.3 Competition.
(a) Seller acknowledges that Buyer may be seriously damaged if
Seller's confidential knowledge of the Business were disclosed to or utilized on
behalf of any person, firm, corporation or other business entity that is in
competition with Seller, and Seller agrees that it shall not, and shall use
commercially reasonable efforts to cause its Affiliates not to, at any time,
without the prior written consent of Buyer, disclose or use any such
confidential information.
(b) In furtherance of this Section 7.3 and to secure the interests of
Buyer hereunder, Seller agrees that for a period of two years following the
Closing Date, it shall not, in the United Kingdom, directly or indirectly,
participate in the ownership, management, operation or control of, or have any
financial interest in or aid or assist any person in the conduct of, any
business (a "Competitive Operation") that competes with the Business as
conducted by the Seller at any time or in the United Kingdom; provided, however,
that the Seller may acquire an entity that conducts a Competitive Operation
where such Competitive Operation accounts for less than 30% of the annual gross
revenues or net profits of the entity acquired and the Seller or any of its
affiliates may purchase products from a Competitive Operation where such
products are for internal use or are incidental to or are an incidental part of
products or a portfolio of products to be sold to customers of the Seller or to
customers of any Affiliates of Seller.
(c) If any provision of this Section 7.3 shall be held invalid, such
invalidity shall not affect any other provision of this Agreement not held so
invalid, and all other such provisions shall continue in full force and effect
to the full extent consistent with law. If any such provision shall be held
invalid in part, such invalidity shall in no way affect the rest of such
provision which, together with all other provisions of this Agreement, shall
likewise continue in full force and effect to the full extent consistent with
law.
(d) Seller acknowledges that a violation by it or any of its
Affiliates of any of the covenants contained in this Section 7.3 may cause
immeasurable and serious damage to Buyer. Seller accordingly acknowledges that
Buyer shall be entitled to injunctive relief in any court of competent
jurisdiction for any actual or threatened violation of any such covenant,
without posting a bond or other security, in addition to any other remedies
available to Buyer.
(e) The Seller further acknowledges and covenants with the Buyer that
it will not and it will
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procure that none of its Affiliates will for the period of two years following
Closing directly or indirectly solicit, interfere with or endeavour to entice
away from the Buyer any of the Employees (whether or not such person would
commit any breach of his contract of employment or engagement by reason of
leaving the service of the Buyer) nor shall it knowingly employ or aid or assist
in or procure the employment by any other person, firm or company or any such
person.
(f) The Seller further acknowledges and covenants with the Buyer that
Seller will not at any time following Closing use for any purpose the name
"Databit" or any name similar to it or likely to be confused with it (whether
alone or in conjunction with any such name).
(g) The Seller agrees that the covenants in clauses 7.3(e), 7.3(b)
and 7.3(f) are reasonable and necessary for the protection of the legitimate
interests of the Buyer and that, having regard to those circumstances, those
covenants do not work harshly on it.
7.4 Value Added Tax. The parties to this Agreement intend that Section 49
of the Value Added Tax Act of 1994 and Paragraph 5 of the Value Added Tax
(Special Provisions) Order 1992 will apply to the sale of the Business and the
Assets and accordingly:
(a) The Buyer declares their intention to use the Assets in carrying
on the Business following Closing;
(b) The Seller and the Buyer will each use all reasonable endeavors
to secure that the sale of the Assets is treated as neither a supply of goods
nor a supply of services for the purposes of value added tax;
(c) The Seller and the Buyer will give notice of the transfer to HM
Customs & Excise as required by paragraph 7 of Schedule I to the Value Added Tax
Act or by paragraph 4 of the Value Added Tax (General) Regulations 1985 or as
otherwise required by law;
(d) The Seller will on Completion deliver to the Buyer the records
referred to in Section 49 of the Value Added Tax Act 1994 and will not at any
time make a request to HM Customs & Excise for such records to be taken out of
the custody of the Buyer and the Buyer agree to preserve such records for such
period as may be required by law and during that period to permit the Seller to
inspect them in accordance with the terms of this agreement;
(e) Buyer declares that it is a taxable person for value added tax
purposes;
(f) The Seller hereby agrees to provide the Buyer within 30 days of a
written request being made by the Buyer with such information (in writing) as
the Buyer may require to enable the Buyer to establish the Seller's input tax
recovery position in relation to the Assets under Part VA of the Value Added Tax
(General) Regulations 1985 as amended ("the VAT Regulations") up to Closing
(including details of the relevant values of taxable grants and supplies of
goods and services made or to be made to the Seller on or before Closing for or
in connection with the acquisition of any Asset and the amount of input tax
claimed by the Seller in the first and subsequent intervals under the VAT
Regulations) and to enable the Buyer to monitor the same and to make any
necessary adjustments under the VAT Regulations in relation to such input tax
after the date hereof and the Seller hereby warrants that to the best of its
knowledge and belief such information will,
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when it is provided, be true and accurate in all respects and hereby
acknowledges that the Buyer will rely upon such information in complying with
the VAT Regulations in respect of any future disposal, transfer, dealing or use
of the Assets; and
(g) If value added tax should be held to be chargeable on the sale
under this agreement or on any part of it then the Buyer agree that the value
added tax will be in addition to the Consideration and the Buyer will (against
delivery of proper tax invoices) pay the amount of any such value added tax.
7.5 Directorship. Until Buyer pays all of the principal amount of the
Note, and all accrued interest due thereunder, Buyer shall use commercially
reasonable efforts to cause one nominee, as selected by the Seller, to be
elected to, and to serve on, the Board of Directors of CTIG. Seller hereby
selects William Driscoll as its initial nominee.
7.6 Nominee Share. Seller shall use its best efforts to cause the Nominee
Share to be transferred to the Buyer, at Seller's sole cost and expense, as soon
as practicable after Closing.
7.7 Books and Records. Buyer shall provide Seller access, upon reasonable
notice and during normal business hours, to the Books and Records of the
Business for six years after the date of Closing. Seller shall provide Buyer
access, upon reasonable notice and during normal business hours, to any Books
and Records of the Business not delivered to the Buyer pursuant to this
Agreement for six years after the date of Closing.
ARTICLE 8.
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to the
satisfaction, at or before the Closing, of each of the following conditions:
8.1 Representations and Warranties. The representations and warranties of
Seller contained herein, and the statements contained in any schedule,
instrument, list, certificate or writing delivered by Seller pursuant to this
Agreement shall be true, complete and accurate as of the date when made and as
of the Closing Date as though such representations and warranties were made at
and as of such dates, except for any changes expressly permitted by this
Agreement.
8.2 Performance. Seller shall have performed and complied in all material
respects with all agreements, obligations and conditions required by this
Agreement to be performed or complied with by Seller at or prior to the Closing.
8.3 No Proceeding or Litigation. There shall not be threatened,
instituted or pending any suit, action, investigation, inquiry or other
proceeding by or before any court or governmental or other regulatory or
administrative agency or commission requesting or looking toward an order,
judgment or decree that could have a material adverse effect on the operations,
condition (financial or otherwise), liabilities, assets, earnings or prospects
of the Business.
8.4 No Injunction. On the Closing Date, there shall be no effective
injunction, writ, preliminary
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restraining order or other order issued by a court of competent jurisdiction
restraining or prohibiting the consummation of the transactions contemplated
hereby.
8.5 Documents. The Related Instruments and all other documents to be
delivered by Seller or the Company to Buyer at the Closing shall be in the form
as agreed hereunder.
8.6 Consents and Approvals. All licenses, permits, consents, approvals
and authorizations of all third parties and governmental bodies and agencies
shall have been obtained that are necessary, in the opinion of counsel to Buyer,
in connection with (a) the execution and delivery by Seller of this Agreement or
the Related Instruments, (b) the consummation by Seller of the transactions
contemplated hereby or thereby, (c) the ownership and operation by Buyer of the
Assets or (d) the conduct by Buyer of the Business as conducted on the date
hereof, and copies of all such licenses, permits, consents, approvals and
authorizations shall have been delivered to Buyer.
8.7 Adverse Change. No material loss, damage or destruction to the Assets
shall have occurred between the date of this Agreement and the Closing Date.
ARTICLE 9.
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of Seller under this Agreement are subject to the
satisfaction, at or before the Closing, of each of the following conditions:
9.1 Representations and Warranties. The representations and warranties of
Buyer contained herein shall be true, complete and accurate as of the date when
made and at and as of the Closing Date as though such representations and
warranties were made at and as of such date, except for any changes expressly
permitted by this Agreement.
9.2 Performance. Buyer shall have performed and complied in all material
respects with all agreements, obligations and conditions required by this
Agreement to be so performed or complied with by it at or prior to the Closing.
9.3 No Injunction. On the Closing Date, there shall be no effective
injunction, writ, preliminary restraining order or other order issued by a court
of competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated hereby.
ARTICLE 10.
MISCELLANEOUS
10.1 Commissions. Each of the parties hereto shall pay or discharge, and
shall indemnify and hold the others harmless from and against, all claims or
liabilities for brokerage commissions or finder's fees incurred by reason of any
action taken by it.
10.2 Expenses; Taxes, Etc. Except as otherwise provided herein, each party
hereto shall pay all fees
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and expenses incurred by it in connection with this Agreement.
10.3 Further Assurances. From time to time, at Buyer's request and without
further consideration, Seller shall execute and deliver to Buyer such documents
and take such other action as Buyer may reasonably request in order to
consummate more effectively the transactions contemplated hereby and to vest in
Buyer good and valid title to the Assets.
10.4 Parties in Interest. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by the respective successors and permitted
assigns of the parties hereto. The rights and obligations of Buyer and Sellers
hereunder may not be assigned without the consent of the other.
10.5 Entire Agreement, Amendments and Waiver.
(a) This Agreement, the exhibits, the schedules and other writings
referred to herein or delivered pursuant hereto that form a part hereof contain
the entire understanding of the parties with respect to its subject matter.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to its subject matter.
(b) This Agreement may be amended only by a written instrument duly
executed by the parties. Any condition to a party's obligations hereunder may
be waived in writing by such party to the extent permitted by law.
10.6 Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.7 Notices. All notices, claims, certificates, requests, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, by telex or facsimile transmission or
mailed (registered or certified mail, postage prepaid, return receipt requested)
as follows:
If to Buyer to: CTI Data Solutions (International) Ltd.
c/o CTI Group (Holdings) Inc.
901 South Trooper Road
P.O. Box 80360
Valley Forge, Pennsylvania 19484 (USA)
Attention: Anthony Johns
Facsimile No.: (610) 666-7707
with copies to: Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, PA 19102 (USA)
Attention: Barry J. Siegel, Esquire
Facsimile No.: (215) 568-6603
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If to Parent Siemens plc
or to Company: Siemens House
Oldbury, Bracknell
Berkshire, R 912 8FZ (England)
Attention: James Loughery
Facsimile No.: 011-44-1344-396020
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above,
provided that notice of a change of address shall be deemed given only upon
receipt.
10.8 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the England without regard to its or
any other jurisdiction's conflicts of law rules. Each party hereto agrees to
submit to personal jurisdiction and to waive any objection to venue in the
England and further agrees that service of process in any action arising out of
or relating to this Agreement shall be effective if mailed to such party at the
address specified herein.
10.9 Third Parties. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person, other than the parties
hereto and their successors or permitted assigns, any rights or remedies under
or by reason of this Agreement.
