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): AUGUST 8, 1997
XPEDITE SYSTEMS, INC.
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(Exact Name of Registrant as specified in its charter)
DELAWARE 0-23394 22-2903158
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
446 HIGHWAY 35, EATONTOWN, NEW JERSEY 07724
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (908) 389-3900
NOT APPLICABLE
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(Former name or former address, if changed since last report)
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Item 5. Other Events
Xpedite Systems, Inc., a Delaware corporation ("XSI" or the "Registrant"),
and Xpedite Acquisition Corp., a Delaware corporation ("Acquisition Corp."),
whose stockholders will include UBS Partners LLC (an affiliate of UBS Capital
LLC), Fenway Partners, Inc. and certain members of XSI's senior management (the
"Management Buyers"), have entered into an Agreement and Plan of Merger dated as
of August 8, 1997 (the "Merger Agreement") under which Acquisition Corp. will
merge with and into XSI for a cash purchase price of $23.25 per share (including
shares issued upon the exercise of incentive stock options) of XSI common stock,
$0.01 par value per share (the "Common Stock"), which values XSI at
approximately $250 million including existing indebtedness. The Merger Agreement
is filed herewith as Exhibit 2.1 and is incorporated by reference herein.
Concurrently with the execution of the Merger Agreement, certain
stockholders of XSI, including the members of the Board of Directors, the
Management Buyers, certain funds managed by Patricof & Co. Ventures, Inc.
("Patricof"), and David, Stuart and Robert Epstein (collectively, the "Epstein
Family"), each entered into individual Stockholder Agreements (the "Stockholder
Agreements"), dated as of August 8, 1997 with XSI and Acquisition Corp. Each
Stockholder Agreement provides, among other things, that the stockholder party
thereto will vote his or its shares, among other things, in favor of the merger
of Acquisition Corp. with and into XSI (the "Merger"), the approval of the
Merger Agreement and the approval of certain amendments to XSI's certificate of
incorporation. Pursuant to the Stockholder Agreement, each stockholder gives
Acquisition Corp. his or its irrevocable proxy to vote his or its shares, among
other things, in favor of the matters referred to above and agrees to certain
restrictions on transfer with respect to his or its shares. There are an
aggregate of 4,164,486 shares of Common Stock (on a fully-diluted basis) subject
to the Stockholders Agreements. A form of Stockholder Agreement is filed
herewith as Exhibit 4.1 and is incorporated by reference herein.
In addition, PHJ&W No. 2 Limited, an English corporation and a wholly-owned
subsidiary of XSI ("UK Acquisition Corp."), Xpedite Systems Limited, an English
corporation ("XSL"), and the shareholders of XSL have entered into a Share
Purchase Agreement (the "UK Agreement") dated as of August 8, 1997 pursuant to
which UK Acquisition Corp. will acquire all of the outstanding share capital of
XSL for $87 million, subject to certain adjustments (the "XSL Acquisition"). The
XSL Acquisition is expected to be completed simultaneously with the Merger.
However, the XSL Acquisition is not conditional upon the completion of the
Merger. The UK Agreement is filed herewith as Exhibit 2.2 and is incorporated by
reference herein.
The Merger Agreement, which is subject to completion of contemplated
financing and the closing of the XSL Acquisition, requires XSI shareholder and
regulatory approvals. The closing of the Merger Agreement is also subject to,
among other things, there being no regulatory change that would materially and
adversely affect XSI's ability to account for the merger using "recap
accounting". To assist XSI in qualifying for "recap accounting" treatment,
certain of the Management Buyers have agreed to retain certain of their shares
of XSI common stock in the merger in lieu of receiving cash therefor. In
connection with the stockholder vote on the Merger Agreement, XSI stockholders
will be offered the opportunity to retain all, but not less than all, of their
shares of XSI common stock in the merger in lieu of receiving cash therefor. The
Merger Agreement provides that an aggregate of 205,000 shares of XSI common
stock may be retained in the merger by stockholders other than the Management
Buyers; in the event holders of more than 205,000 shares of XSI common stock
elect to retain their shares, the number of shares to be retained by such
stockholders will be reduced on a pro rata basis to an aggregate of 205,000
shares. If holders of fewer than 205,000 shares of XSI common stock elect to
retain their shares, the Epstein Family and Patricof have agreed to retain, on a
pro rata basis, a number of their shares of XSI common stock equal to 205,000
minus the number of shares of XSI common stock that stockholders other than the
Management Buyers have elected to retain.
2
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The Board of Directors of XSI has, by unanimous vote of the directors
voting, approved the Merger Agreement and the UK Agreement. Both transactions
are expected to close in the fourth quarter of this year.
Item 7. Financial Statements and Exhibits.
(a) Exhibits.
2.1 Agreement and Plan of Merger, dated as of August 8, 1997, by and
between the Registrant and Acquisition Corp.
2.2 Share Purchase Agreement, dated as of August 8, 1997 among UK
Acquisition Corp., XSL and the Shareholders of XSL.
4.1 Stockholder Agreement, dated as of August 8, 1997, among the
Registrant, Acquisition Corp. and Roy B. Andersen, Jr.
99.1 Press release dated August 8, 1997.
3
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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.
XPEDITE SYSTEMS, INC.
By: /s/ Roy B. Andersen, Jr.
--------------------------------------
Roy B. Andersen, Jr.
President and Chief Executive Officer
Date: August 12, 1997
S-1
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
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2.1 Agreement and Plan of Merger, dated as of
August 8, 1997, by and between the
Registrant and Acquisition Corp.
2.2 Share Purchase Agreement, dated as of August
8, 1997 among UK Acquisition Corp., XSL and
the Shareholders of XSL.
4.1 Stockholder Agreement, dated as of August 8,
1997, among the Registrant, Acquisition
Corp. and Roy B. Andersen, Jr.
99.1 Press release dated August 8, 1997.
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and between
XPEDITE ACQUISITION CORP.
and
XPEDITE SYSTEMS, INC.
Dated as of August 8, 1997
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<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I [INTENTIONALLY OMITTED]...................... 1
ARTICLE II The Merger................................... 1
SECTION 2.01. The Merger............................ 1
SECTION 2.02. Closing............................... 1
SECTION 2.03. Certificate of
Incorporation......................... 2
SECTION 2.04. By-Laws............................... 2
SECTION 2.05. Directors............................. 2
SECTION 2.06. Officers.............................. 2
SECTION 2.07. Effective Time........................ 2
ARTICLE III Effect of the Merger on the
Capital Stock of the
Constituent Corporations;
Exchange of Certificates..................... 3
SECTION 3.01. Effect on Company Common
Stock and Class B Common
Stock................................. 3
SECTION 3.02. Conversion of Acquisition
Sub Common Stock...................... 7
SECTION 3.03. Dissenting Shares..................... 7
SECTION 3.04. Exchange Procedures................... 8
SECTION 3.05. Stock Transfer Books.................. 11
SECTION 3.06. No Further Ownership
Rights in Company Common
Stock or Class B Common
Stock................................. 11
SECTION 3.07. Lost, Stolen or Destroyed
Certificates.......................... 11
SECTION 3.08. Company Stock Options and Warrants.... 12
ARTICLE IV Representations and Warranties
of the Company............................... 13
SECTION 4.01. Organization and
Standing.............................. 13
SECTION 4.02. Authority and Status.................. 14
SECTION 4.03. Capitalization........................ 14
SECTION 4.04. No Conflict; Required Filings and
Consents.............................. 15
SECTION 4.05. Compliance; Permits................... 17
SECTION 4.06. SEC Filings; Financial
Statements............................ 18
SECTION 4.07. Absence of Certain
Changes or Events..................... 18
SECTION 4.08. No Undisclosed
Liabilities........................... 19
SECTION 4.09. Absence of Litigation................. 19
SECTION 4.10. Employee Benefit Plans,
Employment Agreements................. 19
SECTION 4.11. Labor Matters......................... 21
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<PAGE>
PAGE
SECTION 4.12. Information Supplied................... 21
SECTION 4.13. Title to Property...................... 22
SECTION 4.14. Taxes.................................. 22
SECTION 4.15. Environmental Matters.................. 24
SECTION 4.16. Insurance.............................. 25
SECTION 4.17. Opinion of Financial
Advisor................................ 25
SECTION 4.18. Brokers................................ 25
SECTION 4.19. Books and Records...................... 25
SECTION 4.20. Certain Payments....................... 26
SECTION 4.21. Intellectual Property.................. 26
SECTION 4.22. Contracts.............................. 27
SECTION 4.23. Information Systems.................... 27
SECTION 4.24. Regulation of Business................. 27
ARTICLE V Representations and Warranties
of Acquisition Sub............................ 28
SECTION 5.01. Corporate Organization................. 28
SECTION 5.02. Authorization.......................... 28
SECTION 5.03. No Conflict; Required Filings and
Consents............................... 29
SECTION 5.04. Information Supplied................... 29
SECTION 5.05. Brokers................................ 30
SECTION 5.06. No Business............................ 30
SECTION 5.07. Financing.............................. 30
ARTICLE VI Conduct of Business Pending
the Merger.................................... 31
SECTION 6.01. Conduct of Business by
the Company Pending the
Merger................................. 31
SECTION 6.02. No Solicitation........................ 34
ARTICLE VII Additional Agreements......................... 36
SECTION 7.01. HSR Act; Etc........................... 36
SECTION 7.02. Preparation of the
Prospectus/Proxy
Statement.............................. 36
SECTION 7.03. Stockholder Approval................... 37
SECTION 7.04. Access to Information;
Confidentiality........................ 37
SECTION 7.05. Consents; Approvals.................... 38
SECTION 7.06. Indemnification and
Insurance.............................. 38
SECTION 7.06A. Employment and Benefit
Matters................................ 40
SECTION 7.07. Notification of Certain
Matters................................ 40
SECTION 7.08. Further Action......................... 41
SECTION 7.09. Public Announcements................... 41
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SECTION 7.10. Conveyance Taxes....................... 41
SECTION 7.11. NASDAQ Listing......................... 41
SECTION 7.12. Stockholders Agreement................. 41
SECTION 7.13. No Acquisition Sub
Business............................... 42
SECTION 7.14. Solvency Opinion....................... 42
SECTION 7.15. Negotiations with Minority Affiliate... 42
SECTION 7.16. Rollover............................... 42
ARTICLE VIII Conditions to the Merger...................... 42
SECTION 8.01. Conditions to Obligation
of Each Party to Effect
the Merger............................. 42
SECTION 8.02. Additional Conditions to
Obligations of
Acquisition Sub........................ 43
SECTION 8.03. Additional Conditions to
Obligation of the
Company................................ 45
ARTICLE IX Termination................................... 46
SECTION 9.01. Termination............................ 46
SECTION 9.02. Effect of Termination.................. 48
SECTION 9.03. Fees and Expenses...................... 49
ARTICLE X General Provisions............................ 50
SECTION 10.01. Effectiveness of
Representations,
Warranties and
Agreements, Etc........................ 50
SECTION 10.02. Notices................................ 50
SECTION 10.03. Certain Definitions.................... 52
SECTION 10.04. Amendment.............................. 53
SECTION 10.05. Waiver................................. 53
SECTION 10.06. Headings............................... 53
SECTION 10.07. Severability........................... 53
SECTION 10.08. Entire Agreement....................... 54
SECTION 10.09. Assignment............................. 54
SECTION 10.10. Parties in Interest.................... 54
SECTION 10.11. Failure or Indulgence Not
Waiver; Remedies
Cumulative............................. 54
SECTION 10.12. Governing Law.......................... 54
SECTION 10.13. Counterparts........................... 54
SECTION 10.14. Consent to Jurisdiction................ 55
EXHIBIT A Certificate of Merger
EXHIBIT B Affiliate Letter
EXHIBIT C Terms of Stockholders Agreement
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<PAGE>
EXHIBIT D Charter Amendment
SCHEDULE 3.01(e) Principal Stockholders
SCHEDULE 4.01(b) Certificate of Incorporation and
By-Laws of the Company
SCHEDULE 4.03(a) Capitalization
SCHEDULE 4.03(b) Conversion Rights
SCHEDULE 4.03(c) Minority Affiliates
SCHEDULE 4.04(a) Contracts
SCHEDULE 4.04(b) Defaults
SCHEDULE 4.04(c) Conflicts
SCHEDULE 4.05(a) Compliance with Laws and Agreements
SCHEDULE 4.05(b) Permits
SCHEDULE 4.06 SEC Reports
SCHEDULE 4.07(a)-(g) Absence of Certain Changes
SCHEDULE 4.08 Liabilities
SCHEDULE 4.09 Litigation
SCHEDULE 4.10 ERISA Matters
SCHEDULE 4.11 Labor Matters
SCHEDULE 4.13 Title to Property
SCHEDULE 4.14 Taxes
SCHEDULE 4.15 Environmental Matters
SCHEDULE 4.18 Brokers
SCHEDULE 4.21 Intellectual Property Rights
SCHEDULE 4.22(a) Change of Control Provisions
SCHEDULE 4.22(b) Affiliate Contracts
SCHEDULE 5.01(b) Certificate of Incorporation and By-
Laws of Acquisition Sub
SCHEDULE 5.03(a) Acquisition Sub Conflicts
SCHEDULE 5.05 Acquisition Sub Brokers
SCHEDULE 5.07 Financing Commitments
SCHEDULE 6.01 Conduct of Business by the Company
SCHEDULE 7.06A(a) Benefit Plans
SCHEDULE 8.02(j) Class B Common Stock Conversion
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<PAGE>
INDEX OF DEFINITIONS
DEFINITION SECTION
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"Acquisition Proposal"................... Section 6.02(a)
"Acquisition Sub" ....................... Introduction
"Acquisition Sub Common Stock"........... Section 3.02
"Agreement" ............................. Introduction
"Alternative Transaction"................ Section 9.01(g)
"Antitrust Division"..................... Section 7.01
"Benefit Plan"........................... Section 7.06A(a)
"Blue Sky Laws".......................... Section 4.04(d)
"Cash Election Price".................... Section 3.01(a)
"Cash Proration Factor".................. Section 3.01(e)
"Certificate" ........................... Section 3.04(b)
"Certificate of Merger" ................. Introduction
"Charter Amendment"...................... Section 8.02(e)
"Class B Certificates"................... Section 3.04(d)
"Class B Common Stock"................... Section 3.01(b)
"Class B Merger Consideration"........... Section 3.01(b)
"Class B Shares"......................... Section 3.01(b)
"Closing" ............................... Section 2.02
"Closing Date" .......................... Section 2.02
"Code" .................................. Section 3.04(f)
"Company" ............................... Introduction
"Company Common Stock"................... Section 3.01(a)
"Company Employee Plans"................. Section 4.10
"Company Permits"........................ Section 4.05(b)
"Company SEC Reports".................... Section 4.06(a)
"Company Stockholders Meeting"........... Section 4.12
"Company Stock Option Plans"............. Section 3.08(a)
"Confidentiality Letter"................. Section 7.04
"Dissenting Consideration"............... Section 3.03
"Dissenting Shares"...................... Section 3.03
"Effective Time"......................... Section 2.07
"Election Date".......................... Section 3.01(d)
"Electing Shares"........................ Section 3.01(a)
"Environmental Laws"..................... Section 4.15
"ERISA".................................. Section 4.10
"Exchange Act"........................... Section 4.04(a)
"Exchange Agent"......................... Section 3.04(a)
"Exchange Fund".......................... Section 3.04(a)
"Excluded Shares"........................ Section 3.01(c)
"Expenses"............................... Section 9.02(b)
"Fee".................................... Section 9.02(b)
"Financing Commitments".................. Section 5.07
"Form of Election"....................... Section 3.01(d)
"FTC".................................... Section 7.01
"GCL".................................... Section 2.01
"HSR Act"................................ Section 4.04(d)
"Indemnified Parties".................... Section 7.06(b)
"Intellectual Property Rights"........... Section 4.21
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<PAGE>
Definition Section
"IRS"...................................... Section 4.10
"Laws"..................................... Section 4.04(c)
"Liens".................................... Section 4.03(a)
"Material Adverse Effect".................. Section 4.01(a)
"Merger" .................................. Introduction
"Merger Consideration" .................... Section 3.01(a)
"Minority Affiliate"....................... Section 4.03(c)
"NASDAQ" .................................. Section 7.09
"Non-Cash Election"........................ Section 3.01(d)
"Non-Cash Election Holder Number".......... Section 3.01(e)
"Non-Cash Election Share".................. Section 3.01(a)
"Non-Cash Election Share Number"........... Section 3.01(e)
"Non-Cash Proration Factor"................ Section 3.01(e)
"1996 Company Balance Sheet"............... Section 4.08
"Option"................................... Section 3.08(a)
"Option Consideration"..................... Section 3.08(a)
"PBGC"..................................... Section 4.10
"Principal Non-Cash Election Shares"....... Section 3.01(e)
"Principal Stockholders"................... Section 3.01(e)
"Prospectus/Proxy Statement"............... Section 4.12
"Preferred Stock".......................... Section 8.02(e)
"Recap Accounting"......................... Section 8.02(g)
"Securities Act"........................... Section 4.04(d)
"SEC"...................................... Section 4.01(a)
"S-4 Registration Statement"............... Section 4.12
"Shares"................................... Section 3.01(a)
"Significant Subsidiary"................... Section 4.01(a)
"Subsidiary"............................... Section 4.01(a)
"Stockholders Agreement"................... Section 7.12
"Surviving Corporation".................... Section 2.01
"Surviving Corporation Common Stock" ...... Section 3.01(a)
"Tax" or "Taxes"........................... Section 4.14(a)
"Tax Returns".............................. Section 4.14(a)
"Third-Party".............................. Section 9.01
"Xpedite".................................. Introduction
"Xpedite"GmbH.............................. Section 7.15
"XSL"...................................... Section 8.02(c)
"XSL Purchase Agreement"................... Section 8.02(c)
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<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("AGREEMENT"), dated as of August 8,
1997, is entered into by and between XPEDITE ACQUISITION CORP., a Delaware
corporation ("ACQUISITION SUB"), and XPEDITE SYSTEMS, INC., a Delaware
corporation (the "COMPANY" or "XPEDITE").
WHEREAS, the respective Boards of Directors of Acquisition Sub and the
Company have approved the merger of Acquisition Sub with and into the Company
(the "MERGER") upon the terms and subject to the conditions set forth herein and
in the articles of merger annexed as EXHIBIT A (the "CERTIFICATE OF MERGER");
and
WHEREAS, Acquisition Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and of the representations, warranties, covenants and
agreements hereinafter contained, Acquisition Sub and the Company agree as
follows:
ARTICLE I.
[INTENTIONALLY OMITTED]
ARTICLE II.
THE MERGER
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SECTION 2.01. THE MERGER. In accordance with the provisions of this
Agreement, the Certificate of Merger and the General Corporation Law of the
State of Delaware, as amended (the "GCL"), at the Effective Time (as defined in
SECTION 2.07), Acquisition Sub shall be merged with and into the Company, and
the Company shall be the surviving corporation in the Merger (hereinafter
sometimes called the "SURVIVING CORPORATION"). At the Effective Time, the
separate existence of Acquisition Sub shall cease.
SECTION 2.02. CLOSING. The closing of the Merger (the "CLOSING") will
take place as soon as practicable after
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<PAGE>
the satisfaction or waiver of the conditions set forth in Article VIII (the
"CLOSING DATE") at the offices of Paul, Hastings, Janofsky & Walker LLP, 399
Park Avenue, New York, NY 10022, unless another date or place is agreed to in
writing by the parties hereto.
SECTION 2.03. CERTIFICATE OF INCORPORATION. As of the Effective Time,
the Certificate of Incorporation of the Company immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, until thereafter amended as provided by law or in such Certificate
of Incorporation.
SECTION 2.04. BY-LAWS. The By-Laws of Acquisition Sub as in effect at
the Effective Time shall be the By-Laws of the Surviving Corporation, until
thereafter amended or repealed as provided by law.
SECTION 2.05. DIRECTORS. The directors of Acquisition Sub at the
Effective Time shall, from and after the Effective Time, be the directors of the
Surviving Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualified in the manner
provided in the Certificate of Incorporation and By-Laws of the Surviving
Corporation, or as otherwise provided by law.
SECTION 2.06. OFFICERS. The officers of the Company at the Effective
Time shall, from and after the Effective Time, be the officers of the Surviving
Corporation and shall hold office from the Effective Time until their respective
successors are duly elected or appointed and qualified in the manner provided in
the Certificate of Incorporation and By-Laws of the Surviving Corporation, or as
otherwise provided by law.
SECTION 2.07. EFFECTIVE TIME. The Merger shall become effective at the
time of filing of the Certificate of Merger with the Secretary of State of the
State of Delaware in accordance with the provisions of Section 251 of the GCL.
The Certificate of Merger shall be filed with the Secretary of State of the
State of Delaware on the Closing Date. The time when the Merger becomes
effective is herein referred to as the "EFFECTIVE TIME."
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<PAGE>
ARTICLE III.
Effect of the Merger on the Capital Stock of the
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
--------------------------------------------------
SECTION 3.01. EFFECT ON COMPANY COMMON STOCK AND CLASS B COMMON STOCK.
--------------------------------------------------------
a. Except as otherwise provided herein and subject to SECTION 3.01(D)
and SECTION 3.01(E), each share of common stock, par value $.01 per share of the
Company (each, a "SHARE" or collectively, the "SHARES" or the "COMPANY COMMON
STOCK") actually issued and outstanding immediately prior to the Effective Time
(except for the Excluded Shares and Dissenting Shares) shall, at the Effective
Time, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into one of the following (the "MERGER CONSIDERATION"):
(i) for each Share with respect to which an
election to retain pursuant to SECTION 3.01(D) has been
effectively made, and not revoked or lost (each, an "ELECTING
SHARE" and collectively, the "ELECTING SHARES"), the right to
retain one fully paid and nonassessable Share (a "NON-CASH
ELECTION SHARE"), and the certificate representing such retained
Share shall be surrendered in exchange pursuant to the terms of
this Agreement, for a certificate representing one fully paid and
nonassessable share of common stock, par value $.01 per share (the
"SURVIVING CORPORATION COMMON STOCK"), of the Surviving
Corporation; or
(ii) for each Share (other than Electing Shares),
the right to receive $23.25 in cash, payable to the holder of such
Share, without interest thereon, less any required back-up
withholding taxes (the "CASH ELECTION PRICE").
b. Each share of Class B Common Stock, par value $.01 per share, of
the Company (the "CLASS B SHARES" or the "CLASS B COMMON STOCK") issued and
outstanding immediately prior to the Effective Time, shall, at the Effective
Time, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into one fully paid and nonassessable share of Surviving
Corporation Common Stock (the "CLASS B MERGER CONSIDERATION"). From and after
the Effective Time, each outstanding certificate theretofore representing Class
B Shares shall be deemed for all purposes to evidence ownership of, and to
represent the number of
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<PAGE>
shares of, Surviving Corporation Common Stock into which such Class B Shares
shall have been converted.
c. Each share of Company Common Stock and Class B Common Stock held in
the Company's treasury immediately prior to the Effective Time (the "EXCLUDED
SHARES") shall, at the Effective Time, by virtue of the Merger, be cancelled
without payment of any consideration therefor and without any conversion
thereof.
d. SHARE ELECTIONS.
----------------
(i) Each person who, on or prior to the Election
Date, is a record holder of Shares will be entitled, with respect
to all, but not less than all, such holder's Shares, to make an
unconditional election ( a "NON-CASH ELECTION") on or prior to
such Election Date to retain Non-Cash Election Shares, on the
basis set forth herein.
(ii) The Company shall prepare and mail a form of
election, which form shall be subject to the reasonable approval
of Acquisition Sub (the "FORM OF ELECTION"), with the
Prospectus/Proxy Statement to the record holders of Shares as of
the record date for the Company Stockholders Meeting, which Form
of Election shall be used by each record holder of Shares that
wishes to elect, with respect to all, but not less than all, such
holder's Shares, to retain Non-Cash Election Shares. The Company
will use its reasonable efforts to make the Form of Election and
the Prospectus/Proxy Statement available to all persons who become
holders of Shares during the period between such record date and
the Election Date. Any such holder's election to retain Non-Cash
Election Shares shall have been properly made only if the Exchange
Agent shall have received at its designated office by 5:00 p.m.,
New York City time, on the second trading day (the "ELECTION
DATE") next preceding the date of the Company Stockholders
Meeting, a Form of Election reflecting such holder's election with
respect to all, but not less than all, such holder's Shares and
the Stockholders Agreement, in each case, properly completed and
signed and accompanied by certificates for all Shares held by such
holder, duly endorsed in blank or otherwise in form acceptable for
transfer on the books of the Company (or by an appropriate
guarantee of delivery of such certificates as set forth in such
Form of Election from a firm which is a member of a registered
national securities exchange or of the
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<PAGE>
National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office in the United States,
PROVIDED that such certificates are in fact delivered to the
Exchange Agent within three New York Stock Exchange trading days
after the date of execution of such guarantee of delivery).
(iii) Any Form of Election may be revoked by the
holder submitting it to the Exchange Agent only by written notice
received by the Exchange Agent prior to 5:00 p.m., New York City
time, on the Election Date. In addition, all Forms of Election
shall automatically be revoked if the Exchange Agent is notified
in writing by the Company and Acquisition Sub that the Merger has
been abandoned. If a Form of Election is revoked, the certificate
or certificates (or guarantees of delivery, as applicable) for the
Shares to which such Form of Election relates shall be promptly
returned to the holder submitting the same to the Exchange Agent.
(iv) The determination of the Exchange Agent
shall be binding as to whether or not elections to retain Non-Cash
Election Shares have been properly made or revoked pursuant to
this SECTION 3.01(D) with respect to Shares and when elections and
revocations were received by it. If the Exchange Agent determines
that any election to retain Non-Cash Election Shares was revoked
or was not properly made with respect to Shares, such Shares shall
be treated by the Exchange Agent as Shares which were not Electing
Shares at the Effective Time. The Exchange Agent also shall make
all computations as to the allocation and the proration
contemplated by SECTION 3.01(E), and any such computation shall be
conclusive and binding on the holders of Shares. The Exchange
Agent may, with the mutual agreement of the Company and
Acquisition Sub, make such rules as are consistent with this
SECTION 3.01 for the implementation of the elections provided for
herein as shall be necessary or desirable fully to effect such
elections.
e. PRORATION.
----------
(i) Notwithstanding anything in this Agreement to
the contrary, the aggregate number of Shares to be converted into
the right to retain Shares at the Effective Time (the "NON-CASH
ELECTION SHARE NUMBER") shall equal 205,000 Shares (excluding for
this purpose any Excluded Shares).
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<PAGE>
(ii) If the number of Electing Shares exceeds the
Non-Cash Election Share Number, then the Electing Shares covered
by each Non-Cash Election shall be converted into the right to
retain Non-Cash Election Shares or to receive cash in accordance
with the terms of SECTION 3.01(A) in the following manner:
(A) A proration factor (the "NON-CASH
PRORATION FACTOR") shall be determined by dividing the
Non-Cash Election Share Number by the total number of
Electing Shares.
(B) The number of Electing Shares
covered by each Non-Cash Election to be converted into the
right to retain Non-Cash Election Shares shall be
determined by multiplying the Non-Cash Proration Factor by
the total number of Electing Shares covered by such
Non-Cash Election.
(C) All Electing Shares, other than that
number of shares converted into the right to receive
Non-Cash Election Shares in accordance with SECTION
3.01(E)(II)(B), shall be converted into cash (on a
consistent basis among holders who made the election
referred to in SECTION 3.01(A)(I), pro rata to the number
of Shares as to which they made such election) as if such
Shares were not Electing Shares in accordance with the
terms of SECTION 3.01(A)(II).
(iii) If the number of Electing Shares is less
than the Non-Cash Election Share Number, then:
(A) All Electing Shares shall be
converted into the right to retain Non-Cash Election
Shares in accordance with the terms of SECTION 3.01(A)(I).
(B) Additional Shares held by the
Persons listed on SCHEDULE 3.01(E) (the "PRINCIPAL
STOCKHOLDERS") shall be converted into the right to retain
Non-Cash Election Shares in accordance with the terms of
SECTION 3.01(A)(I) in the
following manner:
(1) A proration factor (the
"CASH PRORATION FACTOR" shall be determined by
dividing (x) the difference between the Non-Cash
Election Number and the number of Electing
Shares, by (y) the total number of
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<PAGE>
Shares held by the Principal Stockholders
(the "PRINCIPAL NON-CASH ELECTION SHARES").
(2) The number of Shares in
addition to Electing Shares to be converted into
the right to retain Non-Cash Election Shares
shall be determined by multiplying the Cash
Proration Factor by the total number of Principal
Non-Cash Election Shares.
(C) Shares subject to clause (B) of this
SECTION 3.01(E)(III) shall be converted into the right to
retain Non-Cash Election Shares in accordance with SECTION
3.01(A)(I) on a consistent basis among the Principal
Stockholders who held Principal Non-Cash Election Shares,
pro rata to the number of Principal Non-Cash Election
Shares held by each Principal Stockholder, and each
Principal Stockholder will enter into the Stockholders
Agreement.
SECTION 3.02. CONVERSION OF ACQUISITION SUB COMMON STOCK. Each share
of common stock, par value $.01 per share, of Acquisition Sub (the "ACQUISITION
SUB COMMON STOCK") issued and outstanding at the Effective Time shall, at the
Effective Time by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and exchangeable for one fully paid and
nonassessable share of Surviving Corporation Common Stock. From and after the
Effective Time, each outstanding certificate theretofore representing shares of
Acquisition Sub Common Stock shall be deemed for all purposes to evidence
ownership of, and to represent the number of shares of, Surviving Corporation
Common Stock into which such shares of Acquisition Sub Common Stock shall have
been converted.
SECTION 3.03. DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock and Class B Common
Stock issued and outstanding at the Effective Time which are held of record by
stockholders who shall not have voted such shares (or, in the case of shares of
Class B Common Stock, shares converted into such shares) in favor of the Merger
and who shall have properly exercised rights to demand payment of the fair value
of such shares in accordance with Section 262 of the GCL ("DISSENTING SHARES")
shall not be converted into the right to receive any portion of the Merger
Consideration or the Class B Merger Consideration, as the case may be, specified
in SECTION 3.01, but the holders thereof instead shall be entitled to payment of
the fair value of such
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<PAGE>
shares in accordance with the provisions of Section 262 of the GCL (the
"DISSENTING CONSIDERATION"); PROVIDED that (i) if such a holder fails to file a
notice of election to dissent in accordance with Section 262 of the GCL or,
after filing such notice of election, subsequently delivers an effective written
withdrawal of such notice or fails to establish his entitlement to appraisal
rights as provided in Section 262 of the GCL, if he or she be so required, or
(ii) if a court shall determine that such holder is not entitled to receive
payment for his shares or such holder shall otherwise lose his or her appraisal
rights, then in either of such cases, each share of Company Common Stock and
Class B Common Stock held of record by such holder or holders shall
automatically be converted into and represent only the right to receive the
Merger Consideration or the Class B Merger Consideration, as the case may be,
upon the surrender of the certificate or certificates representing such
Dissenting Shares.
SECTION 3.04. EXCHANGE PROCEDURES.
--------------------
a. Prior to the Effective Time, the Company and
Acquisition Sub jointly shall select a bank or trust company to act as exchange
agent in the Merger (the "EXCHANGE AGENT") and, as of or as soon as reasonably
practicable after the Effective Time, the Surviving Corporation shall deposit or
cause to be deposited with the Exchange Agent, for exchange in accordance with
this Article, in a separate fund (the "EXCHANGE FUND") established for the
benefit of the holders of Shares (other than Dissenting Shares and Excluded
Shares) immediately available funds in an amount necessary to make the payments
of the cash portion of the Merger Consideration to the holders of Company Common
Stock entitled thereto pursuant to SECTION 3.01.
b. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall mail to each holder of record
entitled to the Merger Consideration, (i) a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "CERTIFICATES") shall pass, only upon proper delivery of
the Certificates to the Surviving Corporation, and shall be in such form and
have such other provisions as the Surviving Corporation reasonably may specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration to which such holder is entitled pursuant
to SECTION 3.01. Upon the proper surrender of a Certificate to the Exchange
Agent, together with such letter
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<PAGE>
of transmittal and any additional documentation as the Surviving Corporation may
reasonably require, the holder of such Certificate shall be entitled to receive
in exchange therefor a certificate or certificates representing the number of
whole retained Shares, if any, to be retained by the holder of such Certificates
(and cash in lieu of any fractional retained Shares) pursuant to this Agreement
or the amount of cash into which the number of Shares previously represented by
such Certificates shall have been converted pursuant to this Agreement (less any
required withholding tax), and the Certificate so surrendered shall forthwith be
cancelled. If payment is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be promptly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of the payment
to a person other than the registered holder of the surrendered Certificate or
established to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable.
c. Until surrendered in accordance with the
provisions of this SECTION 3.04, from and after the Effective Time, each
Certificate (other than Certificates representing Excluded Shares or Dissenting
Shares) shall represent for all purposes only the right to receive, upon such
surrender, the Merger Consideration, without interest, into which the Shares
represented by such Certificates shall have been converted pursuant to SECTION
3.01, and shall cease to have any rights with respect to the shares of Company
Common Stock formerly represented thereby, except as otherwise provided herein
or by law.
d. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall deliver to each holder of record
entitled to the Class B Merger Consideration, (i) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates which immediately prior to the Effective Time
represented outstanding Class B Shares (the "CLASS B CERTIFICATES") shall pass,
only upon proper delivery of the Class B Certificates to the Surviving
Corporation, and shall be in such form and have such other provisions as the
Surviving Corporation reasonably may specify) and (ii) instructions for use in
effecting the surrender of the Class B Certificates in exchange for the Class B
Merger Consideration to which such holder is entitled pursuant to SECTION 3.01.
Upon the proper
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<PAGE>
surrender of a Class B Certificate to the Exchange Agent, together with such
letter of transmittal and any additional documentation as the Surviving
Corporation may reasonably require, the holder of such Class B Certificate shall
be entitled to receive a certificate or certificates representing the number of
shares of Surviving Corporation Common Stock into which the Class B Shares
previously represented by such Class B Certificate shall have been converted
pursuant to this Agreement, and the Class B Certificate so surrendered shall
forthwith be cancelled.
e. Any portion of the Exchange Fund which
remains undistributed to the holders of Company Common Stock for six months
after the Effective Time will be returned to the Surviving Corporation and any
holder of shares of Company Common Stock or Class B Common Stock prior to the
Merger who has not theretofore complied with this Article III shall look
thereafter only to the Surviving Corporation for payment of the Merger
Consideration or Class B Merger Consideration, as applicable, in respect of such
holder's shares. Any amounts remaining unclaimed by former stockholders of the
Company one year after the Effective Time shall, to the extent permitted by
abandoned property and any other applicable law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any Person
previously entitled to such claims. All interest accrued in respect of the
Exchange Fund shall inure to the benefit of and be paid to the Surviving
Corporation. If any certificate representing shares of Company Common Stock or
Class B Common Stock (or such documents as may be required pursuant to SECTION
3.07 if such certificate is lost, stolen or destroyed) shall not have been
surrendered prior to one year after the Effective Time (or immediately prior to
such earlier date on which any cash, if any, any cash in lieu of fractional
shares of retained Company Common Stock or any dividends or distribution with
respect to retained Company Common Stock in respect of such certificate would
otherwise escheat to or become the property of any applicable governmental
entity), any such cash, dividends or distributions in respect of such
certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto. Notwithstanding the foregoing, the
Surviving Corporation shall not be liable to any person in respect of retained
Company Common Stock or Class B Common Stock (or dividends or distributions with
respect to either of the foregoing) for any amount delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
- 10 -
<PAGE>
f. The Surviving Corporation shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock or Class B Common
Stock such amounts as the Surviving Corporation is required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "CODE"), or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by the Surviving
Corporation, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock or Class B Common Stock in respect of which such deduction and withholding
was made by the Surviving Corporation.
SECTION 3.05. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of Company Common Stock or Class B Common Stock
thereafter on the records of the Company.
SECTION 3.06. NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK OR
CLASS B COMMON STOCK. The Merger Consideration delivered upon the surrender of a
certificate representing Shares and the Class B Merger Consideration delivered
upon surrender of a certificate representing Class B Shares in accordance with
the terms hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to such Shares or Class B Shares, as the case may be, and
there shall be no further registration of transfers on the records of the
Surviving Corporation of Shares or Class B Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates or Class B Certificates are presented to the Surviving Corporation
for any reason, they shall be cancelled and exchanged as provided in this
Article III.
SECTION 3.07. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates or Class B Certificates shall have been lost, stolen or destroyed,
the Exchange Agent shall pay in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the holder thereof
and delivery of bond in such sum as it may reasonably direct as indemnity
against any claim that may be made against Acquisition Sub or any stockholder of
Acquisition Sub or the Exchange Agent with respect to the Certificates or Class
B Certificates alleged to have been lost, stolen or destroyed, the Merger
Consideration or Class B Merger Consideration, as
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<PAGE>
applicable, attributable to such Certificates or Class B Certificates as may be
required pursuant to SECTION 3.04.
SECTION 3.08. COMPANY STOCK OPTIONS AND WARRANTS.
-----------------------------------
a. At the Effective Time, except as otherwise
provided in this SECTION 3.08, each option and warrant granted by the Company to
purchase shares of Company Common Stock, which is outstanding immediately prior
thereto (an "OPTION" or, collectively, the "OPTIONS"), shall be cancelled and
retired and shall cease to exist and no consideration shall be delivered or
deliverable in exchange therefor, except to the extent that (i) any such Option
granted by the Company to purchase shares of Company Common Stock has vested and
is exercisable immediately prior to the Effective Time, whether as a result of
the passing of time, the Merger or otherwise, or (ii) any such Option was
granted pursuant to the Company's 1992, 1993 or 1996 Incentive Stock Option
Plans or the Officers' Contingent Stock Option Plan (collectively, the "COMPANY
STOCK OPTION PLANS") and such option has not yet vested. In such event, each
holder of such an Option shall, individually, in settlement thereof, receive
from the Surviving Corporation for each share subject to such an Option an
amount (subject to any applicable back-up withholding taxes) in cash equal to
the difference between: (i) the Merger Consideration and (ii) the per share
exercise price of such Option, to the extent such difference is a positive
number (the "OPTION CONSIDERATION").
b. Upon receipt of the Option Consideration, the
Option shall be cancelled. The surrender of an Option to the Surviving
Corporation in exchange for the Option Consideration shall be deemed a release
of any and all rights the holder had or may have had in respect of such Option.
c. Prior to the Effective Time, the Company
shall use its reasonable best efforts to obtain all necessary consents or
releases from holders of Options under any of the Company Stock Option Plans and
take all such other lawful action as may be necessary to give effect to the
transactions contemplated by this Section (except for such action that may
require the approval of the Company's stockholders). Except as otherwise agreed
to by the parties: (i) the Company Stock Option Plans shall terminate as of the
Effective Time and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company shall be cancelled as of the Effective Time
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<PAGE>
and (ii) the Company shall take all commercially reasonable action in an effort
to provide that following the Effective Time no participant in any stock option
plans or other plans, programs or arrangements shall have any right thereunder
to acquire equity securities of the Company or the Surviving Corporation and to
terminate all such plans.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to
Acquisition Sub as follows:
SECTION 4.01. ORGANIZATION AND STANDING.
--------------------------
a. Each of the Company and its Subsidiaries (as
hereinafter defined) is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation, and has
the full corporate power and authority to carry on its business in the places as
it is now being conducted and to own and lease the properties and assets which
it now owns or leases, except where the failure of same will not in any case
result in a Material Adverse Effect. The Company and each of its Subsidiaries is
now duly qualified to transact business and in good standing as a foreign
corporation in all jurisdictions in which the character of the property owned or
leased by it and the nature of the business conducted by it require such
qualification, except where failure to be qualified could not reasonably be
expected to have a Material Adverse Effect. When used in connection with the
Company or any of its Subsidiaries or Acquisition Sub or any of its
Subsidiaries, as the case may be, a "MATERIAL ADVERSE EFFECT" is a material
adverse effect on the business, assets, properties, condition (financial or
other), results of operations or prospects of the Company and its Subsidiaries
or Acquisition Sub and its Subsidiaries, as the case may be, in each case taken
as a whole. For purposes of this Agreement, a "SUBSIDIARY" of any Person is any
corporation, partnership, joint venture or other legal entity of which a
majority of all outstanding shares of capital stock or other equity interests
(the holders of which are ordinarily and generally entitled to vote for the
election of the board of directors or other governing body thereof) is owned,
directly or indirectly, by such Person (either alone or through or together with
any other Subsidiary). For purposes of this agreement "SIGNIFICANT SUBSIDIARY"
means any Subsidiary of the Company or
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<PAGE>
Acquisition Sub as the case may be, that constitutes a significant subsidiary
within the meaning of Rule 1.02(w) of Regulation S-X of the United States
Securities and Exchange Commission (the "SEC").
b. True, correct and complete copies of the
Certificate of Incorporation, certified by the Secretary of State of the State
of Delaware, and By-Laws of the Company are attached hereto as SCHEDULE 4.01(B).
SECTION 4.02. AUTHORITY AND STATUS.
---------------------
a. The Company has requisite corporate power and
authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.
b. This Agreement and the Charter Amendment (as
hereinafter defined) have been approved by the Board of Directors of the Company
in accordance with the GCL and except for the approval of the stockholders of
the Company, no other corporate proceeding on the part of the Company is
necessary to authorize this Agreement or the Charter Amendment or to consummate
the transactions contemplated hereby or thereby. The affirmative vote of the
holders of a majority of the outstanding shares of Company Common Stock
approving this Agreement and the Charter Amendment is the only vote of the
holders of any class or series of the Company's capital stock necessary to
approve this Agreement and the Charter Amendment and the transactions
contemplated by this Agreement and the Charter Amendment.
c. This Agreement has been duly and validly
executed and delivered by the Company and is a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws in effect now
or hereafter relating to creditors' rights generally, and by equitable
principles (whether considered in a proceeding at law or in equity).
SECTION 4.03. CAPITALIZATION.
