================================================================================
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): Commission File Number:
JUNE 17, 1999 1-10210
eGLOBE, INC.
-----------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3486421
-------- ----------
(State or other jurisdiction (IRS Employer
of incorporation) Identification Number)
2000 PENNSYLVANIA AVENUE, N.W., SUITE 4800
WASHINGTON, D.C. 20006
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(303) 691-2115
EXECUTIVE TELECARD, LTD.
(Former name or former address, if changed since last report)
================================================================================
<PAGE>
EGLOBE, INC.
ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
On June 17, 1999 (the "Closing Date"), eGlobe, Inc., formerly known as
Executive TeleCard, Ltd., ("eGlobe"), through its new subsidiary Vogo Networks,
LLC ("Vogo"), acquired substantially all of the assets of Connectsoft
Communications Corporation ("CCC") and Connectsoft Holding Corp.
("Connectsoft"), wholly owned subsidiaries of American United Global, Inc.
("AUGI").
In the transaction, eGlobe acquired software and related technology and
intellectual property, as well as a talented and dedicated development team and
a half million dollars in cash.
The purchase price consisted of preferred stock of eGlobe and the
assumption of debt by eGlobe and Vogo totalling approximately $8 million: (1)
Vogo has assumed approximately $5 million in liabilities of CCC and Connectsoft,
consisting primarily of long-term lease obligations; (2) eGlobe has issued to
AUGI its 6% Series G Cumulative Convertible Redeemable Preferred Stock (the
"Series G Preferred Stock"), having a liquidation value of $3 million (the
"Liquidation Preference"); and (3) eGlobe has issued a note (the "eGlobe Note")
to AUGI in the amount of $500,000.
The terms of the Series G Preferred Stock are set forth in the
Certificate of Designations, Rights and Preferences of the Series G Preferred
Stock, which is attached hereto as Exhibit 4.1. The Series G Preferred Stock
must be redeemed by eGlobe for cash in an amount equal to the Liquidation
Preference on the earlier to occur of five years from the Closing Date or the
first date that eGlobe receives in any transaction or series of transactions any
equity financing of at least $25 million. The Series G Preferred Stock is
convertible from and after October 1, 1999 at the option of the holder, with a
conversion price equal to 75% of the market price of eGlobe stock at the time of
conversion (but not less than $3.00 per share). The holders of the Series G
Preferred Stock are entitled to receive cumulative annual dividends of 6.0% of
the Liquidation Preference payable, at the option of eGlobe, in cash, in shares
of eGlobe common stock, or a combination of cash and eGlobe common stock.
The acquisition was effected under an Asset Purchase Agreement, dated
as of July 10, 1998, as amended, most recently by an amendment dated June 17,
1999 (the "Purchase Agreement") and related documents.
The foregoing description of the Acquisition does not purport to be
complete and is qualified in its entirety by reference to the transaction
documents
-2-
<PAGE>
attached hereto, each of which is incorporated herein by reference. A copy of
the press release, dated June 15, 1999, issued by eGlobe regarding the above-
described transaction is attached as Exhibit 99.1 hereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired.
It is not practicable to provide the required financial statements for
Vogo at this time. The statements will be filed as soon as they are prepared and
not later than August 31, 1999.
(b) Pro Forma Financial Information.
It is not practicable to provide the required pro forma financial
statements for Vogo at this time. The statements will be filed as soon as they
are prepared and not later than August 31, 1999.
(c) Exhibits.
2.1 Asset Purchase Agreement, dated July 10, 1998, by and among Executive
TeleCard, Ltd., American United Global, Inc., Connectsoft
Communications Corporation, Connectsoft Holding Corp., and C-Soft
Acquisition Corp.
2.2 Amendment No. 1 to Asset Purchase Agreement, dated July 30, 1998, by
and among Executive TeleCard, Ltd., American United Global, Inc.,
Connectsoft Communications Corporation, Connectsoft Holding Corp., and
C-Soft Acquisition Corp.
2.3 Amendment No. 2 to Asset Purchase Agreement, dated August _, 1998, by
and among Executive TeleCard, Ltd., American United Global, Inc.,
Connectsoft Communications Corporation, Connectsoft Holding Corp., and
C-Soft Acquisition Corp.
2.4 Amendment No. 3 to Asset Purchase Agreement, dated June 17, 1999, by
and among Executive TeleCard, Ltd., American United Global, Inc.,
Connectsoft Communications Corporation, Connectsoft Holding Corp., and
C-Soft Acquisition Corp.
2.5 Assignment and Assumption Agreement, dated as of June 17, 1999, by and
among Vogo Networks, LLC, Connectsoft Communications Corporation, and
Connectsoft Holding Corp.
-3-
<PAGE>
4.1 Certificate of Designations, Rights and Preferences of Series G
Cumulative Convertible Redeemable Preferred Stock of Executive
TeleCard, Ltd.
4.2 Form of Promissory Note payable to American United Global, Inc. in the
aggregate principal amount of $500,000.
4.3 Form of Promissory Note payable to Connectsoft Communications
Corporation in the aggregate principal amount of $200,000.
4.4 Registration Rights Agreement, dated as of June 17, 1999, by and
between Executive TeleCard, Ltd. and American United Global, Inc.
10.1 Security Agreement, dated as of June 17, 1999, by and between American
United Global, Inc. and Vogo Networks, LLC
99.1 Press Release, dated June 15, 1999, regarding the Purchase Agreement
and the transactions contemplated thereby.
-4-
<PAGE>
SIGNATURE
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.
eGLOBE, INC.
Date: July 2, 1998 By: /s/ Graeme S.R. Brown
-----------------------------
Graeme S.R. Brown
Associate General Counsel
-5-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit Description Page
- ------- ----------- ----
<S> <C> <C>
2.1 Asset Purchase Agreement, dated July 10, 1998, by and among Executive
TeleCard, Ltd., American United Global, Inc., Connectsoft
Communications Corporation, Connectsoft Holding Corp., and C-Soft
Acquisition Corp.
2.2 Amendment No. 1 to Asset Purchase Agreement, dated July 30, 1998, by
and among Executive TeleCard, Ltd., American United Global, Inc.,
Connectsoft Communications Corporation, Connectsoft Holding Corp., and
C-Soft Acquisition Corp.
2.3 Amendment No. 2 to Asset Purchase Agreement, dated August _, 1998, by
and among Executive TeleCard, Ltd., American United Global, Inc.,
Connectsoft Communications Corporation, Connectsoft Holding Corp., and
C-Soft Acquisition Corp.
2.4 Amendment No. 3 to Asset Purchase Agreement, dated June 17, 1999, by
and among Executive TeleCard, Ltd., American United Global, Inc.,
Connectsoft Communications Corporation, Connectsoft Holding Corp., and
C-Soft Acquisition Corp.
2.5 Assignment and Assumption Agreement, dated as of June 17, 1999, by and
among Vogo Networks, LLC, Connectsoft Communications Corporation, and
Connectsoft Holding Corp.
4.1 Certificate of Designations, Rights and Preferences of Series G
Cumulative Convertible Redeemable Preferred Stock of Executive
TeleCard, Ltd.
4.2 Form of Promissory Note payable to American United Global, Inc. in the
aggregate principal amount of $500,000.
4.3 Form of Promissory Note payable to Connectsoft Communications
Corporation in the aggregate principal amount of $200,000.
<PAGE>
4.4 Registration Rights Agreement, dated as of June 17, 1999, by and
between Executive TeleCard, Ltd. and American United Global, Inc.
10.1 Security Agreement, dated as of June 17, 1999, by and between American
United Global, Inc. and Vogo Networks, LLC.
99.1 Press Release, dated June 15, 1999, regarding the Purchase Agreement
and the transactions contemplated thereby.
</TABLE>
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), entered into this 10th day
of July, 1998, by and among AMERICAN UNITED GLOBAL, INC., a Delaware corporation
("AUGI"), CONNECTSOFT COMMUNICATIONS CORPORATION, a Delaware corporation
("CCC"), CONNECTSOFT HOLDING CORP., a Washington corporation ("Connectsoft") and
EXECUTIVE TELECARD, LTD., a Delaware corporation ("EXTEL") and C-SOFT
ACQUISITION CORP., a Delaware corporation, and a wholly-owned subsidiary of
EXTEL (the "Buyer).
W I T N E S S E T H :
WHEREAS, CCC is engaged in the business of developing a unified,
intelligent communications system which it markets under the name FreeAgent(TM)
(the "FreeAgent Technology"); and
WHEREAS, Connectsoft owns and (through an affiliate, InterGlobe
Networks, Inc. ("InterGlobe")) operates a central telecommunications network
center (the "CNOC") located in Seattle, Washington and the hardware networking
equipment, computers and software associated therewith (the "CNOC Business");
and
WHEREAS, the Buyer is interested in acquiring substantially all of the
assets and business associated with the FreeAgent Technology and the CNOC
Business (collectively, referred to herein as the "Businesses"); and
WHEREAS, each of CCC and Connectsoft (hereinafter individually and
collectively referred to as the "Seller") has agreed to sell (a) all or
substantially all of the tangible and intangible assets of CCC, including
without limitation, all software, engineering, developments and technology
associated with the FreeAgent Technology, and (b) the hardware networking
equipment, computers and software relating to the CNOC Business (collectively,
the "Assets"), and the Businesses, to the Buyer, and the Buyer has agreed to
purchase such Assets and the Businesses, all upon the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth, the sufficiency of which is hereby
acknowledged, the parties hereby covenant and agree as follows:
1. ASSETS.
1.1 Acquired Assets. Subject to the terms and conditions of this
Agreement, on the Closing Date (as such term is hereinafter defined), the Seller
<PAGE>
shall sell, transfer and deliver to the Buyer, and the Buyer shall purchase and
receive from the Seller, the Assets, including, but not limited to, the
following:
(a) All items of tangible fixed assets, furniture, fixtures,
machinery, equipment, computers, computer systems and vehicles of CCC and
Connectsoft which are used in the operation of the Businesses, and which are set
forth on Schedule 1.1(a) hereto (collectively, the "Fixed Assets"), all of which
are presently held by CCC other than the CNOC, which is presently held by
Connectsoft;
(b) All inventory and supplies of the Seller;
(c) All trade names, trademarks, patents, copyrights, customer
lists, supplier lists, trade secrets, computer software programs, engineering,
technical information, and other such knowledge and information constituting the
"know-how" of the Seller;
(d) The goodwill of the Businesses and their value as going
concerns;
(e) To the extent assignable, all licenses and permits of the
Seller;
(f) All books, records, printouts, drawings, data, files, notes,
notebooks, accounts, invoices, correspondence and memoranda of the Seller; and
(g) All other rights and assets of any kind, tangible or
intangible, of the Seller (including the Material Contracts listed on Schedule
5.8 hereto, which Buyer specifically assumes the obligations thereunder) whether
or not reflected in their internal financial statements or on their books and
records.
On the Closing Date, the Seller shall execute and deliver to the Buyer a bill of
sale in respect of the Assets, all in the form of Exhibit A annexed hereto and
made a part hereof.
1.2 Excluded Assets. Notwithstanding anything in this Agreement to the
contrary, the Assets shall not include, and the Seller shall retain (a) all
cash, marketable securities, accounts receivable and notes receivable of the
Seller, (b) those specific assets of the Seller relating to the Businesses which
are identified on Schedule 1.2 to this Agreement, (c) all bank accounts of the
Seller, (d) all rights to any tax refunds of the Seller, (e) the Seller's stock
record books, minute books, and tax returns, (f) all of the Seller's rights
under this Agreement, and (g) those miscellaneous other assets or properties of
each of CCC and Connectsoft which are not related to either the FreeAgent
Technology or the CNOC Business and which are identified on Schedule 1.2
(collectively, the "Excluded Assets").
-2-
<PAGE>
2. LIABILITIES.
2.1 Assumed Liabilities. Subject to the terms and conditions of
this Agreement, on the Closing Date, the Seller shall assign to the Buyer, and
the Buyer shall assume and agree to pay and perform when due, only the specific
liabilities, obligations and indebtedness, including without limitation trade
payables and obligations under capitalized leases of CCC relating to the Assets,
which are listed on Schedule 2.1 to this Agreement, as same are constituted on
the Closing Date (collectively, the "Assumed Liabilities") and the Material
Contracts listed on Schedule 5.8. On the Closing Date, the Buyer shall execute
and deliver to the Seller an assumption agreement in respect of the Assumed
Liabilities and the Material Contracts, all in the form of Exhibit B annexed
hereto.
2.2 Limitation on Amount and Timing of Payment of Assumed
Liabilities.
(a) Notwithstanding the provisions of Section 2.1 above or
any other provision of this Agreement it is expressly understood and agreed
by and among the parties hereto that (i) the Buyer shall not assume more than
$4,500,000 in the aggregate principal amount of Assumed Liabilities, and (ii)
the Buyer shall not be required to pay more than $500,000 in the aggregate
principal amount of Assumed Liabilities on or before April 30, 1999.
(b) In the event the Buyer is required to pay more than
$500,000 in the aggregate principal amount of Assumed Liabilities on or before
April 30, 1999, then Buyer, as its sole remedy for any breach under Section
2.2(a)(ii), shall have the right to borrow from AUGI the positive difference of
(i) the amount the Buyer is required to pay of the Assumed Liabilities on or
before April 30, 1999, less (ii) $500,000. The obligation of AUGI to loan such
funds to Buyer shall be conditioned upon a certificate of the Buyer's Chief
Financial Officer representing the amount the Buyer is required to pay in cash
of the Assumed Liabilities on or before April 30, 1999. The loan shall be
evidenced by a promissory note in the form attached hereto as Exhibit C. Buyer
shall have no remedy for a breach of Section 2.2(a)(ii) if Buyer waives
extension of the UPS Note as a condition to Closing under Section 10.1(i)
herein.
2.3 Excluded Liabilities. Except for the Assumed Liabilities and
the Material Contracts, the Buyer shall not assume, and shall have no liability
for, any debts, liabilities, executory obligations, claims or expenses of the
Seller of any kind, character or description, whether accrued, absolute,
contingent or otherwise, including, without limitation, any liabilities relating
to the Seller's conduct of the Businesses prior to the Closing Date (the
"Excluded Liabilities"). The Seller shall be solely liable and responsible to
make timely payment when due of all such Excluded Liabilities.
-3-
<PAGE>
3. CONSIDERATION.
3.1 Consideration to the Seller. The entire purchase price for the
Assets (the "Consideration") shall consist of (i) the assumption by the Buyer of
the Assumed Liabilities, and the Buyer's payment and performance, when due, of
all such Assumed Liabilities, subject only to the provisions of Section 2.2 of
this Agreement, and (ii) the rights granted under the Letter Agreement to be
delivered at the Closing in the form annexed hereto as Exhibit E.
3.2 Allocation of Purchase Price. The fair market values of the
Assets and the allocation of the Purchase Price among the Assets for purposes of
Section 1060 of the Internal Revenue Code shall be as agreed between Buyer and
Seller on or before the Closing Date and included as Schedule 3.2 and Buyer and
Seller agree to be bound by such fair market value determination and allocation
and to complete and attach Internal Revenue Service Form 8594 to their
respective tax returns accordingly. If Buyer and Seller can not agree on the
allocation, the Purchase Price shall be allocated among the Assets by Seller's
outside accountants which determination shall be final.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND AUGI. In
connection with the sale of the Assets to the Buyer and in order to induce the
Buyer to enter into this Agreement, each of CCC, Connectsoft and AUGI hereby
jointly and severally represents and warrants to the Buyer, as of the date of
this Agreement (unless otherwise indicated), as follows:
4.1 Organization, Good Standing and Qualification. CCC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, Connectsoft is a corporation duly organized, validly
existing and in good standing under the laws of the State of Washington, and
AUGI is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, each with full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and to own its assets and conduct its business
as owned and conducted on the date hereof. The Seller is duly qualified to
operate its respective businesses as a foreign corporation under the laws of
each jurisdiction where the nature of its businesses or the location of its
properties makes such qualification necessary and the failure to be so qualified
would have a material adverse effect on the subject Seller or its assets,
properties, businesses or financial condition (a "Material Adverse Effect").
4.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by the Seller and AUGI have been duly and validly authorized
by the Board of Directors of the Seller, and by AUGI (as the sole stockholder of
each of CCC and Connectsoft). No further corporate authorization is required on
-4-
<PAGE>
the part of each Seller or AUGI to consummate the transactions contemplated
hereby.
4.3 Valid and Binding Agreements. This Agreement, and, when
executed, all other agreements, instruments of transfer or assignment, documents
and other instruments delivered, constitute and will constitute the legal, valid
and binding obligation of the Seller and AUGI (to the extent a party thereto),
enforceable against the Seller and AUGI in accordance with their respective
terms, except to the extent limited by bankruptcy, insolvency, reorganization
and other laws affecting creditors' rights generally, and except that the remedy
of specific performance or similar equitable relief is available only at the
discretion of the court before which enforcement is sought.
4.4 Disclosure and Duty of Inquiry. No representation or warranty
by the Seller or AUGI in this Agreement and no statement or information
contained in the schedules hereto or any certificate furnished or to be
furnished to the Buyer hereunder 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 made, in order to make the
statements herein or therein not misleading. The Buyer is not nor will it be
required to undertake any independent investigation to determine the truth,
accuracy and completeness of the representations and warranties made by the
Seller and AUGI pursuant to this Article 4.
5. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF AUGI AND THE SELLER.
In connection with the sale of the Assets to the Buyer and in order to induce
the Buyer to enter into this Agreement, each of CCC, Connectsoft and AUGI hereby
jointly and severally represents and warrants to the Buyer, as of the date of
this Agreement (unless otherwise indicated), as follows:
5.1 No Breach of Statute or Contract. Neither the execution and
delivery of this Agreement by the Seller, nor compliance with the terms and
provisions of this Agreement, will: (a) violate any statute or regulation of any
governmental authority, domestic or foreign, affecting the Seller, (b) except as
set forth in Schedule 5.1 to this Agreement, require the issuance of any
authorization, license, consent or approval of any federal or state governmental
agency or any other person; or (c) except as set forth in Schedule 5.1 to this
Agreement, conflict with or result in a breach of any of the terms, conditions
or provisions of the certificate of incorporation or by-laws of the Seller or
any judgment, order, injunction, decree, agreement or instrument to which the
Seller is a party, or by which the Seller is bound, or constitute a default
thereunder.
5.2 Title to and Condition of Purchased Assets. The Seller owns, or
leases the Assets listed on Schedule 1.1(a) as being leased, and as of the
Closing Date will have good and marketable title in and to, or a valid leasehold
-5-
<PAGE>
interest in, all of the Assets, free and clear of all liens, liabilities,
charges, claims, options, restrictions on transfer or other encumbrances of any
nature whatsoever, except for (a) liens or encumbrances disclosed in Section 5.2
to this Agreement; and (b) miscellaneous materialmen's or mechanics liens or
liens for current taxes not yet due and payable or which are being contested in
good faith by appropriate proceedings and which are listed on Schedule 5.2
(collectively, "Permitted Liens"). All material items of machinery, equipment,
vehicles, and other personal property owned or leased by the Seller are listed
in Schedule 5.2 to this Agreement and, except as and to the extent disclosed in
Schedule 5.2 to the Agreement, all such personal property is included in the
Assets and is in good operating condition and repair (reasonable wear and tear
excepted) and is adequate for its use in the Seller's Businesses as presently
conducted. The Assets constitute all of the assets and properties which are
required for the Seller's Businesses as presently conducted and as proposed to
be conducted by the Seller as of the date hereof.
5.3 Ownership of Businesses. No portion of the Businesses is owned
or operated by any person or entity other than the Seller, except that
InterGlobe operates the CNOC.
5.4 Form SB-2 Information; Financial Statements. CCC has furnished
to EXTEL a copy of the Form SB-2 Registration Statement of CCC, as filed with
the Securities and Exchange Commission ("SEC") on September 4, 1997 (the
"Registration Statement"), which Registration Statement has not, as yet, been
declared effective by the SEC. On or before the closing of the transactions
contemplated by this Agreement, such Registration Statement shall be withdrawn.