10.10 Counterparts. This Agreement may be executed simultaneously in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.11 Certain Defined Terms. As used in this Agreement, the following
terms have the meanings indicated:
"Affiliate" of a specified person means a person that directly or
indirectly through one or more intermediaries, controls, is controlled by,
or is under common control with, the person specified.
"including" means including but not limited to.
"Subsidiary" of a person or entity means any corporation (a) of which
such person or entity directly or indirectly owns or controls at the time
outstanding shares of stock or other equity securities that have in
ordinary circumstances (not dependent upon the happening of a contingency)
voting power to elect a majority of the board of directors of such
corporation, or (b) of which shares of stock or other equity securities of
the character described in the foregoing clause (a) shall at the time be
owned or controlled directly or indirectly by such person or entity and one
or more of its Subsidiaries or by one or more of its Subsidiaries.
10.12 Guarantee. CTIG guarantees the prompt and complete performance of
the obligations of Buyer under this Agreement.
ARTICLE 11.
PROPERTY PROVISIONS
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11.1 Definitions. In this Article XI unless the context
otherwise admits the following words and expressions shall have the meanings set
out below:
"Consent" shall mean the written consents granted by each of the
Reversioners to the assignment as appropriate of each of the Leases to the Buyer
as required by the terms of the Leases;
"the First Lease" means a lease which the Seller is endeavoring
to negotiate with Ekman Cleave Limited for the letting to the Seller of the
First Property such lease to be in the form of the draft annexed hereto as
Exhibit F1 and for the term and subject to the rents and conditions therein
contained;
"the First Property" means the ground floor offices at Ekman Cleave
House 854 Brighton Road Purley in the London Borough being the whole of
the premises to be comprised in and demised by "the First Lease";
"General Conditions" shall mean the National Conditions of
Sale (20th Edition)
"the Leases" means collectively the First Lease and the Second
Lease;
"the Properties" means collectively the First Property and the
Second Property;
"Property Completion Date" shall means the date five working
days after the date of grant of the Leases or (if later) the date five working
days after all the Consents have been received;
"Reversioner" shall mean each of the landlords and others for
the time being entitled to a reversion (including Ekman Cleave Limited) under
any of the Leases or any superior leases or other persons from whom consent is
required for the assignment of the Leases;
"the Second Lease" means a lease which the Seller is endeavouring
to negotiate with Ekman Cleave Limited for the letting to the Seller of the
Second Property such lease to be in the form of the draft annexed hereto as
Exhibit F2 and for the term and subject to the rents and conditions therein
contained;
"the Second Property" means the first floor offices at Ekman Cleave
House aforesaid being the whole of the property to be comprised in and
demised by "the Second Lease";
"Special Conditions" means the conditions contained in this
Article XI (other than the General Conditions) in this Agreement;
11.2 Agreement to Assign.
11.2.1 Subject to the provisions of this Article XI the Seller agrees
to assign the First Lease and the Second Lease to the Buyer which
assignments the Buyer will accept.
11.2.2 The Seller agrees to use all reasonable endeavours to secure
the grant to it of the First Lease and the Second Lease as soon as
reasonably possible PROVIDED THAT the Seller will not be liable under
the provisions of this clause to pay any
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fine, premium or costs to the landlord or any other party to secure
the grant of the Leases.
11.3 General Conditions.
11.3.1 The General Conditions shall be deemed to be incorporated
herein insofar as they are applicable to a sale by private treaty and
are not varied by or inconsistent with the Special Conditions and for
the interpretation of this Agreement and, in particular, this
Schedule:
(i) where the Special Conditions conflict with the General
Conditions the Special Conditions shall prevail; and
(ii) General Conditions 2; 3, 8(1)(ii) and (iii), 10, 11(7),
13(3) 15(2) 20 and 21 shall be deemed deleted
11.4 Occupation of the Properties by the Buyer
11.4.1 From the Completion Date the Seller shall permit the Buyer
only to occupy each of the Properties as licensee and the Buyer shall
in relation to each of the Properties from that date until the
Property Completion Date:
(i) pay to the Seller by way of licence fee an amount equal to
all rents and other outgoings or expenses payable in respect of
the use and occupation of the Properties and any such sums as may
become due under the Leases thereof or otherwise in respect of
the Properties together with any amounts in respect of value
added tax thereon (apportioned as from the Completion Date) and
indemnify the Seller and on demand in respect thereof;
(ii) observe and perform the covenants obligations and
stipulations on the part of the tenant contained or to be
contained in the Leases and indemnity the Seller against all
costs, claims, proceedings, damages, losses and actions arising
out of any breach of the lessee's covenants to be contained in
the Leases whether by virtue of the licence for occupation
granted by this clause or otherwise.
11.4.2 If at any time prior to completion of the assignment of the
Leases a Reversioner lawfully demands that the Buyer vacates the
Properties or either of them, the Buyer will immediately upon such
demand vacate the Properties and yield up the same to the Seller or
(if required) the Reversioner and in either case in the state of
repair and condition as would be required in the event of the
Properties being yielded up at the end of the term in accordance with
the covenants contained in or to be contained in the Leases.
The Buyer acknowledges that the Seller has no right, title or interest
in the Properties which entitles the Seller to possession of the
Properties or to grant permission
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for the Buyer to occupy the Properties.
11.5 Application for Consent.
11.5.1 The Seller shall apply to the Reversioners for the
Consents and shall expeditiously and diligently pursue such
application and use all reasonable endeavours to obtain the
same.
11.5.2 The Buyer shall supply to the Seller such information and
references and legal opinions as the Reversioners may reasonably
require and shall comply with all the lawful requirements of the
Reversioner where appropriate to facilitate the grant of the
Consents including, without limitation, entering into a deed or
agreement with the Reversioners containing direct covenants by
the Buyer and by any guarantor lawfully required by any
Reversioner with the Reversioner or provide such other security
as the Reversioner may lawfully require for the observance and
performance of the obligations of the tenant under the Leases and
the Seller shall (if required by a Reversioner) enter into
authorized guarantee agreements as required by clause 4.1 of the
Leases.
11.5.3 The Seller and the Buyer shall keep the other fully and
promptly informed of progress in connection with obtaining each
Consent.
11.5.4 The Buyer and the Seller shall each bear their own costs
in respect of the application for the Consent and the Seller
shall bear the reasonable and proper costs of the Reversioner in
respect of the grant of the Consent.
11.5.5 It is confirmed and agreed that save to the extent as may
be required by the Leases and by the provisions of 11.5.4 of this
Article XI the Seller will not be obliged:
(i) to make any payments of money or give any other
consideration to the Reversioners for the Consents; or
(ii) take any action against the Reversioners to obtain a
declaration from the Court that consent is being
unreasonably withheld or delayed; or
(iii) be obliged to accept from the Reversioners any Consent
subject to any conditions which the Seller considers
unreasonable.
11.5.6 In the event of:
(i) the Leases not being granted within six months after the
date hereof; or
(ii) the Consents not being issued within six months after
the date hereof; or
(iii) the Consents at any time being refused; or
(iv) the Consents being given or offered on terms and
conditions which the
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<PAGE>
Seller acting reasonably, considers to be unreasonable,
either the Seller or the Buyer may by written notice served on the other
party rescind the agreement set out above for the assignment of the Leases to
the Buyer in which event the Buyer will within one month of the service of the
notice yield up the Properties to the Seller in the manner required by the
provisions of clause 11.4.2 of this Article XI hereof PROVIDED THAT any
rescission by virtue of this clause shall be without prejudice to the rights of
either party in respect of any antecedent breach.
11.6 Completion of Assignment of the Properties.
11.6.1 Completion of the assignment of each of the Properties shall
take place on the Property Completion Date.
11.6.2 Completion shall take place at Siemens House Bracknell RG12
8FZ or at such other place as the Seller's solicitors may direct and
the Buyer's solicitors may agree).
11.7 Assurances.
11.7.1 The assignments of the Buyer of the Leases shall contain
covenants by the Buyer for the future observance and performance of
the covenants in the Leases such assignments to be in the forms of the
assurances attached as Exhibit G and shall be executed in duplicate
one of which is to be retained by the Seller;
11.7.2 In the event of any of the Reversioners requiring any
guarantees in respect of the Buyer's performance of the covenants in
the leases the same guarantors shall give guarantee covenants to the
Seller in similar form to those as may be required by the
Reversioners.
11.8 Agency Appointment.
11.8.1 With effect from the date of the completion of the assignment
to the Buyer of the Leases the Buyer irrevocably appoints the Seller
as agent for the Buyer for the purpose of serving notices of
determination in accordance with clause 7 of each of the Leases which
notices the Seller is hereby authorized to serve upon the landlord at
any time and calling for determination of the terms created by the
Leases on any date as permitted by the Leases.
11.8.2 The Buyer will at any time upon demand from the Seller supply
the Seller with sufficient evidence to demonstrate that the Buyer is
paying the rents received by the Leases and otherwise performing the
obligations of the tenant under each of the Leases and will, if
requested by the Seller, permit the Seller to enter and inspect the
Properties to ascertain whether the obligations under the Leases are
being complied with.
11.9 Title.
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Title to the Properties shall be deduced to the Buyer by
production to it's solicitors of the Leases. The Buyer shall
not be entitled to have deduced any superior titles and shall
raise no objections or requisitions with regard thereto.
11.10 Title Guarantee.
The Assignments shall be made with limited title guarantee but the
Seller shall not be liable for the breach of any covenant or condition
in the Leases and relating to the state or condition of the
Properties.
11.11 Matters affecting the Properties.
The Properties will be assigned to the Buyer subject to the following
matters so far as they relate to the Properties and are still
subsisting and capable of taking effect at the relevant Property
Completion Date:
(i) any matters contained in or referred to in the Leases or the
Leasehold Documents;
(ii) all rights of way light and air support drainage and other
rights easements quasi-easements liabilities and public or
private rights whatsoever and to any liability to repair or
contribute to the repair of sewers drains pipes party structure
and other like matters;
(iii) all matters in the nature of overriding interests as set
out in section 70(1) of the Land Registration Act 1925 (as
amended) which affect the Properties;
(iv) all Local Land Charges (whether or not registered before the
date of this Agreement) and all matters capable of registration
as Local Land Charges (whether or not actually registered);
(v) all notices served and orders demands proposals or
requirements made by any local or other public or competent
authority; and
(vi) all actual or proposed orders directions plans notices
instruments charges restrictions conditions agreements or other
matters arising under any statute relating to town and country
planning and any laws and regulations intended to control or
regulate the construction demolition alteration or change of use
of land or buildings or to preserve or protect the environment.
11.12 Buyer' Knowledge.
The Buyer acknowledges that it has made all searches enquiries
and inspections which a prudent Buyer would make and buys subject
to any matters which are or would be revealed.
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The Buyer shall be deemed to purchase with full knowledge and
notice of the matters aforesaid and shall not raise any objection
or requisition whatsoever in respect of the same.
11.13 Condition of Property.
The Properties are sold in their respective current state of
repair and condition and the Seller shall not be liable for any
loss cost expense or liability arising from the state of repair
or condition of the properties or their previous use and any
covenants which might be implied in the transfer or assurance of
the Properties shall not be deemed to imply that the covenants or
conditions contained in the Lease concerning the state and
condition of the Properties have been performed.
11.14 Dealings.
Neither the Seller nor the Buyer shall without the consent of the
other complete nor permit completion (or purport to do the same)
of any underlease tenancy concession agreement licence to occupy
or other agreement or dealing in respect of the Properties or any
part thereof after the date hereof.
