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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
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TABLE OF CONTENTS
PAGE
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. Xxxxxxx 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
PAGE
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
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PAGE
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
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PAGE
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
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EXHIBIT A Form of Buyback Agreement
EXHIBIT B APAX Letter of Credit
EXHIBIT C Form of Employment Agreement with Xxxxx
Xxxxxxx
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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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
"Xxxxxxx Shares"..................................... Section 1.04(a)
"Xxxxxxx 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
"Xxxxxx Xxxxxxx Fee".................................. Section 2.21
"Net Asset Value"..................................... Section 1.02(a)
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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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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
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 Xxx 0000.
WHEREAS, the Buyback Agreement will automatically terminate if there
is an outstanding objection under Section 176 of the Companies Xxx 0000 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
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SECTION 1.01. PURCHASE AND SALE OF THE SHARES.
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At the Closing (as defined in SECTION 9.01), (a) each Shareholder
(other than Xxxx Xxxxxxx), 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
Xxxxxxx 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
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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, Xxxxxxx 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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(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 Xxxxxxx 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
Xxxxxxx 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 Xxxxx Xxxxxxx has not purchased at least $2.0 million of
Xpedite common stock (which Xpedite hereby irrevocably covenants to
issue to Xxxxx Xxxxxxx 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 Xxxxx
Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxx Xxxxxxxx & 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
Xx. Xxxxxxx 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 Xxxxxx Xxxxxxx 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. XXXXXXX PUT/CALL AGREEMENT. (a) At any time on or after
August 1, 1998, the Purchaser shall have the right to purchase from Xxxx Xxxxxxx
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 Xxxx Xxxxxxx (the "XXXXXXX
SHARES"), and Xxxx Xxxxxxx shall have the right to cause the Purchaser to
purchase all, but not less than all, the Xxxxxxx Shares, for a cash purchase
price equal to the proportion of the Adjusted Purchase Price due to Xxxx Xxxxxxx
as set out in SCHEDULE 1 or SCHEDULE 1A, as the case may be (the "XXXXXXX
PUT/CALL PURCHASE PRICE"). Each of the Purchaser and Xxxx Xxxxxxx, 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 Xxxxxxx Shares (the "XXXXXXX PUT/CALL CLOSING") shall
take
-8-
place on the date that is five (5) days after receipt by the Purchaser or Xxxx
Xxxxxxx, 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 Xxxx Xxxxxxx. It
shall be a condition precedent to the Purchaser's obligation to consummate the
Xxxxxxx Put/Call Closing that (i) the representations and warranties made by
Xxxx Xxxxxxx in Article III hereof with respect to the Xxxxxxx Shares and to
himself are true and correct in all material respects as of such date, (ii) Xxxx
Xxxxxxx will in connection with such Xxxxxxx 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) Xxxx Xxxxxxx shall have complied with the provisions of
Section 1.04(c). At the Xxxxxxx Put/Call Closing, the Xxxxxxx Put/Call Purchase
Price shall be paid in cash by the Purchaser to Xxxx Xxxxxxx by wire transfer to
an account designated by Xxxx Xxxxxxx and Xxxx Xxxxxxx shall deliver to the
Purchaser a certificate or certificates representing the Xxxxxxx Shares,
together with a duly executed stock transfer form in respect of the Xxxxxxx
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 Xxxxxxx Put/Call
Closing, Xxxx Xxxxxxx shall not sell, transfer, pledge, hypothecate, or
otherwise dispose of any of the Xxxxxxx Shares or any interest in or portion
thereof, or any rights appurtenant thereto. Effective as of Closing, Xxxx
Xxxxxxx 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 Xxxx Xxxxxxx, 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. Xxxx Xxxxxxx 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. Xxxx Xxxxxxx 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, Xxxx Xxxxxxx shall deposit the certificate(s) representing the
Xxxxxxx Shares with the Company to be held in escrow in accordance with the
terms of this Agreement. Such Xxxxxxx 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
Xxxx Xxxxxxx, in the event this Agreement is terminated for any reason.
(d) For the avoidance of doubt, Xxxx Xxxxxxx 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 Xxxxxx Xxxxxxx 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
-10-
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 Xxxxx Xxxxxxx.
(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.
--------------
(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 Xxxxx Xxxxxxx 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).
-11-
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
-12-
"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 Xxx 0000 and is fully up-to-date with all its
accounts and other statutory filing obligations at Companies House.
SECTION 2.06. TAX MATTERS.
-----------
(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.