---------------
a. The authorized capital stock of the Company
consists of (i) fifteen million (15,000,000) shares of common stock, par value
$.01 per share, of which 8,987,233 shares were issued and outstanding and 72,000
shares were held in the Company's treasury as of July 31, 1997; (ii) one million
(1,000,000) shares of preferred stock, par value $.01 per share, of which none
are outstanding or held in the
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Company's treasury as of July 31, 1997; and (iii) as of July 31, 1997, 866,913
and 136,832 Shares reserved for future issuance pursuant to outstanding stock
options and warrants under the Company Stock Option Plans and the Non-Employee
Directors' Warrant Plan together with certain other warrant awards,
respectively. All of the issued and outstanding capital stock of the Company is
validly issued, fully paid and non-assessable. All of the outstanding capital
stock of each of the Company's Subsidiaries is owned directly or indirectly by
the Company free and clear of all security interests, liens, pledges, claims,
charges, escrows, encumbrances, mortgages, indentures or easements
(collectively, "LIENS") of any nature, except as disclosed on SCHEDULE 4.03(A).
b. Except as set forth on SCHEDULE 4.03(B),
there are no other shares of capital stock of the Company or any of its
Subsidiaries, or securities convertible into or exchangeable or exercisable for
shares of capital stock of the Company or any of its Subsidiaries, outstanding,
and there are no outstanding options, warrants, rights, contracts, commitments,
understandings, arrangements or claims of any character by which the Company or
any of its Subsidiaries is or may become bound to issue, transfer, sell,
repurchase or otherwise acquire or retire any shares of capital stock or other
ownership interest of the Company or any of its Subsidiaries, or any securities
convertible into or exchangeable or exercisable for any such shares or other
ownership interest.
c. SCHEDULE 4.03(C) sets forth a complete and
accurate list of entities (each, a "MINORITY AFFILIATE"), other than the
Company's Subsidiaries, of which the Company owns equity securities (as defined
in Rule 3a-11 promulgated under the Exchange Act (as hereinafter defined)),
including, as to each Minority Affiliate, its name, its jurisdiction of
incorporation, formation or organization and its capitalization (including the
identity of each stockholder or owner of equity securities or other securities
and the number of shares or other securities held thereby). None of the Company
or any of its Subsidiaries has entered into any commitment, contract or
agreement to provide equity financing to any other person or entity.
SECTION 4.04. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
-------------------------------------------
a. The exhibit index to the Company's most
recently filed Annual Report on Form 10-K, as supplemented
by SCHEDULE 4.04(A), includes each agreement, contract or
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other instrument (including all amendments thereto) to which the Company or any
of its Subsidiaries is a party or by which any of them is bound and which would
be required pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT") and the rules and regulations thereunder to be filed as an
exhibit to an Annual Report on Form 10-K, a Quarterly Report on Form 10-Q or a
Current Report on Form 8-K. The Company has made available to Acquisition Sub on
or prior to the date hereof true, correct and complete copies in all material
respects of each such agreement, contract, instrument and amendment.
b. Except as disclosed in SCHEDULE 4.04(B), (i)
neither the Company nor any of its Subsidiaries has breached, is in default
under, or has received written notice of any breach of or default under, any of
the agreements, contracts or other instruments referred to in SECTION 4.04(A),
(ii) to the best knowledge of the Company, no other party to any of the
agreements, contracts or other instrument referred to in SECTION 4.04(A) has
breached or is in default of any of its obligations thereunder, and (iii) each
of the agreements, contracts and other instruments referred to in SECTION
4.04(A) is in full force and effect, except in any such case for breaches,
defaults or failures to be in full force and effect that do not constitute a
Material Adverse Effect.
c. Except as set forth in SCHEDULE 4.04(C), the
execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby will not, (i) conflict with or violate the
Certificate of Incorporation or By-Laws of the Company or the organizational
documents of any of its Subsidiaries, (ii) conflict with or violate in any
material respect any federal, foreign, state, local or provincial law, rule,
regulation, order, judgment or decree (collectively, "LAWS") applicable to the
Company or any of its Subsidiaries or by which its or any of their respective
properties is bound or affected, or (iii) result in any material breach of or
constitute a material default (or an event that with notice or lapse of time or
both would become a material default) under, or materially impair the Company's
or any of its Subsidiaries' rights or materially alter the rights or obligations
of any third party under, or give to others any material rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a
material Lien on any of the properties or assets of the Company or any of its
Subsidiaries pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease,
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<PAGE>
license, permit, franchise or other instrument or obligation to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or its or any of their respective properties is bound or
affected.
d. The execution and delivery of this Agreement
by the Company does not, and the performance of this Agreement by the Company
will not, require any material consent, approval, authorization or permit of, or
filing with or notification to, any domestic or foreign governmental or
regulatory authority except for applicable requirements, if any, of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), the Exchange Act,
state securities laws ("BLUE SKY LAWS"), the pre-merger notification
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), the premerger notification requirements of the European
Community and other requirements of foreign jurisdictions and the filing and
recordation of the Certificate of Merger or other documents as required by the
GCL.
SECTION 4.05. COMPLIANCE; PERMITS.
--------------------
a. Except as disclosed in SCHEDULE 4.05(A),
neither the Company nor any of its Subsidiaries is in conflict with, or in
default or violation in any material respect of, (i) any Law applicable to the
Company or any of its Subsidiaries or by which its or any of their respective
properties is bound or affected or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or its or any of their respective
properties is bound or affected, except, in the case of clause (ii), for any
such conflicts, defaults or violations which do not constitute a Material
Adverse Effect.
b. Except as disclosed in SCHEDULE 4.05(B), the
Company and its Subsidiaries hold all permits, licenses, easements, variances,
exemptions, consents, certificates, orders and approvals from governmental
authorities which are material to the operation of the business of the Company
and its subsidiaries taken as a whole as it is now being conducted
(collectively, the "COMPANY PERMITS"). The Company and its Subsidiaries are in
compliance in all material respects with the terms of the Company Permits.
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<PAGE>
SECTION 4.06. SEC FILINGS; FINANCIAL STATEMENTS.
----------------------------------
a. The Company has filed all forms, reports and
documents required to be filed with the SEC and has made available to
Acquisition Sub (i) its Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, (ii) all other reports or registration statements filed by
the Company with the SEC since January 1, 1997, (iii) all proxy statements
relating to the Company's meetings of stockholders (whether annual or special)
since January 1, 1997, and (iv) all amendments and supplements to all such
reports and registration statements filed by the Company with the SEC ((i) -
(iv) collectively, the "COMPANY SEC REPORTS"). Except as disclosed in SCHEDULE
4.06, the Company SEC Reports (A) were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and (B) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of the Company's Subsidiaries is required to file any
forms, reports or other documents with the SEC.
b. Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Company
SEC Reports was prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto), and each fairly presents the
consolidated financial position of the Company and its Subsidiaries as at the
respective dates thereof and the consolidated results of its operations and cash
flows and stockholder equity for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
SECTION 4.07. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as set forth in SCHEDULE 4.07(A) through SCHEDULE 4.07(G) or the Company
SEC Reports, since December 31, 1996, the Company has conducted its business in
the ordinary course and there has not occurred: (a) any Material Adverse Effect;
(b) any amendments or changes in the Certificate of Incorporation or By-Laws of
the Company or similar organizational documents of its Subsidiaries; (c) any
damage
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<PAGE>
to, destruction or loss of any asset of the Company or any of its Subsidiaries
(whether or not covered by insurance) that constitutes a Material Adverse Effect
or that would constitute a Material Adverse Effect if not covered by insurance;
(d) any material change by the Company in its accounting methods, principles or
practices except as required by any change in generally accepted accounting
principles; (e) any material revaluation by the Company of any of its or any of
its Subsidiaries' assets, including, without limitation, writing off notes or
accounts receivable other than in the ordinary course of business; (f) any sale,
pledge, disposition of or encumbrance upon any assets of the Company or any of
its Subsidiaries (except (i) sales of assets in the ordinary course of business
and in a manner consistent with past practice, (ii) dispositions of obsolete or
worthless assets and (iii) sales of other assets not in excess of $100,000 in
the aggregate); or (g) any other action or event that would have required the
consent of Acquisition Sub pursuant to SECTION 6.01 had such event occurred
after the date of this Agreement.
SECTION 4.08. NO UNDISCLOSED LIABILITIES. Except as is disclosed in
SCHEDULE 4.08, neither the Company nor any of its Subsidiaries has any material
liabilities (absolute, accrued, contingent or otherwise), except liabilities (a)
in the aggregate adequately provided for in the Company's audited balance sheet
(including any related notes thereto) for the fiscal year ended December 31,
1996 included in the Company's 1996 Annual Report on Form 10-K (the "1996
COMPANY BALANCE SHEET"), (b) incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected on the
1996 Company Balance Sheet, (c) incurred since December 31, 1996 in the ordinary
course of business consistent with past practice or (d) incurred in connection
with this Agreement.
SECTION 4.09. ABSENCE OF LITIGATION. Except as set forth in SCHEDULE
4.09, there are no claims, actions, suits, proceedings or investigations pending
or, to the knowledge of the Company, threatened against the Company or any of
its Subsidiaries, or any properties or rights of the Company or any of its
Subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, that if determined adversely
to the Company, would be reasonably likely to constitute a Material Adverse
Effect.
SECTION 4.10. EMPLOYEE BENEFIT PLANS, EMPLOYMENT AGREEMENTS. Except in
each case as set forth in SCHEDULE 4.10, (i) there has been no "prohibited
transaction," as
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such term is defined in Section 406 of the Employee Retirement Income Security
Act of 1975, as amended ("ERISA") and Section 4975 of the Code, with respect to
any employee pension plans (as defined in Section 3(2) of ERISA, any material
employee welfare plans (as defined in Section 3(1) of ERISA), or any material
bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar fringe or employee benefit
plans, programs or arrangements (collectively, the "COMPANY EMPLOYEE PLANS")
which could result in any liability of the Company or any of its Subsidiaries;
(ii) all Company Employee Plans are in compliance in all material respects with
the requirements prescribed by any and all Laws (including ERISA and the Code),
currently in effect with respect thereto (including all applicable requirements
for notification to participants or the Department of Labor, Pension Benefit
Guaranty Corporation (the "PBGC"), Internal Revenue Service (the "IRS") or
Secretary of the Treasury), and the Company and each of its Subsidiaries have
performed all material obligations required to be performed by them under, are
not in any material respect in default under or violation of, and have no
knowledge of any material default or violation by any other party to, any of the
Company Employee Plans; (iii) each Company Employee Plan intended to qualify
under Section 401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code is the subject of a favorable determination letter
from the IRS, and nothing has occurred which may reasonably be expected to
impair such determination; (iv) all contributions required to be made to any
Company Employee Plan pursuant to Section 412 of the Code, or the terms of the
Company Employee Plan or any collective bargaining agreement, have been made on
or before their due dates; (v) with respect to each Company Employee Plan, no
"reportable event" within the meaning of Section 4043 of ERISA (excluding any
such event for which the 30-day notice requirement has been waived under the
regulations to Section 4043 of ERISA) nor any event described in Section 4062,
4063 or 4041 of ERISA has occurred; (vi) no withdrawal (including a partial
withdrawal) has occurred with respect to any multiemployer plan within the
meaning set forth in Section 3(37) of ERISA that has resulted in, or could
reasonably be expected to result in, any withdrawal liability for the Company or
any of its Subsidiaries; (vii) neither the Company nor any of its Subsidiaries
has incurred, or reasonably expects to incur, any liability under Title IV of
ERISA (other than liability for premium payments to the PBGC, and contributions
not in default to the respective plans, arising in the ordinary course), (viii)
none of the Company or any of its Subsidiaries is a party to any employment,
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consulting or similar agreement; and (ix) none of the Company or any of its
Subsidiaries is or will be liable for any severance or other payments to any of
its employees as a result of this Agreement or the consummation of the
transactions contemplated hereby.
SECTION 4.11. LABOR MATTERS. Except as set forth in SCHEDULE 4.11: (i)
there are no claims or proceedings pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened, between the Company or any of its
Subsidiaries and any of their respective employees, which claims or proceedings
constitute a Material Adverse Effect; (ii) neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or its
subsidiaries, nor does the Company or any of its Subsidiaries know of any
activities or proceedings of any labor union to organize any such employees; and
(iii) neither the Company nor any of its Subsidiaries has any knowledge of any
strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with
respect to any employees of the Company or any of its Subsidiaries.
SECTION 4.12. INFORMATION SUPPLIED. The information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i) the
Registration Statement on Form S-4 to be filed by the Company with the SEC in
connection with the Merger, including the definitive proxy statement and
prospectus (the "PROSPECTUS/PROXY STATEMENT") constituting a part thereof (the
"S-4 REGISTRATION STATEMENT"), will not, at the time the S-4 Registration
Statement becomes effective under the Securities Act, and (ii) the
Prospectus/Proxy Statement and any amendments or supplements thereto, will not,
on the date the Prospectus/Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to stockholders in connection with the
meeting of the Company stockholders to consider the Merger and the Charter
Amendment (the "COMPANY STOCKHOLDERS MEETING"), at the time of the Company
Stockholders Meeting, or at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or shall omit to state
any material fact required to be stated therein or necessary in order to make
the statements made therein not false or misleading, or omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Company Stockholders Meeting
which has become false or misleading. If at any time prior to the Effective Time
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any event relating to the Company or any of its Subsidiaries or any of their
respective affiliates, officers or directors should be discovered by the Company
which should be set forth in a supplement to the Prospectus/Proxy Statement, the
Company shall promptly inform Acquisition Sub. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to any information
supplied by Acquisition Sub or any of its representatives which is contained or
incorporated by reference in any of the foregoing documents.
SECTION 4.13. TITLE TO PROPERTY. Except as set forth in SCHEDULE 4.13,
the Company and each of its Subsidiaries have good and defensible title to all
of their properties and assets, free and clear of all material liens, charges
and encumbrances, except liens for taxes not yet due and payable and such liens
or other imperfections of title, none of which is substantial in amount,
materially detracts from the value or impairs the use of the property subject
thereto, or impairs the operations of the Company or any of its Subsidiaries;
and, all leases pursuant to which the Company or any of its Subsidiaries lease
from others material amounts of real or personal property, are in good standing,
valid and effective in accordance with their respective terms, and there is not,
to the knowledge of the Company, under any of such leases, any existing material
default or event of default (or event which with notice or lapse of time, or
both, would constitute a material default).
SECTION 4.14. TAXES.
------
a. For purposes of this Agreement, "TAX" or
"TAXES" shall mean taxes, fees, levies, duties, tariffs, imposts, and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, local or foreign taxing authority,
including (without limitation) (i) income, franchise, profits, gross receipts,
ad valorem, net worth, value added, sales, use, service, real or personal
property, special assessments, capital stock, license, payroll, withholding,
employment, social security, workers' compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, and (ii) interest, penalties, additional
taxes and additions to tax imposed with respect thereto; and "TAX RETURNS" shall
mean returns, reports, and information statements with respect to Taxes required
to be filed with the IRS or any other federal, foreign, state or provincial
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taxing authority, domestic or foreign, including, without limitation,
consolidated, combined and unitary tax returns.
b. Other than as disclosed in SCHEDULE 4.14,
(i) the Company and its Subsidiaries have filed all United States federal income
Tax Returns and all other material Tax Returns required to be filed by them,
(ii) the Company and its Subsidiaries have paid and discharged all Taxes due in
connection with or with respect to the periods or transactions covered by such
Tax Returns and have paid all other Taxes as are due, except such as are being
contested in good faith by appropriate proceedings (to the extent that any such
proceedings are required) and with respect to which the Company is maintaining
adequate reserves, and (iii) there are no other material Taxes that would be due
if asserted by a taxing authority, except with respect to which the Company is
maintaining reserves to the extent currently required. Except as does not
involve or would not result in material liability to the Company or any of its
Subsidiaries: (i) there are no tax liens on any assets of the Company or any
Subsidiary thereof; and (ii) neither the Company nor any of its Subsidiaries has
been granted a waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax. The accruals and reserves
for Taxes (including deferred taxes) reflected in the 1996 Company Balance Sheet
are in all material respects adequate to cover all Taxes required to be accrued
through the date thereof (including interest and penalties, if any, thereon and
Taxes being contested) in accordance with generally accepted accounting
principles applied on a consistent basis, and the accrual and reserves for Taxes
(including deferred taxes) reflected in the books and records of the Company as
at the last day of the Company's most recently completed fiscal month end are in
all material respects adequate to cover all Taxes required to be accrued through
such date (including interest and penalties, if any, thereon and Taxes being
contested) in accordance with generally accepted accounting principles applied
on a consistent basis.
c. Other than as disclosed in SCHEDULE 4.14, (i)
all Tax Returns filed with respect to Tax years of the Company and each of the
Subsidiaries through the Tax year ended December 31, 1992 have been examined and
closed or are Tax Returns with respect to which the applicable period for
assessment under applicable law, after giving effect to extensions or waivers,
has expired; (ii) to the knowledge of the Company, there is no claim, audit,
action, suit, proceeding, or investigation now pending against or with respect
to the Company or any Subsidiary in respect of any
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Tax; (iii) there are no written requests for rulings or determinations in
respect of any Tax pending between the Company or any Subsidiary and any taxing
authority; (iv) neither the Company nor any Subsidiary will be required to
include any adjustment in taxable income for any Tax period following the
Closing under Section 481(c) of the Code (or any similar provision of the Tax
laws of any jurisdiction) as a result of a change in method of accounting for a
Tax period prior to the Closing or pursuant to the provisions of any agreement
entered into with any taxing authority with regard to the Tax liability of the
Company or any Subsidiary for any Tax period prior to the Closing; (v) all Taxes
that the Company or any Subsidiary is, or was, required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the appropriate taxing authority; (vi) the Company is not a U.S.
real property holding corporation, as defined under Section 897(c)(2) of the
Code; and (vii) there is no contract, agreement, plan or arrangement covering
any person that, individually or collectively, as a consequence of the
transactions contemplated by this Agreement could give rise to the payment of
any amount that would not be deductible by the Company or any Subsidiary by
reason of Section 280G of the Code.
SECTION 4.15. ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE
4.15, the Company and each of its Subsidiaries: (i) have obtained all material
approvals which are required to be obtained under all applicable federal, state,
foreign or local laws or any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
("ENVIRONMENTAL LAWS") by the Company or its Subsidiaries or their respective
agents; (ii) are in compliance in all material respects with all terms and
conditions of such required approvals, and also are in compliance in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in applicable Environmental Laws; (iii) as of the date hereof, are not
aware of nor have received notice of any past or present violations of
Environmental
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Laws or any event, condition, circumstance, activity, practice, incident, action
or plan which is reasonably likely to interfere with or prevent continued
compliance with Environmental Laws or which would give rise to any material
common law or statutory liability, or otherwise form the basis of any claim,
action, suit or proceeding, against the Company or any of its Subsidiaries based
on or resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge or release
into the environment, of any pollutant, contaminant or hazardous or toxic
material or waste; and (iv) have taken all actions necessary under applicable
Environmental Laws to register any products or materials required to be
registered by the Company or its Subsidiaries (or any of their respective
agents) thereunder.
SECTION 4.16. INSURANCE. The Company maintains fire and casualty,
general liability, business interruption, product liability, professional
liability and sprinkler and water damage insurance policies with reputable
insurance carriers, which provide full and adequate coverage for all normal
risks incident to the business of the Company and its Subsidiaries and their
respective properties and assets and are in character and amount similar to that
carried by entities engaged in similar business and subject to the same or
similar perils or hazards.
SECTION 4.17. OPINION OF FINANCIAL ADVISOR. The Company has been
advised by its financial advisor, Merrill Lynch & Co., that in its opinion, as
of the date hereof, the cash Merger Consideration set forth herein is fair to
the holders of Shares from a financial point of view.
SECTION 4.18. BROKERS. Except as set forth in SCHEDULE 4.18, no
broker, finder or investment banker or other party is entitled to any brokerage,
finder's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or its Subsidiaries or affiliates. The fees and expenses of the
entities listed on SCHEDULE 4.18 will be paid by the Company. The Company has
heretofore furnished to Acquisition Sub a complete and correct copy of all
agreements between the Company and the entities listed on SCHEDULE 4.18 pursuant
to which such entities would be entitled to any payment relating to the
transactions contemplated hereunder.
SECTION 4.19. BOOKS AND RECORDS. The books of account, minute books,
stock record books, and other records
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of the Company and its Subsidiaries, all of which have been made available to
Acquisition Sub, are complete and correct in all material respects and have been
maintained in accordance with sound business practices and the requirements of
Section 13(b)(2) of the Exchange Act (regardless of whether or not the Company
and its Subsidiaries are subject to that Section), including the maintenance of
an adequate system of internal controls. The minute books of the Company and its
Subsidiaries contain accurate and complete records of all meetings held of and
corporate action taken by, the stockholders, the Boards of Directors, and
committees of the Boards of Directors of the Company and its Subsidiaries, and
no meeting of any such stockholders, Board of Directors, or committee has been
held for which minutes have not been prepared and are not contained in such
minute books. At the Closing, all of those books and records will be in the
possession of the Company and its Subsidiaries.
SECTION 4.20. CERTAIN PAYMENTS. Since June 17, 1992, none of the
Company or any of its Subsidiaries or any director, officer, agent, or employee
of, or any other Person associated with or acting for or on behalf of, the
Company or any of its Subsidiaries, has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kick-back, or
other payment to any Person, private or public, regardless of form, whether in
money, property, or services in violation of any Laws, or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Company or any of its Subsidiaries.
SECTION 4.21. INTELLECTUAL PROPERTY. The Intellectual Property Rights
(as hereinafter defined) of the Company and its Subsidiaries are listed in
SCHEDULE 4.21. Except as set forth in SCHEDULE 4.21, each of the Company and
each of its Subsidiaries owns or possesses adequate licenses or other valid
rights to use all patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, copyrights, service marks, trade secrets, applications
for trademarks and for service marks, knowhow and other proprietary rights and
information (collectively, "INTELLECTUAL PROPERTY RIGHTS") used or held for use
in connection with its business as currently conducted or as contemplated to be
conducted, and, to the knowledge of the Company, there is no assertion or claim
challenging the validity of any of the foregoing. Except as set forth in
SCHEDULE 4.21, the conduct of the business of the Company and its Subsidiaries
as currently conducted does not conflict with any Intellectual Property Rights
of any third
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party. To the knowledge of the Company, there are no infringements of any
Intellectual Property Rights used or held for use in connection with the
business of the Company and its Subsidiaries.
SECTION 4.22. CONTRACTS. a. Except as set forth on SCHEDULE 4.22(A),
none of the Company or any of its Subsidiaries is a party to or is bound by any
employment agreement, telecommunications agreement, vendor agreement, credit
agreement, mortgage or indenture, or any material joint venture agreement which
(i) provides that the terms thereof or any or all of the benefits or burdens
thereunder will be affected or altered (including, without limitation, by means
of acceleration) by, or are contingent upon, or (ii) will be subject to
termination or cancellation as a result of, the execution of this Agreement or
the consummation of the transactions contemplated hereby.
b. Except as set forth on SCHEDULE 4.22(B), (i)
none of the Company or any of its Subsidiaries is a party to any agreement with
any beneficial owner of 5% or more of the capital stock of, or any executive
officer or director of, the Company or any of its Subsidiaries or any
"associate" (as such term is defined in Rule 12b-2 under the Exchange Act) of
any such person, (ii) no officer or director of the Company or any of its
Subsidiaries or any associate of any such person has any material interest in
any material contract or property (real or personal, tangible or intangible),
used in or pertaining to the business of the Company or any of its Subsidiaries
and (iii) none of the Company or any of its Subsidiaries is a party to any
agreement with any of the Company's Minority Affiliates or XSL.
SECTION 4.23. INFORMATION SYSTEMS. The Company's computer and software
systems (including backup systems) are fully operational, and, to the best of
the Company's knowledge, there has been no material malfunction or other
material problem with such systems.
SECTION 4.24. REGULATION OF BUSINESS. To the best knowledge of the
Company's management, there has not been any change or proposed change in any
Laws which has resulted in or is reasonably likely to result in the regulation
of the business of the Company or any of its Subsidiaries by the Federal
Communications Commission or any other foreign, federal, state or local
governmental agency or other governing body, the compliance with which would
have a material cost to the Company or an adverse impact on the business of the
Company.
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ARTICLE V.
Representations and
WARRANTIES OF ACQUISITION SUB
-----------------------------
Acquisition Sub hereby represents and warrants to
the Company as follows:
SECTION 5.01. CORPORATE ORGANIZATION.
-----------------------
a. Acquisition Sub is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation, and has the full corporate power and
authority to carry on its business in the places and as it is now being
conducted and to own and lease the properties and assets which it now owns or
leases except where the failure of same will not in any case result in a
Material Adverse Effect. Acquisition Sub is duly qualified to transact business
and in good standing as a foreign corporation in all jurisdictions in which the
character of the property owned or leased by it and the nature of the business
conducted by it require such qualification, except where failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect.
b. True, correct and complete copies of the
Certificate of Incorporation, certified by the Secretary of State of the State
of Delaware, and By-Laws (or equivalent documents) of Acquisition Sub as of the
date hereof are attached hereto as SCHEDULE 5.01(B).
c. Acquisition Sub has no direct or indirect
Subsidiaries.
SECTION 5.02. AUTHORIZATION.
--------------
a. Acquisition Sub has requisite corporate power
and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.
b. This Agreement has been approved by the Board
of Directors of Acquisition Sub in accordance with the GCL and no other
corporate proceeding on the part of Acquisition Sub is necessary to authorize
this Agreement or to consummate the transactions contemplated hereby.
c. This Agreement has been duly and validly
executed and delivered by Acquisition Sub and is a valid and
binding agreement of Acquisition Sub, enforceable against
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Acquisition Sub in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws in effect now or hereafter in effect relating to
creditors' rights generally and by equitable principles (whether considered in a
proceeding at law or in equity).
SECTION 5.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
-------------------------------------------
a. Except as set forth in SCHEDULE 5.03(A), the
execution and delivery of this Agreement by Acquisition Sub does not, and the
performance of this Agreement by Acquisition Sub and the consummation of the
transactions contemplated hereby will not, (i) conflict with or violate the
Certificate of Incorporation or By-Laws of Acquisition Sub, (ii) conflict with
or violate in any material respect any Laws applicable to Acquisition Sub or by
which any of its properties is bound or affected, or (iii) result in any
material breach of or constitute a material default (or an event that with
notice or lapse of time or both would become a material default) under, or
materially impair Acquisition Sub's rights or materially alter the rights or
obligations of any third party under, or give to others any material rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a material Lien on any of the properties or assets of Acquisition
Sub pursuant to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Acquisition Sub is a party or by which Acquisition Sub or any of its
properties is bound or affected.
b. The execution and delivery of this Agreement
by Acquisition Sub does not, and the performance of this Agreement by
Acquisition Sub will not, require any material consent, approval, authorization
or permit of, or filing with or notification to, any domestic or foreign
governmental or regulatory authority except for applicable requirements, if any,
of the Securities Act, the Exchange Act, the Blue Sky Laws, the HSR Act, the
premerger notification requirements of the European Community and other
requirements of foreign jurisdictions and the filing and recordation of
appropriate merger or other documents as required by the GCL.
SECTION 5.04. INFORMATION SUPPLIED. The information supplied or to be
supplied by Acquisition Sub for inclusion or incorporation by reference in (i)
the S-4 Registration Statement will not, at the time the S-4 Registration
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Statement becomes effective under the Securities Act, and (ii) the
Prospectus/Proxy Statement (or any amendment thereof or supplement thereto) will
not, on the date the Prospectus/Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to stockholders, at the time of the Company
Stockholders Meeting, or at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or shall omit to state
any material fact necessary in order to make the statements made therein not
false or misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders Meeting which has become false or
misleading. If at any time prior to the Effective Time any event relating to
Acquisition Sub or any of its affiliates, officers or directors should be
discovered by Acquisition Sub which should be set forth in a supplement to the
Prospectus/Proxy Statement, Acquisition Sub shall promptly inform the Company.
Notwithstanding the foregoing, Acquisition Sub makes no representation or
warranty with respect to any information supplied by the Company which is
contained or incorporated by reference in any of the foregoing documents.
SECTION 5.05. BROKERS. Except as set forth in SCHEDULE 5.05, no
broker, finder or investment banker or other party is entitled to any brokerage,
finder's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Acquisition Sub or its affiliates. The fees and expenses of the entities listed
on SCHEDULE 5.05 will be paid by Acquisition Sub.
SECTION 5.06. NO BUSINESS. Acquisition Sub was formed solely for the
purpose of effecting the Merger, and has undertaken no business other than in
connection with the transactions contemplated by this Agreement.
SECTION 5.07. FINANCING. Acquisition Sub or its affiliates has
received the executed commitments (including the term sheets related thereto)
attached as SCHEDULE 5.07 ("FINANCING COMMITMENTS") from one or more financial
institutions or other entities to provide to the Company, subject to the
conditions specified therein, funds sufficient in amount to consummate the
Merger and the respective transactions contemplated thereby.
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ARTICLE VI.
CONDUCT OF BUSINESS PENDING THE MERGER
--------------------------------------
SECTION 6.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.
The Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, unless Acquisition Sub shall otherwise agree in writing
and except as required by the XSL Purchase Agreement, (i) the Company shall
conduct its business and shall cause the businesses of its Subsidiaries to be
conducted only in, and the Company and its Subsidiaries shall not take an action
except in, the ordinary course of business and in a manner consistent with past
practice, and (ii) the Company shall use all reasonable effort to preserve
substantially intact the business organization of the Company and its
Subsidiaries, to keep available the services of the present officers, employees
and consultants of the Company and its Subsidiaries and to preserve the present
relationships of the Company and its Subsidiaries with customers, suppliers and
other persons with which the Company or any of its Subsidiaries has significant
business relations. By way of amplification and not limitation, except as
contemplated by this Agreement or as required by the XSL Purchase Agreement or
as described on SCHEDULE 6.01, neither the Company nor any of its Subsidiaries
shall, during the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, directly
or indirectly do, or propose to do, any of the following without the prior
written consent of Acquisition Sub:
a. amend or otherwise change the Certificate of
Incorporation or By-Laws of the Company or similar
organizational documents of any of its Subsidiaries;
b. issue, sell, pledge, dispose of or encumber,
or authorize the issuance, sale, pledge, disposition or encumbrance of any
shares of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock,
or any other ownership interest (including, without limitation, any phantom
interest) in the Company or any of its Subsidiaries (except for the issuance of
shares of Company Common Stock issuable pursuant to stock options which were
granted under the Company Stock Option Plans and are outstanding on the date
hereof, in accordance with the terms of the Company Stock Option Plans);
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c. sell, pledge, dispose of or encumber any
assets of the Company or any of its Subsidiaries (except for (i) sales of assets
in the ordinary course of business and in a manner consistent with past
practice, (ii) dispositions of obsolete or worthless assets, and (iii) sales of
other assets not in excess of $100,000 in the aggregate);
d. (i) declare, set aside, make or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of any of its capital stock, except that a
wholly owned Subsidiary of the Company may declare and pay a dividend to its
parent, (ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities or property in respect
of, in lieu of or in substitution for shares of its capital stock, or (iii)
amend the terms or change the period of exercisability of, purchase, repurchase,
redeem or otherwise acquire, any of its securities or any securities of its
Subsidiaries, including, without limitation, shares of Company Common Stock or
any option, warrant or right, directly or indirectly, to acquire shares of
Company Common Stock, or provide that upon the exercise or conversion of any
such option, warrant or right the holder thereof shall receive cash, or propose
to do any of the foregoing;
e. (i) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or other business
organization or division or any equity interest therein; (ii) incur any
indebtedness for borrowed money or issue any debt securities, except for
short-term, working capital and commercial paper borrowings not in excess of
$1,000,000 in the aggregate for the Company and its Subsidiaries, taken as a
whole at any one time outstanding incurred in the ordinary course of business
consistent with past practice and except for the intercompany indebtedness
between the Company and any of its wholly owned Subsidiaries or between such
wholly owned Subsidiaries, or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any person or, except
in the ordinary course of business consistent with past practice, make any loans
or advances; (iii) enter into or amend any material contract or agreement; (iv)
authorize any capital expenditures or purchase of fixed assets, in the
aggregate, in excess of $1,000,000 per month for the Company and its
Subsidiaries taken as a whole; (v) make any loan to, or investment in, any
Minority Affiliate or XSL, other than business transactions with Minority
Affiliates or XSL in the ordinary course of business; or (vi) enter into or
amend any
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contract, agreement, commitment or arrangement to effect any
of the matters prohibited by this SECTION 6.01;
f. (i) increase the compensation payable or to
become payable to its officers or employees, except for increases in salary or
wages of employees of the Company or its Subsidiaries who are not officers of
the Company in the ordinary course of business in accordance with past practice
and except for increases in salary or wages as provided for in employment
agreements; (ii) grant any severance or termination pay to, or enter into or
amend any employment or severance agreement with any director, officer or other
employee of the Company or any of its Subsidiaries; or (iii) establish, adopt,
enter into or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any current or former
directors, officers or employees, except, in each case, as may be required by
law;
g. except as may be required as a result of a
change in law or in generally accepted accounting principles take any action to
change accounting policies or procedures (including, without limitation,
procedures with respect to revenue recognition, payments of accounts payable and
collection of accounts receivable);
h. make any material tax election inconsistent
with past practice or settle or compromise or amend any material federal, state,
local or foreign tax liability or agree to an extension of a statute of
limitations;
i. pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business and consistent with past practice of liabilities
reflected or reserved against in the financial statements contained in the
Company SEC Reports filed prior to the date of this Agreement or incurred in the
ordinary course of business and consistent with past practice;
j. offer employment to any person as an officer
of the Company, or promote any existing employee to such
office;
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k. settle or agree to a final settlement of any
litigation against the Company or any of its Subsidiaries
for an amount in excess of $250,000;
l. amend or grant waivers or approvals in its
discretion under the XSL Purchase Agreement; or
m. take, or agree in writing or otherwise to
take, any of the actions described in SECTIONS 6.01(A) through (L) above, or any
action which would make any of the representations or warranties of the Company
contained in this Agreement untrue or incorrect or prevent the Company from
performing or cause the Company not to perform its covenants hereunder.
SECTION 6.02. NO SOLICITATION.
----------------
a. The Company shall not, directly or
indirectly, through any officer, director, employee, representative or agent of
the Company or any of its Subsidiaries, (i) solicit, initiate or encourage or
take any other action to facilitate the institution of any inquiries or
proposals regarding any merger, reorganization, consolidation, business
combination, recapitalization, liquidation, dissolution, sale of all or any
significant portion of assets, sale of shares of capital stock (including
without limitation by way of a tender or exchange offer) or similar transactions
involving the Company or any Subsidiaries of the Company other than the Merger
(any of the foregoing inquiries or proposals being referred to herein as an
"ACQUISITION PROPOSAL"), (ii) engage in negotiations or discussions concerning,
or provide any nonpublic information or assistance to any person in connection
with any Acquisition Proposal or (iii) agree to, approve or recommend any
Acquisition Proposal. Notwithstanding the foregoing, the Company may engage in
negotiations or discussions with respect to a recapitalization transaction after
November 30, 1997; PROVIDED that the Company does not incur or commit to incur,
except in each case upon consummation of such transaction, fees and expenses in
excess of $250,000 in the aggregate in connection with such negotiations or
discussions. Nothing contained in this SECTION 6.02(A) shall prevent the Board
of Directors of the Company from considering, negotiating, discussing, approving
and recommending to the stockholders of the Company a bona fide Acquisition
Proposal not solicited in violation of this Agreement, PROVIDED that the Board
of Directors of the Company determines in good faith (after consultation with
and based upon the advice of outside counsel) that it is required to do so in
order to
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discharge properly its fiduciary duties to the Company's stockholders; and
PROVIDED, FURTHER, that the Company shall keep Acquisition Sub informed, on a
reasonably current basis, as to the status and details of any such
consideration, negotiations or discussions. Nothing contained in this SECTION
6.02 shall prohibit the Board of Directors of the Company from complying with
Rule 14e-2 promulgated under the Exchange Act with regard to a tender or
exchange offer.
b. The Company shall immediately notify
Acquisition Sub after receipt of any Acquisition Proposal or any modification of
or amendment to any Acquisition Proposal, or any request for nonpublic
information relating to the Company or any of its Subsidiaries in connection
with an Acquisition Proposal or for access to the properties, books or records
of the Company or any Subsidiary by any person or entity that informs the Board
of Directors of the Company or such Subsidiary that it is considering making, or
has made, an Acquisition Proposal. Such notice to Acquisition Sub shall be made
orally and in writing, shall indicate whether the Company is providing or
intends to provide the person making the Acquisition Proposal with access to
information concerning the Company as provided in SECTION 6.02(C) and, if
reasonably practicable, shall be made prior to furnishing any such information
to, or entering into negotiations or discussions with, such person.
c. If the Board of Directors of the Company
receives a request for material nonpublic information by a person who makes, or
indicates that it is considering making, a bona fide Acquisition Proposal, and
the Board of Directors determines in good faith and upon the advice of outside
counsel that it is required to cause the Company to act as provided in this
SECTION 6.02(C) in order to discharge properly the directors' fiduciary duties
to the Company's stockholders, then, PROVIDED that such person has executed a
confidentiality agreement substantially similar to the one then in effect among
the Company and Acquisition Sub's stockholders the Company may provide such
person with access to information regarding the Company.
d. The Company shall immediately cease and cause
to be terminated any existing discussions or negotiations with any persons
(other than Acquisition Sub) conducted heretofore with respect to any of the
foregoing. The Company agrees not to release any third party from the
confidentiality provisions of any confidentiality agreement to which the Company
is a party.
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e. The Company shall ensure that the officers,
directors and employees of the Company and its Subsidiaries and any investment
banker or other advisor or representative retained by the Company are aware of
the restrictions described in this SECTION 6.02.
ARTICLE VII.
ADDITIONAL AGREEMENTS
---------------------
SECTION 7.01. HSR ACT; ETC. As promptly as practicable after the date
of the execution of this Agreement, the Company and Acquisition Sub shall file
notifications under and in accordance with the HSR Act and the legal
requirements of the European Community and any other foreign jurisdictions
requiring notification in connection with the Merger and the transactions
contemplated hereby. The Company and Acquisition Sub shall respond as promptly
as practicable to any inquires received from the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "ANTITRUST
DIVISION") for additional information or documentation and shall respond as
promptly as practicable to all inquires and requests received from any State
Attorney General or other governmental authority (foreign or domestic) in
connection with antitrust matters.
SECTION 7.02. PREPARATION OF THE PROSPECTUS/PROXY STATEMENT.
----------------------------------------------
a. As promptly as practicable after the
execution of this Agreement, the Company and Acquisition Sub shall prepare and
file with the SEC the Prospectus/Proxy Statement and thereafter the S-4
Registration Statement. The Company shall use its reasonable best efforts to
respond to all SEC comments, to have the S-4 Registration Statement declared
effective under the Securities Act as promptly as practicable after such filing
and to cause the Prospectus/Proxy Statement to be mailed to the Company's
stockholders at the earliest practicable date.
b. Prior to the Closing Date, the Company shall
deliver to Acquisition Sub a letter identifying all persons whom the Company
believes to be, at the date of the Company Stockholders Meeting, "affiliates" of
the Company for purposes of Rule 145 under the Securities Act and who shall have
made a Non-Cash Election. Each of the Company and Acquisition Sub shall use all
reasonable efforts to cause each Person who is identified as an "affiliate" in
the
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letter referred to above to deliver to Acquisition Sub on or prior to the
Closing Date a written agreement substantially in the form of Exhibit B.
SECTION 7.03. STOCKHOLDER APPROVAL.
---------------------
a. As soon as practicable after the S-4
Registration Statement is effective, the Company shall call and hold the Company
Stockholders Meeting in accordance with applicable laws for the purpose of
voting upon the approval of the Merger and the Charter Amendment and the
adoption of this Agreement and the transactions contemplated hereby. At the
Company Stockholders Meeting, Acquisition Sub shall cause all of the shares of
Company Common Stock for which it holds proxies to vote to be voted in favor of
the Merger and the Charter Amendment.
b. Acquisition Sub shall (i) promptly submit
this Agreement and the transactions contemplated hereby for approval and
adoption by its stockholders; and (ii) cause to be taken all additional actions
necessary for Acquisition Sub to adopt and approve this Agreement and the
transactions contemplated hereby.
SECTION 7.04. ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements to
which such party is subject (from which such party shall use reasonable efforts
to be released), the Company and Acquisition Sub shall each (and shall cause
each of their Subsidiaries, and use commercially reasonable efforts to cause
their Minority Affiliates and XSL, to) afford to the officers, employees,
accountants, counsel and other representatives of the other, reasonable access,
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, the Company and
Acquisition Sub each shall (and shall cause each of their Subsidiaries, and use
commercially reasonable efforts to cause their Minority Affiliates and XSL, to)
furnish promptly to the other all information concerning its business,
properties and personnel as such other party may reasonably request, and each
shall make available to the other the appropriate individuals (including
attorneys, accountants and other professionals) for discussion of the other's
business (including, in the case of the Company, the business of the Minority
Affiliates and XSL), properties and personnel as either Acquisition Sub or the
Company may reasonably request. From and after the date of this Agreement
through the Effective Time, the Company shall provide to Acquisition Sub monthly
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consolidated statements of operations and cash flows and monthly consolidated
balance sheets for the Company and its Subsidiaries and, if the Company receives
such statements from its Minority Affiliates or XSL, from such Minority
Affiliates or XSL, within 30 days following the end of each calendar month
during such period. Each party shall keep such information confidential in
accordance with the terms of the confidentiality letter, dated April 4, 1997
(the "CONFIDENTIALITY LETTER") among Acquisition Sub's stockholders and the
Company.
SECTION 7.05. CONSENTS; APPROVALS. The Company and Acquisition Sub
shall each use all reasonable efforts to obtain all consents, waivers,
approvals, authorizations or orders (including, without limitation, all United
States and foreign governmental and regulatory rulings and approvals), and the
Company and Acquisition Sub shall make all filings (including, without
limitation, all filings with United States and foreign governmental or
regulatory agencies) required in connection with the authorization, execution
and delivery of this Agreement by the Company and Acquisition Sub and the
consummation by them of the transactions contemplated hereby, in each case as
promptly as practicable. The Company and Acquisition Sub shall furnish promptly
all information required to be included in the Prospectus/Proxy Statement or for
any application or other filing to be made pursuant to the rules and regulations
of any United States or foreign governmental body in connection with the
transactions contemplated by this Agreement. The Company will take all actions
reasonably requested by Acquisition Sub (including, without limitation, entering
into agreements with underwriters, placement agents and other financing sources
and assuming the obligations of Acquisition Sub and its stockholders under the
Financing Commitments) in order to effect or facilitate the financing described
in the Financing Commitments.