11.15 Dilapidations Indemnity.
The Buyer agrees to indemnify the Seller against all actions,
proceedings, costs, claims and demands which may be made
against the Seller in respect of any breach by the Seller of
the covenants and conditions contained in the two leases each
dated January 23, 1996 between Ekman Cleave Limited (1) and
the Seller (2) of the First Property and the Second Property,
respectively, and where such covenants and conditions relate
to the state of repair and condition of the Properties.
[Signature Page Follows]
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of Buyer and Seller on the date first written
above.
SIEMENS PLC
By: /s/ John H. Whitehead
-----------------------------
Name: John H Whitehead
Title: Corporate Controller
CTI DATA SOLUTIONS (INTERNATIONAL) LTD.
By: /s/ Anthony Johns
-----------------------------
Name: Anthony Johns
Title: Chairman
For purposes of Section 10.12 of
this Agreement:
CTI GROUP (HOLDINGS), INC.
By: /s/ Anthony Johns
-----------------------------
Name: Anthony Johns
Title: Chairman/C.E.O.
34
<PAGE>
EXHIBIT 10.1
SECURED PROMISSORY NOTE
US $2,000,000 February 2, 1998
FOR VALUE RECEIVED AND INTENDING TO BE LEGALLY BOUND HEREBY, CTI Data
Solutions (International) Ltd. ("Borrower"), an English company and a
wholly-owned subsidiary of CTI Group (Holdings), Inc. ("CTIG"), a Delaware
corporation, promises to pay to the order of Siemens plc ("Lender"), at such
address or at such location as Lender may designate from time to time, the
principal sum of Two Million Dollars ($2,000,000.00), together with interest
as set forth below, until the date on which the principal amount is paid in
full in accordance with the terms of this Promissory Note (the "Note").
Reference is made to that Asset Purchase Agreement, Security Agreement,
Debenture and Pledge Agreement of even date herewith among Borrower, CTIG and
Lender (the "Asset Purchase Agreement", the "Security Agreement", the "Charge
Agreement" and the "Pledge Agreement", respectively) for a statement of the
other terms, conditions and covenants to which this Note is subject.
Capitalized terms appearing herein and not otherwise defined shall have the
respective meanings given to such terms in the Asset Purchase Agreement, the
Security Agreement and/or the Pledge Agreement.
All outstanding principal and any accrued and unpaid interest thereon
due hereunder shall be due and payable on February 2, 2001 (the "Maturity
Date").
1. Interest. During the period beginning on the date hereof and
ending on the Maturity Date, interest shall accrue daily on the outstanding
principal amount hereunder at a simple rate of ten percent (10%) per annum.
Interest shall be calculated hereunder for the actual number of days that the
principal is outstanding, based on a three hundred sixty (360) day year.
Interest shall continue to accrue on the principal balance hereof at rate of
interest specified in this Note, notwithstanding any demand for payment,
acceleration and/or the entry of any judgment against Borrower, until all
principal owing hereunder is paid in full.
2. Payment. Except as set forth in Sections 3 and 5 hereof, no
principal payments shall be due on the Note until the Maturity Date. Accrued
interest shall be paid to the Lender quarterly in arrears on April 1, July 1,
October 1 and January 1 ("Interest Payment Dates") of each year. All
payments of principal and interest shall be made by cash or certified check
to Lender at the address designated in writing by Lender.
<PAGE>
3. Prepayments. This Note may be prepaid in whole or in part at any
time and from time to time without payment of a penalty or premium provided
that each such prepayment is accompanied by interest on the amount of such
prepayment calculated at the rate of interest set forth in this Note to the
date of such prepayment. The Borrower hereby agrees to cause CTIG to use
commercially reasonable efforts to sell, within twelve (12) months of the
date hereof, its United States telemanagement service bureau and to apply the
net cash proceeds from such sale, up to an amount equal to the Required Cash
Amount (as the term "Required Cash Amount" is defined in the Asset Purchase
Agreement), toward reducing the principal amount outstanding under this Note.
The foregoing shall in no way limit the obligations of Borrower to repay
principal and pay interest in accordance with the terms of this Note, which
are absolute and unconditional.
4. Events of Default. Each of the following shall be an "Event of
Default" hereunder: (1) the non-payment when due of any amount of principal
or interest payable under this Note; or (2) if Borrower becomes insolvent or
makes an assignment for the benefit of creditors, or if any petition is filed
by or against Borrower under any provision of any state or federal law or
statute alleging that Borrower is insolvent or unable to pay debts as they
mature or under any provision of the United States Bankruptcy Code, as
amended.
5. Lender's Rights Upon Default. Upon the occurrence of any Event of
Default and without the necessity of giving any prior written notice to
Borrower, Lender may do any one or all of the following: (a) accelerate the
maturity of this Note and all amounts payable hereunder and demand immediate
payment thereof and (b) exercise all of the rights, benefits, privileges and
remedies of a secured party under the laws of the United Kingdom (or under
the laws of any other jurisdiction in which any collateral security for the
obligations of the Borrower under this Note may be located) and all of
Lender's rights and remedies under the Security Agreement and/or the Pledge
Agreement.
6. Guaranty. Pursuant to the Guaranty of even date herewith of CTIG
in favor of Lender, repayment of principal of and payment of interest in
unconditionally guaranteed by CTIG.
7. Attorneys' Fees and Costs. In the event that Lender engages an
attorney to represent it in connection with (a) any default by Borrower under
the Note, (b) the enforcement of any of Lender's rights and remedies under
the Note, or (c) any bankruptcy or other insolvency proceedings commenced by
or against Borrower, then Borrower shall be liable to and shall reimburse
Lender for all reasonable attorneys' fees, costs and expenses incurred by
Lender. Borrower shall also be liable and shall also reimburse Lender for all
other costs and expenses incurred by Lender in connection with the
collection, preservation and liquidation of any property acting as collateral
security under the Note and/or in the enforcement of any of Borrower's
obligations under the Note.
8. Choice of Law. This Note has been delivered to and accepted by
Lender in and shall be governed by the laws of the United Kingdom. Borrower
agrees to the exclusive jurisdiction of the courts located in the United
Kingdom without regard to principles of conflicts of laws, in connection
2
<PAGE>
with any matter arising hereunder, including the collection and enforcement
hereof, except with regard to Lender's rights and remedies concerning any of
the collateral security for the obligations of the Borrower under this Note.
With respect to such collateral security, the parties hereto hereby agree to
the exclusive jurisdiction of the courts located in, and to the application
of the laws of, the Commonwealth of Pennsylvania.
9. Miscellaneous. If any provision of this Note shall for any reason
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision hereof. Upon any such determination
that any provision is invalid or incapable of being enforced, such provision
shall be construed so as to effect the original intent of the parties as
closely as possible in a permissible manner in order that the transactions
contemplated hereby are consummated to the greatest extent possible. The
waiver of any Event of Default or the failure of Lender to exercise any right
or remedy to which it may be entitled shall not be deemed a waiver of any
subsequent Event of Default or of Lender's right to exercise that or any
other right or remedy to which Lender is entitled.
IN WITNESS WHEREOF, Borrower has duly executed this Note the day and
year first above written and has hereunto set hand and seal.
ATTEST: CTI DATA SOLUTIONS (INTERNATIONAL) LTD.
By: /s/ Mary Ann Davis By: /s/ Anthony Johns
----------------------------- ----------------------------
Name: Mary Ann Davis Name: Anthony Johns
Title: Corporate Secretary Title: President
[Corporate Seal]
3
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EXHIBIT 10.2
GUARANTY
In order to induce Siemens plc, an English company (the "Holder"), to
accept as payment a certain secured promissory note (the "Note") of even date
herewith in the principal amount of $2,000,000 executed and delivered by CTI
Data Solutions (International) Ltd., an English Company (the "Maker") and a
wholly owned subsidiary of CTI Group (Holdings), Inc., a Delaware corporation
("CTIG"), pursuant to the terms of the Note and that certain Asset Purchase
Agreement of even date herewith between Holder and Maker, and in
consideration thereof and other valuable consideration, the receipt of which
is hereby acknowledged, the undersigned, intending to be legally bound
hereby, agrees as follows:
1. The undersigned unconditionally guarantees the performance by Maker
of the obligations of Maker to Holder pursuant to the terms of the Note.
Upon failure by Maker to make any of the payments required to be made by
Maker pursuant to the Note, for whatever reason, the undersigned (the
"Guarantor") shall pay, forthwith on of demand by the Holder, the amount of
payments not so made, by wire transfer of immediately available funds to the
account of the Holder specified in the demand or by such other method of
payment specified in the demand.
2. The obligations of the Guarantor hereunder shall be unconditional
and absolute and, without limiting the generality of the foregoing, shall not
be released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Maker under this Guaranty
or the Note, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Guaranty or the Note;
(iii) any release, impairment, non-perfection or invalidity
of any direct or indirect security for any obligation of the Maker
under this Guaranty or the Note;
(iv) any change in the corporate existence, structure or
ownership of the Maker, or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting the Maker or its assets or any
resulting release or discharge of any obligation of the Maker
contained in this Guaranty or the Note;
<PAGE>
(v) the existence of any claim, set-off or other rights which
Guarantor may have at any time against the Maker, the Holder or any
other corporation or person, whether in connection herewith or any
unrelated transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
(vi) any invalidity or unenforceability relating to or against
the Maker for any reason of this Guaranty or the Note, or any
provision of applicable law or regulation purporting to prohibit the
payment by the Maker of the principal of or interest on the Note or
any other amount payable by the Borrower under this Guaranty; or
(vii) any other act or omission to act or delay of any kind
by the Maker, the Holder or any other corporation or person or any
other circumstance whatsoever which might, but for the provisions of
this paragraph, constitute a legal or equitable discharge of the
Guarantor's obligation hereunder.
The Guarantor hereby waives diligence, presentment, demand of payment (other
the demand referred to above), or filing of claims with a court in the event
of insolvency or bankruptcy of the Maker any right to require a proceeding
first against the Maker, protest, notice and all demands (other the demand
referred to above) whatsoever and covenants that this Guaranty will not be
discharged except by complete performance of the obligations of the Maker or
of this Guaranty.
3. If acceleration of the time for payment of any amount payable by
the Maker under this Agreement or the Note is stayed upon the insolvency,
bankruptcy or reorganization of the Maker, all such amounts otherwise subject
to acceleration under the terms of this Agreement shall nonetheless be
payable by the Guarantor hereunder forthwith on demand by the Holder.
4. The Guarantor's liability hereunder shall continue in full force
and effect during the term of the Note and any and all extensions of renewals
thereof, until all liabilities and obligations of Maker to Holder pursuant to
the Note are paid in full.
5. This Guaranty is secured by and entitled to the benefits of the
Security Agreement and the Pledge Agreement, reference to which is made for a
description of the Collateral and the rights of the Holder and CTIG with
respect thereto.
6. This Guaranty shall be governed, construed and interpreted as to
validity, enforceability and in all other respects under the laws of the
United Kingdom. This Guaranty has been delivered to and accepted by Holder
in and shall be governed by the laws of the United Kingdom. Guarantor agrees
to the exclusive jurisdiction of the courts located in the United Kingdom
without regard to principles
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of conflicts of laws, in connection with any matter arising hereunder,
including the collection and enforcement hereof, except with regard to
Lender's rights and remedies concerning any of the collateral security for
the obligations of the Guarantor under this Guaranty. With respect to such
collateral security, the parties hereto hereby agree to the exclusive
jurisdiction of the courts located in, and to the application of the laws of
the Commonwealth of Pennsylvania.
