EXHIBIT 10.38
ORGANIZATIONAL AGREEMENT
BY AND AMONG
NEWBRIDGE NETWORKS CORPORATION,
TELEHUB COMMUNICATIONS CORPORATION,
TELEHUB TECHNOLOGIES CORPORATION AND
NEWCO CORPORATION [NAME TO BE CHANGED]
TABLE OF CONTENTS
Page No.
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ARTICLE I Capitalization of the Company...............................2
1.1 Transfer of VASP-related Propertyto the Company.....................2
1.2 Assumed Liabilities.................................................4
1.3 Purchase of Common Stock by Newbridge...............................5
1.4 Payments by the Company to TeleHub..................................5
1.5 Wire Transfers......................................................5
1.6 Assignment of Purchased Assets......................................5
1.7 Sales and Transfer Tax..............................................6
ARTICLE IIClosing and Closing Date Deliveries.................................6
2.1 Closing Date........................................................6
2.2 Closing Deliveries and Action.......................................6
2.3 Post-Closing Cooperation............................................9
ARTICLE III Financial Statements and Schedules...............................10
3.1 Financial Statements...............................................10
3.2 Schedules..........................................................10
ARTICLE IV Warranties and Representations of TeleHub and TTC.................10
4.1 Corporate Status...................................................10
4.2 Authority and Binding Obligation...................................11
4.3 No Violations......................................................11
4.4 Capitalization of the Company......................................12
4.5 Brokers............................................................13
4.6 Required Assets....................................................13
4.7 Related Party Transaction..........................................13
4.8 Title to Purchased Assets..........................................13
4.9 Condition of Purchased Assets......................................14
4.10 Real Estate........................................................14
4.11 Litigation and Compliance with Laws................................14
4.12 Intellectual Property..............................................15
4.13 Contracts..........................................................16
4.14 Financial Statements and Related Matters...........................17
4.15 Changes............................................................18
4.16 Insurance..........................................................20
4.17 Licenses and Permits...............................................20
4.18 Benefit Plans......................................................21
4.19 Tax Matters........................................................23
4.20 Books and Records..................................................24
4.21 Disclosure.........................................................24
4.22 Employee and Consulting Agreements and Arrangements................24
4.23 Absence of Undisclosed Liabilities.................................24
4.24 Operation of the Business..........................................24
4.25 Territorial Restrictions...........................................25
4.26 Licensing Arrangements.............................................25
4.27 Year 2000 and Euro Conformity......................................25
4.28 Product Warranties.................................................27
4.29 No Guarantees......................................................27
ARTICLE V Warranties and Representations of Newbridge........................27
5.1 Corporate Status...................................................27
5.2 Authority and Binding Obligation...................................27
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5.3 No Violations......................................................28
5.4 Brokers............................................................28
5.5 Non-Disqualification...............................................28
5.6 Litigation.........................................................28
ARTICLE VI Representations and Warranties Regarding Unregistered Securities..29
6.1 Representations and Warranties.....................................29
ARTICLE VII Conditions to Closing............................................29
7.1 Conditions to Closing for Newbridge................................29
7.2 Conditions to Closing for TeleHub and TTC..........................31
ARTICLE VIII Termination.....................................................33
8.1 Termination........................................................33
ARTICLE IX Pre-Closing Covenants.............................................33
9.1 Due Diligence Review...............................................33
9.2 Maintenance of Business and Notice of Changes......................33
9.3 Pending Closing....................................................34
9.4 Best Efforts.......................................................35
9.5 Publicity..........................................................35
9.6 Confidentiality....................................................35
9.7 Negotiations with Third Parties....................................36
9.8 HSR Filings........................................................36
9.9 Formation of the Company...........................................36
ARTICLE X Indemnification....................................................36
10.1 TeleHub Indemnification............................................36
10.2 Newbridge Indemnification..........................................37
10.3 Indemnification Notice.............................................37
10.4 Indemnification Procedure..........................................37
10.5 Limitations on Indemnity...........................................38
ARTICLE XI Employee Matters..................................................38
11.1 Hiring of Employees................................................38
11.2 Benefit Plans......................................................39
ARTICLE XII Miscellaneous....................................................39
12.1 Costs and Expenses.................................................39
12.2 Entire Agreement...................................................39
12.3 Counterparts.......................................................39
12.4 Assignment, Successors and Assigns.................................39
12.5 Savings Clause.....................................................40
12.6 Headings...........................................................40
12.7 Governing Law......................................................40
12.8 U.S. Dollars.......................................................40
12.9 Survival...........................................................40
12.10 Notices.........................................................40
12.11 No Third Party Beneficiary......................................41
12.12 Arbitration of Disputes.........................................41
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EXHIBITS
Exhibit A Form of Stockholders Agreement
Exhibit B Form of Option Agreement
Exhibit C Form of Software License
Exhibit D Form of Development Plan
Exhibit E Form of Opinion of Haligman Xxxxxxx Xxxxx & Xxxxxxx, P.C.
Exhibit F Form of Opinion of Xxxx Xxxxxxxx Xxxxxxxx & Xxxxxx LLP
Exhibit G Form of the Company's Articles of Incorporation
SCHEDULES
Schedule 1 Business Description
Schedule 1.2 Assumed Liabilities
Schedule 4.1 TeleHub and TTC Corporate Status
Schedule 4.3 No Violations
Schedule 4.4 Capitalization
Schedule 4.7 Related Party Transactions
Schedule 4.8 Title to Assets
Schedule 4.10 Real Estate
Schedule 4.12 Intellectual Property
Schedule 4.13 Contracts
Schedule 4.15 Changes Since the Balance Sheet Date
Schedule 4.16 Insurance
Schedule 4.17 Licenses and Permits
Schedule 4.18 Benefits Plans
Schedule 4.22 Employee and Consulting Agreements and Arrangements
Schedule 4.23 Absence of Undisclosed Liabilities
Schedule 4.24 Intercompany Service
Schedule 4.25 Territorial Restrictions
Schedule 4.26 Licensing Arrangements
Schedule 4.28 Product Warranties
Schedule 4.29 Guarantees
Schedule 5.1 Newbridge Corporate Status
Schedule 5.6 Newbridge Litigation
Schedule 9.3 Fixed Assets to be Purchased
Schedule 11.1 Employees to be Hired
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DEFINED TERMS SECTION REFERENCE
Accredited Investor 6.1(e)
Accumulated Funding Deficiency 4.18(c)(vi)
Acquisition Proposal 9.7
Affiliate 1.1
Agreement Recitals
Applicable Law 4.17
Assumed Liabilities 1.2(a)(ii)
Business Recitals
Closing 2.1
COBRA 4.18(g)
Code 4.18(c)(i)
Common Stock 4.4
Company Recitals
Contract/Contracts 1.2 (a)(ii)
Control 1.1(k)
Controlled Group 4.18(c)(iv)
Date of the Notice of Claim 10.4(c)
Distribution Agreement 2.2(b)(vi)
Distribution 6.1(a)
Employee Benefit Plan 4.18(a)
Environmental Laws 4.11(c)
ERISA 4.18
Financial Statements 3.1
Foreign Persons 4.19
Governmental Approval 4.3
Governmental Authority 4.3
Hazardous Material 4.11(c)
HSR Act 7.1(j)
Indemnified Party 10.3
Indemnifying Party 10.3
Intellectual Property 1.1
Intellectual Property Assets 1.1(g)
Intercompany Payables 1.2
Interests 1.6
Material Adverse Effect 4.15(f)
NCUs 4.27(b)
Newbridge Recitals
Notice of Claim 10.3
Option Agreement 2.2(a)(vii)
Other Agreements 4.2
ParticipatingEemployer 11.2
Person 4.7
Plans 4.18(a)
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DEFINED TERMS SECTION REFERENCE
Prohibited Transaction 4.18(c)(vi)
Purchased Assets 1.1
Real Property 4.10
Release 4.11(c)
Reportable Event 4.18(c)(vi)
Schedules 3.2
SEC 5.5
Securities Act 6.1(a)
Senior Discount Notes 7.1(h)
Software 4.27
Stockholders Agreement 2.2(a)(vii)
Tax / Taxes 4.19
Tax Authority 4.19
Tax Returns 4.19
Technology 4.27
TeleHub Recitals
TeleHub Balance Sheet 3.1
TeleHub Balance Sheet Date 3.1
TTC Recitals
TTC Balance Sheet 3.1
TTC Balance Sheet Date 3.1
TTC Common Shares 4.4
TTC Financial Statements 3.1
TNS 2.2(b)
VASP(TM) Recitals
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ORGANIZATIONAL AGREEMENT
This Organizational Agreement (this "Agreement") dated as of
March 31, 1999 is made by and among Newbridge Networks Corporation, a
corporation organized under the laws of Canada ("Newbridge"), TeleHub
Communications Corporation, a corporation organized under the laws of the State
of Nevada, one of the states of the United States ("TeleHub"), TeleHub
Technologies Corporation, a corporation organized under the laws of the State of
Nevada ("TTC") and Newco Corporation, a corporation organized under the laws of
the State of Nevada and whose name will be changed pursuant to this Agreement
(the "Company").
RECITALS:
A. Newbridge and TeleHub wish to form a new venture to
further develop the Virtual Access Services Platform
("VASP(TM)") technology and related products that are
essential to world-wide, end-to-end, service-rich
communications, as more fully described in Schedule 1 (the
"Business") and expand the market for the Business.
B. The goal of the new venture will be to establish a
successful, highly profitable market position for
VASP(TM), specifically addressing narrowband switch
replacement, addressing the needs of incumbent carriers
and alternate carriers, in North America originally. In
doing so, the new venture will meet the needs of Newbridge
and TeleHub, by delivering a best of breed product that
allows the users of the technology competitive advantage
in these markets.
C. The new venture will ultimately be implemented through a
new venture owned by TeleHub and Newbridge. As one of the
first steps in organizing such new venture, Newbridge and
TeleHub shall select a new name for the Company, and
TeleHub will form the Company within 10 days after the
date hereof. Newbridge will invest in the Company
according to the terms of this Agreement.
D. TeleHub, TTC and Newbridge wish the Company to operate as
a new venture with the two principal shareholders,
Newbridge and TTC, operating in a spirit of cooperation
and collaboration to address the emerging narrowband
switch replacement and data services markets and to grow a
profitable venture which leads these markets.
AGREEMENTS
In consideration of the recitals and respective agreements,
covenants, representations and warranties contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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ARTICLE I
Capitalization of the Company
1.1 TeleHub Transfer of VASP-related Property to the Company.
(a) Subject to the terms and conditions of this Agreement, and in reliance upon
the representations, warranties, covenants and agreements made in this Agreement
by the parties hereto, at the Closing on the Closing Date (as those terms are
hereinafter defined and including without limitation, TTC) TeleHub shall and
shall cause its Affiliates (as hereinafter defined) to, contribute, assign,
transfer, convey and deliver to the Company, and the Company shall acquire and
accept from TeleHub and such Affiliates, all right, title and interest of
TeleHub and such Affiliates in and to the properties, assets and rights of every
nature, kind and description, tangible and intangible (including goodwill),
whether real, personal or mixed, whether accrued, contingent or otherwise and
whether now existing or hereafter acquired relating to or used or held for use
in connection with the Business as the same may exist on the Closing Date
(collectively, the "Purchased Assets"), including without limitation all those
items in the following categories that relate to or are used in or held for use
in the Business and that conform to the definition of the term "Purchased
Assets":
(a) all machinery, equipment, furniture, furnishings,
automobiles, trucks, vehicles, tools, dies, molds and parts
and similar property (including, but not limited to, any of
the foregoing purchased subject to any conditional sales or
title retention agreement in favor of any other Person);
(b) all inventories of raw materials, work in
process, finished products, goods, spare parts, replacement
and component parts, and office and other supplies;
(c) all rights in and to products sold or leased
(including, but not limited to, products hereafter returned or
repossessed and unpaid sellers' rights of rescission,
replevin, reclamation and rights to stoppage in transit);
(d) all rights (including but not limited to any and
all Intellectual Property rights) in and to the products sold
or leased and in and to any products or other Intellectual
Property rights under research or development prior to or on
the Closing Date;
(e) all of the rights of TeleHub and/or its
Affiliates under all contracts, arrangements, licenses, leases
and other agreements, including, without limitation, any right
to receive payment for products sold or services rendered, and
to receive goods and services, pursuant to such agreements and
to assert claims and take other rightful actions in respect of
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breaches, defaults and other violations of such contracts,
arrangements, licenses, leases and other agreements and
otherwise;
(f) all notes and accounts receivable held by TeleHub
and/or its Affiliates and all notes, bonds and other evidences
of indebtedness of and rights to receive payments from any
Person held by TeleHub and/or its Affiliates;
(g) all Intellectual Property and all rights
thereunder or in respect thereof (including, without
limitation, goodwill) primarily relating to or used or held
for use in connection with the Business, including, but not
limited to, rights to xxx for and remedies against past,
present and future infringements thereof, and rights of
priority and protection of interests therein under the laws of
any jurisdiction worldwide and all tangible embodiments
thereof (together with all Intellectual Property rights
included in the other clauses of this Section 1.1, the
"Intellectual Property Assets");
(h) all books, records, manuals and other materials
(in any form or medium), advertising matter, catalogues, price
lists, correspondence, mailing lists, lists of customers,
distribution lists, photographs, production data, sales and
promotional materials and records, purchasing materials and
records, personnel records, manufacturing and quality control
records and procedures, blueprints, research and development
files, records, data and laboratory books, Intellectual
Property disclosures, media materials and plates, accounting
records, sales order files and litigation files;
(i) to the extent their transfer is permitted by law,
all governmental approvals, including all applications
therefor;
(j) all rights to causes of action, lawsuits,
judgments, claims and demands of any nature available to or
being pursued by TeleHub and/or its Affiliates with respect to
the Business or the ownership, use, function or value of any
Purchased Asset, whether arising by way of counterclaim or
otherwise; and
(k) all guarantees, warranties, indemnities and
similar rights in favor of TeleHub and/or its Affiliates with
respect to any Purchased Asset.