-13-
(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
-14-
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
-15-
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
-16-
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
-17-
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;
-18-
(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
-19-
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;
-20-
(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
-21-
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;
-22-
(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
-23-
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;
-24-
(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
-25-
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 xxxx, 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
-26-
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
-27-
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
-28-
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
-29-
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 Xxxxxx Xxxxxxx & Co. Limited
(thE "XXXXXX XXXXXXX 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 Xxxxxx Xxxxxxx 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.
-30-
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 Xxx 0000, as amended by the Environment Xxx
0000.
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,
-31-
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 Xxx 0000 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
-32-
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
-33-
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
-42-
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 Xxx 0000 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 Xxx 0000 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 Xxxxxx Xxxxxxx 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. Xxxxx Xxxxxxx 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 Xxxx Xxxxxxx) and Eagle hereby waives any and all
pre-emption rights (if any) held by such Shareholders (including but not limited
to Xxxx Xxxxxxx) and Eagle, respectively, in connection with the transactions
contemplated hereby.
SECTION 6.22. TRANSFERS BY EAGLE. Xxxxx Xxxxxxx 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 Xxxxx Xxxxxxx 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
-45-
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 Xxxxxx Xxxxxxx 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 Xxxxx Xxxxxxx (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.
-46-
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 Xxxxxx Xxxxxxx 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 Xxxxxx Xxxxxxx 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 Xxxxxxx Shares).
Xxxx Xxxxxxx shall have delivered to the Company the share certificates
representing the Xxxxxxx 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,
Xxxxxxxx & Xxxxxx 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 Xxxxxxx 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 Xxxxx
Xxxxxxx 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 Xxx 0000 (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) Xxx
X. Xxxxxxxx, Xx. and Xxxxxx X. Xxxxxx shall be appointed Directors and
Xxxxxx X. Xxxxxx 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 Xxxxxx
Xxxxxxx 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 Xxxxxx
Xxxxxxx 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
-56-
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.
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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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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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(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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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, Xxxxxxxx & Xxxxxx LLP
00 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx XX0X 0XX
Tel: 000-00-000-000-0000
Fax: 000-00-000-000-0000
Attn: Xxx Xxxxxx, Esq.
Copy to:
Xpedite Systems, Inc.
000 Xxxxxxx 00
Xxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxx X. Xxxxxxxx, Xx.
Xxxx Xxxxxxxx Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
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If to the Shareholders to:
APAX Partners & Co. Ventures Limited
00 Xxxxxxxx Xxxxx
Xxxxxx XXX 0XX
Attn: Xxxx XxXxxxxxxx
Tel: 000-00-000-000-0000
Fax: 000-00-000-000-0000
and
Xxxxx Xxxxxxx
Xxxxxx Xxxxx
Xxxx Xxx
Xxxxxxx Xxxxxx
Xxxx, X00 0XX
Tel: 000-00-0000-000-000
Fax: 000-00-0000-000-000
Copy to:
Xxxxxxx Suddards
Trinity Court
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx M 60 8MS
Attn: Ged X'Xxxxx, Esq.
Tel: 000-00-000-000-0000
Fax: 000-00-000-000-0000
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.
-64-
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
-65-
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
Xxx 0000 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
-66-
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
-67-
(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.
-68-
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/ XXX X. XXXXXXXX, XX.
-----------------------------------
Name: Xxx X. Xxxxxxxx, Xx.
Title:
XPEDITE SYSTEMS, INC.
By:/s/ XXX X. XXXXXXXX, XX.
-----------------------------------
Name: Xxx X. Xxxxxxxx, Xx.
Title: President
SHAREHOLDERS:
/s/ XXXXX XXXXXXX
--------------------------------------
Xxxxx Xxxxxxx
WITNESS:/s/ Xxxxxxx Xxxxxxxx /s/ XXXXX XXXXXXX
--------------------------------------
Executed as a DEED by
Xxxx Xxxxxxx, acting by
Xxxxx Xxxxxxx, his duly
authorized attorney
APAX PARTNERS & CO. VENTURES
LIMITED, as manager of Apax
Ventures IV and Apax IV
International Partners, L.P.