7. No modification hereof shall be binding or enforceable unless in
writing and signed by the party against whom enforcement is sought. This
Guaranty shall be binding upon the successors and assigns of the Guarantor.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty this 2nd
day of February, 1998.
ATTEST: CTI DATA SOLUTIONS (INTERNATIONAL) LTD.
By: /s/ Mary Ann Davis By: /s/ Anthony Johns
---------------------------- -----------------------------
Name: Mary Ann Davis Name: Anthony Johns
Title: Corporate Secretary Title: President
[Corporate Seal]
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EXHIBIT 10.3
DEBENTURE
Date: 2 February 1998
Parties:
1 Siemens plc whose registered office is at Siemens House, Oldbury,
Bracknell, Berkshire, RG12 8FZ (the "Secured Party").
2 CTI Data Solutions (International) Limited (registered no 2969593)
whose registered office is at CTI Data Solutions (International) Limited, c/o
Sheddon Smith, Milton House, Gatehouse Road, Aylesbury, Buckinghamshire HP19
3EA, United Kingdom, (the "Company").
Operative provisions:
1 Interpretation
1.1 In this Debenture:
"ACTS" means the Law of Property Act 1925 and the Insolvency Act 1986 (or
any statutory modification or re-enactment of those acts for the time being
in force).
"ASSETS" means the property, undertaking and assets of the Company
expressed to be charged to the Secured Party now or hereafter under clause
2.
"BOOKS AND RECORDS" means all present and future books of account of every
nature, correspondence, memoranda, invoices, ledger cards, bills of lading,
disks, diskettes, and other software storage media and devices, papers,
books and other documents.
"EVENTS OF DEFAULT" shall have the same meaning ascribed to such term in
the Note.
"NOTE" means a Secured Promissory Note executed of even date herewith by
the Company under which the Company has promised to pay the Secured Party
the sum of $2,000,000 dollars (together with interest thereon) on February
2, 2001.
"OBLIGATIONS" means the obligation of the Company to make payment under the
Note in accordance with its terms.
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"PRIOR CHARGES" means the charges over the Assets of the Company in favour
of the Company's bankers from time to time being one United Kingdom
clearing bank.
"PROPERTY" means all leasehold and freehold property referred to in clauses
2.1.1
"RECEIVER" has the meaning given to it in clause 4.1.
1.2 Clause headings are for ease of reference only.
2 Charge
2.1 The Company hereby covenants to observe and properly discharge the
Obligations. As security for the discharge of the Obligations, the Company
hereby charges to the Secured Party, with full title guarantee :
2.1.1 by way of fixed charge, all estates or interests in any freehold and
leasehold property of the Company now and in the future vested in the
Company, together with all buildings, fixtures (including trade fixtures)
and fixed plant and machinery from time to time on that property;
2.1.2 by way of fixed charge, all the goodwill and uncalled capital for the
time being of the Company;
2.1.3 by way of fixed charge, all book debts and other debts now and in the
future due or owing to the Company;
2.1.4 by way of fixed charge, all intellectual property rights, choses in
action and claims now and in the future belonging to the Company;
2.1.5 by way of floating charge, all the Company's present and future
undertaking and assets, whatever and wherever, including (without
limitation) all other property and assets not subject to a fixed charge
under this Debenture.
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3 Covenants
3.1 Excepting the Prior Charges, the Company shall not without the prior
written consent of the secured Party:
3.1.1 create or permit to subsist any mortgage, charge or lien on any of its
undertaking or assets other than liens arising by operation at law;
3.1.2 sell, transfer or otherwise dispose of its undertaking and other
assets or any part of them, except by getting in and realising them in the
ordinary and proper course of its business;
3.1.3 pull down or remove all or any part of the buildings forming part of
the Property or sever, unfix or remove any of the fixtures on the Property
nor (except for repairs or the substitution of replacements) remove any
plant and machinery from the Property except in the ordinary course of
business;
3.1.4 deal with its book or other debts or securities for money except by
getting in and realising them in the ordinary and proper course of its
business, but so that this exception shall not permit the realisation of
debts by means of block discounting or factoring; or
3.1.5 grant or accept a surrender of any lease or licence of or part with or
share possession or occupation of the Property or any part of it.
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3.2 The Company shall:
3.2.1 keep such of the Assets as are insurable insured against loss or
damage by fire and such other risks as may be prudent, to their full
replacement value and, where such insurance is not in joint names, procure
that the Secured Party's interest is noted on all policies required under
this clause 3.2.1;
3.2.2 duly and promptly pay all premiums and other moneys necessary for
maintaining the insurances required under clause 3.2.1 and on demand on
reasonable notice produce the insurance policies and premium receipts to
the Secured Party;
3.2.3 keep all buildings and all plant, machinery, fixtures, fittings and
other effects in reasonable repair and working order;
3.2.4 promptly notify the Secured Party of any meeting to discuss, or any
proposal or application for the appointment of an administrator, receiver,
liquidator or similar official in respect of the Company or any of its
Assets and, if any such official is appointed, of his appointment;
3.2.5 promptly notify the Secured Party of any event which will constitute
an Event of Default;
3.2.6 conduct and carry on its business in a proper efficient and business
like manner and keep or cause to be kept proper books of account relating
to such business;
3.2.7 furnish within [4] months of the end of the Company's financial year
to the Secured Party an annual balance sheet and profit and loss account
and trading account showing the true position of the Company's affairs in
each year certified by a Chartered Accountant and also on a quarterly
basis within 6 weeks of the end of each quarter of the Company's financial
year quarterly management accounts prepared by the Company.
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4 Receiver
4.1 Upon the occurrence of an Event of Default in the event that the
Obligation remains undischarged within 48 hours of notice in writing from
the Secured Party to the Company demanding repayment, the Secured Party
may appoint by writing any person or persons to be an administrative
receiver or a receiver and manager or receivers and managers ('the
Receiver', which expression shall include any substituted receiver(s) and
manager(s)) of all or any part of the Assets.
4.2 The Company may from time to time determine the remuneration of the
Receiver and may remove the Receiver and appoint another in his place.
4.3 The Receiver shall, subject to the terms of the Acts, be the Company's
agent and shall have all powers conferred by the Acts. The Company alone
shall be responsible for his acts and omissions and for his remuneration.
In particular, but without limiting any general powers or the Secured
Party's power of sale, the Receiver shall have power:
4.3.1 to take possession of collect and get in all or any part of the Assets
and for that purpose to take any proceedings in the Company's name or
otherwise as he shall think fit;
4.3.2 to carry on or concur in carrying on the Company's business and raise
money from the Secured Party or others on the security of all or any part
of the Assets;
4.3.3 to sell, let and/or terminate or to accept surrenders of leases or
tenancies of any part of the Property, in such manner and on such terms as
he thinks fit;
4.3.4 to take, continue or defend any proceedings and make any arrangement
or compromise which the Secured Party or he shall think fit;
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4.3.5 to make and effect all repairs, improvements and insurances;
4.3.6 to appoint managers, officers and agents for any of the above
purposes, at such salaries as the Receiver may determine;
4.3.7 to call up any of the Company's uncalled capital;
4.3.8 to promote the formation of a subsidiary company or companies of the
Company, so that such subsidiary may purchase, lease, license or otherwise
acquire interests in all or any part of the Assets; and
4.3.9 to do all other acts and things which he may consider to be incidental
or conducive to any of the above powers.
4.4 Any moneys received under this Debenture shall be applied:
4.4.1 first, in satisfaction of all costs, charges and expenses properly
incurred and payments properly made by the Secured Party or the Receiver
and of the remuneration of the Receiver;
4.4.2 secondly, in or towards satisfaction of the Obligations in such order
as the Secured Party shall determine; and
4.4.3 thirdly, the surplus (if any) shall be paid to the person or persons
entitled to it.
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5 Miscellaneous
5.1 No statutory or other power of granting or agreeing to grant or of
accepting or agreeing to accept surrenders of leases or tenancies of any
part of the Property may be exercised by the Company without the Secured
Party's prior written consent. Section 93 of the Law of Property Act 1925
shall not apply.
5.2 By notice in writing to the Company, the Secured Party may at any time
convert the floating charge created by clause 2.1.5 into a specific charge
over any Assets specified in the notice which the Secured Party considers
to be in danger of being seized or sold under any form of distress,
attachment or other legal process or to be otherwise in jeopardy. The
Company at its expense shall at any time on the Secured Party's reasonable
request in writing promptly execute and deliver to the Secured Party any
other or further mortgage, charge or other instrument conferring a fixed
charge on any of its Assets (including any of the Assets charged by clause
2.1.5) or such other charge as the Secured Party may reasonably require
for securing the discharge of the Obligations.
5.3 This Debenture shall be:
5.3.1 a continuing security to the Secured Party, notwithstanding any
settlement of account or other matter or thing whatever;
5.3.2 without prejudice and in addition to any other security for the
Secured Party (whether by way of mortgage, equitable charge or otherwise)
which the Secured Party may hold now or hereafter on all or any part of
the Assets; and
5.3.3 in addition to any rights, powers and remedies at law.
5.4 Section 103 of the Law of Property Act 1925 shall not apply. The statutory
power of sale shall be exercisable at any time after the execution of this
Debenture. The Secured Party shall not exercise its power of sale until
payment has been demanded, but this provision shall not affect a purchaser
or put him on inquiry whether such demand has been made.
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5.5 No failure or delay on the Secured Party's part in the exercise of any of
its rights, powers and remedies (in this clause 5 'right(s)') under this
Debenture or at law shall operate or be construed as a waiver. No waiver
of any of the Secured Party's rights shall preclude any further or other
exercise of that right or of any other right.
5.6 The Secured Party may give time or other indulgence or make any other
arrangement, variation or release with any person in respect of the
Obligations or any other security or guarantee for the Obligations without
derogating from the Company's liabilities or the Secured Party's rights
under this Debenture.
5.7 The Company certifies that the charges created by this Debenture do not
contravene any provision of its memorandum and articles of association or
any agreement binding on it or any of the Assets and the Company has all
due authority to enter into this Debenture.
5.8 The Company shall, on reasonable prior notice by the Secured Party,
execute and deliver all transfers, mandates, assignments, deeds or other
documents as the Secured Party may reasonably require to perfect its
rights under this Debenture and to give effect to any sale or disposal of
any of the Assets and otherwise give effect to the intent of this
Debenture.
6 Power of attorney
By way of security, the Company hereby irrevocably appoints the
Secured Party and any Receiver jointly and severally as its attorney, with
full power of delegation, for it and in its name and on its behalf and as
its act and deed or otherwise, to seal, deliver and otherwise perfect any
deed, assurance, agreement, instrument or act which may be properly
required for any of the above purposes.
7 Appointment of Director
7.1 As further security the Company hereby agrees to allow the Secured Party
to appoint a person as a non-executive Director (the "Director") of the
Company for such period as this Debenture remains in effect.
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7.2 The person so appointed under clause 7.1 may be an employee of the Secured
Party or a third party nominated by the Secured Party, but shall not be
entitled to receive a director's fee or other remuneration (including out
of pocket costs and expenses).