SECTION 7.06. INDEMNIFICATION AND INSURANCE.
------------------------------
a. The By-Laws of the Surviving Corporation
shall contain the provisions with respect to indemnification set forth in the
By-Laws of the Company on the date hereof, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who on or prior to the Effective Time were directors, officers,
employees or agents of the Company, unless such modification is required by law.
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<PAGE>
b. The Company shall, to the fullest extent
permitted under applicable law or under the Company's Certificate of
Incorporation or By-Laws and regardless of whether the Merger becomes effective,
indemnify and hold harmless, and, after the Effective Time, the Surviving
Corporation shall, to the fullest extent permitted under applicable law or under
the Surviving Corporation's Certificate of Incorporation or By-Laws as in effect
at the Effective Time, indemnify and hold harmless, each present and former
director, officer or employee of the Company or any of its Subsidiaries
(collectively, the "INDEMNIFIED PARTIES") against any cost or expense (including
attorney's fees), judgments, fines, losses, claims, damages, liabilities and
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, (x) arising out of or pertaining to the transactions contemplated
by this Agreement or (y) otherwise with respect to any acts or omissions
occurring at or prior to the Effective Time, to the same extent as provided in
the Company's Certificate of Incorporation or By-Laws or any applicable contract
or agreement as in effect on the date hereof, in each case for a period of six
years after the date hereof. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) any counsel retained by the Indemnified Parties for any period after
the Effective Time shall be reasonably satisfactory to the Surviving
Corporation, (ii) after the Effective Time, the Surviving Corporation shall pay
the reasonable fees and expenses of such counsel, promptly after statements
therefor are received, and (iii) the Surviving Corporation will cooperate in the
defense of any such matter; PROVIDED that the Surviving Corporation shall not be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld); and PROVIDED, FURTHER, that in the event
that any claim or claims for indemnification are asserted or made within such
six-year period, all rights to indemnification in respect of any such claim or
claims shall continue until the disposition of any and all such claims. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to any single action unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more Indemnified Parties.
c. Acquisition Sub and the Surviving Corporation
shall honor and fulfill in all respects the obligations of
the Company pursuant to indemnification agreements with the
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<PAGE>
Company's directors and officers existing at or before the Effective Time.
d. For a period of six years after the Effective
Time, Acquisition Sub shall cause the Surviving Corporation to maintain in
effect, if available, directors' and officers' liability insurance covering
those persons who are currently covered by the Company's directors' and
officers' liability insurance policy (a copy of which has been made available to
Acquisition Sub) on terms comparable to those now applicable to directors and
officers of the Company; PROVIDED that in no event shall Acquisition Sub or the
Surviving Corporation be required to expend in excess of 150% of the annual
premium currently paid by the Company for such coverage; and PROVIDED, FURTHER,
that if the premium for such coverage exceeds such amount, Acquisition Sub or
the Surviving Corporation shall purchase a policy with the greatest coverage
available for such 150% of the annual premium.
e. This Section shall survive the consummation
of the Merger at the Effective Time, is intended to benefit the Company, the
Surviving Corporation and the Indemnified Parties, shall be binding on all
successors and assigns of Acquisition Sub and the Surviving Corporation and
shall be enforceable by the Indemnified Parties.
SECTION 7.06A. EMPLOYMENT AND BENEFIT MATTERS. The Surviving
Corporation shall for a period of one (1) year following the Effective Time
maintain the contractual benefit programs identified in SCHEDULE 7.06A (each, a
"BENEFIT PLAN"); PROVIDED that nothing herein shall affect the Surviving
Corporation's rights to modify or terminate any such Benefit Plan at or after
the end of such one (1) year period.
SECTION 7.07. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Acquisition Sub, and Acquisition Sub shall give prompt notice
to the Company, of (i) the occurrence and nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any representation
or warranty contained in this Agreement to become materially untrue or
inaccurate, or (ii) any failure of the Company or Acquisition Sub, as the case
may be, materially to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; PROVIDED that the
delivery of any notice pursuant to this Section shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice; and
PROVIDED, FURTHER, that failure to give such
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<PAGE>
notice shall not be treated as a breach of covenant for the purposes of SECTIONS
8.02(A) and 8.03(A) unless the failure to give such notice results in material
prejudice to the other party.
SECTION 7.08. FURTHER ACTION. Upon the terms and subject to the
conditions hereof each of the parties hereto shall use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, to
obtain in a timely manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings, and otherwise to satisfy or
cause to be satisfied all conditions precedent to its obligations under this
Agreement.
SECTION 7.09. PUBLIC ANNOUNCEMENTS. Acquisition Sub and the Company
shall consult with each other before issuing any press release with respect to
the Merger or this Agreement and shall not issue any such press release or make
any such public statement without the prior consent of the other party, but
following consultation with the other party and the use of reasonable efforts to
agree on a mutually satisfactory text, which shall not be unreasonably withheld;
PROVIDED that a party may, without the prior consent of the other party, issue
such press release or make such public statement as may upon the advice of
outside counsel be required by law or the rules and regulations of the NASDAQ
National Market ("NASDAQ"), as the case may be.
SECTION 7.10. CONVEYANCE TAXES. Acquisition Sub and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed at or before the Effective
Time.
SECTION 7.11. NASDAQ LISTING. The Company shall use its best efforts
to continue the listing of the Company Common Stock on the NASDAQ during the
term of this Agreement.
SECTION 7.12. STOCKHOLDERS AGREEMENT. The Company and Acquisition Sub
agree that, prior to the Effective Time, each of them will enter into a
stockholders agreement
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<PAGE>
containing terms consistent with the provisions of EXHIBIT C (the "STOCKHOLDERS
AGREEMENT"), with the Principal Stockholders and the other holders of Electing
Shares in the
Merger.
SECTION 7.13. NO ACQUISITION SUB BUSINESS. Prior to the Effective
Time, Acquisition Sub shall not undertake any business other than as necessary
to consummate the transactions contemplated by this Agreement.
SECTION 7.14. SOLVENCY OPINION. The parties hereto shall use
commercially reasonable efforts to obtain an opinion addressed to the Company,
the lenders to this transaction and the Board (and on which the Board is
entitled to rely) confirming the solvency and adequacy of capital of the
Surviving Corporation after the Merger and related financings, taking into
account the transactions contemplated hereby and the financial ramifications
thereof.
SECTION 7.15. NEGOTIATIONS WITH MINORITY AFFILIATE. Acquisition Sub
shall be entitled to commence and conduct (including without limitation the
formulation of the terms and conditions of) negotiations with Xpedite Systems,
GmbH ("XPEDITE GMBH") with respect to the acquisition by the Company of all or
substantially all the outstanding capital stock or assets of Xpedite GmbH (which
acquisition shall be conditioned upon the consummation of the Merger), PROVIDED
that the Company agrees to use reasonable efforts requested by Acquisition Sub
to facilitate such negotiations and the Company and its representatives shall be
entitled to participate in all such negotiations.
SECTION 7.16. ROLLOVER. Acquisition Sub agrees that, immediately
following the Merger and assuming that Section 3.01(e) has been satisfied, the
Non-Cash Election Share Number shall constitute not less than 5.1% of the total
outstanding capital stock of the Surviving Corporation on a fully-diluted basis,
taking into account all shares issued and reserved for issuance.
ARTICLE VIII.
CONDITIONS TO THE MERGER
------------------------
SECTION 8.01. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the
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satisfaction at or prior to the Effective Time of the
following conditions:
a. STOCKHOLDER APPROVAL OF THE MERGER. This
Agreement and the Merger shall have been approved and
adopted by the requisite vote of the stockholders of the
Company;
b. HSR ACT, ETC. The waiting period applicable
to the consummation of the Merger under the HSR Act and under any legal
requirement of the European Community shall have expired or been terminated, and
any material requirements of other foreign jurisdictions applicable to the
consummation of the Merger shall have been satisfied; and
c. NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No
statute, rule, regulation, executive order, decree, ruling, temporary
restraining order, preliminary or permanent injunction or other order shall have
been enacted, entered, promulgated, enforced or issued by any court or
governmental authority of competent jurisdiction or shall otherwise be in effect
which prohibits, restrains, enjoins or restricts the consummation of the Merger.
SECTION 8.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF ACQUISITION SUB.
The obligations of Acquisition Sub to effect the Merger are also subject to the
following conditions:
a. REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects at and as of the Effective Time
with the same force and effect as if made at and as of such time, except for (i)
changes contemplated by this Agreement and (ii) those representations and
warranties which address matters only as of a particular date (which shall have
been true and correct as of such date) and Acquisition Sub shall have received a
certificate to such effect signed by the Chief Executive Officer and the Chief
Financial Officer of the Company;
b. AGREEMENTS AND COVENANTS. The Company shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it at
or prior to the Effective Time, and Acquisition Sub shall have received a
certificate to such effect signed by the Chief Executive Officer and the Chief
Financial Officer of the Company;
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<PAGE>
c. ACQUISITION OF XPEDITE SYSTEMS LTD. All
conditions precedent to the closing of the transactions contemplated by the
Stock Purchase Agreement dated as of the date hereof (the "XSL PURCHASE
AGREEMENT") by and among PHJ&W No. 2 Limited, Xpedite Systems, Inc. and the
stockholders of Xpedite Systems Limited, a company organized under the laws
of the United Kingdom ("XSL") shall have been satisfied;
d. MANAGEMENT TEAM. The management team and
officers of the Company, its Subsidiaries and XSL shall be satisfactory in all
respects to Acquisition Sub in its sole discretion.
e. CHARTER AMENDMENT. The Company shall have
obtained the requisite vote of the stockholders of the Company, approving and
adopting an amendment to the Company's Certificate of Incorporation, in the form
attached hereto as EXHIBIT D (the "CHARTER AMENDMENT"), which amendment shall
authorize the Class B Common Stock, which shall be a new class of common stock
identical in all respects to, and voting as a class with, the Company Common
Stock, except that it shall have two votes per share in any election of
directors. The Company shall have authorized the issuance of one or more series
of preferred stock (the "PREFERRED STOCK"), with rights, preferences and
privileges to be specified by Acquisition Sub. The Company shall have filed the
Charter Amendment and certificate(s) of designation setting forth the rights,
preferences and privileges of the Preferred Stock with the Secretary of State of
the State of Delaware;
f. APPRAISAL RIGHTS. Holders of no more than
10% of the outstanding shares of the Company Common Stock shall have perfected
their appraisal rights with respect to the Merger in accordance with Section 262
of the GCL, and Acquisition Sub shall have received a certificate to such effect
signed by the Chief Executive Officer and the Chief Financial Officer of the
Company;
g. NO ADVERSE CHANGE REGARDING "RECAP
ACCOUNTING". There shall have been no ruling or advice given by any governmental
body with respect to, or any change in existing accounting standards of
interpretation thereof relating to, the permitted use of Recap Accounting (as
defined below) which, in the opinion of Acquisition Sub's independent
accountants, would materially and adversely affect the ability of the Surviving
Corporation to account for the transactions contemplated by this Agreement using
Recap Accounting (as used herein, "Recap Accounting" means that the transactions
contemplated by this Agreement qualify to be accounted for as a recapitalization
for financial reporting purposes);
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<PAGE>
h. NO MATERIAL ADVERSE EFFECT. There shall have
been no Material Adverse Effect with respect to the Company since the date of
this Agreement, and Acquisition Sub shall have received a certificate to such
effect signed by the Chief Executive Officer and the Chief Financial Officer of
the Company.
i. FINANCING. The Company shall have obtained
the funds pursuant to the Financing Commitments,
substantially on the terms provided therein; and
j. CONVERSION TO CLASS B COMMON STOCK. In the
event the Charter Amendment has been approved by the requisite vote of the
stockholders of the Company, each person set forth on SCHEDULE 8.02(J) (A) shall
have converted into shares of Class B Common Stock the number of shares of
Company Common Stock set forth in Column A next to such person's name on
SCHEDULE 8.02(J), and (B) shall have sold to UBS Partners LLC or an affiliate of
Fenway Partners, Inc. the number of shares of Class B Common Stock set forth in
Column B next to such person's name on SCHEDULE 8.02(J) for a per share amount
equal to the Cash Election Price, as provided in the stockholder agreement dated
as of the date hereof among such person, the Company and Acquisition Sub.
k. AMENDMENT TO MINORITY AFFILIATE AGREEMENT.
The Put and Call Option Agreement dated as of December 15, 1993 by and among the
Company, Apax Partners & CIE. Gestion S.A., Apax Partners & Co. Ventures
Limited, Olivier de Puymorin and Xpedite Systems S.A. shall have been amended to
provide that the consideration thereunder may be satisfied in cash, securities
or any combination thereof, at the Company's option.
SECTION 8.03. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
a. REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Acquisition Sub contained in this Agreement
shall be true and correct in all material respects on and as of the Effective
Time, except for (i) changes contemplated by this Agreement and (ii) those
representations and warranties which address matters only as of a particular
date (which shall have been true and correct as of such date), and the Company
shall have received a certificate to such effect signed by the Chief Executive
Officer or President of Acquisition Sub; and
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<PAGE>
b. AGREEMENTS AND COVENANTS. Acquisition Sub
shall have performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with by
them on or prior to the Effective Time, and the Company shall have received a
certificate to such effect signed by the Chief Executive Officer or President of
Acquisition Sub.
ARTICLE IX.
TERMINATION
-----------
SECTION 9.01. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company:
a. by mutual written consent duly authorized by
the Boards of Directors of Acquisition Sub and the Company;
or
b. by either Acquisition Sub or the Company if
the Merger shall not have been consummated by February 28, 1998 (PROVIDED that
such date shall be extended by an additional 30 days in the event the
Prospectus/Proxy Statement shall have been mailed to stockholders by such date;
and PROVIDED, FURTHER, that the right to terminate this Agreement under this
SECTION 9.01(B) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the failure
of the Merger to occur on or before such date); or
c. by either Acquisition Sub or the Company if a
court of competent jurisdiction or governmental, regulatory or administrative
agency or commission shall have issued a nonappealable final order, decree or
ruling or taken any other action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger (PROVIDED that the right to
terminate this Agreement under this SECTION 9.01(C) shall not be available to
any party who has not complied with its obligations under SECTION 7.08 and such
noncompliance materially contributed to the issuance of any such order, decree
or ruling or the taking of such action); PROVIDED, FURTHER, that for the
purposes of this SECTION 9.01(C), a temporary injunction restraining, enjoining
or otherwise prohibiting the Merger shall be deemed to be a nonappealable final
order hereunder if such injunction remains continuously in effect for 60 days
after the date of
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<PAGE>
issuance thereof; and PROVIDED, FURTHER, that during such period all obligations
of the Company or Acquisition Sub to expend funds or incur monetary obligations
in connection with the transactions contemplated hereby shall be suspended; or
d. [INTENTIONALLY OMITTED]
e. by Acquisition Sub or the Company, if:
(i) the Board of Directors of the Company shall have recommended to the
stockholders of the Company an Alternative Transaction (as defined below) or
(ii) a tender offer or exchange offer for 15% or more of the outstanding shares
of Company Common Stock is commenced (other than by Acquisition Sub or an
affiliate of Acquisition Sub) and the Board of Directors of the Company
recommends that the stockholders of the Company tender their shares in such
tender or exchange offer; PROVIDED that the Company shall not be entitled to
exercise any termination rights under clause (i) or (ii) of this SECTION 9.01(E)
unless (x) any action of the Board of Directors of the Company referred to in
either such clause is required to be taken by the Board of Directors in order to
properly discharge its fiduciary duties to its stockholders and (y) the Company
has complied with its obligations in SECTION 6.02; or
f. by Acquisition Sub, if the Board of Directors
of the Company shall withdraw, modify or change its approval or recommendation
of this Agreement, the Merger or the Charter Amendment in a manner adverse to
Acquisition Sub; or
g. by either the Company or Acquisition Sub, if
there has been a material breach of any representation, warranty, covenant or
agreement on the part of the other set forth in this Agreement, which breach has
not been cured within 30 days following receipt by the breaching party of
written notice of such breach, in any case such that the conditions set forth in
SECTIONS 8.02 OR 8.03, as the case may be, would be incapable of being satisfied
by February 28, 1998 (PROVIDED that the right to terminate this Agreement under
this SECTION 9.01(G) shall not be available to any party who is itself in
material breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement, such that the conditions set forth in
SECTIONS 8.02 OR 8.03, as the case may be, would be incapable of being satisfied
by February 28, 1998).
As used herein, "ALTERNATIVE TRANSACTION" means
(i) a transaction or series of transactions pursuant to
which any person (or group of persons) other than
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<PAGE>
Acquisition Sub or its Subsidiaries (a "THIRD PARTY") acquires or would acquire
more than 15% of the outstanding shares, whether from the Company or pursuant to
a tender offer or exchange offer or otherwise, (ii) any acquisition or proposed
acquisition of the Company or any of its Subsidiaries by a merger, consolidation
or other business combination (including any so-called "merger of equals" and
whether or not the Company or any of its Subsidiaries is the entity surviving
any such merger or business combination), (iii) any reorganization,
recapitalization, liquidation or dissolution of the Company or any of its
Subsidiaries (other than the liquidation or dissolution of a wholly-owned
subsidiary of the Company or any of its Subsidiaries) or (iv) any other
transaction pursuant to which any Third Party acquires or would acquire control
of assets (including for this purpose the outstanding equity securities of
Subsidiaries of the Company and any entity surviving any merger or business
combination with any Subsidiary) of the Company or any of its Subsidiaries
having a fair market value equal to more than 15% of the fair market value of
all the assets of the Company and its Subsidiaries, taken as a whole,
immediately prior to such transaction.
SECTION 9.02. EFFECT OF TERMINATION.
----------------------
a. Except as provided in SECTION 10.01, in the
event of the termination of this Agreement pursuant to SECTION 9.01, this
Agreement shall forthwith become void and there shall be no liability on the
part of any party hereto or any of its affiliates, directors, officers or
stockholders, subject to the provisions of SECTION 9.02(B), and nothing herein
shall relieve any party from liability for any breach hereof occurring prior to
termination. The Confidentiality Letter shall survive termination of this
Agreement as set forth therein.
b. Notwithstanding anything to the contrary
contained in this Agreement, in the event that this Agreement is terminated by
either party for any reason, the Company shall pay to Acquisition Sub, an amount
equal to $7,500,000 (the "FEE") plus all documented fees and expenses incurred
by Acquisition Sub and its stockholders in connection with or related to the
authorization, preparation, regulation, execution and performance of this
Agreement, the Financing Commitments, the transactions contemplated hereby and
thereby (including, without limitation, all fees and expenses of counsel,
accountants, investment bankers, experts, consultants, banks and other financial
institutions) (the "EXPENSES") up to a maximum of $2,000,000 in the aggregate.
Notwithstanding the foregoing:
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<PAGE>
(i) the Company shall not be obligated to pay the
Fee or any Expenses if this Agreement is terminated (A) pursuant
to SECTION 9.01(A), (B) by the Company due to a failure to satisfy
the condition set forth in SECTION 8.03(A) or (B), or pursuant to
SECTION 9.01(B) or SECTION 9.01(G), in either such case as a
result of Acquisition Sub's breach of a representation or warranty
herein or Acquisition Sub's failure to fulfill any of its material
obligations under this Agreement or (C) by Acquisition Sub solely
due to a failure to satisfy any condition set forth in SECTION
8.02(D), (G), (I), (J) or (K); and
(ii) the Company shall not be obligated to pay
the Fee but shall only be obligated to reimburse Acquisition Sub
for the amount of Expenses incurred by it up to a maximum of
$2,000,000 if this Agreement is terminated by Acquisition Sub due
to the failure to satisfy (A) the condition set forth in SECTION
8.02(C) other than as a result of the Company's breach of a
representation or warranty in the XSL Purchase Agreement or the
Company's failure to fulfill any of its material obligations in
the XSL Purchase Agreement or (B) the condition set forth in
Section 8.02(h).
c. Any payment required to be made pursuant to
SECTION 9.02(B) shall be made to Acquisition Sub or its designee not later than
two business days after delivery by Acquisition Sub or its designee to the
Company of notice of demand for payment and shall be made by wire transfer of
immediately available funds to an account designated by Acquisition Sub or its
designee in the notice of demand for payment delivered pursuant to this SECTION
9.02(C).
SECTION 9.03. FEES AND EXPENSES. All fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, whether or not the Merger is
consummated, subject to the provisions of SECTION 9.02(B).
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<PAGE>
ARTICLE X.
GENERAL PROVISIONS
------------------
SECTION 10.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS, ETC. Except as otherwise provided in this SECTION 10.01, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to SECTION 9.01, as the case may be, except that the agreements set
forth in Article III and SECTION 7.06 shall survive the Effective Time
indefinitely and those set forth in SECTIONS 7.04, 9.02 AND 9.03 shall survive
such termination indefinitely. Nothing in this SECTION 10.01 shall relieve any
party for any breach of any representation, warranty or agreement in this
Agreement occurring prior to termination.
SECTION 10.02. 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 if and when delivered personally or by overnight courier to the
parties at the following addresses or sent by electronic transmission, with
confirmation of receipt, to the telecopy numbers specified below (or at such
other address or telecopy number for a party as shall be specified by like
notice):
a. If to Acquisition Sub:
UBS Partners LLC
299 Park Avenue
34th Floor
New York, NY 10171
Telecopier No.: (212) 821-6333
Telephone No.: (212) 821-6380
Attention: Michael Greene
- 50 -
<PAGE>
and
Fenway Partners, Inc.
152 West 57th Street
New York, NY 10019
Telecopier No.: (212) 581-1205
Telephone No.: (212) 698-9441
Attention: Russell W. Steenberg
With copies to:
Kaye, Scholer, Fierman, Hays & Handler,
LLP
425 Park Avenue
New York, NY 10022
Telecopier No.: (212) 836-8689
Telephone No.: (212) 836-8000
Attention: Nancy E. Fuchs, Esq.
and
Ropes & Gray
1 International Place
Boston, MA 02110
Telecopier No.: (617) 951-7050
Telephone No.: (617) 951-7000
Attention: John Ayer, Esq.
b. If to the Company:
Xpedite Systems, Inc.
446 Highway 35
Eatontown, New Jersey 07724
Telecopier No.: (908) 544-1044
Telephone No.: (908) 389-3900
Attention: President
- 51 -
<PAGE>
With a copy to:
Neil A. Torpey, Esq.
Paul, Hastings, Janofsky & Walker LLP
399 Park Avenue
New York, New York 10022
Telecopier No.: (212) 319-4090
Telephone No.: (212) 318-6000
SECTION 10.03. CERTAIN DEFINITIONS. For purposes of this agreement,
the term:
a. "affiliates" means a person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first
mentioned person;
b. "beneficial owner" with respect to any shares of Company
Common Stock means a person who shall be deemed to be the beneficial owner of
such shares (i) which such person or any of its affiliates or associates (as
such term is defined in Rule 12b-2 of the Exchange Act) beneficially owns,
directly or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether such
right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise, or (B)
the right to vote pursuant to any agreement, arrangement or understanding, or
(iii) which are beneficially owned, directly or indirectly, by any other persons
with whom such person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares;
c. "business day" means any day other than a day
on which banks in the State of New York are required or
authorized to be closed;
d. "control" (including the terms "controlled by" and "under
common control with") means the possession, directly, or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise;
- 52 -
<PAGE>
e. "generally accepted accounting principles"
shall mean United States generally accepted accounting
principles; and
f. "person" means an individual, corporation,
partnership, association, trust, unincorporated
organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act).
SECTION 10.04. AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; PROVIDED that after approval of the
Merger by the stockholders of the Company, no amendment may be made which by law
required further approval by such stockholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
SECTION 10.05. WAIVER. At any time prior to the Effective Time, any
party hereto may with respect to any other party hereto (a) extend the time for
the performance of any of the obligations or other acts, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, or (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 10.06. 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.
SECTION 10.07. 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
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereby shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
- 53 -
<PAGE>
SECTION 10.08. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Letter), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof.
SECTION 10.09. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise, except that Acquisition Sub may assign all or any
of its rights hereunder to any direct wholly owned Subsidiary of Acquisition
Sub, PROVIDED that no such assignment shall relieve the assigning party of its
obligations hereunder.
SECTION 10.10. PARTIES IN INTEREST. 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, including, without limitation, by way of subrogation, other
than SECTION 7.06 (which is intended to be for the benefit of the Indemnified
Parties and may be enforced by such Indemnified Parties).
SECTION 10.11. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 10.12. GOVERNING LAW. This agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
applicable to contracts executed and fully performed within the State of New
York, without giving effect to principles of conflicts of laws.
SECTION 10.13. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 10.14. CONSENT TO JURISDICTION. Each of the parties hereto:
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<PAGE>
a. consents to submit itself to the personal jurisdiction of
(i) the United States District Court for the Southern District of New York in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement to the extent such court would have subject
matter jurisdiction with respect to such dispute and (ii) the Chancery or other
Courts of the State of Delaware otherwise;
b. agrees that it will not attempt to deny or
defeat such personal jurisdiction or venue by motion or
other request for leave from any such court;
c. agrees that it will not bring any action
relating to this Agreement or any of the transactions
contemplated by this Agreement in any Court other than such
courts;
d. agrees that service of process in any such
action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to a party to its address set forth in SECTION 10.02 or
at such other address of which a party shall have been notified pursuant
thereto; and
e. agrees that nothing herein shall affect the
right to effect service of process in any other manner
permitted by law.
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<PAGE>
IN WITNESS WHEREOF, each of Acquisition Sub and the Company has
executed this Agreement, or has caused this Agreement to be executed on its
behalf by a representative duly authorized, all as of the day and year first
above written.
XPEDITE ACQUISITION CORP.
By: /s/ MICHAEL GREENE
----------------------
Name:Michael Greene
Title:President
XPEDITE SYSTEMS, INC.
By: /s/ PHILIP A. CAMPBELL
-------------------------
Name:Philip A. Campbell
Title:Director
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<PAGE>
EXHIBIT A
CERTIFICATE OF MERGER
OF
XPEDITE ACQUISITION CORP.
INTO
XPEDITE SYSTEMS, INC.
PURSUANT TO SECTION 251(C) OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
************************************************************
THE UNDERSIGNED CORPORATION, organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, does hereby
certify that:
1. The name and state of incorporation of each of the constituent
corporations of the merger are as follows:
STATE OF
--------
NAME INCORPORATION
---- -------------
Xpedite Acquisition Corp. Delaware
Xpedite Systems, Inc. Delaware
2. An Agreement and Plan of Merger has been approved, adopted, certified,
executed and acknowledged by each of the aforesaid constituent corporations in
accordance with the requirements of subsection (c) of Section 251 of the General
Corporation Law of the State of Delaware.
3. The name of the surviving corporation of the merger is Xpedite Systems,
Inc., which will continue its existence as said surviving corporation under its
present name upon the effective date of said merger pursuant to the provisions
of the General Corporation Law of the State of Delaware.
4. The Certificate of Incorporation, as amended to read in its entirety as
set forth in ANNEX A hereto, of Xpedite Systems, Inc. a Delaware corporation,
shall be the Certificate of Incorporation of the surviving corporation.
<PAGE>
5. The executed Agreement and Plan of Merger between the aforesaid
constituent corporations is on file at the principal place of business of the
surviving corporation, the address of which is as follows:
Xpedite Systems, Inc.
446 Highway 35
Eatontown, New Jersey 07724
6. A copy of the Agreement and Plan of Merger will be furnished by the
surviving corporation, on request and without cost, to any stockholder of any
constituent corporation.
IN WITNESS WHEREOF, the undersigned has subscribed this certificate on the
date set forth below and hereby affirms that the statements contained herein are
true and correct.
_________________ , 1997
XPEDITE SYSTEMS, INC.
By:-----------------------
Name:
Title:
ATTESTED TO:
By:-----------------------
Name:
Title:
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11
<PAGE>
EXHIBIT B
Form of Affiliate Letter
_______________, 1997
Xpedite Systems, Inc.
446 Highway 35
Eatontown, NJ 07724
Attention: _______________
Ladies and Gentlemen:
The undersigned has been advised that as of the date of this letter the
undersigned may be deemed to be an "affiliate" of Xpedite Systems, Inc., a
Delaware corporation (the "Company"), as the term "affiliate" is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"). Pursuant
to the terms of the Agreement and Plan of Merger dated as of August ___, 1997
(the "Agreement"), between the Company and Xpedite Acquisition Corp.
("Acquisition Sub"), a newly-formed Delaware corporation, Acquisition Sub will
be merged with and into the Company, which will be the surviving company (the
"Merger").
In connection with the Merger, the undersigned may retain shares of common
stock, par value $0.01 per share, of the Company ("Company Common Stock")
currently owned by [him] [her] [it].
The undersigned represents, warrants and covenants to the Company that in
the event the undersigned retains any Company Common Stock as a result of the
Merger:
A. The undersigned shall not make any sale,
transfer of other disposition of the Company Common Stock in violation of the
Act or the Rules and Regulations.
B. The undersigned has carefully read this
letter and the Agreement and discussed the requirements of such documents and
other applicable limitations upon [his] [her] [its] ability to sell, transfer or
otherwise dispose of the Company Common Stock to the extent the undersigned
<PAGE>
felt necessary, with [his] [her] [its] counsel or counsel for the Company.
C. The undersigned has been advised that the
issuance of the Company Common Stock to [him] [her] [it] pursuant to the Merger
has been registered with the Commission under the Act on a Registration
Statement on Form S-4. However, the undersigned has also been advised that,
since at the time the Merger was submitted for a vote of stockholders of the
Company, the undersigned may be deemed to have been an affiliate of the Company
and the distribution by [him] [her] [it] of the Company Common Stock has not
been registered under the Act, the undersigned may not sell, transfer or
otherwise dispose of the Company Common Stock issued to [him] [her] [it] in the
Merger unless (i) such sale, transfer or other disposition has been registered
under the Act, (ii) such sale, transfer or other disposition is made in
conformity with Rule 145 promulgated by the Commission under the Act, or (iii)
in the opinion of counsel reasonably acceptable to the Company, or pursuant to a
"no action" letter obtained by the undersigned from the staff of the Commission,
such sale, transfer or other disposition is otherwise exempt from registration
under the Act.
D. Except as may be provided in any registration
rights agreement between the Company and the undersigned, the undersigned
understands that the Company is under no obligation to register the sale,
transfer or other disposition of the Company Common Stock by [him] [her] [its]
behalf under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
E. The undersigned also understands that stop
transfer instructions will be given to the Company's transfer agents with
respect to the Company Common Stock and that there will be placed on the
certificates for the Company Common Stock issued to [him] [her] [it], or any
substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN
A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES REPRESENTED BY
THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT DATED ______________,
BETWEEN THE REGISTERED HOLDER THEREOF AND ______________,
A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF
----------------.
- 2 -
<PAGE>
F. The undersigned also understands that unless
the transfer by [him] [her] [it] of [his] [her] [its] Company Common Stock has
been registered under the Act or is a sale made in conformity with the
provisions of Rule 145, the Company reserves the right to put the following
legend on the certificates issued to [his] [her] [its] transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE
ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE
IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE
MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in Paragraphs E and
F above will be removed by delivery of substitute certificates without such
legend if such legend is not required for purposes of the Act or this letter
agreement. It is understood and agreed that such legends and the stop orders
referred to above will be removed if (i) one year shall have elapsed from the
date the undersigned acquired the Company Common Stock received in the Merger
and the provisions of Rule 145(d)(2) are then available to the undersigned, (ii)
two years shall have elapsed from the date the undersigned acquired the Company
Common Stock received in the Merger and the provisions of Rule 145(d)(3) are
then available to the undersigned, or (iii) the Company has received either an
opinion of counsel, which opinion of counsel shall be reasonably satisfactory to
the Company, or a "no action" letter obtained by the undesigned from the staff
of the Commission, to the effect that the restrictions imposed by Rule 145 under
the Act no longer apply to the undersigned.
- 3 -
<PAGE>
Execution of this letter should not be considered an admission on the part
of the undersigned that the undersigned is an "affiliate" of the Company as
described in the first paragraph of this letter or as a waiver of any rights the
undersigned may have to object to any claim that the undersigned is such an
affiliate on or after the date of this letter.
Very truly yours,
-------------------------
Agreed to and Accepted this
____ day of ______________, 1997
XPEDITE SYSTEMS, INC.
By: _________________________
- 4 -
<PAGE>
EXHIBIT C
SUMMARY OF PRINCIPAL TERMS
OF ROLLOVER INVESTORS
STOCKHOLDERS AGREEMENT
PARTIES The Company, UBS Partners LLC, together with its affiliates
("UBS"), Fenway Partners, Inc., together with its affiliates
("Fenway"), and the Principal Stockholders and other shareholders
who retain Non-Cash Election Shares ("Shares") in the Merger
(such Principal Stockholders and other shareholders being the
"Investors").
RESTRICTIONS
ON TRANSFER The Investors will agree not to transfer Shares prior to the
first anniversary of the Closing Date. The Investors will grant
to the Company (or UBS and Fenway or an affiliate thereof) a
right of first refusal with respect to any proposed sales by them
of Shares thereafter. Reasonable and customary procedures
concerning this right of first refusal will be set forth in the
Stockholders Agreement. Each Investor which is an "affiliate" of
the Company will agree to the restrictions on transfer contained
in Exhibit B to the Merger Agreement.
RIGHT TO
CAUSE SALE If UBS and Fenway decide to sell all of their remaining shares of
the Company received in the Merger (other than a sale to the
other or an affiliate), and collectively hold in the aggregate at
that time (prior to giving effect of the proposed sale) more than
40% of the then-outstanding shares of the Company, then UBS and
Fenway shall have the right to require the Investors to sell
their remaining Shares as part of that sale on the same price and
terms (or to vote in favor of any merger or other transaction
which would effect such a sale).
<PAGE>
RIGHT TO
PARTICIPATE
IN SALE In the event that, during the period beginning immediately after
the closing of the Merger and ending upon a Public Offering, UBS
and Fenway hold 40% or more of the then-outstanding shares of the
Company and propose to engage in a sale of equity interests which
would result in a transfer of 40% or more of the then-outstanding
shares of the Company to an unaffiliated purchaser, then the
Investors shall have the right to participate pro rata (together,
if applicable, with other stockholders, based on the percentage
of their fully diluted equity in the Company at the time of such
transaction) in such sale transaction on the same price and terms
as UBS and Fenway. (As used herein, "Public Offering" shall mean
a registered offering of equity securities of the Company or an
institutional private placement or 144A offering of such equity
securities with or without registration rights.)
REGISTRATION
RIGHTS In the Stockholders Agreement (or by separate registration rights
agreement) the Company will grant to the Investors unlimited
"piggyback" registration rights in registrations in which
stockholders participate, at the Company's expense (other than
underwriting discounts and selling commissions), subject to
customary provisions and restrictions. Cutbacks will be pro rata
among all holders requesting registration (based on each holder's
percentage interest in the fully diluted equity of the Company at
the time of such registration).
The Investors will, if requested by the underwriters for an
underwritten public offering of equity securities of the Company,
agree not to sell or transfer any equity securities of the
Company (other than equity securities, if any, included in such
offering), without the consent of the underwriters, for a period
of not more than 180 days following effectiveness of the
registration statement relating to a Public Offering.
FINANCIAL
INFORMATION The Stockholders Agreement will grant the Investors the right to
receive quarterly and annual financial statements of the Company.
AFFILIATE
TRANSACTIONS The Stockholders Agreement will provide that agreements or
transactions between the Company and UBS or Fenway or any of
their affiliates shall require the prior approval of the holders
of a majority of the then-outstanding voting common stock of the
Company (excluding shares held by the interested person and its
affiliates) other than agreements or transactions which are on
arms-length terms or consulting or management agreements on terms
(including with respect to fees) that are customary as between
UBS and/or Fenway, as applicable, and their respective portfolio
companies. Acquisition Sub agrees that any preferred stock to be
purchased by UBS and/or Fenway or any of their affiliated
entities or any financial accomodation to be provided to them for
their preferred equity commitment in connection with the
financing of the Merger will be on market terms or terms approved
by Roy B. Andersen, Jr. and at least two of the following four
indviduals: Robert Vaters, Dennis Schmaltz, Max Slifer and Dennis
DeVita. Except as contemplated by the foregoing sentence, nothing
in this paragraph shall limit any other activity of UBS and/or
Fenway or any of their affiliated entities in connection with the
transactions contemplated by the Merger Agreement.
-2-
<PAGE>
EXHIBIT D
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
XPEDITE SYSTEMS, INC.
* * * * *
XPEDITE SYSTEMS, INC., a corporation organized and
existing under the laws of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That Xpedite Systems, Inc. (the
"Corporation") was originally incorporated under the same name, and the original
Certificate of Incorporation of the Corporation was filed with the Secretary of
State of the State of Delaware on July 26, 1988.
SECOND: That this Amended and Restated
Certificate of Incorporation restates and integrates and amends the provisions
of the Certificate of Incorporation of the Corporation and has been duly adopted
in accordance with the provisions of Section 245 of the General Corporation Law
of the State of Delaware.
THIRD: That the Certificate of Incorporation of
the Corporation is hereby amended and restated to read in
its entirety as follows:
"1. NAME.
-----
The name of the corporation is Xpedite Systems, Inc.
2. REGISTERED OFFICE AND REGISTERED AGENT.
---------------------------------------
The address of its registered office in the State of Delaware
is The Corporation Trust Company, 1209 Orange Street, in The City of Wilmington,
County of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
-2-
<PAGE>
3. PURPOSE.
--------
The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
4. EXISTENCE.
----------
The Corporation is to have perpetual existence.
5. CAPITALIZATION.
---------------
A. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is _________ Million (__,000,000)
shares consisting of (i) _________ Million (__,000,000) shares of Preferred
Stock, par value $.01 per share (hereinafter, the "Preferred Stock"), (ii)
_________ Million (__,000,000) shares of Common Stock, par value $.01 per share
(hereinafter, the "Common Stock") and (iii) _______ Million (__,000,000) shares
of Class B Common Stock, $.01 per share (hereinafter, the "Class B Common
Stock"). The Common Stock and Class B Voting Common Stock shall be nonassessable
and shall not have cumulative voting rights or preemptive rights.
B. The shares of Preferred Stock may be issued from time to
time in one or more series. The Board of Directors of the Corporation is hereby
authorized, by adopting appropriate resolutions and causing one or more
certificates of designation to be executed, acknowledged, filed, recorded and to
become effective in accordance with the General Corporation Law of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights, dividend
rights, dividend rate, conversion rights, exchange rights, voting rights, rights
and terms of redemption (including sinking fund provisions), the redemption
price or prices, and the liquidation preferences of any wholly unissued series
of shares of Preferred Stock, or any of them; and to increase or decrease the
number of shares of any series subsequent to the issue of the shares of that
series, but not above the total number of authorized shares of Preferred Stock
and not below the number of shares of such series then outstanding. In case the
number of any shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status that they had prior to the
adoption of the resolution originally fixing the number of shares of such
series. Except as may otherwise be required by law or this Amended and Restated
-2-
<PAGE>
Certificate of Incorporation, the terms of any series of Preferred Stock may be
amended without the consent of the holders of any other series of Preferred
Stock or of Common Stock.
C. Section 1. RANKING. Except with respect to
voting rights provided in the proviso to Section 2, the Common Stock and the
Class B Common Stock shall in all respects have the same powers, preferences,
rights and qualifications and shall rank PARI PASSU with each other.
Section 2. VOTING RIGHTS OF COMMON STOCK.
The holders of Class B Common Stock shall be entitled to two votes per share in
connection with the election of directors of the Corporation, and otherwise on
all matters with respect to which they have the right to vote the holders of
Common Stock and Class B Common Stock shall be entitled to one vote per share.
6. LIMITATION OF LIABILITY OF DIRECTOR.
------------------------------------
No Director shall have any personal liability to the
Corporation or its stockholders for any monetary damages for breach of fiduciary
duty as a Director, except that this Article shall not eliminate or limit the
liability of each Director: (i) for any breach of such Director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which such Director derived an improper personal
benefit.
7. AMENDMENTS TO CERTIFICATE OF INCORPORATION.
-------------------------------------------
The Corporation reserves the right to amend,
alter, change or repeal any provision contained in the Amended and Restated
Certificate of Incorporation, in the manner now or hereafter prescribed by the
statute, and all rights conferred upon stockholders herein are granted subject
to this reservation."
-3-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed
this Amended and Restated Certificate of Incorporation on behalf of the
Corporation and hereby affirm that the statements made herein are true under the
penalties of perjury, this ______ day of ______________, 1997.
XPEDITE SYSTEMS, INC.