Annexed hereto as Schedule 5.4 is an unaudited balance sheet of CCC as at April
30, 1998 and the unaudited statement of income (loss) of CCC for the nine months
ended April 30, 1998 (collectively, the "April 1998 Financial Statements"). The
April 1998 Financial Statements were prepared by management of CCC, fairly set
forth the assets and liabilities and financial conclusion of CCC and its results
of operations as at April 30, 1998 and for the fiscal period then ended, and
were prepared in accordance with generally accepted accounting principles,
consistent with those of prior periods, subject only to the absence of financial
statement footnotes (which would not differ materially from those of the most
recent audited financial statements) and year end audit adjustments (which would
not be material). The financial statements included in the Registration
Statement (a copy of which has been provided to the Buyer) present fairly, in
all material respects, the financial condition of CCC as of July 31, 1997 and
the results of operations and cash flows for the respective periods then ended
and have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved. The
financial statements referred to in this Section 5.4 do not reflect the
operations of any business or any portion of Seller's Businesses not included in
the Assets. Except as expressly set forth in the April 1998 Financial Statements
and those financial statements included in the Registration Statement, as
disclosed pursuant to this Agreement, or non-material
-6-
<PAGE>
liabilities arising in the normal course of the Seller's Businesses since April
30, 1998, except for the Assumed Liabilities, there are no liabilities or
obligations (including, without limitation, any tax liabilities or accruals)
of the Seller, including any contingent liabilities, that are, in the aggregate,
material to the Seller.
5.5 No Material Changes. Except as otherwise described in Schedule
5.5 to this Agreement, since July 31, 1997, there has been no material adverse
change in the financial condition, operations, or Businesses of the Seller, or
any damage, destruction, or loss (whether or not covered by insurance) of the
Assets materially and adversely affecting the financial condition, operations,
or Businesses of the Seller, provided, that the offering of the Businesses and
the Assets for sale, the preparation for such sale pursuant to the terms and
conditions of this Agreement, and the public disclosure of the same shall not
constitute such a material adverse change.
5.6 Insurance Policies. Schedule 5.6 to this Agreement contains a
true and correct schedule of all insurance coverages held by the Seller
concerning the Businesses and the Seller's assets and properties. To the
Seller's knowledge, the Seller is not in violation of any requirements of any
its insurance carriers, and the Seller has received no written notice of any
default or violation under or in respect of any of the foregoing.
5.7 Permits and Licenses. Except as set forth in Schedule 5.7, the
Seller possesses (and there are included in the Assets being transferred to the
Buyer) all required permits, licenses and/or franchises, from whatever
governmental authorities or agencies (domestic and/or foreign) requiring the
same and having jurisdiction over the Seller, necessary in order to operate the
Businesses in the manner presently conducted, all of which permits, licenses
and/or franchises are valid, current and in full force and effect, except where
the failure to have or maintain any such permit, license and/or franchise would
not have or could not reasonably be expected to have a material adverse effect
on the Assets or the Businesses. The Seller has heretofore conducted the
Businesses in compliance in all material respects with the requirements of such
permits, licenses and/or franchises, and the Seller has not received written
notice of any default or violation in respect of or under any of such permits,
licenses and/or franchises, except where such default would not have or could
not reasonably be expected to have a Material Adverse Effect on the Assets or
the Businesses.
5.8 Contracts and Commitments.
(a) Schedule 5.8 to this Agreement lists all material contracts
contracts, leases, commitments, technology agreements, software development
agreements, software licenses, indentures and other agreements to which the
Seller is a party (collectively, "Material Contracts"), all of which are
included in the Assets except as indicated in Schedule 5.8 except that Schedule
5.8 need not list any such
-7-
<PAGE>
agreement that is listed on any other schedule hereto, or was entered into
in the ordinary course of the Businesses of the Seller and that, in any case:
(i) is for the purchase of supplies or other inventory items in the ordinary
course of the Businesses; (ii) is related to the purchase or lease of any
capital asset involving aggregate payments of less than $25,000 per annum; or
(iii) may be terminated without penalty, premium or liability by the Seller on
not more than thirty (30) days' prior written notice; provided however, that
Schedule 5.8 shall list all technology agreements, software development
agreements and software licenses involving the Seller and all Assumed
Liabilities, regardless of the duration thereof or the amount of payments called
for or required thereunder, other than standard software licenses of software
products available to the Businesses' customers generally.
(b) Except as set forth in Schedule 5.8 to this Agreement, all
Material Contracts are in full force and effect, and the Seller is in compliance
in all material respects with all of the Material Contracts and with all Assumed
Liabilities, and has not received any written notice that any party to any
Material Contract is in material breach or default of such Material Contract or
is now subject to any condition or event which has occurred and which, after
notice or lapse of time or both, would constitute a material default by any
party under any such Material Contract. Except as set forth in Schedule 5.8 to
this Agreement, none of the Material Contracts will be voided, revoked or
terminated, or voidable, revocable or terminable, upon and by reason of the
assignment thereof to the Buyer pursuant to this Agreement. The Seller has
delivered true and correct copies of all Material Contracts to the Buyer.
(c) To the best of each Seller's knowledge, no purchase
commitment by the Seller relating to the Businesses is materially in excess of
the normal, ordinary and usual requirements of the Businesses.
(d) Except as set forth in Schedule 5.8 to this Agreement, the
Seller does not have any outstanding contracts with or commitments to officers,
employees, technicians, agents, consultants or advisors relating to the
Businesses that are not cancelable by the Seller without penalty, premium or
liability (for severance or otherwise) on less than thirty (30) days' prior
written notice.
5.9 Customers and Suppliers. Except as set forth in Schedule
5.9 to this Agreement, the Seller has not received any written notice of any
claim by or dispute with, or any existing, announced or anticipated changes in
the policies of, any material clients, customers, referral sources or suppliers
of the Seller which would have a Material Adverse Effect on the Businesses as
presently conducted.
-8-
<PAGE>
5.10 Labor, Benefit and Employment Agreements.
(a) Except as set forth in Schedule 5.10 to this Agreement, the
Seller is not a party to and does not have any commitment or obligation in
respect of (i) any collective bargaining agreement or other labor agreement
relating to any employees of the Seller, or (ii) any agreement with respect to
the employment or compensation of any non-hourly and/or non-union employee(s) of
the Businesses. Schedule 5.10 sets forth the amount of all compensation or
remuneration (including any discretionary bonuses) paid by the Seller during the
1997 calendar year to employees or consultants of the Seller who presently
receive aggregate compensation or remuneration at an annual rate in excess of
$35,000.
(b) No union is now certified or, to the best of the Seller's
knowledge, claims to be certified, as a collective bargaining agent to represent
any employees of the Seller, and there are no labor disputes existing or, to the
best of the Seller's knowledge, threatened, involving strikes, slowdowns, work
stoppages, job actions or lockouts of any employees of the Seller.
(c) With respect to any "multiemployer plan" (as defined in
Section 3(37) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) to which the Seller or any of its past or present affiliates has at
any time been required to make contributions, neither the Seller nor any of its
past or present affiliates has, at any time on or after April 29, 1980, suffered
or caused any "complete withdrawal" or "partial withdrawal" (as such terms are
respectively defined in Sections 4203 and 4205 of ERISA) therefrom on its part.
(d) Except as disclosed in Schedule 5.10, the Seller does not
maintain, or have any liabilities or Assumed Liabilities of any kind with
respect to, any bonus, deferred compensation, pension, profit sharing,
retirement or other such benefit plan, and does not have any potential or
contingent liability in respect of any actions or transactions relating to any
such plan other than to make contributions thereto if, as and when due in
respect of periods subsequent to the date hereof. Without limitation of the
foregoing, (i) the Seller has made all required contributions to or in respect
of any and all such benefit plans, (ii) no "accumulated funding deficiency" (as
defined in Section 412 of the Internal Revenue Code of 1986, as amended (the
"Code")) has been incurred in respect of any of such benefit plans, and the
present value of all vested accrued benefits thereunder does not, on the date
hereof, exceed the assets of any such plan allocable to the vested accrued
benefits thereunder, (iii) there has been no "prohibited transaction" (as
defined in Section 4975 of the Code) with respect to any such plan, and no
transaction which could give rise to any tax or penalty under Section 4975 of
the Code or Section 502 of ERISA, and (iv) there has been no "reportable event"
(within the meaning of Section 4043(b) of ERISA) with respect to any such plan.
All of such plans which constitute, are intended to constitute, or have been
treated by the Seller as "employee pension
-9-
<PAGE>
benefit plans" or other plans within Section 3 of ERISA have been determined by
the Internal Revenue Service to be "qualified" under Section 401(a) of the Code,
and have been administered and are in compliance with ERISA and the Code; and
the Seller does not have any knowledge of any state of facts, conditions or
occurrences such as would impair the "qualified" status of any of such plans.
All of the matters listed on Schedule 5.10 shall constitute Excluded
Liabilities.
(e) Except for the group insurance programs listed in Schedule
5.10, the Seller does not maintain any medical, health, life or other employee
benefit insurance programs or any welfare plans (within the meaning of Section
3(1) of ERISA) for the benefit of any current or former employees, and, except
as required by law, the Seller does not have any liability, fixed or contingent,
for health or medical benefits to any former employee.
5.11 Accounts Payable. Except as set forth in Schedule 5.11, the
Seller is current in its payment of all accounts payable relating to the
Businesses, and has received no notice, not subsequently withdrawn or cured,
from any vendor, supplier or other person with respect to non-payment or late
payment of any accounts payable of the Businesses, or any threatened suspension
or termination of the provision of goods or services to the Businesses, which
suspension or termination would have a Material Adverse Effect on the financial
condition, operations, or Businesses of the Seller.
5.12 Compliance with Laws.
(a) To the Seller's knowledge, the Seller is in compliance in
all material respects with all laws, statutes, regulations, rules and ordinances
applicable to the conduct of its Businesses as presently constituted; and the
Seller has received no written notice of any default or violation under or in
respect of any of the foregoing.
(b) Without limitation of Section 5.12(a) above, except as set
forth on Schedule 5.12 to this Agreement, to the best of the Seller's knowledge
the Seller has not, at any time during the three (3) year period prior to the
date hereof, (i) handled, stored, generated, processed or disposed of any
hazardous substances in violation of any federal, state or local environmental
laws or regulations, or (ii) otherwise committed any material violation of any
federal, state or local environmental laws or regulations (including, without
limitation, the provisions of the Environmental Protection Act, the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, and other applicable environmental statutes and regulations) or any
material violation of the Occupational Safety and Health Act.
(c) Except as set forth in Schedule 5.12 to this Agreement,
neither the Seller nor, to the best of the Seller's knowledge, any of the
Seller's directors or officers has received any written notice of default or
violation,
-10-
<PAGE>
nor, to the best of the Seller's knowledge, is the Seller or any of its
directors or officers in default or violation, with respect to any judgment,
order, writ, injunction, decree, demand or assessment issued by any court or any
federal, state, local, municipal or other governmental agency, board,
commission, bureau, instrumentality or department, domestic or foreign, relating
to any aspect of the Seller's Businesses, affairs, properties or assets. Neither
the Seller nor, to the best of the Seller's knowledge, any of its directors or
officers, has received written notice of, been charged with, or is under
investigation with respect to, any violation of any provision of any federal,
state, local, municipal or other law or administrative rule or regulation,
domestic or foreign, relating to any aspect of the Seller's Businesses, affairs,
properties or assets, which violation would have a Material Adverse Effect on
the financial condition, operations, or Businesses of the Seller or upon any
material portion of the Assets.
(d) Schedule 5.12 sets forth the date(s) of the last known
audits or inspections (if any) of the Seller conducted by or on behalf of the
Environmental Protection Agency, the Occupational Safety and Health
Administration, the federal Department of Health and Human Services and/or any
agency thereof (including, without limitation, the Health Care Financing
Administration) or intermediary acting on its behalf, any corresponding or
comparable state or local governmental department, agency or authority, and any
other governmental and/or quasi-governmental agency (federal, state and/or
local).
5.13 Litigation. Except as disclosed in Schedule 5.13 to this
Agreement, there is no suit, action, arbitration, or legal, administrative or
other proceeding, or governmental investigation (including, without limitation,
any claim alleging the invalidity, infringement or interference of any patent,
patent application, or rights thereunder owned or licensed by the Seller)
pending, or to the best knowledge of the Seller, threatened, by or against the
Seller that relates in any material way to the Businesses or any of the Assets.
All of the matters listed on Schedule 5.13 shall constitute Excluded
Liabilities. The Seller is not aware of any state of facts, events, conditions
or occurrences which might properly constitute grounds for or the basis of any
suit, action, arbitration, proceeding or investigation against or with respect
to the Seller or that relate in any material way to the Businesses or any of the
Assets, which, if adversely determined, would have a Material Adverse Effect on
the financial condition, operations, or Businesses of the Seller or upon any
material portion of the Assets.
5.14 Intellectual Property.
(a) Schedule 5.14 to this Agreement sets forth a list and
brief description of the nature and ownership of: (i) all patents, patent
applications, copyright registrations and applications, registered trade names,
and trademark registrations and applications, both domestic and foreign, which
are presently owned, filed or held by the Seller and/or any of its directors,
officers, stockholders or employees and which in any material way relate to or
are used in the Businesses; (ii) all licenses, both domestic and foreign, which
are owned or controlled by the Seller and/or any of its directors, officers,
-11-
<PAGE>
stockholders, or employees and which in any material way relate to or are used
in the Businesses; and (iii) all franchises, licenses and/or similar
arrangements granted to the Seller by others and/or to others by the Seller.
None of the patents, patent applications, copyright registrations or
applications, registered trade names, trademark registrations or applications,
franchises, licenses or other arrangements set forth or required to be set forth
in Schedule 5.14 is subject to any pending challenge known to the Seller.
(b) Schedule 5.14 also lists (i) the jurisdictions in which
such intellectual property has been issued or registered or in which any
application for such issuance and registration has been filed, (ii) licenses,
sublicenses and other agreements as to which the Seller is a party and pursuant
to which any person is authorized to use any Intellectual Property (as defined
herein), and (iii) licenses, sublicenses and other agreements as to which the
Seller is a party and pursuant to which the Seller is authorized to use any
third party patents, trademarks or copyrights, including software ("Third Party
Intellectual Rights") which are incorporated in, are or form a part of any
product of the Seller.
(c) Schedule 5.14 lists all hardware, computer software,
identifiable know-how (and the manner in which such know-how is memorialized)
and other identifiable technology (collectively, the "Seller Technology") which
the Seller owns or licenses and is included in the Assets, and the nature of the
Seller's rights in each item of Seller Technology. Schedule 5.14 also describes
the technology design and development that is currently ongoing or planned for
1998.
(d) The Seller owns, or is licensed or otherwise possesses
all necessary rights to use all patents, trademarks, trade names, service marks,
copyrights and any applications therefor, maskworks, net lists, schematics,
technology, know-how, trade secrets, inventory, ideas, algorithms, processes,
computer software programs and applications (in both source code and object code
form), and tangible or intangible proprietary information or material
("Intellectual Property") that are used or marketed in its business as presently
conducted and as proposed to be conducted or included or proposed to be included
in its products or proposed products.
(e) To the knowledge of the Seller, there is no unauthorized
use, disclosure, infringement or misappropriation of any Intellectual Property
rights of the Seller, any trade secret material to the Seller or any
Intellectual Property right of any third party to the extent licensed by or
through the Seller by any third party, including any employee or former employee
of the Seller. Except as set forth in Schedule 5.14, the Seller has never
entered into any
-12-
<PAGE>
agreement to indemnify any other person against any charge of infringement of
any Intellectual Property. Except as set forth in Schedule 5.14, there are no
royalties, fees or other payments payable by the Seller to any person by reason
of the ownership, use, sale or disposition of Intellectual Property.
(f) The Seller is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in material breach of any license, sublicense or other
agreement relating to the Intellectual Property or Third Party Intellectual
Property Rights.
(g) The Seller has not (i) been served with process, or is
aware that any person is intending to serve process on the Seller, in any suit,
action or proceeding which involves a claim of infringement of any patents,
trademarks, service marks, copyrights or violation of any trade secret or other
proprietary right of any third party and (ii) brought any action, suit or
proceeding for infringement of Intellectual Property against any third party. To
the knowledge of the Seller, the business of the Seller as presently conducted
and as proposed to be conducted, the Seller's products or proposed products do
not infringe any patent, trademark, service mark, copyright, trade secret or
other proprietary right of any third party.
(h) The Seller has made available to the Buyer copies of all
agreements executed by officers, employees and consultants of the Seller
regarding the protection of proprietary information and the assignment to the
Seller of any Intellectual Property arising from services performed for the
Seller by such persons.
(i) The Seller has, to the extent it deemed necessary and
appropriate, obtained or entered into written agreements with third parties in
connection with the disclosure to, or use or appropriation by, third parties, of
trade secret or proprietary Intellectual Property owned by the Seller and not
otherwise protected by a patent, a patent application, copyright, trademark, or
other registration or legal scheme ("Confidential Information"), and does not
know of any situation involving such third party use, disclosure or
appropriation of Confidential Information where the lack of such a written
agreement is likely to result in any material adverse effect on the Seller or
the Assets.
5.15 Sensitive Payments. To the best of the Seller's knowledge,
the Seller has not (a) made any contributions, payments or gifts to or for the
private use of any governmental official, employee or agent where either the
payment or the purpose of such contribution, payment or gift is illegal under
the laws of the United States or the jurisdiction in which made, (b) established
or maintained any unrecorded fund or asset for any purpose or made any false or
artificial entries on its or their books, or (c) made any payments to any person
with
-13-
<PAGE>
the intention that any part of such payment was to be used for any purpose other
than that described in the documents supporting the payment.
5.16 Real Property. Except as set forth in Schedule 5.16 to this
Agreement, the Seller neither owns or has any interest of any kind (whether
ownership, lease, or otherwise) in any real property except to the extent of the
Seller's leasehold interests under the leases for its Businesses premises, true
and complete copies of which leases (including all amendments thereto) are
annexed to Schedule 5.16 (the "Leases"). The Seller, and to the knowledge of the
Seller, the landlords thereunder, are presently in compliance with all of their
respective Assumed Liabilities under the Leases, and the premises leased
thereunder are in good condition (reasonable wear and tear excepted) and are
adequate for the operation of the Seller's Businesses as presently conducted.
5.17 Status of Payment Obligations in Respect of Assumed
Liabilities. Schedule 5.17 annexed hereto sets forth the current status of all
payment obligations of the Seller and/or AUGI in respect of each of the Assumed
Liabilities set forth on Schedule 2.1 annexed hereto.
5.18 Disclosure and Duty of Inquiry. Sellers have filed all tax
returns required to be filed (except for returns that have been properly
extended) and have paid all taxes shown as owing (other than taxes currently
being contested in good faith by appropriate proceedings, for which amounts have
been reserved in accordance with generally accepted accounting principles
("GAAP")). No tax returns are currently the subject of audit and there has been
no extension of time for assessment of taxes or waiver of the statute of
limitations with respect to taxes. Neither Seller is party to any tax sharing or
allocation agreement and neither has ever been a member of an affiliated group
filing a consolidated federal income tax return. The Buyer is not nor will it be
required to undertake any independent investigation to determine the truth,
accuracy and completeness of the representations and warranties made by the
Seller pursuant to this Article 5.
6. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF AUGI. In connection
connection with the sale of the Assets to the Buyer and in order to induce the
Buyer to enter into this Agreement, AUGI hereby represents and warrants to the
Buyer, as of the date of this Agreement (unless otherwise indicated), as
follows:
6.1 Absence of Undisclosed Liabilities. Except as expressly set
forth in the Registration Statement or as disclosed pursuant to schedules to
this Agreement, or arising in the normal course of the Seller's Businesses since
July 31, 1997, to the best of AUGI's knowledge there are no liabilities or
obligations (including, without limitation, any tax liabilities or accruals) of
either Seller, including any contingent liabilities, that are, in the aggregate,
material to the Businesses or which could have Material Adverse Effect on the
Assets, other than the Assumed Liabilities identified on Schedule 2.1. To the
best of AUGI's
-14-
<PAGE>
knowledge, the amount of each of the Assumed Liabilities is correctly set
forth on Schedule 2.1 in all material respects and, subject to obtaining an
extension of the UPS Note (as herein described), not more than $500,000 of such
Assumed Liabilities will be payable on or before April 30, 1999.
6.2 Disclosure and Duty of Inquiry. The Buyer is not nor will it be
required to undertake any independent investigation to determine the truth,
accuracy and completeness of the representations and warranties made by AUGI
pursuant to this Article 6.
7. REPRESENTATIONS AND WARRANTIES OF EXTEL AND THE BUYER In connection
with the purchase of the Assets from the Seller hereunder, EXTEL and the Buyer
hereby jointly and severally represent and warrant to the Seller and AUGI as
follows:
7.1 Organization, Good Standing and Qualification. Each of EXTEL
and the Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all necessary power and
authority to execute and deliver this Agreement, to perform the Assumed
Liabilities hereunder, and to consummate the transactions contemplated hereby.