7.3 The Director so appointed shall have the right to attend all Board
Meetings of the Company and shall have access to all Books and Records of
the Company.
8 Costs
All costs, charges and expenses reasonably and properly incurred by
the Secured Party in respect of all proceedings for enforcement of this
Debenture shall be recoverable from the Company as a debt, and shall bear
interest at the rate per annum of two per cent over the Secured Party's
base lending rate accordingly (as well before as after judgment) and shall
be charged on the Assets.
9 Severance
If at any time any provision in this Debenture is or becomes invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions of this Debenture shall not be impaired.
10 Notices
10.1 Any demand, notice or other communication by the Secured Party may be
delivered personally to the Company or sent to the Company by post,
telemessage, cable, telex or telecopier at its address set out above or
such other address notified in writing to the Secured Party. Any such
notice, demand or other communication shall be deemed to have been
received by the Company 24 hours after posting (where sent by first
class prepaid post) immediately upon such delivery (where delivered
personally) and immediately on sending (where sent by telemessage, cable,
telex or telecopier) whether or not it is actually received.
10.2 Any notice from the Company to the Secured Party shall be served by first
class prepaid recorded delivery post or by tested telex sent to the
Secured Party at its address set out above or such other address notified
to the Company.
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11 Term
This Debenture shall continue in full force and effect until such time as
the Obligations are discharged in full.
12 Law
This Debenture shall be governed by and construed in accordance with
English law.
Attestation
Executed and unconditionally delivered as a deed as follows:
Executed as a Deed
for and on behalf of
CTI Data Solutions
(International) Limited
/s/ Anthony Johns
- -------------------------
Director
/s/ Mary Ann Davis
- --------------------------
Director/Secretary
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EXHIBIT 10.4
SECURITY AGREEMENT
This Security Agreement (the "Agreement") made this 2nd day of February
1998, between CTI Group (Holdings), Inc. ("Guarantor"), a Delaware
corporation having its chief executive office at 901 South Trooper Road, P.O.
Box 89360, Valley Forge, PA 19484, and Siemens plc ("Secured Party"), an
English company.
BACKGROUND
Pursuant to a certain Asset Purchase Agreement of even date herewith
between CTI Data Solutions (International) Ltd., an English company and a
wholly-owned subsidiary of Guarantor ("Borrower") and Secured Party, Secured
Party advanced a loan to Borrower in the principal amount of Two Million
Dollars ($2,000,000.00) (the "Term Loan"). The Term Loan is evidenced by a
Secured Promissory Note of even date herewith executed and delivered by
Borrower to Secured Party in the principal amount of Two Million Dollars
($2,000,000.00) (the "Note"). As incentive for Secured Party to make the
Term Loan to the Borrower, the Guarantor executed a Guaranty in favor of
Secured Party relating to the performance of Borrower's obligations under the
Note (the "Guaranty"), a Collateral Pledge Agreement (the "Pledge Agreement")
and is entering into this Security Agreement. Borrower's obligations to
Pledgee, as evidenced by the Note are hereinafter referred to as the
("Obligations").
NOW, THEREFORE, the parties hereto, intending to be legally bound,
covenant and agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
1.1 "Account", "Account Debtor", "Contracts", "Document",
"Equipment", "Fixtures", "General Intangibles", "Goods", "Instrument",
"Inventory", "Proceeds" and "Purchase Money Security Interest" shall have the
same respective meanings as are given to these terms in or for the purposes
of the Uniform Commercial Code as enacted in the Commonwealth of Pennsylvania
("UCC").
<PAGE>
1.2 "Books and Records" means all present and future books of
account of every nature, correspondence, memoranda, invoices, ledger cards,
bills of lading and other shipping evidence, tapes, disks, diskettes and
other software storage media and devices, papers, books and other documents,
or transcribed information of any type, whether expressed in ordinary or
machine language, and whether on or off the premises of Guarantor.
1.3 "Collateral" means the property of Guarantor described in
Section 2 of this Agreement.
1.4 "Note" means the Secured Promissory Note of even date herewith
executed by CTI Data Solutions (International) Ltd., an English company and a
wholly-owned subsidiary of Guarantor ("Debtor"), in favor of the Secured
Party.
1.5 "Event of Default" shall have the meaning ascribed to such
term in the Note.
1.6 "Obligations" means any and all obligations of Borrower under
the Note and Guarantor under the Guaranty (the "Guaranty") of even date
herewith executed by the Guarantor in favor of the Secured Party and which
guarantees the performance of Borrower under the Note, whether direct or
indirect, absolute or contingent, primary or secondary, due or to become due,
now existing or hereafter arising, regardless of how they arise or by what
instrument they must be evidenced or whether evidenced by any agreement or
instrument, and includes obligations to perform acts and refrain from acting
as well as obligations to pay money.
1.7 "Permitted Liens" means the liens, claims or encumbrances, if
any, described on Exhibit A attached hereto, incorporated herein by this
reference and hereby made a part hereof .
1.8 "Person" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, court or government or political subdivision or agency thereof.
SECTION 2. COLLATERAL SECURITY.
2.1 As security for the prompt payment, performance and
satisfaction of all Obligations, Guarantor hereby assigns, pledges,
hypothecates, transfers and sets over to Secured Party, all of Guarantor's
right, title and interest in and to, and hereby grants to Secured Party a
continuing lien on and security interest in and to, all of the following,
wherever located, whether now owned or existing or hereafter acquired or
arising, together with all replacements, accessions, parts, additions and
substitutions therefor and thereof:
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2.2 All Goods and Inventory including, without limitation, all
stock-in-trade, raw materials, work-in-process and materials used, produced
or consumed in Guarantor's business, all tangible personal property held by
Guarantor for sale, consignment or lease, or to be furnished under contracts
of service and all property which Guarantor has so sold, consigned, leased or
furnished, Goods that are returned, reclaimed or repossessed, together with
rights of Guarantor as a seller of Goods and rights to returned or
repossessed Goods and the proceeds from the sale of any and all Goods and
Inventory;
2.3 All Accounts, Contracts, Document, Equipment, Fixtures,
General Intangibles, Goods, Instrument, Inventory, Proceeds, including,
without limitation, (a) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other insurance
related to the Collateral, (b) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, (c) goods described in invoices, documents,
contracts or instruments with respect to, or otherwise representing or
evidencing, Collateral, including, without limitation, returned, repossessed
and reclaimed goods, and (d) deposits by and property of account Borrowers or
other persons securing the obligations of account Borrowers;
2.4 All property of Guarantor which at any time Secured Party
shall have in its possession, or which is in transit to it; and
2.5 Without limiting the generality of any of the foregoing, all
property which is now owned by Guarantor or which will be acquired by the
Guarantor until such time as the Obligations are satisfied.
SECTION 3. OBLIGATIONS SECURED.
The Collateral secures all of the Obligations and may be retained
by Secured Party until all such Obligations have been paid and satisfied in
full.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
Guarantor hereby represents and warrants, which representations and
warranties shall be deemed continuing until all Obligations have been paid
and satisfied in full, as follows:
4.1 Guarantor is a corporation duly organized and in good standing
under the laws of its state of formation and is duly qualified as a foreign
corporation and in good standing in all
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states or other jurisdictions where the nature and extent of the business
transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on Guarantor's financial condition,
results of operation or business or the rights of Secured Party in or to any
of the Collateral;
4.2 The execution, delivery and performance of this Agreement, the
Guaranty, the Pledge Agreement and the transactions contemplated hereunder
and thereunder are all within Guarantor's corporate powers, have been duly
authorized by Guarantor and will not violate any provision of any applicable
law, rule or regulation, judgement, order, writ or decree, or of any
contract, agreement, indenture or instrument to which Guarantor is a party or
by which Guarantor or its assets (including the Collateral) are or may be
bound;
4.3 This Agreement, the Guaranty, the Pledge Agreement, the
Obligations and all related instruments, agreements and documents, when
executed and/or delivered by Guarantor, will represent the legal, valid and
binding Obligations of Guarantor, enforceable against Guarantor in accordance
with their respective terms;
4.4 No Event of Default or event which, with the passage of time
or the giving of notice, or both, will result in an Event of Default has
occurred;
4.5 Guarantor is not in default in any respect under, or in
violation in any respect of, any of the terms of, any agreement, contract,
instrument, lease or other commitment to which it is a party or by which it
or any of its assets are bound, and Guarantor is in compliance in all
respects with all applicable provisions of laws, rules, regulations,
licenses, permits, approvals and orders of any foreign, federal, state or
local governmental authority, except to the extent such default, violation or
non-compliance would not result in or cause a material adverse change in the
assets, business or prospects of Guarantor, or have an adverse effect on the
legality, validity or enforceability of this Agreement, the Guaranty or the
Pledge Agreement or priority of the security interests or liens of Secured
Party in the Collateral, or would impair the ability of Guarantor to perform
its obligations under this Agreement or under any of the other financing
agreements, or of Secured Party to enforce any Obligation or realize upon any
Collateral;
4.6 There are no judgments or judicial or administrative orders or
proceedings pending, or to the knowledge of Guarantor threatened, against or
affecting Guarantor in any court or before any governmental authority or
arbitration board or tribunal which may adversely affect the condition
(financial or otherwise) of Guarantor or the assets (including the
Collateral) of Guarantor, or the ability of Guarantor to perform its
obligations under this Agreement, the Guaranty, the Pledge Agreement, the
Obligations or any related instruments, agreements or documents;
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4.7 The security interests and liens granted to Secured Party
under this Agreement constitute valid and perfected first priority liens and
security interests in and upon the Collateral, subject only to Permitted
Liens;
4.8 Guarantor has good and marketable title in fee simple (or its
equivalent under applicable law) to all of the properties and assets it
purports to own, free from liens, claims and encumbrances of any third
Person, except for Permitted Liens;
4.9 The Guarantor has no knowledge of any fact that would impair
the validity or collectability of any of the Collateral that is accounts
receivable, chattel paper, contract rights, documents or instruments and each
obligor upon such Collateral has or will have (as the case may be) capacity
to contract;
4.10 Each account receivable is or will be (as the case may be) a
true and correct statement of the initial indebtedness incurred by each
account Borrower with respect thereto and will arise out of or in connection
with the sale or lease of goods or for the rendering of services by the
Guarantor to each such account Borrower;
4.11 No presently effective financing statement under the UCC
naming the Guarantor as Borrower is on file in any jurisdiction and the
Guarantor has not signed any presently effective security agreement
authorizing any secured party thereunder to file a financing statement,
except for financing statements naming the Secured Party as the secured party
and except as otherwise disclosed on Exhibit A.1 hereto;
4.12 The Guarantor's exact legal name is set forth at the beginning
of this Agreement and the Guarantor does not conduct business under any other
name; and
4.13 Guarantor's chief executive office, and the address at which
the Books and Records relating to the Collateral are located, is as set forth
on the first page of this Agreement, and all other locations of the
Collateral, if any, are shown on Exhibit B attached hereto, incorporated
herein by this reference and hereby made a part hereof. Exhibit B correctly
identifies any Collateral locations which are not owned by Guarantor and sets
forth the owners and/or operators thereof, and to the best of Guarantor's
knowledge, the holders of any mortgages on such location.
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SECTION 5. COVENANTS.