For the purposes of this Agreement, an "Affiliate" shall mean any other
Person directly or indirectly controlling, controlled by, or under
common control with, such specified person, (b) any officer, director,
partner, legal representative (including a trustee for the benefit of
such specified person) or employee of such specified Person, and (c)
any Person for which such specified Person acts as an officer,
director, partner or employee. As used in this definition of
"Affiliate," the term "control" and any derivatives thereof mean the
possession, directly or indirectly of the power to direct or cause the
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direction of the management and policies of a Person, whether through
ownership of voting securities, by contract, or otherwise. For the
purposes of this Agreement, "Intellectual Property" shall mean any and
all United States and foreign: (a) patents (including design patents,
industrial designs and utility models) and patent applications
(including docketed patent disclosures awaiting filing, reissues,
divisions, continuations-in-part and extensions), patent disclosures
awaiting filing determination, inventions and improvements thereto; (b)
trademarks, service marks, trade names, trade dress, logos, business
and product names, slogans, and registrations and applications for
registrations thereof; (c) copyrights (including software) and
registrations thereof; (d) inventions, processes, designs, formulae,
trade secrets, know-how, industrial models, confidential and technical
information, manufacturing, engineering and technical drawings, product
specifications and confidential business information; (e) mask work and
other semiconductor chip rights and registrations thereof; (f)
intellectual property rights similar to any of the foregoing; (g)
copies and tangible embodiments thereof (in whatever form or medium,
including electronic media).
1.2 Assumed Liabilities.
(a) Subject to the provisions of Section 1.2(b) hereof,
effective as of the Closing on the Closing Date, the Company shall assume only
those liabilities and obligations of TeleHub, TTC or any of their Affiliates set
forth below:
(i) those liabilities, obligations and commitments
relating exclusively to the Business or the Purchased Assets that are
set forth on and in the amounts set forth on Schedule 1.2;
(ii) all debts, obligations, and liabilities arising
under the contracts, agreements, licenses, leases, commitments, sales
orders, purchase orders, invoices and other agreements to which TTC is a
party or bound and which relate to the Business and which are set forth
on Schedule 1.2 (hereinafter referred to individually as a "Contract"
and collectively, the "Contracts")
(iii) Intercompany debt of $22,000,000 relating to
the Business (the "Intercompany Payable"), owed by TTC to TeleHub, as
represented by a promissory note evidencing such debt; and
(iv) the Software License in the form attached hereto
as Exhibit C .
(All of the foregoing liabilities and obligations are set forth on Schedule 1.2
hereto and are hereinafter referred to collectively as, the "Assumed
Liabilities"). The Assumed Liabilities at the time of Closing, other than the
performance obligations under the Contracts and the Intercompany Payable, shall
not exceed $2,500,000.
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(b)......Except for the Assumed Liabilities, the Company is
not assuming and is not responsible for any debts, obligations or liabilities of
TeleHub or TTC, whether known or unknown, fixed or unfixed, xxxxxx or unchoate,
liquidated or unliquidated, secured or unsecured, accrued or unaccrued,
absolute, contingent or otherwise. Not in limitation of the generality of the
foregoing, the Company is not assuming and is not responsible for the following:
(i) All litigation and claims, including, without
limitation, those described in the Schedules to this Agreement, whether
commenced before, on or after the Closing Date, based upon the acts or
omissions of either TeleHub or TTC or any of their Affiliates or
operation or conduct of the Business or products manufactured by either
TeleHub or TTC or any of their Affiliates prior to the Closing Date;
(ii) Any liabilities for Taxes (as hereinafter
defined); and
(iii) All liabilities arising out of, resulting from
or relating to any violation of or liability arising under any statute,
ordinance, regulation or other governmental requirement including,
without limitation, any Environmental Laws including, without
limitation, the use, generation, disposal, treatment, storage,
transportation arrangement for disposal or treatment, Release or
threatened Release of Hazardous Materials by TeleHub, TTC or any of
their Affiliates or any predecessor of any of them.
1.3 Purchase of Common Stock by Newbridge. At the Closing on
the Closing Date, Newbridge shall purchase from the Company 3,293,333 shares of
Common Stock (as defined herein) for a purchase price of Fifty Two Million
Dollars ($52,000,000) and Newbridge shall purchase from TeleHub 506,667 shares
of Common Stock for a purchase price of Eight Million Dollars ($8,000,000).
1.4 Payments by the Company to TeleHub. At the Closing on the
Closing Date, the Company shall pay to TeleHub Twenty-Two Million Dollars
($22,000,000) represented by the promissory note by TTC in favor of TeleHub and
assigned to the Company pursuant to Section 1.2 in full payment of the
Intercompany Payables.
1.5 Wire Transfers. The amounts to be transferred pursuant to
Sections 1.3 and 1.4 hereof shall be by the wire transfer of immediately
available federal funds to an account designated in writing by the recipient
thereof prior to the Closing on the Closing Date.
1.6 Assignment of Purchased Assets. (a) To the extent that any
Contract, property interest, qualification or other Purchased Asset to be
contributed, assigned, transferred or conveyed to the Company, or any claim,
right or benefit arising thereunder or resulting therefrom (the "Interests"),
cannot be contributed, assigned, transferred or conveyed without the approval,
consent or waiver of or filing with the issuer thereof or the other party
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thereto or any third person (including a government or governmental unit), or to
the extent that contribution, assignment, transfer or conveyance or attempted
contribution, assignment, transfer or conveyance of any such Interest would
constitute a breach thereof or a violation of any law, decree, order, regulation
or other governmental edict, this Agreement shall not constitute a contribution,
assignment, transfer or conveyance thereof or an attempted contribution,
assignment, transfer or conveyance thereof.
(b) To the extent that any of the approvals, consents,
filings, waivers, permits, licenses, registrations or other authorizations
referred to in Section 1.6(a) hereof have not been obtained by TeleHub or TTC as
of the Closing, TeleHub or TTC shall, during the remaining term of such
Interests, use all reasonable efforts to (i) obtain the consent of any such
third person (including a government or governmental unit), (ii) cooperate with
the Company in any reasonable and lawful arrangement designed to provide the
benefits of such Interests to the Company and (iii) enforce, at the request of
the Company and for the benefit of the Company, any rights of TeleHub or TTC or
parties thereto (including the right to elect to terminate any such Interests in
accordance with the terms thereof upon the written request of the Company). Any
such efforts by TeleHub or TTC pursuant to this Section 1.6(b) shall be at the
expense of TeleHub.
1.7 Sales and Transfer Tax. TeleHub shall pay the cost of any
transfer, sales, use, purchase, value added, excise or similar tax imposed under
the laws of the United States or Canada, or any state, province or political
subdivision thereof, which arises out of the sale or transfer of the Purchased
Assets to the Company pursuant to this Agreement or the sale of the Common Stock
to Newbridge or TTC.
ARTICLE II
Closing and Closing Date Deliveries
2.1 Closing Date. The term "Closing" as used herein shall
refer to the consummation of the transactions set forth in Sections 1.1, 1.2,
1.3 and 1.4 hereof. The Closing shall take place at the offices of Winston &
Xxxxxx, 00 Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx at 10:00 a.m. Chicago time on
the date five business days after the fulfillment of the conditions set forth in
Article VII hereof, or at such other date or at such other place and time as is
agreed to by the parties hereto.
2.2 Closing Deliveries and Action.
(a) At the Closing on the Closing Date, TeleHub and TTC shall
deliver the following documents or instruments or take the following actions:
(i) all such bills of sale, lease assignments,
contract assignments and other documents and instruments of assignment,
conveyance and transfer, as Newbridge or its counsel may deem
reasonably necessary to transfer and convey the Purchased Assets to the
Company as contemplated by this Agreement;
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(ii) where required, consents executed by the other
parties to the Contracts consenting to the assignment of the Contracts
to the Company in form and substance reasonably satisfactory to
Newbridge and its counsel;
(iii) a certificate of good standing for TeleHub,
certified by the Secretary of State of the State of Nevada;
(iv) Articles of Incorporation of TeleHub, certified
by the Secretary of State of the State of Nevada;
(v) certified copy of the by-laws of TeleHub;
(vi) certified copies of minutes or unanimous written
consents of the Board of Directors and shareholders of TeleHub,
approving the execution of this Agreement and the Other Agreements and
the consummation of the transactions contemplated hereby and thereby;
(vii) the following agreements: (A) the Stockholders
Agreement by and among the Company, TeleHub, Newbridge and TTC, in the
form attached as Exhibit A (the "Stockholders Agreement"); and (B) the
Option Agreement by the Company, TeleHub and TTC in favor of Newbridge
in the form attached as Exhibit B (the "Option Agreement") ;
(viii) an opinion of Haligman Xxxxxxx Xxxxx &
Xxxxxxx, P.C., special counsel to TeleHub and TTC in the form attached
as Exhibit E, and Paul, Hastings, Xxxxxxxx & Xxxxxx LLP in the form of
Exhibit F hereto and otherwise, in form and substance reasonably
satisfactory to Newbridge which shall, among other things, address the
consent solicitations and enforceability of the consents and waivers
under the indenture relating to Senior Discount Notes (as hereinafter
defined) and a copy, certified by the Secretary of the Company, of (i)
the Consent Solicitation used to obtain such consents (the "Consent
Solicitation") and (ii) the Supplemental Indenture setting forth the
amendments to the indenture relating to the Senior Discounts Notes (the
"Supplemental Indenture");
(ix) an opinion of counsel of Netzorg & Caschette,
P.C., special Nevada counsel to TeleHub and TTC in form and substance
reasonably satisfactory to Newbridge;
(x) all required consents, approvals or
authorizations of any Governmental Authority or other person in
connection with the performance by TeleHub or TTC of their respective
obligations under this Agreement, the Other Agreements and the
transactions contemplated hereby and thereby;
(xi) deliver to Newbridge a stock certificate
representing 506,667 shares of Common Stock as contemplated by Section
1.3 hereof;
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(xii) a letter agreement from TeleHub and TNS
addressed to the Company that permits the Company to use and occupy the
real property described in Schedule 4.10;
(xiii) a Tax Sharing Agreement which shall have a
term of one year from the Closing Date (i) reserve to the Company the
net operating losses generated by the Company and (ii) provide that
TeleHub and its Affiliates (other than the Company) shall not use, and
shall forego, any deductions attributable to any net operating losses
generated by the Company; and
(xiv) such other documents, instruments or
certificates to be delivered by TeleHub, as Newbridge or its counsel
may reasonably request to carry out the purposes of this Agreement or
the Other Agreements.
(b) At the Closing on the Closing Date, TTC and/or the Company
shall deliver the following documents or instruments or take the following
actions:
(i) all such bills of sale, lease assignments,
contract assignments and other documents and instruments of assignment,
conveyance and transfer, as Newbridge or its counsel may deem
reasonably necessary to transfer and convey the Purchased Assets to the
Company as contemplated by this Agreement;
(ii) where required, consents executed by the other
parties to the Contracts consenting to the assignment of the Contracts
to the Company in form and substance reasonably satisfactory to
Newbridge and its counsel;
(iii) a certificate of good standing of each of the
Company and TTC, certified by the Secretary of State of the State of
Nevada;
(iv) Articles of Incorporation of TTC and of the
Company, certified by the Secretary of the State of Nevada, and with
respect to the Company, which conform to the provisions of the
Stockholders Agreement and are substantially in the form attached
hereto as Exhibit G;
(v) certified copy of the by-laws of TTC and the
Company, amended to conform to the provisions of the Stockholders
Agreement;
(vi) certified copies of minutes or unanimous written
consents of the Board of Directors and shareholders of TTC and the
Company, approving the execution of this Agreement and the Other
Agreements and the consummation of the transactions contemplated hereby
and thereby;
(vii) issue and deliver to (a) TeleHub the payments
as contemplated by Section 1.3 hereof, and (b) Newbridge a stock
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certificate representing 3,293,333 shares of Common Stock as
contemplated by Section 1.3 hereof;
(viii) the following agreements: (a) the Software
License Agreement between the Company and TeleHub Network Services
Corporation ("TNS"), in the form attached as Exhibit C (the "Software
License"); and (b) the Option Agreement;
(ix) all required consents, approvals or
authorizations of any Governmental Authority or other person in
connection with the performance by TTC or the Company of its
obligations under this Agreement or the Other Agreements and the
transactions contemplated hereby or thereby; and
(x) such other documents, instruments or certificates
to be delivered by TTC or the Company, as Newbridge or its respective
counsel may reasonably request to carry out the purposes of this
Agreement.
(c) At the Closing on the Closing Date, Newbridge shall
deliver the following documents or instruments or take the following actions:
(i) Newbridge shall pay the consideration specified
in Section 1.3 to TeleHub and the Company as specified therein in
exchange for shares of Common Stock as specified therein;
(ii) certified copy of the Articles of Incorporation
of Newbridge;
(iii) certified copy of the by-laws of Newbridge;
(iv) certified copies of minutes or unanimous written
consents of the Board of Directors of Newbridge, approving the
execution of this Agreement and the Other Agreements and the
consummation of the transactions contemplated hereby and thereby;
(v) the Shareholders Agreement;
(vi) an opinion of Winston & Xxxxxx, special counsel
to Newbridge, reasonably satisfactory to TeleHub and TTC; and
(vii) such other documents, instruments or
certificates to be delivered by Newbridge, as TeleHub or its counsel
may reasonably request to carry out the purposes of this Agreement.