Each of EXTEL and the Buyer has all requisite corporate power and authority to
own its properties and to conduct its business as currently conducted, and to
execute, deliver and perform its Assumed Liabilities under this Agreement. The
Buyer is a wholly-owned subsidiary of EXTEL.
7.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by EXTEL and the Buyer have been duly and validly authorized
by all necessary and appropriate action by the respective Board of Directors and
stockholders of EXTEL and the Buyer; and EXTEL and the Buyer each have the full
legal right, power and authority to execute and deliver this Agreement, to
perform the Assumed Liabilities hereunder, and to consummate the transactions
contemplated hereby. No further corporate authorization is necessary on the part
of EXTEL or the Buyer to consummate the transactions contemplated hereby.
7.3 Valid and Binding Agreement. This Agreement and, when executed
and delivered, all other agreements, instruments of transfer or assignment,
documents, and other instruments, constitute and will constitute the legal,
valid and binding obligation of EXTEL and the Buyer, enforceable against EXTEL
and the Buyer in accordance with their respective terms, except, in each case,
to the extent limited by bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally, and except that the remedy of specific
performance or similar equitable relief is available only at the discretion of
the court before which enforcement is sought.
-15-
<PAGE>
7.4 No Breach of Statute or Contract. Neither the execution and
delivery of this Agreement, nor compliance with the terms and provisions of this
Agreement or such other agreements on the part of EXTEL or the Buyer will: (a)
violate any statute or regulation of any governmental authority, domestic or
foreign, affecting EXTEL or the Buyer; (b) require the issuance of any
authorization, license, consent or approval of any federal or state governmental
agency (except to the extent that EXTEL or the Buyer may be required to be
qualified as a foreign corporation in certain jurisdictions in which it is not
currently so qualified, and to the extent that EXTEL or the Buyer may be
required to reapply for any permits, licenses and/or franchises which are not
assignable as part of the Assets and any consent of EXTEL's current lenders as
may be required); or (c) conflict with or result in a breach of any of the
terms, conditions or provisions of any judgment, order, injunction, decree,
note, indenture, loan agreement or other agreement or instrument to which EXTEL
or the Buyer is a party, or by which EXTEL or the Buyer is bound, or constitute
a default thereunder.
7.5 Disclosure. EXTEL and the Buyer have previously delivered to
the Seller and AUGI a true and correct copy of the Annual Report on Form 10-K
for the year ended March 31, 1998, as filed by EXTEL with the SEC, including
therein audited and unaudited financial information (the "EXTEL Public
Filings"). The EXTEL Public Filings comply with the SEC disclosure requirements
applicable thereto and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in light of the circumstances under
which it was made, in order to make the statements therein not misleading. Since
the date of the most recent EXTEL Public Filings, (a) there has been no material
change in the capitalization of EXTEL or the Buyer, (b) the businesses of EXTEL,
the Buyer and their respective subsidiaries have been operated in the normal
course, and (c) there has been no material adverse change in the financial
condition, operations or businesses of EXTEL, the Buyer, or their respective
subsidiaries (taken as a consolidated whole) from that reflected in such report.
7.6 Litigation. There is no suit, action, arbitration, or legal,
administrative or other proceeding, or governmental investigation pending, or to
the knowledge of EXTEL or the Buyer, threatened, against EXTEL or the Buyer (i)
which challenges EXTEL's or the Buyer's ability to consummate the transactions
provided for herein, or (ii) materially restricts or affects the business
operations of EXTEL or the Buyer either before or after the Closing.
7.7 Disclosure and Duty of Inquiry. No representations or
warranties by Buyer or EXTEL in this Agreement and no statement or information
contained in the schedules hereto or any certificate furnished or to be
furnished to Seller or AUGI hereunder 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 made, in order to
make the statements herein or therein not misleading. The Seller and AUGI are
not and will not be required to
-16-
<PAGE>
undertake any independent investigation to determine the truth, accuracy and
completeness of the representations and warranties made by EXTEL and the Buyer
in this Article 7.
8. PRE-CLOSING COVENANTS. Each of the Seller and AUGI covenants
covenants and agrees that, from April 15, 1998 (the date of execution of a
letter of intent regarding the transactions contemplated hereby) through and
including the Closing Date:
8.1 Representations and Warranties. The representations and
warranties contained in Articles 4 and 5 of this Agreement shall be true and
correct in all material respects as of the Closing Date as if made on such date.
8.2 Access to Information.
(a) The Seller shall permit the Buyer and its counsel,
accountants and other representatives, upon reasonable advance notice to the
Seller, during normal business hours and without undue disruption of the
Businesses of the Seller, to have reasonable access to all properties, books,
accounts, records, contracts, documents and information relating to the
Businesses and, to the extent reasonably required by the Buyer for its due
diligence, the Seller. The Buyer and its representatives shall also be permitted
to freely consult with the Seller's counsel concerning the Businesses.
(b) Each of the Seller and AUGI will make available to the
Buyer and its accountants all financial records relating to the Seller and
the Businesses, and shall cause the Seller's accountants to cooperate with the
Buyer's accountants and make available to the Buyer's accountants all work
papers and other materials developed by or in the possession of the Seller's
accountants, for the purpose of assisting the Buyer's accountants in the
performance of an audit of the Businesses for all periods subsequent to January
1, 1996.
8.3 Conduct of Businesses in Normal Course. The Seller shall carry
on the Businesses in substantially the same manner as heretofore conducted and
as provided under the Management Agreement dated April 15, 1998, and shall not
make or institute any unusual or novel methods of service, sale, purchase,
lease, management, accounting or operation that will vary materially from those
methods used by the Seller as of the date hereof, without in each instance
obtaining the prior written consent of the Buyer.
8.4 Preservation of Businesses and Relationships. The Seller shall,
without making or incurring any unusual commitments or expenditures, use all
reasonable efforts to preserve its business organization intact, and preserve
its present relationships with referral sources, clients, customers, suppliers
and others having business relationships with the Seller.
-17-
<PAGE>
8.5 Maintenance of Insurance. The Seller shall continue to carry
its existing insurance, to the extent obtainable upon reasonable terms.
8.6 Corporate Matters. The Seller shall not, without the prior
written consent of the Buyer:
(a) amend, cancel or modify any Material Contract or enter
into any material new agreement, commitment or transaction except, in each
instance, in the ordinary course of business;
(b) modify in any material respect (i) any material agreement
relating to the Businesses to which the Seller is a party or by which it may be
bound, or (ii) any policies, procedures or methods of doing business relating to
the Businesses, except in each case in the ordinary course of business;
(c) except pursuant to commitments in effect on the date
hereof (to the extent disclosed in this Agreement or in any schedule hereto),
make any capital expenditure(s) or commitment(s), whether by means of purchase,
lease or otherwise, or any operating lease commitment(s), in excess of $50,000
in the aggregate;
(d) dispose of or transfer any Asset outside of the ordinary
course of business, or sell, assign or dispose of any capital asset(s) with a
net book value in excess of $15,000 as to any one item or $50,000 in the
aggregate;
(e) materially change its method of collection of accounts or
notes receivable, or accelerate or slow in any material respect its payment of
accounts payable;
(f) forgive any obligation or performance (past, present or
future) owed to the Businesses, except for any intercompany obligation owed by
AUGI or its Affiliates to the Seller;
(g) incur any material liability or indebtedness except, in
each instance, in the ordinary course of business
(h) subject any of the assets or properties of the Businesses
to any further liens or encumbrances, other than Permitted Liens;
(i) make any payments to any Affiliate of the Seller; or
(j) agree to do, or take any action in furtherance of, any of
the foregoing.
-18-
<PAGE>
9. ADDITIONAL AGREEMENTS OF THE PARTIES.
9.1 Confidentiality. Notwithstanding anything to the contrary
contained in this Agreement, and subject only to any disclosure requirements
which may be imposed upon any party under applicable state or federal securities
or antitrust laws, it is expressly understood and agreed by the parties that,
except with respect to matters or information which are publicly available other
than by reason of a breach of this Section 9.1, (i) this Agreement, the
schedules hereto, and the conversations, negotiations and transactions relating
hereto and/or contemplated hereby, and (ii) all financial information, business
records and other non-public information concerning either party which the other
party or its representatives has received or may hereafter receive, shall be
maintained in the strictest confidence by the recipient and its representatives,
and shall not be disclosed to any person that is not associated or affiliated
with the recipient and involved in the transactions contemplated hereby, without
the prior written approval of the party which provided the information. The
parties hereto shall use their best efforts to avoid disclosure of any of the
foregoing or undue disruption of any of the business operations or personnel of
the parties, and no party shall issue any press release or other public
announcement regarding the transactions contemplated hereby without the prior
approval of each other party (such approval not to be unreasonably withheld or
delayed) unless otherwise required under applicable laws and regulations,
including SEC rules and regulations. In the event that the transactions
contemplated hereby shall not be consummated for any reason, each party
covenants and agrees that neither it nor any of its representatives shall retain
(other than information which is publicly available other than by reason of a
breach of this Section 9.1) any documents, lists or other writings of any other
party which it may have received or obtained in connection herewith or any
documents incorporating any of the information contained in any of the same (all
of which, and all copies thereof in the possession or control of the recipient
or its representatives, shall be returned to the party which provided the
information).
9.2 Exclusivity. From the date hereof through any termination of
this Agreement in accordance with Section 13 below, the Seller and AUGI shall
not (and shall not permit any of their stockholders, directors, officers,
Affiliates, agents or representatives to) negotiate with or enter into any other
commitments, agreements or understandings with any person, firm or corporation
(other than its Affiliates) in respect of any sale of capital stock or assets of
the Seller, any merger, consolidation or corporate reorganization, or any other
such transaction relating to the Seller or the Businesses.
9.3 Bill of Sale; Transfer Documents; Assumption Agreement.
(a) On the Closing Date, the Seller shall execute and
deliver to the Buyer a bill of sale in respect of the Assets in substantially
the form of
-19-
<PAGE>
Exhibit A annexed hereto (the "Bill of Sale"). In addition, to the extent that
specific assignments may be necessary or appropriate in respect of any of the
Assets, and/or to the extent that any of the Assets are represented by
certificates of title or other documents, then the Seller shall execute and
deliver to the Buyer any and/or additional transfer documents, and shall endorse
to and in the name of the Buyer all certificates of title and other such
documents, as may be necessary or appropriate in order to effect the full
transfer to the Buyer or its designee(s) of all of the Assets.
(b) On the Closing Date, the Seller and the Buyer shall
execute and deliver to one another an assignment and assumption agreement in
respect of the Assumed Liabilities in substantially the form of Exhibit B
annexed hereto (the "Assumption Agreement"). In addition, to the extent that
specific assignments may be required in order to effect the assignment to and
assumption by the Buyer of any particular Assumed Liabilities, the Seller and
the Buyer shall execute and deliver to one another such additional assignment
and assumption documents.
9.4 Additional Agreements and Instruments. On or before the Closing
Date, the Seller, AUGI, EXTEL, and the Buyer shall execute, deliver and file all
exhibits, agreements, certificates, instruments and other documents, not
inconsistent with the provisions of this Agreement, which, in the opinion of
counsel to the parties hereto, shall reasonably be required to be executed,
delivered and filed in order to consummate the transactions contemplated by this
Agreement.
9.5 Non-Interference. Neither EXTEL, the Buyer, the Seller, nor
AUGI shall cause to occur any act, event or condition which would cause any of
their respective representations and warranties made in this Agreement to be or
become untrue or incorrect in any material respect as of the Closing Date, or
would interfere with, frustrate or render unreasonably expensive the
satisfaction by the other party or parties of any of the conditions precedent
set forth in Sections 10 and 11 below.
9.6 Management Agreement. On the Closing Date, the Management
Agreement dated April 15, 1998, as amended June 22, 1998, shall terminate as
provided in Section 5.2(ii) of the Management Agreement; provided however,
within 13 months of the Closing Date, EXTEL or Buyer shall pay AUGI in the
amount of $150,000 as reimbursement for advances of expenses by AUGI to CCC. The
obligation shall be evidenced by a promissory note to be delivered at the
Closing in the form attached hereto as Exhibit D.
9.7 Letter Agreement. On the Closing Date, AUGI and the Seller, on
the one hand, and EXTEL and the Buyer, on the other hand, shall execute and
deliver to each other the letter agreement in the form annexed hereto as Exhibit
E.
-20-
<PAGE>
10. CONDITIONS PRECEDENT
10.1 Conditions to Obligations of EXTEL and Buyer. The obligations
of EXTEL and the Buyer to consummate the transactions contemplated by this
Agreement are further subject to the satisfaction, at or before the Closing
Date, of all the following conditions, any one or more of which may be waived in
writing by the Buyer:
(a) Accuracy of Representations and Warranties. All
representations and warranties made by the Seller and/or AUGI in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
as though such representations and warranties were made on and as of that date.
(b) Performance. The Seller and AUGI shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by them on or before the Closing Date.
(c) Certification. The Buyer shall have received a
certificate, dated the Closing Date, signed by the Seller and AUGI, certifying,
in such detail as the Buyer and its counsel may reasonably request, that the
conditions specified in Sections 10.1(a) and 10.1(b) above have been fulfilled.
(d) Resolutions. The Buyer shall have received certified
resolutions of the Board of Directors and the sole stockholder of the Seller and
of the Board of Directors of AUGI, in form reasonably satisfactory to counsel
for the Buyer, authorizing the Seller's and AUGI's execution, delivery and
performance of this Agreement and all actions to be taken by the Seller and AUGI
hereunder.
(e) Absence of Litigation. No action, suit or proceeding by or
before any court or any governmental body or authority, against either the
Seller or AUGI or pertaining to the transactions contemplated by this Agreement
or their consummation, shall have been instituted on or before the Closing Date,
which action, suit or proceeding would, if determined adversely, have a Material
Adverse Effect.
(f) Due Diligence. The Buyer shall have completed, to its
satisfaction, due diligence of the properties and assets of the Businesses,
contracts, agreements, books, records and documents relating to the Seller and
the Assets.
(g) Consents. All necessary consents of third parties required
for the consummation of this Agreement and the proposed transaction, including:
(i) any parties to any Material Contracts (including, without limitation,
contracts with customers of the Businesses), and any licensing authorities which
are material to the Businesses, and (ii) any governmental authorities or
agencies to
-21-
<PAGE>
the extent required to be obtained prior to the Closing in
connection with the transactions contemplated by this Agreement, shall have been
obtained and true and complete copies thereof delivered to the Buyer.
(h) Material Adverse Effect. On the Closing Date, there shall
not have occurred any event or condition materially and adversely affecting the
Assets or the financial condition, operations or Businesses of the Seller,
except as disclosed in this Agreement or the schedules hereto on the date
hereof.
(i) Extension of UPS Note. AUGI shall have obtained prior to
the Closing Date, an extension until not earlier than November 1999 of the $1.5
million note of Connectsoft and AUGI payable to UPS, which is currently due and
payable on April 30, 1999 (the "UPS Note").
(j) Intercompany Obligations. The Buyer shall have received
from AUGI and its Affiliates written releases or other assurances, in form and
substance reasonably satisfactory to the Buyer, that AUGI and its Affiliates
will not assert against the Buyer or the Assets or any of Buyer's Affiliates any
claims in respect of obligations owed by the Seller to AUGI and its Affiliates,
except for the Note to be delivered at the Closing in the form annexed hereto as
Exhibit D.
(k) Additional Working Capital. EXTEL shall have obtained a
minimum of $1.0 million of additional working capital financing for the
Businesses upon such terms and conditions as shall be reasonably acceptable to
EXTEL.
(l) Bill of Sale. On or before the Closing Date, the Seller
shall have executed and delivered the Bill of Sale to the Buyer.
(m) Keyman Agreement. On or before the Closing Date, Howard
Katz shall have entered into an employment agreement with EXTEL on terms and
conditions mutually agreeable to Howard Katz and EXTEL.
(n) Non-Disclosure Agreements. All employees of CCC shall have
executed and delivered to CCC (and Buyer shall have received copies thereof)
Non-Disclosure Agreements in form and substance reasonably satisfactory to
Buyer.
10.2 Conditions to Obligations of AUGI and Seller. The
obligations of AUGI and the Seller to consummate the transactions contemplated
by this Agreement are further subject to the satisfaction, at or before the
Closing Date, of all the following conditions, any one or more of which may be
waived in writing by AUGI:
-22-
<PAGE>
(a) Accuracy of Representations and Warranties. All
representations and warranties made by EXTEL and the Buyer in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
as though such representations and warranties were made on and as of that date.
(b) Performance. EXTEL and the Buyer shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by EXTEL and the Buyer on or before the Closing Date.
(c) Certification. The Seller and AUGI shall have received a
certificate, dated the Closing Date, executed by EXTEL and the Buyer,
certifying, in such detail as the Seller and AUGI and their counsel may
reasonably request, that the conditions specified in Sections 10.2(a) and
10.2(b) above have been fulfilled.
(d) Resolutions. The Seller and AUGI shall have received
certified resolutions of the Board of Directors and sole stockholder of the
Buyer and of the Board of Directors of EXTEL, in form reasonably satisfactory to
counsel for the Seller and AUGI, authorizing the Buyer's and EXTEL's execution,
delivery and performance of this Agreement and all actions to be taken by the
Buyer and EXTEL hereunder.
(e) Consents. All necessary consents of third parties required
for the consummation of this Agreement and the proposed transaction, including:
(i) any parties to any Material Contracts (including, without limitation,
contracts with customers of the Businesses), and any licensing authorities which
are material to the Businesses, and (ii) any governmental authorities or
agencies to the extent required to be obtained prior to the Closing in
connection with the transactions contemplated by this Agreement, shall have been
obtained and true and complete copies thereof delivered to the Buyer.
(f) Assumption Agreement. The Buyer shall have executed and
delivered to the Seller the Assumption Agreement.
(g) Promissory Note. The Buyer and EXTEL shall have executed
and delivered to AUGI the Note in the form annexed hereto as Exhibit D.
(h) Letter Agreement. The Buyer and EXTEL shall have executed
and delivered to AUGI and the Seller the letter agreement in the form annexed
hereto as Exhibit E.
-23-
<PAGE>
11. CLOSING.
11.1 Place and Date of Closing. Unless this Agreement shall be
terminated pursuant to Section 13 below, the consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of the Buyer, or such other location as is agreed to between the parties, at
10:00 A.M. local time on the date that is three (3) business days after the
satisfaction of all conditions to Closing set forth herein, it being understood
that the parties hereto shall use their best efforts to satisfy the conditions
precedent to Closing, in each case on or before July 15, 1998 (the date of the
Closing being referred to in this Agreement as the "Closing Date"). If,
notwithstanding the parties' best efforts, such conditions shall not have been
satisfied by such date, then the Closing Date shall be extended to the date that
is three (3) Businesses days after the satisfaction of all such conditions, but
which shall not in any case be later than July 31, 1998 ("Outside Closing
Date"), unless the parties hereto agree in writing otherwise.
11.2 Deliveries at Closing. At the Closing, the Seller and the
Buyer, respectively, will deliver the following documents:
(a) The Seller and AUGI will deliver or cause to be delivered
to EXTEL and to the Buyer:
(i) a copy of the by-laws of the Seller and resolutions
adopted by the Seller's Board of Directors and sole stockholder approving the
transactions contemplated by this Agreement, certified by the Secretary of the
Seller as of the Closing Date;
(ii) a copy of the certificate of incorporation of the
Seller, with all amendments thereto, together with a long form good standing
certificate and tax clearance certificate, certified by the Secretary of State
of the Seller's state of incorporation as of a date no later than five (5) days
before the Closing Date;
(iii) certificate(s) by the Secretaries of the Seller and
of AUGI, dated as of the Closing Date, attesting to the authority and verifying
the signature of each person who signed this Agreement or any other agreement,
instrument or certificate delivered in connection with the transactions
contemplated hereby on behalf of the Seller and AUGI, respectively;
(iv) all agreements, authorizations, exemptions, waivers
and consents of any third persons or entities required to be obtained by the
Seller or AUGI hereunder or generally necessary for the consummation by the
Seller and AUGI of the transactions contemplated by this Agreement;
(v) sufficient, original, executed copies of assignments
of patents, trademarks and/or copyrights, in form and substance
-24-
<PAGE>
acceptable to the Buyer, such that there is one original version for each
group of patents, trademarks and copyrights;
(vi) certificate(s), dated the Closing Date, signed by the
chief financial officer of each of the Seller and AUGI that the conditions
specified in Section 10.2(a) and (b) hereof have been fulfilled in all respects;
(vii) assignment of leases for each Lease; and
(viii) such other specific instruments of sale,
conveyance, assignment, transfer, and delivery as are required to vest good and
marketable title to the Assets in the Buyer.