Guarantor covenants and agrees with Secured Party that, so long as
any of the Obligations remain unpaid or unsatisfied, it shall continuously
take all steps that are necessary or prudent to protect and maintain the
security interest of the Secured Party in the Collateral and, without
limiting the generality of the foregoing, will comply with the following
covenants:
5.1 Guarantor will promptly notify Secured Party, in writing at
Secured Party's address set forth on the first page of this Agreement, of any
prospective change of business location or of any additions or changes to the
locations of Collateral shown on the first page of this Agreement or on
[Exhibit C];
5.2 Guarantor will execute and deliver to Secured Party all such
further instruments and do all such further acts and things as Secured Party
may request or as may be necessary or desirable to effectuate the purposes of
this Agreement, or for filing financing or continuation statements or other
instruments or records necessary or proper for perfection of the security
interest of Secured Party. Secured Party may execute on behalf of any
Guarantor and file or record any such documents in such manner as Secured
Party may see fit to effectuate the purposes hereof;
5.3 Guarantor shall keep complete and accurate Books and Records
and make all necessary entries therein to reflect the quantities, costs and
location of the Collateral. Guarantor further agrees to mark its Books and
Records, in such fashion so as to indicate the liens on and security
interests in and to the Collateral granted to Secured Party pursuant to this
Agreement. Guarantor shall permit Secured Party or any other holder of the
Note, its officers, employees, agents and representatives at any time and
from time to time, to have full access to all of the Books and Records and
any other records pertaining to Guarantor's business or the Collateral which
Secured Party may request, and shall cause all Persons to make all such Books
and Records in their possession available to Secured Party, its officers,
employees, agents and representatives and, if deemed necessary by Secured
Party, in its sole discretion, permit Secured Party, its officers, employees,
agents and representatives to remove the Books and Records from Guarantor's
place(s) of business or any other place where they may be found for the
purpose of examining, auditing and/or reproducing the same. Subject to the
terms and conditions of this Agreement, any of Guarantor's Books and Records
so removed by Secured Party, its officers, employees, agents or
representatives, shall be returned to Guarantor as soon as Secured Party
shall have completed its inspection, audit and/or reproduction thereof.
Secured Party's right to take possession of the Books and Records shall be
enforceable at law by an action of replevin or by any other appropriate
remedy at law or in equity;
5.4 Guarantor shall promptly pay, when due, all taxes, assessments
and impositions upon the Collateral or for its use or operation or upon this
Agreement or the Obligations including, without limitation, any and all
documentary stamp and intangible taxes, and shall promptly furnish
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to Secured Party the receipted bills therefor. At its option, Secured Party
may (without obligation) discharge taxes, liens or security interests, or
other encumbrances at any time levied or placed on the Collateral, and may
pay for the maintenance and preservation of the Collateral. Guarantor agrees
to reimburse Secured Party, on demand, together with interest at the highest
rate set forth in the Note, for any payment made, or any expense incurred by
Secured Party, pursuant to the foregoing authorization;
5.5 Guarantor shall upon reasonable notice during regular business
hours allow Secured Party, by or through any of its officers, employees,
agents or representatives, to examine or inspect the Collateral, wherever
located;
5.6 If any of the Collateral or any of the Books and Records are,
at any time, to be located on premises leased by Guarantor or on premises
owned by Guarantor subject to a mortgage or other lien, Guarantor shall
obtain and deliver, or cause to be obtained and delivered to Secured Party,
prior to delivery of any Collateral or Books and Records to such premises, an
agreement, in form and substance satisfactory to Secured Party and its
counsel, pursuant to which such landlord, mortgagee or other lien holder
waives its rights, if any, to enforce any claims against Guarantor for monies
due under a landlord's lien, mortgagee's mortgage or other lien by levy or
distraint, or similar proceeding against the Collateral or the Books and
Records, and assuring Secured Party's ability to have access to the
Collateral and the Books and Records in order to exercise Secured Party's
rights to take possession thereof and to remove the same from such premises
and/or to prepare for disposition and dispose of the same at or about such
premises;
5.7 Guarantor shall promptly notify Secured Party, in writing, of
(a) any event causing a material loss or decline in the value of the
Collateral (whether or not covered by insurance) and of the amount of such
loss or depreciation, (b) the inability or unwillingness of any Account
Guarantor to pay or preserve the Collateral, and of any defense, set-off or
counterclaim asserted by any Account Borrower, and (c) any Collateral having
been returned by any Account Guarantor to Guarantor for any reason.
Guarantor agrees not to return any Inventory to the supplier thereof, or to
sell or otherwise dispose of Goods returned or repossessed from Secured
Party, lessees or consignees thereof, without Secured Party's prior written
consent;
5.8 Guarantor shall, at its sole cost and expense, (a) preserve
the Collateral and Guarantor's rights against any Person free and clear of
all liens, claims and encumbrances, except for Permitted Liens and liens,
claims and encumbrances created pursuant to this Agreement, (b) defend its
right, title and interest in and to the Collateral and (c) defend the
Collateral against any and all claims and demands of all Persons at any time
or from time to time claiming the same or any interest therein. Guarantor
will not grant to any Person, other than Secured Party, any lien on or
security interest in and to the Collateral, nor allow any Person other than
Secured Party to obtain a lien on or security interest in and to or levy upon
the Collateral;
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5.9 Guarantor shall, at its sole cost and expense, maintain the
Collateral in good condition and repair at all times, subject to ordinary
wear and tear, and shall not waste, abuse or destroy, or use in violation of
any applicable laws, any of the Collateral;
5.10 Guarantor shall, at all times, maintain with financially sound
and reputable insurers insurance with respect to the Collateral against loss
or damage and all other insurance of the kinds and in the amounts customarily
insured against or carried by corporations of established reputation engaged
in the same or similar businesses and similarly situated. Guarantor shall
furnish such certificates, policies or endorsements to Secured Party as
Secured Party shall require as proof of such insurance, and, if Guarantor
fails to do so, Secured Party is authorized, but not required, to obtain such
insurance at the expense of Guarantor. All policies shall provide for at
least thirty (30) days prior written notice to Secured Party of any
cancellation or reduction of coverage and that Secured Party may act as
attorney for Guarantor in obtaining, and at any time an Event of Default
exists or has occurred and is continuing, adjusting, settling, amending and
canceling such insurance. Guarantor shall cause Secured Party to be named as
a loss payee and an additional insured (but without any liability for any
premiums) under such insurance policies and Guarantor shall obtain
non-contributory loss payable endorsements to all insurance policies in form
and substance satisfactory to Secured Party. Such loss payable endorsements
shall specify that the proceeds of such insurance shall be payable to Secured
Party as its interest may appear and further specify that Secured Party shall
be paid regardless of any act or omission by Guarantor or any of its
affiliates. At its option, Secured Party may apply any insurance proceeds
received by Secured Party at any time to the cost of repairs or replacement
of Collateral and/or to payment of the Obligations, whether or not then due,
in any order and in such manner as Secured Party may determine or hold such
proceeds as cash collateral for the Obligations;
5.11 Guarantor will sell its Inventory only in the ordinary course
of its business consistent with past practice; and
5.12 Guarantor shall, upon request of Secured Party or Secured
Party itself may, in the name of Secured Party or Guarantor, and without
notice to Guarantor, at any time or from time to time, notify Account
Borrowers and other obligors of debts, liabilities and obligations to
Guarantor that are included in the Collateral of Secured Party's interest in
the Collateral pursuant to this Agreement and direct and cause all payments
to be made to Secured Party with respect to such Collateral. Secured Party
shall have the right at any time and from time to time, in Secured Party's
name or in the name of a nominee of Secured Party, to verify the validity,
amount or any other matter relating to any Account or Collateral, by mail,
telephone, facsimile transmission or otherwise. Secured Party may demand,
sue for, collect or receive any money or property payable or receivable on
any Inventory.
5.13 Guarantor shall join with the Secured Party at its request
from time to time in executing financing statements, amendments thereto and
continuation statements, and pay the cost of filing the same wherever the
Secured Party reasonably deems desirable, and do, make, execute
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and deliver all additional and further acts, things, deeds, powers of
attorney, assurances, writings and instruments that the Secured Party may
reasonably require to vest completely in it and assure to it its rights
hereunder and in and to the Collateral.
5.14 Guarantor shall notify the Secured Party at least 30 days
before changing its legal name, the location of its principal place of
business or location where it keeps or holds any Collateral or any records
relating thereto or before doing any business under any name other than its
legal name.
5.15 Guarantor shall use all commercially reasonable efforts to
sell, within twelve (12) months of the date hereof, its United States
telemanagement service bureau and to make available to Borrower and to cause
Borrower to apply the net cash proceeds from such sale, up to an amount equal
to the Required Cash Amount (as the term "Required Cash Amount" is defined in
the Asset Purchase Agreement), toward reducing the principal amount
outstanding under the Note.
SECTION 6. SECURED PARTY'S RIGHTS UPON DEFAULT.
Upon the occurrence of an Event of Default, the Obligations shall
be immediately due and payable without notice or demand and Secured Party
shall have, in addition to any and all rights and remedies that Secured Party
may then have under the instruments, agreements and documents evidencing the
Obligations, the UCC or at law or in equity, at its option, and without
further action, the unconditional right to do any one or more of the
following:
6.1 Exercise any or all rights, remedies, benefits and privileges
available to Secured Party under this Agreement, the Note, and those
available to a secured party under the UCC, as well as those under any other
applicable agreement with respect to any of the Collateral, and to apply such
monies and the net Proceeds of the Collateral to any of the Obligations in
such order as Secured Party, in its sole discretion, may elect;
6.2 Require Guarantor to assemble all or part of the Collateral as
Secured Party may in its sole discretion request or demand and make the same
available to Secured Party in a place to be designated by Secured Party which
is reasonably convenient to Secured Party and Guarantor;
6.3 Without limiting the generality of the foregoing, Secured
Party may immediately, without demand of performance and without other notice
(except as specifically required by this Agreement or the Collateral
Documents) or demand whatsoever to Guarantor, all of which are hereby
expressly waived, and without advertisement, sell at public or private sale
or otherwise realize upon, in Philadelphia, Pennsylvania or elsewhere, the
whole or, from time to time, any part of the Collateral, or any interest
which Guarantor may have therein, in one or more parcels at public sale or
sales, at any exchange, broker's board or elsewhere, at such price and on
such terms as
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Secured Party may determine, for or on credit, or for future delivery without
assumption of any credit risk. Notice of any sale or other disposition shall
be given to Guarantor at least ten (10) days before the time of any intended
public sale or of the time after which any intended private sale or other
disposition of the Collateral is to be made, which Guarantor hereby agrees
shall be reasonable notice of such sale or other disposition. Guarantor
agrees to assemble, or to cause to be assembled at its expense, the
Collateral at such place or places as Secured Party shall designate. At any
such sale or other disposition, Secured Party may, to the extent permissible
under applicable laws, purchase the whole or any part of the Collateral, free
from any right or equity of redemption on the part of Guarantor, which right
or equity is hereby waived and released.
6.4 The proceeds of any disposition of the Collateral or other
action by Secured Party shall be applied as follows:
(a) First, the costs and expenses incurred in connection
therewith or incidental thereto or to the care or safekeeping of any of the
Collateral or in any way relating to the rights of Secured Party hereunder,
including reasonable attorneys' fees and legal expenses;
(b) Second, to the satisfaction of the Obligations;
(c) Third, to the payment of any other amounts required by
applicable law (including, without limitation, Section 9-504(a)(3) of the
UCC); and
(d) Fourth, to Guarantor, to the extent of any surplus
proceeds, absent the agreement of the parties to the contrary or as directed
by a court of competent jurisdiction.
