STRICTLY PRIVATE AND CONFIDENTIAL
---------------------------------
HEADS OF AGREEMENT
(non legally binding save as provided)
between the parties
TELEMONDE INC
and
XXXXX XXXXXX, XXXXXXX XXXXXX XXXXXXX AND XXXXX XXXXXX PEAK
----------------------------------------------------------
--------------------------------------------------------------------------------
These Heads of Agreement ("Heads") set out the outline terms for the proposed
acquisition by Telemonde, Inc. ("Telemonde") of the entire issued share and loan
capital of Newco Ltd ("Newco"), formed to acquire Global Communications
(Holdings) Limited ("Global") from its shareholders Xxxxx Xxxxxx, Xxxxxxx Xxxxxx
Xxxxxxxx and Xxxxx Xxxxxx Peak (together "the Vendors").
The Vendors agree to sell to Telemonde all existing interests in the entire
issued share and loan capital of Newco pursuant to a definitive agreement
currently under negotiation ("Share Purchase Agreement"). It is presently
assumed that exchange of the Share Purchase Agreement will take place as soon as
possible.
Save for paragraphs 5.1, 7, 8 and 9, these Heads are not legally binding and
the transactions contemplated by them remain strictly subject to contract.
1. Introduction
1.1 Telemonde will acquire the entire issued share and loan capital of Newco
for the consideration specified below.
2. Consideration
-------------
2.1 The maximum aggregate value of the consideration payable by Telemonde to
the Vendors will be One Hundred Million Pounds Sterling
([Pounds]100,000,000) (the "Consideration").
2.2 The Consideration will be satisfied as follows:
2.2.1 On completion of the Share Purchase Agreement ("Completion") by
the sum of Five Hundred Thousand Pounds Sterling
([Pounds]500,000) in cash; and
2.2.2 On Completion of the Share Purchase Agreement, satisfaction of
Ninety Nine Million Five Hundred Thousand Pounds Sterling
([Pounds]99,500,000) of Newco Loan Notes then held by the
Vendors as follows:
2.2.2.1 Fifty Million Pounds Sterling ([Pounds]50,000,000) of
Preferred Shares in Telemonde, Inc., the strike price
for which shall be the average price over the twenty
(20) trading days prior to the date of these Heads,
carrying such registration rights as agreed by the
parties, including that a percentage to be agreed of the
Vendors Restricted shares will be registered on
Telemonde Inc's first filing after the date hereof but
no later than 12 months from Completion; and
2.2.1.2 Forty-Nine Million Five Hundred Thousand Pounds
Sterling ([Pounds]49,500,000) in Loan Notes ("Loan
Notes") of Telemonde Inc., bearing interest at LIBOR
payable on normal UK quarter days in arrears,
redeemable for cash subsequent to Completion and in
accordance with a schedule to be finalized by Sands
Brothers, Telemonde Inc's investment bankers, but not
be less (in the case of the initial raise) than 26.6%
of the value of the funds raised, and in any event to
be redeemed within 12 months of Completion.
3. Funding
-------
3.1 Subject to separate agreements, loans in the aggregate sum of Three
Million Five Hundred Thousand Pounds ([Pounds]3,500,000) will be made to
Global, as follows;
3.1.1 One Million Five Hundred Thousand Pounds ([Pounds]1,500,000) upon
Completion, Five Hundred Thousand Pounds ([Pounds]500,000) of the
proceeds of which will be used to repay two other certain Loans to
Global, each of Two Hundred and Fifty Thousand Pounds Sterling
([Pounds]250,000) dated 09 August 1999 and 05 November 1999
respectively; and
3.1.2 Two Million Pounds Sterling ([Pounds]2,000,000) as later agreed
between the parties.
4. People
------
4.1 Upon Completion, each of the Vendors will enter into Directors Service
Agreements with Newco in a form to be agreed between the Vendors and
Purchaser.
4.2 Two positions on the Board of Telemonde will be made available to the
Vendors following Completion.
4.3 Following the acquisition of Newco, a share option pool with a value of
not less than Three Million Dollars (US$3,000,000) is to be made
available to Global employees pursuant to the terms of a share option
scheme to be agreed.
5. XxxX.xxx Corp
--------------
5.1 The Company previously known as Professional Recovery Systems Limited,
("PRS") a Nevada corporation, and now known as XxxXxxx.xxx Corp is to
immediately change its name to XxxX.xxx Corp.
5.2 A total of Two Million (2,000,000) shares of XxxX.xxx Corp, at US$1 per
share (ten cents (10cents) of which shall be payable at time of grant
and ninety cents (90cents) which shall be subsequently payable as
agreed), is to be made available to the Vendors (either directly or
through options on terms to be agreed), such shares to be pari passu
with other initial founder investors of XxxX.xxx Corporation.
5.3 At least one of the Vendors is to be offered a place on the Board of
NetJ.
6. Share Purchase Agreement
------------------------
6.1 The Share Purchase Agreement will be in a form appropriate for the
transaction and contains such provisions (including without limitation
as to warranties tax indemnity and such restrictive covenants) as a
prudent Purchaser would reasonably require with such warranty
limitations as a Vendor would reasonably require.