(b) EXTEL and the Buyer will deliver or cause to be
delivered to the Seller and to AUGI:
(i) a copy of the by-laws of the Buyer and resolutions
adopted by the Buyer's Board of Directors and sole stockholder approving the
transactions contemplated by this Agreement, certified by the Secretary of the
Buyer as of the Closing Date;
(ii) a copy of the certificate of incorporation of the
Buyer, with all amendments thereto, together with a long form good standing
certificate and tax clearance certificate, certified by the Secretary of State
of the Buyer's state of incorporation as of a date no later than five (5) days
before the Closing Date;
(iii) certificate(s) by the Secretaries of EXTEL and of
the Buyer, dated as of the Closing Date, attesting to the authority and
verifying the signature of each person who signed this Agreement or any other
agreement, instrument or certificate delivered in connection with the
transactions contemplated hereby on behalf of EXTEL and the Buyer, respectively;
(iv) certificate(s), dated the Closing Date, signed by the
chief financial officer of each of EXTEL and the Buyer that the conditions
specified in Section 10.1(a) and (b) hereof have been fulfilled in all respects;
and
(v) such other specific instruments of conveyance,
assignment, transfer, and delivery as are required to confirm that the Buyer
shall have assumed the payment and performance of the Assumed Liabilities and
the performance of the Material Contracts.
12. TERMINATION OF AGREEMENT.
12.1 General. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the
-25-
<PAGE>
Closing: (a) by the mutual written consent of the parties hereto; (b) by EXTEL
and the Buyer, on the one hand, or by the Seller and AUGI, on the other hand,
if: (i) a material breach shall exist with respect to the written
representations and warranties made by the other party or parties, as the case
may be, which breach shall not have been cured within thirty (30) days after
notice thereof to such other party or parties; (ii) the other party or parties,
as the case may be, shall take any action prohibited by this Agreement, if such
actions shall or may have a Material Adverse Effect on the financial condition,
operations, or Businesses of the Seller or on any material portion of the Assets
and/or the consummation of the transactions contemplated hereby, and such breach
shall not have been cured, if the same is capable of cure, within thirty (30)
days after notice thereof to the breaching party, (iii) the other party or
parties, as the case may be, shall not have furnished, upon reasonable notice
therefor, such certificates and documents required in connection with the
transactions contemplated hereby and matters incidental thereto as it or they
shall have agreed to furnish, and it is reasonably unlikely that the other party
or parties will be able to furnish such item(s) prior to the Outside Closing
Date specified below, or (iv) any consent of any third party to the transactions
contemplated hereby (whether or not the necessity of which is disclosed herein
or in any schedule hereto) is reasonably necessary to prevent a default under
any outstanding material obligation of EXTEL, the Buyer, AUGI or the Seller, and
such consent is not obtainable, after good faith efforts to obtain the same,
without material cost or penalty (unless the party or parties not seeking to
terminate this Agreement agrees or agree to pay such cost or penalty); or (c) by
EXTEL or the Buyer, on the one hand, or by the Seller and AUGI, on the other
hand, at any time on or after the Outside Closing Date, if the transactions
contemplated hereby shall not have been consummated prior thereto, and the party
directing termination shall not then be in breach or default of any obligations
imposed upon such party by this Agreement.
12.2 Effect of Termination. In the event of termination by
either party as above provided in this Section 12, prompt written notice shall
be given to the other party. Termination of this Agreement shall not relieve any
party of any of its obligations pursuant to Section 9.1 above, and shall not
relieve any breaching party from liability for any breach of this Agreement.
13. INDEMNIFICATION. It is expressly understood and agreed by and among
all parties to this Agreement that the indemnification provisions set forth in
this Article 13 are in addition to, and not in lieu of, the respective
indemnification obligations of each of EXTEL and AUGI as are set forth in
Article 14 herein. In the event and to the extent that there shall be any
inconsistency between the rights and obligations contained in this Article 13
and to Article 14, the terms and conditions of Article 14, shall, in all
respects, govern.
-26-
<PAGE>
13.1 General.
(a) Without prejudice to any rights of contribution as between
the Seller and AUGI, from and after the Closing Date, the Seller and AUGI shall
jointly and severally defend, indemnify and hold harmless the Buyer and its
stockholders, affiliates, officers, directors, employees and agents (each a
"Buyer Indemnified Person") from, against and in respect of any and all claims,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including costs of investigation, interest, penalties and
reasonable attorneys' fees, that the Buyer may incur, sustain or suffer
("Losses") as a result of (i) any breach of, or failure by the Seller or AUGI to
perform, in any material respect, any of the representations, warranties,
covenants or agreements of the Seller or AUGI contained in this Agreement, or
(ii) any failure by the Seller to pay or perform when due (or any imposition on
the Buyer or EXTEL) any of its retained liabilities (including any liabilities
of the Business or the Seller which are not Assumed Liabilities).
(b) Without prejudice to any rights of contribution as
between the Buyer and EXTEL, from and after the Closing Date, the Buyer and
EXTEL shall jointly and severally defend, indemnify and hold harmless the Seller
and AUGI, and their respective stockholders, affiliates, officers, directors,
employees and agents (each a "Seller Indemnified Person") from, against and in
respect of any and all claims, losses, costs, expenses, obligations,
liabilities, damages, recoveries and deficiencies, including costs of
investigation, interest, penalties and reasonable attorneys' fees, that the
Seller or AUGI may incur, sustain or suffer as a result of (i) any breach of, or
failure by the Buyer or EXTEL to perform, in any material respect, any of the
representations, warranties, covenants or agreements of the Buyer or EXTEL
contained in this Agreement, or (ii) any failure by the Buyer to pay or perform
(or any imposition on the Seller or AUGI) when due any of the Assumed
Liabilities.
13.2 Limitations on Certain Indemnity.
(a) Notwithstanding any other provision of this
Agreement to the contrary, the Seller and AUGI shall not be liable to the Buyer
with respect to Losses unless and until, and then only to the extent that, the
aggregate amount of all Losses incurred by the Buyer shall exceed the sum of
$50,000 (the "Basket"); provided, however, that the Basket shall not be
available with respect to any Losses involving proven fraud by the Seller or
AUGI. The Seller and AUGI shall thereafter be liable for all Losses in excess of
the Basket, provided that the Seller's and AUGI's maximum aggregate liability in
respect of all Losses shall not, in the absence of proven fraud by the Seller or
AUGI in respect of any particular Losses, in any event exceed the limitations
set forth in Section 13.2(b) below.
-27-
<PAGE>
(b) Except with respect to any Losses involving proven fraud
by the Seller or AUGI, the Seller and AUGI shall only be required, in the
aggregate, to pay indemnification hereunder, after application of the Basket, up
to a maximum amount equal to the Consideration.
(c) The Buyer shall be entitled to indemnification by the
Seller and AUGI for Losses only in respect of claims for which notice of claim
shall have been given to the Seller and AUGI on or before June 30, 1999, or,
with respect to Losses relating to a breach of any warranties in respect of
taxes, the expiration of the final statute of limitations for those tax returns
covered by the tax warranties contained herein; provided, however, that the
Buyer shall not be entitled to indemnification from the Seller or AUGI in the
event that the subject claim for indemnification relates to a third-party claim
and the Buyer delayed giving notice thereof to the Seller and AUGI to such an
extent as to cause material prejudice to the defense of such third-party claim.
This Section 13.2(c) shall not apply to any failure by the Seller to pay when
due any of its retained liabilities.
13.3 Claims for Indemnity. Whenever a claim shall arise for
which any party shall be entitled to indemnification hereunder, the indemnified
party shall notify the indemnifying party in writing (which may include
facsimile transmission) within three (3) Business days of the indemnified
party's first receipt of notice of, or the indemnified party's obtaining actual
knowledge of, such claim, and in any event within such shorter period as may be
necessary for the indemnifying party or parties to take appropriate action to
resist such claim. Such notice shall specify all facts known to the indemnified
party giving rise to such indemnity rights and shall estimate (to the extent
reasonably possible) the amount of potential liability arising therefrom. If the
indemnifying party shall be duly notified of such dispute, the parties shall
attempt to settle and compromise the same or may agree to submit the same to
arbitration or, if unable or unwilling to do any of the foregoing, such dispute
shall be settled by appropriate litigation, and any rights of indemnification
established by reason of such settlement, compromise, arbitration or litigation
shall promptly thereafter be paid and satisfied by those indemnifying parties
obligated to make indemnification hereunder.
13.4 Right to Defend. If the facts giving rise to any claim for
indemnification shall involve any actual or threatened action or demand by any
third party against the indemnified party or any of its Affiliates, the
indemnifying party or parties shall be entitled (without prejudice to the
indemnified party's right to participate at its own expense through counsel of
its own choosing), at their expense and through counsel of their own choosing,
to defend or prosecute such claim in the name of the indemnifying party or
parties, or any of them, or if necessary, in the name of the indemnified party.
In any event, the indemnified party shall give the indemnifying party advance
written notice of any proposed compromise or settlement of any such claim. If
the remedy sought in any such action or demand is solely money damages, the
indemnifying party shall have five
-28-
<PAGE>
(5) Business Days after receipt of such notice of settlement to object to the
proposed compromise or settlement, and if it does so object, the indemnifying
party shall be required to undertake, conduct and control, though counsel of
its own choosing and at its sole expense, the settlement or defense thereof,
and the indemnified party shall cooperate with the indemnifying party in
connection therewith.
14. INDEMNIFICATION - ASSUMED LIABILITIES/MATERIAL CONTRACTS
14.1. Indemnification of the Seller and AUGI. Each of EXTEL and
Buyer does hereby jointly and severally, irrevocably, absolutely and
unconditionally indemnify, defend and hold harmless the Seller and AUGI, and
each of them, individually and severally, to the fullest extent permitted by
law, from and against any claim against the Seller or AUGI in respect of (i) any
act, omission, neglect, breach or failure by EXTEL and/or Buyer, or either of
them, to timely and fully pay and perform each and every one of the Assumed
Liabilities and Material Contracts, when due, and (ii) as a result of, arising
from or in connection with any claim by any taxing authority for Taxes of or
relating to EXTEL or Buyer, including (but not limited to) all Taxes
attributable to the business and operations of any of them after the Closing
Date (all of the foregoing being referred to collectively as the "AUGI Group
Indemnified Amounts"), except to the extent provided in Sections 2.2(b) and
14.2. Each of the Buyer and EXTEL jointly and severally covenants and agrees to
fully pay and reimburse each of the Seller and AUGI, within twenty-four (24)
hours of written demand therefor, for any payments made or amounts which the
Seller or AUGI becomes legally obligated to pay in connection with any of the
AUGI Group Indemnified Amounts, except to the extent provided in Sections 2.2(b)
and 14.2.
14.2 Indemnification of the Buyer and EXTEL. Each of AUGI,
Connectsoft and CCC does hereby jointly and severally, irrevocably, absolutely
and unconditionally indemnify, defend and holds harmless the Buyer and EXTEL,
and each of them, individually and severally, to the fullest extent permitted by
law, from and against any claim against the Buyer or EXTEL in respect of (i) any
act, omission, neglect, breach or failure by AUGI, Connectsoft and/or CCC, or
any of them, to timely and fully pay and perform (a) each and every one of the
Excluded Liabilities, when due, and (b) any of the Assumed Liabilities, but only
to the extent that the aggregate principal amount of all such Assumed
Liabilities shall exceed $4,500,000 and (ii) as a result of, arising from or in
connection with any claim by any taxing authority for Taxes of or relating to
AUGI, Connectsoft or CCC, including (but not limited to) all Taxes attributable
to the business and operations of any of them prior to the Closing Date (all of
the foregoing being referred to collectively as the "EXTEL Group Indemnified
Amount"). For purposes of this Agreement, "Taxes" shall mean all federal, state,
county, local and other taxes, including, without limitation, income taxes,
estimated taxes, withholding taxes, excise taxes, sales taxes, use taxes, gross
receipt taxes, franchise taxes, employment
-29-
<PAGE>
and payroll related taxes, property taxes and import duties, whether or not
measured in whole or in part by net income, and all deficiencies or other
additions to tax, interest and penalties owed by it in connection with any such
taxes. Each of AUGI, Connectsoft and CCC jointly and severally covenants and
agrees to fully pay and reimburse each of the Buyer and EXTEL, within
twenty-four (24) hours of written demand therefor, for any payments made or
amounts which the Buyer or EXTEL becomes legally obligated to pay in connection
with any of the EXTEL Group Indemnified Amount.
14.3 Claims for Indemnity. Whenever a claim shall arise for
which any party shall be entitled to indemnification hereunder, the indemnified
party shall promptly notify the indemnifying party in writing (which may include
facsimile transmission) following the indemnified party's receipt of notice of,
or the indemnified party's obtaining actual knowledge of, such claim. Such
notice shall specify all facts known to the indemnified party giving rise to
such indemnity rights and shall estimate (to the extent reasonably possible) the
amount of potential liability arising therefrom.
14.4 Right to Defend. If the facts giving rise to any claim for
indemnification shall involve any actual or threatened action or demand by any
third party against the indemnified party or any of its affiliates, the
indemnifying party or parties shall be entitled (without prejudice to the
indemnified party's right to participate at its own expense through counsel of
its own choosing), at their expense and through counsel of their own choosing,
to defend or prosecute such claim in the name of the indemnifying party or
parties, or any of them, or if necessary, in the name of the indemnified party.
In any event, the indemnified party shall give the indemnifying party advance
written notice of any proposed compromise or settlement of any such claim. If
the remedy sought in any such action or demand is solely money damages, the
indemnifying party shall have three (3) days after receipt of such notice of
settlement to object to the proposed compromise or settlement, and if it does so
object, the indemnifying party shall be required to undertake, conduct and
control, though counsel of its own choosing and at its sole expense, the
settlement or defense thereof, and the indemnified party shall cooperate with
the indemnifying party in connection therewith.
-30-
<PAGE>
15. POST-CLOSING EVENTS. The parties hereby further agree
that, from and after the Closing:
15.1 Books and Records. At any time and from time to time from and
after the Closing Date, the Buyer shall permit the Seller and/or AUGI to have
access, during normal business hours and without undue disruption of the Buyer's
Businesses, to those books and records transferred to the Buyer as part of the
Assets, for purposes of preparing any tax filings or any other legitimate
purpose of the Seller and/or AUGI. Such books and records may be made available
at any location where the Buyer maintains same, and all costs and expenses
relating to such access and inspection shall be the responsibility of the Seller
and/or AUGI. In the event that, at any time and from time to time after the
Closing Date, the Buyer shall determine to destroy or dispose of any such books
and records, the Buyer shall give notice thereof to the Seller and/or AUGI not
less than thirty (30) days prior to such disposition, and the Seller and/or AUGI
shall have the right, at their own cost and expense, to take possession of such
books and records prior to their disposition.
15.2 Employees. The Buyer hereby confirms its intention to retain,
as of the Closing Date, the employees of the Businesses identified on Schedule
15.2, provided that the Buyer shall at all times retain the absolute discretion
to terminate, dismiss, reassign or otherwise modify the terms of employment of
any or all of such employees. The Buyer shall retain full discretion as to the
nature and extent of benefits to be provided to employees for periods from and
after the Closing Date.
15.3 Further Assurances. From time to time from and after the
Closing Date, the parties will take any and all such action and execute and
deliver to one another any and all further agreements, instruments, certificates
and other documents, as may reasonably be requested by any other party in order
more fully to consummate the transactions contemplated hereby, and to effect an
orderly transition of the ownership and operations of the Businesses.
16 COSTS.
16.1 Finder's or Broker's Fees. The Buyer and EXTEL (on the one
hand) and the Seller and AUGI (on the other hand) represents and warrants that
neither they nor any of their respective Affiliates have dealt with any broker
or finder in connection with any of the transactions contemplated by this
Agreement, and no broker or other person is entitled to any commission or
finder's fee in connection with any of these transactions.
16.2 Expenses. The Buyer, the Seller and AUGI shall each pay all of
their own respective costs and expenses incurred or to be incurred by them,
respectively, in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement.
-31-
<PAGE>
17. FORM OF AGREEMENT.
17.1 Effect of Headings. The Section headings used in this
Agreement and the titles of the schedules hereto are included for purposes of
convenience only, and shall not affect the construction or interpretation of any
of the provisions hereof or of the information set forth in such schedules.
17.2 Entire Agreement; Waivers. This Agreement (including the
schedules and exhibits hereto) constitutes the entire agreement between the
parties pertaining to the subject matter hereof, and supersedes all prior
agreements or understandings as to such subject matter. No party hereto has made
any representation or warranty or given any covenant to the other except as set
forth in this Agreement and the schedules and exhibits hereto. No waiver of any
of the provisions of this Agreement shall be deemed, or shall constitute, a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless executed in
writing by the party making the waiver.
17.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18. PARTIES.
18.1 Parties in Interest. Nothing in this Agreement, whether
expressed or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective successors and permitted assigns, nor is anything in this Agreement
intended to relieve or discharge the Assumed Liabilities or liability of any
third persons to any party to this Agreement, nor shall any provision give any
third persons any right of subrogation or action over or against any party to
this Agreement.
18.2 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on or
telecopied to the party to whom notice is to be given (telecopy confirmation
received by the transmitting party), one day after being deposited for overnight
delivery with a recognized overnight courier service in a properly addressed
package with all charges prepaid or billed to the account of the sender, or on
the third day after mailing if mailed to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
-32-
<PAGE>
(a) If to the Seller or AUGI:
Connectsoft, Inc.
c/o American United Global, Inc.
11130 NE 33rd Place, Suite 250
Bellevue, Washington 98004
Attn: Mr. Robert M. Rubin
Fax No.: (425) 822-9095 and (516) 254-2136
with a copy sent concurrently to:
Jay M. Kaplowitz, Esq.
Gersten, Savage, Kaplowitz & Fredericks, LLP
101 East 52nd Street
New York, New York 10022
Fax No.: (212) 980-5192
(b) If to the Buyer:
Executive TeleCard, Ltd.
4260 East Evans Avenue
Denver, Colorado 80222
Attn: Christopher Vizas
Fax No.: (303) 692-0965
with a copy sent concurrently to:
Stephen Kaufman, Esq.
Hogan & Hartson, LLP
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Fax No.: (202) 637-5910
or to such other address or telecopier number as any party shall have specified
by notice in writing given to all other parties.
19. MISCELLANEOUS.
19.1 Amendments and Modifications. No amendment or modification
of this Agreement or any exhibit or schedule hereto shall be valid unless made
in writing and signed by the party to be charged therewith.
19.2 Non-Assignability; Binding Effect. Neither this Agreement,
nor any of the rights or liabilities of the parties hereunder, shall be
assignable by any party hereto without the prior written consent of all other
parties hereto, except that the Buyer may, without requirement of any consent of
AUGI or
-33-
<PAGE>
the Seller, assign the Buyer's rights to indemnification hereunder to any
secured lender to the Buyer from time to time. Otherwise, this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
19.3 Governing Law; Jurisdiction. This Agreement shall be
construed and interpreted and the rights granted herein governed in accordance
with the laws of the State of Delaware applicable to contracts made and to be
performed wholly within such State. Except as otherwise provided in Section 13.3
and Section 14.3 above, any claim, dispute or controversy arising under or in
connection with this Agreement or any actual or alleged breach hereof shall be
settled exclusively by arbitration in accordance with the commercial arbitration
rules of the American Arbitration Association then obtaining. As part of his or
her award, the arbitrator shall make a fair allocation of the fee of the
American Arbitration Association, the cost of any transcript, and the parties'
reasonable attorneys' fees, taking into account the merits and good faith of the
parties' claims and defenses. Judgment may be entered on the award so rendered
in any court having jurisdiction. Any process or other papers hereunder may be
served by registered or certified mail, return receipt requested, or by personal
service, provided that a reasonable time for appearance or response is allowed.
[SIGNATURES ON FOLLOWING PAGE]
-34-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
on and as of the date first set forth above.
AMERICAN UNITED GLOBAL, INC.
By:_________________________________________
Name:
Title:
CONNECTSOFT COMMUNICATIONS
CORPORATION
By:_________________________________________
Name:
Title:
CONNECTSOFT HOLDING CORP.
By:_________________________________________
Name:
Title:
C-SOFT ACQUISITION CORP.