6.5 Without limiting the generality of any of the rights and
remedies conferred upon Secured Party under this paragraph, Secured Party
may, to the full extent permitted by applicable laws:
(a) Enter upon the any of Guarantor's premises, exclude
therefrom Guarantor, and take immediate possession of the Collateral, either
personally or by means of a receiver appointed by a court of competent
jurisdiction, using all necessary force to do so;
(b) At Secured Party's option, use, operate, manage and
control the Collateral in any lawful manner;
(c) Exercise rights of set-off in accordance with applicable
law;
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(d) Maintain, repair, renovate, alter, remove, abandon or
relinquish rights in and to the Collateral as Secured Party may determine in
its discretion;
(e) Cure any default in any reasonable manner and add the
cost of any such cure to the Obligations and accrue interest thereon at the
highest rate of interest then being charged to Guarantor on any of the
Obligations;
(f) Notwithstanding any outstanding commitment of any Buyer
to Guarantor to make additional and further loans, advances or extensions of
credit to or for the benefit of Guarantor, declare any such commitment null
and void and of no further force and effect whatsoever; and
(g) Retain all of Guarantor's Books and Records with respect
to the Collateral.
SECTION 7. MISCELLANEOUS.
7.1 This Agreement shall inure to the benefit of, and is and shall
continue to be binding upon, the parties hereto, Secured Party and their
respective heirs, personal representatives, successors and assigns,
including, without limitation, receivers, trustees and
Borrowers-in-possession, but nothing contained herein shall be construed to
permit Guarantor to assign this Agreement or any of Guarantor's rights or
obligations hereunder without Secured Party's prior written consent, which
consent may be withheld in Secured Party's sole and absolute discretion.
7.2 This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania. The parties to
this Agreement agree to the jurisdiction of the federal courts located in
Philadelphia, Pennsylvania for resolution of controversies arising out of or
relating to this Agreement, the Note and any related instruments, agreements
or documents. THE PARTIES HERETO IRREVOCABLY WAIVE TRIAL BY JURY IN ANY
COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT
OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED PURSUANT HERETO OR THERETO OR
ANY OTHER CLAIM OR DISPUTE HOWEVER ARISING, BETWEEN THE GUARANTOR AND THE
SECURED PARTY.
7.3 Guarantor agrees to pay upon demand, all expenses (including
reasonable fees and expenses of attorneys, experts and agents) incurred in
any way in connection with the exercise or defense of any rights or interests
of Secured Party hereunder or the enforcement of any provisions hereof, or
the management, preservation, maintenance, collection, disposition or
enforcement of any of the Collateral (all such expenses to be Obligations
hereunder). Guarantor agrees to defend, indemnify and save Secured Party and
its directors, officers, employees, and agents harmless from and against any
and all claims, losses, liabilities, costs and expenses, arising out of or
resulting from
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this Security Agreement (including, without limitation, enforcement of this
Agreement) or Secured Party's interest in the Collateral, including claims
for the return or disgorgement of amounts paid to Secured Party, whether or
not ultimately successful, whether brought by Guarantor or any other party,
and in connection therewith to indemnify it against all costs, reasonable
counsel fees, expenses and liabilities incurred in or about the defense of
any such claims, actions or proceedings brought or threatened thereon,
whether brought by Guarantor or any other party, except claims, losses or
liabilities resulting from Secured Party's gross negligence or willful
misconduct.
7.4 If any provision of this Agreement shall for any reason be
held to be invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision hereof. Upon any such determination
that any provision is invalid or incapable of being enforced, such provision
shall be construed so as to effect the original intent of the parties as
closely as possible in a permissible manner in order that the transactions
contemplated hereby are consummated to the greatest extent possible.
7.5 The rights, powers and remedies of Secured Party hereunder are
cumulative, concurrent and not alternative, and shall not be exhausted by the
single assertion or exercise thereof, and the failure of Secured Party to
exercise any such right, power or remedy will not be deemed a waiver thereof
nor preclude any further or additional assertion or exercise of such right,
power or remedy. The waiver of any default, violation or Event of Default
hereunder shall not be a waiver of any subsequent default, violation or Event
of Default hereunder.
7.6 No modifications or amendments of this Agreement shall be
binding or enforceable unless in writing and signed by duly authorized
representatives of Guarantor and Secured Party.
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IN WITNESS WHEREOF, the parties have hereunto caused this Security
Agreement to be duly executed as of the day and year first above written.
SIEMENS PLC
By: /s/ J.H. Whitfield
-----------------------------
Name: J. Whitfield
Title: Corporate Controller
CTI GROUP (HOLDINGS), INC.
By: /s/ Anthony Johns
-----------------------------
Anthony Johns
President
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EXHIBIT 10.5
COLLATERAL PLEDGE AGREEMENT
This Collateral Pledge Agreement (the "Agreement") is made this 2nd day
of February, 1998, by CTI Group (Holdings), Inc., a Delaware corporation
("Pledgor'), in favor of Siemens plc, an English company ("Pledgee").
BACKGROUND
Pursuant to a certain Asset Purchase Agreement of even date herewith
between CTI Data Solutions (International) Ltd., an English company and a
wholly-owned subsidiary of Pledgor ("Borrower") and Pledgee, Pledgee advanced
a loan to Borrower in the principal amount of Two Million Dollars
($2,000,000.00) (the "Term Loan"). The Term Loan is evidenced by a Secured
Promissory Note of even date herewith executed and delivered by Borrower to
Pledgee in the principal amount of Two Million Dollars ($2,000,000.00) (the
"Note"). As incentive for Pledgee to make the Term Loan to the Borrower, the
Pledgor executed a Guaranty in favor of Pledgee relating to the performance
of Borrower's obligations under the Note and entered into a Security
Agreement of even date herewith granting Pledgee a security interest in
substantially all of the assets of Pledgor. Borrower's obligations to
Pledgee, as evidenced by the Note are hereinafter referred to as the
("Obligations").
As additional Collateral Security to the Obligations, Pledgor has agreed
to pledge to Pledgee all of Pledgor's right, title and interest in and to the
Pledged Securities (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing, and intending to be
legally bound hereby, and for good, valuable and sufficient consideration,
the receipt of which is hereby acknowledged, Pledgor agrees as follows:
7. Certain Definitions.
(a) The term "Pledged Securities" shall mean all shares of Capital
Stock of: (i) CTI Delaware Holdings, Inc., a Delaware corporation; (ii) CTI
Soft-Com, Inc., a Delaware corporation; (iii) Plymouth Communications, Inc.,
a Delaware corporation; (iv) Telephone Budgeting Systems, Inc., a Delaware
corporation; and (v) Borrower, owned legally or beneficially by Pledgor,
including all shares issued in the future, whether certificated or
uncertificated, together with all certificates, options, rights, dividends or
other distributions issued in addition to, in substitution or in exchange
for, or on account of, any such shares, and all cash and noncash proceeds of
all of the foregoing, now or hereafter owned, acquired by or arising in favor
of Pledgor.
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(b) The term "Event of Default" shall mean a default or an event
of default under this Agreement, the Note or any other instrument, document
or agreement, which evidences or secures the Obligations.
8. Pledge.
(a) As security for the full and prompt satisfaction of the
Obligations, Pledgor hereby pledges, hypothecates, delivers, transfers and
sets over to Pledgee in form transferable for delivery, the Pledged
Securities and grants to Pledgee a valid first priority lien on and security
interest in and to the Pledged Securities, all certificates representing the
Pledged Securities or other instruments or documents evidencing the same.
(b) Prior to the occurrence of an Event of Default, Pledgor shall
be entitled to all voting rights with respect to the Pledged Securities and,
for that purpose, Pledgee shall execute and deliver to Pledgor all necessary
proxies. Immediately and without further notice, upon the occurrence of an
Event of Default, whether or not the Pledged Securities shall have been
registered in the name of Pledgee or its nominee, Pledgee or its nominee
shall have the right to exercise all voting rights as to all of the Pledged
Securities and all other corporate rights and all conversion, exchange,
subscription or other rights, privileges or options pertaining thereto as if
Pledgee or its nominee were the absolute owner thereof including, without
limitation, the right to exchange any or all of the Pledged Securities upon
the merger, consolidation, reorganization, recapitalization or other
readjustment of Pledgee thereof, or upon the exercise by Pledgee of any
right, privilege, or option pertaining to any of the Pledged Securities and,
in connection therewith, to deliver any of the Pledged Securities to any
committee, depository, transfer agent, registrar or other designated agency
upon such terms and conditions as it may determine, all without liability
except to account for property actually received by Pledgee; but Pledgee
shall have no duty to exercise any of the aforesaid rights or privileges, or
may delay in so doing.
(c) Prior to the occurrence of an Event of Default, Pledgor shall
be entitled to any and all regular cash dividends declared by the Pledgee to
be paid on account of the Pledged Securities; provided, however, that
immediately and without further notice, upon the occurrence of an Event of
Default, whether or not the Pledged Securities shall have been registered in
the name of Pledgee or its nominees, Pledgee or its nominee shall have the
right to any and all regular cash dividends paid on account of the Pledged
Securities which shall be delivered to Pledgee and may, at Pledgee's option,
be applied on account of the Obligations in such order and manner as Pledgee
may elect.
(d) At any time following execution of this Agreement, if Pledgor
shall become entitled to receive or shall receive, in connection with any of
the Pledged Securities, any: (i) stock certificate, including, without
limitation, any certificate representing a stock dividend or in connection
with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock split, spin-off
or split-off; (ii) option, warrant or right, whether as an addition to or in
substitution or in exchange for any of the Pledged Securities, or otherwise;
or (iii) dividends or distributions payable in property, including securities
issued by an issuer other than Pledgee; then, Pledgor shall accept the same
as Pledgee's agent, in express trust for Pledgee, and shall deliver the same
forthwith to the Pledgee in the exact form received with, as applicable,
Pledgor's endorsement, or
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appropriate stock powers duly executed in blank, (with signatures "bank
guaranteed") which the Pledgor hereby unconditionally agrees to make and/or
furnish, to be held by Pledgee, subject to the terms hereof, as part of the
Pledged Securities.
(e) The Pledgor hereby delivers to the Pledgee appropriate updated
stock transfer powers duly executed in blank for the Pledged Securities and
will deliver appropriate updated stock transfers powers duly executed in
blank for any Pledged Securities to be pledged hereunder from time to time.
9. Remedies Upon an Event of Default.
(a) Upon the occurrence of an Event of Default, Pledgee shall have
in each case all of the remedies of a secured party under the Pennsylvania
Uniform Commercial Code, and, without limiting the foregoing, shall have the
right, without demand of performance or other demand, advertisement, or
notice of any kind (except the notice specified below of time and place of
public or private sale or other disposition) to or upon the Pledgor or any
other person (all of which are, to the extent permitted by law, hereby
expressly waived), to forthwith realize upon the Pledged Securities or any
part thereof, and may forthwith, or agree to, sell or otherwise dispose of
and deliver the Pledged Securities or any part thereof or interest therein,
in one or more parcels at public or private sale or sales, at any exchange,
broker's board or elsewhere, at such prices and on such terms (including,
without limitation, a requirement that any purchaser of all or any part of
the Pledged Securities purchase the shares constituting the Pledged
Securities for investment and without any intention to make a distribution
thereof) as Pledgee shall, in its sole discretion, determine (the Pledgor
hereby waiving and releasing any and all right or equity of redemption
whether before or after sale hereunder) for or on credit, or for future
delivery without assumption of any credit risk, with the right to Pledgee or
any purchaser to purchase upon any such sale or acquire pursuant to (i) above
the whole or any part of the Pledged Securities free of any right or equity
of redemption in Pledgor, which right or equity is hereby expressly waived
and released. Pledgee agrees to give at least ten (10) days written notice
of the time and place of any public sale or of the time after which a private
sale or other disposition may take place, which notice Pledgor hereby deems
commercially reasonable.