2.3 Post-Closing Cooperation. TeleHub, TTC and Newbridge
shall, on request, on and after the Closing Date, cooperate with one another by
furnishing any additional information, executing and delivering any additional
documents and/or instruments and doing any and all such other things as may be
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reasonably required by the parties or their counsel to consummate or otherwise
implement the transactions contemplated by this Agreement.
ARTICLE III
Financial Statements and Schedules
3.1 Financial Statements. (a) The obligation of Newbridge to
purchase any Common Stock at the Closing is subject to the delivery by TeleHub
to Newbridge of the audited consolidated balance sheets of TeleHub as of
December 31, 1998 and the related audited consolidated statements of income,
cash flow and shareholders equity for December 31, 1998, together with the notes
thereto and the unqualified opinion thereon of PriceWaterhouse Coopers LLP,
TeleHub's independent public accountants (hereinafter collectively referred to
as the "Financial Statements"). The TeleHub balance sheet included in the
Financial Statements is referred to as the "TeleHub Balance Sheet" and December
31, 1998 is referred to as the "TeleHub Balance Sheet Date."
(b) TeleHub has heretofore delivered to Newbridge the
unaudited consolidated balance sheet of TTC as of December 31, 1998 (the "TTC
Balance Sheet") and the related unaudited consolidated statements of income and
shareholders equity for December 31, 1998, hereinafter collectively referred to
as the "TTC Financial Statements". December 31, 1998 is referred to as the "TTC
Balance Sheet Date".
3.2 Schedules. TeleHub has heretofore delivered to Newbridge
the disclosure schedules required by this Agreement ("Schedules") together with
copies of each contract, agreement, commitment or plan or other document or
instrument referred to in the Schedules.
ARTICLE IV
Warranties and Representations of TeleHub and TTC
TeleHub and TTC, jointly and severally, warrant and represent
to the Company and Newbridge (a) as of the date hereof and as of the Closing
Date, with respect to TeleHub or TTC and (b) as of the date of incorporation of
the Company and as of the Closing Date, with respect to the Company, (which
warranties and representations shall survive the Closing regardless of what
examinations, inspections, audits and other investigations either the Company or
Newbridge has heretofore made, or may hereafter make, with respect to such
warranties and representations) as follows:
4.1 Corporate Status. (a) Each of the Company, TeleHub and TTC
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada. Schedule 4.1 sets forth the states in which
TeleHub, the Company or TTC is qualified to do business as a foreign corporation
and neither TeleHub, the Company nor TTC is required to be qualified to do
business as a foreign corporation in any other state or jurisdiction, except
such states or jurisdictions where the failure to be qualified would not have a
10
material adverse effect on the operations or the financial condition of TeleHub,
the Company or TTC; and
(b) Each of TeleHub, the Company and TTC has full corporate
power and authority to carry on its business (including its portion of the
Business) and to own or lease and to operate its properties as and in the places
where such business is conducted and such properties are owned, leased or
operated.
4.2 Authority and Binding Obligation. (a) Each of TeleHub, the
Company and TTC, as applicable, has full right and power to execute and deliver
this Agreement and each of the agreements contemplated hereby, including without
limitation, those agreements (including without limitation the Agreements
attached hereto as exhibits, the Indenture Supplement, Consent Solicitation and
documents evidencing the transfer of assets and liabilities to the Company) set
forth in Article II hereof ("Other Agreements"), to perform fully its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby;
(b) The execution and delivery by each of TeleHub, the Company
and TTC of this Agreement and the consummation of the transactions contemplated
hereby, have been, and on the Closing Date the execution and delivery by each of
TeleHub, the Company and TTC of the Other Agreements to which it is a party will
have been, duly authorized by all requisite corporate action of TeleHub, the
Company or TTC, as applicable.
(c) This Agreement is, and on the Closing Date each of the
Other Agreements to which each of TeleHub, the Company or TTC is a party will
be, legal, valid and binding obligations of such party, enforceable against it
in accordance with its respective terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting enforcement of creditors' rights generally and by general
principles of equity (whether applied in a proceeding at law or in equity).
4.3 No Violations. Neither the execution, delivery and
performance of this Agreement or the Other Agreements by TeleHub, the Company or
TTC nor the consummation of the transfer of the Purchased Assets or any other
transaction contemplated by this Agreement or the Other Agreements, does or
will, after the giving of notice, or the lapse of time, or otherwise, (a)
conflict with, result in a breach of, or constitute a default under, (i) the
Articles of Incorporation or By-laws of TeleHub, the Company or TTC, (ii)
constitutions, treaties, statutes, laws, rules, regulations, ordinances, codes
or orders of any Governmental Authority, (iii) Governmental Approvals, and (iv)
orders, decisions, injunctions, judgements, awards and decrees of or agreements
with any Governmental Authority; (v) any lease, contract, agreement,
arrangement, commitment or plan to which TeleHub, the Company or TTC is a party;
(b) result in the creation of any mortgage, pledge, lien, claim, charge,
encumbrance or other adverse interest upon any of the Purchased Assets; (c)
terminate, amend, modify, abandon, or refuse to perform, any lease, contract,
11
agreement, arrangement, commitment or plan to which TeleHub, the Company or TTC
is a party, except as disclosed in Schedule 4.3; or (d) accelerate or modify, or
give any party the right to accelerate or modify, the time within which, or the
terms under which, any duties or obligations are to be performed, or any rights
or benefits are to be received, under any lease, contract, agreement,
arrangement, commitment or plan to which TeleHub, the Company or TTC is a party.
No consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority is required for the consummation by the Company,
TeleHub or TTC of the transactions contemplated by the Transaction Documents or
the Consent Documents, including without limitation the issue and sale of the
Common Stock to TeleHub, TTC and Newco. For the purposes hereof, "Governmental
Authority" shall mean any nation or government, any state or other political
subdivision thereof, any entity exercising executive, legislative, judiciary,
regulatory or administrative functions of or pertaining to government,
including, without limitation, any government authority, agency, department
board, commission or instrumentality of the United States, any State of the
United States or any political subdivision thereof, and any tribunal or
arbitrator(s) of competent jurisdiction, and any self-regulatory organization.
For the purposes hereof, "Governmental Approval" shall mean any decree, consent,
approval, authorization, waiver, permit, grant, franchise, concession,
agreement, license, exemption or order of, registration, certification,
declaration or filing with, or report or notice to, any Governmental Authority.
4.4 Capitalization of the Company. (a) The Company has total
authorized capital stock of (i) 100,000,000 shares of common stock, $0.001 par
value per share (the "Common Stock"), of which no shares of Common Stock are
issued and outstanding on the date hereof, and on the Closing Date immediately
prior to the issuance of Common Stock for Newbridge, 16,706,667 shares of Common
Stock will be issued and outstanding and (ii) 100,000,000 shares of preferred
stock, $0.01 par value per share, of which none is issued and outstanding.
TeleHub owns all of the issued and outstanding capital stock of TTC. On the
Closing Date, TeleHub will own 506,667 shares of Common Stock and on the Closing
Date, immediately prior to the issuance of Common Stock to Newbridge, TTC will
own 16,200,000 shares of Common Stock, which together will be all the issued and
outstanding capital stock of the Company.
(b) There are no outstanding options, warrants, rights,
privileges or other arrangements, preemptive, contractual or otherwise, to
acquire any shares of capital stock or other securities of TTC or the Company.
There are no contracts between or among any of the shareholders of TTC or the
Company relating to the voting or transfer of any shares of capital stock of TTC
or the Common Stock. All shares of capital stock of TTC and the Common Stock are
free and clear of all liens, claims, pledges, encumbrances, security interests
or other rights or restrictions. No approvals or consents of any nature of any
party or entity are necessary in connection with the transactions contemplated
hereby.
(c) Neither TeleHub, the Company nor TTC owns any securities
or other direct or indirect interest in any firm, corporation or other entity
12
(including any joint venture, partnership or limited liability company), except
as disclosed on Schedule 4.4).
4.5 Brokers. Neither this Agreement nor any other transaction
contemplated by this Agreement was induced or procured through any person, firm,
corporation or other entity acting on behalf of, or representing TeleHub, the
Company or TTC or any of their Affiliates as broker, finder, investment banker,
financial advisor or in any similar capacity, except for BancBoston Xxxxxxxxx
Xxxxxxxx, Inc., whose fees and expenses will be paid by TeleHub.
4.6 Required Assets. Subsequent to the consummation of the
transactions contemplated hereby, all of the rights, properties and assets
utilized or required by TeleHub or TTC or any of their Affiliates in connection
with owning and operating the Business and the Purchased Assets will be (a)
owned by the Company or licensed or leased to the Company; and (b) included in
the Purchased Assets. Except for the leased office space described on Section
4.10, the Purchased Assets and Contracts comprise all of the assets and services
presently used in the Business or required for the continued conduct of the
Business by the Company as now being conducted by TeleHub or TTC or any of their
Affiliates.
4.7 Related Party Transaction. Neither TeleHub, the Company,
TTC or any of TeleHub's, the Company's or TTC's officers, directors or employees
(a) own five percent (5%) or more of any class of securities of, or has an
equity interest of five percent (5%) or more in, any Person, which has any
business relationship (as lessor, supplier, customer or otherwise) with the
Business; (b) owns, or has any interest in, any right, property or asset which
is utilized or required by TeleHub, the Company or TTC in connection with owning
or operating the Business and the Purchased Assets, or (c) has any other
business relationship (as lessor, supplier, customer or otherwise) with the
Business. For purposes of this Agreement, "Person" means any person, firm,
corporation, partnership, joint venture or other entity.
4.8 Title to Purchased Assets. (a) On the Balance Sheet Date,
either TeleHub or TTC had, and on the date hereof either TeleHub or TTC has, and
on the Closing Date, the Company will have, good and marketable title to all of
the Purchased Assets, free and clear of any mortgages, pledges, liens, security
interests, encumbrances or other charges or rights of others of any kind or
nature, except as disclosed in Schedule 4.8;
(b) At the Closing on the Closing Date, TeleHub and TTC will
contribute, assign, convey, transfer and deliver good and marketable title to
all of the Purchased Assets to the Company, free and clear of any mortgages,
pledges, liens, security interests, encumbrances or other charges or rights of
others of any kind or nature, except as described in Schedule 4.8.
(c) The Purchased Assets include, without limitation, those
items described in Schedule 4.8.
13
4.9 Condition of Purchased Assets. All of the fixtures,
leasehold improvements and other improvements, machinery, equipment, tools and
other personal property included in the Purchased Assets are in good condition
and repair, ordinary wear and tear excepted.
4.10 Real Estate. Schedule 4.10 sets forth a true and complete
schedule setting forth and describing all real estate leased by TeleHub, the
Company or TTC and which TeleHub or TTC utilizes or requires in the operation of
the Business ("Real Property") and all leases and other agreements with respect
thereto (the "Leases"). The Company does not and has not owned any real
property. Except as set forth in Schedule 4.10, all Leases are, and will be on
the Closing Date, valid and enforceable in all respects; all obligations under
the Leases required to be performed by TeleHub or TTC prior to the Closing Date
have been performed; neither TeleHub nor TTC is presently in default under any
Lease; the tenant under each Lease possess and quietly enjoys the premises; and
neither the Leases nor the estates created thereby are subject to any liens,
encumbrances, easements, rights of way, building or use restrictions,
reservation or limitations as do or would in any material respect interfere with
or impair any normal conduct of the Business or of the Company. To the best
knowledge of TeleHub, the parties to the Leases have not committed any event of
default under any Lease or any financing obligations which is secured by such
Lease which is prior in right to such Lease and no event has occurred which with
the passage of time or the giving of notice or both would result in the
occurrence of such event of default. The letter agreement delivered by TeleHub
and TNS to the Company pursuant to Section 2.2(a)(xii) fully and effectively
transfers to the Company the right to use and occupy the premises to which the
Leases described in Schedule 4.10 relate.
4.11 Litigation and Compliance with Laws. (a) There is no
action at law or in equity, no arbitration proceeding, and no action,
proceeding, complaint, notice of violation, information request or investigation
of any nature before or by any Governmental Authority, pending or threatened
against or affecting TeleHub, the Company or TTC or the operations, business or
affairs of the Business, or any of the Purchased Assets or either TeleHub's, the
Company's or TTC's right to own the Purchased Assets or operate the Business;
and neither TeleHub, the Company nor TTC have knowledge of any state of facts or
contemplated events which may reasonably be expected to give rise to any such
claim, action, suit, proceeding, complaint, notice of violation, information
request or investigation.
(b) Neither TeleHub, the Company nor TTC is a party to or
bound by any collective bargaining agreement and no employees of any of them are
represented by any union or bargaining unit. There is no request for union
representation pending or threatened against either party or affecting the
Business or the Business' operations.
(c) Neither TeleHub nor TTC (with respect to the Business and
the Purchased Assets) nor the Company is owning or operating, and has not owned
or operated the Business or the Purchased Assets, and is not carrying on or
14
conducting, and has not carried on or conducted, any business in violation of or
in a manner that could result in liability under any federal, foreign, state or
local law, statute, ordinance, rule or regulation, or any court or
administrative order or process including, without limitation, any Environmental
Laws (as hereinafter defined) or any law relating to occupational health or
safety. There is no and has not been any Release or threatened Release of any
Hazardous Material existing on, beneath, from or in the vicinity of the surface,
subsurface, groundwater, sediment, rivers or other bodies of water associated
with the Real Property, currently occurring or occurring at any time in the
past. For purposes of this Agreement: "Environmental Laws" shall mean any and
all foreign, federal, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, permits, licenses,
authorizations, requirements of any governmental authority, or requirements of
law (including, without limitation, common law) now in effect relating to any
manner to contamination, pollution, or protection of the environment, human
health or safety; "Hazardous Material" shall mean any substance which is (i)
defined as a hazardous substance, hazardous material, hazardous waste, pollutant
or contaminant under any Environmental Laws, (ii) a petroleum hydrocarbon,
including crude oil or any fraction thereof, (iii) hazardous, toxic, corrosive,
flammable, explosive, infectious, radioactive or carcinogenic or (iv) regulated
pursuant to any Environmental Laws; "Release" shall mean any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, or disposing into the environment (including, without
limitation, the abandonment or discarding of barrels, containers, and other
receptables containing any Hazardous Material).