By:/s/ XXXX XXXXXXXX MCMONIGALL
---------------------------------
Name: Xxxx Xxxxxxxx McMonigall
Title:
-69-
ROTHSCHILD NOMINEES LIMITED,
acting by Xxxx Xxxxxxxx
McMonigall, its duly
authorized attorney
By:/s/ XXXX XXXXXXXX MCMONIGALL
-----------------------------------
EAGLE NOMINEES LIMITED,
acting by Xxxxxx Xxxxx
X'Xxxxx, its duly authorized
attorney
By: /s/ XXXXXX XXXXX X'XXXXX
-----------------------------------
-70-
SCHEDULE 1
NO. OF
SHAREHOLDER CLASS OF SHARE SHARES CONSIDERATION
------------------------------ ----------------------------- -------------------- --------------------------
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
Xxxxx Xxxxxxx 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
Xxxx Xxxxxxx 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)
Xxxxx Xxxxxxx 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)
-71-
SCHEDULE 1A
CLASS OF NO. OF
SHAREHOLDER SHARE SHARES CONSIDERATION
------------------------------ -------------------------- ---------------------- ------------------------
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
Xxxxx Xxxxxxx 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
Xxxx Xxxxxxx 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)
-72-
CLASS OF NO. OF
SHAREHOLDER SHARE SHARES CONSIDERATION
------------------------------ -------------------------- ---------------------- ------------------------
Xxxxx Xxxxxxx 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)
-73-
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 Xxxxx Xxxxx, Xxx Xxxx, Xx.
Xxxxxx, Xxxxxx (the "VENDOR");
(2) XPEDITE SYSTEMS LIMITED (Company Number: 2778084)
whose registered office is at Xpedite House, Pioneer
Business Park, Xxx Xxxxxxx Xxx, Xxxxxxx Xxxx, Xxxx,
X00 0XX (the "COMPANY")
RECITALS
--------
(A) The Company was incorporated in England under the Companies Xxx
0000 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.
(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
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 Xxxxx Xxxxxxx
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
(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
be payable to the Vendor (or as the Vendor directs) by telegraphic
transfer out of the monies held by Xxxxxxx 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 Xxxxxxx Suddards, Trinity Court, 00 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx, X00 0XX.
(a) the Vendor shall deliver to the Company the
share certificate(s) in respect of the Sale
Shares;
(b) the Company shall instruct Xxxxxxx 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
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
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 XXXXXX XXXXX X'XXXXX,
----------------------
its duly authorized attorney:
Signature:
Witness Name:
Address:
Occupation:
SIGNED by XXXX XXXXXXXXXX
----------------------
for and on behalf of
XPEDITE SYSTEMS LIMITED
--------------------------------
in the presence of
Signature:
Witness name:
Address:
Occupation:
7
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
Xxxxxxx Suddards
Solicitors
Trinity Court
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx
X00 0XX
Tel: 0000 000 0000
Fax: 0000 000 0000
Ref: GJO
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 00 Xxxxx Xxxxxx,
Xxxxxx, X0X 0XX (the "Guarantor"); and
(2) PHJ&W NO. 2 LIMITED (Company No. 3406448) whose registered office
is at c/o Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, 00 Xxxxxxx Xxxxxx, Xxxxxx, XX0X
0XX (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
"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 00
Xxxxxxxx Xxxxx, Xxxxxx XXX 0XX.
"the Company" Xpedite Systems Limited (Company No. 2778084)
whose registered office is at Xpedite House,
Pioneer Business Park, Xxx Xxxxxxx Xxx, Xxxxxxx
Xxxx, Xxxx XX0 0XX.
"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
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-
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 00 Xxxxx Xxxxxx, Xxxxxx, X0X 0XX and shall be
treated as having been received on delivery. A demand or
notice sent by post may be addressed to the Guarantor at 00
Xxxxx Xxxxxx, Xxxxxx, X0X 0XX 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-
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
00 Xxxxx Xxxxxx
Xxxxxx
X0X 0XX
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-
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
000 Xxxxxxx 00, Xxxxxxxxx, XX 00000, and XXXXX XXXXXXX (hereinafter
"Executive"), an individual residing at Xxxxxx Xxxxx, Xxxx Xxx, Xxxxxxx Xxxxxx,
Xxxx X00 0XX.
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, Xxx
Xxxxxxx Xxx, Xxxxxxx Xxxx, Xxxx, XX0 0XX, Xxxxxxx 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
"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-
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-
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-
(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-
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-
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-
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.
000 Xxxxxxx 00
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxx X. Xxxxxxxx, Xx.
If to Executive:
Xxxxx Xxxxxxx
Xxxxxx 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-
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-
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,
-10-
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.
-11-
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:
-----------------------------
Xxxxx Xxxxxxx
-12-
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
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.
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
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 Xxxxx Xxxxxxx 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_.
------------------------------
Xxxxx Xxxxxxx
Apax Partners & Co. Ventures
Limited, as manager of Apax
Ventures IV and Apax IV
International Partners, L.P.
By:
------------------------------
Name:
Title:
-2-