-------------------------------
Roy B. Andersen, Jr., President
ATTEST:
- ---------------------------
Robert S. Vaters, Secretary
-4-
================================================================================
SHARE PURCHASE AGREEMENT
by and among
PHJ&W NO. 2 LIMITED
XPEDITE SYSTEMS, INC.
and
the
SHAREHOLDERS OF XPEDITE SYSTEMS LIMITED
Dated as of August 8, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I Purchase and Sale of the Shares........................... 2
SECTION 1.01. Purchase and Sale of the Shares.................. 2
SECTION 1.02. Adjustments...................................... 5
SECTION 1.03. Modification of Option Agreement;
Termination of Option Agreement.................. 7
SECTION 1.04. Epstein Put/Call Agreement....................... 8
ARTICLE II Representations and Warranties of APAX.................... 10
SECTION 2.01. Organization and Standing........................ 10
SECTION 2.02. [INTENTIONALLY OMITTED].......................... 11
SECTION 2.03. Capitalization................................... 11
SECTION 2.04. Absence of Equity Investments.................... 12
SECTION 2.05. Liabilities and Obligations of the
Company.......................................... 12
SECTION 2.06. Tax Matters...................................... 13
SECTION 2.07. Title to Property and Related Matters............ 16
SECTION 2.08. Real Property Owned or Leased.................... 16
SECTION 2.09. Personal Property Owned or Leased................ 17
SECTION 2.10. Accounts Receivable.............................. 18
SECTION 2.11. Agreement Does Not Violate Other
Instruments...................................... 18
SECTION 2.12. Absence of Changes............................... 19
SECTION 2.13. Litigation....................................... 21
SECTION 2.14. Licenses and Permits; Compliance With
Law.............................................. 21
SECTION 2.15. Contracts, Etc................................... 21
SECTION 2.16. Licenses; Trademarks; Trade Names;
Etc.............................................. 24
SECTION 2.17. Insurance........................................ 25
SECTION 2.18. Employee Benefit Plans........................... 26
SECTION 2.19. Labor Relations; Employees....................... 28
SECTION 2.20. Compensation..................................... 28
SECTION 2.21. Investment Banking Fees, Brokers and
Finders.......................................... 29
SECTION 2.22. Tariffs.......................................... 29
SECTION 2.23. Customers and Suppliers.......................... 29
SECTION 2.24. Environmental Compliance......................... 30
SECTION 2.25. Change of Control Provisions..................... 31
SECTION 2.26. Improper and Other Payments...................... 31
SECTION 2.27. Minute Books..................................... 31
SECTION 2.28. Accounts......................................... 32
SECTION 2.29. Accuracy of Representations...................... 32
ARTICLE III Representations and Warranties of the
Shareholders.............................................. 33
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 3.01. Ownership of the Shares.......................... 33
SECTION 3.02. Authorization.................................... 33
SECTION 3.03. No Conflict or Violation......................... 33
SECTION 3.04. Brokers' Fees.................................... 34
ARTICLE IV Representations and Warranties of Xpedite
and Purchaser............................................. 35
SECTION 4.01. Corporate Organization........................... 35
SECTION 4.02. Authorization.................................... 35
SECTION 4.03. Agreement Does Not Violate Other
Instruments...................................... 35
SECTION 4.04. Brokers and Finders.............................. 36
ARTICLE V Interpretation and Survival of
Representations and Warranties............................ 36
SECTION 5.01. Interpretation................................... 36
SECTION 5.02. Reliance by Purchaser............................ 37
SECTION 5.03. Survival......................................... 37
ARTICLE VI Covenants................................................. 37
SECTION 6.01. Regular Course of Business....................... 37
SECTION 6.02. Capital Changes.................................. 39
SECTION 6.03. Dividends........................................ 39
SECTION 6.04. Capital Expenditures............................. 39
SECTION 6.05. Indebtedness..................................... 40
SECTION 6.06. Property......................................... 40
SECTION 6.07. Loans............................................ 40
SECTION 6.08. Other............................................ 40
SECTION 6.09. Interim.......................................... 40
SECTION 6.10. Consents......................................... 40
SECTION 6.11. Access........................................... 40
SECTION 6.12. Notice of Transfer............................... 41
SECTION 6.13. [INTENTIONALLY OMITTED].......................... 41
SECTION 6.14. Further Assurances............................... 41
SECTION 6.15. No Solicitation or Negotiation................... 41
SECTION 6.16. Public Announcements............................. 42
SECTION 6.17. Authorized Share Capital......................... 42
SECTION 6.18. Expenses......................................... 43
SECTION 6.19. Escrow of Eagle Shares........................... 43
SECTION 6.20. Modifications to Buyback Agreement............... 43
SECTION 6.21. Waiver of Pre-emption Rights..................... 43
SECTION 6.22. Transfers by Eagle............................... 43
ARTICLE VII Conditions to the Obligations of the
Purchaser................................................. 44
SECTION 7.01. Representations and Warranties;
Performance...................................... 44
SECTION 7.02. Consents and Approvals........................... 44
SECTION 7.03. Litigation....................................... 45
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 7.04. APAX Letter of Credit............................ 45
SECTION 7.05. No Material Adverse Change....................... 45
SECTION 7.06. Options.......................................... 45
SECTION 7.07. Employment Agreement............................. 46
SECTION 7.08. Buyback Agreement................................ 46
SECTION 7.09. Satisfaction of Financial Assistance
Requirements..................................... 46
SECTION 7.10. Share Certificates; Redemption of
A Prefs.......................................... 46
ARTICLE VIII Conditions to the Obligations of the
Shareholders.............................................. 46
SECTION 8.01. Representations and Warranties;
Performance...................................... 47
SECTION 8.02. Consents and Approvals........................... 47
SECTION 8.03. No Proceeding or Litigation...................... 47
SECTION 8.04. Purchaser Letter of Credit....................... 47
ARTICLE IX Closing................................................... 47
SECTION 9.01. Closing.......................................... 47
ARTICLE X Termination............................................... 51
SECTION 10.01. Termination Events............................... 51
SECTION 10.02. Effect of Termination............................ 52
ARTICLE XI Liability to Purchaser.................................... 53
SECTION 11.01. Integration...................................... 53
SECTION 11.02. Projections...................................... 53
SECTION 11.03. Disclosed Matters................................ 53
SECTION 11.04. Survival Period.................................. 54
SECTION 11.05. No Rescission.................................... 55
SECTION 11.06. Mitigation....................................... 55
SECTION 11.07. Offset; Increase................................. 56
SECTION 11.08. DeMinimis Claims; Basket......................... 56
SECTION 11.09. Maximum Liability................................ 57
SECTION 11.10. Third Party Recoveries........................... 57
SECTION 11.11. Subsequent Recovery.............................. 57
SECTION 11.12. Purchase Price Reduction. ... 58
SECTION 11.13. Actual Damages................................... 58
SECTION 11.14. Contingent Liability............................. 58
SECTION 11.15. Application of Credits, etc...................... 58
SECTION 11.16. Single Recovery.................................. 58
SECTION 11.17. [INTENTIONALLY OMITTED].......................... 59
SECTION 11.18. Shareholders' Indemnity.......................... 59
SECTION 11.19. Settlement of Claims............................. 59
SECTION 11.21. Reservation...................................... 61
ARTICLE XII Miscellaneous............................................. 61
SECTION 12.01. Expenses......................................... 61
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 12.02. Headings......................................... 61
SECTION 12.03. Notices.......................................... 62
SECTION 12.04. Assignment....................................... 64
SECTION 12.05. Complete Agreement............................... 64
SECTION 12.06. Waivers.......................................... 64
SECTION 12.07. Counterparts..................................... 64
SECTION 12.08. Governing Law.................................... 64
SECTION 12.09. Arbitration...................................... 64
SECTION 12.10. Accounting Terms................................. 65
SECTION 12.11. Parties.......................................... 65
SECTION 12.12. Legal Remedies................................... 65
SECTION 12.13. Schedules........................................ 66
SECTION 12.14. Xpedite Guarantee................................ 66
</TABLE>
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<PAGE>
EXHIBIT A Form of Buyback Agreement
EXHIBIT B APAX Letter of Credit
EXHIBIT C Form of Employment Agreement with David
Proctor
EXHIBIT D Rules with Respect to Arbitration
Proceedings
EXHIBIT E Form of Closing Date Certificate
SCHEDULE 1 Ownership of Shares (excluding Eagle)
SCHEDULE 1A Ownership of Shares (including Eagle)
SCHEDULE 1.02 Audit Policies
SCHEDULE 1.02(a) Projected Balance Sheet
SCHEDULE 2.01(b) Subsidiaries; Jurisdictions of
Organization
SCHEDULE 2.01(c) Organizational Documents of Subsidiaries
SCHEDULE 2.03 Conversion Rights
SCHEDULE 2.05(a)(i) Company Financial Statements
SCHEDULE 2.05(a)(ii) Material Liabilities
SCHEDULE 2.06(b) Unpaid Taxes
SCHEDULE 2.06(c)(i) Encumbrances Relating to Taxes
SCHEDULE 2.06(c)(ii) Jurisdictions in Which Returns Have Been
Examined or Statute of Limitations Has
Run
SCHEDULE 2.06(c)(iii) Unpaid Deficiencies Resulting from
Audits or Examinations and Material
Issues Raised
SCHEDULE 2.06(c)(iv) Returns Under Audit and Outstanding
Subpoenas
SCHEDULE 2.06(d) Tax Extensions; Powers of Attorney
SCHEDULE 2.06(e) Consolidated Groups; Tax Jurisdictions
SCHEDULE 2.06(f) Tax Sharing Agreements
SCHEDULE 2.06(g) Inclusions in Income
SCHEDULE 2.06(h) Nexus Jurisdictions
SCHEDULE 2.07 Encumbrances
SCHEDULE 2.08 Real Property; Encumbrances; Defaults
SCHEDULE 2.09 Personal Property; Leases; Defaults
SCHEDULE 2.10 Receivables Deemed Uncollectible
SCHEDULE 2.11 Conflicts, Consents, etc.
SCHEDULE 2.12 Absence of Changes
SCHEDULE 2.13 Litigation
SCHEDULE 2.14 Permits; Violations
SCHEDULE 2.15 Material Contracts; Defaults
SCHEDULE 2.16 Licenses; Trademarks; Tradenames
SCHEDULE 2.17 Insurance Policies; Claims; Denials of
Coverage
SCHEDULE 2.18 Benefit Plans; Withdrawal Liability;
Unfunded Benefits
SCHEDULE 2.19 Labor Relations; Unions; Foreign Plans
SCHEDULE 2.20 Compensation
SCHEDULE 2.21 Brokers
SCHEDULE 2.22 Tariffs
SCHEDULE 2.23 Customers
SCHEDULE 2.28 Accounts
SCHEDULE 6.04 Budgeted Capital Expenditures
SCHEDULE 6.06 Commitments with Respect to Property
SCHEDULE 7.02 Consents
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<PAGE>
INDEX OF DEFINITIONS
DEFINITION SECTION
"A Prefs" ............................................ Section 1.01
"Adjusted Purchase Price"............................. Section 1.02(a)
"Adjustment Statement"................................ Section 1.02(b)
"Affiliated Group".................................... Section 2.06(a)
"Agreement" .......................................... Introduction
"APAX"................................................ Article II
"APAX Letter of Credit"............................... Section 7.04
"Applicable Laws" .................................... Section 2.11(c)
"Balance Amount" ..................................... Section 1.01
"Base Balance Sheet".................................. Section 2.05
"Base Net Asset Value"................................ Section 1.02(a)
"Breakup Amount" ..................................... Section 10.02
"Buyback Agreement"................................... Introduction
"Closing" ............................................ Section 9.01
"Closing Date" ....................................... Section 9.01
"Closing Date Balance Sheet".......................... Section 1.02(a)
"Closing Date Net Asset Value"........................ Section 1.02(a)
"Company" ............................................ Introduction
"Company Financial Statements"........................ Section 2.05
"Contested Adjustment Notice"......................... Section 1.02(b)
"Contested Adjustments"............................... Section 1.02(b)
"Conversion Rights"................................... Section 2.03(b)
"Covered Taxes"....................................... Section 2.06(b)
"Disclosure Letter"................................... Section 11.03(c)
"Eagle" .............................................. Introduction
"Eagle Shares"....................................... Introduction
"Employment Agreement:................................ Section 7.07
"Encumbrances"........................................ Section 2.03(a)
"Environmental Laws".................................. Section 2.24
"Epstein Shares"..................................... Section 1.04(a)
"Epstein Put/Call Purchase Price".................... Section 1.04(a)
"Exercise Notice"..................................... Section 1.06(a)
"Exit Bonus Scheme"................................... Section 2.20
"Finally Determined".................................. Section 11.19
"GAAP" ............................................... Section 2.05
"Governmental Authority" ............................. Section 2.11(c)
"Hazardous Materials"................................. Section 2.24
"Indebtedness"........................................ Section 1.01
"Independent Accountant".............................. Section 1.02(b)
"Judgment" ........................................... Section 2.11(c)
"June 1997 Accounts" ................................. Section 2.05
"Legal Action"........................................ Section 2.13
"Material Adverse Change" ............................ Section 7.05
"Material Adverse Effect" ............................ Section 2.01(a)
"Material Contracts".................................. Section 2.15
"Morgan Stanley Fee".................................. Section 2.21
"Net Asset Value"..................................... Section 1.02(a)
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<PAGE>
DEFINITION SECTION
"1995/1996 Accounts" ................................. Section 2.05
"Option Agreement" ................................... Introduction
"Options" ............................................ Section 2.03(a)
"Permits" ............................................ Section 2.14
"Person".............................................. Section 2.11(b)
"Personal Property"................................... Section 2.09
"Plans" .............................................. Section 2.18(a)
"Purchase Price"...................................... Section 1.01
"Purchaser Letter of Credit".......................... Section 8.04
"Qualifying Claim" ................................... Section 11.08
"Return" or "Returns"................................. Section 2.06(a)
"Settlement Amount Certificate"....................... Section 1.02(b)
"Share" or "Shares"................................... Introduction
"Shareholder" or "Shareholders"....................... Introduction
"Subsidiary" ......................................... Section 2.01(a)
"Tax" or "Taxes"...................................... Section 2.06(b)
"Taxing Authority".................................... Section 2.06(a)
"Xpedite"............................................. Introduction
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<PAGE>
SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT (collectively with the Schedules,
Exhibits, Disclosure Letter and other attachments hereto, the "AGREEMENT"),
dated as of August 8, 1997, is entered into by and among PHJ&W No. 2 LIMITED, an
English corporation (Registration No. 3406448) (the "PURCHASER"), XPEDITE
SYSTEMS, INC., a Delaware corporation ("XPEDITE"), and the shareholders of
XPEDITE SYSTEMS LIMITED, an English corporation (Registration No. 2778084) (the
"COMPANY") listed on SCHEDULE 1 attached hereto (each, a "SHAREHOLDER" and
collectively, the "SHAREHOLDERS" but, for the avoidance of doubt, the terms
"SHAREHOLDER" and "SHAREHOLDERS" shall not include Eagle (as defined below)
unless the Buyback Agreement (as defined below) is terminated).
WHEREAS, the Shareholders own all of the issued ordinary and
preference share capital of the Company (other than the "A PREFS" (as
hereinafter defined) and the Ordinary Shares of (pound)1.00 each in the capital
of the Company subject to the provisions of the Buyback Agreement)
(individually, a "SHARE" and collectively, the "SHARES"), in the amounts
indicated on SCHEDULE 1 attached hereto.
WHEREAS, Xpedite, the Company and the Shareholders are parties to that
certain Put and Call Option Agreement dated as of January 29, 1993 (as amended
through the date hereof, the "OPTION AGREEMENT") in which the parties thereto
set forth certain agreements regarding the ability of a party to either "put" or
"call" the Shares as more fully set forth in the Option Agreement.
WHEREAS, Xpedite has formed Purchaser for the purpose of purchasing
the Shares.
WHEREAS, the Shareholders desire to sell to Purchaser, and Purchaser
desires to purchase from the Shareholders, the number of Shares set forth
opposite their respective names on SCHEDULE 1 attached hereto or, in the event
the Buyback Agreement is terminated, SCHEDULE 1A attached hereto, in accordance
with the terms and provisions of this Agreement.
WHEREAS, on the date of this Agreement, the Company and Eagle Nominees
Limited ("EAGLE") have entered
<PAGE>
into a conditional sale and purchase agreement (the "BUYBACK AGREEMENT") in the
form of EXHIBIT A attached hereto for the acquisition by the Company of 48,334
Ordinary Shares (the "Eagle Shares") of (pound)1.00 each in the capital of the
Company from Eagle for a consideration of $10,773,935 subject to compliance with
the Companies Act 1985.
WHEREAS, the Buyback Agreement will automatically terminate if there
is an outstanding objection under Section 176 of the Companies Act 1985 at
Closing in which event Eagle will become a "Shareholder" for purposes of this
Agreement and the Eagle Shares shall be treated as "Shares" for purposes hereof.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and of the representations, warranties, covenants and
agreements hereinafter contained, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
-------------------------------
SECTION 1.01. PURCHASE AND SALE OF THE SHARES.
-------------------------------
At the Closing (as defined in SECTION 9.01), (a) each Shareholder
(other than Marc Epstein), in reliance on the representations, warranties and
covenants of Purchaser and Xpedite contained herein and subject to the terms and
conditions of this Agreement, shall sell with full title guarantee to Purchaser
all of the Shares set forth opposite such Shareholder's name on SCHEDULE 1
hereto or, in the event the Buyback Agreement is terminated, SCHEDULE 1A hereto;
and (b) Purchaser, in reliance on the representations, warranties and covenants
of the Company and the Shareholders contained herein and subject to the terms
and conditions of this Agreement, shall purchase the Shares (including the
Epstein Shares (as defined in SECTION 1.04) which ordinary shares are subject to
the provisions of SECTION 1.04) from the Shareholders in the proportions set
forth in SCHEDULE 1 or, in the event the Buyback Agreement is terminated, in the
proportions set forth in SCHEDULE 1A , for the aggregate cash purchase price
equal to $76,226,065 (or $87,000,000, in the event the Buyback Agreement is
terminated and the Eagle Shares are purchased pursuant hereto) MINUS the nominal
amount outstanding of the 17.5% cumulative redeemable "A" preference shares (the
"A PREFS"), in the capital of the Company, and any premiums and interest
-2-
<PAGE>
thereon (accrued down to the Closing Date) and penalties (if any) with respect
thereof, and MINUS Indebtedness (as defined below) of the Company outstanding on
the Closing Date including, but not limited to, any overdrafts and indebtedness
to N.M. Rothschild & Sons Limited ("PURCHASE PRICE"), which Purchase Price shall
be allocated among the Shareholders as set forth on SCHEDULE 1 or SCHEDULE 1A
attached hereto, as applicable. For purposes of this Agreement, the term
"INDEBTEDNESS" of a Person at a particular date shall mean all obligations for
borrowed money of such Person (other than trade debt incurred in the ordinary
course of business) which in accordance with GAAP (as defined in SECTION 2.05
hereof) would be classified upon a balance sheet as liabilities, including all
indebtedness, debt and similar monetary obligations of such Person, whether
direct or guaranteed, and all premiums, if any, due at the required prepayment
dates of, interest on, and penalties with respect to, such indebtedness. Not
later than two business days prior to the Closing Date, the Shareholders shall
deliver to Purchaser (i) an estimated consolidated balance sheet of the Company,
prepared in good faith, as of the close of business on the last day of the month
immediately preceding the Closing Date (as defined in SECTION 9.01 hereof);
provided that where the Closing is delayed pursuant to SECTION 9.01 and
consequently the Closing Date is before the 15th day of a month, the
Shareholders shall deliver to Purchaser a consolidated balance sheet of the
Company prepared in good faith as of the close of business on the last day of
the second to last month immediately preceding the Closing Date, and (ii) a
statement of aggregate revenues and page count, on a weekly basis, for each week
(or portion thereof) in the period from the date of the balance sheet of the
Company delivered pursuant to clause (i) of this sentence to the day before such
delivery. Not later than October 31, 1997, Xpedite shall provide the
Shareholders with evidence that it has received financing commitments (subject
to customary closing conditions) in an amount of at least $87,000,000. The
Purchase Price will be paid by Purchaser as follows:
(i) at the Closing, $57,000,000 shall be delivered to
either Shareholders' solicitors, Hammond Suddards, or to such other
persons that the Shareholders specify, whose respective bank account
details will be provided to Purchaser not less than 7 days prior to the
Closing in cash by wire transfer in immediately available funds, which
$57,000,000 will be applied in accordance with SECTION 9.01(b)(i);
provided that the amounts applied pursuant to SECTION 9.01(b)(i)
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<PAGE>
(First) and (Second) shall be contributed to the Company for the
purpose of redeeming the A Prefs and completing the Buyback Agreement,
respectively; and
(ii) six months after the Closing Date, the remaining
balance of the Purchase Price (after taking into account any adjustment
to be made pursuant to SECTION 1.02) ("BALANCE AMOUNT") shall be
delivered to Hammond Suddards, or to such other persons that the
Shareholders specify, for the benefit of all the Shareholders in cash
by wire transfer in immediately available funds, LESS the amount of the
Epstein Put/Call Purchase Price which shall be paid in accordance with
SECTION 1.04; PROVIDED, that in the event of a dispute over the
calculation of the Balance Amount, such Balance Amount shall be payable
on the later of (i) the date ten (10) days after the final calculation
of the Balance Amount pursuant to SECTION 1.02(b) hereof, or (ii) the
date six months after the Closing Date; PROVIDED, FURTHER, that in the
event of a dispute over the adjustment to the Purchase Price pursuant
to SECTION 1.02(b) hereof, Purchaser shall pay the undisputed portion
of the Balance Amount on the date six months after the Closing Date.
Notwithstanding anything contained in this Agreement to the contrary,
in the event David Proctor has not purchased at least $2.0 million of
Xpedite common stock (which Xpedite hereby irrevocably covenants to
issue to David Proctor upon such payment being made) within six months
after the Closing Date, as required by the Employment Agreement (as
defined in SECTION 7.07), the Purchaser shall have the right to
withhold the payment of the Balance Amount until such time as David
Proctor has purchased $2.0 million of Xpedite stock. In addition, APAX
agrees that the Purchaser has a right of set-off of $172,000 against
APAX, which amount may be withheld by the Purchaser from APAX's portion
of the Balance Amount.
Upon delivery to Hammond Suddards or to such other persons that the
Shareholders specify, of any payment described in this SECTION 1.01, neither the
Purchaser nor Xpedite shall have any liability with respect to such payment to
any party.
Subject to Section 1.02 hereof, nothing contained in this Agreement
shall require that, in order to purchase the Shares the Purchaser will pay more
than an aggregate sum of $76,226,065 (in the event the Buyback Agreement is in
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effect) or $87,000,000 (in the event the Buyback Agreement has been terminated
pursuant to Clause 5.2 of the Buyback Agreement), LESS the nominal amount
outstanding of the A Prefs on the Closing Date (and any premiums and interest
thereon accrued down to the Closing Date and penalties (if any) in respect
thereof), LESS the amount of Indebtedness of the Company outstanding on the
Closing Date, and LESS the amount of the Epstein Put/Call Purchase Price (as
defined in SECTION 1.04), as adjusted pursuant to SECTION 1.02 hereof.
SECTION 1.02. ADJUSTMENTS.
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(a) Within sixty (60) days after the Closing Date, the Purchaser shall
prepare, in a manner consistent with the procedures and policies, bases and
methods of valuation adopted in the preparation of the audited accounts of the
Company for the year ending December 31, 1996 as detailed in SCHEDULE 1.02, and
deliver to the Shareholders a consolidated balance sheet of the Company (the
"CLOSING DATE BALANCE SHEET") as at the end of the calendar month prior to the
month in which the Closing takes place (but, for the avoidance of doubt, without
taking into account the effect of the transactions described in SECTION
9.01(b)(i) and (if the Buyback Agreement is not terminated) the completion of
the Buyback Agreement). The parties shall have the right to dispute the Closing
Date Balance Sheet as provided in SECTION 1.02(b) hereof. The Purchase Price
payable to the Shareholders shall be increased, where the Closing Date Net Asset
Value, as defined below, is more than the Base Net Asset Value, as defined
below, or reduced, where the Closing Date Net Asset Value is less than the Base
Net Asset Value, by the difference between the Closing Date Net Asset Value and
the Net Asset Value, as defined below, of the Company as of the end of the
calendar month prior to the month in which the Closing takes place (the "BASE
NET ASSET VALUE"), as shown in the projected balance sheets of the Company
attached as SCHEDULE 1.02(a). For purposes of this Agreement, the term "NET
ASSET VALUE" shall mean the total assets MINUS total liabilities of the Company
(calculated in a manner consistent with the calculation of the Base Net Asset
Value) as of the end of a particular month, and the term "CLOSING DATE NET ASSET
VALUE" shall be the Net Asset Value shown on the Closing Date Balance Sheet, and
in each case, the Net Asset Value shall be expressed in U.S. Dollars based upon
an exchange rate from Pounds Sterling equal to the average daily closing
exchange rate as reported in the Wall Street Journal for the five business days
immediately prior to the third business day prior to the date following six (6)
months after Closing; PROVIDED, FURTHER, that for
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purposes of calculating "Net Asset Value" the amount of liability for amounts
owed by the Company to Xpedite shall not exceed one month of Xpedite's royalty
charges to the Company. The amount of the Purchase Price, as adjusted pursuant
to this SECTION 1.02, shall be referred to herein as the "ADJUSTED PURCHASE
PRICE" provided always that the adjustment to the Purchase Price shall not in
any event be more than $1,500,000 up or down.
(b) The Shareholders shall have until thirty (30) days after the
delivery of the Closing Date Balance Sheet to them to review such statement and
propose any adjustments thereto. The Purchaser agrees that it shall provide the
Shareholders and their accountants access during normal business hours to review
and, where reasonable, take copies of, the Company's books and records for all
relevant periods in connection with the Shareholders' review of the Closing Date
Balance Sheet and proposal of adjustments with respect thereto in accordance
with this SECTION 1.02(b). All adjustments proposed by the Shareholders shall be
set out in detail in a written statement delivered to Purchaser (an "ADJUSTMENT
STATEMENT") and shall be incorporated into the Closing Date Balance Sheet unless
Purchaser shall object in writing to such proposed adjustment within fifteen
(15) days after delivery by the Shareholders to Purchaser of such Adjustment
Statement. If Purchaser does object in writing within fifteen (15) days to any
such proposed adjustment (the proposed adjustment or adjustments to which
Purchaser objects, hereinafter the "CONTESTED ADJUSTMENTS" and Purchaser's
objection notice, hereinafter, a "CONTESTED ADJUSTMENT NOTICE"), then Purchaser
and the Shareholders shall use reasonable efforts to resolve their dispute
regarding the Contested Adjustments, but if a final resolution thereof is not
obtained within fifteen (15) days after Purchaser delivers to the Shareholders
the relevant Contested Adjustment Notice, the Shareholders and Purchaser shall
promptly retain Arthur Andersen & Co. (the Leeds, England office) (the
"INDEPENDENT ACCOUNTANT") to resolve any remaining disputes concerning the
Contested Adjustments. Within fifteen (15) days after the Independent Accountant
is retained, (i) Purchaser and the Shareholders shall each submit to the
Independent Accountant in writing their respective positions with respect to the
Contested Adjustments, together with such supporting documentation as they deem
necessary or as the Independent Accountant requests, and (ii) Purchaser and the
Shareholders shall cause the Independent Accountant to, within thirty (30) days
after receiving the positions of both Purchaser and the Shareholders and all
supplementary supporting documentation
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requested by the Independent Accountant, render its decision as to the Contested
Adjustments, which decision shall (in the absence of manifest error) be final
and binding on, and nonappealable by, Purchaser and the Shareholders. The fees
and expenses of the Independent Accountant incurred in connection with the
procedure set forth in this SECTION 1.02(b) shall be borne by Purchaser and the
Shareholders in proportion to the difference between the Closing Date Net Asset
Value last claimed by each such party in the Adjustment Statement or Contested
Adjustment Notice immediately prior to the retention of such Independent
Accountant and the Closing Date Net Asset Value as determined by the Independent
Accountant in its final decision as set forth in its Settlement Amount
Certificate (as hereinafter defined) (E.G., if Purchaser claims a Closing Date
Net Asset Value of Three Hundred Thousand Pounds Sterling ((pound)300,000), the
Shareholders claim a Closing Date Net Asset Value of Five Hundred Thousand
Pounds Sterling ((pound)500,000) and the Settlement Amount Certificate
establishes a Closing Date Net Asset Value of Four Hundred Fifty Thousand Pounds
Sterling ((pound)450,000) then the costs of the Independent Accountant would be
borne Seventy-Five Percent (75%) by Purchaser and Twenty-Five Percent (25%) by
the Shareholders. The decision of the Independent Accountant shall also include
a certificate (the "SETTLEMENT AMOUNT CERTIFICATE") of the Independent
Accountant setting forth the final amount of the Closing Date Net Asset Value
and the amount, if any, by which the second installment of the Purchase Price
payable six months after the Closing shall be increased or reduced. The Closing
Date Balance Sheet shall be deemed to include all undisputed adjustments and
those adjustments made by the decision of the Independent Accountant in
resolving the Contested Adjustments.
(c) For the avoidance of doubt, Purchaser shall, subject to the time
limits imposed by this SECTION 1.02, be entitled to cause the Company to take
such steps as Purchaser decides necessary (including, but not limited to,
obtaining rulings from relevant Governmental Authorities) in order to prepare
and finalize the Closing Date Balance Sheet.
SECTION 1.03. MODIFICATION OF OPTION AGREEMENT; TERMINATION OF OPTION
AGREEMENT. The parties hereto agree that in the event this Agreement is
terminated for whatever reason then the Option Agreement shall as of the date of
such termination be amended so that the definition of "MC" contained in the
Schedule of the Option Agreement shall in
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the event of a "put" or "call" option being exercised pursuant to the Option
Agreement in January 1998 (but not in connection with an exercise at any other
time) be as follows: "means (a) INC's total equity value (as represented by the
average market capitalization of all INC's Stock in issue on (i) the last 20
trading days prior to December 31, 1997 or (ii) the 20 trading days commencing
on the 30th day after the termination of the Share Purchase Agreement dated as
of August 8, 1997 among PHJ&W No. 2 Limited, Xpedite Systems, Inc. and APAX and
Mr. Proctor and others (as amended, the "Purchase Agreement"), whichever period
begins later, including, but without limitation, all ordinary and preferred
stock including accrued and unpaid interest and dividends) and (b) any amount
paid by INC within the last 6 months of the date falling 30 days after the
termination of the Purchase Agreement, other than funds representing profits
from operations, to redeem, repurchase or retire any preferred stock." The
parties hereto also agree that the definition of "CP" shall be calculated by
reversing the expenses booked by the Company that are associated with the Exit
Bonus Scheme and the Morgan Stanley Fee (each as defined herein). The parties
hereto further agree that upon the unconditional purchase and sale of the Shares
on the Closing Date, the Option Agreement shall be automatically terminated
without any further action of the parties, shall be of no further force or
effect and no party shall have any rights, liability or obligation to any other
party thereunder with respect thereto. For the avoidance of doubt, in connection
with the exercise of a "put" or "call" option under the Option Agreement other
than in January 1998, the definition of "MC" shall remain as set forth in the
Option Agreement as of the date hereof.
SECTION 1.04. EPSTEIN PUT/CALL AGREEMENT. (a) At any time on or after
August 1, 1998, the Purchaser shall have the right to purchase from Marc Epstein
all, but not less than all, of the 10,000 ordinary shares of(pound)1.00 eACH in
the capital of the Company beneficially owned by Marc Epstein (the "EPSTEIN
SHARES"), and Marc Epstein shall have the right to cause the Purchaser to
purchase all, but not less than all, the Epstein Shares, for a cash purchase
price equal to the proportion of the Adjusted Purchase Price due to Marc Epstein
as set out in SCHEDULE 1 or SCHEDULE 1A, as the case may be (the "EPSTEIN
PUT/CALL PURCHASE PRICE"). Each of the Purchaser and Marc Epstein, as the case
may be, may exercise their rights under this SECTION 1.04(a) by giving written
notice thereof to the other party ("EXERCISE NOTICE"). The closing for the
purchase and sale of the Epstein Shares (the "EPSTEIN PUT/CALL CLOSING") shall
take
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place on the date that is five (5) days after receipt by the Purchaser or Marc
Epstein, as the case may be, of the Exercise Notice from the other party or such
other date as may be mutually agreed upon by the Purchaser and Marc Epstein. It
shall be a condition precedent to the Purchaser's obligation to consummate the
Epstein Put/Call Closing that (i) the representations and warranties made by
Marc Epstein in Article III hereof with respect to the Epstein Shares and to
himself are true and correct in all material respects as of such date, (ii) Marc
Epstein will in connection with such Epstein Put/Call Closing execute and
deliver to Xpedite at Closing a Noncompetition and Nondisclosure Agreement in a
form reasonably satisfactory to Xpedite (both parties agreeing to negotiate in
good faith) and (iii) Marc Epstein shall have complied with the provisions of
Section 1.04(c). At the Epstein Put/Call Closing, the Epstein Put/Call Purchase
Price shall be paid in cash by the Purchaser to Marc Epstein by wire transfer to
an account designated by Marc Epstein and Marc Epstein shall deliver to the
Purchaser a certificate or certificates representing the Epstein Shares,
together with a duly executed stock transfer form in respect of the Epstein
Shares in favor of the Purchaser (or to such other Person as the Purchaser may
designate).
(b) From the date hereof until the date of the Epstein Put/Call
Closing, Marc Epstein shall not sell, transfer, pledge, hypothecate, or
otherwise dispose of any of the Epstein Shares or any interest in or portion
thereof, or any rights appurtenant thereto. Effective as of Closing, Marc
Epstein hereby appoints the Purchaser as his attorney to attend any and all
meetings of the shareholders of the Company, to vote all of the share capital of
the Company owned by Marc Epstein, to give or withhold a written consent in
connection with any solicitation of consents and to represent and otherwise to
act for him in matters involving the Company and its business in the same manner
and with the same effect as if done by him. This power of attorney shall be
irrevocable. Marc Epstein hereby authorizes the Purchaser to substitute any
other Person to act pursuant to this power of attorney, to revoke any
substitution and to file this power of attorney and any substitution or
revocation with the Secretary of the Company. Marc Epstein agrees to execute
such instruments as the Purchaser may request in order to evidence the granting
of this power of attorney.
(c) Within ten (10) days after the execution of
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this Agreement, Marc Epstein shall deposit the certificate(s) representing the
Epstein Shares with the Company to be held in escrow in accordance with the
terms of this Agreement. Such Epstein Shares shall be released from the
provisions of this escrow as follows: (a) to the Purchaser, upon the
consummation of the transactions contemplated by this SECTION 1.04, or (b) to
Marc Epstein, in the event this Agreement is terminated for any reason.
(d) For the avoidance of doubt, Marc Epstein agrees to (i) take all
reasonable steps required by the Company to satisfy all requirements under
English law to enable the Company to lawfully make the payments contemplated by
the Exit Bonus Scheme and the Morgan Stanley Fee and (ii) give consent in favor
of the Company granting to Xpedite's financing sources guarantees of Xpedite's
indebtedness including, without limitation, voting his shares in favor of any
resolution approving such guarantees.
ARTICLE II
Representations and Warranties
oF APAX
------------------------------
Apax Partners & Co. Ventures Limited ("APAX")(in its capacity as
manager of Apax Ventures IV and as manager of Apax IV International Partners LP)
hereby represents and warrants to Purchaser as follows:
SECTION 2.01. ORGANIZATION AND STANDING.
-------------------------
(a) Each of the Company and its Subsidiaries (as hereinafter defined)
is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation, and has the full corporate
power and authority to carry on its business in the places and as it is now
being conducted and to own and lease the properties and assets which it now owns
or leases. The Company and each of its Subsidiaries is now duly qualified to
transact business and in good standing as a foreign corporation in all
jurisdictions in which the character of the property owned or leased by it and
the nature of the business conducted by it require such qualification, except
where failure to be qualified could not reasonably be expected to have a
Material Adverse Effect. Each of the Company's Subsidiaries has no assets or
liabilities (save for cash and receivables not exceeding (pound)50,000 in the
aggregate) and does not engage in any active
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operations. For purposes of this Agreement, a "MATERIAL ADVERSE EFFECT" is a
material adverse effect on the business or prospects of the Company and its
Subsidiaries taken as a whole. For purposes of this Agreement, a "SUBSIDIARY" of
any Person is any corporation, partnership, joint venture or other legal entity
of which a majority of all outstanding shares of capital stock or other equity
interests (the holders of which are ordinarily and generally entitled to vote
for the election of the members of the board of directors or other governing
body thereof) is owned, directly or indirectly, by such Person (either alone or
through or together with any other Subsidiary). For purposes of this Agreement,
"so far as APAX is aware" or any similar expression shall be restricted to mean
APAX's actual knowledge having made reasonable enquiry of David Proctor.
(b) SCHEDULE 2.01(b) sets forth a list of the Company's Subsidiaries
and the jurisdiction of incorporation or organization of each such Subsidiary.
(c) True, correct and complete copies of the Memorandum and Articles
of Association, Certificate of Incorporation, Certificates of Incorporation on
Change of Name and Articles of Association of the Company and each of its
Subsidiaries are attached hereto as SCHEDULE 2.01(c).
SECTION 2.02. [INTENTIONALLY OMITTED]
SECTION 2.03. CAPITALIZATION.
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(a) The authorized share capital of the Company is (pound)12,059,205
divided into 2,712,094 A Preference Shares of (pound)1.00 each (of which
2,644,033 are in issue and fully paid), 6,238,778 B Preference Shares of
(pound)1.00 each (none of which are in issue) 2,775,000 Preference Shares of
(pound)1.00 each (of which 2,375,000 are in issue and fully paid), 250,000 A
Ordinary Shares of (pound)1.00 each (all of which are in issue and fully paid)
and 83,333 Ordinary Shares of (pound)1.00 each (of which 60,000 are in issue and
fully paid, 3,267 are held under options by David Proctor and 20,066 are the
subject of options issued under the Company's Share Option Scheme disclosed in
the Disclosure Letter (as defined in SECTION 11.03(c)) (the "OPTIONS")). Save
for the 48,334 Ordinary Shares which are the subject of the Buyback Agreement
and the A Prefs, the Shares to be sold by the Shareholders pursuant to this
Agreement constitute all of the issued share capital of the Company. All of the
issued share capital of the Company is validly issued, fully paid, and not
subject to any capital call (I.E., are non-assessable).
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All of the outstanding share capital of each of the Company's Subsidiaries is
validly issued, fully paid non-assessable and is owned directly or indirectly by
the Company free and clear of all security interests, liens, pledges, claims,
charges, escrows, encumbrances, options, rights of first refusal, rights of
pre-emption, mortgages, indentures or easements (collectively "ENCUMBRANCES") of
any nature.
(b) Except as set forth on SCHEDULE 2.03 or in the Disclosure Letter,
there are no other shares in the share capital of the Company or any of its
Subsidiaries, or securities convertible into or exchangeable or exercisable for
shares of the Company or any of its Subsidiaries, outstanding, and there are no
outstanding options, warrants, rights, contracts, commitments, understandings,
arrangements or claims of any character by which the Company or any of its
Subsidiaries is or may become bound to create, allot, issue, transfer, sell,
redeem, repurchase or otherwise acquire or retire any shares or other ownership
interest of the Company or any of its Subsidiaries, or any securities
convertible into or exchangeable or exercisable for any such shares or other
ownership interest (all of the foregoing being called "CONVERSION RIGHTS").
There are no voting trusts or other agreements or understandings to which the
Company is a party with respect to the voting of the shares of the Company or
any of its Subsidiaries. No holder or beneficiary of any Conversion Rights shall
be entitled to receive any consideration with respect thereto not expressly
contemplated by this Agreement.
SECTION 2.04. ABSENCE OF EQUITY INVESTMENTS. Neither the Company nor
any of its Subsidiaries, either directly or indirectly, owns legally or
beneficially any shares or other equity interests in any Person (as defined in
SECTION 2.11(b)) other than the Company's ownership of the Subsidiaries.
SECTION 2.05. LIABILITIES AND OBLIGATIONS OF THE COMPANY. The
consolidated balance sheets of the Company and its Subsidiaries as at December
31, 1995 and December 31, 1996 and the related profit and loss account and
related cash flows for the respective years and periods then ended, including
the notes thereto and the reports thereon of Price Waterhouse, chartered
accountants (the "1995/1996 ACCOUNTS") and the Company's unaudited consolidated
balance sheet and related consolidated profit and loss account and cash flows
for the six-month period ended June 30, 1997 (the "JUNE 1997 ACCOUNTS" and,
collectively with the 1995/1996 Accounts, the
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"COMPANY FINANCIAL STATEMENTS"), are attached hereto as SCHEDULE 2.05(a)(i). The
Company Financial Statements present fairly the consolidated financial position
and the results of operations of the Company and its Subsidiaries as of the
dates and for the periods indicated on the Company Financial Statements, in each
case in conformity with generally accepted accounting principles in the United
Kingdom ("GAAP"), consistently applied during such periods. The Company and its
Subsidiaries did not have any material liabilities or obligations of any nature
(whether accrued, absolute, contingent, unasserted or otherwise) except (1) as
disclosed, reflected or reserved against in the balance sheet dated as of June
30, 1997 (the "BASE BALANCE SHEET") included in the Company Financial Statements
and the notes thereto and (2) for liabilities set forth on SCHEDULE 2.05(a)(ii).
The Company has complied in all respects with the accounts and audit
requirements of the UK Companies Act 1985 and is fully up-to-date with all its
accounts and other statutory filing obligations at Companies House.
SECTION 2.06. TAX MATTERS.
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(a) All federal, state, national, foreign and local tax returns and
tax reports, if any, required to be filed with respect to the business and
assets of the Company and its Subsidiaries and any consolidated, combined,
unitary, affiliated or aggregate group of which the Company or any of its
Subsidiaries is or has ever been a member (an "AFFILIATED GROUP"), have been
filed with the appropriate governmental agencies in all jurisdictions in which
such returns and reports are required to be filed and all of the foregoing are
true, correct and complete in all material respects as amended, if appropriate.
For purposes of this Agreement, (A) "TAXING AUTHORITY" shall mean any domestic,
foreign, federal, national, state, provincial, county or municipal or other
local government, any subdivision, agency, commission or authority thereof, or
any quasi-governmental body exercising any Taxing authority or any other
authority exercising Tax regulatory authority (including, without limitation,
the Inland Revenue and H.M. Customs and Excise); and (B) "RETURN" or "RETURNS"
shall mean all returns, declarations of estimated Tax payments, reports,
estimates, information returns and statements, including any related or
supporting information filed with respect to any of the foregoing, maintained,
filed or to be filed with any Taxing Authority in connection with the
determination, assessment, collection or administration of any Taxes.
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(b) All federal, state, national, foreign and local income, profits,
franchise, sales, use, value added, occupation, property, excise, payroll, wage
withholding and all other taxes, fees, charges, assessments, duties or similar
charges of any kind whatsoever (including interest, fines, penalties and
additions) ("TAX" or "TAXES"), if any, payable by the Company or its
Subsidiaries or relating to or chargeable against its assets, revenues or income
through June 30, 1997 were fully and timely paid by such date or provided for by
adequate liabilities and reserves on the Base Balance Sheet and all similar
items due through the date of the Closing Date Balance Sheet ("COVERED TAXES")
will have been fully and timely paid by that date or provided for by adequate
liabilities and reserves on the Closing Date Balance Sheet in accordance with
GAAP consistently applied during such periods. There are no pending claims of
insufficiency of payments or assertions of any deficiency for any Taxes, or of
any adjustments to any tax item or attribute, of the Company or any of its
Subsidiaries and except as scheduled, no audits or investigations of which the
Company is aware which may lead to such claims. Except as set forth in SCHEDULE
2.06(b), none of the Company, any of its Subsidiaries or any Affiliated Group is
a party to any action for assessment or collection of Covered Taxes. All
material payments of estimated Taxes required to be made with respect to the
Company or any of its Subsidiaries under any provision of Applicable Law have
been made. The provision for taxation shown on the Base Balance Sheet and the
Closing Date Balance Sheet adequately reflects, in accordance with GAAP,
consistently applied during such periods, the liability for unpaid Taxes
(including deferred Taxes, any Taxes not yet due and payable that are properly
accruable as of the date thereof and any Taxes that are being contested) of the
Company and its Subsidiaries as of the date of the Base Balance Sheet and the
date of the Closing Date Balance Sheet, respectively.