4.12 Intellectual Property. (a) Schedule 4.12 sets forth the
true and complete schedule of all trade names, trademark registrations,
trademark applications; service marks, servicemark registrations, servicemark
applications; copyrights, copyright registrations, copyright applications;
patent rights (including, without limitation, issued patents, applications,
divisions, continuations and continuations-in-part, reissues and patents of
addition) and any licenses or sublicenses with respect to the foregoing which
are utilized or required in the conduct of the Business and the Purchased
Assets. All registrations listed in Schedule 4.12 are in good standing, valid,
subsisting and in full force and effect in accordance with their terms. Except
as set forth in Schedule 4.12, no licenses, sublicenses, covenants or agreements
have been granted or entered into by TeleHub or TTC in respect of any of such
trade names, trademarks, service marks, copyrights or patents or any
applications therefor.
(b) No other patents, trademarks, trade names, service marks
or copyrights or other intellectual property is necessary for the conduct of the
Business as presently operated or as contemplated to be operated as set forth in
Exhibit H to the Shareholders Agreement.
(c) There is not now and has not been during the past seven
(7) years any infringement, misuse or misappropriation by TeleHub, the Company
or TTC of any valid patent, trademark, trade name, servicemark, copyright, trade
secret or other Intellectual Property owned by any third party, and there is not
now any existing or threatened claim against TeleHub, the Company or TTC of
infringement, misuse or misappropriation of any patent, trademark, trade name,
servicemark, copyright, trade secret or other Intellectual Property.
15
(d) There is no pending or threatened claim by TeleHub, the
Company or TTC against others for infringement, misuse or misappropriation of
any patent, trademark, trade name, servicemark, copyright, trade secret or other
Intellectual Property owned by TeleHub and which is utilized or required in the
conduct of the Business or which is owned by TTC or the Company.
(e) No shareholder, director, officer or employee of or
consultant to TeleHub, the Company or TTC or any other Person owns, directly or
indirectly, in whole or in part, any invention, patent, proprietary right,
trademark, servicemark, trade name, brand name or copyright or application
therefor (i) which TeleHub or TTC (with respect to the Business and the
Purchased Assets) or the Company is using; (ii) the use of which is necessary
for the Business; or (iii) which pertains to the art in which the Business is
engaged. All shareholders, directors, officers and employees of and consultants
to TeleHub, the Company and TTC have agreed to abide by the "Invention
Assignment and Confidentiality Covenant," a copy of which is provided in
Schedule 4.12, or a substantially similar agreement.
4.13 Contracts. (a) Schedule 4.13 contains a true and complete
schedule setting forth and describing all Contracts and all other personal
property leases, real property leases, and all other contracts, agreements,
instruments, arrangements and commitments (oral or written) to which TeleHub or
TTC (with respect to the Business and the Purchased Assets) is a party, except
(i) leases, contracts, agreements or commitments which may be terminated by
TeleHub or TTC on thirty (30) days' or less written notice without penalty to
TeleHub or TTC; or (ii) leases, contracts, agreements or commitments which have
a term of one (1) year or less and involve payment by or to TeleHub or TTC of
Twenty Five Thousand Dollars ($25,000) or less. Schedule 4.13 includes without
limitation, to the extent relating to the Business, the Purchased Assets or the
Company, the following:
(i) all contracts, agreements and commitments;
(ii) all leases or real or personal property;
(iii) all permits, licenses, franchises,
authorizations, approvals, public utility permits and other
certificates of need or authority;
(iv) all promissory notes, indentures, guarantees,
letters of credit, installment obligations, bonds, mortgages, liens,
pledges, security agreements, or other instruments relating to the
borrowing of money or the guarantee of any obligation for the borrowing
of money or the creation of any security interests;
(v) all collective bargaining or union agreements;
16
(vi) all patents, trademarks, trade names
copyrights;
(vii) all employment or consulting agreements;
(viii) all agreements, contracts or other commitments
that would limit the ability of the Company to compete in any line of
business or with any person or in any geographical area or otherwise to
conduct its business as presently conducted or to use or disclose any
information in its possession;
(ix) a list of all bank accounts and other
depositories including authorized signers for such accounts and
depositories:
(x) all pension, retirement, bonus, deferred
compensation, stock purchase, profit sharing or similar plans; and
(xi) all of any other agreements and instruments
which are binding on the Company or any of its property or pursuant to
which it derives any material benefit.
(b) All Contracts and all other leases, contracts, agreements,
instruments, arrangements and commitments to be conveyed to the Company under
this Agreement are valid, binding and enforceable in accordance with their
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement of
creditors' rights generally and by general principles of equity (whether applied
in a proceeding at law or in equity).
(c) Neither TeleHub, the Company, TTC nor any other Person is
in breach of, or default under, any Contract or any other lease, contract,
agreement, instruments, arrangements or commitment to be conveyed to the Company
under this Agreement and no event or action has occurred, is pending or
threatened, which, after the giving of notice, or the lapse of time, or
otherwise, could constitute or result in a breach by TeleHub, the Company, TTC
or any other Person, or a default by TeleHub, the Company, TTC or any other
Person under any Contract, any other lease, contract, agreement, instruments,
arrangements or commitment to be conveyed to the Company under this Agreement.
(d) TeleHub and TTC have delivered to Newbridge complete and
correct copies of the Contracts, all written leases, contracts, agreements,
instruments, arrangements and commitments together with amendments thereto and
accurate descriptions of all material terms of all oral agreements set forth on
Schedule 4.13.
4.14 Financial Statements and Related Matters. (a) The
Financial Statements and TTC Financial Statements are attached hereto as
Schedule 4.14. The Financial Statements were prepared in accordance with
generally accepted accounting principles consistently applied and present fairly
in all respects the consolidated financial position and results of operations
17
and cash flows of TeleHub and TTC at the dates, and for the periods indicated
therein. The TTC Financial Statements were prepared in accordance with generally
accepted accounting principles, consistently applied and presents fairly in all
respects the financial position and results of operations of TTC at the dates
and for the periods indicated therein.
(b) On the TeleHub Balance Sheet Date and the TTC Balance
Sheet Date, all debts, liabilities or obligations of TeleHub and TTC,
respectively, of any nature (whether accrued, absolute, contingent or otherwise)
which are of the type required by generally accepted accounting principles to be
reflected on balance sheets and the notes thereto, were fully disclosed,
reflected or reserved against in the TeleHub Balance Sheet or the notes thereto
and in the TTC Balance Sheet. Except for current liabilities or obligations
which have been incurred since the TeleHub Balance Sheet Date in the ordinary
course of business and which, individually and in the aggregate are not material
to the Business, since the TeleHub Balance Sheet Date, neither TeleHub nor TTC
has incurred any debt, liability or obligation of any nature (whether known or
unknown, accrued, absolute, contingent or otherwise and whether due or to become
due). Subsequent to the transfer of the Purchased Assets and the Company's
assumption of the Assumed Liabilities, the Company will not have any liabilities
or obligations of any nature, whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due, except as set forth in
Schedule 1.2.
(c) All of the accounts receivables which are reflected in the
TeleHub Balance Sheet and the TTC Balance Sheet were acquired by TeleHub or TTC,
respectively, in the ordinary and regular course of the conduct of the Business;
and all of the accounts receivables which have been or will be acquired by
TeleHub or TTC, respectively, since the TeleHub Balance Sheet Date and the TTC
Balance Sheet Date were or will be acquired in the ordinary and regular course
of the conduct of the Business. The accounts receivable owned by the Company or
conveyed to the Company on the Closing Date pursuant to this Agreement shall be
collectible in full by the Company within sixty (60) days after their respective
due dates.
(d) On the Closing Date after the payment of amounts owed to
TeleHub and its Affiliates pursuant to Section 1.4 hereof, the Company's Assumed
Liabilities will not exceed $2,500,000.
4.15 Changes Since the Balance Sheet Date. Since the TeleHub
Balance Sheet Date and the
TTC Balance Sheet Date:
(a) The Business has been conducted an carried on only in
the ordinary and regular course;
(b) Except as set forth in Schedule 4.15, neither TeleHub, the
Company nor TTC has (i) purchased, sold, leased, mortgaged, pledged or
otherwise acquired or disposed of, or subjected to lien, security
interest, change or other restrictions or limitations of any nature
whatsoever, any properties or assets of or for the Business, (ii)
cancelled or compromised any debt or claim, or waived or released any
18
right of substantial value or (iii) entered into any transaction,
contract or commitment other than in the ordinary course of business;
(c) Neither TeleHub, the Company nor TTC has received any
written notice of termination of any contract, lease or other agreement
or sustained or incurred any loss or damage (whether or not insured
against) on account of fire, flood, accident or other calamity which
has interfered with or affected or may interfere with or affect, the
operation of the Business;
(d) Except as set forth in Schedule 4.15, neither TeleHub, the
Company nor TTC has made, or become committed to make, any payment,
contribution or award under or into any bonus, pension, profit sharing,
deferred compensation or similar plan, program or trust covering an
employee of the Business;
(e) Except as set forth in Schedule 4.15, neither TeleHub, the
Company nor TTC has increased the rate of compensation of any employee
of the Business;
(f) There has been no material adverse change in or with
respect to the results of operations, financial condition, operations,
the business, prospects, rights, properties, assets or liabilities of
the Business or its relations with its employees, creditors, suppliers,
distributors, customers, or others having business relationships with
the Business and no state of facts exists which may reasonably be
expected to give rise to any such material adverse change (a "Material
Adverse Effect");
(g) Neither TeleHub, the Company nor TTC has changed any
accounting methods or practices (including, without limitation, any
change in depreciation or amortization policies or rates) used with
respect to the Business and the Purchased Assets;
(h) Except as set forth on Schedule 4.15, neither TeleHub, the
Company nor TTC has declared or paid any dividend, whether in cash or
properties, with respect to the Common Stock, or made any other
distribution of cash or property in respect to the Common Stock;
(i) Neither TeleHub, the Company nor TTC has incurred any
obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due, except current liabilities for trade or
business obligations incurred in connection with the purchase of goods
or services in the ordinary course of business consistent with prior
practice, none of which liabilities, individually or in the aggregate,
could have a Material Adverse Effect with respect to the Business;
19
(j) Neither TeleHub, the Company or TTC has transferred or
granted any rights under, or entered into any settlement regarding the
breach or infringement of, any Intellectual Property, or modified any
existing rights with respect thereto relating to the Business and the
Purchased Assets;
(k) Except as set forth in Section 4.11 hereof, neither
TeleHub, the Company or TTC has instituted, settled or agreed to settle
any litigation, action or proceeding before any court or governmental
body relating to the Business or the Purchased Assets other than in the
ordinary course of business consistent with past practices but not in
any case involving amounts in excess of $50,000;
(l) Each of TeleHub, the Company and TTC has paid its
liabilities and obligations incurred in the ordinary and regular course
of its business relating to the Business;
(m) Neither TeleHub, the Company nor TTC has discharged or
satisfied any lien other than those then required to be discharged or
satisfied, or paid any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, other than
current liabilities shown on the Financial Statements and current
liabilities incurred since the date thereof in the ordinary course of
business consistent with prior practice;
(n) The Company has not entered into any transaction, contract
or commitment other than this Agreement and the Other Agreements or
paid or agreed to pay any legal, accounting, brokerage, finder's fee,
Taxes or other expenses in connection with, or incurred any severance
pay obligations by reason of, this Agreement or the Other Agreements or
the transactions contemplated hereby or thereby; or
(o) Neither TeleHub, the Company nor TTC has agreed to do any
of the items set forth in this Section 4.15 relating to the Business.
4.16 Insurance. Schedule 4.16 sets forth and describes all
policies of insurance which are owned or held by TeleHub, the Company or TTC and
that relate to the Purchased Assets or the Business; and all of such policies of
insurance are in good standing, valid and subsisting, and in full force and
effect in accordance with their terms. Such insurance policies are adequate and
customary for the conduct of the Business. TeleHub and TTC have complied in all
material respects with the term of such policies.
4.17 Licenses and Permits. (a) Each of TeleHub and TTC (with
respect to the Business and the Purchased Assets) and the Company has complied
in all material respects with all Applicable Laws and neither TeleHub, the
Company nor TTC has received any notice alleging any such conflict, violation,
breach or default. For the purposes hereof, "Applicable Law" shall mean all
applicable provisions of all (i) constitutions, treaties, statutes, laws
(including the common law), rules, regulations, ordinances, codes or orders of
any Governmental Authority (ii) Governmental Approvals and (iii) orders,
20
decisions, injunctions, judgements, awards and decrees of or agreements with any
Governmental Authority.
(b) Schedule 4.17 sets forth a complete and correct list of all
Governmental Approvals and other licenses, franchises, permits and consents held
by the Company, TeleHub or TTC relating to the Business. Such Governmental
Approvals, licenses, franchises, permits and consents are valid and in effect on
the date hereof and neither TeleHub, the Company nor TTC has received any notice
that any appropriate party or governmental authority intends to cancel,
terminate or not renew any of the same. Each of TeleHub, the Company and TTC
holds all Governmental Approvals and all other licenses, permits necessary for
the conduct of the Business as heretofore conducted, including, without
limitation, any licenses, permits and Governmental Approvals required under
applicable Environmental Laws.