(b) The proceeds of any disposition of the Pledged Securities or
other action by Pledgee shall be applied as follows:
(i) First, the costs and expenses incurred in connection
therewith or incidental thereto or to the care or safekeeping of any of the
Pledged Securities or in any way relating to the rights of Pledgee hereunder,
including reasonable attorneys' fees and legal expenses;
(ii) Second, to the satisfaction of the Obligations;
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(iii) Third, to the payment of any other amounts required by
applicable law (including, without limitation, Section 9-504(a)(3) of the
Uniform Commercial Code as enacted in the Commonwealth of Pennsylvania (the
"UCC"); and
(iv) Fourth, to Pledgor, to the extent of any surplus
proceeds, absent the agreement of the parties to the contrary or as a court
of competent jurisdiction may direct.
10. Pledgor's Representations and Warranties. Pledgor represents and
warrants that:
(a) Pledgor has all requisite capacity and power to enter into
this Pledge, to pledge the Pledged Securities for the purposes described in
Paragraph 2(a) above, and to carry out the transactions contemplated by this
Pledge;
(b) Pledgor is the legal and beneficial owner of the Pledged
Securities free and clear of all liens, security interests and other
encumbrances except the security interest granted hereby. The Pledged
Securities include all issued and outstanding capital stock of each issuer
thereof. All of the Pledged Securities have been duly authorized and validly
issued and are fully paid and non-assessable and are subject to no option to
purchase or similar rights of any person or entity. Pledgor is not, and will
not become, a party to or bound by any agreement which restricts in any
manner the rights of any present or future holder of any of the Pledged
Securities with respect thereto.;
(c) The execution and delivery of this Pledge, and the performance
of its terms, will not violate or constitute a default under the terms of any
agreement, indenture or other instrument, license, judgment, decree, order or
regulation, applicable to Pledgor or any of its property; and
(d) Upon the execution of this Pledge and the delivery to Pledgee
of the shares of Pledged Securities now held of record by Pledgor, this
Pledge shall create a valid first priority lien upon and perfected security
interest in the Pledged Securities and the cash and noncash proceeds thereof,
subject to no prior lien or subordinate lien, or agreement purporting to
grant to any third party a security interest in the property or assets of
Pledgor which would include the Pledged Securities.
11. Pledgor's Covenants. Pledgor hereby covenants that, until all of
the Obligations have been satisfied in full:
(a) Pledgor will not sell, convey, or otherwise dispose of any of
the Pledged Securities or any interest therein, or create, incur, or permit
to exist any pledge, mortgage, lien, charge, encumbrance or any security
interest whatsoever in or with respect to any of the Pledged Securities or
the proceeds thereof, other than that created hereby; and
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(b) Pledgor will, at Pledgor's own expense, defend (engaging
counsel acceptable to Pledgee) Pledgee's right, title, special property and
security interest in and to the Pledged Securities against the claims of any
person, firm, corporation or other entity.
12. Further Assurances. Pledgor shall at any time, and from time to
time, at its sole expense, upon written request of Pledgee, execute and
deliver such further documents and do such further acts and things as Pledgee
may reasonably request to effect the purposes of this Pledge including,
without limitation, delivering to Pledgee, upon the occurrence of an Event of
Default, irrevocable proxies with respect to the Pledged Securities in form
satisfactory to Pledgee. Until receipt thereof, this Pledge shall constitute
Pledgor's proxy to Pledgee or his nominee to vote all shares of Pledged
Securities then registered in Pledgor's name. To the extent permitted by
law, Pledgor authorizes Pledgee to execute and file, in Pledgor's name or
otherwise, Uniform Commercial Code financing statements (which may be copies
of this Pledge) that the Pledgor in its sole discretion may deem necessary or
appropriate to further perfect the security interest herein.
13. Termination of Pledge. Upon the satisfaction in full of all
Obligations and the satisfaction of all additional costs and expenses of
Pledgee as provided herein, this Pledge shall terminate and Pledgee shall
deliver to Pledgor, the Pledged Securities or so much thereof as shall not
have been sold or otherwise applied pursuant to this Pledge.
14. Miscellaneous.
(a) Beyond the exercise of reasonable care to assure the safe
custody of the Pledged Securities while held hereunder, Pledgee shall have no
duty or liability to preserve rights pertaining thereto and shall be relieved
of all responsibility for the Pledged Securities upon surrendering the
Pledged Securities or tendering surrender of it to Pledgor.
(b) The rights and remedies provided herein and in the Note and
any related instruments, agreements and documents are cumulative and are in
addition to and not exclusive of any rights or remedies provided by law,
including, without limitation, the rights and remedies of a secured party
under the UCC.
(c) The provisions of this Pledge are severable, and if any clause
or provision shall be held invalid or unenforceable in whole or in part in
any jurisdiction and shall not in any manner affect such clause or provision
in any other jurisdiction or any other clause or provision in this Pledge in
any jurisdiction.
15. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been validly given, as of the date
delivered, if delivered personally, three days after being sent by registered
or certified mail (postage prepaid, return receipt requested), one day after
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dispatch by recognized overnight courier (provided delivery is confirmed by
the courier) and upon transmission by telecopy, confirmed received, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like change of address):
(a) If to Pledgee:
Siemens plc
Siemens House
Oldbury, Bracknell
Berkshire, R 912 8FZ (England)
Attention: James Loughery
Facsimile No.: 011-44-1344-396020
With a copy to:
Siemens Corporation
1301 Avenue of the Americas
New York, NY 10019
Attention: Kevin M. Royer
Facsimile No.: (212) 258-4945
(a) If to Pledgor:
CTI Group (Holdings), Inc.
901 South Trooper Road
P.O. Box 80360
Valley Forge, Pennsylvania 19484 (USA)
Attention: Anthony Johns
Facsimile No.: (610) 666-7707
with copies to:
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, Pennsylvania 19102 (USA)
Attention: Barry J. Siegel, Esquire
Facsimile No.: (215) 568-6603
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16. Governing Law. This Pledge shall be construed in accordance with
the substantive laws of the Commonwealth of Pennsylvania without regard to
principles of conflicts of laws and is intended to take effect as an
instrument under seal.
17. Jurisdiction. The parties agree to the exclusive jurisdiction of
the federal courts located in Philadelphia, Pennsylvania in connection with
any matter arising hereunder, including the collection and enforcement
hereof. THE PARTIES HERETO IRREVOCABLE WAIVE TRIAL BY JURY IN ANY
JURISDICTION AND IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING
OUT OF THIS AGREEMENT OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED PURSUANT
HERETO OR THERETO OR ANY OTHER CLAIM OR DISPUTE HOWEVER ARISING BETWEEN THE
GUARANTOR AND THE SECURED PARTY.
IN WITNESS WHEREOF, Pledgor has executed this Collateral Pledge
Agreement as of the day and year first above written.
WITNESS: CTI GROUP (HOLDINGS), INC.
/s/ Mary Ann Davis /s/ Anthony Johns
- --------------------- ----------------------------
By: Anthony Johns, President
7
<PAGE>
EXHIBIT 99.1
NEWS RELEASE
<PAGE>
[LETTERHEAD] CTI Group [Holdings] Inc.
901 South Troop Road
NEWS RELEASE P.O. Box 80360
Valley Forge, PA 19484 USA
February 3, 1998 -1 610 666-1700
FOR IMMEDIATE RELEASE Fax -1 610 666-7707
For more information contact: E-mail [email protected]
Mark H. Daugherty, CFO
Telephone: -1 610 666 1700
CTIG Closes Transaction to Acquire Databit Ltd.--A Subsidiary of Siemens plc
Merger Significantly increases CTIG's Revenues, Customer Base, Staff,
International Presence
Valley Forge, Pennsylvania USA. CTI Group (Holdings) Inc. (OTC:CTIG),
following a board meeting, announced today that it has successfully concluded
a transaction with Siemens plc of the U.K. to acquire Databit Ltd., a
wholly-owned subsidiary of Siemens plc operating exclusively in
telemanagement products and services. Databit now becomes a wholly-owned
subsidiary of CTIG and will undergo a name change to CTI Data Solutions Ltd.
to reflect market synergies with CTIG's major U.S. subsidiary CTI Data
Solutions Inc.
CTIG funded the transaction by the issuance to Siemens of a $2 million
promissory note which will become due for repayment by February 2, 2001. The
note carries interest at the rate of 10% per annum payable quarterly in
arrears and is secured by a second lien on CTIG's assets, Mr. Bill Driscoll,
Managing Director of Siemens plc, will join CTIG's board of directors.
Based on historical financial information, the acquisition will
dramatically increase CTIG's business. Assuming the acquisition had been
effective from April 1, 1997, the fiscal year ending March 31, 1998 would
show pro form annualized revenues increasing from approximately $3 million to
approximately $8.3 million. The customer base will increase from
approximately 4,500 North American sites to over 13,500 sites world-wide; and
staff will increase from approximately 35 to 90 employees.
-MORE-
Shipping Address
901 South Trooper Road
Valley Forge, PA 19482 USA
<PAGE>
February 3, 1998
CTIG Closes Transaction to Acquire Databit Ltd.--A Subsidiary of Siemens plc
Page 2
CTIG's Chairman and CEO, Anthony P. Johns, said, "that by acquiring
Databit CTIG adds important critical mass; strengthens its product portfolio;
significantly expands its sales distribution channels; and enhances its
ability to market products internationally; in particular, the ability to
market and support its new telecommunications billing products overseas."
Mr. Johns continued, saying that, "the businesses of CTIG's U.S.
subsidiaries and Databit are totally complementary. Both recently introduced
new, Year-2000 compliant, Windows OS products for sale into mature markets
eager to replace obsolete DOS systems and into new markets emerging world-wide
from telecommunications industry deregulation. The companies have a
non-overlapping market presence with respect to each other such that the
merger will expand product offerings to each of the companies' existing
customer bases."
Said Mr. Johns, "We believe that Databit's high-end ClairePro
(telemanagement) product for Windows NT-Registered Trademark- will gain an
established network of new U.S. distributors within six months.
Subsequently--we will be investing further in our NEPTUNE Billing System for
Windows NT and utilizing fully the benefits of our newly established presence
in the U.K."
CTIG, through its wholly-owned subsidiaries, designs, develops, markets
and supports information processing software and services for managing
telecommunications systems. The Company provides telemanagement solutions to
corporate users of telecommunications services, and billing solutions for
providers of telecommunications services to invoice customers.
This release contains forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual future
events or results. Readers are referred to documents filed by CTIG with the
U.S. Securities and Exchange Commission, specifically the most recent
Form 10-KSB.
For more information, contact: Mark H. Daugherty
CTI Group (Holdings) Inc.
P.O. Box 80360
Valley Forge, PA 19484
Telephone: -1 610 666-1700
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