(c) Except as set forth on SCHEDULE 2.06(c)(i), no Encumbrances or
liens relating to Taxes exist with respect to any of the assets or properties of
the Company or any of its Subsidiaries. Except as set forth in SCHEDULE
2.06(c)(ii), no statute of limitations period with respect to any Tax liability
of, or Return filed by, the Company, any Subsidiary or any Affiliated Group, has
expired. Except as set forth on SCHEDULE 2.06(c)(iii), each deficiency resulting
from any audit or examination relating to Covered Taxes by any Taxing Authority
has been paid and no material issues were raised (either orally or in writing)
by the
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relevant Taxing Authority during any such audit or examination that might apply
to taxable periods other than the taxable period to which such audit or
examination related. Except as set forth on SCHEDULE 2.06(c), (A) no Taxing
Authority has given notice (either orally or in writing), nor is APAX otherwise
aware, that any Returns of the Company, any of its Subsidiaries or any
Affiliated Group has ever been audited or examined by any Taxing Authority, (B)
no Taxing Authority has given notice (either orally or in writing) that it will
commence any such audit or examination and (C) there are no outstanding
subpoenas or requests for information with respect to the Company, any of its
Subsidiaries or any Affiliated Group.
(d) Except as set forth in SCHEDULE 2.06(d), there is no agreement,
waiver, consent or other document extending, or having the effect of extending,
the period of assessment or collection of any Covered Taxes and no power of
attorney with respect to any Covered Taxes has been executed or filed permitting
any Person other than the Company to file any Return or conduct any proceedings
with any Taxing Authority.
(e) Except as set forth in SCHEDULE 2.06(e), none of the Company or
any of its Subsidiaries has been a member of any affiliated, consolidated,
combined, unitary or aggregate group for purposes of filing Returns or paying
Taxes at any time. SCHEDULE 2.06(e) lists each jurisdiction in which the Company
or any of its Subsidiaries joins or has joined, or is or has ever been required
to join, in filing any consolidated, combined, unitary or aggregate Return and
lists the other corporations and/or other persons that were included or were
required to be included in filing such Return.
(f) Except as set forth in SCHEDULE 2.06(f), none of the Company, any
of its Subsidiaries or any Affiliated Group is or has been a party to or is or
ever was bound by any written agreement, written arrangement or written practice
with respect to Taxes except published agreements, arrangements or practices
(including any Tax sharing agreements with any of its affiliates, or with any
Taxing Authority). The Company has delivered to Purchaser complete and accurate
copies of any such written agreement, arrangement or practice.
(g) Except as set forth on SCHEDULE 2.06(g), none of the Company or
any of its Subsidiaries will be required in a taxable period beginning on or
after the Closing Date
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to include any amount in income pursuant to any provisions of applicable
federal, national, state, local or foreign law), solely by reason of a change in
accounting methods made before the date hereof.
(h) SCHEDULE 2.06(h) lists each country, county, local, municipal or
foreign jurisdiction in which the Company or any of its Subsidiaries files, has
during the past five (5) years filed, is required to file or has during the past
five (5) years been required to file a Return or is or has been liable for Tax
on a "nexus" or any other basis.
(i) All copies of Tax documents, schedules, lists and other
information provided by the Company or any of its Subsidiaries to Purchaser are
true, complete and correct copies of the originals in all material respects.
(j) All taxes required to be withheld, collected or deposited by the
Company or any of its Subsidiaries have been withheld, collected or deposited
when due or required by Applicable Law and, to the extent required, have been
paid to the relevant Taxing Authority.
(k) The Company has not, during the period commencing five (5) years
prior to the date hereof, acquired, either directly or through any of its
Subsidiaries, any corporation that was a member of any Affiliated Group that
included any corporation that was not also acquired, either directly or through
any of its Subsidiaries, by the Company.
SECTION 2.07. TITLE TO PROPERTY AND RELATED MATTERS. The Company and
each of its Subsidiaries has good and marketable title to all the real and
personal property reflected on the Base Balance Sheet or subsequently acquired
(except for properties or interests in properties sold or otherwise disposed of
since the date of the Base Balance Sheet in the ordinary course of business)
free and clear of all Encumbrances, except for (w) contractual retention of
title prior to payment, (x) mechanics', workmen's, or other like liens arising
or incurred in the ordinary course of business, (y) encumbrances or other
imperfections of title, if any, which do not materially affect the marketability
of the property subject thereto and do not materially impair the use of the
property subject thereto as presently conducted, and (z) except as reflected on
SCHEDULE 2.07.
SECTION 2.08. REAL PROPERTY OWNED OR LEASED. SCHEDULE 2.08 contains a
list of all real estate owned or
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leased (where the aggregate payments remaining under such lease aggregate
(pound)20,000 or more) by the Company and each of its Subsidiaries and
identifies the owner or lessor thereof. All of such real estate and the
improvements thereon are in (given its age and subject to normal wear and tear)
reasonably good condition and working order. With respect to real estate owned,
the Company or the Subsidiary identified on SCHEDULE 2.08, as applicable, has
good and marketable title in fee simple thereto and (save for landlord's
fixtures and fittings) owns all improvements (including buildings and other
structures) thereon, subject only to those Encumbrances, if any, which are
listed on SCHEDULE 2.08. So far as APAX is aware, with respect to real estate
leased, except as may be set forth on SCHEDULE 2.08 (i) all such leases are in
full force and effect and constitute valid and binding obligations of the
respective parties thereto; (ii) there have not been and there currently are not
any material defaults thereunder by any party; (iii) no event has occurred which
(whether with or without notice, lapse of time or the happening or occurrence of
any other event) would constitute a default thereunder entitling the landlord to
terminate the lease; and (iv) the continuation, validity and effectiveness of
all such leases under the current rentals and other current material terms
thereof will in no way be affected by the transactions contemplated hereby,
except where the failure of same will not in any case result in damage to the
Company or any of its Subsidiaries in excess of (pound)20,000. Neither the
Company nor any of its Subsidiaries has received any notice of any failure of
the improvements on such real estate to conform to all Applicable Laws.
SECTION 2.09. PERSONAL PROPERTY OWNED OR LEASED. SCHEDULE 2.09
includes a list of each item of machinery, equipment, office furniture,
automobiles, trucks and other personal property (collectively, the "PERSONAL
PROPERTY") of the Company included in the Base Balance Sheet at a depreciated
book value of more than (pound)1,000. Except for ANY Personal Property with
Xpedite for repair and except as set forth in SCHEDULE 2.09, the Personal
Property in the aggregate is in reasonably good condition and working order, and
each individual item of Personal Property which would cost in excess of
(pound)1,000 to replace is in reasonably goOD condition and working order
(subject to fair wear and tear). SCHEDULE 2.09 also contains a list of each
lease or other agreement under which the Company or any of its Subsidiaries
leases, licenses, holds or operates any item of Personal Property under which
the amount payable exceeds (pound)5,000 PER year, and identifies the lessee,
licensee, holder or
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operator thereof. Except for inaccuracies in (i), (ii), or (iii) below which
would not in any case result in damage to the Company or any of its Subsidiaries
in excess of (pound)100,000 (in the aggregate) and except as set forth on
SCHEDULE 2.09, (i) all of such leases and agreements are in full force and
effect and constitute legal, valid and binding obligations of the respective
parties thereto; (ii) there have not been and there currently are not any
material defaults thereunder by any party thereto; and (iii) no event has
occurred which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute a material default
thereunder. Except as set forth on SCHEDULE 2.09, the continuation and
effectiveness of all of such leases and agreements under the current rentals and
other current material terms thereof will in no way be affected by the
consummation of the transactions contemplated by this Agreement or, if any would
be affected, the result will not in any case result in costs to the Company or
any of its Subsidiaries in excess of (pound)25,000 (for each case). The Company
and its Subsidiaries are not obligated under any lease that would be
characterized as a Capital lease in accordance with GAAP.
SECTION 2.10. ACCOUNTS RECEIVABLE. All accounts receivable of the
Company and its Subsidiaries, whether reflected on the Base Balance Sheet or
subsequently created, have arisen from bona fide transactions in the ordinary
course of business. Except as set forth on SCHEDULE 2.10, all accounts
receivable reflected on the Base Balance Sheet or subsequently created are, good
and collectible at the aggregate recorded amounts thereof, net of any applicable
reserves for doubtful accounts reflected on the Base Balance Sheet or
subsequently created in the ordinary course of business and consistent with past
practice and all customer accounts receivable arising since the date of the Base
Balance Sheet are good and collectible at the aggregate recorded amounts
thereof, net of any applicable reserves for doubtful accounts reflected on the
Base Balance Sheet or subsequently recorded and disclosed in writing to
Purchaser.
SECTION 2.11. AGREEMENT DOES NOT VIOLATE OTHER INSTRUMENTS. Except as
set forth on SCHEDULE 2.11, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby and thereby will:
(a) result in the creation of any Encumbrance upon any of the assets
and properties of the Company or any of its Subsidiaries;
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(b) with or without giving of notice or the passage of time, or both,
violate, or conflict with, or constitute a default under, or result in the
termination or in a right of termination of, violate or be in conflict
with, result in a breach of any term or provision of, or constitute a
default under, or accelerate or permit the acceleration of the performance
required by, or give any other natural person, corporation, trust,
association, company, partnership, joint venture or other entity or any
government, governmental agency, instrumentality or political subdivision
("PERSON") a basis for increased rights or termination or nonperformance
under, or require any consent, authorization or approval under, any term or
provision of any Encumbrance, lease, license, decree, order or any other
agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which any of them are bound;
(c) violate any provision of, or require any consent, authorization or
approval under, any statute, law, ordinance, or administrative rule or
regulation, Permit, order or license, in each case, which is legally
binding on the Company or any of its Subsidiaries, (collectively,
"APPLICABLE LAWS") of any governmental agency, body or instrumentality
(whether federal, national, supra-national, state, local or foreign)
("GOVERNMENTAL AUTHORITY"), or any judicial, administrative or arbitration
order, award, judgment, writ, injunction or decree (collectively,
"JUDGMENT") in each case legally binding on the Company or any of its
Subsidiaries; or
(d) require any consent, approval, permit or authorization of, or
declaration, filing or registration with, any Governmental Authority or any
other Person, to be made or obtained by or on behalf of the Company.
SECTION 2.12. ABSENCE OF CHANGES. Except as set forth on SCHEDULE
2.12, since December 31, 1996, the Company and each of its Subsidiaries has
conducted its business only in the ordinary course, and neither the Company nor
any of its Subsidiaries has, except as set forth on SCHEDULE 2.12:
(a) transferred, assigned, conveyed or liquidated any of its assets
(with a net book value in excess of (pound)10,000) or entered into any
transaction or incurred
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any liability or obligation which materially affected its assets, except in
the ordinary course of business, consistent with past practice;
(b) suffered any change in its business, operations, or financial
condition which could reasonably be expected to have a Material Adverse
Effect thereon, or become aware of any event which will result in any such
Material Adverse Effect;
(c) suffered any material destruction, damage or loss relating to its
assets (whether or not covered by insurance);
(d) suffered, permitted or incurred the imposition of any Encumbrance
which might adversely affect the Company or any of its Subsidiaries (other
than contractual retention of title prior to payment, mechanic's,
materialmen's and similar liens arising in the ordinary course of business
and purchase money security interests arising as a matter of law between
the date of delivery and payment);
(e) committed, suffered, permitted or incurred any default in any
liability or obligation which, in the aggregate, has had or will have a
Material Adverse Effect;
(f) made or agreed to any change in the terms of any contract or
instrument to which it is a party which will have a Material Adverse
Effect;
(g) waived, cancelled, sold or otherwise disposed of, for less than
the face amount thereof, any claim or right which it has against others,
except in the ordinary course of business, consistent with past practice;
(h) declared, promised, set aside or made any distribution (within the
meaning of Section 209 Income and Corporation Taxes Act 1988) to its
shareholders (other than reasonable compensation for services actually
rendered) or issued any additional shares of, or rights, options or calls
with respect to, any of its shares, or redeemed, purchased or otherwise
acquired any of its shares, or made any change whatsoever in its capital
structure;
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(i) paid, agreed to pay or incurred any obligation for any payment
for, any contribution or other amount to or with respect to, any employee
benefit plan, or paid any bonus to, or granted any increase in the
compensation (including but not limited to severance or termination pay)
applicable to (x) any group or classification of employees, (y) any
individual employee who is paid more than (pound)50,000 per year in the
aggregate, or (z) any of its officers or directors; or made any increase in
the pension, retirement or other benefits (other than salary) of any of its
directors, officers or other employees, or entered into any employment,
severance or termination agreement with any officer or director;
(j) incurred any other material liability or obligation or entered
into any transaction other than, in either case, in the ordinary course of
business;
(k) made any change in accounting methods, principle or practices; or
(l) agreed to take or taken any action reasonably likely to cause any
event or occurrence listed in (a) - (k) above.
SECTION 2.13. LITIGATION. Except as set forth on SCHEDULE 2.13, there
is no suit, action, proceeding, claim, inquiry or investigation ("LEGAL ACTION")
pending against the Company or any of its Subsidiaries, and, so far as APAX is
aware, no such Legal Actions are threatened. There has not occurred any event
nor does there exist any condition on the basis of which APAX reasonably
believes that any such Legal Action might properly be instituted.
SECTION 2.14. LICENSES AND PERMITS; COMPLIANCE WITH LAW. The Company
and each of its Subsidiaries holds all licenses, certificates, permits,
authorizations, franchises, rights and other approvals from all Governmental
Authorities ("PERMITS") which are material to the conduct of its business. All
such Permits and the respective expiration dates thereof are listed on SCHEDULE
2.14. Except as set forth on SCHEDULE 2.14, neither the Company nor any of its
Subsidiaries is, or at any time has been, in violation of or non-compliance, in
any material respect (taking the business of the Company as a whole) with any
Applicable Laws, Judgments or Permits. Further, neither the Company nor any of
its Subsidiaries is presently charged with, nor so far as APAX is aware, is the
Company or any of
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its Subsidiaries under investigation by any Governmental Authority with respect
to, any actual or alleged violation of any Applicable Laws, Judgments or
Permits, and neither the Company nor any of its Subsidiaries is presently the
subject of any pending or, so far as APAX is aware, any threatened adverse
proceeding by any Governmental Authority having jurisdiction over it, except as
may be set forth on SCHEDULE 2.14. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
result in the termination of, or any material change in, any Permit, except as
may be set forth on SCHEDULE 2.14. All Permits will continue in full force and
effect after the transactions contemplated by this Agreement, except as may be
set forth on SCHEDULE 2.14.
SECTION 2.15. CONTRACTS, ETC. SCHEDULE 2.15 contains a true, correct
and complete list of all material (i) contracts, (ii) leases, (iii) agreements
and (iv) other instruments to which the Company or any of its Subsidiaries is a
party not otherwise included on any other Schedule hereto, except (i) purchase
or sale orders for goods or services which are (x) to be performed within ninety
(90) days, or (y) are terminable by the Company or any such Subsidiary on not
more than ninety (90) days notice, and do not involve aggregate payments to or
by the Company or any of its Subsidiaries of more than (pound)100,000, and (ii)
agreements for utility or similar services on customary terms which are not
material in respect of the business of the Company or any such Subsidiary
(collectively "MATERIAL CONTRACTS"). Except for (i) Material Contracts and (ii)
purchase or sale orders for goods or services which are (x) to be performed
within ninety (90) days, or (y) are terminable by the Company or any such
Subsidiary on not more than ninety (90) days notice, and do not involve
aggregate payments to or by the Company or any of its Subsidiaries of more than
(pound)100,000, and (iii) agreements for utility or similar services on
customary terms which are not material in respect of the business of the Company
or any such Subsidiary, neither the Company nor any of its Subsidiaries is a
party or subject to any of the following, whether oral or written:
(a) any contracts, commitments, understandings or agreements, the
consummation or performance of which would, either singly or in the
aggregate, have a Material Adverse Effect;
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(b) any contract or commitment which is outside of the normal,
ordinary and usual requirements of its business;
(c) any contract or commitment which authorizes others to perform
services for, through or on behalf of it with respect to its business;
(d) other than a contract or commitment with a customer or
telecommunications carrier, any material contract or commitment involving
an obligation with respect to its business which cannot, or in reasonable
probability will not, be performed or terminated within ninety (90) days
from the date hereof;
(e) any promissory note or other evidence of indebtedness to the
Company or any of its Subsidiaries;
(f) other than a contract or commitment with a customer or
telecommunications carrier, any single contract or commitment, or sales or
purchase order, which involves future payments, performance of services or
delivery of goods and/or materials, to or by it, with an amount or value in
the aggregate in excess of (pound)100,000;
(g) any contract or agreement with a creditor not made in the ordinary
course of business;
(h) any instrument or arrangement evidencing or related to
indebtedness for money borrowed or to be borrowed, whether directly or
indirectly, by way of purchase money obligation, guaranty, subordination,
conditional sale, lease purchase, or otherwise, which may affect it (other
than a purchase or sale transaction to be performed within ninety (90)
days, which does not involve payments of more than (pound)1,000);
(i) any deed, indenture, lease, sublease or other instrument by which
an ownership, leasehold or other interest in real property is held by the
Company or any of its Subsidiaries;
(j) other than a contract or commitment with a customer or
telecommunications carrier, any contract, commitment or agreement,
including contracts or licenses pertaining to the payment of intellectual
property royalties (but excluding customer purchase orders), to the extent
such contracts, commitments or
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agreements involve payments or commitments (whether fixed or contingent) to
or from the Company or any of its Subsidiaries for an amount (or potential
amount) in excess of (pound)100,000 and have a term longer than three (3)
months in duration;
(k) any written management, compensation or employment contracts or
contracts entered into with any officer or director of the Company or any
of its Subsidiaries;
(l) any contracts or agreements under which the Company or any of its
Subsidiaries has any outstanding indebtedness, obligation or liability for
borrowed money or the deferred purchase price of property or has the right
or obligation to incur any such indebtedness, obligation or liability, in
each case in an amount greater than (pound)25,000;
(m) any bonds or agreements of guarantee or indemnification in which
the Company or any of its Subsidiaries acts as surety, guarantor or
indemnitor with respect to any obligation (fixed or contingent) in an
amount or potential amount greater than (pound)100,000;
(n) any secrecy, noncompete or other agreements which (i) restrict the
right of the Company or any of its Subsidiaries to engage in any business
reasonably related to its present activities or (ii) would restrict the
right of Purchaser to engage in any business after the consummation of the
transactions contemplated by this Agreement;
(o) any agreements relating to preemptive or other preferential
rights, restrictions on the disposition of shares and registration rights;
(p) any partnership, joint venture or similar agreements;
(q) any agreements to which the Company or any of its Subsidiaries is
a party relating to material business acquisitions or dispositions during
the last five (5) years, including any separate tax or indemnification
agreements;
(r) any sales representative, sales marketing, agency or
distributorship agreements;
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(s) any facilities management agreements; and
(t) any contracts or agreements, not covered by, or specifically
excluded in, any of the other items of this SECTION 2.15, which was not
entered into in the ordinary course of business or which could reasonably
be expected to have a Material Adverse Effect.
Except as set forth on SCHEDULE 2.15, neither the Company nor any of
its Subsidiaries has received any notice that it is in default under the terms
of any Material Contract. No Material Contract, when entered into, was in excess
of the normal, ordinary, usual and current requirements of the Company's or any
of its Subsidiaries' business or was at a price that was in excess of the then
current reasonable market price. Each Material Contract is a valid and binding
obligation of the parties thereto in accordance with the terms and conditions
thereof and, except as disclosed on SCHEDULE 2.15 hereto, no party to any such
Material Contract is in default with respect to any term thereof, nor has any
event occurred which, through the passage of time or the giving of notice, or
both, would constitute a default thereunder or would cause the acceleration of
any obligation of any party thereto.
SECTION 2.16. LICENSES; TRADEMARKS; TRADE NAMES; ETC. SCHEDULE 2.16
contains a list of (i) all material non-governmental licenses held by the
Company or any of its Subsidiaries and (ii) all trademarks, trade names, service
marks, copyrights, patents and applications for any of the foregoing owned by or
registered in the name of the Company or any of its Subsidiaries, necessary or
used in connection with its business, and in each case identifies the owner or
holder thereof. Except as set forth on SCHEDULE 2.16, all of such licenses are
in full force and effect and constitute legal, valid and binding obligations of
the respective parties thereto; there have not been and there currently are not
any material defaults thereunder by any party; and no event has occurred which
(whether with or without notice, lapse of time or the happening or occurrence of
any other event) would constitute a material default thereunder; and the
validity, continuation and effectiveness of all of such licenses under the
current terms thereof will in no way be materially adversely affected by the
transactions contemplated hereby. Except as set forth on SCHEDULE 2.16, the
Company or the Subsidiary identified on SCHEDULE 2.16 owns all the trademarks,
trade names, service marks, copyrights, patents and applications for patents
which are listed on SCHEDULE 2.16; except as set forth thereon, pays
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no royalty under any of them and has the exclusive right to bring actions for
the infringement thereof; and no third party is infringing on any of the
Company's or any of its Subsidiaries' rights thereto. No service provided by the
Company or any of its Subsidiaries violates any such license or infringes any
trademark, trade name, service mark, copyright, know-how, patent, trade secret
or other proprietary rights of another party. Except as may be listed on
SCHEDULE 2.16, there is no pending or, so far as APAX is aware, threatened claim
or litigation against the Company or any of its Subsidiaries contesting a breach
of any of the trademarks, trade names, service marks, copyrights, know-how or
patents of any Person.
SECTION 2.17. INSURANCE. All material insurance policies maintained by
the Company and its Subsidiaries are listed on SCHEDULE 2.17 and the holder
thereof is identified on SCHEDULE 2.17. The Company and its Subsidiaries are
insured by insurers, who are reputable and who APAX reasonably believes are
financially sound, against all risks of liability and casualty in amounts deemed
reasonably necessary by the Company's management. All such policies are in full
force and effect in accordance with their terms, no notice of cancellation has
been received by the Company or any of its Subsidiaries, and, so far as APAX is
aware, there is no existing default or event which with the giving of notice or
lapse of time, or both, would constitute a default thereunder. All premiums to
date have been paid in full. The Shareholders have no reason to believe that the
Company and its Subsidiaries shall not be able to renew such policies at the end
of the applicable term for such policy. Except as set forth on SCHEDULE 2.17,
all material pending property damage and personal injury claims against the
Company or any of its Subsidiaries are listed on SCHEDULE 2.17, are being
defended by the respective insurer and, to the knowledge of APAX, involve no
exposure to the Company or any of its Subsidiaries.
SECTION 2.18. EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 2.18 contains a true and complete list of each bonus,
deferred compensation, incentive compensation, stock purchase, stock option,
severance or termination pay, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension, or
retirement plan, program, agreement or arrangement, and each other employee
benefit plan, program, agreement or arrangement (other than arrangements
involving the payment of wages), sponsored, maintained or contributed
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to or required to be contributed to by the Company or any of its Subsidiaries,
for the benefit of any current or former employee of the Company or any of its
Subsidiaries, whether formal or informal and whether legally binding or not (the
"PLANS") with respect to which the Company or any of its Subsidiaries has or may
in the future have any liability or obligation to contribute or make payments of
any kind.
(b) With respect to each of the Plans, the Shareholders have
heretofore delivered to Purchaser true, complete and correct copies of each of
the following documents:
(i) the Plan (including all amendments thereto)(or, in the case
of any unwritten Plans, descriptions thereof);
(ii) if the Plan is funded through a trust or any third party
funding vehicle, such as an insurance contract, a copy of the trust or
other funding agreement (including all amendments thereto) and the
latest financial statements thereof; and
(iii) all contracts relating to the Plans with respect to which
the Company or any of its Subsidiaries may have any liability,
including, without limitation, insurance contracts, investment
management agreements, subscription and participation agreements and
record keeping agreements;
(c) Full payment has been made, or will be made in accordance with the
terms of each of the Plans and any applicable collective bargaining agreement
required to pay, and all such amounts properly accrued through the Closing Date
with respect to the current plan year thereof will be paid by the Company or one
of its Subsidiaries on or prior to the Closing Date or were properly recorded on
the Base Balance Sheet.
(d) During the one (1) year period ending on the date of this
Agreement, there has been no change in the manner in which contributions to any
Plan are made or the basis on which such contributions are determined.
(e) Each of the Plans has been operated and administered in all
material respects in accordance with its terms and all Applicable Laws. All
reports, returns and similar documents with respect to the Plans required to be
filed with any governmental agency or distributed to any
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Plan participant have been duly and timely filed or distributed and, so far as
APAX is aware, all reports, returns and similar documents actually filed or
distributed were true, complete and correct in all material respects. There are
no investigations by any governmental agency or other claims (except claims for
benefits payable in the normal operation of the Plan), suits or proceedings
against or involving any Plan or asserting any rights to or claims for benefits
under any Plan that could give rise to any material liability and there are not
any facts that could give rise to any material liability in the event of any
such investigation claim, suit or proceeding.
(f) No employee of the Company or any of its Subsidiaries will be
entitled to any additional benefits or any acceleration of the time of payment
or vesting of any benefits under any Plan as a result of the transactions
contemplated by this Agreement.
(g) No Plan provides benefits, including, without limitation, death or
medical benefits (whether or not insured), with respect to current or former
employees upon retirement or other termination of service (other than (i)
coverage mandated by Applicable Law, (ii) deferred compensation benefits accrued
as liabilities on the books of the Company or any of its Subsidiaries or (iii)
benefits the full cost of which is borne by the current or former employee (or
his beneficiary)).
(h) With respect to each Plan that is funded wholly or partially
through an insurance policy, there will be no liability of the Company or any of
its Subsidiaries, as of Closing Date, under any such insurance policy or
ancillary agreement with respect to such insurance policy in the nature of a
retroactive rate adjustment loss sharing arrangement or other actual or
contingent liability arising wholly partially out of events occurring prior to
the Closing Date.
(i) Other than current or contingent liabilities disclosed on SCHEDULE
2.18, neither the Company nor any of its Subsidiaries has any material current
or contingent liability with respect to any Plan.
SECTION 2.19. LABOR RELATIONS; EMPLOYEES. The Company and each of its
Subsidiaries has generally enjoyed a reasonably good employer-employee
relationship with their employees. The Company or one of its Subsidiaries will
pay in full to the extent possible or, if not, to the extent
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consistent with past practices, accrue by adequate reserves on the Base Balance
Sheet, all wages, salaries, bonuses, vacation pay and other direct and indirect
compensation earned by all employees of the Company and each of its Subsidiaries
through the date of the Base Balance Sheet (whether or not payable by such
date). Neither the Company nor any of its Subsidiaries has received notice that
it is not in compliance with any national, federal, state, foreign or local law
or regulation respecting employment or employment practices, terms or conditions
of employment or wages or hours. Except as listed on SCHEDULE 2.19, there is no
charge or complaint against the Company or any of its Subsidiaries pending
before any industrial tribunal, national or local labor or employment agency or
any representative thereof; nor is there any strike, dispute, slowdown or
stoppage pending or threatened against or involving the Company or any of its
Subsidiaries, and none has occurred since their inception. Except as identified
on SCHEDULE 2.19, neither the Company nor any of its Subsidiaries is a party to
any union, collective bargaining, works council or similar agreement or
arrangement. No representation question exists respecting the employees of the
Company or any of its Subsidiaries, and no collective bargaining agreement is
currently being negotiated by the Company or any of its Subsidiaries. Except as
listed on SCHEDULE 2.19, no grievance procedure or arbitration proceeding is
pending under any collective bargaining agreements.
SECTION 2.20. COMPENSATION. SCHEDULE 2.20 contains a list of each of
the current officers, employees and consultants of the Company or any of its
Subsidiaries, who during calendar year 1997 is expected to receive aggregate
remuneration in excess of (pound)50,000, together With the current job title and
aggregate remuneration rate (bonus and salary) for each such person. SCHEDULE
2.20 also contains a list of all employment contracts in effect with respect to
employees of the Company or any of its Subsidiaries, and, except as listed on
SCHEDULE 2.20, all employment contracts are in writing and include all material
information required by law to be included in particulars of terms of
employment. The Company has not paid or agreed to pay any compensation, fee,
bonus, or other remuneration of any kind to any officer, employee, consultant or
other Person in connection with this Agreement or the transactions contemplated
herein, except for (i) compensation payable in the ordinary course of business
of the Company consistent with past practice and (ii) an "Employee Exit Bonus
Scheme" which may provide for bonuses payable to employees of the
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Company in amounts which will not exceed an aggregate of (pound)150,000 (the
"EXIT BONUS SCHEME"). So far as APAX is aware, no executive, key employee or
group of employees has any plans to terminate employment with the Company or any
of its Subsidiaries.
SECTION 2.21. INVESTMENT BANKING FEES, BROKERS AND FINDERS. Except as
set forth on SCHEDULE 2.21, neither the Company nor any of its Subsidiaries has
employed any investment banker, broker or finder, and has not incurred and will
not incur any liability for any investment banking, brokerage fees, commissions,
finders' fees or similar fees or expenses in connection with this Agreement or
the transactions contemplated herein. Notwithstanding the disclosure of the
requirement to pay any investment banking, broker or finder fee, other than the
payment of a fee of up to (pound)400,000 payable to Morgan Stanley & Co. Limited
(thE "MORGAN STANLEY FEE"), the Shareholders shall be solely responsible for
paying any and all such fees and reimbursement of expenses owed to such
investment bankers, brokers or finders including, without limitation, any fees
and expenses in excess of the Morgan Stanley Fee referred to above.
SECTION 2.22. TARIFFS. SCHEDULE 2.22 contains a list of the local and
international telephone tariffs of the major carriers as they are currently
applied to the Company and each of its Subsidiaries.
SECTION 2.23. CUSTOMERS AND SUPPLIERS. APAX reasonably believes the
Company's and its Subsidiaries' relationships with their customers and suppliers
are satisfactory. Except as set forth on SCHEDULE 2.23, since December 31, 1996,
no significant supplier of the Company or any of its Subsidiaries has advised
the Company or any of its Subsidiaries that it will stop or decrease the rate of
supplying any materials, products or services to the Company or any of its
Subsidiaries, and no customer of the Company or any of its Subsidiaries which
currently generates monthly revenues of at least (pound)10,000 has advised the
Company or any of its Subsidiaries that it will stop or materially decrease the
rate of buying any materials, products or services from the Company or any of
its Subsidiaries. SCHEDULE 2.23 hereto sets forth a list of (a) the Company's 50
largest accounts for the six months ended June 30, 1997 and the amount of
revenues accounted for by such customer during such period and (b) each supplier
that is the sole supplier of any significant product or component to the Company
or any of its Subsidiaries.
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SECTION 2.24. ENVIRONMENTAL COMPLIANCE. The Company and its
Subsidiaries have been and are in compliance with and are not subject to
liability under any Environmental Law (as defined below). The Company and its
Subsidiaries have made all filings and provided all notices required under
Environmental Laws, and possess, and are in compliance with, all Permits
required under Environmental Laws and each of them are in full force and effect.
There is no civil, criminal or administrative action, suit, demand, claim,
hearing, notice of violation, investigation, proceeding, notice or demand letter
or request for information as to which the Company or any of its Subsidiaries
have been notified, that is pending or threatened against the Company or any of
its Subsidiaries under any Environmental Law. No Encumbrance has been recorded
under any Environmental Law with respect to any assets, facility or property
owned, operated, leased or controlled by the Company or any of its Subsidiaries.
Neither the Company nor any of its Subsidiaries had received any notice that it
has been identified as the potential recipient of a remediation notice pursuant
to the Environmental Protection Act 1990, as amended by the Environment Act
1995.
For purposes of this Agreement, "ENVIRONMENTAL LAWS" means the common
law and all applicable national, supra-national, federal, state, local or
foreign laws or regulations, codes, rules, orders, decrees, judgments,
requirements or injunctions issued, promulgated, approved or entered
thereunder, relating to the outdoor or indoor environment, pollution or
protection of public or employee health and safety related to Hazardous
Materials as now or previously in effect and regulating, relating to or
imposing liability or standards of conduct concerning, without limitation,
(i) emissions, discharges, releases or threatened releases of Hazardous
Materials into the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), (ii) the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport, possession, or handling of Hazardous Materials, and
(iii) underground and above ground storage tanks and related piping, and
emissions, discharges, releases or threatened releases therefrom.
For purposes of this Agreement, "HAZARDOUS MATERIALS" means any
pollutant, contaminant, or hazardous, toxic, or dangerous waste, substance,
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constituent, or material, defined or regulated as such in, or for purposes
of, any Environmental Law, including, without limitation, any asbestos,
petroleum, oil (including crude oil or any fraction thereof), radioactive
substance, polychlorinated biphenyls, urea-formaldehyde insulation, toxin,
pathogen, virus, infectious disease agent, and any other substance that is
regulated pursuant to or may give rise to liability under any Environmental
Law.
SECTION 2.25. CHANGE OF CONTROL PROVISIONS. Neither the execution and
delivery of this Agreement nor the consummation of the transactions provided for
herein will trigger any obligation of the Company or its Subsidiaries to any
Person, including, without limitation, the obligation to make payments to any
Person pursuant to any contract or agreement to which the Company or its
Subsidiaries is a party or by which it or its assets are bound.
SECTION 2.26. IMPROPER AND OTHER PAYMENTS. (a) None of the Company or
any of its Subsidiaries, any director, officer, employee, agent or
representative of the Company or any of its Subsidiarie or any Person acting on
behalf of any of them, made, paid or received any unlawful bribes, kickbacks or
other similar payments to or from any Person and (b) no improper contributions
have been made by or on behalf of the Company or any of its Subsidiaries,
directly or indirectly, to a domestic or foreign political party or candidate.
SECTION 2.27. MINUTE BOOKS. Each of the Company's and its
Subsidiaries' minute books and copies thereof provided to Purchaser contain in
all material respects true and complete minutes and records of all meetings,
proceedings, and other actions of its shareholders and directors from the date
of its respective date of organization to the date hereof. All meetings and
other corporate proceedings of the Company and its Subsidiaries, their
respective shareholders and directors, have in all material respects been
legally and properly held or taken. All books required to be kept by the Company
under the Companies Act 1985 and copies thereof provided to Purchaser are true
and complete in all material respects, and all of the signatures which purport
to be signatures of officers of the Company and its Subsidiaries, as applicable,
which appear on certificates representing shares of stock of the Company and its
Subsidiaries (including all certificates which are not outstanding and all
certificates which have heretofore been cancelled) are the true signatures which
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they purport to be and were actually affixed to the respective documents by the
person whose names they represent. All stamp and other taxes (if any) levied on
or relating to the original issuance or transfer of shares of the Company and
its Subsidiaries have been paid.
SECTION 2.28. ACCOUNTS. Set forth on SCHEDULE 2.28 attached hereto is
an accurate and complete list showing (a) the name and address of each bank and
brokerage firm in which the Company or any of its Subsidiaries has an account or
safe deposit box, the number of any such account or any such box and the names
of all persons authorized to draw thereon or to have access thereto; and (b) the
names of all persons, if any, holding powers of attorney from the corporation
with respect to such bank or brokerage account and a summary statement of the
terms thereof.
SECTION 2.29. ACCURACY OF REPRESENTATIONS. So far as APAX is aware, no
representation or warranty contained in this Agreement, and no statement
contained in any certificate, Schedule or Exhibit furnished to Purchaser in
connection with the transactions contemplated hereby contains any materially
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein not misleading. All
copies of all writings furnished or made available to Purchaser hereunder or in
connection with the transactions contemplated hereby have been true and complete
copies except as may otherwise have been disclosed or apparent on the face of
the document.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
--------------------------------------------------
Each of the Shareholders, severally and not jointly, represents and
warrants to Purchaser as follows:
SECTION 3.01. OWNERSHIP OF THE SHARES. Save as specified in SCHEDULE 1
or SCHEDULE 1A (as applicable) hereto, each Shareholder is the legal and
beneficial owner of the Shares set forth opposite its name on SCHEDULE 1 or
SCHEDULE 1A (as applicable) hereto, and upon delivery of and payment for the
Shares owned by such Shareholder in accordance with the provisions of this
Agreement, such Shareholder shall transfer to Purchaser with full title
guarantee such Shares, free and clear of all Encumbrances of any type. Save for
the 48,334 Ordinary Shares at (pound)1.00 each
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which are the subject of the Buyback Agreement and any Ordinary Shares issuable
upon exercise of the Options, the Shares listed on SCHEDULE 1 or SCHEDULE 1A (as
applicable) hereto are all of the allotted and issued share capital of the
Company and are fully paid. The Ordinary Shares issuable upon exercise of
Options will be fully paid and the owners of such Ordinary Shares shall, upon
delivery of and payment for such Shares in accordance with the provisions of
this Agreement, transfer to Purchaser with full title guarantee such Ordinary
Shares, free and clear of all Encumbrances of any type. Following the redemption
of the A Prefs as contemplated by SECTION 9.01(b)(i)(First), the Company shall
have no further liability to any Person (other than any Taxing Authority) with
respect thereto.
SECTION 3.02. AUTHORIZATION. Each Shareholder has the requisite power
and authority to execute and deliver this Agreement, and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each Shareholder and is a valid and binding agreement
of each Shareholder, enforceable against each Shareholder in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws in effect now
or hereafter relating to creditors' rights generally, and by equitable
principles (whether considered in a proceeding at law or in equity).
SECTION 3.03. NO CONFLICT OR VIOLATION. Neither the execution and
delivery by each Shareholder of this Agreement nor the consummation of the
transactions contemplated hereby or thereby, will:
(a) conflict with or result in a breach of any provision of the
respective articles or certificate of incorporation or organization or
By-laws (or equivalent documents) of such Shareholder;
(b) with or without giving of notice or the passage of time, or both,
violate, or conflict with, or constitute a default under, or result in the
termination or in a right of termination of, violate or be in conflict
with, result in a breach of any term or provision of, or constitute a
default under, or accelerate or permit the acceleration of the performance
required by, or give any other Person a basis for increased rights or
termination or nonperformance under, or require any consent,
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authorization or approval under, any term or provision of any Encumbrance,
lease, license, decree, order or any other agreement or instrument to which
any of the Shareholders is a party or by which it or any of its property is
bound or affected;
(c) violate any provision of, or require any consent, authorization or
approval under, any Applicable Laws of any Governmental Authority, or any
Judgment, in each case applicable to such Shareholder;
(d) require any consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Authority or any other
Person, to be made or obtained by or on behalf of such Shareholder; or
(e) require any consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Authority, to be made or
obtained by or on behalf of such Shareholder pursuant to any Applicable Law
save that a filing by the Company with the Inland Revenue will have to be
made detailing any Options that may have been exercised pursuant to the
Share Option Scheme.
SECTION 3.04. BROKERS' FEES. None of the Shareholders has employed any
broker or finder, and none has incurred nor will incur any liability for any
brokerage fees, commissions, finders' fees or similar fees or expenses in
connection with this Agreement or the transactions contemplated herein other
than as provided in SECTION 2.21 hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XPEDITE AND PURCHASER
-------------------------------------------------------
Xpedite and Purchaser hereby severally represent and warrant to the
Shareholders as follows:
SECTION 4.01. CORPORATE ORGANIZATION. Each is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation, and has the full corporate power and
authority to carry on its business in the places and as it is now being
conducted and to own and lease the properties and assets which it now owns or
leases.
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SECTION 4.02. AUTHORIZATION.
(a) Each has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby.
(b) This Agreement has been approved by the Boards of Directors of
both Xpedite and Purchaser and no other corporate proceeding on the part of
Xpedite or Purchaser is necessary to authorize this Agreement or to consummate
the transactions contemplated hereby.
(c) This Agreement has been duly and validly executed and delivered by
Xpedite and Purchaser and is a valid and binding agreement of Xpedite and
Purchaser, enforceable against Xpedite and Purchaser in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws in effect now
or hereafter in effect relating to creditors' rights generally and by equitable
principles (whether considered in a proceeding at law or in equity).
SECTION 4.03. AGREEMENT DOES NOT VIOLATE OTHER INSTRUMENTS. Neither
the execution and delivery by Xpedite or Purchaser of this Agreement nor the
consummation by Xpedite or Purchaser of the transactions contemplated hereby and
thereby will:
(a) conflict with or result in a breach of any provision of the
respective articles or certificate of incorporation or organization or
By-laws (or equivalent documents) of Xpedite or Purchaser;
(b) with or without giving of notice or the passage of time, or both,
violate, or conflict with, or constitute a default in any material respect
under, or result in the termination or in a right of termination of,
violate or be in conflict in any material respect with, result in a
material breach of any term or provision of, or constitute a material
default under, or accelerate or permit the acceleration of the performance
required by, or give any Person a basis for increased rights or termination
or nonperformance under, or require any consent, authorization or approval
under, any term or provision of any Encumbrance, lease, license, decree,
order or any other agreement or instrument to which Xpedite or Purchaser is
a party or by which it is bound;
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(c) violate in any material respect any provision of, or require any
consent, authorization or approval under, any Applicable Laws of any
Governmental Authority, or any Judgment in each case applicable to Xpedite
or Purchaser; or
(d) require any consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Authority, to be made or
obtained by or on behalf of Xpedite or Purchaser pursuant to any Applicable
Law.
SECTION 4.04. BROKERS AND FINDERS. Neither Xpedite nor Purchaser has
employed any broker or finder, and has not incurred and will not incur any
liability for any brokerage fees, commissions, finders' fees or similar fees or
expenses in connection with this Agreement or the transactions contemplated
herein.