(c) To the knowledge of TeleHub, the Company and TTC, there are no
proposed laws, rules, regulations, ordinances, orders, judgements, decrees,
governmental takings, condemnations or other proceedings which would be
applicable to the business, operations or properties of the Business and which
might adversely affect the properties, assets, liabilities, operations or
prospects of the Business, either before or after the Closing Date.
4.18 Benefit Plans. (a) Schedule 4.18 contains a true and
complete list of each "employee benefit plan" (within the meaning of section
3(3) of the Employment Retirement Income Security Act of 1974, as amended
("ERISA")), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus, incentive,
deferred compensation and all other employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to ERISA
(including any funding mechanism therefor now in effect or required in the
future as a result of the transactions contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, legally binding or not
under which any employee or former employee of TeleHub, the Company or TTC or
any Controlled Group member has any present or future right to benefits or under
which TeleHub, the Company or TTC or any Controlled Group member has any present
or future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "Plans."
(b) With respect to each Plan, TeleHub has delivered to
Newbridge a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) thereof and, to the extent applicable; (i) any
related trust agreement, annuity contract or other funding instrument; (ii) the
most recent determination letter if applicable; (iii) any summary plan
description and other written communications (or a decision of any oral
communications) to employees concerning the extent of the benefits provided
under a Plan; and (iv) for the most recent plan year (I) Form 5500 and attached
schedules; (II) audited financial statements; (III) actuarial valuation reports;
and (IV) attorney's response to an auditor's request for information.
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(c) (i) Each Plan has been established and
administered in accordance with its terms, and in compliance with the
applicable provisions of ERISA, the Internal Revenue Code of 1986, as
amended ("Code") and other applicable laws, rules and regulations;
(ii) Each Plan which is intended to be qualified
within the meaning of Code Section 401(a) is so qualified and has
received a favorable determination letter as to its qualification and
nothing has occurred, whether by action or failure to act, that could
reasonably be expected to cause the loss of such qualification;
(iii) With respect to any Plan, no actions, suits or
claims (other than routine claims for benefits in the ordinary course)
are pending or, threatened, and, no facts or circumstances exist which
could give rise to any such actions, suits, or claims;
(iv) No event has occurred and no condition exists
that would subject TeleHub, the Company or TTC, or any member of its
"Controlled Group" (defined as any organization which is a member of a
controlled group of organizations within the meaning of Code Sections
414(b), (c), (m) or (o) that includes TeleHub, the Company or TTC
respectively), to any tax, fine, lien, penalty or other liability
imposed by ERISA, the Code or other applicable laws, rules and
regulations;
(v) For each Plan with respect to which a Form 5500
has been filed, no material change has occurred with respect to the
matters covered by the most recent Form since the date thereof; and
(vi) No "reportable event" (as such term is defined
in ERISA Section 4043), "prohibited transaction" (as such term is
defined in ERISA Section 406 and Code Section 4975) or "accumulated
funding deficiency" (as such term is defined in ERISA Section 302 and
Code Section 412 (whether or not waived)) has occurred with respect to
any Plan.
(d) With respect to each of the Plans that is not a
multiemployer plan within the meaning of section 4001(a)(3) of ERISA but is
subject to Title IV of ERISA, as of the Closing Date, the assets of each such
Plan are at least equal in value to the present value of the accrued benefits
(vested and unvested) of the participants in such Plan on a termination and
projected benefit obligation basis, based on the actuarial methods and
assumptions indicated in the most recent actuarial valuation reports.
(e) Neither TeleHub, the Company nor TTC, nor any Controlled
Group member, is, nor has ever been, a party to any multiemployer plan (within
the meaning of ERISA Section 4001(a)(3).
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(f) No Plan exists that could result in the payment to any
person or former employee of TeleHub, the Company or TTC of any money or other
property or accelerate or provide any other rights or benefits to any present or
former employee of TeleHub, the Company or TTC as a result of the transactions
contemplated by this Agreement or the Other Agreements, whether or not such
payment would constitute a parachute payment within the meaning of Code Section
280G.
(g) TeleHub, the Company, TTC, and each Controlled Group
member is in compliance with Section 4980B of the Code (so-called "COBRA") and
all other laws which require the continuation of benefit coverage upon the
happening of certain events, such as the termination of employment.
4.19 Tax Matters. All Tax Returns required to be filed by
either TeleHub, the Company or TTC or any of their Affiliates on or before the
Closing Date with respect to its activities, properties or employees have been
or shall be timely filed and all Taxes which are due or which may be claimed to
be due with respect to its activities, properties or employees have been or
shall be timely paid or accrued within the prescribed period, including any
extension thereof. All such Tax Returns are complete and accurate. There are no
liens due and payable. All Taxes required to be withheld by TeleHub, the Company
or TTC with respect to its activities, properties or employees have been
withheld and paid over to the appropriate Tax authority. Neither TeleHub, the
Company nor TTC is a party to and has not received any notice with respect to
any proposed or pending action by any governmental authority for assessment or
collection of Taxes with respect to its activities, properties or employees, nor
is TeleHub, the Company or TTC a party to any dispute or threatened dispute in
which action or dispute an adverse determination reasonably could be expected to
result in a foreclosure of the Purchased Assets and no such claim for assessment
or collection of Taxes has been made upon TeleHub, the Company or TTC. Neither
TeleHub, the Company nor TTC is a "foreign person" within the meaning of section
1445 of the Code, and, if requested, each of TeleHub, the Company and TTC will
furnish the other with an affidavit that satisfies the requirements of section
1445(b)(2) of the Code. None of the Purchased Assets are tax exempt use property
under section 168(h) of the Code. None of the Purchased Assets are property that
TeleHub, the Company or TTC are required to treat as being owned by any other
Person pursuant to the safe harbor lease provision of former section 168(f)(8)
of the Code. No portion of the cost of any of the Purchased Assets was financed
directly or indirectly from the proceeds of any tax exempt state or local
government obligation described in section 103 of the Code. Neither the Code nor
any other provision of law requires Newbridge to withhold any portion of the
investment described in Section 1.4. The Business, TeleHub, the Company and TTC
are not a party to any joint venture, partnership or other arrangement that
could be treated as a partnership for Tax purposes. Neither TeleHub, the Company
nor TTC has agreed to and is not required to make any adjustment by reason of a
change in accounting methods that affects any taxable year ending after the
Closing Date. There is no contract, agreement, plan or arrangement covering any
employee or former employee of TeleHub, the Company or TTC that, individually or
collectively, could give rise to the payment by the Company of any amount that
would not be deductible by reason of section 280G of the Code. For purposes of
23
this Agreement, (i) the term "Tax" or "Taxes" shall mean all United States
federal, state and local and all foreign income, profits, franchise, gross
receipts, payroll, sales, employment, use, property, excise, value added, net
worth, intangible, privilege, business, license, transfer, estimated, stamp,
alternative or add-on minimum, environmental, withholding and any other taxes,
duties, premiums, assessments or other similar governmental charges, together
with all interest, penalties and additions imposed with respect to such amounts,
(ii) the term "Tax Returns" shall mean any return (including any consolidated
combined or unitary return), declaration, estimated, installment, report, claim
for refund or information return or statement relating to Taxes which is
required to be filed with any governmental agency or other Tax authority,
including any schedule or attachment thereto, and including any amendment
thereof and (iii) the term "Tax authority" shall mean any authority having
jurisdiction over Taxes.
4.20 Books and Records. The financial books and records,
(including, without limitation, the minute books) of the Company or pertaining
to the Business are complete and correct in all material respects, have been
maintained in accordance with good business practice, and reflect the basis for
the financial position and results of operations of the Business set forth in
the Financial Statements.
4.21 Disclosure. This Agreement, the related Schedules and the
Registration Statement of TeleHub on Form S-4 declared effective by the SEC on
December 11, 1998 hereto contain no untrue statement of any material fact nor
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
4.22 Employee and Consulting Agreements and Arrangements.
Schedule 4.22 lists and describes (i) all employment or consulting agreements to
which TeleHub or TTC (with respect to the Business and the Purchased Assets) or
the Company is party; and (ii) all incentive compensation and bonus (with
respect to the Business and the Purchased Assets) (based on sales or otherwise)
arrangements, whether written or oral, by which TeleHub or TTC (with respect to
the Business and the Purchased Assets) or the Company is bound.
4.23 Absence of Undisclosed Liabilities. Neither TeleHub
(arising out of or relating to the Business or the Purchased Assets) nor TTC nor
the Company has any liabilities or obligations of any nature, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to become
due, except to the extent disclosed or reserved against in the Financial
Statements and the TTC Financial Statements (excluding the notes thereto) and
(b) liabilities and obligations that (i) were incurred after the TeleHub Balance
Sheet Date and the TTC Balance Sheet Date in the ordinary course of business
consistent with prior practice and (ii) individually, and in the aggregate are
not material to the Business and have not had or resulted in, and will not have
or result in, a material adverse effect on the Business, TeleHub, the Company or
TTC.
4.24 Operation of the Business. TeleHub, the Company and TTC
have conducted the Business only through TeleHub and TTC and not through any
24
other division or any direct or indirect subsidiary or affiliate of TeleHub. No
part of the Business is operated by TeleHub and TTC through any entity other
than TeleHub and TTC. The Company has not, and prior to the Closing Date will
not, engage in any business or activities whatsoever. Schedule 4.24 sets forth
all services, fees, costs, expenses, products, contracts, agreements, purchases
and/or sales by, between and/or among TTC, the Company, TeleHub and/or any of
their Affiliates.
4.25 Territorial Restrictions. Neither TeleHub, the Company
nor TTC is restricted by any agreement or understanding with any other Person
from carrying on the Business anywhere in the world. The Company is not
restricted in carrying on any business anywhere in the world.
4.26 Licensing Arrangements. Schedule 4.26 sets forth all
agreements, arrangements or laws (i) pursuant to which either TeleHub or TTC
(relating to or affecting the Business and the Purchased Assets) or the Company
has licensed Intellectual Property Assets to, or the use of Intellectual
Property Assets is otherwise permitted (through non-assertion, settlement or
similar agreements or otherwise) by, any other Person and (ii) pursuant to which
either TeleHub or TTC (relating to or affecting the Business and the Purchased
Assets) and the Company has had Intellectual Property licensed to it, or has
otherwise been permitted to use Intellectual Property (through non-assertion,
settlement or similar agreements or otherwise). All of the agreements or
arrangements set forth on Schedule 4.26 (x) are in full force and effect in
accordance with their terms and no default exists thereunder by either TeleHub,
the Company or TTC, or to the knowledge of either TeleHub, the Company or TTC
after due inquiry, by any other party thereto, (y) are free and clear of all
Liens, and (z) do not contain any change in control or other terms or conditions
that will become applicable or inapplicable as a result of the consummation of
the transactions contemplated by this Agreement or the Other Agreements. All of
such agreements set forth on Schedule 4.26 will be owned by the Company free and
clear of all mortgages, pledges, liens, claims, security interests and
encumbrances, or other charges or rights of any kind or nature at the time of
Closing.
4.27 Year 2000 and Euro Conformity. All technology owned,
developed, licensed or used in connection with the Business and the Purchased
Assets or by the Company (including, without limitation, information systems and
technology, commercial and noncommercial hardware and software, firmware,
mechanical or electrical products, embedded systems or any other
electro-mechanical or processor-based system, whether as part of a desktop
system, office system, building system or otherwise) (collectively, the
"Technology"):
(a) is subject to a Year 2000 compliance plan attached hereto
as Exhibit D, which means that the Technology will function correctly, in the
following manner, when dealing with dates/times and date/time related data prior
to, during and after the calendar year 2000:
(i) the Technology shall, when processing date/time
data from, into, in and between the 20th and 21st centuries, and the
years 1999 and 2000, and performing leap year calculations, accurately
25
process such date/time data (including, but not limited to accurately
inputting, outputting, extracting, displaying, calculating, comparing,
sorting and sequencing such data), and shall not, as a result of the
processing of such data (A) create any logical or mathematical error or
inconsistency, (B) malfunction or (C) cease to function; and
(ii) the Technology shall accurately process the
date/time data exchanged with the information technology systems of all
of the Company's customers and suppliers, provided that the information
technology systems of such customers and suppliers format the date/time
data which is to be exchanged with the Technology in the customary
format or such other format as may be agreed between the Company and
such customer or supplier; and
(b) is subject to a development plan attached hereto as
Exhibit D that is to enable the Technology to process and report any data
denominated in the Euro in the same manner as it processes and reports data
denominated in the national currency units ("NCUs") that comprise the currencies
of the Member States that adopt the Euro without any loss of functionality or
interoperability or degradation in performance or volume capacity, including,
without limitation, (i) operating without errors, problems, delays or the need
for any further modifications as a result of the introduction of the Euro in
whole or in part as a European currency or currency unit; (ii) continuing to
receive, recognize, use and process both NCUs and Euro units (and permit
conversions from NCUs to Euro units and vice-versa) without errors, problems,
delays, or the need for any further modifications.
(c) The telecommunications software known as the Virtual
Access Services Platform software and the Pathminder software, all as more
particularly described on Exhibit A to the Software License (the "Software") is
Year 2000 compliant, which means that the Software will function correctly, in
the following manner, when dealing with dates/times and date/time related data
prior to, during and after the calendar year 2000:
(i) the Software shall, when processing date/time
data from, into, in and between the 20th and 21st centuries, and the
years 1999 and 2000, and performing leap year calculations, accurately
process such date/time data (including, but not limited to accurately
inputting, outputting, extracting, displaying, calculating, comparing,
sorting and sequencing such data), and shall not, as a result of the
processing of such data (A) create any logical or mathematical error or
inconsistency, (B) malfunction or (C) cease to function; and
(ii) the Software shall accurately process the
date/time data exchanged with the information technology systems of all
of TTC's customers and suppliers, provided that the information
technology systems of such customers and suppliers format the date/time
data which is to be exchanged with the Technology in the customary
format or such other format as may be agreed between TTC and such
customer or supplier.