By:_______________________________________
Name:
Title
EXECUTIVE TELECARD, LTD.
By:_______________________________________
Name:
Title
-35-
EXHIBIT 2.2
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
Amendment No. 1 to Asset Purchase Agreement entered into this 30th day
of July, 1998 by and among American United Global, Inc. ("AUGI"), Connectsoft
Communications Corporation ("CCC"), Connectsoft Holding Corp. ("Connectsoft")
and Executive TeleCard, Ltd. ("EXTEL") and C-Soft Acquisition Corp. (the
"Buyer").
WHEREAS, AUGI, CCC, Connectsoft, EXTEL and the Buyer entered into an
Asset Purchase Agreement dated July 10, 1998 (the "Purchase Agreement"); and
WHEREAS, the parties desire to make certain amendments to the Purchase
Agreement.
NOW THEREFORE, the parties hereto do hereby agree as follows:
1. The last sentence of Section 11.1 of the Purchase Agreement shall be
amended to read as follows:
"If, notwithstanding the parties' best efforts, such conditions
shall not have been satisfied by such date, then the Closing Date
shall be extended to the date that is three (3) Business days after
the satisfaction of all such conditions, but which shall not in any
case be later than August 15, 1998 ("Outside Closing Date"), unless
the parties hereto agree in writing otherwise."
2. Capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Purchase Agreement. All other terms and
provisions of the Purchase Agreement shall continue in full force and effect and
unchanged and are hereby confirmed in all respects.
3. This Amendment No. 1 to Purchase Agreement may be executed in
several counterparts, each of which is an original, but all of which together
constitute one and the same agreement. The descriptive headings in this
Amendment No. 1 to Purchase Agreement are for convenience of reference only and
shall not define or limit the provisions hereof.
4. This Amendment No. 1 to Purchase Agreement is governed by, and shall
be construed in accordance with, the laws of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to
Purchase Agreement on and as of the date first set forth above.
AMERICAN UNITED GLOBAL, INC.
By:_________________________________________
Name:
Title:
CONNECTSOFT COMMUNICATIONS
CORPORATION
By:_________________________________________
Name:
Title:
CONNECTSOFT HOLDING CORP.
By:_________________________________________
Name:
Title:
C-SOFT ACQUISITION CORP.
By:_________________________________________
Name:
Title
EXECUTIVE TELECARD, LTD.
By:_________________________________________
Name:
Title
- 2 -
EXHIBIT 2.3
AMENDMENT NO. 2 TO ASSET PURCHASE AGREEMENT
Amendment No. 2 to Asset Purchase Agreement entered into this __ day of
August, 1998 by and among American United Global, Inc. ("AUGI"), Connectsoft
Communications Corporation ("CCC"), Connectsoft Holding Corp. ("Connectsoft")
and Executive TeleCard, Ltd. ("EXTEL") and C-Soft Acquisition Corp. (the
"Buyer").
WHEREAS, AUGI, CCC, Connectsoft, EXTEL and the Buyer entered into an
Asset Purchase Agreement dated July 10, 1998, which was subsequently amended on
July 30, 1998 (the "Purchase Agreement"); and
WHEREAS, the parties desire to make certain amendments to the Purchase
Agreement.
NOW THEREFORE, the parties hereto do hereby agree as follows:
1. The last sentence of Section 11.1 of the Purchase Agreement shall be
amended to read as follows:
"If, notwithstanding the parties' best efforts, such conditions
shall not have been satisfied by such date, then the Closing Date
shall be extended to the date that is three (3) Business days after
the satisfaction of all such conditions, but which shall not in any
case be later than September 15, 1998 ("Outside Closing Date"),
unless the parties hereto agree in writing otherwise."
2. Capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Purchase Agreement. All other terms and
provisions of the Purchase Agreement shall continue in full force and effect and
unchanged and are hereby confirmed in all respects.
3. This Amendment No. 2 to Purchase Agreement may be executed in
several counterparts, each of which is an original, but all of which together
constitute one and the same agreement. The descriptive headings in this
Amendment No. 2 to Purchase Agreement are for convenience of reference only and
shall not define or limit the provisions hereof.
4. This Amendment No. 2 to Purchase Agreement is governed by, and shall
be construed in accordance with, the laws of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 to
Purchase Agreement on and as of the date first set forth above.
AMERICAN UNITED GLOBAL, INC.
By:_________________________________________
Name:
Title:
CONNECTSOFT COMMUNICATIONS
CORPORATION
By:_________________________________________
Name:
Title:
CONNECTSOFT HOLDING CORP.
By:_________________________________________
Name:
Title:
C-SOFT ACQUISITION CORP.
By:_________________________________________
Name:
Title
EXECUTIVE TELECARD, LTD.
By:_________________________________________
Name:
Title
-2-
EXHIBIT 2.4
AMENDMENT NO. 3 TO ASSET PURCHASE AGREEMENT
Amendment No. 3 to Asset Purchase Agreement (the "Amendment") is
entered into as of this 17th day of June, 1999 by and among American United
Global, Inc. ("AUGI"), Connectsoft Communications Corporation ("CCC"),
Connectsoft Holding Corp. ("Connectsoft"), Executive TeleCard, Ltd., doing
business as eGlobe ("EXTEL"), C-Soft Acquisition Corp. (the "Buyer") and Vogo
Networks, LLC, a Delaware limited liability company of which eGlobe is the only
member ("Vogo LLC").
WHEREAS, AUGI, CCC, Connectsoft, EXTEL and the Buyer entered into an
Asset Purchase Agreement dated July 10, 1998 (the "Purchase Agreement"); and
WHEREAS, the parties desire to make certain amendments to the Purchase
Agreement.
NOW THEREFORE, the parties hereto do hereby agree as follows:
1. Vogo LLC shall be substituted for C-Soft Acquisition Corp. for all
purposes under the Purchase Agreement and shall be the "Buyer" thereunder. All
references in the representations and warranties of Vogo LLC (as the Buyer)
shall be deemed to refer to Vogo LLC being a newly formed (on May 13, 1999)
Delaware limited liability company of which eGlobe is the only member, and of
the Agreement being a valid and binding obligation of Vogo LLC from and after
execution of this Amendment by the parties hereto. The references to the Buyer
and corporate documents and certificates of the Buyer in Section 11.2(b)(i)
through (iv) shall be deleted in their entirety.
2. The Purchase Agreement shall be amended by adding to the definition
of "Assets", as Section 1.1(h) (and moving the "and" from after Section 1.1(f)
to after Section 1.1(g)), the following:
(h) Not less than $300,000 in cash, and a Note in the amount of
$200,000 of which AUGI is the maker, due in full (without interest)
<PAGE>
on July 15, 1999 (the "AUGI Note"), which Note will be in the form
attached hereto as Exhibit C."
3. The Purchase Agreement shall be amended by adding, at the end of
Section 1.2(a), the following:
(other than the $300,000 in cash and AUGI Note referred to in Section
1.1(h))."
4. The Purchase Agreement shall be amended by replacing Schedule 2.1 of
the Purchase Agreement, which refers to (and defines) the Assumed Liabilities,
and Schedule 5.8 of the Purchase Agreement, which refers to Material Contracts,
with the Schedules attached hereto as Schedules A and B. For the avoidance of
doubt, the parties acknowledge and agree that the liabilities listed on Schedule
A shall not include any obligations of AUGI, CCC or Connectsoft to UPS or any of
its affiliates ("UPS Liabilities"), and that such obligations shall not be
Assumed Liabilities for purposes of the Purchase Agreement.
5. Section 2.2 of the Purchase Agreement and Exhibit C referred to
therein shall be amended by deleting all of said section and exhibit in their
entirety.
6. Section 3.1 of the Purchase Agreement shall be amended by deleting
all of said section and replacing the deleted language with a new Section 3.1
that reads as follows:
"3.1 Consideration to the Seller. The entire purchase price for the
Assets (the "Consideration") shall consist of (i) the assumption by the
Buyer of the Assumed Liabilities, and the Buyer's agreement to pay and
perform, when due, all of such Assumed Liabilities; (ii) the issuance
by EXTEL of one (1) share of its 6% Series H Cumulative Convertible
Redeemable Preferred Stock, par value $.001 per share, of EXTEL ("EXTEL
Convertible Preferred Stock"), the terms of which are set forth in the
Certificate of Designations for the EXTEL Convertible Preferred Stock
in the form attached hereto as Exhibit D; and (iii) a Note, in the form
attached hereto as Exhibit E (the "EXTEL Note"), in the amount of
$500,000, of which $200,000 is contingent upon the payment in full by
AUGI under the $200,000 AUGI Note."
7. The Purchase Agreement shall be amended by adding new Sections 6.3,
6.4 and 6.5 that read as follows:
6.3 No Registration Under the Securities Act. AUGI and the Seller
understand that the shares of EXTEL Convertible Preferred Stock and the
EXTEL Note to be issued under this Agreement have not been and will not
be registered under the Securities Act of 1933, as
-2-
<PAGE>
amended (the "Securities Act"), in reliance upon exemptions
contained in the Securities Act or interpretations thereof, and neither
such shares of EXTEL Convertible Preferred Stock, the EXTEL Common
Stock issuable upon conversion thereof, nor the EXTEL Note
(collectively, the "EXTEL Securities"), can be offered for sale, sold
or otherwise transferred unless such shares or note are so registered
or qualify for exemption from registration under the Securities Act.
6.4 Acquisition for Investment. The EXTEL Securities are being (or
will be) acquired in good faith by the Seller and AUGI solely for their
own account, for investment and not with a view toward resale or other
distribution within the meaning of the Securities Act. The EXTEL
Securities will not be offered for sale, sold or otherwise transferred
by the Seller or AUGI without either registration or exemption from
registration under the Securities Act.
6.5 Evaluation of Merits and Risks of Investment. The Seller and
AUGI have such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and risks of
their investment in the EXTEL Securities Stock. The Seller and AUGI
understand and are able to bear any economic risks associated with such
investment (including, without limitation, the necessity of holding
such shares for an indefinite period of time). AUGI and the Seller (as
a corporation wholly owned by AUGI) are "accredited investors" as
defined in Regulation D promulgated under the Securities Act. The
Seller and AUGI confirm that EXTEL has made available to them and their
representatives and agents the opportunity to ask questions of the
officers and management employees of EXTEL about the business and
financial condition of EXTEL as the Seller and AUGI or their
representatives have requested.
8. Sections 9.6 and 9.7 of the Purchase Agreement and Exhibits D and E
referred to therein shall be amended by deleting all of said sections and
exhibits in their entirety, and any promissory note delivered to AUGI under
the Purchase Agreement, or the Management Agreement dated as of July 1998 among
certain of the parties hereto (in each case as amended), is hereby superseded
(and canceled) by the transactions contemplated hereby, and shall be marked
"Void" and returned to the maker thereof.
9. Section 13.2(c) of the Purchase Agreement shall be amended by
replacing the reference to June 30, 1999 with the date that is one year from
the date hereof.
-3-
<PAGE>
10. Sections 14.1 and 14.2 of the Purchase Agreement shall be amended
by deleting all of said Sections and replacing the deleted language with new
Sections 14.1, 14.2, 14.3 and 14.4 (and existing Sections 14.3 and 14.4, and
references thereto, shall be renumbered appropriately) that read as follows :
"14.1 Indemnification of the Seller and AUGI for Assumed
Liabilities. The Buyer does hereby irrevocably, absolutely and
unconditionally indemnify, defend and hold harmless the Seller and
AUGI, and each of them, individually and severally, to the fullest
extent permitted by law, from and against any claim against the Seller
or AUGI in respect of any act, omission, neglect, breach or failure by
Buyer to timely and fully pay and perform each and every one of the
Assumed Liabilities and Material Contracts, when due ("AUGI Group
Assumed Liability Indemnified Amounts"). The Buyer covenants and agrees
to fully pay each of the Seller and AUGI, within twenty-four (24) hours
of written demand therefor, for any payments made or amounts which the
Seller or AUGI becomes legally obligated to pay (and reimburse Seller
and AUGI, to the extent payment is made by them) in connection with any
of the AUGI Group Assumed Liability Indemnified Amounts.
"14.2 Indemnification by EXTEL for Certain Assumed Liabilities.
EXTEL does hereby irrevocably, absolutely and unconditionally
indemnify, defend and hold harmless AUGI from and against any claim
against AUGI in respect of any act, omission, neglect, breach or
failure by Buyer to timely and fully pay, when due, those Assumed
Liabilities which consist of liabilities to T&W which are guaranteed by
or primary obligations of AUGI ("AUGI Direct Obligations"). EXTEL
covenants and agrees to fully pay AUGI, within twenty-four (24) hours
of written demand therefor, for any payments made or amounts which AUGI
becomes legally obligated to pay (and reimburse AUGI, to the extent
payment is made by it) in connection with any of the AUGI Direct
Obligations. Notwithstanding the foregoing, the obligations of EXTEL
under this Section 14.2 shall be unsecured and subordinated in all
respects to EXTEL's existing and future obligations to IDT Corporation
and to EXTL Investors.
14.3 Indemnification of the Seller and AUGI for Certain Taxes.
EXTEL does hereby irrevocably, absolutely and unconditionally
indemnify, defend and hold harmless the Seller and AUGI, and each of
them, individually and severally, to the fullest extent permitted by
law, from and against any claim against the Seller or AUGI as a result
of, arising from or in connection with any claim by any taxing
authority for Taxes of or relating to EXTEL, including (but not limited
to) all Taxes attributable to the business and operations of EXTEL
-4-
<PAGE>
prior to the Closing Date (the "AUGI Group Indemnified Tax Amounts").
For purposes of this Agreement, "Taxes" shall mean all federal, state,
county, local and other taxes, including, without limitation, income
taxes, estimated taxes, withholding taxes, excise taxes, sales taxes,
use taxes, gross receipt taxes, franchise taxes, employment and payroll
related taxes, property taxes and import duties, whether or not
measured in whole or in part by net income, and all deficiencies or
other additions to tax, interest and penalties owed by it in connection
with any such taxes. EXTEL covenants and agrees to fully pay and
reimburse each of the Seller and AUGI, within twenty-four (24) hours of
written demand therefor, for any payments made or amounts which the
Seller or AUGI becomes legally obligated to pay in connection with the
AUGI Group Indemnified Tax Amounts.
14.4 Indemnification of the Buyer and EXTEL. Each of AUGI,
Connectsoft and CCC does hereby jointly and severally, irrevocably,
absolutely and unconditionally indemnify, defend and hold harmless the
Buyer and EXTEL from and against (i) any claim against EXTEL as a
result of, arising from or in connection with any claim by any taxing
authority for Taxes of or relating to AUGI, Connectsoft or CCC,
including (but not limited to) all Taxes attributable to the business
and operations of any of them prior to the Closing Date (the "EXTEL
Group Indemnified Tax Amounts"), and (ii) any claim against the Buyer
or EXTEL in respect of any act, omission, neglect, breach or failure by
AUGI, Connectsoft or CCC to timely and fully pay, when due, UPS
Liabilities. Each of AUGI, Connectsoft and CCC jointly and severally
covenants and agrees to fully pay and reimburse the Buyer and EXTEL, as
appropriate, within twenty-four (24) hours of written demand therefor,
for any payments made or amounts which the Buyer or EXTEL becomes
legally obligated to pay in connection with any UPS Liabilities."
11. AUGI and the Seller shall, and shall ensure that their
respective affiliates shall, afford to EXTEL and the Buyer, and their respective
officers, employees, accountants, consultants and legal counsel, access at any
time and from time to time following the date hereof, but during business days
and normal business hours, to the books, records and other information
(including without limitation, operating and financial information), contracts,
facilities and premises relating to the Assets, the Seller and all other
companies, divisions or other entities or portions thereof that EXTEL and Buyer
may reasonably request for purposes of preparing audited financial statements
pursuant to EXTEL's reporting requirements under the Securities Act of 1933 and
the Securities Exchange Act of 1934 (the "Securities Laws"), make available the
personnel, accountants and other representatives having knowledge regarding the
same and cooperate with and furnish assistance to EXTEL and the Buyer (provided
that
-5-
<PAGE>
AUGI and the Seller shall not be obligated to incur any non-minimal cost or
expense), as EXTEL or the Buyer may reasonably request in connection with the
preparation of financial statements with respect to the Assets and Assumed
Liabilities and the business represented thereby being acquired under the
Purchase Agreement. In connection with an audit of such financial statements, if
required, AUGI and its financial and other management agree to provide certain
representations in the form of a representation letter to BDO Seidman, LLP,
independent certified public accountants, in accordance with generally accepted
auditing standards. The provision of such financial statement representations
and information and assistance shall be reasonably prompt. AUGI and the Seller
shall ensure that none of such information is destroyed during the three year
period commencing on the closing date unless EXTEL and the Buyer have been
afforded a reasonable opportunity to obtain and make copies of the information.
Any document or information produced or disclosed pursuant to this Section 11 in
any form is Confidential Information and EXTEL and Buyer shall not permit the
duplication, use, or disclosure of any such Confidential Information by or to
any third party (other than officers, employees, accountants, consultants and
legal counsel) except as required pursuant to the Securities Laws and permitted
hereunder, unless such duplication, use or disclosure is specifically authorized
by AUGI or the Seller in writing prior to any disclosure. EXTEL and Buyer shall
use commercially reasonable diligence, and in no event less than that degree of
care that such party uses in respect to its own confidential information of like
nature, to prevent the unauthorized disclosure or reproduction of such
information.
12. EXTEL and the Buyer have previously delivered to the Seller and
AUGI true and correct copies of its Annual Report on Form 10K, filed April 16,
1999 and Registration Statement on Form S-1 effective May 28, 1999 (the "Recent
Public Filings"). The Recent Public Filings comply as to form with the
disclosure requirements applicable thereto and do not contain any false and
misleading statement or omit any fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. Since the date of the most recent of the Recent Public Filings, (a)
there has been no material change in the capitalization of EXTEL or the Buyer,
(b) the businesses of EXTEL, the Buyer and their respective subsidiaries have
been operated in the normal course, and (c) there has been no material adverse
change in the financial condition, operations or businesses of EXTEL, the Buyer,
and their respective subsidiaries (taken as a consolidated whole) from that
reflected in such report (except as indicated in any later filing with the
Securities and Exchange Commission).
13. Copies of all notices to the Buyer shall be sent to the Buyer at
its principal place of business, attention "President."
14. Capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Purchase Agreement. All terms and provisions
-6-
<PAGE>
of the Purchase Agreement and amendments thereto, as amended hereby, shall
continue in full force and effect, and are hereby confirmed in all respects.
15. This Amendment No. 3 to Asset Purchase Agreement may be executed in
several counterparts, each of which is an original, but all of which together
constitute one and the same agreement. The descriptive headings in this
Amendment No. 3 to Asset Purchase Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
16. This Amendment No. 3 to Asset Purchase Agreement is governed by,
and shall be construed in accordance with, the laws of the State of Delaware.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date first set forth above.
AMERICAN UNITED GLOBAL, INC.
By:__________________________________
Name/Title:__________________________
CONNECTSOFT COMMUNICATIONS
CORPORATION
By:__________________________________
Name/Title:__________________________
CONNECTSOFT HOLDING CORP.
By:__________________________________
Name/Title:__________________________
C-SOFT ACQUISITION CORP.
By:__________________________________
Name/Title:__________________________
EXECUTIVE TELECARD, LTD.
By:__________________________________
Name/Title:__________________________
VOGO NETWORKS, LLC
BY ITS MEMBER:
EXECUTIVE TELECARD, LTD.
By:__________________________________
-8-
EXHIBIT 2.5
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of June 17, 1999, between
VOGO NETWORKS, LLC, a Delaware limited liability company ("Buyer"), and
CONNECTSOFT COMMUNICATIONS CORPORATION, a Delaware corporation, and CONNECTSOFT
HOLDING CORP., a Washington corporation (collectively "Seller").
Buyer, Seller, American United Global, Inc., a Delaware corporation,
and Executive TeleCard Ltd., a Delaware corporation are parties to an Asset
Purchase Agreement dated as of July 10, 1998, as amended, including by Amendment
No. 3 thereto dated June __, 1999 (the "Purchase Agreement"). It is a condition
precedent to Seller's obligations under the Purchase Agreement that Buyer
execute and deliver this Assignment and Assumption Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Buyer hereby agrees as follows:
1. Capitalized terms used herein but not defined herein shall have the
meanings assigned such terms in the Purchase Agreement.
2. Seller hereby assigns to Buyer each of the contracts, agreements and
instruments set forth on Schedule B-1 hereto (the "Seller Contracts") and the
Assumed Liabilities set forth on Schedule B-2 hereto ("Assumed Liabilities").