ARTICLE V
Interpretation and Survival of
REPRESENTATIONS AND WARRANTIES
------------------------------
SECTION 5.01. INTERPRETATION. Each warranty and representation made by
a party in this Agreement or pursuant hereto is independent of all other
warranties and representations made by the same party in this Agreement or
pursuant hereto (whether or not covering identical, related or similar matters)
and must be independently and separately satisfied.
SECTION 5.02. RELIANCE BY PURCHASER. Notwithstanding the right of
Purchaser to investigate the Company and its Subsidiaries, and notwithstanding
any knowledge of facts determinable by Purchaser as a result of such
investigation or right of investigation, Purchaser has the unqualified right to
rely upon the representations and warranties made by the Shareholders in this
Agreement and in the Schedules attached hereto. Each and every representation
and warranty of the Shareholders made herein is material to the decision of the
Purchaser to enter into this Agreement and to consummate the transaction
contemplated herein.
SECTION 5.03. SURVIVAL. All representations and warranties of Xpedite,
APAX and the other Shareholders and Purchaser made in this Agreement or pursuant
hereto shall
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survive the date hereof, the Closing Date, the consummation of the transactions
contemplated hereby, the termination of this Agreement and any investigation
related thereto until the 12 month anniversary of the Closing Date. All
unperformed covenants and agreements of Xpedite, APAX and the other Shareholders
and Purchaser made in this Agreement or pursuant hereto shall survive the date
hereof, the Closing Date and the consummation of the transactions contemplated
hereby.
ARTICLE VI
COVENANTS
---------
Unless otherwise permitted by Xpedite in writing, which permission
will not be unreasonably withheld or delayed, from and after the date hereof
until the Closing Date, the Shareholders shall, and/or shall cause the Company
and its Subsidiaries to, comply with the following:
SECTION 6.01. REGULAR COURSE OF BUSINESS.
(a) GENERALLY. The Shareholders shall cause the Company and its
Subsidiaries (so far as they are lawfully able) to (i) operate and carry on
their businesses in the ordinary course of business consistent with past
practices, (ii) use commercially reasonable efforts to preserve their
relationships with third parties (materially important to the smooth running of
the Company's business) and to keep available the services of their present key
officers and employees, (iii) maintain all of their properties in their current
state of repair, order and condition (fair wear and tear excepted), (iv)
maintain all material contracts, agreements, leases, understandings,
arrangements (whether written or oral) in effect on the date hereof without
modification, termination or change (other than immaterial modifications,
terminations or changes and modifications, terminations or changes which in the
reasonable opinion of the Company's management are in the best interests of the
Company, both prior to and after Closing), (v) comply with the provisions of all
material Applicable Laws of Governmental Authorities applicable to the Company
and its Subsidiaries and the conduct of their businesses, and (vi) maintain,
renew as necessary and comply with all material Permits. The Company shall
maintain its financial and accounting records in a manner consistent with that
employed at December 31, 1996.
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(b) COMPENSATION. Neither the Company nor any of its Subsidiaries
shall hire or fire any employee earning an annual base salary in excess of
(pound)20,000 nor shall it grant any increase greater than (pound)5,000 in the
compensation (in whatever form) or other benefits payable or to become payable
to any officer, director, consultant, independent contractor or other employee
of the Company or any of its Subsidiaries.
(c) INSURANCE. The Company and its Subsidiaries shall maintain in full
force and effect all of the insurance policies with the coverage and in the
amounts set forth on SCHEDULE 2.17.
(d) CLAIMS. The Company shall promptly notify Purchaser of any Legal
Action that may be commenced against the Company or any of its Subsidiaries.
(e) SUPPLEMENT. From time to time until the Closing Date, the
Shareholders shall, after they obtain actual knowledge of such facts or
circumstances, notify Purchaser, as soon as reasonably practicable, of any
material changes with respect to the information set forth in this Agreement or
the Schedules hereto and of any material matters hereafter arising. No
disclosure made pursuant to this SECTION 6.01(e) shall be deemed to cure any
misrepresentation, breach of warranty or breach of covenant unless it is
specifically waived in writing by Purchaser; provided, that the Shareholders
shall have no liability to Purchaser for any additional disclosures made against
the representations and warranties set forth in SECTION 2.23, between the date
of this Agreement and the Closing Date.
(f) AMENDMENTS. Save as contemplated by this Agreement (particularly
in SECTION 6.17), without the prior written consent of Xpedite (not to be
unreasonably withheld or delayed), no change or amendment shall be made to the
Memorandum and Articles of Association, certificate of incorporation or bylaws
(or equivalent governing documents) of the Company or any of its Subsidiaries,
and neither the Company nor any of its Subsidiaries shall merge into or
consolidate with any other Person or change the character of their businesses.
SECTION 6.02. CAPITAL CHANGES. Save as contemplated by this Agreement
(particularly in SECTION 6.17), without the prior written consent of Xpedite
(not to be unreasonably withheld or delayed), neither the Company nor any of its
Subsidiaries shall issue, sell,
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purchase or redeem any shares of its share capital of any class or issue or sell
any securities convertible into, or options, warrants or other rights to
subscribe for, any of its share capital; provided that nothing herein shall
prevent the redemption of the preference shares and/or the A preference shares
of (pound)1.00 each in the capital of the Company; provided further that no such
redemption shall be effectuated between the date of the Base Net Asset Value and
Closing.
SECTION 6.03. DIVIDENDS. Neither the Company nor any of its
Subsidiaries shall declare, pay or set aside for payment any dividend or other
distribution in respect of its ordinary share capital; provided that nothing
herein shall prevent (i) the redemption of the preference shares of (pound)1.00
each in the capital of the Company and/or the A Prefs or (ii) the payment of
dividends to the holders of the preference shares of (pound)1.00 each in the
capital of the Company in accordance with the Company's Articles of Association
or accruing for the premium payable on redemption of the A Prefs; provided
further that no redemption or payment described in (i) above shall be
effectuated between the date of the Base Net Asset Value and Closing.
SECTION 6.04. CAPITAL EXPENDITURES. The Company and its Subsidiaries
shall not make any capital expenditures (except in respect of (i) any purchases
from Xpedite in accordance with the System and Marketing Agreement between
Xpedite and the Company and (ii) purchases involving expenditures less than
(pound)10,000 in any instance and (pound)100,000 in the aggregate) in excess of
those budgeted in the Company's forecast, a true and complete copy of which is
attached hereto as SCHEDULE 6.04.
SECTION 6.05. INDEBTEDNESS. Neither the Company nor any of its
Subsidiaries shall incur, assume or guarantee any indebtedness or obligations
not reflected on the Base Balance Sheet, except for amounts not to exceed
(pound)250,000 in the aggregate.
SECTION 6.06. PROPERTY. Except as may be required by any Applicable
Law or Legal Action, neither the Company nor any of its Subsidiaries shall sell,
transfer, or dispose of any of its assets and properties (having a book value of
(pound)10,000 or more in any case or (pound)100,000 in the aggregate), allow any
of its assets and properties to become subject to any Encumbrance, or acquire
any material assets
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of any other Person or make any investment in any other Person.
SECTION 6.07. LOANS. The Company shall not make or accept any loan or
advance from any of its Associates, except for loans or advances not exceeding
(pound)10,000 in any instance and (pound)100,000 in the aggregate.
SECTION 6.08. OTHER COMMITMENTS. Except as set forth in this Agreement
or permitted in writing by Purchaser, neither the Company nor any of its
Subsidiaries shall enter into any transaction, make any commitment or incur any
obligation other than in the ordinary course of business.
SECTION 6.09. INTERIM FINANCIAL INFORMATION. The Company shall supply
Purchaser with a copy of its monthly financial statements (in the form
historically provided by the Company to Xpedite) within thirty (30) days after
the end of each month.
SECTION 6.10. CONSENTS AND AUTHORIZATIONS. The Shareholders shall, and
shall cause the Company to, promptly after the date hereof, commence and use
commercially reasonable efforts to obtain any consents, waivers and
authorizations necessary to consummate the transactions contemplated by this
Agreement.
SECTION 6.11. ACCESS. The Shareholders shall cause the Company to
afford to Purchaser and its debt and equity financing sources and their
respective counsel, accountants, agents and other authorized representatives
access during normal business hours to the Company's and its Subsidiaries'
plants, properties, books and records in order that Purchaser and its debt and
equity financing sources may have full opportunity to make such reasonable
investigations as it shall desire to make of the affairs of the Company and its
Subsidiaries. The Shareholders shall employ reasonable efforts to cause the
Company to cause the directors, officers, employees and auditors of the Company
and its Subsidiaries to furnish such additional financial and operating data and
other information as Purchaser and its debt and equity financing sources shall
from time to time reasonably request.
SECTION 6.12. NOTICE OF TRANSFER. Each of Xpedite, Purchaser and the
Shareholders shall cooperate in providing any required notices to the
appropriate
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Governmental Authority regarding any issues of ownership or control or change
thereof with respect to the Company.
SECTION 6.13. [INTENTIONALLY OMITTED]
SECTION 6.14. FURTHER ASSURANCES. On the terms and subject to the
conditions of this Agreement, the parties hereto shall use all reasonable
efforts at their own expense to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable under all
Applicable Laws, to consummate and make effective as promptly as possible the
transactions contemplated by this Agreement, and to cooperate with each other in
connection with the foregoing, including, without limitation, using all
reasonable efforts (a) to obtain all necessary waivers, consents and approvals
from other parties to loan agreements, leases, mortgages and other contracts or
agreements, (b) to obtain all necessary consents, approvals and authorizations
as are required to be obtained under any Judgment, Applicable Law or in
connection with any Permit, (c) to lift or rescind any injunction or restraining
order or other order adversely affecting the ability of the parties to
consummate the transactions contemplated by this Agreement and (d) to fulfill
all conditions to the obligations of the parties under this Agreement.
SECTION 6.15. NO SOLICITATION OR NEGOTIATION. Prior to termination of
this Agreement, the Shareholders shall not initiate or solicit, directly or
indirectly, any inquiries or the making of any proposal with respect to, or
engage in negotiations concerning, or provide any confidential information or
data to any Person with respect to, or have any discussions with any Person
relating to, any acquisition, business combination, tender or exchange offer or
purchase of all or any significant asset of, or any equity interest in, directly
or indirectly, the Company or any of its Subsidiaries, or otherwise facilitate
any effort or attempt to do or seek any of the foregoing and shall immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing; nor shall the Shareholders permit the Company to engage in any of the
foregoing activities.
SECTION 6.16. PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, no
party hereto nor any affiliate, representative or shareholder of such party,
shall disclose any of the terms of this Agreement to any third party, except as
may be required under Applicable Laws, without the
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other parties' prior written consent. Prior to the Closing Date, the form,
content and timing of all press releases, public announcements or publicity
statements with respect to this Agreement and the transactions contemplated by
this Agreement shall be subject to the prior approval of both the Shareholders
and Purchaser, which approval shall not be unreasonably withheld or delayed to
any of the foregoing which discloses any of the financial terms of this
transaction other than as required by Applicable Laws. Prior to the Closing
Date, no press releases, public announcements or publicity statements shall be
released by either party without such prior mutual agreement; provided, however
a party may, without the prior consent of the other party, issue a press release
or make a public statement as may, upon the advice of independent counsel, be
required by law or the rules and regulations of the Securities and Exchange
Commission or the NASDAQ National Market in which case a copy of such press
release or public announcement will be copied to the other party prior to it
being issued.
SECTION 6.17. AUTHORIZED SHARE CAPITAL. The Shareholders shall procure
that the Company increases its authorized share capital above (pound)12,059,205
by not less than $10,773,935 and (pound)3,661,000 in accordance with Section 80
of the Companies Act 1985 by the creation of 10,773,935 Ordinary Shares of $1.00
each and 3,661,000 Ordinary Shares of (pound)1.00 each, respectively, to rank
pari passu in all respects with the existing ordinary shares of (pound)1.00 each
in the capital of the Company and to disapply the pre-emption rights contained
in Section 89 of the Companies Act 1985 and any contained in the Company's
Articles of Association in relation to the allotment of such shares. The
Shareholders shall be permitted, and shall take all necessary actions, to amend
the Articles of Association of the Company to authorize the issuance of a new
class of Ordinary Shares of $1.00 each and increase the authorized number of
Ordinary Shares of (pound)1.00 each in order to facilitate the increase in share
capital set out in this SECTION 6.17.
SECTION 6.18. EXPENSES. Prior to or on October 31, 1997, the Company
shall cause any portion of the Morgan Stanley Fee to be incurred by the Company
and all amounts which are to be paid by the Company in connection with the Exit
Bonus Scheme to be reflected on the Company's books as expenses, and the parties
agree that such amounts will be reflected as liabilities on the Closing Date
Balance Sheet.
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SECTION 6.19. ESCROW OF EAGLE SHARES. Eagle agrees that it shall,
within four weeks after the date of this Agreement, deposit the share
certificates relating to the Sale Shares (as defined in the Buyback Agreement)
with the office of Ernst & Young, LLP based in Jersey, Channel Islands to be
held in escrow in accordance with the terms of this Agreement. Such certificates
shall be released from the provisions of such escrow as follows: (a) to the
Company, upon the consummation of the transactions contemplated by the Buyback
Agreement, (b) to the Purchaser, in the event the Buyback Agreement is
terminated and such Shares are sold in accordance with this Agreement, or (c) to
Eagle, upon the termination of this Agreement for any reason.
SECTION 6.20. MODIFICATIONS TO BUYBACK AGREEMENT. David Proctor shall
not, and shall not permit Eagle to, agree to any amendment to, or deliver any
waiver with respect to, the Buyback Agreement, without the prior written consent
of the Purchaser (not to be unreasonably withheld or delayed).
SECTION 6.21. WAIVER OF PRE-EMPTION RIGHTS. Each of the Shareholders
(including but not limited to Marc Epstein) and Eagle hereby waives any and all
pre-emption rights (if any) held by such Shareholders (including but not limited
to Marc Epstein) and Eagle, respectively, in connection with the transactions
contemplated hereby.
SECTION 6.22. TRANSFERS BY EAGLE. David Proctor shall not cause,
allow, or give Eagle instruction to sell, transfer, pledge, hypothecate, or
otherwise dispose of any of the Sale Shares or any interest in or portion
thereof, or any rights appurtenant thereto other than as contemplated by this
Agreement or the Buyback Agreement.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
----------------------------------------------
Each and every obligation of the Purchaser under this Agreement shall
be subject to the satisfaction, on or before the Closing Date, of each of the
following conditions, unless waived by the Purchaser:
SECTION 7.01. REPRESENTATIONS AND WARRANTIES; PERFORMANCE. (a) The
representations and warranties of the Shareholders contained in this Agreement
shall be true and
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correct in all material respects when made and on the Closing Date, with the
same effect as though made on the Closing Date; PROVIDED, that this condition
will be deemed satisfied unless the failure of such representations and
warranties to be true and correct (i) constitutes a Material Adverse Change (as
defined in SECTION 7.05 hereof) or (ii) involves the matters represented and
warranted to in any of SECTION 2.03, 3.01, 3.02 or 3.03 hereof and would cause
any party hereto to be unable to complete the transactions contemplated hereby
or (iii) is as a result of the actual revenues, cash flow (I.E., earnings before
interest, taxes, depreciation and amortization) or net profit for the aggregate
six-month period covered by the June 1997 Accounts, being in any case less than
90% of the amount thereof reflected in the June 1997 Accounts; (b) the
Shareholders shall have performed and complied in all material respects with all
agreements and covenants required by this Agreement to be performed and complied
with by them prior to the Closing Date; PROVIDED, that this condition will be
deemed satisfied unless the failure to perform and comply with such agreements
and covenants (i) constitutes a Material Adverse Change or (ii) involves a
breach of a covenant set forth in (A) SECTION 6.01(b), with respect to increases
in compensation and/or benefits only, (B) SECTION 6.02 - 6.07 (inclusive), (C)
SECTION 6.17 or (D) Section 6.22; and (c) APAX and David Proctor shall have
delivered to the Purchaser a certificate in the form attached hereto as Exhibit
E, dated the Closing Date, certifying to the foregoing.
SECTION 7.02. CONSENTS AND APPROVALS. The Shareholders and the Company
shall have obtained all material consents, approvals, orders, qualifications,
licenses, permits or other authorizations required by all Applicable Laws and
contracts binding on the Company or any of its Subsidiaries or binding on their
properties and assets, with respect to the execution, delivery and performance
of the Agreement by the Shareholders, the consummation of the transactions
contemplated herein and the conduct of the business of the Company and the
Subsidiaries in the same manner after the Closing Date as before the Closing
Date as listed on SCHEDULE 7.02 hereto.
SECTION 7.03. LITIGATION. There shall be no pending action or Legal
Action commenced against the Company, any of its Subsidiaries, Purchaser or any
Shareholder that is intended to have the effect of preventing, delaying or
making illegal the transactions
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contemplated by this Agreement and no such action or Legal Action shall have
been threatened.
SECTION 7.04. APAX LETTER OF CREDIT. APAX shall have delivered to
Purchaser a letter of credit or guarantee issued by a major U.S. or U.K. banking
institution (which for the avoidance of doubt, includes National Westminster
Bank PLC) reasonably acceptable to Purchaser in the face amount of $5,000,000
("APAX LETTER OF CREDIT"), which APAX Letter of Credit shall be in substantially
the form attached hereto as EXHIBIT B.
SECTION 7.05. NO MATERIAL ADVERSE CHANGE. During the period from the
date of this Agreement through and including the Closing Date, there shall not
have occurred any material adverse change in the business, financial condition
or operations of the Company, taken as a whole, other than any change arising
out of matters of a general economic nature, which is reasonably likely to
result in a decline in calendar year 1998 of 10% or more in the (i) revenues,
(ii) cash flow (I.E., earnings before ---- interest, taxes, depreciation and
amortization) or (iii) net profit of the Company and its Subsidiaries (taken as
a whole) achieved for the period from January 1, 1997 to the Closing Date,
annualized (a "MATERIAL ADVERSE CHANGE") PROVIDED, that, for purposes of
calculating whether a -------- Material Adverse Change has occurred, neither any
portion of the Morgan Stanley Fee payable by the Company nor any amount paid
pursuant to the Exit Bonus Scheme shall be considered in such calculation.
SECTION 7.06. OPTIONS. The Options shall have either lapsed and be
void and no longer of any force and effect or the Shareholders shall have caused
the Options to be exercised and procured the delivery of the Shares issuable
upon the exercise of the Options to Purchaser with duly executed stock transfer
forms in respect thereof as part of the Shares to be delivered to Purchaser in
consideration of the Purchase Price.
SECTION 7.07. EMPLOYMENT AGREEMENT. The Company shall have entered
into an Employment Agreement with David Proctor (the "EMPLOYMENT AGREEMENT"),
substantially in the form of EXHIBIT C hereto.
SECTION 7.08. BUYBACK AGREEMENT. If the Buyback Agreement has not been
terminated, the transactions contemplated by the Buyback Agreement shall be
completed simultaneously with Closing.
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SECTION 7.09. SATISFACTION OF FINANCIAL ASSISTANCE REQUIREMENTS. To
the extent any amount is paid by the Company to any Person in connection with
the Exit Bonus Scheme and/or the Morgan Stanley Fee, the Company shall have made
all filings and satisfied all other material requirements under English law to
enable the Company to lawfully make the payments contemplated by the Exit Bonus
Scheme and to pay the Morgan Stanley Fee.
SECTION 7.10. SHARE CERTIFICATES; REDEMPTION OF A PREFS. All share
certificates and other instruments (if any) representing the shares to be
acquired or redeemed as described in SECTION 9.01 (other than the A Prefs for
which the Shareholders shall demonstrate, to Purchaser's reasonable
satisfaction, that such certificates shall be delivered to the Company within
seven (7) days after the Closing), together with any power of attorney or
certified copy thereof or other authority under which such transfers have been
executed, shall have been delivered to the Company in contemplation of the
acquisition or redemption of such shares in accordance with SECTION 9.01; such
certificates and other instruments shall represent the whole of the outstanding
share capital of the Company (other than the A Prefs and the Epstein Shares).
Marc Epstein shall have delivered to the Company the share certificates
representing the Epstein Shares; such certificates shall be held in escrow by
the Company pending completion of the transactions contemplated in SECTION 1.04,
upon the terms set forth in such SECTION 1.04. All conditions for redemption of
the A Prefs, including all English law requirements, have been satisfied.
ARTICLE VIII
Conditions to the
OBLIGATIONS OF THE SHAREHOLDERS
-------------------------------
Each and every obligation of the Shareholders under this Agreement
shall be subject to the satisfaction, on or before the Closing Date, of each of
the following conditions unless waived by the Shareholders.
SECTION 8.01. REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The
representations and warranties of Xpedite and the Purchaser contained in this
Agreement shall be true and correct in all material respects when made and on
the Closing Date, with the same effect as though made on the Closing Date. The
Purchaser shall have performed and
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complied in all material respects with all agreements and covenants required by
this Agreement to be performed and complied with by it prior to the Closing
Date. The Presidents of Xpedite and the Purchaser shall have delivered to the
Shareholders a certificate, dated the Closing Date, certifying to the foregoing.
SECTION 8.02. CONSENTS AND APPROVALS. Xpedite and the Purchaser shall
have obtained all consents, approvals, orders, qualifications, licenses, permits
or other authorizations required to be obtained by Xpedite or the Purchaser by
all Applicable Laws, with respect to the execution, delivery and performance of
the Agreement, the consummation of the transactions contemplated herein and the
conduct of the business of the Company in the same manner after the Closing Date
as before the Closing Date.
SECTION 8.03. NO PROCEEDING OR LITIGATION. There shall be no pending
action or Legal Action commenced against Xpedite and the Company, any of its
Subsidiaries, Purchaser or any Shareholder that may have the effect of
preventing, delaying or making illegal the transactions contemplated by this
Agreement and no such action or Legal Action shall have been threatened.
SECTION 8.04. PURCHASER LETTER OF CREDIT. Purchaser shall have
delivered to the Shareholders a letter of credit issued by a major U.S. or U.K
banking institution reasonably acceptable to the Shareholders in the face amount
of $31.5 million (the "Purchaser Letter of Credit"), which Purchaser Letter of
Credit shall be in form and substance reasonably satisfactory to the
Shareholders.
ARTICLE IX
CLOSING
-------
SECTION 9.01. CLOSING. Subject to the terms and conditions of this
Agreement, the purchase and sale of the Shares and the consummation of the
transactions contemplated by this Agreement (the "CLOSING") shall occur at 10:00
a.m., New York City Time, November 14, 1997 at the offices of Paul, Hastings,
Janofsky & Walker LLP, Thirty-First Floor, 399 Park Avenue, New York, New York,
or at such other hour or on such other earlier date as shall be agreed upon
between the Purchaser and the Shareholders (the date on which the Closing occurs
being referred to as the "CLOSING DATE"); provided that the Closing Date may be
delayed to a
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date not later than December 31, 1997 in the event Purchaser or Xpedite notifies
the Shareholders prior to November 14, 1997 that Xpedite is engaged in a
material transaction and that Xpedite has not received all third party approvals
(whether from any governmental authority, its stockholders or otherwise)
necessary to consummate such transaction; but in no event shall the Closing be
later than December 31, 1997 unless there is a legal impediment (not created by
the Purchaser or Xpedite for the purpose of preventing the consummation of the
transactions contemplated hereby) to the consummation of the transactions
contemplated hereby, in which case the Closing Date shall occur within five (5)
business days of the removal of such legal impediments; At the Closing:
(a) The Shareholders shall deliver or cause to be delivered to the
Purchaser, against payment by the Purchaser of the portion of the Adjusted
Purchase Price payable at the Closing:
(i) duly executed transfers of the Shares in favor of the
Purchaser or its nominees and the share certificates in respect of the
Shares and the A Prefs being redeemed (or, with respect to the A
Prefs, evidence reasonably satisfactory to Purchaser that such
certificates shall be delivered to the Company within seven (7) days
after the Closing) together with any power of attorney or a certified
copy thereof or other authority under which such transfers have been
executed and an indemnity in such form as the Purchaser shall
reasonably require in relation to any missing share certificates;
(ii) the statutory and other books duly written up to the Closing
Date, the Certificates of Incorporation, Certificates of Incorporation
on Change of Name and common seals (if any) of the Company and the
Subsidiaries;
(iii) the share certificates for all the issued shares in the
Subsidiaries together with indemnities in such form as the Purchaser
may reasonably require in respect of any missing certificates;
(iv) the title deeds in the Company's possession relating to the
real estate listed in SCHEDULE 2.08 (not including vacated properties)
and
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all insurance policies, premium receipts, maintenance contracts and
other documents relating thereto;
(v) all books of account and other books and records and copies
of the Memorandum and Articles of Association of the Company and each
of the Subsidiaries;
(vi) letters of resignation from such of the Directors and the
Secretary of the Company and the Subsidiaries as may be specified by
the Purchaser, each of whom shall resign from all his offices and
employments with the Company and each of the Subsidiaries with
immediate effect and shall at the Closing deliver to the Purchaser a
deed of acknowledgement to the effect that he has no claim for any
payment in respect of compensation for loss of office or employment or
any other claim or right of action against the Company or the
Subsidiaries or any of them; and
(vii) all of the documents, certificates and instruments required
to be delivered, or caused to be delivered, by the Company and the
Shareholders pursuant to Article VII hereof, duly executed as provided
herein or therein.
(b) The Purchaser shall, subject to the Shareholders complying with
SECTION 9.01(a)(i)-(vii) (other than with respect to any obligation in
SECTION 9.01(a) relating to Transmit International (Asia) Limited):
(i) wire transfer $57,000,000 in accordance with SECTION
1.01(i), which funds shall be applied as follows:
(First) In subscribing at par for the number of
Ordinary Shares of(pound)1.00 each in capital
of the Company in an amount equal to the
nominal value of the A Prefs (plus the
premiums payable upon redemption of the
A Prefs) calculated down to the Closing
Date which will be used by the Company
to fund the redemption of the A Prefs
including the premium payable on
redemption;
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(Second) Subject to the Buyback Agreement not
having been terminated, in subscribing
at par for the 10,773,935 ordinary
shares of $1.00 each in the capital of
the Company which are to be created in
the increase in the authorized share
capital of the Company pursuant to
SECTION 6.17, which $10,773,935 will be
applied at Closing by Hammond Suddards
to satisfy the Company's obligations
under the Buyback Agreement;
(Third) In acquiring the Preference Shares of
(pound)1.00 in the capital of the Company
from APAX Funds Nominees Limited and David
Proctor for their nominal value plus all
accrued dividends, interest and
penalties (if any) down to the Closing
Date;
(Fourth) Subject to the Buyback Agreement not
having been terminated, the balance to
be paid to the holders of Ordinary
Shares and A Ordinary Shares both of
(pound)1.00 each in the capital of the
Company on account of the Adjusted Purchase
Price in accordance with the proportions
specified in SCHEDULE 1 and where the
Buyback Agreement is terminated, in the
proportions specified in SCHEDULE 1A;
and
(ii) all of the documents required to be delivered, or
caused to be delivered, by the Purchaser pursuant to Article VIII
hereof, duly executed as provided herein or therein.
Only the payments made under SECTION 9(b)(i) (Third) and 9.01(b)(i)
(Fourth) shall constitute payment of the Adjusted Purchase Price for the Shares.
(c) At the Closing, the Shareholders shall procure that:
(i) the auditors of the Company and of each of the
Subsidiaries shall resign their office in accordance with Section 392
of the Companies Act 1985 (without any claim for compensation for loss
of office or otherwise); and
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(ii) a board meeting of the Company be held at which it
shall be resolved that: (1) the stock transfers deliverable pursuant
to SECTION 9.01(a)(i) in respect of the Shares be passed for
registration subject only to their being represented duly stamped; (2)
Ernst & Young shall be appointed auditors of the Company; and (3) Roy
B. Andersen, Jr. and Robert S. Vaters shall be appointed Directors and
Robert S. Vaters shall be appointed Secretary.
ARTICLE X
TERMINATION
-----------
SECTION 10.01. TERMINATION EVENTS. This Agreement may, by written
notice given prior to or at the Closing, be terminated:
(a) By the Purchaser, if there shall have been a Material
Adverse Change unless (i) such Material Adverse Change is cured by the
Shareholders within 10 days after receiving written notice thereof from
the Purchaser or (ii) such Material Adverse Change is as a result of a
breach of the representations, warranties or covenants set forth herein
in which case the Purchaser may terminate this Agreement pursuant to
SECTION 10.01(c); PROVIDED, that, for purposes of calculating whether a
Material Adverse Change has occurred, neither any portion of the Morgan
Stanley Fee payable by the Company and any amount paid pursuant to the
Exit Bonus Scheme shall be considered in such calculation;
(b) By the Shareholders, if any of the representations,
warranties or covenants of Purchaser set forth in this Agreement are
not true and correct or performed, as the case may be, in all material
respects and such misrepresentation or breach, as the case may be, has
not been (1) waived in writing by the Shareholders or (2) cured by
Purchaser within 10 days after receipt of written notice thereof from
the Shareholders;
(c) By the Purchaser, if any of the representations,
warranties or covenants of the Shareholders set forth in this Agreement
are not true and correct or performed, as the case may be, in all
material respects and such misrepresentation or breach,
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as the case may be, (1) would constitute a Material Adverse Change and
(2) has not been (A) waived in writing by the Purchaser or (B) cured by
the Shareholders within 10 days after receipt of written notice thereof
from Purchaser; provided, that, for purposes of calculating whether a
Material Adverse Change has occurred, neither any portion of the Morgan
Stanley Fee payable by the Company nor any amount paid pursuant to the
Exit Bonus Scheme shall be considered in such calculation;
(d) By mutual written consent of Purchaser,
Xpedite and the Shareholders; or
(e) If in the reasonable judgment of Purchaser or the
Shareholders there is an immovable and insurmountable legal impediment
to Closing (not created by any party for such purpose), by either
Purchaser or the Shareholders, if the Closing has not occurred (other
than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on
or before December 31, 1997, or such later date as the parties may
agree upon in writing.
SECTION 10.02. EFFECT OF TERMINATION. In the event Purchaser
terminates this Agreement pursuant to SECTION 10.01(a) hereof, Purchaser's sole
and exclusive right and remedy shall be to receive from the Shareholders, upon
demand, an amount equal to $1,700,000 (the "BREAKUP AMOUNT"). In the event
Purchaser terminates this Agreement pursuant to SECTION 10.01(c) hereof, (i) if
Purchaser shall have satisfied all conditions set forth in Article VIII hereof
or prior to the last date under this Agreement when Purchaser could have
satisfied such conditions and (ii) Purchaser is otherwise prepared to close the
transactions contemplated by this Agreement but for such breach, Purchaser
shall, in any such case, be entitled to receive the Break-Up Amount from the
Shareholders and also or alternatively may, subject to the terms of this
Agreement, seek any remedies at law for damages or other relief, institute and
prosecute an action in any court of competent jurisdiction to enforce specific
performance of such covenant or agreement or seek any other equitable relief.
The liability of Purchaser, on the one hand, and the Shareholders, on the other
hand, under this SECTION 10.02 shall be several and not joint.
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ARTICLE XI
LIABILITY TO PURCHASER
----------------------
Subject to the limitations set forth in this Article XI, Purchaser
shall be entitled to make claims hereunder relating to or arising out of any
misrepresentation or breach of warranty of the Shareholders contained in this
Agreement. For the purposes of SECTIONS 11.01 - 11.21, "Shareholders" shall mean
APAX in relation to limitations to the representations and warranties contained
in Article II.
SECTION 11.01. INTEGRATION. The Purchaser hereby acknowledges that
except as provided in this Agreement and without prejudice to any liability for
fraudulent misrepresentation, no reliance has been placed nor will at any time
after execution of this Agreement be placed by the Purchaser on any
representation or warranty (whether express or implied and whether written or
oral) relating to the Company other than those contained in this Agreement and
accordingly all representations and warranties (whether express or implied,
statutory or otherwise) on the part of the Shareholders other than those
contained in this Agreement are hereby excluded. No party shall have any remedy
in respect of any misrepresentation or untrue statement made by any other party
unless and to the extent that a claim lies under this Agreement.
SECTION 11.02. PROJECTIONS. Without prejudice to the generality of
SECTION 11.01, the Purchaser expressly acknowledges and warrants that, save as
specifically warranted to that effect in this Agreement, it is not relying on
nor will at any time hereafter rely on any statement, representation, warranty
or forecast of realized or prospective profits or turnover of the Company.
SECTION 11.03. DISCLOSED MATTERS. The Purchaser shall not be entitled
to make any claim under or pursuant to any of the representations and warranties
contained in this Agreement in relation to and to the extent that:
(a) any matter which is reserved, or provided for in the Company's
audited accounts for the year ended December 31, 1996 or in the Closing
Date Balance Sheet as finally determined in accordance with SECTION 1.02
(but the Purchaser's right to make such a claim shall be limited only
insofar as there is a reserve or provision for the matter to which the
claim relates);
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(b) any matter where the claim arises as a result of, or would not
have arisen but for, or a liability is increased as a result of,
legislation not in force at the date of this Agreement, or any change in
legislation with retrospective effect after the date of this Agreement
(including without limitation any increase in rates or scope or calculation
of Taxes, new Taxes, or changes in legislation relating to Taxes with
retrospective effect) or any change in the interpretation or application of
the law or any judicial decision or practice or any generally accepted
change in any rule or regulation, after the date of this Agreement the
withdrawal or alteration after the date of this Agreement of any extra
statutory concession made by any fiscal authority and presently in
operation, or any introduction, change or withdrawal after the date of this
Agreement of any regulatory or administrative rule or provision of general
application;
(c) any matter where the facts, events, matters or circumstances
giving rise to such claim have been fully and fairly disclosed (but so that
any facts, events, matters or circumstances which are disclosed only in
part shall be deemed fully and fairly disclosed to that extent but not
further or otherwise) to the Purchaser in this Agreement or the disclosure
letter of even date from the Shareholders to the Purchaser and Xpedite (the
"DISCLOSURE LETTER") or the documents annexed or referred to in the
Disclosure Letter or in any documents entered into pursuant to the terms of
this Agreement;
(d) any claim which has been made good or is compensated for in full
otherwise than by the Company or the Purchaser;
(e) any matter which would not have arisen but for a breach by Xpedite
or the Purchaser of its obligations under this Agreement or under any
document entered into pursuant to this Agreement; and
(f) any matter relating to Taxes to the extent that it has been
discharged on or before the Closing Date.
SECTION 11.04. SURVIVAL PERIOD. The rights of the Purchaser in respect
of any breach of any of the representations and warranties contained in this
Agreement
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shall only be enforceable if written notice giving the amount and all available
material and specific details of a claim shall have been given to the
Shareholders on or before the first anniversary of the Closing Date and the
Shareholders shall cease to be liable in respect of such claim (which shall be
deemed to have been withdrawn) if legal proceedings are not issued and served in
respect of it within 18 months after the Closing Date.
SECTION 11.05. NO RESCISSION. Following the Closing, the remedies of
the Purchaser and Xpedite in respect of any breach of any of the representations
and warranties contained in this Agreement shall be against the Shareholders and
limited to a claim for damages subject to the limitations contained in this
Agreement and shall not extend to rescission or termination of this Agreement or
the right to claim that any such breach constitutes repudiation of this
Agreement.
SECTION 11.06. MITIGATION. Following the Closing, the Purchaser shall
not be entitled to make any claim under or pursuant to the representations and
warranties contained in this Agreement unless:
(a) within 45 days after the Chief Executive Officer of
Xpedite has obtained actual knowledge of circumstances which will, or is
reasonably likely to, give rise to such a claim the Purchaser gives to the
Shareholders written notice of such claim and in particular (but without
prejudice to the generality of the foregoing) gives such written notice of
any claim by or against, or any liability of or to, any third party (or of
any circumstances which become known to the Purchaser and/or the Company
which are reasonably likely to give rise to any such claim or liability) in
consequence of which the Shareholders will or may become liable for a claim
under this Agreement;
(b) if requested in writing by the Shareholders, the
Purchaser has taken or procured that the Company has taken all steps
necessary in Purchaser's reasonable judgment to avoid, resist, or
compromise any such claim or liability and any relevant proceedings and has
taken or procured that the Company has taken all reasonably necessary
proceedings or other actions in connection with such claim or liability
subject in each case to the Shareholders indemnifying the Purchaser to the
reasonable satisfaction of the Purchaser against all
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reasonable costs, liabilities, charges and expenses which it may reasonably
incur thereby; and
(c) the Purchaser has at all times allowed the
Shareholders and their professional advisers and other agents access (at
reasonable times upon reasonable notice during normal business hours) to
and to inspect and take copies of, all necessary books, files and records
of the Company for the purpose of assessing and dealing with any such claim
or liability; PROVIDED, that the foregoing shall not unreasonably disrupt
the Purchaser's and the Company's business.
Nothing contained in this SECTION 11.06 shall be deemed to require the
Purchaser to take any act, or omit from taking any act, that would, in the good
faith judgment of the Purchaser, materially adversely affect the Company's
business or its relations with any of its material customers.
SECTION 11.07. OFFSET; INCREASE. (a) In calculating the loss to the
Purchaser arising or alleged to arise out of any liability of the Shareholders
in respect of any breach of any of the representations and warranties contained
in this Agreement there shall be deducted the amount by which any Taxes for
which the Purchaser or the Company is assessed or accountable (with respect to
the taxable year in which the indemnity claim relating to any such liability is
paid) is reduced or extinguished as a result of any such liability.
(b) Except where a claim is made by a third party to whom this
Agreement has been assigned, the amount of any claim to be paid under this
Article XI shall be increased by the amount of any Taxes imposed by any Taxing
Authority on the receipt by the Purchaser or the Company of such payment (and
imposed on any payments received under this SECTION 11.07(b)).
(c) The parties intend that an arbitrator or court of competent
jurisdiction will take into account the principles set forth in SECTION 11.07(a)
and (b). Provided this is so, once a Qualifying Claim has been Finally
Determined (as defined in SECTION 11.19) by a court of competent jurisdiction or
by an arbitrator, the amount awarded shall be in full and final settlement of
such Qualifying Claim and no further adjustment for Taxes will be made.
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SECTION 11.08. DEMINIMIS CLAIMS; BASKET. No payment in respect of any
individual matter giving rise to a claim under any of the representations and
warranties contained in this Agreement shall be made unless and until and to the
extent that the amount finally adjudicated by a court of competent jurisdiction
or arbitrator or agreed to be payable by the Shareholders in respect of any such
claim shall exceed (pound)10,000 ("a QUALIFYING CLAIM") and in such event the
Shareholders shall be liable for the full amount of such claim. No payment shall
be made in respect of any matter giving rise to a claim under any of the
representations and warranties contained in this Agreement unless and until the
amount in respect of that claim (when aggregated with each other Qualifying
Claim) shall exceed (pound)100,000 in which case the Shareholders shall be
liable for all such claims.
SECTION 11.09. MAXIMUM LIABILITY. The maximum aggregate liability of
the Shareholders for claims under any of the representations and warranties
contained in this Agreement shall not in any circumstances exceed the sum of
$5,000,000 (as supported by the APAX Letter of Credit).
SECTION 11.10. THIRD PARTY RECOVERIES. If the Purchaser or the Company
is entitled to recover (whether by payment, discount, credit, set-off or
otherwise) from any Person other than the Shareholders any sum in respect of any
matters giving rise to a liability of the Shareholders under any of the
representations and warranties contained in this Agreement the Purchaser shall,
and shall procure that the Company shall, give all reasonable assistance
(including access to documents) if required by the Shareholders, and at the
expense of the Shareholders, shall take, or procure the taking of, all, in
Purchaser's judgment, appropriate steps to enforce such recovery (keeping the
Shareholders reasonably informed of the progress of any action taken) and, in
the case of the Purchaser, shall forthwith account to the Company for any amount
so recovered less all reasonable expenses of recovery thereof or, if less, any
amount paid or payable by the Shareholders in respect of the claim.
SECTION 11.11. SUBSEQUENT RECOVERY. If any payment is made by the
Shareholders or any of them in or towards the settlement of any claim under any
of the representations and warranties contained in this Agreement and the
Purchaser or the Company subsequently recovers or procures the recovery from a
third party of an amount which is referable to that claim the Purchaser shall,
or shall
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procure that the Company shall, forthwith repay or procure repayment to the
relevant Shareholders of an amount equal to whichever is the lesser of:
(a) the amount recovered from the third party
after deduction of all reasonable expenses of recovery;
and
(b) the amount paid in or towards settlement of
the claim.
SECTION 11.12. PURCHASE PRICE REDUCTION. To the extent permitted under
Applicable Law, the amount or amounts of payments made by the Shareholders
pursuant to any successful claim under any of the representations and warranties
contained in this Agreement shall be deemed to constitute a reduction in the
Purchase Price paid for the Shares.
SECTION 11.13. ACTUAL DAMAGES. The liability of the Shareholders in
respect of any claim under any of the representations and warranties contained
in this Agreement shall not extend or be increased by reference to loss of
future profit or revenue or to loss of or harm to goodwill or reputation.
SECTION 11.14. CONTINGENT LIABILITY. If any breach arises by
reason of a liability falling on the Purchaser or the Company which is a
contingent or future liability when the claim in respect thereof is notified to
the Shareholders then the Shareholders shall not be obliged to make any payment
to the Purchaser until such time as the contingent or future liability ceases to
be contingent and becomes an actual liability or (if earlier) the time at which
the Purchaser or the Company suffers loss.
SECTION 11.15. APPLICATION OF CREDITS, ETC. The Shareholders shall not
be liable in respect of any claim under any of the representations and
warranties contained in this Agreement to the extent that any losses (including
carry forward tax losses), relief, allowances, credits, deductions,
counterclaims, rights of set off or other rights or claims of a similar nature
arising by reference to the period before Closing and to the extent not
accounted for in the final Closing Date Balance Sheet are available to the
Company against or to otherwise mitigate any liability arising from such claims.
-59-
<PAGE>
SECTION 11.16. SINGLE RECOVERY. The Purchaser shall not be entitled to
recover any sum in respect of any claim for breach of the representations and
warranties contained in this Agreement or otherwise obtain compensation,
reimbursement or restitution more than once in respect of the same loss or
damage by reason of any misrepresentation or breach of the representations and
warranties contained in this Agreement.