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4.28 Product Warranties. Except for warranties under
Applicable Law or as set forth in Schedule 4.28, (a) there are no warranties
express or implied, written or oral, with respect to the products of the
Business or other products of the Company and (b) there are no pending or
threatened claims with respect to any such warranty, and neither TeleHub, the
Company nor TTC has any liability with respect to any such warranty, whether
known or unknown, absolute, accrued, contingent or otherwise and whether due or
to become due.
4.29 No Guarantees None of the obligations or liabilities of
the Business or of TeleHub or TTC incurred in connection with the operation of
the Business or of the Company is guaranteed by or subject to a similar
contingent obligation of any other Person. Except as set forth on Schedule 4.29,
neither TeleHub, the Company nor TTC has guaranteed or become subject to a
similar contingent obligation in respect of the obligations or liabilities of
any other Person.
ARTICLE V
Warranties and Representations of Newbridge
As of the date hereof and as of the Closing Date, Newbridge
warrants and represents to TeleHub, TTC and to the Company (which warranties and
representations shall survive the Closing regardless of what examinations,
inspections, and other investigations TeleHub or TTC has heretofore made, or may
hereafter make, with respect to such warranties and representations) as follows:
5.1 Corporate Status. (a) Newbridge is a corporation duly
organized and validly existing under the laws of Canada. Schedule 5.1 sets forth
the states in which Newbridge is qualified to do business as a foreign
corporation and Newbridge is not required to be qualified to do business as a
foreign corporation in any other state or jurisdiction, except such states or
jurisdictions where the failure to be qualified would not have a material
adverse effect on the operations or the financial condition of Newbridge; and
(b) Newbridge has full corporate power and authority to carry
on its business and to own or lease and to operate its properties as and in the
places where such business is conducted and such properties are owned, leased or
operated.
5.2 Authority and Binding Obligation. (a) Newbridge has full
right and power to execute and deliver this Agreement and each of the Other
Agreements to which it is a party, to perform fully its obligations hereunder
and to consummate the transactions contemplated hereby;
(b) The executive and delivery by Newbridge of this Agreement
and the consummation of the transactions contemplated hereby, have been, and on
the Closing Date the execution and delivery by Newbridge of the Other Agreements
27
to which it is a party will have been, duly authorized by all requisite
corporate action of Newbridge.
(c) This Agreement is, and on the Closing Date each of the
Other Agreements to which Newbridge is a party will be, legal, valid and binding
obligations of Newbridge, enforceable against it in accordance with its
respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
enforcement of creditors' rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity).
5.3 No Violations. Neither the execution, delivery or
performance of this Agreement or the Other Agreements by Newbridge to which it
is a party, nor the consummation of the other transactions contemplated by this
Agreement, does or will, after the giving of notice, or the lapse of time, or
otherwise: (a) conflict with, result in a breach of, or constitute a default
under, the Certificate of Incorporation or Bylaws of Newbridge, or any federal,
foreign, state or local law, statute, ordinance, rule or regulation, or any
court or administrative order or process, or any material contract, agreement,
commitment or plan to which Newbridge is a party or by which Newbridge or any of
its rights, properties or assets is subject or is bound; or (b) result in the
creation of any mortgage, pledge, lien, claim, charge, encumbrance or other
adverse interest upon any material right, property or asset of Newbridge.
5.4 Brokers. Neither this Agreement nor any other transaction
contemplated by this Agreement was induced or procured through any person, firm,
corporation or other entity acting on behalf of, or representing, Newbridge or
any of its members as broker, finder, investment banker, financial advisor or in
any similar capacity.
5.5 Non-Disqualification. Neither Newbridge nor any of its
directors, officers, employees, predecessors, or agents who will participate in
the management of TTC could be disqualified under U.S. Securities and Exchange
Commission ("SEC") Rule 262, promulgated under the Securities Act.
5.6 Litigation. Other than as disclosed in Schedule 5.6
hereto, the contents of which schedule have been previously provided to TeleHub
and TTC, there are no actions, suits, proceedings or investigations, commenced,
contemplated or threatened against or affecting Newbridge, at law or in equity,
before any government department, commission, board, bureau, court, agency,
arbitrator or instrumentality, domestic or foreign, or any kind, which is
seeking to prevent Newbridge from purchasing the Common Stock as contemplated by
Section 1.3 hereof.
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ARTICLE VI
Representations and Warranties Regarding Unregistered Securities
6.1 Representations and Warranties. TeleHub and TTC, jointly
and severally represent and warrant to Newbridge on the Closing Date and
Newbridge hereby represents and warrants to TeleHub and TTC on the Closing Date
that:
(a) such person is acquiring the Common Stock (as hereinafter
defined) for investment and not with a view to distributing all or any part
thereof in any transactions which would constitute a "distribution" within the
meaning of the Securities Act of 1933, as amended (the "Securities Act");
(b) such person acknowledges that the Common Stock has not
been registered under the Securities Act or any state securities law, and the
Company is under no obligation to file a registration statement with the
Securities and Exchange Commission or any state securities commission with
respect to Common Stock;
(c) such person has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
its investment in Common Stock;
(d) such person is able to bear the complete loss of its or
his investment in Common Stock;
(e) such person or entity is an "accredited investor" (as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act);
(f) such person or entity understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to such
person or entity) promulgated by the Securities and Exchange Commission under
the Securities Act depends upon the satisfaction of various conditions, that
such exemption is currently not available and that, if applicable, Rule 144 may
in many instances afford the basis for sales only in limited amounts.
ARTICLE VII
Conditions to Closing
7.1 Conditions to Closing for Newbridge. The obligation of
Newbridge to purchase the shares of Common Stock at the Closing is subject to
the fulfillment to its satisfaction of each of the following conditions (unless
waived in writing by Newbridge):
(a) Termination. Neither TeleHub, TTC nor Newbridge shall have
terminated this Agreement pursuant to Section 8.1 hereof.
29
(b) Representations and Warranties Correct. The
representations and warranties made by TeleHub and TTC in Articles IV and VI
shall be true and correct in all material respects as of the Closing on the
Closing Date as if made on and as of the Closing Date.
(c) Performance. All covenants, agreements and conditions
contained in this Agreement and the Other Agreements (including, but not limited
to, the closing deliveries and actions set forth in Section 2.2(a) and (b)) to
be performed or complied with by TeleHub, the Company or TTC at or prior to the
Closing shall have been performed or complied with by the applicable party at or
prior to the Closing Date.
(d) Compliance Certificate. TeleHub, the Company and TTC shall
have delivered to Newbridge a certificate of TeleHub, the Company and TTC,
executed by the chief executive officer of TeleHub, the Company and TTC, dated
the date of the Closing, certifying to the fulfillment of the conditions
specified in Sections 7.1(b) and 7.1(c) of this Agreement.
(e) Legal Investment. As of the Closing, the purchase of
Common Stock by Newbridge shall be legally permitted by all laws and regulations
to which Newbridge, TeleHub, the Company and/or TTC is subject.
(f) No Adverse Change. Between the TeleHub Balance Sheet Date
and the TTC Balance Sheet Date and the Closing Date there shall have been no
materially adverse change in the results of operations, financial condition or
the operations, the business, prospects, rights, properties, assets or
liabilities of the Business.
(g) Pending Actions. No investigation, action, suit or
proceeding by any governmental or regulatory commission, agency, body or
authority, and no action, suit or proceeding by any other Person, shall be
pending on the Closing Date which challenges, or might result in a challenge to,
this Agreement, the Other Agreements or any transactions contemplated hereby, or
which claims, or might give rise to a claim for, damages in a material amount as
a result of the consummation of this Agreement or the Other Agreements.
(h) Consents and Approvals. All consents, approvals or
authorizations of any governmental authority or other Person required on the
part of TeleHub, the Company or TTC in connection with the performance by
TeleHub, the Company or TTC of their respective obligations under this
Agreement, the Other Agreements and the consummation of the transactions
contemplated hereby and thereby (including without limitation, consent of the
holders of TeleHub's $125,000,000 aggregate principal amount of 13-7/8% senior
discount notes due 2005 ("Senior Discount Notes"), to the exclusion of the
Company from all covenants, agreements and terms of the indenture and other
agreements pursuant to which the Senior Discount Notes shall have been issued,
any other consents, approvals or authorizations described in the Schedules,
shall have been duly obtained and shall be in full force and effect as of the
Closing Date and all of the foregoing shall in form and substance satisfactory
to Newbridge.
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(i) Other Documents and Proceedings. As of the Closing, all
corporate and other proceedings in connection with the transactions contemplated
hereby and by the Other Agreements and all documents and instruments executed
and delivered or delivered pursuant to this Agreement (including, without
limitation, the documents and instruments to be delivered pursuant to Section
2.2 and Section 3.1 hereof) and the Other Agreements or otherwise incident to
such transactions, shall be satisfactory in form and substance to Newbridge, and
Newbridge shall have received at or prior to the Closing all such documents as
Newbridge shall have requested.
(j) HSR Act Notification. In respect of the notifications of
TeleHub and Newbridge pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement
Act (the "HSR Act"), the applicable waiting period and any extensions thereof
shall have expired or been terminated.
(k) Director Approval The Board of Directors of Newbridge
shall have approved the transactions contemplated by this Agreement and the
Other Agreements.
(l) Investigation. Newbridge and Newbridge's agents shall have
been afforded access to the Company's, TeleHub's and TTC's books, properties and
records, officers, employees, agents, facilities and personnel, as provided in
Section 9.1, shall have completed their respective due diligence reviews of the
assets, properties, liabilities, business and books and records of TeleHub, the
Company and TTC, including without limitation, the development plan as to Year
2000 and Euro conformity mentioned in Section 4.27 hereof and as requested in
writing by Newbridge or its counsel and shall be satisfied with the results
thereof in Newbridge's reasonable discretion.
(m) Employment Agreements. Each of Xxxx X. Xxxxxx III, Xxxx
Xxxxx, Xxxx Xxxxxxx, Xxxxxxx Xxxx, Xxxxxxx Xxxxx and the other individuals
listed on Schedule 4.22 shall have (i) amended his employment agreement to
provide that the consummation of the transactions contemplated by this Agreement
and the Other Agreements shall not constitute a "Change of Control" thereunder
and (ii) agreed to the assignment of their employment agreements to the Company.
(n) Intellectual Property. TeleHub and/or TNS shall have
executed assignments in favor of the Company of all of the right, title and
interest of TeleHub and/or TNS in and to the Intellectual Property included in
the Purchased Assets.
7.2 Conditions to Closing for TeleHub and TTC.
The obligation of TeleHub or TTC to contribute the Purchased
Assets is subject to the fulfillment to its satisfaction of each of the
following conditions (unless waived in writing by TeleHub):
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(a) Termination. Neither TeleHub, TTC nor Newbridge shall have
terminated this Agreement pursuant to Section 8.1 hereof.
(b) Representations and Warranties Correct. The
representations and warranties made by Newbridge in Articles V and VI shall be
true and correct in all material respects as of the Closing on the Closing Date
as if made on and as of the Closing Date.
(c) Performance. All covenants, agreements and conditions
contained in this Agreement and the Other Agreements (including, but not
limited, to closing deliveries and actions set forth in Section 2.2(c)) to be
performed or complied with by Newbridge at or prior to the Closing shall have
been performed or complied with by Newbridge at or prior to the Closing Date.
(d) Compliance Certificate. Newbridge shall have delivered to
TeleHub a certificate of Newbridge, executed by an executive officer, dated the
date of the Closing Date, certifying to the fulfillment of the conditions
specified in Sections 7.2(b) and 7.2(c) of this Agreement.
(e) Sale of Common Stock. As of the Closing, the sale of
Common Stock to Newbridge in exchange for the consideration set forth in Section
1.3 hereof shall be legally permitted by all laws and regulations to which
TeleHub, the Company and TTC are subject.
(f) Pending Actions. No investigation, action, suit or
proceeding by any governmental or regulatory commission, agency, body or
authority, and no action, suit or proceeding by any other Person shall be
pending on the Closing Date which challenges or might result in a challenge to
this Agreement, the Other Agreements or any transaction contemplated hereby, or
which claims, or might give rise to a claim for, damages in a material amount as
a result of the consummation of the transactions contemplated hereby.
(g) Other Documents and Proceedings. As of the Closing, all
corporate and other proceedings in connection with the transactions contemplated
hereby and by the Other Agreements and all documents and instruments executed
and delivered or delivered pursuant to this Agreement (including, without
limitation, the documents and instruments to be delivered pursuant to Section
2.2 hereof) and the Other Agreements or otherwise incident to such transactions,
shall be satisfactory in form and substance to TeleHub and TTC, and TeleHub and
TTC shall have received at or prior to Closing all such documents as TeleHub or
TTC shall have requested.
(h) HSR Act Notification. In respect of the notifications of
TeleHub and Newbridge pursuant to the HSR Act, the applicable waiting period and
any extensions thereof shall have expired or been terminated.