3. Buyer hereby assumes all liabilities arising (i) under the Seller
Contracts and (ii) under the Assumed Liabilities, in each case from and after
the Closing Date, and hereby assumes, and agrees to be bound by, pay and fully
and faithfully discharge and perform, all obligations of Seller of continued
performance under the Seller Contracts and Assumed Liabilities from and after
the date hereof in accordance with the terms of the Purchase Agreement.
4. Notwithstanding anything contained in Sections 2 or 3 hereof to the
contrary, Buyer does not assume, and shall not be responsible for any
liabilities or obligations of Seller or any affiliate of Seller, whether fixed
or contingent, known or unknown, threatened, pending or unasserted, other than
the Seller Contracts and Assumed Liabilities. Seller does retain and shall
remain responsible for in accordance with the terms and conditions of the
Purchase Agreement, all of Seller's debts, liabilities and obligations of any
nature whatsoever, other than the Assumed Liabilities and Seller Contracts,
whether accrued, absolute or contingent, whether known or unknown, whether due
or to become due and whether related to the Assets or otherwise, and regardless
of when asserted, including, without limitation, the following liabilities or
obligations of Seller (none of which will constitute Assumed Liabilities):
-1-
<PAGE>
(a) all liabilities and obligations of any kind existing as of
the Closing of a nature characterized as an intercompany liability, and any
similar item otherwise owed between Seller and American United Global, Inc. or
any of its affiliates;
(b) any liabilities with respect to any bonus, deferred
compensation, pension, profit sharing, retirement or other such benefit plan;
(c) all liabilities and obligations of Seller for Taxes; and
(d) any of the obligations and claims required to be set forth
in Schedule 5.13 of the Purchase Agreement.
For the avoidance of doubt, the parties acknowledge and agree that the
liabilities listed on Schedule B-1 and B-2 shall not include any obligations of
AUGI, CCC or Connectsoft to UPS or any of its affiliates ("UPS Liabilities"),
and that such obligations shall not be Assumed Liabilities for purposes of the
Purchase Agreement or this Assignment and Assumption Agreement..
5. From time to time after the date hereof, each of Buyer and Seller
will execute and deliver to the other such instruments as may be reasonably
requested by Buyer or its counsel or Seller or its counsel, as the case may be,
in order to carry out the purpose and intent of this Assignment and Assumption
Agreement and the Purchase Agreement.
6. Notwithstanding any other provision of this Assignment and
Assumption Agreement to the contrary, nothing contained in this Assignment and
Assumption Agreement shall in any way supersede, modify, replace, amend, change,
rescind, waive, exceed, expand, enlarge, or in any way affect the provisions,
including the warranties, covenants, agreements, conditions, representations or,
in general any of the rights and remedies, and any of the obligations and
indemnifications of Buyer or Seller set forth in the Purchase Agreement nor
shall this Assignment and Assumption Agreement expand or enlarge any remedies
under the Purchase Agreement including without limitation any limits on
indemnification specified therein. This Assignment and Assumption Agreement is
intended only to effect the transfer of certain liabilities assumed pursuant to
the Purchase Agreement and shall be governed entirely in accordance with the
terms and conditions of the Purchase Agreement.
7. This Assignment and Assumption Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware.
[SIGNATURES ON FOLLOWING PAGE]
-2-
<PAGE>
IN WITNESS WHEREOF, Buyer and Seller have caused this Assignment and
Assumption Agreement to be executed and delivered on the date and year first
written above.
CONNECTSOFT COMMUNICATIONS
CORPORATION
By:__________________________________
Name:
Its:
CONNECTSOFT HOLDING CORP.
By:__________________________________
Name:
Its:
VOGO NETWORKS, LLC
By:__________________________________
Name:
Its:
-3-
EXHIBIT 4.1
CERTIFICATE OF DESIGNATIONS
RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS
OF 6% SERIES G CUMULATIVE CONVERTIBLE REDEEMABLE
PREFERRED STOCK BY RESOLUTION OF
THE BOARD OF DIRECTORS OF
eGLOBE, INC.
PURSUANT TO SECTION 151 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
6% SERIES G CUMULATIVE CONVERTIBLE
REDEEMABLE PREFERRED STOCK
I, Christopher J. Vizas, Chairman of the Board of eGlobe, Inc. (the
"Corporation"), a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware ("DGCL"), DO HEREBY CERTIFY
that, pursuant to authority conferred upon the Board of Directors by the
Restated Certificate of Incorporation, as amended, of the Corporation (the
"Certificate of Incorporation"), the Board of Directors, in accordance with the
provisions of Section 151 of the DGCL, adopted the following resolution,
effective as of June 8, 1999 providing for the creation of the 6% Series G
Cumulative Convertible Redeemable Preferred Stock:
RESOLVED that, pursuant to Article IV of the Certificate of
Incorporation of the Corporation, there be and hereby is authorized and created
a series of Cumulative Convertible Redeemable Preferred Stock consisting of 1
share having a par value of $.001 per share, which series shall be titled "6%
Series G Cumulative Convertible Redeemable Preferred Stock."
The designations, rights, preferences, privileges and restrictions of
the 6% Series G Cumulative Convertible Redeemable Preferred Stock shall be made
as follows:
1. Designation and Amount. This series of Preferred Stock shall be
designated and known as "6% Series G Cumulative Convertible Redeemable Preferred
Stock" (the "Series G Preferred Stock") and shall consist of 1 share. The par
value of the Series G Preferred Stock shall be $.001 per share. Certain defined
terms used herein are defined in paragraph 10 below.
2. Voting. 2(a) Except as may be otherwise provided by these terms of
the Series G Preferred Stock or by law, the holders of Series G Preferred Stock
shall have no voting rights unless dividends payable on the shares of Series G
Preferred Stock are in arrears for six quarterly periods, in which case the
holders of Series G
-1-
<PAGE>
Preferred Stock voting separately as a class with the shares of any other
Preferred Stock having similar voting rights, will be entitled at the next
regular or special meeting of stockholders of the Corporation to elect one
director (such voting rights will continue until such time as the dividend
arrearage on Series G Preferred Stock has been paid in full).
2(b) The affirmative vote or consent of holders of at least 66 2/3% of
the outstanding shares of Series G Preferred Stock will be required for the
issuance of any class or series of stock of the Corporation after the date
hereof ranking senior to or pari passu with the shares of Series G Convertible
Preferred Stock (other than the series of Preferred Stock authorized as of the
date hereof and other than the Series G Preferred Stock, which is presently
proposed to be authorized) as to dividends or rights on liquidation, winding up
and dissolution. Whenever holders of Series G Preferred Stock are required or
permitted to take any action by vote as a single class or series, such action
may be taken without a meeting by written consent, setting forth the action so
taken and signed by the holders of the Series G Preferred Stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted.
3. Dividends. 3(a) The holders of the Series G Preferred Stock shall be
entitled to receive, out of funds legally available therefor, when, as and if
declared by the Board of Directors, cumulative annual dividends of 6.0%
(computed on a simple basis, without compounding) of the Liquidation Amount (as
defined below) per share of Series G Preferred Stock outstanding (the "Accruing
Dividends"). Accruing Dividends shall accrue from the Issue Date (whether or not
the Corporation has earnings, there are funds legally available therefor or such
dividends are declared) and shall be fully cumulative. Accruing Dividends shall
be payable annually out of assets legally available therefor on June 30 (each of
such dates being hereinafter referred to as a "Dividend Payment Date"),
commencing June 30, 2000, when, as and if declared by the Board of Directors.
3(b) On each Dividend Payment Date commencing June 30, 2000, or upon
conversion of Series G Preferred Stock, Accruing Dividends, may at the option of
the Corporation, be payable (i) in cash, (ii) in kind in fully paid
nonassessable shares of Common Stock (including fractional shares, as necessary)
valued at the Market Price, or (iii) a combination thereof; provided, however
that the Corporation may pay Accruing Dividends in kind only to the extent that
such payment would not require shareholder approvals (including under rules of
the Nasdaq Stock Market) or such shareholder approvals shall have been obtained.
3(c) All shares of Series G Preferred Stock which may be issued as a
dividend will thereupon be duly authorized, validly issued, fully paid and
nonassessable.
-2-
<PAGE>
3(d) The record date for the payment of Accruing Dividends shall,
unless otherwise altered by the Corporation's Board of Directors, be the
fifteenth day of the month immediately preceding the month in which the Dividend
Payment Date occurs, but in no event more than sixty (60) days nor less than ten
(10) days prior to the Dividend Payment Date
3(e) No dividends shall be granted on any Common Stock or other Junior
Stock unless and until all accrued but unpaid dividends with respect to the
Series G Preferred Stock have been paid in full. Accruing Dividends shall not be
payable unless and until all accrued but unpaid dividends with respect to any
Senior Stock then outstanding have been paid in full. All dividends with respect
to the Series G Preferred Stock shall be payable on a parity basis with
dividends (including accrued but unpaid dividends) on Parity Stock.
4. Liquidation. 4(a) (i) Upon any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the holder(s) of each
outstanding share of Series G Preferred Stock shall first be entitled, before
any distribution or payment is made upon any Junior Stock but after the full
liquidation preference has been paid with respect to all Senior Stock, and on a
parity basis with all Parity Stock, to be paid, in the case of each such share,
an amount equal to $3,000,000 divided by the number of shares of Series G
Preferred Stock then outstanding (the "Liquidation Amount"), plus accrued and
unpaid dividends thereon (collectively, the "Liquidation Preference"). If upon
such liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the assets to be distributed among the holders of
Series G Preferred Stock shall be insufficient to permit payment in full to all
holders of Series G Preferred Stock of the aggregate Liquidation Preference and
the amount of any payment to all holders of any other class or series of
Preferred Stock ranking on parity with the Series G Preferred Stock as to
liquidation, then the entire assets of the Corporation to be so distributed
shall be distributed ratably among the holders of Series G Preferred Stock and
the holders of any other class or series of Preferred Stock ranking on parity
with the Series G Preferred Stock as to liquidation, in accordance with the
respective amounts payable on liquidation upon the shares of Series G Preferred
Stock and such Preferred Stock ranking on parity with the Series G Preferred
Stock as to liquidation. After payment in full to the holders of Series G
Preferred Stock of the aggregate Liquidation Preference as aforesaid, holders of
the Series G Preferred Stock shall, as such, have no right or claim to any of
the remaining assets of the Corporation.
(ii) Written notice of any such liquidation, dissolution or winding up,
stating a payment date and the place where said payments shall be made, shall be
given (A) by certified or registered mail, postage prepaid, (B) by a nationally
known overnight delivery service or (C) by hand, not less than 45 days prior to
the payment date stated therein, to each holder of record of Series G Preferred
Stock,
-3-
<PAGE>
such notice to be addressed to each such holder at its address as shown
by the records of the Corporation.
4(b) None of the merger or the consolidation of the Corporation, or the
sale, lease or conveyance of all or substantially all of its property and
business as an entirety, shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of this paragraph 4, unless
such sale, lease, or conveyance shall be in connection with a plan of
liquidation, dissolution or winding up of the Corporation.
5. Conversion. The holders of shares of Series G Preferred Stock shall
have the following conversion rights:
5(a). Right to Convert. (i) Subject to the terms and conditions of
paragraph 5, from and after October 1, 1999, any share or fraction of a share of
Series G Preferred Stock shall be convertible at the option of the holder into
such number of fully paid and nonassessable shares of Common Stock (the
"Conversion Rate") as is obtained by (1) multiplying the number of shares or
fraction of a share of Series G Preferred Stock by the Liquidation Amount and
(2) dividing the result by the price (the "Conversion Price") that equals the
greater of (A) 75% of the Market Price of the Common Stock on the date notice of
conversion is received by the Company and all other conditions to or
requirements for the conversion of the Series G Preferred Stock have been
satisfied, and (B) $3.00 (which $3.00, as it may have last been adjusted
pursuant to the terms hereof, is referred to herein as the "Minimum Conversion
Price").
(ii) A holder's rights of conversion shall be exercised by the holder
thereof by giving written notice that the holder elects to convert a stated
number of shares or fraction of a share of Series G Preferred Stock into Common
Stock. Such written notice may be given by telecopying a written and executed
notice of conversion to the Corporation at its main telecopier number at its
principal office and delivering within five (5) business days thereafter, to the
Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to the holders
of the Series G Preferred Stock), together with a copy to the Corporation's
transfer agent, the original notice of conversion by express courier, together
with a certificate or certificates for the shares to be so converted, duly
endorsed to the Corporation or in blank, and with a statement of the name or
names (with address) in which the certificate or certificates for shares of
Common Stock shall be issued; provided, however, that the Corporation shall not
be obligated to issue certificates for shares of Common Stock in any name other
than the name or names set forth on the certificates for the shares of Series G
Preferred Stock being converted unless all requirements for transfer of Series G
Preferred Stock have been complied with. Conversion shall be effective upon
receipt by the Corporation and the transfer agent of the telecopied notice
(provided that the
-4-
<PAGE>
original notice and the share certificate or certificates are sent to the
Corporation and the transfer agent as contemplated above).
(iii) In case of any liquidation of the Corporation, all rights of
conversion shall cease and terminate at the close of business on the business
day preceding the date fixed for payment of the amount to be distributed to the
holders of the Series G Preferred Stock pursuant to paragraph 4.
5(b). Issuance of Certificates; Time Conversion Effected. (i) Promptly
after the receipt of the written notice referred to in subparagraph 5(a)(ii),
and surrender of the certificate or certificates for the share (or fraction of
share) of Series G Preferred Stock to be converted, the Corporation shall issue
and deliver or cause to be issued and delivered, to such holder of Series G
Preferred Stock or to such holder's nominee or nominees, registered in such name
or names as such holder may direct, a certificate or certificates for the number
of shares of Common Stock, including, subject to subparagraph 5(c) below,
fractional shares, as necessary, issuable upon the conversion of such share (or
fraction of share) of Series G Preferred Stock. Upon the effectiveness of
conversion the rights of the holder of such share or shares of Series G
Preferred Stock being converted shall cease, and the Person or Persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby.
(ii) The Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless the
certificates evidencing such shares of Series G Preferred Stock are either
delivered to the Corporation or its transfer agent as provided herein, or the
holder notifies the Corporation or its transfer agent that such certificates
have been lost, stolen or destroyed and executes an agreement satisfactory to
the Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificates.
5(c). Fractional Shares; Partial Conversion. In the event that the
computation pursuant to subparagraph 5(a) of the number of shares of Common
Stock issuable upon conversion of shares of Series G Preferred Stock results in
any fractional share of Common Stock, the Corporation may, at its option, issue
fractional shares or scrip representing fractional shares of Common Stock or pay
in cash the value of such fractional shares of Common Stock upon such
conversion, which for this purpose shall be deemed to equal the Market Price as
of the conversion date. In case the number of shares (or fraction of a share) of
Series G Preferred Stock represented by the certificate or certificates
surrendered pursuant to subparagraph 5(a) exceeds the number of shares
converted, the Corporation shall, upon such conversion, issue and deliver to the
holder of the Certificate or Certificates so surrendered, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series G Preferred Stock represented by the certificate or certificates
surrendered which are not to be converted, and which new certificate
-5-
<PAGE>
or certificates shall entitle the holder thereof to the rights of the shares (or
fraction of a share) of Series G Preferred Stock represented thereby to the same
extent as if the Certificate theretofore covering such unconverted shares had
not been surrendered for conversion.
5(d). Subdivision or Combination of Common Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Minimum Conversion Price shall be proportionately reduced, and,
conversely, in case the outstanding shares of Common Stock shall be combined
into a smaller number of shares, the Minimum Conversion Price shall be
proportionately increased.
5(e). Reorganization. Reclassification. Merger or Distribution. If any
of the following shall occur: (i) any consolidation or merger to which the
Corporation is a party other than a merger in which the Corporation is the
continuing corporation and which does not result in any reclassification of, or
change (other than a change in name, or par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination) in, the outstanding shares of Common Stock, or (ii) any sale or
conveyance of all or substantially all of the property or business of the
Corporation as an entirety, then, as a condition of such distribution,
reorganization, classification, consolidation, merger, sale or conveyance,
lawful and adequate provisions shall be made whereby each holder of a share or
shares of Series G Preferred Stock shall thereupon have the right to receive,
upon the basis and upon the terms and conditions specified herein and in lieu of
the shares of Common Stock immediately theretofore receivable upon the
conversion of such share or shares of Series G Preferred Stock, such shares of
stock, securities, evidence of indebtedness or assets as may be issued or
payable in such transaction with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
Common Stock immediately theretofore receivable upon such conversion had such
distribution, reorganization, reclassification, consolidation, merger, sale or
conveyance not already taken place, and in such case appropriate provisions
shall be made with respect to the right and interests of such holder to the end
that the provisions hereof shall thereafter be applicable, as nearly as may be,
in relation to any shares of stock, securities, evidence of indebtedness or
assets thereafter deliverable upon the exercise of such conversion rights.
Anything herein to the contrary notwithstanding, if the provisions of this
subparagraph 5(e) shall be deemed to apply to any distribution, reorganization,
reclassification, consolidation, merger, sale or conveyance in respect of the
Corporation or its capital stock, no duplicative adjustments shall be made
pursuant to subparagraph 5(d) upon the occurrence of such distribution,
reorganization, reclassification, consolidation, merger, sale or conveyance.
-6-
<PAGE>
5(f). Notice of Adjustment. Upon any adjustment of the Minimum
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, (i) by certified or registered mail, postage prepaid, (ii) by a
nationally known overnight delivery service or (iii) delivered by hand,
addressed to each holder of shares of Series G Preferred Stock at the address of
such holder as shown on the books of the Corporation, which notice shall state
the Minimum Conversion Price resulting from such adjustment, setting forth in
reasonable detail the method upon which such calculation is based.
5(g). Other Notices. In case at any time:
(i) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(ii) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights;
(iii) there shall be any distribution (other than a cash
dividend) on the capital stock of the Corporation or capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all
its assets to, another entity or entities; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give (A) by
certified or registered mail, return receipt requested, postage prepaid, (B) by
a nationally known overnight delivery service or (C) delivered by hand,
addressed to each holder of any shares of Series G Preferred Stock at the
address of such holder as shown on the books of the Corporation at least 30
days' prior written notice of the date on which the books of the Corporation
shall close or a record shall be taken for such dividend, distribution or
subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up and the date when the same shall take place. Such
notice in accordance with the foregoing sentence shall also specify, in the case
of any such dividend, distribution or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto and the date on which the
holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
-7-
<PAGE>
5(h). Stock to be Reserved. The Corporation shall at all times, from
and after the date on which the Series G Preferred Stock first becomes
convertible, reserve and keep available out of its authorized but unissued
Common Stock, solely for the purpose of issuance upon the conversion of Series G
Preferred Stock as herein provided, such number of shares of Common Stock as
shall then be issuable upon the conversion of all outstanding shares of Series G
Preferred Stock. The Corporation covenants that all shares of Common Stock which
shall be so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be required to assure that the par value per share of the Common Stock is at all
times equal to or less than the Minimum Conversion Price in effect at the time.
The Corporation will take all such action as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any applicable
law or regulation, or of any requirement of any national securities exchange
upon which the Common Stock may be listed. The Corporation will not take any
action which results in any adjustment of the Minimum Conversion Price if the
total number of shares of Common Stock issued and issuable after such action
upon conversion of the Series G Preferred Stock would exceed the total number of
shares of Common Stock then authorized by the Certificate of Incorporation.
5(i). Reissuance of Preferred Stock. Shares of Series G Preferred Stock
which are converted into shares of Common Stock as provided herein shall resume
the status of authorized and unissued shares of Preferred Stock without
designation as to series or class until shares are once more designated as part
of a particular series or class by the Board of Directors of the Corporation.
5(j). Issue Tax. The issuance of certificates for shares of Common
Stock upon conversion of Series G Preferred Stock shall be made without charge
to the holders thereof for any issuance tax in respect thereof; provided. that
the Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any certificate
in a name other than that of the holder of the Series G Preferred Stock which is
being converted.
5(k). Closing of Books. The Corporation will at no time close its
transfer books against the transfer of any Series G Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Series G Preferred Stock in any manner which interferes with the timely
conversion of such Series G Preferred Stock, except as may otherwise be required
to comply with applicable securities laws.