SECTION 11.17. [INTENTIONALLY OMITTED]
SECTION 11.18. SHAREHOLDERS' INDEMNITY. The Purchaser and Xpedite
jointly and severally covenant to procure that the Company shall indemnify and
keep indemnified on an after-Tax basis (if it is not otherwise liable to make
such payment to the Shareholders) the Shareholders (including in all
circumstances and notwithstanding any provision herein to the contrary, Eagle):
(a) any liability to make a payment of Tax of the Shareholders, being
a payment of Tax which is primarily a Tax liability of the Company incurred
by it on or prior to Closing or an accounting period beginning prior to the
date hereof and is payable by the Shareholders (or any of them) by virtue
of the Company failing to discharge such Tax liability;
(b) all losses, liabilities and costs which the Shareholders (or any
of them) may incur in connection with or as a consequence of any of the
matters referred to in SECTION 11.18(a); and
(c) any sums payable by the Purchaser, Xpedite or the Company under
SECTION 11.18(a) or (b) shall be paid not later than the fifth business day
before the date on which the payment of Tax is payable by the Shareholders
(or any of them) or, if later, not more than five (5) business days
following the date on which the Shareholders notify the Purchaser, Xpedite
or the Company of its liability to procure the making of such payment.
SECTION 11.19. SETTLEMENT OF CLAIMS. Not later than the fifth business
day after (i) APAX and Purchaser settle any claim for which Purchaser is
entitled to payment under the provisions of this Article XI or (ii) upon the
determination by a court of competent jurisdiction or arbitrator where there are
no further rights of appeal or
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<PAGE>
the time limits for any such rights of appeal have lapsed ("Finally Determined")
the Purchaser is entitled to payment for a claim under the provisions of this
Article XI, APAX shall pay to Purchaser the amount agreed to or awarded to
Purchaser and, if it fails to do so, will not hinder Purchaser from being paid
such amount under the APAX Letter of Credit. In the event that APAX does not
make such payment then Purchaser shall have the right to proceed against the
APAX Letter of Credit to satisfy its claim.
SECTION 11.20. TAX MATTERS. The Purchaser shall not be entitled to
make any claim under or pursuant to any of the representations and warranties
contained in this Agreement, so far as the same relate to Taxes in relation to:
(a) any claim which would not have arisen but for a voluntary act,
omission or transaction, outside the ordinary course of business, on the
part of or carried out by the Purchaser or the Company after Closing
(including, without limitation, the effecting of any change in the nature
or conduct of any trade or business carried on by the Company but not
including seeking advice or a ruling from any Governmental Authority) which
the Purchaser or the Company know, or ought reasonably to have known, would
give rise to the claim;
(b) any claim which would not have arisen or would have been reduced
or eliminated but for a failure or omission on the part of the Company
after Closing to make any claim, election, surrender or disclaimer or to
give any notice or consent or to do any other thing the making, giving or
doing of which was taken into account in computing the provision or reserve
for Taxes made in the Closing Date Balance Sheet or taken into account in
the preparation of the Closing Date Balance Sheet;
(c) any claim which would not have arisen but for the voluntary making
of any claim, election, surrender or disclaimer or voluntary giving of any
claim, election, surrender or disclaimer or voluntary giving of any notice
or consent by the Purchaser or the Company after Closing, the giving,
making or doing of which was not assumed in completing the provision or
reserve for Taxes made in the Closing Date Balance Sheet or taken into
account in the preparation of the Closing Date Balance Sheet;
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<PAGE>
(d) any claim which would not have arisen but for a withdrawal or
disclaimer of, or a revision of a claim for any relief from Taxes or any
other modification of the Company's current tax position where such
withdrawal, disclaimer, revision or modification is caused or made by the
Purchaser or the Company after Closing; and
(e) any claim which arises from any change in accounting or taxation
policy or practice adopted by the Company on or after Closing.
SECTION 11.21. RESERVATION. Notwithstanding anything to the contrary
provided for in this Agreement, the provisions and limitations contained in this
Article XI shall not be applicable with respect to (a) any breach or any
non-performance of any agreement or undertaking of the Shareholders contained in
this Agreement or (b) any breach of the representations and warranties contained
in SECTIONS 2.01 or 3.01 or the first sentence of SECTION 2.03(B) hereof or in
respect of any claim for fraud and, in the event of a breach of such
representations or such a claim for fraud, Xpedite and Purchaser shall be
entitled to pursue all remedies available to them at law or in equity against
any of the Shareholders without any limitation or restriction.
ARTICLE XII
MISCELLANEOUS
-------------
SECTION 12.01. EXPENSES. Purchaser and the Shareholders shall bear
their own costs, fees and expenses in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including, without
limitation, fees, commissions and expenses (including, without limitation, all
filing, printing, copying, mailing, telephone, transportation and delivery
charges) payable to brokers, finders, investment bankers, consultants, exchange
or transfer agents, attorneys, accountants and other professionals.
Notwithstanding any provision herein to the contrary, the Purchaser shall pay
any stamp, transfer or similar Taxes arising as a result of the consummation of
the transactions contemplated hereunder.
SECTION 12.02. HEADINGS. The descriptive headings of the several
Articles and Sections of this
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<PAGE>
Agreement are inserted for convenience only and do not constitute a part of this
Agreement and shall not in any manner affect the meaning or interpretation of
the terms of this Agreement.
SECTION 12.03. NOTICES.
(a) Any notices or other communications (including any notices or
other documents relating to service of legal process) required or permitted
hereunder shall be addressed as follows:
If to Purchaser or Xpedite to:
PHJ&W No. 2 Limited
c/o Paul, Hastings, Janofsky & Walker LLP
60 Lombard Street
London, England EC3V 9EA
Tel: 011-44-171-464-8429
Fax: 011-44-171-464-8731
Attn: Ian Burton, Esq.
Copy to:
Xpedite Systems, Inc.
446 Highway 35
Eatontown, NJ 07724
Tel: (732) 389-3900
Fax: (732) 544-1044
Attn: Roy B. Andersen, Jr.
Paul Hastings Janofsky & Walker LLP
399 Park Avenue, 31st Floor
New York, NY 10022-4697
Attn: Neil A. Torpey, Esq.
Tel: (212) 318-6034
Fax: (212) 319-4090
-63-
<PAGE>
If to the Shareholders to:
APAX Partners & Co. Ventures Limited
15 Portland Place
London WIN 3AA
Attn: John McMonigall
Tel: 011-44-171-872-6300
Fax: 011-44-171-636-6475
and
David Proctor
Warren House
Moor End
Acaster Malbis
York, Y02 1UQ
Tel: 011-44-1904-700-700
Fax: 011-44-1904-707-372
Copy to:
Hammond Suddards
Trinity Court
16 John Dalton Street
Manchester M 60 8MS
Attn: Ged O'Neill, Esq.
Tel: 011-44-161-830-5000
Fax: 011-44-161-830-5001
or such other address as shall be furnished in writing by either party in
accordance with this SECTION 12.03, and any such notice or communication shall
be deemed to have been given on the date specified in SECTION 12.03(b) both for
the purposes of this Agreement and, in the context of service of legal process,
for the purposes of the Rules of the Supreme Court, although the parties reserve
the right to effect service of such legal process pursuant to such Rules.
(b) Notices or other communications shall be deemed given (i) if
delivered personally, upon delivery, (ii) if delivered by registered or
certified mail (return receipt requested), upon the earlier of actual delivery
or three business days after being mailed, (iii) if delivered by overnight
courier or similar service, upon delivery, or (iv) if given by telecopy, upon
confirmation of transmission by telecopy; PROVIDED, that if such notice or other
communications would be otherwise deemed given on a day which is not a business
day, the delivery shall be deemed given the first business day following such
day.
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<PAGE>
SECTION 12.04. ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests, or obligations hereunder shall be assigned by
any of the parties hereto, either in whole or in part, without the prior written
consent of the other parties hereto; provided, however, the Purchaser shall have
the right to assign its rights hereunder to the providers of the financing to be
obtained to consummate the transactions contemplated hereby.
SECTION 12.05. COMPLETE AGREEMENT. This Agreement, including the
Schedules, exhibits and other writings referred to herein or delivered pursuant
hereto contain the entire understanding among the parties with respect to the
transactions contemplated hereby and supersede all prior arrangements or
understandings with respect thereto. There are no restrictions, agreements,
promises, warranties, covenants or undertakings other than those expressly set
forth herein.
SECTION 12.06. WAIVERS. No delay on the part of any party hereto in
exercising any right hereunder shall operate as a waiver of such right, nor
shall any waiver, express or implied, by any party hereto of any right hereunder
or of any failure to provide and perform hereunder or breach hereof by either
party hereto constitute or be deemed to constitute a waiver of any other failure
to provide and perform hereunder or breach hereof by any party hereto whether of
a similar or dissimilar nature thereto.
SECTION 12.07. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
SECTION 12.08. GOVERNING LAW. This agreement shall be governed by and
construed in accordance with English Law and the parties hereby submit to the
non- exclusive jurisdiction of the English Courts.
SECTION 12.09. ARBITRATION. (a) Any disputes arising under or in
connection with this Agreement (other than a dispute in which a person is
seeking equitable relief (including without limitation, for specific performance
of this Agreement), in which case such party shall have the right to institute
proceedings in the English courts without pursuing arbitration proceedings
pursuant to this SECTION
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<PAGE>
12.09) that cannot be resolved amicably by the parties hereto shall be finally
settled by binding arbitration under the Rules of the London Court of
International Arbitration (a copy of which Rules, as amended, are annexed hereto
as EXHIBIT D hereto) by three arbitrators. If there are two parties to any such
dispute, each such party will choose one arbitrator and the two arbitrators so
chosen will select the third arbitrator; if there are three parties to any such
dispute, each such party will choose an arbitrator. For the purposes hereof, one
or more Shareholders shall count as only one party. The arbitration proceedings
shall be held at a place and time mutually agreed between the parties to such
arbitration or, in the event such parties do not so agree within ten (10) days
of the commencement of consideration of the issue of the venue for such
arbitration, in London, England. The provisions of Section 69 of the Arbitration
Act 1996 shall not apply to any reference to arbitration carried out pursuant to
this Section.
(b) In any such arbitration proceedings, at the request of either any
party hereto, to protect confidential information and any other matter that any
such party would normally not reveal to third parties, the arbitrators shall
enter a protective order in such form as the parties hereto shall stipulate or
as the arbitrators shall determine is suitable. Among other things, the
protective order shall stipulate that the arbitrators themselves shall receive
any information designated as "confidential" solely for the purposes of
assessing the facts and/or law for the purposes of making any necessary factual
determination or issuing an award, and shall not otherwise use or disclose such
matter.
SECTION 12.10. ACCOUNTING TERMS. All accounting terms used herein
which are not expressly defined in this Agreement shall have the meanings given
to them in accordance with GAAP.
SECTION 12.11. PARTIES. Nothing in this Agreement is intended to
confer any rights or remedies under or by reason of this Agreement on any
persons or entities other than the parties hereto and their respective
successors and permitted assigns in accordance with SECTION 12.04 hereof.
Without limiting the foregoing, no third Person shall be a beneficiary of any
provision of this Agreement.
SECTION 12.12. LEGAL REMEDIES. Subject to ARTICLE XI and SECTION 12.11
but otherwise notwithstanding
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<PAGE>
any other provision in this Agreement to the contrary, the parties hereto
reserve all of their contractual remedies (arising both at common law and in
equity) including, without limitation, for specific performance, in respect of
any breach or non-performance of the representations, warranties, covenants,
undertakings and agreements contained in this Agreement.
SECTION 12.13. SCHEDULES. References in this Agreement to Schedules
shall be deemed to mean the information and/or documents contained in the
Disclosure Letter referring to such Schedules.
SECTION 12.14. XPEDITE GUARANTEE.
(a) In consideration of the Shareholders agreeing to enter into this
Agreement, Xpedite as principal obligor and not merely as surety hereby
irrevocably and unconditionally undertakes and guarantees to the Shareholders
the due and punctual performance by Purchaser of the obligations, undertakings,
covenants and liabilities of Purchaser contained in this Agreement and further
undertakes that if default shall be made in the performance of the same Xpedite
shall forthwith on demand pay to the Shareholders an amount equal to, or procure
the discharge of such of the obligations, undertakings, covenants and
liabilities as shall not have been paid or discharged when due, as if Xpedite
was the principal obligor in respect thereof, provided always that Xpedite's
liability pursuant to this SECTION 12.14 shall be no greater than if Xpedite had
been named as the Purchaser and Xpedite shall be entitled to the same rights (if
any) of set-off, counterclaim and defense as if it were so named.
(b) The liability of Xpedite shall not be affected nor shall the
guarantee contained in this SECTION 12.14 be discharged or diminished by reason
of:
(i) the Shareholders compounding with, discharging, releasing or
varying the liability of or granting any time, indulgence or
concession to the Purchaser or granting any accommodation, facility or
transaction in any manner whatsoever to the Purchaser, or concurring
in, accepting, varying or novating any agreement (including this
Agreement), compromise, arrangement or settlement, or waiving or
omitting to claim or enforce payment from or discharge by partner of
the obligations guaranteed under this SECTION 12.14; or
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<PAGE>
(ii) any change in the constitution of the Purchaser; or
(iii) any other act, circumstance or omission which, but for this
provision would or might operate or exonerate Xpedite from its
obligations and liabilities under the guarantee contained in this
SECTION 12.14.
(c) Any intermediate payment, discharge or settlement of the
obligations guaranteed by Xpedite under this SECTION 12.14 will not affect the
liability of Xpedite nor will it discharge or diminish the terms of this
guarantee in respect of the obligations not so paid, discharged or settled.
(d) Until the obligations imposed by this SECTION 12.14 have been paid
or discharged in full Xpedite shall not, by paying off any sum recoverable under
this SECTION 12.14, or by any other means or on any other ground, claim or prove
in competition with the shareholder in respect of any payment by Xpedite under
this SECTION 12.14 or be entitled to claim to have the benefit of any set-off or
counterclaim or proof against or dividend composition or payment by the
Purchaser or the benefit of any other security which the Shareholders may now or
later hold in respect of the said sums.
(e) This guarantee shall be a continuing guarantee and accordingly
shall remain in operation until all Xpedite's obligations under this SECTION
12.14 have been paid or discharged in full.
(f) Any of Xpedite's obligations under this SECTION 12.14 which may
not be recoverable from the Purchaser, whether by reason of any legal
limitation, disability, incapacity or any other fact or circumstance and whether
known to the Shareholders or not, shall nevertheless be recoverable from Xpedite
as sole or principal debtor.
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<PAGE>
IN WITNESS WHEREOF, the parties here to have executed this Agreement,
or has caused this Agreement to be executed on its behalf by a representative
duly authorized, all as of the day and year first above written.
PHJ&W NO. 2 LIMITED
By:/s/ ROY B. ANDERSEN, JR.
-----------------------------------
Name: Roy B. Andersen, Jr.
Title:
XPEDITE SYSTEMS, INC.
By:/s/ ROY B. ANDERSEN, JR.
-----------------------------------
Name: Roy B. Andersen, Jr.
Title: President
SHAREHOLDERS:
/s/ DAVID PROCTOR
--------------------------------------
David Proctor
WITNESS:/s/ Michael Chernick /s/ DAVID PROCTOR
--------------------------------------
Executed as a DEED by
Marc Epstein, acting by
David Proctor, his duly
authorized attorney
APAX PARTNERS & CO. VENTURES
LIMITED, as manager of Apax
Ventures IV and Apax IV
International Partners, L.P.
By:/s/ JOHN PHILLIPS MCMONIGALL
---------------------------------
Name: John Phillips McMonigall
Title:
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<PAGE>
ROTHSCHILD NOMINEES LIMITED,
acting by John Phillips
McMonigall, its duly
authorized attorney
By:/s/ JOHN PHILLIPS MCMONIGALL
-----------------------------------
EAGLE NOMINEES LIMITED,
acting by Gerard James
O'Neill, its duly authorized
attorney
By: /s/ GERARD JAMES O'NEILL
-----------------------------------
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<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
NO. OF
SHAREHOLDER CLASS OF SHARE SHARES CONSIDERATION
- ------------------------------ ----------------------------- -------------------- --------------------------
<S> <C> <C> <C>
Apax Funds "A" ordinary 250,000 250,000
Nominees Limited, of(pound) 1.00 each 284,999 of the amount
B Account (as payable under
custodian trustee Sections 1.01(ii) and
for Apax Ventures 9.01(b)(i)(Fourth)
International
Partners LP and
Apax Ventures IV)
Preference 2,355,288 The nominal value
Shares of plus all accrued
(pound) 1.00 each dividends, interest
and penalties (if
any) calculated down
to the Closing Date
David Proctor Preference 19,712 The nominal value
Shares of plus all accrued
(pound) 1.00 each dividends, interest
and penalties (if
any) calculated down
to the Closing Date
Marc Epstein Ordinary 10,000 10,000
shares of 284,999 of the
(pound)1.00 each Adjusted Purchase
Price
Rothschild Ordinary 1,666 1,666
Nominees Limited shares of 284,999 of the amount
(as trustee for (pound) 1.00 each payable under
N.M. Rothschild & Sections 1.01(ii) and
Sons Limited) 9.01(b)(i)(Fourth)
David Proctor Ordinary 3,267 3,267
shares of 284,999 of the amount
(pound)1.00 each payable under
(held under Sections 1.01(ii) and
option) 9.01(b)(i)(Fourth)
Holders of Ordinary 20,066 20,066
Options shares of 284,999 of the amount
(pound) 1.00 each payable under
(held under Sections 1.01(ii) and
option) 9.01(b)(i)(Fourth)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1A
CLASS OF NO. OF
SHAREHOLDER SHARE SHARES CONSIDERATION
- ------------------------------ -------------------------- ---------------------- ------------------------
<S> <C> <C> <C>
Apax Funds "A" ordinary 250,000 250,000
Nominees Limited, of(pound) 1.00 333,333 of the
B Account (as each amount payable
custodian trustee under Sections
for Apax Ventures 1.01(ii) and
International 9.01(b)(i)(Fourth)
Partners LP and
Apax Ventures IV)
Preference 2,355,288 The nominal value
Shares of plus all accrued
(pound) 1.00 each dividends,
interest and
penalties (if any)
calculated down to
the Closing Date
David Proctor Preference 19,712 The nominal value
Shares of plus all accrued
(pound) 1.00 each dividends,
interest and
penalties (if any)
calculated down to
the Closing Date
Marc Epstein Ordinary 10,000 10,000
shares of 333,333 of the
(pound) 1.00 each Adjusted Purchase
Price
Rothschild Ordinary 1,666 1,666
Nominees Limited shares of 333,333 of the
(as trustee for (pound) 1.00 each amount payable
N.M. Rothschild & under Sections
Sons Limited) 1.01(ii) and
9.01(b)(i)(Fourth)
Eagle Nominees Ordinary 48,334 48,334
Limited Shares of 333,333 of the
(pound) 1.00 each amount payable
under Sections
1.01(ii) and
9.01(b)(i)(Fourth)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
CLASS OF NO. OF
SHAREHOLDER SHARE SHARES CONSIDERATION
- ------------------------------ -------------------------- ---------------------- ------------------------
<S> <C> <C> <C>
David Proctor Ordinary 3,267 3,267
shares of 333,333 of the
(pound) 1.00 each amount payable
(held under under Sections
option) 1.01(ii) and
9.01(b)(i)(Fourth)
Holders of Ordinary 20,066 20,066
Options shares of 333,333 of the
(pound) 1.00 each amount payable
(held under under Sections
option) 1.01(ii) and
9.01(b)(i)(Fourth)
</TABLE>
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<PAGE>
BUYBACK AGREEMENT
THIS AGREEMENT is made as of the _____ day of August, 1997
- --------------
BETWEEN:
- -------
(1) EAGLE NOMINEES LIMITED (Company Number: 36514) whose
registered office is at Eagle House, Don Road, St.
Helier, Jersey (the "VENDOR");
(2) XPEDITE SYSTEMS LIMITED (Company Number: 2778084)
whose registered office is at Xpedite House, Pioneer
Business Park, Amy Johnson Way, Clifton Moor, York,
Y03 8XT (the "COMPANY")
RECITALS
- --------
(A) The Company was incorporated in England under the Companies Act
1985 and is a company limited by shares.
(B) The Company has an authorised share capital of
(pound)12,059,205 divided into 2,712,094 'A' Preference
Shares of(pound)1.00 each (of which 2,644,033 are in issue),
6,238,778 'B' Preference Shares of(pound)1.00 each (none of
which are in issue), 2,775,000 Preference Shares of
(pound)1.00 each (of which 2,375,000 are in issue), 250,000
'A' Ordinary Shares of(pound)1.00 each (all of which are in
issue) and 83,333 Ordinary Shares of(pound)1.00 each (of
which 60,000 are in issue) of which 48,334 are
registered in the name of the Vendor and are the
subject of this Agreement (the "SALE SHARES").
(C) The Company desires to purchase the Sale Shares
pursuant to the power conferred in Section 162 of the
Companies Act 1985 (the "ACT") and the authority
contained in Regulation 35 of Table A of the Companies
(Tables A to F) Regulations 1985 which are incorporated
in the Company's Articles of Association pursuant to
Article 1.2 of the Company's Articles of Association
and the Vendor has agreed to sell the Sale Shares for
the consideration specified in this Agreement and upon
the other terms of this Agreement.
(D) The terms of this Agreement were authorized in connection with
Section 165(2) and Section 320 of the Act by Special Resolutions
of the Company passed by Written Resolution on August 7, 1997 in
accordance with paragraph 5 of Schedule 15A to the Act.
<PAGE>
(E) All of the holders of ordinary share capital in the
Company (other than the Vendor save where this
Agreement is terminated pursuant to Section 5.2 hereof)
have agreed to sell the whole of the ordinary share
capital of the Company to PHJ&W No. 2, Limited (the
"PURCHASER") pursuant to the terms of a Share Purchase
Agreement (the "SHARE PURCHASE AGREEMENT") to be
entered into on the date of this Agreement between (1)
Apax Partners & Co. Ventures Limited and others (2) the
Purchaser and (3) Xpedite Systems, Inc.
IT IS HEREBY AGREED as follows:
- -------------------
1. AGREEMENT FOR SALE
------------------
1.1 Subject to the provisions of Clause 2 below, the Vendor
shall sell with full title guarantee and the Company shall
purchase the Sale Shares free from all liens charges and
Encumbrances (as defined herein) and together with all
accrued benefits and rights attached to them.
1.2 Subject to the condition set out in Clause 2.1 below
having been satisfied and subject to the provisions of the
Act, completion of the sale and purchase shall take place
on the 36th day after approval of the sale and purchase
provided for in this Agreement has been obtained in
accordance with Section 173(2) of the Act or if such
conditions have not been satisfied by such date, on the
day of the satisfaction of such conditions and the date
for such completion is hereinafter referred to as the
"COMPLETION DATE".
2. CONDITIONS
----------
2.1 This Agreement is conditional upon but shall take place
simultaneously with the consummation of the "CLOSING" (as
defined in the Share Purchase Agreement).
2.2 The Vendor and the Company shall co-operate and
use all reasonable endeavors to procure the
fulfillment of the condition set out in
Clause 2.1.
2.3 The Vendor and the Company shall cooperate and use all
reasonable endeavors to cause the approval of the sale and
purchase of the Sale Shares, including but not limited to
that required under Section 173(2) of the Act, to be
obtained.
2
<PAGE>
3. REPRESENTATIONS, WARRANTIES, AND COVENANTS
------------------------------------------
The Vendor represents and warrants to the Company, and covenants
to the Company, as follows:
3.1 OWNERSHIP OF THE SALE SHARES. The Vendor is the legal
owner of the Sale Shares and upon delivery of and payment
for the Sale Shares in accordance with the provisions of
this Agreement, the Vendor shall transfer to the Company
with full title guarantee to such Sale Shares, free and
clear of all security interests, liens, pledges, claims,
charges, escrows, encumbrances, options, rights of first
refusal, rights of pre-emption, mortgages, indentures or
easements of any type ("ENCUMBRANCE"). Other than the Sale
Shares (which are fully paid) the Vendor does not own any
of the share capital of the Company. From the date hereof
until the date of termination of this Agreement, Vendor
shall not, without specific instruction from David Proctor
to do so, sell, transfer, pledge, hypothecate, or
otherwise dispose of any of the Sale Shares or any
interest in or portion thereof, or any rights appurtenant
thereto.
3.2 AUTHORIZATION. The Vendor has the requisite power and
authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered
by the Vendor and is a valid and binding agreement of the
Vendor, enforceable against the Vendor in accordance with
its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or similar laws in effect now or
hereafter relating to creditors' rights generally, and by
equitable principles (whether considered in a proceeding
at law or in equity).
3.3 NO CONFLICT OR VIOLATION. Neither the execution
and delivery by the Vendor of this Agreement nor
the consummation of the transactions contemplated
hereby or thereby, will:
(a) conflict with or result in a breach of any
provision of the articles or certificate of
incorporation or organization of the Vendor;
3
<PAGE>
(b) with or without giving of notice or the
passage of time, or both, violate, or
conflict with, or constitute a default under,
or result in the termination or in a right of
termination of, violate or be in conflict
with, result in a breach of any term or
provision of, or constitute a default under,
or accelerate or permit the acceleration of
the performance required by, or give any
other "PERSON" (as defined in the Share
Purchase Agreement) a basis for increased
rights or termination or nonperformance
under, or require any consent, authorization
or approval under, any term or provision of
any Encumbrance, lease, license, decree,
order or any other agreement or instrument to
which the Vendor is a party or by which the
Sale Shares are bound or affected;
(c) violate any provision of, or require any consent,
authorization or approval under, any "APPLICABLE
LAWS" of any "GOVERNMENTAL AUTHORITY", or any
"JUDGMENT" (in each case as such terms are
defined in the Share Purchase Agreement), in each
case applicable to the Vendor;
(d) require any consent, approval or
authorization of, or declaration, filing or
registration with, any Governmental Authority
or any other Person, to be made or obtained
by or on behalf of the Vendor; or
(e) require any consent, approval or authorization
of, or declaration, filing or registration with,
any Governmental Authority, to be made or
obtained by or on behalf of the Vendor pursuant
to any Applicable Law.
3.4 BROKERS' FEES. The Vendor has not employed any broker or
finder, and it has not incurred nor will it incur any
liability for any brokerage fees, commissions, finders'
fees or similar fees or expenses in connection with this
Agreement or the transactions contemplated herein.
4. CONSIDERATION
-------------
The aggregate price payable for the Sale Shares shall be the sum
of $10,773,935 ("BUYBACK PRICE") which shall
4
<PAGE>
be payable to the Vendor (or as the Vendor directs) by telegraphic
transfer out of the monies held by Hammond Suddards pursuant to
Section 9.01(b)(i)(Second) of the Share Purchase Agreement.
5. COMPLETION; TERMINATION
-----------------------
5.1 COMPLETION. Completion of the sale and purchase of the
Sale Shares shall take place on the Completion Date at the
office of Hammond Suddards, Trinity Court, 16 John Dalton
Street, Manchester, M60 8HS.
(a) the Vendor shall deliver to the Company the
share certificate(s) in respect of the Sale
Shares;
(b) the Company shall instruct Hammond Suddards
to deliver to the Vendor (or as the Vendor
directs) a telegraphic transfer for the sum
due under Clause 4.
(c) The provisions of Section 3 hereof shall
survive completion of the transactions
contemplated hereby.
5.2 TERMINATION. This Agreement shall terminate (i) in the
event a creditor exercises its right to block the
transactions contemplated by this Agreement in accordance
with Section 176 of the Act or (ii) in the event the
conditions (save the Closing itself) to completion
hereunder have not been satisfied by Closing. In the event
this Agreement is terminated for any reason whatsoever,
the Vendor agrees that the Sale Shares shall become
subject to the provisions of the Share Purchase Agreement.
In such circumstances and in accordance therewith, the
Sale Shares shall be deemed "SHARES," and the Vendor shall
be deemed a "SHAREHOLDER," for all purposes of the Share
Purchase Agreement.
6. ENTIRE AGREEMENT
----------------
This Agreement constitutes the whole agreement between the parties
hereto and no variation hereof shall be effective unless made in
writing and signed by both the parties hereto and which variation
is thereafter authorized and approved by Special Resolution of the
Company as required by the provisions of the Act.
5
<PAGE>
7. GENERAL
-------
7.1 This Agreement shall not be assignable.
7.2 This Agreement shall be binding upon, and shall enure for
the benefit of, the personal representatives of successors
in the title of the Vendor.
7.3 This Agreement shall so far as it remains to be performed
continue in full force and effect notwithstanding any
completion thereof.
7.4 This Agreement shall be construed in accordance with the
laws of England and the English Courts shall have
jurisdiction over any matter arising out of it.
7.5 The Vendor undertakes to the Company to execute all such
other documents and do all such other acts and things as
the Company shall require in order to perfect the right,
title and interest of the Company to the Sale Shares (and
this undertaking shall survive Completion).
7.6 The parties hereto reserve all of their contractual
remedies (arising both at common law and in equity)
including, without limitation, for specific performance,
in respect of any breach or non-performance of the
representations, warranties, covenants, undertakings and
agreements contained in this Agreement.
6
<PAGE>
AS WITNESS the hands of the parties or their duly authorised representatives on
the date shown on the first page.
SIGNED by EAGLE NOMINEES LIMITED
----------------------
acting by GERARD JAMES O'NEILL,
----------------------
its duly authorized attorney:
Signature:
Witness Name:
Address:
Occupation:
SIGNED by JOHN MCMONIGALL
----------------------
for and on behalf of
XPEDITE SYSTEMS LIMITED
- --------------------------------
in the presence of
Signature:
Witness name:
Address:
Occupation:
7
<PAGE>
DATED , 199
(1) NATIONAL WESTMINSTER BANK PLC
(2) PHJ&W NO. 2 LIMITED
- --------------------------------------------------------------------------------
DEED OF GUARANTEE
- --------------------------------------------------------------------------------
National Westminster Bank Plc has executed this deed on the condition that the
deed shall not be taken to be delivered for the purposes of Section 36A
Companies Act 1985 (As Amended) until the deed has been formally dated by or on
behalf of National Westminster Bank Plc
Hammond Suddards
Solicitors
Trinity Court
16 John Dalton Street
Manchester
M60 8HS
Tel: 0161 830 5000
Fax: 0161 830 5001
Ref: GJO
<PAGE>
THIS DEED OF GUARANTEE is made on ________
BETWEEN:
- -------
(1) NATIONAL WESTMINSTER BANK PLC (Company No: 929027) whose principal
place of business for the purposes of this Guarantee is at 62 Green Street,
London, W1Y 4BA (the "Guarantor"); and
(2) PHJ&W NO. 2 LIMITED (Company No. 3406448) whose registered office
is at c/o Paul, Hastings, Janofsky & Walker LLP, 60 Lombard Street, London, EC3V
9EA (the "Purchaser")
RECITALS
- --------
(A) The definitions adopted in Clause 1 apply to these recitals.
(B) In consideration of the Purchaser entering into the Agreement the
Guarantor has agreed to guarantee certain of Apax's obligations
under the Agreement.
(C) This is the Apax Letter of Credit (as defined in the Agreement).
NOW THIS DEED WITNESSES as follows:
- -----------------------
1. INTERPRETATION
--------------
1.1 In this Guarantee, unless the context otherwise requires,
the following words and expressions shall bear the
following meanings:
EXPRESSION MEANING
- ---------- -------
"the Agreement" the share purchase agreement dated August 8,
1997 made between (1) Apax and others, (2) the
Purchaser and (3) Xpedite Systems, Inc., as the
same may be amended from time to time in
accordance with the terms thereof.
8
<PAGE>
"Apax" Apax Partners & Co Ventures Limited (in its
capacity as manager of Apax Ventures IV and as
manager of Apax Ventures IV International
Partners LP) whose registered office is at 15
Portland Place, London WIN 3AA.
"the Company" Xpedite Systems Limited (Company No. 2778084)
whose registered office is at Xpedite House,
Pioneer Business Park, Amy Johnson Way, Clifton
Moor, York YO3 8XT.
"Finally Determined" decided upon by a court of competent
jurisdiction or by an arbitrator where there are
no further rights of appeal or the time limits
for any such rights of appeal have lapsed, and
"Final Determination" shall be construed
accordingly.
"Qualifying Claim" as defined in the Agreement.
1.2 Unless the context otherwise requires, references to the
singular include the plural, references to any gender include
all other genders, and references to "persons" shall include
bodies corporate, unincorporated associations and
partnerships.
1.3 Clause headings are for information only and shall not affect
the construction of this Guarantee.
2. GUARANTEE
---------
2.1 In consideration of the Purchaser agreeing to Closing (as
defined in the Agreement), the Guarantor, subject to clause
2.3, hereby irrevocably and unconditionally guarantees and
undertakes to pay the Purchaser on demand all amounts not paid
by Apax to the Purchaser under or in connection with
Qualifying Claims, PROVIDED THAT the Guarantor's maximum
aggregate liability hereunder shall in no event exceed the sum
of US$5,000,000 together with any interest payable under
clause 2.2 for the payment of which sum to the Purchaser the
Guarantor hereby binds itself.
-2-
9
<PAGE>
2.2 The Guarantor agrees to pay interest on any sums payable by
the Guarantor under Clause 2.1 if it has not paid any sum
demanded within 7 days of receipt of such demand day by day
from the date of receipt of a demand until full discharge at
the rate of 1% per annum over the Guarantor's base rate from
time to time, compounded monthly.
2.3 The Purchaser shall not be entitled to make any claim or
demand under this Guarantee unless and until:
2.3.1 A Qualifying Claim has been Finally Determined or
Apax has agreed in writing that it is liable for a
Qualifying Claim; and
2.3.2 Apax fails to settle such Qualifying Claim within
five days following written demand being made by the
Purchaser.
3. GENERAL
-------
3.1 This Guarantee shall not be discharged nor shall the
Guarantor's obligations and liability be affected or impaired
by any thing or any circumstance which would not have
discharged or affected or impaired the Guarantor's liability
if the Guarantor had been a principal debtor to the Purchaser.
3.2 Subject to Clause 3.6, this Guarantee is and at all times
shall be a continuing security.
3.3 This Guarantee is and will remain the property of the
Purchaser.
3.4 No delay or omission on the part of the Purchaser in
exercising any right or remedy under this Guarantee shall
impair that right or remedy or operate as or be taken to be a
waiver of it; nor shall any single partial or defective
exercise of any such right or remedy preclude any other or
further exercise under this Guarantee of that or any other
right or remedy.
-3-
<PAGE>
3.5 The benefit of this Guarantee is personal to the Purchaser and
is not transferable or assignable without the Guarantor's
prior written consent.
3.6 Save in respect of claims received prior to that time, the
Guarantor's liability hereunder shall expire ("Expiry") on the
date Apax ceases to be liable for Qualifying Claims in
accordance with the provisions of the Agreement. Any claims or
demands must be received by the Guarantor before Expiry and
any claims, notices, statements or demands received by the
Guarantor after Expiry shall be ineffective for the purposes
of this Guarantee whether or not this Guarantee is returned to
the Guarantor for cancellation.
3.7 A demand or notice hereunder by the Purchaser shall be in
writing signed by the Purchaser (and shall be accompanied by a
copy of the order made by the court or arbitrator in making a
Final Determination or a copy of Apax's written agreement to
accepting liability for a Qualifying Claim) and may be served
on the Guarantor either by hand or by post. In the case of
delivery by hand, the demand or notice may be delivered to the
Guarantor at 62 Green Street, London, W1Y 4BA and shall be
treated as having been received on delivery. A demand or
notice sent by post may be addressed to the Guarantor at 62
Green Street, London, W1Y 4BA and shall be treated as having
been received on the day following the day on which it was
posted by first class pre-paid post and shall be effective
notwithstanding it be returned undelivered.
3.8 This Guarantee shall be governed by and construed in
accordance with English law.
3.9 This Guarantee may be executed in any number of counterparts
all of which taken together shall constitute one and the same
Guarantee and any of the parties may execute this Guarantee by
executing any such counterpart.
-4-
<PAGE>
IN WITNESS whereof these presents have been duly executed as a deed the day and
year first above written.
EXECUTED (but not delivered until )
the date hereof) as a DEED by )
__________________________ as the )
attorney for and on behalf of )
NATIONAL WESTMINSTER )
BANK PLC in the presence of:- )
- -------------------------------------
Bank Official
National Westminster Bank plc
62 Green Street
London
W1Y 4BA
National Westminster Bank PLC has executed this deed on the condition that the
deed shall not be taken to be delivered for the purposes of Section 36A
Companies Act 1985 (As Amended) until the deed has been formally dated by or on
behalf of National
Westminster Bank PLC.
EXECUTED (but not delivered until )
the date hereof) as a DEED by )
__________________________ for )
and on behalf of PHJ&W No. 2 )
in the presence of: )
- -------------------------------------
Name
-5-
<PAGE>
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), made
as of __________, 1997, by and between XPEDITE SYSTEMS, INC. (collectively with
its subsidiaries, "XSI"), a Delaware corporation with its principal offices at
446 Highway 35, Eatontown, NJ 07724, and DAVID PROCTOR (hereinafter
"Executive"), an individual residing at Warren House, Moor End, Acaster Malbis,
York Y02 1UQ.
WHEREAS, Eagle Nominees Limited, the Executive's
nominee, has entered into an agreement with XSL dated August __, 1997 (the
"Buyback Agreement"), pursuant to which Xpedite Systems Limited, an English
corporation ("XSL"), is to purchase the Sale Shares (as defined in the Buyback
Agreement);
WHEREAS, XSI, through its subsidiary PHJ&W No. 2,
Limited, an English corporation (the "Purchaser"), has agreed to acquire the
whole (save as provided in the Buyback Agreement) of the issued share capital of
XSL having its registered office at Xpedite House, Pioneer Business Park, Amy
Johnson Way, Clifton Moor, York, YO3 8XT, England pursuant to the terms of a
Share Purchase Agreement dated August 8, 1997 made among (1) the Executive and
the other stockholders of XSL, (2) XSI and (3) PHJ&W No. 2 Limited (the "Share
Purchase Agreement"). Where the context so permits, definitions adopted in the
Share Purchase Agreement shall have the same meanings in this Agreement; and
WHEREAS, XSI wishes to assure itself of the
services of Executive for the period provided in this Agreement, and Executive
is willing to provide such services to XSI for said period, and upon the other
terms and conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, the parties hereto hereby agree
as follows:
1. SERVICES PROVIDED. XSI agrees to utilize the
services of Executive, and Executive agrees to provide such services, for the
period stated in Paragraph 2 hereof and upon the other terms and conditions
herein provided.
2. TERM, DUTIES AND CONDITIONS PRECEDENT.
(a) Term of Agreement. The term of this
Agreement will commence on the Closing Date (the
<PAGE>
"Commencement Date") and will continue until the date three (3) years after the
Commencement Date. On each anniversary of the Commencement Date (each, an
"Anniversary Date"), this Agreement will be renewed for a new three-year term
commencing on such Anniversary Date unless either XSI or Executive notifies the
other in writing, no later than ninety (90) days prior to the Anniversary Date,
that it does not intend to renew this Agreement. If XSI notifies Executive that
it does not intend to renew this Agreement, such notice will be considered an
"Event of Termination" (as defined in Paragraph 5 herein), and benefits will be
payable to Executive as specified in Paragraph 5.
(b) Termination Prior to Expiration of the
Term. Notwithstanding the provisions of Section 2(a) hereof, this Agreement may
also be terminated forthwith by either party prior to the end of the initial
term or any renewal term hereof.
(c) Duties. During the period of
Executive's employment hereunder, Executive shall serve as (i) as long as XSI's
business is conducted through XSI (or another legal entity), Executive Vice
President - European Operations (or a position of similar responsibility but in
any event reporting directly to the President of XSI), or (ii) if the business
of XSI ceases to be conducted through a separate legal entity (I.E. XSI's
business is conducted as a "division" of a legal entity), as the principal
officer responsible for European operations (or a position of similar
responsibility but in any event reporting directly to the head of the division)
in the division through which XSI's business is conducted. Executive shall
perform his duties primarily in the York, England vicinity subject to reasonable
travel obligations as may be necessary for the proper performance of Executive's
duties under this Agreement. Except for illness, vacation periods, and
reasonable leaves of absence, Executive shall devote all of his business time,
attention, skill and efforts to the faithful performance of his duties in said
office, and will use his reasonable efforts to further XSI's business interests.
(d) Conditions Precedent. This Agreement is
being executed coincident with the acquisition of XSL by the Purchaser. As part
of that transaction, it is understood that Executive will purchase at least $2.0
million of shares of common stock of XSI (the "Shares") at a price per share
equal to the fair market value thereof on the date of purchase; such purchase
shall occur within two business days after the completion of the transactions
contemplated by the
-2-
<PAGE>
Share Purchase Agreement. Executive agrees not to sell or in any way dispose of
more than (i) 15% of the Shares during the first 12 months of this Agreement and
(ii) an aggregate of 25% of the Shares during the first 18 months of this
Agreement, unless, in either case, there is an "Event of Termination" pursuant
to Paragraph 5 hereof, or the liquidation or dissolution of XSI or the sale of
all or substantially all of XSI's stock or assets, in which case Executive would
be free to dispose of all the Shares.
3. COMPENSATION AND REIMBURSEMENT OF EXPENSES.
(a) Compensation. For all services rendered
by Executive to XSI during the term of this Agreement, XSI shall pay Executive a
base salary of (pound)120,000 per year (the "Base Salary"); plus an annual bonus
of up to (pound)48,000 (the "Bonus Amount"), which Bonus Amount is subject to
adjustment in any particular year as described below. The actual annual bonus
payable in any particular year shall be determined by taking into account the
overall composite performance of XSI during such year as compared to the goals
for revenue, EBITDA and net income (the "Goals") set forth in XSI's budget with
respect to such year.1 Up to 25% of the Bonus Amount may be payable based on
Executive's performance with respect to his direct responsibilities rather than
XSI corporate performance. In determining XSI's performance as compared to the
Goals, (i) extraordinary expenses incurred in connection with a sale of all or
substantially all of the assets of XSI or a liquidation or dissolution of XSI
after which XSI's business is to be continued by a successor entity (the
foregoing or any similar transaction, a "Sale") or a recapitalization of XSI or
other transaction pursuant to which XSI's outstanding debt is increased to $100
million or more and at least $60 million is distributed to XSI's shareholders (a
"Recapitalization"), shall not be taken into account and (ii) the Goals for any
particular year shall be amended as mutually agreed by Executive and XSI to take
into account any Recapitalization, acquisition, merger or similar transaction
which takes place during such year. If XSI achieves or exceeds the Goals for a
particular year, the annual bonus payable to Executive shall be equal to the
Bonus Amount with respect to such year. In the event XSI does not achieve the
Goals for a particular year, the bonus
- --------
1 For example, if XSI achieves 103% of the revenue Goal,
102% of the EBITDA Goal and 94% of the net income Goal,
the "overall composite performance" of XSI as compared
to the Goals would be equal to: (103 + 102 + 94) / 3 =
99.7%.