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ARTICLE VIII
Termination
8.1 Termination. This Agreement may be terminated at any time
prior to the Closing as follows, and in no other manner:
(a) by mutual consent of TeleHub and Newbridge;
(b) by TeleHub or by Newbridge, if at or before the Closing
any material obligation set forth herein for the benefit of TeleHub or
Newbridge, respectively, are not fulfilled within ten (10) days after
notification in writing;
(c) by TeleHub or by Newbridge if the Closing of the
transactions contemplated by this Agreement shall not have occurred on or before
June 30, 1999, or such later date as may have been agreed upon in writing by the
parties hereto; provided, the party seeking to terminate is not in breach of or
default under this Agreement; or
(d) by TeleHub and TTC or by Newbridge if any representation
or warranty made herein for the benefit of Newbridge or TeleHub and TTC,
respectively, or in any certificate, schedule or documents furnished to
Newbridge or TeleHub and TTC, respectively, pursuant to this Agreement is untrue
in any material respect, or Newbridge or TeleHub and TTC, respectively, shall
have defaulted in any material respect in the performance of any material
obligation under this Agreement.
Any termination pursuant to this Article VIII shall not limit
or restrict the rights or other remedies of any party hereto.
ARTICLE IX
Pre-Closing Covenants
9.1 Due Diligence Review. The Company, TeleHub and TTC shall
at all reasonable times prior to the Closing make the properties, assets, books
and records of the Company, TeleHub and TTC available for examination,
inspection, investigation and review by Newbridge and its agents, and
representatives. No such examination, inspection, investigation or review by
Newbridge or its agents or representatives shall in any way affect, diminish or
terminate any of the representations, warranties or covenants of the Company,
TeleHub or TTC expressed in this Agreement.
9.2 Maintenance of Business and Notice of Changes. (a) Pending
the Closing, each of, the Company, TeleHub and TTC shall (i) use its best
efforts to preserve and protect the goodwill, business, rights, properties and
assets of the Business, to keep available to the Business and the Company the
services of its employees, and to preserve and protect the Company's, TeleHub's
and TTC's relationships with their employees, suppliers, distributors, customers
and others having business relationships with them; and (ii) consult with
Newbridge regarding all significant developments, transactions and proposals
relating to the Business.
33
(b) TeleHub and TTC shall give Newbridge prompt notice of any
and all material adverse changes which may occur between the date hereof and the
Closing Date with respect to the results of operations, financial condition,
operations, business, prospects, rights, properties, assets or liabilities of
the Business, or the relationship of TeleHub or TTC with its employees,
suppliers, distributors, customers or others relating to the Business.
9.3 Pending Closing. Pending the Closing, each of the Company,
TeleHub and TTC shall:
(a) conduct and carry on the Business only in the ordinary and
regular course consistent with past practices;
(b) not declare or pay any dividend, in cash or property, with
respect to the Company's outstanding capital stock or make any other
distributions with respect to the Company's outstanding capital stock;
(c) not purchase, sell, lease, mortgage, pledge or otherwise
acquire or dispose of any properties or assets of or in connection with the
Business, except for fixed assets purchased in the ordinary and regular course
of the Business and set forth in Schedule 9.3;
(d) collect TTC account receivables and pay TTC's current
liabilities in the ordinary and regular course of business consistent with past
practices;
(e) not increase or otherwise change the rate or nature of the
compensation (including wages, salaries, bonuses, and benefits under pension,
profit sharing, deferred compensation and similar plans or programs) which is
paid or payable to any employee of TTC, except (i) in the ordinary and regular
course of its business and in accordance with past practices consistently
applied or (ii) pursuant to existing plans or agreements disclosed in the
Schedules;
(f) keep the equipment and machinery used in the operation of
the Business in good working order and repair, replace any of it which shall be
worn out, lost, stolen, or destroyed;
(g) not enter into, or become obligated under, any lease,
contract, agreement or commitment with respect to the Business except for any
lease, contract, agreement or commitment (i) entered into in connection with a
sale of products or services to any customer of TeleHub or TTC entered into in
the ordinary course of business; (ii) having a term of one (1) year or less and
involving either a payment by or to TeleHub or TTC of less than $25,000 and
which is entered into in the ordinary and regular course of the Business; or
(iii) as set forth in Schedule 9.3.
34
(h) not change, amend, terminate or otherwise modify any
lease, contract, agreement or commitment to which TeleHub is a party and which
relates to the Business or the Purchased Assets
(i) not change, amend, terminate or otherwise modify any
lease, contract, agreement or commitment to which TeleHub (relating to the
Business or the Purchased Assets) or TTC is a party;
(j) maintain in full force and effect with respect to the
Business, policies of insurance of the same type, character and coverage as the
policies currently carried and described in the Schedules;
(k) Except as specifically set forth on Schedule 4.15, not
make, or commit to make, any payment, contribution or award under or into any
bonus, pension, profit sharing, deferred compensation or similar plan, program
or trust relating to the Business;
(l) refrain from doing any act or omitting to do any act, or
permitting any act or omission to act, which will cause a breach of any lease,
agreement, contract, commitment or obligation of TeleHub or TTC relating to the
Business;
(m) comply in all respects with all applicable laws applicable
to the Business;
(n) with respect to the Company, not carry on or engage in any
business or activities or enter into any contracts or agreements whatsoever; and
(o) not agree to do any of the items prohibited by Section
9.3.
9.4 Best Efforts. Each party will use all reasonable best
efforts to take all action and to do all things necessary, proper or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement and the Other Agreements (without payment of money, commencement of
litigation or the assumption of any material obligation). TeleHub represents
that its shareholders which own in excess of 50% of the capital stock of TeleHub
required, if necessary, to approve the transaction contemplated hereby and by
the Other Agreements have agreed to vote those shares in favor of such
transaction.
9.5 Publicity. The parties agree that no publicity, release or
announcement concerning the execution of this Agreement, any of the provisions
of this Agreement or the transactions contemplated hereby shall be issued
without the advance written approval of the form and content of the same by the
parties; provided, however, that no such consent shall be required when such
disclosure is required by applicable law.
9.6 Confidentiality. Newbridge confirms that it is bound by
the terms of the letter agreement, dated February 10, 1999 between Newbridge and
TeleHub and that it will keep and treat the evaluation material and all other
35
items of confidential information provided by TeleHub or TTC to Newbridge
hereunder in accordance with the terms of that confidentiality agreement.
9.7 Negotiations with Third Parties. From the date hereof
through the Closing or, if earlier, the termination of this Agreement pursuant
to Article VIII, neither TeleHub, the Company nor TTC will directly or
indirectly, through any director, employee, affiliate, representative, agent or
otherwise, (i) solicit, initiate, encourage or assist in the submission of any
inquiries, proposals or offers from any corporation, partnership, person, or
other entity or group (as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended) (other than Newbridge, their respective associates and
affiliates and officers, partners, members, employees and other authorized
representatives of Newbridge or such affiliates or associates) relating to any
acquisition or purchase of assets of, or any equity interest in TTC, the Company
or the Business or any form of recapitalization transactions, merger,
consolidation, business combination, spin-off, liquidation or similar
transaction involving, directly or indirectly, the Company or the Business
(each, an "Acquisition Proposal"), (ii) participate in any discussions or
negotiations regarding an Acquisition Proposal or furnish to any Person any
information concerning TTC, the Company or the Business or the transactions
contemplated hereby or (iii) enter into any agreement or otherwise cooperate in
any way with, or assist or participate in, facilitate or encourage, any effort
or attempt by any other person to make or enter into an Acquisition Proposal.
Should TeleHub, the Company or TTC receive any inquiry, proposal or offer to
enter into any transaction of the type referred to in clauses (i), (ii) or (iii)
above, TeleHub will promptly inform Newbridge of the terms thereof and the
identity of the party making such inquiry, proposal or offer.
9.8 HSR Filings. As promptly as practicable, Newbridge and
TeleHub shall (in cooperation with Newbridge) make all filings and submissions
under the HSR Act and any foreign competition, investment, foreign exchange, tax
or other foreign laws.
9.9 Formation of the Company. Within 10 days after the date
hereof, Newbridge and TeleHub shall agree on a name for the Company. TeleHub and
TTC shall form the Company as a Nevada corporation. The Company's Articles of
Incorporation shall be in substantially the form set forth in Exhibit G.
ARTICLE X
Indemnification
10.1 TeleHub Indemnification. TeleHub and TTC, jointly and
severally agree to defend, indemnify and hold the Company and Newbridge and
their respective successors and assigns, harmless from and against any loss,
damage or expense (including reasonable attorneys' fees), which may arise out of
or be in respect of (a) any breach or violation of this Agreement or the Other
Agreements by TeleHub, the Company or TTC; (b) any inaccuracy or
misrepresentation in or breach of any of the warranties, representations,
covenants or agreements made by TeleHub, the Company or TTC in this Agreement or
the Other Agreements, (c) any inaccuracy or misrepresentation in any Exhibit,
36
the Schedules, Financial Statements, or any other certificate, document,
instrument or affidavit furnished by TeleHub, the Company or TTC in accordance
with the provisions of this Agreement or the Other Agreements; (d) any and all
claims, debts, liabilities, taxes and other obligations of TeleHub, the Company
or TTC, whether accrued, absolute, contingent or otherwise, not expressly agreed
to be assumed or undertaken by the Company pursuant to Section 1.2(a) of this
Agreement; (e) any occurrence, act or omission of any stockholder, director,
officer, employee, consultant or agent of TeleHub, the Company or TTC, which
occurrence, act or omission occurred prior to the Closing; and (f) the Consent
Solicitation, waiver and amendment of the indenture and other agreements
relating to the Senior Discount Notes in connection with the transactions
contemplated by this Agreement (including without limitation the exclusion of
the Company from all covenants, agreements and terms of such indenture and other
agreements).
10.2 Newbridge Indemnification. Newbridge agrees to defend,
indemnify and hold the Company, TeleHub and TTC and their respective successors
and assigns harmless against any loss, damage or expense (including reasonable
attorneys' fees), which may arise out of or be in respect of (a) any breach or
violation of this Agreement by Newbridge, (b) any inaccuracy or
misrepresentation in or breach of any of the warranties, representations,
covenants or agreements made by Newbridge in this Agreement or in the Other
Agreements or in Schedules prepared by Newbridge to the Agreement, or (c) any
inaccuracy or misrepresentation in any certificate, document, instrument or
affidavit furnished by Newbridge in accordance with the provisions of this
Agreement.
10.3 Indemnification Notice. Promptly upon obtaining knowledge
of any claim, event, statement of facts or demand which has given rise to, or
could reasonably give rise to, a claim for indemnification hereunder, any party
seeking indemnification under this Article X (an "Indemnified Party") shall give
written notice of such claim or demand ("Notice of Claim") to the party from
which indemnification is sought (an "Indemnifying Party"), setting forth the
amount of the claim. The Indemnified Party shall furnish to the Indemnifying
Party, in reasonable detail, such information as it may have with respect to
such indemnification claim (including copies of any summons, complaint or other
pleading which may have been served on it and any written claim, demand,
invoice, billing or other document evidencing or asserting the same). No failure
or delay by the Indemnified Party in the performance of the foregoing shall
reduce or otherwise affect the obligation of any Indemnifying Party to indemnify
and hold the Indemnified Party harmless, except to the extent that such failure
or delay shall have materially and adversely affected the Indemnifying Party's
ability to defend against, settle or satisfy any liability, damage, loss, claim
or demand for which the Indemnified Party is entitled to indemnification
hereunder.
10.4 Indemnification Procedure. (a) If the claim or demand set
forth in the Notice of Claim given by the Indemnified Party pursuant to Section
10.3 of this Agreement is a claim or demand asserted by a third party, the
Indemnifying Party shall have fifteen (15) days after the Date of the Notice of
Claim (as that term is hereinafter defined) to notify the Indemnified Party in
37
writing of its election to defend such third party claim or demand on behalf of
the Indemnified Party. If the Indemnifying Party elects to defend such third
party claim or demand, the Indemnified Party shall make available to the
Indemnifying Party and its agents and representatives all records and other
materials which are reasonably required in the defense of such third party claim
or demand and shall otherwise cooperate with, and assist the Indemnifying Party
in the defense of, such third party claim or demand, and so long as the
Indemnifying Party is defending such third party claim or demand in good faith,
the Indemnified Party shall not pay, settle or compromise such third party claim
or demand. If the Indemnifying Party elects to defend such third party claim or
demand, the Indemnified Party shall have the right to participate in the defense
of such third party claim or demand, at its own expense. If the Indemnifying
Party does not elect to defend such third party claim or demand, or does not
defend such third party claim in good faith, the Indemnified Party shall have
the right, in addition to any other right or remedy it may have hereunder, at
the Indemnifying Party's expense, to defend such third party claim or demand;
provided, however, that (i) the Indemnified Party shall not have any obligation
to participate in the defense of, or defend, any such third party claim or
demand; and (ii) the Indemnified Party's defense of or its participation in the
defense of any such third party claim or demand shall not in any way diminish or
lessen the obligations of the Indemnifying Party under the agreements of
indemnification set forth in this Article X.
(b) Except for third party claims being defended in good
faith, the Indemnifying Party shall satisfy its obligations hereunder in cash
within thirty (30) days after the Date of Notice of Claim.
(c) The term "Date of the Notice of Claim" as used in this
Article X shall mean the date the Notice of Claim is deemed delivered pursuant
to Section 12.10 hereof.
10.5 Limitations on Indemnity. In the absence of fraud,
TeleHub's obligation to indemnify the Company and Newbridge and their respective
successors and assigns for any breach of, or any inaccuracy or misrepresentation
in, any representation and warranty set forth in Article IV hereof, shall not
exceed Ten Million Dollars ($10,000,000) in the aggregate. In the absence of
fraud, Newbridge's obligation to indemnify the Company, TTC and TeleHub and
their respective successors and assigns for any breach of, or any inaccuracy or
misrepresentation in, any representation and warranty set forth in Article V
hereof, shall not exceed Ten Million Dollars ($10,000,000) in the aggregate.
ARTICLE XI
Employee Matters
11.1 Hiring of Employees. Effective upon Closing, the Company
shall offer employment to all employees of or TeleHub listed on Schedule 11.1.