6.2 The parties intend to exchange documents before the 20th December 1999.
6.3 Should any material default occur in the satisfaction of the Loan Notes,
security in favour of the Vendors over the entire issued share capital
of Newco will operate so as to enable the Vendors to compel transfer of
stated shares back to Vendors or their order on the payment of nominal
consideration. The exact mechanism is to be settled but as a condition
precedent to which will be material default (including without
limitation the failure to pay interest or redeem the Loan Notes within
30 days of the due date) under any of the Loan Notes, referred in
section 2.2.2.2 above.
6.4 Except in the instance of fraud on the part of the Vendors, Telemonde
will have no recourse to Thirty Million Pounds ([Pounds]30,000,000) of
the total Consideration paid in the event of a warranty or indemnity
claim against the Vendors.
6.5 The remaining Seventy Million Pounds ([Pounds]70,000,000) of the total
Consideration will be held in escrow as follows:
6.5.1 Seven Million Five Hundred Thousand Pounds ([Pounds]7,500,000)
to be held in escrow on terms and for a period to be agreed
against any potential tax liabilities of Newco, Global,
Telemonde or any group company of Telemonde, Inc; and
6.5.2 Sixty Two Million Five Hundred Thousand Pounds
([Pounds]62,500,000 of the Consideration to be held in escrow
such that the escrowed shares are to be released to the Vendors
as follows:
6.5.1.1 Seventy per cent (70%) at the end of the initial 21
month warranty period; and
6.5.1.2 Thirty percent (30%) on staggered, agreed releases up
until the end of the tax warranty period.
In all instances once shares are released from escrow, such
shares will be free of any further claims (save in the event of
fraud) pursuant to the warranties, indemnities or under any
other provision of the Share Purchase Agreement.
6.6 To ensure that the security over the Newco shares is adequate,
sufficient protections are to be incorporated in the Sale and Purchase
documentation to ensure that no transactions outside of the ordinary
course of business occur within Global prior to full settlement of the
loan stock, without the Vendors' consent.
6.7 Save for the tax indemnity, the general warranty period in the Share
Purchase Agreement is to be limited to 21 months.
6.8 Once monies are received from the redemption of Twenty Nine Million Five
Hundred Thousand Pounds Sterling ([Pounds]29,500,000) of Loan Notes in
Telemonde then no further recourse will be made to that cash save in the
event of fraud) pursuant to any warranties or indemnities or other
provisions contained within the Agreement.
6.9 All warranty claims exclude consequential losses.
6.10 [Pounds]10,000 de minimus and [Pounds]1,000,000 threshold levels for
warranties are to be included in the Share Purchase Agreement.
6.11 The period of the restrictive covenants in the Share Purchase Agreement
are to be 5 years from Completion. Those contained in any Service
Agreement are to be limited to 2 years from the termination of the
Service Agreement for whatever reason. The Service Agreements are to run
for a 3 year period from Completion terminable on 12 months' notice from
either side expiring on or after termination of that 3 year period.
6.12 European Tendering Exchange Network Limited is to be removed from the
Newco Group prior to Completion
7 Costs
-----
7.1 Telemonde is to be responsible for Stamp Duty. Vendors agree to defer or
defray such cost in any reasonable proposed method.
7.2 Each party will bear its own costs in connection with these Heads and
the Share Purchase Agreement.
8 Information Due Diligence
-------------------------
8.1 The Vendor and their advisers and Telemonde and its advisers will
provide to each other all reasonable assistance and documentation
necessary to enable them to continue and complete their due diligence,
including the degree of disclosure necessary to complete an SEC filing.
8.2 Up until 20 December 1999, the Vendors will ensure that Telemonde is
kept reasonably informed about all material activities and developments
of Newco, any material contract or arrangement which is one (illegible)
outside the normal course of business or otherwise prejudicial to the
interests of Newco or Telemonde in any material respect or any
transaction with the Vendors (including without limitation the payment
of any dividend or the making of any distribution).
9 Confidentiality
---------------
9.1 The Vendors and Telemonde acknowledge that the existence of these Heads
and the discussions between the parties relating to the proposed
transaction and the information received by each party as part of their
due diligence process must be kept absolutely confidential. Accordingly,
neither Telemonde or the Vendors will disclose to any third party (other
than their respective professional advisers who reasonably need to know
the same) or otherwise make any announcements as to the existence of
these Heads or the nature or the extent of negotiations between them
with regard to the transactions contemplated under these Heads without
the prior written consent of the other of them or except as may be
required by law or by a court of competent jurisdiction or by a
competent authority.
/s/ Xxxxx Xxxxxx 5th Nov. 1999
---------------------------------- ---------------
Xxxxx Xxxxxx Date
/s/ X. X. Xxxxxxxx 5th Nov 1999
---------------------------------- ---------------
Xxxxxxx Xxxxxx Xxxxxxxx Date
/s/ Xxxxx Xxxxxx Peak, by his attorney
(Illegible) 5th Nov 1999
---------------------------------- ---------------
Xxxxx Xxxxxx Peak Date
/s/ Xxxxx Xxxxxxx 5th Nov 1999
---------------------------------- ---------------
Signed on behalf of Telemonde, Inc Date
Xxxxx Xxxxxxx