-3-
<PAGE>
payable for such year shall be calculated as follows: (i) the bonus shall be
equal to the Bonus Amount with respect to such year reduced by five percent (5%)
for each one percent (1%) shortfall in XSI's performance for such year as
measured against the Goals, up to a five percent (5%) shortfall in such
performance, and (ii) if the shortfall in performance exceeds five percent (5%),
the bonus payable for such year shall be further reduced by fourteen and
two-tenths percent (14.2%) of the Bonus Amount for each one percent (1%)
shortfall in XSI's performance in excess of five percent (5%). For example, if
XSI achieved only ninety-four percent (94%) of the Goals for a particular year,
the bonus for such year would be equal to the Bonus Amount with respect to such
year, reduced by thirty-nine and two-tenths percent (39.2%). The Base Salary
shall be paid on a biweekly basis. The annual bonus shall be payable at the end
of each calendar year, in cash. The Base Salary shall increase on each
anniversary of the date hereof, and the Bonus Amount for each of XSI's fiscal
years during the term hereof shall increase, in each case by the greater of (x)
five (5%) or (y) the increase over the previous twelve (12) months in the Retail
Price Index as published by the United Kingdom government.
(b) Reimbursement of Expenses and
Administrative Support. XSI shall pay or reimburse Executive for all reasonable
travel, relocation (if applicable) and other expenses incurred by Executive in
performing his obligations under this Agreement. XSI further agrees to furnish
Executive with office space and administrative support, and any other assistance
and accommodations as shall be reasonably required by Executive in the
performance of his duties under this Agreement. In addition, XSI agrees to pay
to Executive an automobile allowance of (pound)750 monthly and to pay or
reimburse Executive for all gasoline (for business and private uses), insurance,
parking, maintenance and similar expenses during the term of this Agreement.
(c) Stock Options. The parties acknowledge
that Executive shall in the future be granted options to purchase stock of XSI
pursuant to certain of XSI's incentive stock option plans and pursuant to
certain other such options which may be granted at the discretion of the Board
of Directors of XSI reasonably consistent with grants made to other members of
XSI's senior management at Executive's level of responsibility.
(d) Vacation. Executive shall be entitled
to five (5) weeks paid vacation in each calendar year.
-4-
<PAGE>
(e) Withholding and Deductions. All
payments made under this Agreement shall be subject to such withholding and
deductions at the source as from time to time are required to be made pursuant
to any law, regulation or order.
4. PARTICIPATION IN BENEFIT PLANS.
(a) Participation. In addition to the
payments provided in Paragraphs 3 and 5 hereof, to the extent legally
permissible, Executive will participate, for the term of this Agreement and
during the Severance Period (as defined herein), in all XSI benefit programs,
including but not limited to group hospitalization, health, dental care, death
benefit plan, long-term disability, pension or other retirement benefit plan or
other present or future group employee benefit plans or programs of XSI for
which key executives are or shall become eligible, on the same terms as other
key executives of XSI.
(b) Incapacity. In the event that Executive
shall, by reasons of illness or mental or physical disability or incapacity, be
unable to perform the duties and responsibilities required to be performed by
him on behalf of XSI, the Base Salary payments as specified in Paragraph 3(a)
herein shall continue for an uninterrupted period of one hundred eighty (180)
days, then such payments shall be suspended. The Executive's entitlement to the
Bonus Amount shall accrue through such 180-day period. Such payments shall be
resumed upon the assumption by Executive of his activities on behalf of XSI as
called for herein.
5. PAYMENTS TO EXECUTIVE UPON TERMINATION OF
AGREEMENT.
(a) Termination. Upon the occurrence of an
Event of Termination (as hereinafter defined) during the term of this Agreement,
the provisions of this Paragraph 5 shall apply. As used in this Agreement, an
"Event of Termination" shall mean and include any one or more of the following:
(i) The termination by XSI of this
Agreement for any reason (including, but not limited to, XSI's election not to
renew this Agreement pursuant to Paragraph 2(a) hereof) other than "cause" (as
defined in Paragraph 6 herein); or
(ii) Executive's termination of this
Agreement, pursuant to:
-5-
<PAGE>
A. Material change by XSI of the
Executive's responsibilities or assignments, which change would cause
Executive's responsibilities or assignments to become of less responsibility or
importance from the assignments and responsibilities described in Paragraph 2
above, and any such material change shall be deemed a continuing breach of this
Agreement; or
B. Any other breach of this Agreement by
XSI.
Upon the occurrence of any event described in
clauses A or B above, Executive shall have the right to elect to terminate this
Agreement, upon not less than thirty (30) days prior written notice given within
a reasonable period of time not to exceed, except in case of a continuing
breach, three (3) calendar months after the event giving rise to said right to
elect.
(b) Continuation of Benefits. Upon the
occurrence of an Event of Termination, in addition to any amounts payable
pursuant to Paragraph 3 hereof, XSI shall pay semi-monthly to Executive the
compensation described in Paragraph 3 herein, including the Base Salary and one
twenty-fourth (1/24) of the annual bonus last paid to Executive. Such payments
shall commence on the first day of the month following the date of termination
hereof and shall continue for the remaining term of this Agreement or
twenty-four (24) months, whichever is greater (the "Severance Period"). During
the Severance Period, Executive shall continue to receive all other benefits to
which Executive was entitled under Paragraphs 3 and 4 hereof.
(c) Offset. If Executive becomes employed,
other than with XSI, after an Event of Termination, but prior to the date at
which the continued Base Salary, Bonus and other payments would have expired,
any salary received by Executive as a result of such employment will be
subtracted from any payments due Executive from XSI under Paragraph 5(b)
hereunder.
6. TERMINATION FOR BREACH BY EXECUTIVE.
(a) Conditions for Termination. Executive
shall be considered in breach of this Agreement, and the Agreement subject to
termination by XSI, in the following events:
(i) Willful disobedience of lawful
instructions of the Board of Directors of XSI by Executive
-6-
<PAGE>
which continues after being afforded a reasonable opportunity to cure such
disobedience; or
(ii) The commission of any indictable
offense or any offense involving moral turpitude by
Executive; or
(iii) Gross negligence by Executive in
carrying out his duties on behalf of XSI.
(b) Notice. In the event XSI elects to
terminate this Agreement pursuant to Paragraph 6(a), XSI shall give a thirty
(30) day written notice of termination to Executive setting out, in detail, the
reasons for termination. Upon the expiration of such thirty (30) day notice
period this Agreement shall be wholly terminated subject to the payment to
Executive of any remuneration or other amounts owing pursuant hereto.
7. EFFECT OF PRIOR AGREEMENTS. This Agreement
contains the full and complete understanding between the parties hereto with
respect to the subject matter hereof and supersedes any prior agreement between
XSI or XSL and Executive.
8. BINDING AGREEMENT. This Agreement shall be
binding upon, and inure to the benefit of Executive and XSI and their respective
permitted successors and assigns. Notwithstanding any provision herein to the
contrary, in the event of a Sale (whether by an asset acquisition, merger,
consolidation, stock acquisition or similar transaction), this Agreement may be
assigned by XSI or assumed by a purchaser of XSI or XSI's assets.
9. MODIFICATION AND WAIVER.
(a) Amendment of Agreement. This Agreement
may not be modified or amended except by an instrument in
writing signed by the parties hereto.
(b) Waiver. No term or condition of this
Agreement shall be deemed to have been waived, nor shall there be any estoppel
against the enforcement of any provision of this Agreement, except by written
instrument of the party charged with such waiver or estoppel. No such written
waiver shall be deemed a continuing waiver unless specifically stated therein,
and each such waiver shall operate only as to the specific term or condition
waived and shall not constitute a waiver of such term or condition for
-7-
<PAGE>
the future or as to any act other than that specifically waived.
10. GOVERNING LAW, SUBMISSION TO JURISDICTION.
This Agreement has been executed and delivered in England, and its validity,
interpretation, performance, and enforcement shall be governed by the laws of
England and Wales. Each party hereto submits to the jurisdiction of the High
Court of London in connection with any action or proceeding arising out of or
relating to this Agreement. Each party hereby waives the defenses of forum non
conveniens and improper venue.
11. NOTICES.
(a) Any notices or other communications
(including any notices or other documents relating to service of legal process)
required or permitted hereunder shall be addressed as follows:
If to XSI to:
c/o Xpedite Systems, Inc.
446 Highway 35
Eatontown, New Jersey 07724
Attn: Roy B. Andersen, Jr.
If to Executive:
David Proctor
Warren House
Moor End
Acaster Malbis
York YO2 1UQ
England
or such other address as shall be furnished in writing by either party in
accordance with this Section 11, and any such notice or communication shall be
deemed to have been given on the date specified in Section 11(b) both for the
purposes of this Agreement and, in the context of service of legal process, for
the purposes of the Rules of the Supreme Court, although the parties reserve the
right to effect service of such legal process pursuant to such Rules.
(b) Notices or other communications shall be
deemed given (i) if delivered personally, upon delivery, (ii) if delivered by
registered or certified mail (return receipt requested), upon the earlier of
actual delivery or three business days after being mailed, (iii) if delivered
-8-
<PAGE>
by overnight courier or similar service, upon delivery, or (iv) if given by
telecopy, upon confirmation of transmission by telecopy; PROVIDED, that if such
notice or other communications would be otherwise deemed given on a day which is
not a business day, the delivery shall be deemed given the first business day
following such day.
12. OWNERSHIP.
(a) Treatment of Improvements. Executive
hereby covenants and agrees that, during the continuance of his employment
hereunder, all rights, title and interest in and to any intellectual or
industrial property, including without limitation, all works, ideas, processes,
systems, inventions, and improvements to XSI's operations (hereinafter,
collectively, the "Improvements"), that are created or suggested by Executive in
connection with his duties at XSI, and each of them, together with all patents,
copyrights, trademarks, and trade secret rights therein, if any, shall be and
remain the exclusive property of XSI and of XSI's assignees and successors.
(b) Full Disclosure. Executive hereby
covenants and agrees to fully disclose all such Improvements, as and when such
are created and shall promptly upon XSI's request, and without further
consideration other than that provided for herein, but at no expense to
Executive, to make all such applications, execute all such papers, and do all
such things as may be necessary or desirable so that the ownership of such
Improvements shall vest in XSI and so that XSI may obtain, own and exploit, for
its own benefit and in all respects, such Improvements.
13. CONFIDENTIAL INFORMATION.
(a) Use of Information. Except in
connection with the performance of Executive's proper performance of his duties
hereunder, Executive shall not, either during the term of this Agreement or at
any time thereafter, disclose the private affairs of XSI or any confidential
information of XSI (including but not limited to customer lists, market
research, business plans and projections, trade secrets and the like) to any
person other than the officers and directors of XSI, or for XSI's purposes, and
shall not use for his own purposes or for any purpose other than those of XSI
any such confidential information which he may acquire in relation to the
business and affairs of XSI; provided that Executive shall not be
-9-
<PAGE>
bound by this clause in respect of information entering the public domain
through no fault of Executive.
(b) Return of Information. Upon termination
of this Agreement, all documents, records, notebooks, computer discs, and
similar repositories of XSI information, including copies thereof, then in
Executive's possession, whether prepared by him or others, will be left with or
returned to XSI. All XSI information must be deleted from the hard drives of any
computers Executive owns.
14. NON-COMPETITION.
(a) Non-Solicitation. Executive
acknowledges that XSI is, by its nature, a worldwide business having customers
throughout the world. Executive shall not, without the written permission of
XSI, during the term of this Agreement and until the passing of the Severance
Period, or, in the event of there being no Severance Period, for a period of 18
months after termination of this Agreement (collectively the "Non-Compete
Period") within the United Kingdom, Europe or the United States, solicit or hire
the services of any management-level employee of XSI who was employed with XSI
at the termination hereof for Executive's own purposes or for any other person
or persons, partnership, firm, association, syndicate, company or corporation
engaged in or concerned with or interested in a similar or competitive business
as that conducted by XSI or any other business now or at any time during the
term of this Agreement carried on by XSI (a "Competitive Business"). Without the
written permission of XSI, Executive also shall not, during the term of the
Non-Compete Period, engage in any such Competitive Business on his own account
or become interested therein, directly or indirectly, as an individual, partner,
shareholder, director, officer, principal, agent, employee, lender, trustee or
in any relation or capacity whatsoever. Executive also shall not on behalf of a
Competitive Business, without the written permission of XSI, during the term of
the Non-Compete Period solicit any customer of XSI that was a customer of XSI
and with which the Executive dealt during the term of this Agreement, it being
understood and agreed that each of the above combinations of time and area shall
be severable. If Executive has any questions or uncertainty about whether a
particular activity constitutes a violation of this Agreement, Executive shall
make inquiry of XSI's President prior to engaging in such activity.
(b) Severability. XSI and Executive agree
that if a court of competent jurisdiction shall limit,
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<PAGE>
restrict or otherwise change the geographical area or time period referred to in
Paragraph 14(a) hereof, that the limited, restricted or changed geographical
area or time period determined by the said court shall, for the purposes of the
said paragraph, be deemed to be the geographical area and/or time period
referred to in the said paragraph as if they were the original geographical area
and time period set out herein.
(c) Voidability. Notwithstanding the
provisions of Paragraph 14(a) herein, the provisions of said Paragraph 14(a)
shall be considered voided upon a termination of this Agreement pursuant to the
provisions of Paragraph 5(a) except when such Event of Termination is caused by
notice not to renew this Agreement as provided in Paragraph 2(a) herein. In this
latter case the provisions of Paragraph 14(a) shall apply.
15. MUTUAL RELEASE. At the end of the Severance
Period, upon receipt by Executive of all payments required by Paragraph 5(b)
herein, the parties hereto will be deemed to have mutually irrevocably and
unconditionally released all claims, promises, debts, causes of action or
similar rights of any type or nature that either party has or had which in any
way relate to or arise from this Agreement. The parties hereto further agree,
upon and after the effectiveness of such releases, not to criticize, denigrate
or otherwise disparage any other person or entity described in this Agreement.
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<PAGE>
IN WITNESS THEREOF, XSI has caused this Agreement
to be executed and its seal to be affixed hereunto by its duly authorized
officer, and Executive has signed this Agreement, all as of the day and year
first above written.
XPEDITE SYSTEMS, INC.
By:
-----------------------------
Name:
Title:
-----------------------------
David Proctor
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<PAGE>
EXHIBIT D
---------
Rules to Apply in Arbitration in addition to the
RULES OF THE LONDON COURT OF INTERNATIONAL ARBITRATION
------------------------------------------------------
The provisions of this Exhibit D relating to any arbitration
proceeding initiated in connection with that certain Share Purchase Agreement
dated as of August ___, 1997 among PHJ&W No. 2, Limited, Xpedite Systems, Inc.,
and the shareholders of Xpedite Systems Limited (as amended from time to time,
the "Agreement").
a. The arbitrators shall have the power and authority
to award relief under legal or equitable
principles, including interim or preliminary
relief and the parties hereto hereby consent to
the entry of any such interim, preliminary or
final relief by any court of competent
jurisdiction. Nothing herein shall limit the
right of any party, before and during such
arbitration, to have recourse to such judicial
remedies, including preliminary injunction and
attachment, as would be available in the absence
of Section 12.09 of the Agreement.
b. In deciding any matter submitted to them involving
this Agreement, the arbitrators shall be bound to
apply the respective contractual provisions of the
Agreement and shall be bound by any prior
determinations made by any other arbitrators
appointed under the Agreement. In no event shall
the arbitrators have the authority, by reason of
Section 12.09 of the Agreement or otherwise, to
render a decision that is contrary to the express
intent of the parties as set forth in the
Agreement.
c. All parties to the Agreement not initially named
as a party to an arbitration under the Agreement
shall be given notice of the commencement of the
arbitration and shall have the right to join as a
party to the arbitration, by written notice to all
other parties to this Agreement within thirty (30)
days after receipt of written notice of the
commencement of the arbitration. Any such party
<PAGE>
or parties receiving written notice that shall fail to
seek to join within such period of thirty (30) days shall
nonetheless be bound by the final award of the
arbitrators. Upon invitation by any party to this
Agreement, any person or persons not named as a party to
such arbitration shall have the right to join as a party
or parties to such arbitration and be bound by Section
12.09 of the Agreement and the final award of the
arbitrators, provided that a majority of the arbitrators
appointed for the arbitration shall determine that the
person or persons seeking to join the arbitration have a
material interest in the subject matter of the
arbitration.
d. The arbitrators shall, upon the request of any
party to the arbitration, issue a factually
detailed, reasoned written opinion of their
findings of fact and conclusions, legal or
otherwise. Upon the receipt by the requesting
party of that written opinion, the requesting
party shall have the right within ten (10) days to
file with the arbitrators a motion to reconsider,
and the arbitrators thereupon shall reconsider the
issues raised by that motion and either confirm or
change their majority decision, which shall then
be final and conclusive upon all parties in
accordance with Section 12.09 of the Agreement.
The costs of such a motion for reconsideration
shall be borne by the requesting party.
e. Judgment upon any award rendered by the
arbitrators may be entered in any court in any
country, or application may be made to such court
for a judicial acceptance of the award and an
order of enforcement, a the law of such
jurisdiction may require or allow. The parties
agree to exclude any right of application or
appeal to any courts, including those of the place
of arbitration, in connection with any question
either of law or of fact arising in the course of
the arbitration or with respect to any award made.
<PAGE>
Exhibit E
CLOSING DATE CERTIFICATE
------------------------
This Closing Date Certificate is delivered to PHJ&W No. 2 Limited (the
"Purchaser") in connection with the closing of the transactions contemplated by
that certain Share Purchase Agreement dated as of August 8, 1997 among (1) the
Purchaser, (2) Xpedite Systems, Inc., and (3) the shareholders of Xpedite
Systems Limited (including the undersigned) (as amended through the date of this
Certificate, the "Purchase Agreement"). Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Purchase
Agreement.
Subject to the terms of the Purchase Agreement (particularly, but
without limitation, Article XI), the undersigned hereby certifies to the
following:
1. The representations and warranties of the Shareholders contained in
the Purchase Agreement are true on the date hereof, with the same effect as
though made on the date hereof; PROVIDED, that this certification will be deemed
true and correct unless the failure of such representations and warranties to be
true and correct (i) constitutes a Material Adverse Change or (ii) involves the
matters represented and warranted to in any of SECTION 2.03, 3.01, 3.02 or 3.03
of the Purchase Agreement and would cause any party to the Purchase Agreement to
be unable to complete the transactions contemplated thereby or (iii) is as a
result of the actual revenues, cash flow (I.E., earnings before interest, taxes,
depreciation and amortization) or net profit for the aggregate six-month period
covered by the June 1997 Accounts, being in any case less than 90% of the amount
thereof reflected in the June 1997 Accounts.
2. The Shareholders have performed and complied in all material
respects with all agreements and covenants required by the Purchase Agreement to
be performed and complied with by them prior to the date hereof; PROVIDED, that
this certification will be deemed true and correct unless the failure to perform
and comply with such agreements and covenants (i) constitutes a Material Adverse
Change or (ii) involves a breach of a covenant set forth in (A) SECTION 6.01(b),
with respect to increases in
<PAGE>
compensation and/or benefits only, (B) SECTION 6.02 - 6.07 (inclusive), (C)
SECTION 6.17 or (D) Section 6.22.
It is acknowledged by the Purchaser that David Proctor only signs this
certificate as a formality to the Closing and without assuming any liability
whatsoever solely as a result of his making the certifications herein.
IN WITNESS WHEREOF, each of the undersigned has executed this
Certificate as of this ____ day of ______________, 199_.
------------------------------
David Proctor
Apax Partners & Co. Ventures
Limited, as manager of Apax
Ventures IV and Apax IV
International Partners, L.P.
By:
------------------------------
Name:
Title:
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STOCKHOLDER AGREEMENT dated as of August 8, 1997, among Roy B. Andersen
(the "STOCKHOLDER"), Xpedite Systems, Inc., a Delaware corporation (the
"Company"), and Xpedite Acquisition Corp., a Delaware corporation ("ACQUISITION
SUB").
WHEREAS, Acquisition Sub proposes to enter into a Merger Agreement
dated as of the date hereof (as amended from time to time, the "MERGER
AGREEMENT"; capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement, whether or not such Merger Agreement
shall be in effect from time to time) with the Company which provides, among
other things, that Acquisition Sub will merge with and into the Company pursuant
to the merger contemplated by the Merger Agreement (the "MERGER");
WHEREAS, as of the date hereof, the Stockholder beneficially owns the
number of shares of common stock, par value $.01 per share, of the Company
("COMPANY COMMON STOCK") set forth on Schedule 1; and
WHEREAS, as a condition to the willingness of Acquisition Sub to enter
into the Merger Agreement, Acquisition Sub has requested that the Stockholder
agree, and in order to induce Acquisition Sub to enter into the Merger
Agreement, the Stockholder has agreed, to enter into this Agreement with respect
to all the shares of Company Common Stock now beneficially owned and of which
the Stockholder may hereafter acquire beneficial ownership (the "SHARES") and
any other securities, if any, which the Stockholder is entitled to vote at any
meeting of stockholders of the Company (the "OTHER SECURITIES").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
VOTING AGREEMENT
SECTION 1.1 VOTING AGREEMENT. The Stockholder hereby agrees that, at
any meeting of the stockholders of the Company, however called, or in connection
with any written consent of the holders of shares of Company Common Stock, the
Stockholder shall vote (or cause to be voted) the Shares and the Other
Securities: (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval of the terms thereof and each
of the other actions contemplated by the Merger Agreement and this Agreement and
any actions required in furtherance thereof and hereof; (ii) in favor of
approval of the Charter Amendment; (iii) against any action, any failure to act,
or agreement that would result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or this Agreement (before giving effect to any
materiality or similar qualifications contained therein); and (iv) except as
otherwise agreed to in writing in advance by Acquisition Sub, against the
following actions (other than the Merger, the Charter Amendment, the XSL
Purchase Agreement and the transactions contemplated by the Merger Agreement and
the XSL Purchase Agreement): (A) any extraordinary corporate transaction, such
as a merger, consolidation or other business combination involving the Company
or any of its Subsidiaries;
<PAGE>
(B) a sale, lease or transfer of a material amount of assets of the Company or
any of its Subsidiaries, or a reorganization, recapitalization, dissolution or
liquidation of the Company or any of its Subsidiaries; (C) (1) any change in a
majority of the persons who constitute the board of directors of the Company;
(2) any change in the present capitalization of the Company or any amendment of
the Company's Certificate of Incorporation or Bylaws; (3) any other material
change in the Company's corporate structure or business; or (4) any other action
involving the Company or any of its Subsidiaries which is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the Merger and the transactions contemplated by this
Agreement and the Merger Agreement. Each Stockholder agrees that it shall not
enter into any agreement or understanding with any person or entity the effect
of which would be to violate the provisions and agreements contained in this
Section 1.01. The Stockholder acknowledges receipt and review of a copy of the
Merger Agreement.
SECTION 1.2 IRREVOCABLE PROXY. The Stockholder hereby irrevocably
appoints Acquisition Sub and each of its officers, as his attorney and proxy
pursuant to the provisions of Section 212(c) of the General Corporation Law of
the State of Delaware, with full power of substitution, to vote and otherwise
act (by written consent or otherwise) with respect to the Shares and the Other
Securities, which the Stockholder is entitled to vote at any meeting of
stockholders of the Company (whether annual or special and whether or not an
adjourned or postponed meeting) or consent in lieu of any such meeting or
otherwise, on the matters and in the manner specified in Section 1.01. THIS
PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST. The
Stockholder hereby revokes all other proxies and powers of attorney with respect
to the Shares and the Other Securities that the Stockholder may have heretofore
appointed or granted, and no subsequent proxy or power of attorney shall be
given or written consent executed (and if given or executed, shall not be
effective) by the Stockholder with respect thereto. All authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the
Stockholder and any obligation of the Stockholder under this Agreement shall be
binding upon the heirs, personal representatives, successors and assigns of the
Stockholder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder represents and warrants to Acquisition Sub as follows:
(a) This Agreement has been duly executed and delivered by the
Stockholder and is a legal, valid and binding obligation of the
Stockholder, enforceable against the Stockholder in accordance with its
terms. There is no beneficiary or holder of a voting trust certificate
or other interest of any trust of which Stockholder is trustee whose
consent is required for the execution and delivery of this Agreement or
the consummation by the Stockholder of the transactions contemplated
hereby.
2
<PAGE>
(b) The execution and delivery of this Agreement by the
Stockholder do not, and the performance of this Agreement by the
Stockholder will not, (i) conflict with or violate any federal, state,
local or foreign law, statute, ordinance, rule, regulation, permit,
injunction, writ, judgment, decree or order (collectively, "LAWS") of
any domestic or foreign administrative, governmental or regulatory
agency or other governing body (each, a "GOVERNMENTAL ENTITY")
applicable to the Stockholder or by which any of the Stockholder's
assets are bound, or (ii) conflict with, result in any breach of or
constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or require
payment under, or result in the creation of any Encumbrance (as
hereinafter defined) on any of the assets of the Stockholder pursuant
to, any contract or other instrument to which the Stockholder is a
party or by which the Stockholder or any of the Stockholder's assets
are bound, except for any thereof that could not reasonably be expected
to materially impair the ability of the Stockholder to perform the
Stockholder's obligations hereunder or to consummate the transactions
contemplated hereby and except for any Encumbrances created hereby.
(c) The execution and delivery of this Agreement by the
Stockholder do not, and the performance of this Agreement by the
Stockholder will not, require the Stockholder to obtain any consent,
approval, authorization or permit of, or to make any filing with or
notification to, any Governmental Entity based on any Laws of any
Governmental Entity, except (i) the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange
Commission (the "COMMISSION") thereunder (the "EXCHANGE ACT"), and the
Securities Act of 1933, as amended, and the rules and regulations of
the Commission thereunder (the "SECURITIES ACT"); and (ii) where the
failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, could not reasonably be
expected to materially impair the ability of the Stockholder to perform
its obligations hereunder or to consummate the transactions
contemplated hereby.
(d) There is no suit, action, investigation or proceeding
pending or, to the knowledge of the Stockholder, threatened against the
Stockholder at law or in equity before or by any Governmental Entity
that could reasonably be expected to materially impair the ability of
the Stockholder to perform the Stockholder's obligations hereunder or
to consummate the transactions contemplated hereby, and there is no
judgment, decree, injunction, rule, order or writ of any Governmental
Entity to which the Stockholder or the Stockholder's assets are subject
that could reasonably be expected to materially impair the ability of
the Stockholder to perform the Stockholder's obligations hereunder or
to consummate the transactions contemplated hereby.
(e) The Stockholder owns beneficially and of record the number
of shares of Company Common Stock (the "EXISTING SHARES") set forth on
Schedule 1. The Existing Shares constitute all the shares of Company
Common Stock owned of record or beneficially by the Stockholder. The
Stockholder has sole voting power, sole power
3
<PAGE>
of disposition and all other shareholder rights with respect to all the
Existing Shares, with no restrictions, other than pursuant to
applicable securities laws, on the Stockholder's rights of disposition
pertaining thereto. The Stockholder owns options and/or warrants to
purchase an aggregate of such number of shares of Company Common Stock
not otherwise included in the first sentence of this paragraph (e) as
set forth on Schedule 1 ("OPTIONS"), all of which Options will become
exercisable upon consummation of the Merger. The Stockholder has good
and valid title to all the Existing Shares, free and clear of all
Encumbrances (other than any Encumbrance created by this Agreement).
SECTION 2.2 REPRESENTATIONS AND WARRANTIES OF ACQUISITION SUB.
Acquisition Sub represents and warrants to the Stockholder that Acquisition Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Acquisition Sub has the requisite corporate power
and authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by Acquisition
Sub's Board of Directors and (except as otherwise set forth in the Merger
Agreement) no other corporate proceedings on the part of Acquisition Sub are
necessary to authorize this Agreement and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Acquisition Sub and is a legal, valid and binding obligation of Acquisition Sub,
enforceable against Acquisition Sub in accordance with its terms.
ARTICLE III
COVENANTS OF THE STOCKHOLDER
SECTION 3.1 "NO SHOP". The Stockholder shall immediately cease and
cause to be terminated all existing discussions or negotiations relating to an
Acquisition Proposal or an Alternative Transaction, other than with respect to
the transactions contemplated by the Merger Agreement, with any parties
conducted heretofore. The Stockholder will not, directly or indirectly, and will
instruct the Stockholder's employees, agents and representatives (collectively,
"REPRESENTATIVES") not to, directly or indirectly, initiate, solicit or
encourage (including by way of furnishing information or assistance), or take
any other action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
or Alternative Transaction, or enter into or maintain discussions or negotiate
with any person in furtherance of or relating to such inquiries or to obtain an
Acquisition Proposal or an Alternative Transaction, or agree to or endorse any
Acquisition Proposal or Alternative Transaction, or authorize or permit any of
the Stockholder's Representatives to take any such action, and the Stockholder
shall use the Stockholder's best efforts to cause the Stockholder's
Representatives not to take any such action, and the Stockholder shall promptly
notify Acquisition Sub if any such inquiries or proposals are made regarding an
Acquisition Proposal or an Alternative Transaction, and the Stockholder shall
promptly inform Acquisition Sub as to the material details of any such inquiry
or proposal and, if in writing, promptly deliver or cause to be delivered to
Acquisition Sub a copy of such inquiry or proposal, and the Stockholder shall
keep Acquisition Sub
4
<PAGE>
informed, on a current basis, of the details of any such inquiries and the
status and terms of any such proposals. Anything in this Section 3.01 to the
contrary notwithstanding, nothing in this Section 3.01 shall limit the
Stockholder or any of the Stockholder's Representatives, including without
limitation Robert Chefitz and David Epstein, from exercising any of his rights
or performing any of his duties as a director of the Company.
SECTION 3.2 RESTRICTION ON TRANSFER. Until and unless this Agreement
has been terminated, the Stockholder shall not, except as expressly provided for
in this Agreement, (a) sell, exchange, pledge, encumber or otherwise transfer or
dispose of, or agree to sell, exchange, pledge, encumber or otherwise transfer
or dispose of, any of its Shares or Options, or any interest therein (except for
transfers in connection with distributions of securities by the Stockholder to
its equity holders on a pro rata basis in accordance with their interests in the
Stockholder, provided that any such distributee shall be required to execute an
agreement in substantially the form of this Agreement), (b) deposit its Shares
into a voting trust or enter into voting agreement or arrangement with respect
to such Shares or grant any proxy or power of attorney with respect thereto, (c)
take any action that would make any representation or warranty of the
Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling the Stockholder from performing the Stockholder's
obligations under this Agreement, or (d) enter into any agreement, arrangement,
understanding, or undertaking to do any of the foregoing. The Stockholder agrees
with, and covenants to, Acquisition Sub that beginning on the date hereof and
ending on the date of termination of this Agreement, the Stockholder shall not
request that the Company, and the Company hereby agrees with, and covenants to,
Acquisition Sub that beginning on the date hereof and ending on the date of
termination of this Agreement it will not, register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest representing any of the
Stockholder's Shares, unless such transfer is made in compliance with this
Agreement.
SECTION 3.3 CONVERSION OF SHARES; SALE OF SHARES. The Stockholder
agrees that, following the adoption of the Charter Amendment and simultaneously
with the consummation of the Merger, the Stockholder will (a) exercise all of
the Stockholder's options to purchase Company Common Stock (other than options
used in connection with the exercise of options pursuant to the terms of the
Company's option plans), (b) convert the number of Shares set forth on Schedule
1 into shares of Class B Common Stock, par value $.01 per share, of the Company
("Class B Shares") in accordance with the terms of the Merger Agreement and (c)
sell the number of Class B Shares set forth on Schedule 1 to UBS Partners LLC or
an affiliate of Fenway Partners, Inc. at the same price as the Cash Election
Price.
SECTION 3.4 COMPLIANCE WITH MERGER AGREEMENT. If the Stockholder is a
"Principal Stockholder" referred to in Section 3.01(e)(iii) of the Merger
Agreement, the Stockholder agrees that he/it will take such action as is
necessary to comply with and effect the provisions of such Section 3.01(e)(iii).
Acquisition Sub covenants that the price per share at which its stockholders
will purchase Surviving Corporation Common Stock at the Effective Time shall be
the same as the Cash Election Price.
SECTION 3.5 CONFIDENTIALITY OF AGREEMENT. Each party hereto agrees
that, without the prior written consent of the other party, it will not disclose
this Agreement, or the contents
5
<PAGE>
hereof, to any person or entity, except (a) such party's directors, employees,
agents, advisors and affiliates, in each case on a confidential and need-to-know
basis, (b) the lenders or other providers of financing necessary for the
consummation of the transactions contemplated by the Merger Agreement, (c)
amendment(s) to Schedule 13D or (d) as is required, in the opinion of its
counsel, by applicable law or pursuant to applicable requirements of any listing
agreement with or the rules of any securities exchange or the NASDAQ National
Market, provided that if any party hereto proposes to make any disclosure based
upon the opinion of its counsel such party will, if practicable, advise and
consult with the other party at least one business day prior to such disclosure
concerning the information such party proposes to disclose.
SECTION 3.6 FURTHER ASSURANCES. The Stockholder agrees to use the
Stockholder's reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. If any further action
is necessary or desirable to carry out the purposes of this Agreement, the
Stockholder shall use the Stockholder's reasonable best efforts to take all such
action as promptly as practicable.
ARTICLE IV
TERMINATION
SECTION 4.1 TERMINATION. This Agreement shall terminate upon the
earlier of (a) the termination of the Merger Agreement for any reason whatsoever
and (b) the Effective Time of the Merger and, except as set forth below, the
parties hereto shall have no further rights or obligations with respect thereto,
except as a result of any prior breach thereof.
ARTICLE V
DEFINITIONS
SECTION 5.1 DEFINITIONS. For purposes of this Agreement:
(a) "BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect
to any securities shall mean having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the Exchange
Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing;
(b) "PERSON" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated
organization or other entity.
(c) "ENCUMBRANCE" means any pledge, security interest, lien,
claim, encumbrance, mortgage, charge, hypothecation, option, right of
first refusal or offer, community property right, other marital right,
preemptive right, voting agreement, voting trust, proxy, power of
attorney, escrow, option, forfeiture, penalty, action at law or in
equity, security agreement, shareholder agreement or other agreement,
6
<PAGE>
arrangement, contract, commitment, understanding or obligation, or any
other restriction, qualification or limitation on the use, transfer,
right to vote, right to dissent and seek appraisal, receipt of income
or other exercise of any attribute of ownership.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 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 this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
SECTION 6.2 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
SECTION 6.3 COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) 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 instrument.
SECTION 6.4 ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties, provided that Acquisition Sub may assign its rights hereunder to UBS
Partners LLC or Fenway Partners, Inc., or any affiliate of either such entity,
but no such assignment shall relieve Acquisition Sub of its obligations
hereunder.
SECTION 6.5 AMENDMENTS. This Agreement may not be amended,
supplemented, waived or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by the parties hereto.
SECTION 6.6 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, facsimile
transmission, mail (registered or certified mail, postage prepaid, return
receipt requested), or courier service providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
7
<PAGE>
If to Stockholder, to the address set forth on Schedule 1:
If to the Company:
Xpedite Systems, Inc.
446 Highway 35
Eatontown, NJ 07724
Attention: President
Telephone: (908) 544-1044
Fax: (908) 389-3900
copy to:
Paul, Hastings, Janofsky & Walker LLP
399 Park Avenue
New York, NY 10022
Attention: Neil A. Torpey, Esq.
Telephone: (212) 318-6000
Fax: (212) 319-4090
If to Acquisition Sub:
UBS Partners LLC
299 Park Avenue
34th Floor
New York, NY 10171
Attention: Michael Greene
Telephone: (212) 821-6380
Fax: (212) 821-6333
and
Fenway Partners, Inc.
152 West 57th Street
New York, NY 10019
Attention: Russell W. Steenburg
Telephone: (212) 698-9441
Fax: (212) 581-1205
8
<PAGE>
copies to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, NY 10022
Attention: Nancy E. Fuchs, Esq.
Telephone: (212) 836-8000
Fax: (212) 836-8689
and
Ropes & Gray
1 International Place
Boston, MA 02110
Attention: John Ayer, Esq.
Telephone: (617) 951-7000
Fax: (617) 951-7050
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
SECTION 6.7 NO THIRD PARTY BENEFICIARIES. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity not a party hereto.
SECTION 6.8 SPECIFIC PERFORMANCE. Each of the parties hereto
acknowledges that a breach by it of any agreement contained in this Agreement
will cause the other parties to sustain damage for which they would not have an
adequate remedy at law for money damages, and therefore each of the parties
hereto agrees that in the event of any such breach the aggrieved parties shall
be entitled to the remedy of specific performance of such agreement and
injunctive and other equitable relief in addition to any other remedy to which
they may be entitled, at law or in equity.
SECTION 6.9 REMEDIES CUMULATIVE. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
SECTION 6.10 NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon strict compliance by any
other party hereto with its obligations hereunder, and any custom or practice of
the parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.
9
<PAGE>
SECTION 6.11 GOVERNING LAW. (a) This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, without
giving effect to the principles of conflicts of law thereof.
(b) Each party hereby irrevocably submits to the exclusive
jurisdiction of the Court of Chancery in the State of Delaware in any action,
suit or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such court (and
waives any objection based on FORUM NON CONVENIENS or any other objection to
venue therein); PROVIDED, HOWEVER, that such consent to jurisdiction is solely
for the purpose referred to in this subsection (b) and shall not be deemed to be
a general submission to the jurisdiction of such court or in the State of
Delaware other than for such purposes.
SECTION 6.12 WAIVER OF JURY TRIAL. EACH OF ACQUISITION SUB, THE COMPANY
AND THE STOCKHOLDER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF
ACQUISITION SUB, THE COMPANY OR THE STOCKHOLDER IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
SECTION 6.13 DESCRIPTIVE HEADINGS. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 6.14 RESTRICTIVE LEGEND. The Stockholder and the Company hereby
agree that the Stockholder's Shares and Options, whether now owned or hereafter
acquired, shall be certificated by the Company, and that the Company shall place
the following legend on any new or existing certificate representing the
Stockholder's Shares or Options:
"Transfer and voting of the securities represented by this
certificate are subject to restrictions set forth in a
Stockholders Agreement dated August 8, 1997, a copy of which
may be obtained from the Company at its principal executive
offices."
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
/s/ ROY B.ANDERSEN
-------------------------------
ROY B. ANDERSEN, JR.
XPEDITE SYSTEMS, INC.
By: /s/ ROBERT S. VATERS
-------------------------------
Name: Robert S. Vaters
Title: Executive Vice President and
Chief Financial Officer
XPEDITE ACQUISITION CORP.
By: /s/ JAMES A. BRECKENRIDGE
-------------------------------
Name: James A. Breckenridge
Title: Secretary
<PAGE>
Schedule 1
<TABLE>
<CAPTION>
Number of Shares Shares To Be Converted Class B
Shares
STOCKHOLDER BENEFICIALLY OWNED OPTIONS INTO CLASS B SHARES TO BE SOLD
- ----------- ------------------ ------- ----------------------- ----------
<S> <C> <C> <C> <C>
Roy B. Andersen 197,750 180,657 376,407 245,224
c/o Xpedite Systems, Inc.
446 Highway 35
Eatontown, NJ 07724
Fax No.: (908) 544-1044
</TABLE>
Contacts: Robert S. Vaters,
EVP, Finance and CFO
Xpedite Systems, Inc.
(908) 389-3900 ext. 221
David P. Walker
Union Bank of Switzerland
(212) 821-5121
Thomas C. Franco
Broadgate Consultants, Inc.
(212) 232-2220
UBS Capital LLC, Fenway Partners and Members of Senior Management
Announce an Agreement to Acquire Xpedite Systems, Inc.
New York, NY, August 8, 1997 -- UBS Partners LLC (an affiliate of UBS Capital
LLC), Fenway Partners, Inc. and members of Xpedite Systems, Inc. (XSI) senior
management announced today that they have reached a definitive merger
agreement under which the group will acquire Xpedite Systems, Inc. (NASDAQ:
XPED) for $23.25 per share, which values XSI at approximately $250 million
including existing indebtedness.
XSI is also announcing an agreement to acquire its U.K. affiliate.Xpedite
Systems Limited (XSL), for $87 million which is expected to be completed
simultaneously with the XSI merger. However, the XSL acquisition is not
conditional upon completion of the XSI merger.
The Board of Directors of XSI has unanimously approved the merger agreement
and the purchase agreement to acquire XSL. The merger agreement, which is
subject to completion of contemplated financing and the simultaneous closing of
the XSL acquisition, requires XSI shareholder and regulatory approvals. Both
transactions are expected to close in the fourth quarter of this year.
-more-
<PAGE>
-2-
Xpedite, a worldwide leader in the enhanced fax and electronic messaging
market, offers a wide range of computer and fax-based services focused
primarily on high-volume document distribution.
Xpedite has operating centers in North America, Europe and the Pacific Rim.
In addition to computer and fax-based services, Xpedite provides high-volume
electronic mail distribution via the Internet and traditional messaging
services such as mailgram. The company has a worldwide fax and message
distribution network with direct delivery to over 35 countries around the world.
UBS Partners LLC, a subsidiary of Union Bank of Switzerland, headquartered in
New York, engages in the Merchant Banking business. UBS Capital LLC and its
affiliates have investments in over 40 portfolio companies and manages a
proprietary capital allocation from Union Bank of Switzerland of over $1.2
billion. Union Bank of Switzerland is the largest bank in Switzerland and one
of the world's leading financial institutions with more than $16 billion in
equity capital.
Fenway Partners, a New York-based investment firm, has approximately $527
million in assets under management. Fenway invests in middle-market branded
growth companies and works closely with managements to improve operating
performance. Since its inception in 1994, Fenway has completed 11
transactions involving the acquisition of 16 businesses with an aggregate
purchase price of over $1 billion.
***