5(l). Limitations on Adjustments. Anything herein to the contrary
notwithstanding, no adjustment in the Minimum Conversion Price shall be required
unless such adjustment, either by itself or with other adjustments not
previously made, would require a change of at least $0.01 (one cent) in such
Minimum
-8-
<PAGE>
Conversion Price; provided, that any adjustment which by reason of this
subparagraph 5(l) is not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations of shares of Common
Stock or Series G Preferred Stock under this paragraph 5 shall be rounded to the
nearest three decimal points.
6. Redemption. The shares of Series G Preferred Stock shall be subject
to redemption by delivery, in cash, of a redemption price equal to the
Liquidation Preference (the "Redemption Price") as provided in paragraphs 6(a)
and 6(b).
6(a). Mandatory Redemption. The Corporation shall redeem the Series G
Preferred Stock upon the first to occur of the following dates: (1) on the first
date (subsequent to the Issue Date) on which the Corporation receives in any
transaction or series of transaction any equity financing of at least
twenty-five million dollars ($25,000,000) or (2) the fifth (5th) year
anniversary of the Issue Date.
6(b). Optional Redemption Rights. The Shares of Series G Preferred
Stock shall be subject to redemption at any time at the option of the
Corporation (upon at least thirty days notice as set forth in paragraph 6(c)
below).
6(c). Redemption Mechanics. The Corporation shall give a redemption
notice (the "Redemption Notice") not less than thirty (30) and not more than
sixty (60) days prior to the redemption date (the "Redemption Notice Period")
(i) by certified mail, postage prepaid, (ii) by a nationally known overnight
delivery service or (iii) delivered by hand, addressed to each holder of record
of shares of Series G Preferred Stock, notifying such holder of the redemption
and specifying the Redemption Price applicable to the Series G Preferred Stock,
the redemption date and the place where said Redemption Price shall be payable.
During the Redemption Notice Period the holders of Series G Preferred Stock may
exercise their right to convert pursuant to Paragraph 5. The Redemption Notice
shall be addressed to each holder at his address as shown by the records of the
Corporation. On or after the redemption date fixed in such Redemption Notice,
each holder of shares of Series G Preferred Stock to be so redeemed shall
present and surrender the certificate or certificates for such shares to the
Corporation at the place designated in said notice and thereupon the Redemption
Price of such shares shall be paid to, or to the order of, the Person whose name
appears on such certificate or certificates as the owner thereof. From and after
the close of business on the redemption date, unless there shall have been a
default in the payment of the Redemption Price upon surrender of a certificate
or certificates representing shares of Series G Preferred Stock to be redeemed,
all rights of holders of shares of Series G Preferred Stock subject to
redemption on the redemption date (except the right to receive the Redemption
Price upon surrender of a certificate or certificates representing shares of
Series G Preferred Stock to be redeemed, but without interest) shall cease with
respect to such shares, and such shares shall not
-9-
<PAGE>
thereafter be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever.
7. Information Rights. Each holder of Series G Preferred Stock will be
entitled to copies of all material provided to holders of Common Stock and
copies of all filings made with the Securities and Exchange Commission pursuant
to rules and regulations thereof upon request by such holder.
8. Definitions.
"Board of Directors" shall mean the Board of Directors of the
Corporation.
"Closing Price" of each share of Common Stock or other security means
the composite closing price of the sales of the Common Stock or such other
security on all securities exchanges on which such security may at the time be
listed (as reported in The Wall Street Journal) or, if there has been no sale on
any such exchange on any day, the average of the highest bid and lowest asked
prices of the Common Stock or such other security on all such exchanges at the
end of such day, or, if such security is not so listed, the closing price (or
last price, if applicable) of sales of the Common Stock or such other security
in the Nasdaq National Market (as reported in The Wall Street Journal on such
day, or if such security is not quoted in the Nasdaq National Market but is
traded over-the-counter, the average of the highest bid and lowest asked prices
on such day in the over-the-counter market as reported by the National Quotation
Bureau Incorporated, or any similar successor organization.
"Common Stock" shall mean the common stock, $.001 par value, of the
Corporation.
"Issue Date" shall mean the date of original issuance of any share of
Series G Preferred Stock.
"Junior Stock" shall mean any class or series of capital stock
(including Common Stock) of the Corporation (other than the series of Preferred
Stock authorized as of the date hereof) which may be issued which, at the time
of issuance, is not declared to be on a parity with or senior to the Series G
Preferred Stock as to dividends and rights upon liquidation (or in the case of
Preferred Stock issued after the date hereof which has not received the consent
required by paragraph 2(b) hereto).
"Market Price" means (i) if the Common Stock is listed on any
securities exchange, quoted in the Nasdaq National Market, or quoted in the
over-the-counter market, the Closing Price of the Common Stock averaged over the
15 consecutive trading days ending on the date immediately prior to the date as
of which the Market Price is to be determined, or (ii) if the Common Stock is
not listed on any
-10-
<PAGE>
securities exchange, quoted in the Nasdaq National Market, or quoted in the
over-the-counter market, the fair value of the Common Stock determined by
agreement between the Corporation and the holders of a majority of the
outstanding Series G Preferred Stock or, if they are unable to reach
agreement within a reasonable period of time, the fair value of the Common Stock
as determined by an independent appraiser selected by the Corporation (which
appraiser may be the Corporation's investment banker, and the fees and expenses
of such appraiser shall be borne by the Corporation), which determination shall
be final and binding upon the Corporation and the holders of the outstanding
Series G Preferred Stock.
"Nasdaq" shall mean the Nasdaq Stock Market.
"Parity Stock" shall mean any class or series of Preferred Stock of the
Corporation which, at the time of issuance, is declared to be on a parity with
the Series G Preferred Stock as to dividends and rights upon liquidation and (in
the case of Preferred Stock issued after the date hereof) which has received the
consent required by paragraph 2(b) hereto.
"Person" shall mean an individual, corporation, trust partnership,
limited liability company, joint venture, unincorporated organization,
government agency or any agency or political subdivision thereof, or other
entity.
"Preferred Stock" shall mean any class or series of preferred stock of
the Corporation.
"Senior Stock" shall mean any class or series of Preferred Stock of the
Corporation (including the series of Preferred Stock authorized as of the date
hereof) which, at the time of issuance, is declared to be senior to the Series G
Preferred Stock as to dividends and rights upon liquidation and (in the case of
Preferred Stock issued after the date hereof) which has received the consent
required by paragraph 2(b) hereto.
-11-
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereunto signed his name and
affirms that the statements made herein are true under the penalties of perjury
this 16th day of June, 1999.
-----------------------------------
Christopher J. Vizas
Chairman of the Board and President
[SEAL]
ATTEST:
- -----------------------------------
Graeme Brown
Assistant Secretary`
-12-
EXHIBIT 4.2
EXECUTIVE TELECARD, LTD.
Promissory Note
New York, New York
June 17, 1999
Executive TeleCard, Ltd., a Delaware corporation (the "Maker"), for
value received, promises to pay, subject to the terms and conditions of this
Note, to American United Global, Inc. (the "Holder"), the principal sum of Five
Hundred Thousand ($500,000) with simple interest on the outstanding unpaid
principal amount accruing from the date hereof until this Note is paid in full,
at the rate of interest for each month equal to the prime rate of interest for
such month at the bank where the Maker maintains its principal bank account, or
if there is no such bank, at the average of the prime rates of the three largest
banks in the United States of America (the "Prime Rate"). All interest payment
calculations required hereunder shall be computed on the basis of the actual
number of days elapsed over a year comprised of 365 days.
1. Payments
1.1 Principal (and any accrued but unpaid interest) shall be due and
payable (1) commencing on September 1, 1999 in twelve (12) equal monthly
installments or (2) in full on the first date (subsequent to the date hereof) on
which (x) the Maker receives in any transaction or series of transaction any
equity or debt financing of at least fifty million dollars ($50,000,000) or (y)
the Vogo Networks LLC subsidiary of the Maker receives in any transaction or
series of transaction any equity or debt financing of at least five million
dollars ($5,000,000)
1.2 Payments of principal and interest of this Note shall be made to
the Holder at American United Global, Inc., c/o Gersten, Savage & Kaplowitz LLP,
101 E. 52nd Street, New York, NY 10022 or such other place or places within the
United States as may be specified by the Holder of this Note in a written notice
to the Maker at least 10 business days before a given payment date.
1.3 Payments of principal and interest on this Note shall be made in
lawful money of the United States of America by mailing the Maker's good check
in the proper amount to such Holder to arrive prior to or on the due date of
such
-1-
<PAGE>
payment or otherwise transferring funds so as to be received by such Holder on
the due date of such payment. Interest payment shall be made monthly.
1.4 If any payment on this Note becomes due and payable on a Saturday,
Sunday or other day on which commercial banks in New York City are authorized or
required by law to close, the maturity thereof shall be extended to the next
succeeding business day, and no interest on the principal amount shall be
payable during such extension.
1.5 In no event shall the amount of interest due or payable hereunder
exceed the maximum rate of interest allowable by applicable law, and in the
event any such payment is inadvertently paid by the Maker, or inadvertently
received by the Holder, then such excess shall be credited as a payment of
principal. It is the express intent hereof that the Maker not pay, and the
Holder not receive, directly or indirectly in any manner whatsoever, interest in
excess of that which may be legally paid by the Maker under applicable law.
2. Security.
The principal and interest payments under this Note shall be
secured by, and the Maker will cause Vogo at the Closing (as defined in the
Asset Purchase Agreement dated July 10, 1998, as amended, to which Maker
and the Holder are parties) to grant a security interest in, all chattels,
assets and property being acquired by Vogo Networks LLC ("Vogo") at the
Closing (as generally described in Exhibit A), wherever located, and all
products and proceeds thereof. This security interest will be granted to the
Holder to secure the payment of the indebtedness evidenced by this Note
(including all renewals, extensions and modifications thereof).
3. Subordination of Note
The principal and all interest due under this Note shall be
subordinated in all respects to the debt obligations of the Maker and Vogo set
forth on Exhibit B; provided, however, that such subordination shall not prevent
this Note from becoming fully due and payable under Section 1.1 of this Note.
4. Subordination of Security Interest
The security interest granted under this Note shall not be a first
priority security interest, but shall be (1) subordinated in all respects to
security interests granted (previously or in the future) with respect to (i) the
obligations described in paragraphs 1 and 2 of Exhibit B and (ii) the
obligations being assumed by Vogo at the Closing under the Asset Purchase
Agreement dated July 10, 1998, as amended, to which Maker and the Holder are
parties, and any interest, penalties or
-2-
<PAGE>
other amounts which may accrue thereon, and (2) pari passu in all respects with
security interests granted in connection with future indebtedness of Vogo;
provided, however, that such subordination or pari passu treatment shall not
prevent this Note from becoming fully due and payable under Section 1.1 of
this Note.
5. Reduction and Cancellation of Note.
5.1 If the Holder shall fail to make payment under the AUGI Note (as
defined in the Asset Purchase Agreement dated July 10, 1998, as amended) the
principal balance under this Note shall be reduced by $200,000, and all interest
accrued on such $200,000 shall be rescinded and cease to be accrued.
5.2 Upon payment in full in accordance with Section 1 hereof of all
outstanding obligations under this Note, the Maker's obligations in respect of
payment of this Note shall terminate and the Holder shall surrender this Note to
the Maker.
6. Events of Default.
In the event that:
(a) Maker defaults for more than five (5) business days after
receipt of written notice of failure to make any payment required to be made on
this Note or any other note issued by the Maker in favor of the Holder; or
(b) The Maker: (i) commences any case, proceeding or other action
(1) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to the Maker,
or seeking to adjudicate the Maker a bankrupt or insolvent, or seeking
reorganization, arrangement, composition or other relief with respect to the
Maker or its debts or (2) seeking appointment of a receiver, trustee, custodian
or other similar official for the Maker or for all or any substantial part of
the Maker's assets, or shall make a general assignment for the benefit of its
creditors; or (ii) is the debtor named in any other case, proceeding or other
action of a nature referred to in clause (i) above which (1) results in the
entry of an order for relief or any such adjudication or appointment or (2)
remains undismissed, undischarged or unbonded for a period of thirty (30) days;
or (iii) takes any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the facts set forth in clause (i) or
(ii) above; or (iv) shall generally not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due; then, and in any
such event (an "Event of Default"), and at any time thereafter, the Holder of
this Note may, by written notice to the Maker, declare this Note due and
payable, whereupon this Note shall be due and payable
-3-
<PAGE>
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived.
7. Miscellaneous.
7.1 Upon receipt of evidence reasonably satisfactory to the Maker of
the loss, theft, destruction or mutilation of this Note and of a letter of
indemnity reasonably satisfactory to the Maker and upon surrender or
cancellation of the Note, if mutilated, the Maker will make and deliver a new
Note of like tenor in lieu of such lost, stolen, destroyed or mutilated Note.
7.2 This Note and the rights and obligations of the Maker and any
Holder hereunder shall be construed in accordance with and be governed by the
internal laws of the State of New York.
7.3 Time is of the essence of this Note. If any provisions of this Note
or the application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Note and the application of
such provisions to other persons or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.
7.4 All notices to be given under this Note shall be mailed by first
class mail, postage prepaid, or telegraphed or telexed with confirmation of
receipt or delivered by hand or by overnight delivery service:
i. If to the Maker, at:
Executive Telecard, Ltd.
2000 Pennsylvania Avenue, N.W.
Washington, DC 20006
ii. if to the Holder at the address set forth in Section 1.2.
or at such other address as it may have furnished in writing to the other party.
Any notice so addressed, when mailed by registered or certified mail shall be
deemed to be given three days after so mailed, when telegraphed or telexed shall
be deemed to be given when transmitted, or when delivered by hand or overnight
shall be deemed to be given when delivered.
[Signature on next page]
-4-
<PAGE>
IN WITNESS WHEREOF, the Maker has executed this Note as of the day and
year first above written.
EXECUTIVE TELECARD, LTD.
By:______________________________
Name:____________________________
Title:___________________________
-5-
EXHIBIT 4.3
AMERICAN UNITED GLOBAL, INC.
Promissory Note
New York, New York
June ____, 1999
American United Global, Inc., a Delaware corporation (the "Maker"),
for value received, promises to pay, subject to the terms and conditions of this
Note, to Connectsoft Communications Corporation or its permitted assigns (the
"Holder"), the principal sum of Two Hundred Thousand ($200,000), without
interest, on June 15, 1999.
1. Payments
1.1 Payments of principal on this Note shall be made to the Holder
at such place or places within the United States as may be specified by the
Holder of this Note in a written notice to the Maker at least two business days
before the payment date); provided no payment shall be due under this Note if
the Buyer and its Affiliate under the Asset Purchase Agreement dated July 10,
1998, as amended (the "Purchase Agreement") are in breach of any material term
thereof.
1.2 Payments on this Note shall be made in lawful money of the
United States of America by mailing the Maker's good check in the proper amount
to such Holder to arrive prior to or on the due date of such payment or
otherwise transferring funds so as to be received by such Holder on the due date
of payment.
2. Assignment.
The Note may not be assigned, pledged or otherwise transferred
or negotiated by the Holder without the prior written consent of the Maker;
provided, however, that this Note may be assigned pursuant to the Purchase
Agreement to which the Maker and the initial Holder are parties, to the Buyer
thereunder or its affiliate EXTEL, or any affiliate thereof, but may not be
further assigned, pledged or otherwise transferred or negotiated by the Holder
to any non-affiliate of EXTEL without the prior written consent of the Maker.
Any purported transfer of this Note in violation of this provision shall be void
and without effect and the purported transferee shall acquire no rights in the
Note.
-1-
<PAGE>
3. Cancellation of Note.
Upon payment in full in accordance with Section 1 hereof of
all outstanding obligations under this Note, the Maker's obligations in respect
of payment of this Note shall terminate and the Holder shall surrender this Note
to the Maker.
4. Miscellaneous.
4.1 Upon receipt of evidence reasonably satisfactory to the Maker
of the loss, theft, destruction or mutilation of this Note and of a letter of
indemnity reasonably satisfactory to the Maker and upon surrender or
cancellation of the Note, if mutilated, the Maker will make and deliver a new
Note of like tenor in lieu of such lost, stolen, destroyed or mutilated Note.
4.2 This Note and the rights and obligations of the Maker and any
Holder hereunder shall be construed in accordance with and be governed by the
internal laws of the State of New York.
4.3 Time is of the essence of this Note. If any provisions of this
Note or the application thereof to any person or circumstance shall be invalid
or unenforceable to any extent, the remainder of this Note and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
[Signature on next page]
-2-
<PAGE>
IN WITNESS WHEREOF, the Maker has executed this Note as of the day and
year first above written.
AMERICAN UNITED GLOBAL, INC.
By:______________________________
-3-
EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of June
17, 1999, by and between Executive Telecard, Ltd., a Delaware corporation (the
"Company"), and American United Global, Inc. (the "Holder").
WHEREAS, pursuant to an Asset Purchase Agreement dated July 10, 1998
and amendments (including Amendment No. 3) thereto (the "Asset Purchase
Agreement ") the Company is issuing to the Holder one share of the Company's 6%
Series G Preferred Stock (the "Preferred Stock").
WHEREAS, the Preferred Stock may be converted into the Company's Common
Stock and may receive dividends, at the Company's option in Common Stock. (The
Company's Common Stock issuable upon conversion of the Preferred Stock and any
shares of Common Stock issued as dividend on the Preferred Stock are referred to
collectively as the "Registrable Securities");
WHEREAS, the transfer of the Preferred Stock to Holder is exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"1933 Act").
WHEREAS, pursuant to the terms of the Asset Purchase Agreement and in
order to induce the Holder to accept the Preferred Stock, the Company and the
Holder have agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and in the Asset Purchase Agreement, the Company
hereby agrees as follows:
1. Registration Rights.
(a) Mandatory Registration. The Company shall file with reasonable
diligence a registration statement covering the Registrable Securities as soon
as reasonably practicable, but in no event later than is reasonably calculated
to ensure such registration statement shall become effective prior to October 1,
1999. The Company shall use its best efforts to effect the registration under
the Securities Act of all the Registrable Securities on or prior to October 1,
1999, for resale under the 1933 Act, unless prior to filing a registration
statement to effect such registration the Company shall receive a written
request from the holder of the Preferred Stock requesting that such registration
be delayed for a specified period. Upon receipt of such a request the Company
shall delay the effective date of the registration required pursuant to this
Section 1(a) to such requested date.
-1-
<PAGE>
(b) Demand Registration. If the Company, at any time after October 1,
1999, at a time when no registration statement with respect to Registrable
Securities is then effective (whether due to the suspension of a prior
registration statement or otherwise), receives a written request from the holder
of the Preferred Stock to register the Registrable Securities not then subject
to an effective registration statement, the Company shall use its reasonable
best efforts to effect, as soon as practicable, the registration of such
Registrable Securities for resale under the 1933 Act; provided, however, that
the Company shall not be obligated to file a registration statement with respect
to any Registrable Securities that have been sold pursuant to an effective
registration statement or that may be sold under Rule 144(k) under the 1933 Act.
(c) "Piggyback Registration". If the Company at any time, after October
1, 1999, at a time when no registration statement with respect to Registrable
Securities is then effective (whether due to the suspension of a prior
registration statement or otherwise), proposes to register any of its securities
under the 1933 Act (other than in connection with a merger or pursuant to Form
S-8 or other comparable form), the Company shall give notice to the holder of
the Preferred Stock of such registration. If the holder of the Preferred Stock
requests within fifteen (15) days of such notice that the Registrable Securities
be included in such registration, the Company shall request that the underwriter
or managing underwriter (if any) of an underwritten offering, or if not an
underwritten offering the Company shall include the Registrable Securities in
such registration. If the offering is underwritten and such underwriter or
managing underwriter agrees to include the Registrable Securities in the
underwritten offering the Company shall include the Registrable Securities in
such registration; provided, however, that:
(1) If, at any time after giving such written notice of the
Company's intention to register any of the Holder' Registrable Securities and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason not to
register or to delay the registration of its securities, at its sole election,
the Company may give written notice of such determination to each Holder and
thereupon shall be relieved of its obligation to register any Registrable
Securities issued or issuable in connection with such registration (but not from
its obligation to pay registration expenses in connection therewith or to
register the Registrable Securities in a subsequent registration) ; and in the
case of a determination to delay a registration shall thereupon be permitted to
delay registering any Registrable Securities for the same period as the delay in
respect of securities being registered for the Company's own account; and
(2) The Company shall not be obligated to file a registration
statement with respect to any Registrable Securities that have been sold
pursuant
-2-
<PAGE>
to an effective registration statement or that may be sold under Rule 144(k)
under the 1933 Act.
(d) Cooperation with Company. The Holder will cooperate with the
Company in all respects in connection with this Agreement, including, timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.
2. Registration Procedures. If and whenever the Company is required by
any of the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registrable Securities under the 1933 Act, the
Company shall as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement and shall use its best efforts to cause
such registration statement to become effective and remain effective until all
the Registrable Securities are sold.
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the 1933 Act with
respect to the sale or other disposition of all securities covered by such
registration statement (including prospectus supplements with respect to the
sales of securities or the exercise of Preferred Stock from time to time in
connection with a registration statement pursuant to Rule 415 of the
Commission);
(c) furnish to the Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the 1933 Act, and such other documents, as the Holder may reasonably request
in order to facilitate the public sale or other disposition of the securities
owned by the Holder;
(d) use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or blue sky laws of
such jurisdictions as the Holder shall reasonably request, except that the
Company shall not for any such purpose be required to qualify to do business as
a foreign corporation in any jurisdiction wherein it is not so qualified or to
file therein any general consent to service of process;
(e) use its best efforts to list such securities on any securities
exchange on which any securities of the Company is then listed, if the listing
of such securities is then permitted under the rules of such exchange;
-3-
<PAGE>
(f) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
(g) notify the Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the 1933 Act,
of the happening of any (event of which it has knowledge as a result of which
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(h) take such other actions as shall be reasonably requested by any
Holder to facilitate the registration and sale of the Registrable Securities;
provided, however, that the Company shall not be obligated to take any actions
not specifically required elsewhere herein which in the aggregate would cost in
excess of $5,000.
3. Expenses. All expenses incurred in any registration of the Holder's
Registrable Securities under this Agreement shall be paid by the Company,
including, without limitation, printing expenses, fees and disbursements of
counsel for the Company, expenses of any audits to which the Company shall agree
or which shall be necessary to comply with governmental requirements in
connection with any such registration, all registration and filing fees for the
Holder' Registrable Securities under federal and State securities laws, and
expenses of complying with the securities or blue sky laws of any jurisdictions
pursuant to Section 2 (d); provided, however, the Company shall not be liable
for (a) any discounts or commissions to any underwriter; (b) any stock transfer
taxes incurred with respect to Registrable Securities sold in the Offering or
(c) the fees and expenses of counsel for any Holder, provided that the Company
will pay the costs and expenses of Company counsel when the Company's counsel is
representing any or all selling security holders.
4. Indemnification. In the event any Registrable Securities are
included in a registration statement pursuant to this Agreement:
(a) Company Indemnity. Without limitation of any other indemnity
provided to any Holder, to the extent permitted by law, the Company shall
indemnify and hold harmless each Holder, the affiliates, officers, directors and
partners of each Holder, any underwriter (as defined in the 1933 Act) for such
Holder, and each person, if any, who controls such Holder or underwriter (within
the meaning of the 1933 Act or the Securities Exchange Act of 1934 (the
"Exchange Act") , against any losses, claims, damages or liabilities (joint or
several) to which they may become subject under the 1933 Act, the Exchange Act
or other federal or
-4-
<PAGE>
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statements including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or any blue sky filings made
in any jurisdiction, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, (iii) any violation or alleged violation by the Company of the 1933
Act, the Exchange Act, or any state securities law or any rule or regulation
promulgated under the 1933 Act, the Exchange Act or any state securities law,
and in each case, the Company shall reimburse the Holder, affiliate, officer or
director or partner, underwriter or controlling person for any legal or other
expenses incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
shall not be liable to any Holder in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
the Holder or any other officer, director or controlling person thereof.
(b) Holder Indemnity. The Holder shall indemnify and hold harmless the
Company, its officers and directors, any underwriter (as defined in the 1933
Act) of such registration statement and each person, if any, who controls the
Company or such underwriter (within the meaning of the 1933 Act or the Exchange
Act) , against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the 1933 Act, the Exchange Act or any state
securities law, and the Holder shall reimburse the Company, officer or director,
underwriter or controlling person for any legal or other expenses incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability or action; insofar as such losses, claims, damages or liabilities (or
actions and respect thereof) arise out of or are based upon any Violation;
provided, however, that the Holder shall not be liable to the Company in any
such case for any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a Violation which occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by the Company or any other officer, director
or controlling person thereof.
(c) Notice; Right to Defend. Promptly after receipt by an indemnified
party under this Section 4 of notice of the commencement of any action
(including any governmental action), such indemnified party shall, if a claim in
respect thereof is to be made against any indemnifying party under this Section
4, deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in the
defense of such claim, and if the indemnifying party agrees in writing that it
will be responsible for
-5-
<PAGE>
any costs, expenses, judgments, damages and losses incurred by the indemnified
party with respect to such claim, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if the indemnified party reasonably believes that
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of any liability to the indemnified
party under this Agreement only if and to the extent that such failure is
prejudicial to its ability to defend such action, and the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Agreement.
(d) Contribution. If the indemnification provided for in this Agreement
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other
hand in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relevant fault of the indemnifying party and the indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties, relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount the Holder shall be obligated to
contribute pursuant to the Agreement shall be limited to an amount equal to the
proceeds to the Holder of the Registrable Securities sold pursuant to the
registration statement which gives rise to such obligation to contribute (less
the aggregate amount of any damages which the Holder has otherwise been required
to pay in respect of such loss, claim, damage, liability or action or any
substantially similar loss, claim, damage, liability or action arising from the
sale of such Registrable Securities).
(e) Survival of Indemnity. The indemnification provided by this
Agreement shall be a continuing right to indemnification and shall survive the
registration and sale of any Registrable Securities by any person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
-6-
<PAGE>
5. Assignment of Registration Rights. The right to cause the Company to
register Registrable Securities pursuant to this Agreement may be assigned by
the Holder to a transferee or assignee of the Preferred Stock.
6. Blackout Periods. On not more than two occasions per year, the
Company may defer the filing of any registration statement or suspend the use of
any registration statement for periods of not more than 45 consecutive days each
(a "Blackout Period"), if there is a possible acquisition or business
combination or other transaction, significant business development or event
involving the Company that, in the opinion of the Company's primary outside
counsel, would require disclosure in the registration statement and the Board of
Directors of the Company determines in the exercise of its reasonable judgment
that such disclosure is not in the best interests of the Company and its
stockholders or obtaining any financial statements relating to an acquisition or
business combination required to be included in the registration statement would
be impracticable.
In such a case, the Company shall promptly notify the holders of
Registrable Securities of the suspension of the use of registration statement
(provided that such notice shall not require the Company to disclose the
possible acquisition or business combination or other transaction, business
development or event if the Board of Directors of the Company determines in good
faith that such acquisition or business combination or other transaction,
business development or event should remain confidential) Promptly after
receiving such notice the holders shall cease disposition of any Registrable
Securities pursuant to the Registration Statement.
Upon the abandonment, consummation, or termination of the possible
acquisition or business combination or other transaction, business development
or event, the availability of the required financial statements with respect to
a possible acquisition or business combination, or the expiration of the 45 day
period, whichever comes first, the suspension of the use of the registration
statement pursuant to this Section 6 shall cease and the Company shall promptly
notify the holders of Registrable Securities that disposition of Registrable
Securities may be resumed. The Company may not defer the filing of any
registration statement or suspend the use of any registration statement within
45 days of the end of a Blackout Period.
7. Limitations on other Registration Rights. Except as otherwise set
forth in this Agreement, the Company shall not, without the prior written
consent of the holder of the Preferred Stock, file any registration statement
under the 1933 Act (other than in connection with a merger or pursuant to Form
S-8 or other comparable form), on behalf of any person, including the Company
(other than for the holder of the Preferred Stock), to become effective during
any period when the Company has failed to effect a registration statement in
breach of the terms of this
-7-
<PAGE>
Agreement; provided, however, that nothing in this Agreement shall preclude the
Company from filing a registration statement (i) pursuant to a good faith
contractual obligation with another person or entity not entered into with the
intention of circumventing this Agreement, or (ii) on behalf of the Company if
one of the uses of proceeds is the redemption in full of the Preferred Stock.
8. Remedies.
(a) Time is of the Essence. The Company agrees that time is of the
essence of each of the covenants contained herein and that, in the event of a
dispute hereunder, this Agreement is to be interpreted and construed in a
manner, consistent with the fair meaning of the language of this Agreement, that
will enable the holder to sell its Registrable Securities as quickly as possible
after such holder has given written notice to the Company, pursuant to one of
its rights hereunder to require the Company to register its Registrable
Securities, that the holder desires its Registrable Securities to be registered.
(b) Remedies Upon Default or Delay. The Company acknowledges the breach
of any part of this Agreement may cause irreparable harm to the Holder and that
monetary damages alone may be inadequate. The Company therefore agrees that the
Holder shall be entitled to injunctive relief or such other applicable remedy as
a court of competent jurisdiction may provide. Nothing contained herein will be
construed to limit a Holder's right to any remedies at law, including recovery
of damages for breach of any part of this Agreement.
9. Notices.
(a) All communications under this Agreement shall be in writing and
shall be mailed by first class mail, postage prepaid, or telegraphed or telexed
with confirmation of receipt or delivered by hand or by overnight delivery
service at,
i. If to the Company, at:
Executive Telecard, Ltd.
2000 Pennsylvania Avenue, N.W.
Washington, DC 20006
or at such other address as it may have furnished in writing to the Holder or
ii. if to the Holder at the address of the Holder
as it appears in the stock ledger of the Company.
(b) Any notice so addressed, when mailed by registered or certified
mail shall be deemed to be given three days after so mailed, when telegraphed or
-8-
<PAGE>
telexed shall be deemed to be given when transmitted, or when delivered by hand
or overnight shall be deemed to be given when delivered.
11. Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of the Company and the Holder.
12. Amendment and Waiver. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, but only with the
written consent of the Company and the Holder. No delay on the part of any party
in the exercise of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise by any party of any right, power or
remedy preclude any other or further exercise thereof, or the exercise of any
other right, power or remedy.
13. Counterparts. One or more counterparts of this Agreement may be
signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same instrument.
14. Governing Law. This Agreement shall be construed in accordance with
and governed by the internal laws of the State of New York, without giving
effect to conflicts of law principles.
15. Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
16. Headings. The headings in this Agreement are for convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
-9-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
EXECUTIVE TELECARD, LTD. AMERICAN UNITED GLOBAL, INC.
BY:______________________ BY:__________________________
-10-
EXHIBIT 10.1
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of June 17, 1999,
is made and entered into by and among American United Global, Inc. ("AUGI"), and
Vogo Networks, LLC, a Delaware limited liability company of which Executive
TeleCard, Ltd., doing business as eGlobe ("EXTEL"), is the only member (the
"Buyer").
WHEREAS, AUGI, EXTEL and the Buyer are parties to an Asset Purchase
Agreement dated July 10, 1998, as amended, including by Amendment No. 3 dated
June ___, 1999 (the "Purchase Agreement"); and
WHEREAS, as part of the purchase price for the Assets under the
Purchase Agreement EXTEL is issuing to AUGI a Note, in the form attached as
Exhibit E to the Purchase Agreement (the "EXTEL Note"), in the amount of
$500,000, the principal and interest payments under which EXTEL Note are to be
secured by, and the Buyer is to grant a security interest in, all chattels,
assets and property being acquired by the Buyer at the Closing under the
Purchase Agreement, wherever located, and all products and proceeds thereof.
WHEREAS, capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings given such terms in the Purchase
Agreement; and
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. GRANT OF SECURITY INTEREST. For the purpose of securing the payment
of the indebtedness evidenced by the EXTEL Note, including all renewals,
extensions and modifications thereof, and any fees and expenses payable
thereunder (collectively, the "Obligations"), the Buyer hereby grants to AUGI
(subject to Section 2 hereof) a security interest in the Assets being acquired
by the Buyer at the Closing under the Purchase Agreement and described in
Section 1.1(a) through (g) of the Purchase Agreement, wherever located, and all
products and proceeds thereof (collectively, the "Collateral").
2. SUBORDINATION OF SECURITY INTEREST. The security interest granted
under this Agreement shall not be a first priority security interest, but shall
be (1) subordinated in all respects to security interests granted (previously or
in the future) with respect to (i) the obligations described in paragraphs 1 and
2 of
-1-
<PAGE>
Exhibit B of the EXTEL Note and (ii) the obligations being assumed by the
Buyer at the Closing under the Purchase Agreement, and any interest, penalties
or other amounts which may accrue thereon, and (2) pari passu in all respects
with security interests granted in connection with future indebtedness of the
Buyer.
3. COVENANTS. The Buyer covenants and agrees as follows:
(a) The Buyer will notify AUGI whenever any of the Collateral is
removed from the location in which it is delivered at the Closing, except for
temporary periods in the normal and customary use thereof.
(b) The Buyer will, in all material respects, maintain, preserve
and keep the Collateral which are tangible property (whether owned in fee or a
leasehold interest) in good repair and working order, reasonable wear and tear
excepted, and from time to time will make all necessary repairs, replacements,
renewals and additions so that at all times the economic efficiency thereof will
be maintained and will pay and discharge all taxes, levies and other impositions
levied thereon as well as the cost of repairs to or maintenance of same.
(c) The Buyer will file, and pay all costs of filing, such
financing, continuation and termination statements with respect to the security
interests created hereby as AUGI may reasonably request, and AUGI is authorized
to do all things that it deems necessary to perfect and continue perfection of
the security interests created hereby.
(d) The Buyer shall take or cause to be taken such further actions,
shall execute, deliver, and file or cause to be executed, delivered, and filed
such further documents and instruments, and shall obtain such consents as may be
necessary or as AUGI may reasonably request to effectuate the purposes, terms,
and conditions of this Agreement, whether before, at or after the closing of
transactions contemplated hereby or the occurrence of an Event of Default under
the EXTEL Note.
4. EVENT OF DEFAULT. The occurrence of an Event of Default under the
EXTEL Note shall constitute an Event of Default hereunder.
5. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence and during the
continuation of an Event of Default, AUGI may exercise any and all rights and
remedies provided by the Uniform Commercial Code (New York) or other applicable
law, as well as all other rights and remedies possessed by AUGI pursuant to the
Purchase Agreement, all of which shall (to the extent permitted by law) be
cumulative. Any notice of sale, lease or other intended disposition of the
Collateral by AUGI sent to the Buyer at the address hereinafter set forth, at
least
-2-
<PAGE>
ten (10) days prior to such action, shall constitute reasonable notice to
the Buyer. AUGI may waive any Event of Default before or after the same has been
declared without impairing its right to declare a subsequent Event of Default
hereunder.
6. RELEASE OF SECURITY INTEREST. Upon payment in full of all
Obligations, AUGI shall release the security interest created hereby and shall
execute and deliver to the Buyer such termination statements and other
agreements and documents as the Buyer may reasonably request to evidence such
payment and release.
7. NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered, mailed or transmitted, and shall be effective upon
receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier number
specified below:
(a) If to the Buyer:
Vogo Networks, L.L.C.
2000 Pennsylvania Avenue, NW
Suite 4800
Washington, DC 20006
Telecopier No.: 202-882-8984
Attention: Chairman
(b) If to AUGI:
American United Global, Inc.
c/o Gersten, Savage & Kaplowitz LLP
101 E. 52nd Street
New York, NY 10022
8. HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
9. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon any determination that a term or other provision is
invalid, illegal or incapable of being enforced, the parties shall negotiate in
good faith to modify this
-3-
<PAGE>
Agreement to effect the original intent of the parties as closely as possible so
that transactions contemplated hereby are fulfilled to the extent possible.
10. ENTIRE AGREEMENT. This Agreement (together with the EXTEL Note and
the Purchase Agreement, as referred to or incorporated herein) constitutes the
entire agreement of the parties and supersedes all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof, except as otherwise expressly provided
herein, are not intended to confer upon any other person any rights or remedies
hereunder.
11. SPECIFIC PERFORMANCE. The transactions contemplated by this
Agreement are unique. Accordingly, each of the parties acknowledges and agrees
that, in addition to all other remedies to which it may be entitled, each of the
parties hereto is entitled to a decree of specific performance, provided such
party is not in material default hereunder.
12. ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
party. Subject to the preceding sentence, this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
13. THIRD PARTY BENEFICIARIES. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
14. FEES AND EXPENSES. Except as otherwise provided for in this
Agreement, each party hereto shall pay its own fees, costs and expenses incurred
in connection with this Agreement and in the preparation for and consummation of
the transactions provided for herein.
15. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
16. GOVERNING LAW. All corporate law matters arising under this
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, and all other matters arising under this Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
Notwithstanding the foregoing, it is the intention of the parties that, to the
extent local law would govern with respect to Collateral located in a particular
jurisdiction, this Agreement shall create a security interest or similar grant
of rights under such local law with respect to Collateral located in such
jurisdiction.
-4-
<PAGE>
17. COUNTERPARTS. This Agreement may be executed and delivered in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed and delivered shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
[Remainder of Page Intentionally Left Blank]
-5-
<PAGE>
IN WITNESS WHEREOF, the Buyer and AUGI have caused this Agreement to be
executed as of the date first above written.
VOGO NETWORKS, LLC
By:_______________________________
Title:____________________________
AMERICAN UNITED GLOBAL, INC.
By:_______________________________
Title:____________________________
-6-
EXHIBIT 99.1
Tuesday June 15, 7:00 am Eastern Time
Company Press Release
SOURCE: eGlobe, Inc.
eGlobe Completes Unified Messaging and Web Interface Acquisition
WASHINGTON, June 15 /PRNewswire/ -- eGlobe today announced that it completed the
acquisition of substantially all of the assets of Connectsoft Communications
Corporation, a wholly owned subsidiary of American United Global, Inc. eGlobe,
in combination with its existing telephone company and ISP customers around the
world, is now able to offer innovative Internet Protocol based information and
communications services that combine the power of the Internet with the
convenience of the telephone -- these services include "unified" messaging and
telephone (rather than computer) access to the Internet and the Word Wide Web.
The Company plans to launch its first unified messaging service within the next
month.
In the transaction, eGlobe acquired software and related technology and
intellectual property, as well as a talented and dedicated development team and
a half million dollars in cash. The Company will conduct this new segment of
business through a newly formed subsidiary, Vogo Networks, LLC, (www.vogo.net),
based in Seattle, Washington.
The terms of the acquisition agreement provide for a combination payment in
stock and assumption of debt totaling approximately $8 million. eGlobe will pay
$3 million in the form of convertible redeemable preferred stock. The stock is
redeemable in five years, becomes convertible at the holder's option during the
fourth quarter of 1999, and carries a minimum conversion price of $3.00 per
share with a higher conversion price possible depending upon market price at the
time of conversion. eGlobe will assume approximately $5.0 million in
liabilities, consisting primarily of long-term lease obligations. In addition,
American United Global will lend $500,000 to eGlobe for initial funding of the
operations of the new Vogo Networks subsidiary.
eGlobe's Chairman and CEO, Christopher Vizas, said, "As stated in our public
filings and consistent with the new direction of eGlobe, this acquisition is
another building block in eGlobe's reemergence as a leading, global provider of
enhanced information and communications services. With Vogo, we continue our
focus on mobility, ease of use for the user, and the high service quality
demanded by national telephone companies. Vogo's unified messaging and Internet
portal capabilities will allow eGlobe to add more than one new offering of
leading edge technology and service over the next year. I am particularly
delighted to welcome the talented Vogo development team to eGlobe."
-1-
<PAGE>
eGlobe is a leading supplier of global enhanced telecommunications and
information services, including a range of Internet Protocol services, including
IP voice and fax and unified messaging, as well as calling card services along
with related validation, billing and payment systems, and other international
Intranet and inter-networking services in partnership with telecommunications
operators around the world. Operating through its World Direct network, eGlobe
originates traffic in 90 territories and countries and terminates anywhere in
the world. eGlobe provides its services principally to telecommunications
companies and financial institutions. eGlobe's web site is www.eglobe.com.
Certain statements in this news release are "forward looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 and involve
known and unknown risks, uncertainties and other factors that may cause the
Company's actual results, performance or achievements to be materially different
from the results, performance or achievements expressed or implied by the
forward looking statement. Factors that impact such forward looking statements
include, among others, the ability of the Company to attract additional
business, the ability of the Company to successfully integrate the Vogo
acquisition and unified messaging technology, complete software development and
offer new products, changes in expectations regarding restructurings, including
tax liabilities and reductions in cost, possible changes in collections of
accounts receivable, risks of competition, price and margin trends, changes in
worldwide general economic conditions, changes in interest rates, currency rates
and worldwide competition.
SOURCE: eGlobe
-2-