Such offers shall include wages or base salaries at least equivalent to those
38
paid by TTC as of the Closing Date, and employee benefits taken as a whole no
less favorable than the employee benefits offered by TTC as of the Closing Date,
to such employees.
11.2 Benefit Plans. Effective upon Closing, TeleHub shall
consent to the participation of the Company as a "participating employer" in all
Plans offered to employees of TeleHub. Each former employee of TeleHub who is
employed by the Company immediately after the Closing and who was a participant
in a Plan immediately before the Closing shall continue to participate in such
Plan after the Closing, subject to the terms of such Plan. The parties agree to
furnish all information and execute all documents to the extent necessary to
effect the terms of this Section 11.2.
ARTICLE XII
Miscellaneous
12.1 Costs and Expenses. TeleHub and TTC will pay their own
and the Company's respective expenses (including attorneys' fees, accountants'
fees and other professional fees and expenses) in connection with the
negotiation, preparation, execution and delivery of this Agreement and Other
Agreements and the consummation of the transactions contemplated by this
Agreement and Other Agreements; and Newbridge will pay its own costs and
expenses (including attorneys' fees, accountants' fees and other professional
fees and expenses) in connection with the negotiation, preparation, execution
and delivery of this Agreement and the Other Agreements and the consummation of
the transactions contemplated by this Agreement and Other Agreements.
12.2 Entire Agreement. The Schedules and the Exhibits
referenced in this Agreement are incorporated into this Agreement and together
with the Other Agreements contain the entire agreement between the parties
hereto with respect to the transactions contemplated hereunder, and supersede
all negotiations, representations, warranties, commitments, offers, contracts
and writings prior to the date hereof. No waiver and no modification or
amendment of any provision of this Agreement shall be effective unless
specifically made in writing and duly signed by the party to be bound thereby.
12.3 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute one and the same instrument.
12.4 Assignment, Successors and Assigns. The respective rights
and obligations of the parties hereto shall not be assignable without the prior
written consent of the other parties; provided, however, that Newbridge may
assign all or part of its rights under this Agreement and delegate all or part
of its obligations under this Agreement to one or more Affiliates identified to
TeleHub in a letter delivered simultaneously with the execution of this
Agreement, in which event all the rights and powers of Newbridge and remedies
available to it under this Agreement shall extend to and be enforceable by each
39
such assignee. In the event of any such assignment and delegation the term
"Newbridge" as used in this Agreement shall be deemed to refer to Newbridge and
each such assignee of Newbridge where reference is made to actions or to be
taken with respect to the transactions contemplated hereby, and shall be deemed
to include both Newbridge and each such assignee where appropriate. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their permitted successors and assigns.
12.5 Savings Clause. If any provision hereof shall be held
invalid or unenforceable by any court of competent jurisdiction or as a result
of future legislative action, such holding or action shall be strictly construed
and shall not affect the validity or effect of any other provision hereof.
12.6 Headings. The captions of the various Articles and
Sections of this Agreement have been inserted only for convenience of reference
and shall not be deemed to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
12.7 Governing Law. The validity, interpretation and effect of
this Agreement shall be governed exclusively by the laws of the State of
Illinois, one of the states of the United States, without giving effect to the
conflicts of law provisions thereof.
12.8 U.S. Dollars. All amounts expressed in this Agreement and
all payments required by this Agreement are in United States dollars.
12.9 Survival. All representations and warranties made by any
party in this Agreement shall be deemed made for the purpose of inducing the
other party to enter into this Agreement and shall survive the Closing for a
period of two (2) years subsequent to the time of Closing; provided, however,
the representations and warranties set forth in (i) Section 4.1, 4.2 and 4.4
shall survive indefinitely and (ii) Sections 4.19 shall survive for the
applicable statute of limitations period after giving effect to any tolling
thereof.
12.10 Notices. Any notices or communications permitted or
required hereunder shall be deemed sufficiently given if hand-delivered, or sent
by (i) registered or certified mail return receipt requested, (ii) telecopy or
other electronic transmission service (to the extent receipt is confirmed) or
(iii) by overnight courier, in each case to the parties at their respective
addresses and telecopy numbers set forth below, or to such other address of
which any party may notify the other party in writing.
To TeleHub, TTC or the Company
TeleHub Communications Corporation
0000 Xxx-Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
Telephone No: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Chief Executive Officer
40
With Copies To:
Haligman Xxxxxxx Xxxxx & Xxxxxxx, P.C.
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone No: (000) 000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
To Newbridge:
Newbridge Networks Corporation
000 Xxxxx Xxxx
Xxxxxx, Xxxxxxx X0X0X0
Telephone No.: (000) 000-0000
Fax No. (000) 000-0000
Attention: Xxxxx X. Xxxxxx
With Copy To:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone No: (000) 000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxx Xxxxx
12.11 No Third Party Beneficiary . This Agreement is being
entered into solely for the benefit of the parties hereto, and the parties do
not intend that any employee or any other person shall be a third-party
beneficiary of the covenants by any party contained in this Agreement.
12.12 Arbitration of Disputes. All disputes concerning this
Agreement will be submitted to binding arbitration in Chicago, Illinois, in
accordance with the Rules of the American Arbitration Association. The
Arbitrator's decisions must be delivered in writing accompanied by written
findings of fact and conclusions of law. All documents submitted to the
Arbitrator shall be treated as confidential. The prevailing party, as part of
its damages, shall be entitled to recover its legal fees and expenses incurred
in such action from the losing party. Any competent Illinois court may enter
judgment upon the Arbitrator's awards and the parties hereto irrevocably submit
to the jurisdiction of the Illinois courts.
41
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
TELEHUB COMMUNICATIONS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Title: President, CEO
---------------------------------
TELEHUB TECHNOLOGIES CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Title CEO
---------------------------------
NEWBRIDGE NETWORKS CORPORATION
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Title: E.V.P. Switching Products
---------------------------------
By: /s/ Xxxx X. Xxxx
---------------------------------
Title: President
---------------------------------
42
IN WITNESS WHEREOF, the undersigned has executed this
Agreement as of March 31, 1999
NEWCO CORPORATION [NAME TO BE CHANGED]
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Title CEO
---------------------------------
43
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE I
(BUSINESS)
TeleHub and TTC (collectively, "Company") have developed
first-to-market proprietary software, Virtual Access Services Platform
("VASP(TM)") that will enable telecommunications service providers to (i)
integrate the delivery of voice, video and data over a single platform; (ii)
seamlessly interconnect with the Public Switched Telephone Network ("PSTN");
(iii) provide real-time monitoring of telecommunications traffic; and (iv)
facilitate local exchange competition. The Company believes the VASP(TM)
platform addresses significant needs throughout the telecommunications industry
for improved systems and less reliance on legacy hardware. VASP(TM) creates
virtual switching capabilities, permits real-time network supervision and
facilitates the introduction of new service offerings. When fully deployed,
VASP(TM) will integrate voice, video and data on a single switched network and
enable the provisioning of bandwidth-on-demand services.
The Company believes the VASP(TM) platform addresses significant needs
throughout the telecommunications industry for improved systems and less
reliance on legacy hardware. While the legacy network evolved principally for
voice transmission, demand for data, video and advanced voice services has grown
rapidly over the past ten years. The legacy network, designed to handle the
lower bandwidth requirements of voice traffic, has inherent service and cost
inefficiencies when carrying data and video transmissions. Existing carriers
must develop new Operational Support Systems ("OSS") that are interoperable with
their legacy systems, not only to support initiatives like Local Number
Portability ("LNP") and the unbundling requirements of the Telecommunications
Act, but also to enable carriers to respond to increasing competitive
challenges. VASP(TM) addresses several shortcomings of legacy networks
including: (i)the inability to switch packet- and cell-based traffic into the
PSTN; (ii)the lack of real-time management, billing and monitoring capabilities;
(iii)the inflexibility of hardware-based network architectures; and (iv) the
lack of integrated OSS capabilities. VASP(TM) creates virtual switching
capabilities, permits real-time network supervision and facilitates the
introduction of new service offerings. When fully deployed, VASP(TM) will
integrate voice, video and data on a single switched network and enable the
provisioning of bandwidth-on-demand services The Company believes that its
VASP(TM) technology provides Incumbent Local Exchange Carriers ("ILECs"),
Competitive Local Exchange Carriers (CLECs), Inter-exchange Carriers ("IXCs")
and Original Equipment Manufacturers ("OEMs") with the ability to accelerate the
introduction of new products and services, to reduce costs and to enter into new
markets rapidly.
VASP(TM)'s applications are designed to administer, operate, control
and manage switching devices and network elements in the public carrier services
market. The Company believes that VASP(TM) provides telecommunications carriers
with superior billing, management and control capabilities. VASP(TM) has been
designed to be integrated with any carrier's customer care, billing,
provisioning and network management applications. VASP(TM) accumulates
information about network events for each phone call and generates a Transaction
Detail Record ("TDR"). The TDR can be converted into the standard industry call
detail record or into customized information that allows service providers to
xxxx innovatively (e.g., millisecond billing). In addition, service providers
can access their databases containing customer information and individual call
records in real-time to trouble shoot problems and identify customer calling
patterns. This information can be obtained by simple dial-up access from a
personal computer, as opposed to the current network process of downloading
information from each switch in the network, which can take more than a day to
complete. The carrier can use such information as a strategic advantage for
pricing and offering targeted product based upon real-time market feedback. The
Company's software can also be used as a network surveillance monitoring device.
The software has the ability to track phone calls from end-to-end and,
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
therefore, can locate the specific network element that may be causing a
problem. These advantages, coupled with the capability to provision circuits
electronically, will significantly reduce carriers' operating costs.
The Company expects that future releases of VASP(TM) will allow for
the replacement of the Class 4/tandem. switch and Class 5/end-office switch.
Based upon engineering studies, the Company believes that by using Asynchronous
Transfer Mode ("ATM") and VASP(TM) in place of traditional switch fabrics, the
reduction in tandem switching investment will lower the overall cost of
multi-city interconnections by 45% to 60%. The VASP(TM) open system architecture
is scalable from small sizes up to hundreds of phone calls per second, and its
underlying hardware platforms and control center designs are selected to meet
the operating objectives by accumulating no more than one hour of downtime
during each twenty year period of service (99.999% uptime service level
objective). VASP(TM) is also adaptable to other transmission mediums such as
Internet Protocol ("IP"), cable and wireless. VASP(TM) products and services
include the following:
Virtual Class 4/Tandem. The Company expects that its software,
combined with an ATM switching platform, will be capable of replacing the
traditional Class 4/tandem switch. This capability will enable data service
providers to offer voice products over their existing networks. VASPTM, running
on a Sun Microsystems server and controlling ATM switches, offers a 30% to 40%
savings over the cost of purchasing and installing traditional tandem switches.
In addition TeleHub's VASP(TM) -based software solution offers other benefits,
including cost effective scalability, customization to specific customer
requirements and applications, and faster introduction of new products.
Local Switch Bypass. TTC is engineering solutions to identify Internet
data and other long-holding time calls (e.g., voice mail) and route them
directly to called parties, thereby bypassing end-office and tandem switches.
The Company expects this technology to address carriers' growing problem of
congestion at end-office and tandem switches caused by Internet traffic. TTC's
solution allows carriers to manage existing traffic levels and flow without
purchasing additional switch capacity.
Virtual Class 5/End-Office Switching. TeleHub is in the process of
enhancing its VASP(TM) solution to duplicate the basic functionality of a Class
5/end-office switch. TeleHub expects its virtual Class 5 solution to provide
carriers with the capability to enter the local market with a voice product at a
fraction of the cost of buying and installing a conventional Class 5/end-office
switch. The same advantages offered by TeleHub's Class 4/tandem switch solution
apply here - reduced capital expenditures, customization and faster
time-to-market for new products. As an example, many CLECs have data Points of
Presence ("POPs") which currently utilize ATM switches. TeleHub expects its
solution to allow CLECs to carry and switch voice traffic using their existing
ATM networks without purchasing Class 5/end-office switches.
Virtual STP/SCP Signaling). Signal Transfer Points ("STPs") and Signal
Control Points ("SCPs") are key elements of the underlying Signaling System 7
("SS7") network. Messages, such as telephone number, calling card validation,
800 number routing, and calling name delivery are transmitted to STPs that route
the messages to the proper SCPs where call processing information is stored.
Embodied within the VASP(TM) design today are both SCP and STP functionality,
thereby allowing carriers to perform their own SS7 signaling, without purchasing
signaling services or expensive equipment. VASP(TM) contains translation and
routing instructions needed to deliver advanced network services and can be
further enhanced as new services or requirements are identiRed. The necessary
STP functions are also incorporated in the VASP(TM) design to handle the
signaling and management of "on-net" traffic. Conventional STP is deployed in
VASP(TM) as an interface to other carriers in the Public Switched Telephone
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
Network ("PSTN") and as a firewall to protect both parties' proprietary
information from compromise.
Mediated Access Services ("MAS'). The Telecommunications Act and
subsequent FCC mandates will require service inter-operability between the
various proprietary systems of existing telecommunications carriers. Local and
long distance carriers and their current software vendors are therefore
expending significant design and software development resources trying to create
the inter- operability solutions that can be achieved through VASP(TM). TeleHub
expects many carriers to select TeleHub as a service supplier and VASP(TM) as a
standard product to integrate the various operating overlays.
TeleHub expects its MAS capability to provide neutral "third-party"
access to service management system and Operational Support system ("OSS")
databases throughout the industry. Any service provider (virtual or
facilities-based) will be able to obtain the key call treatment information
necessary to process customer calls, while the proprietary information of the
database owner is protected from compromise. The first requirement for mediation
results from the FCC's mandated LNP that requires the Regional Xxxx Operating
Companies ("RBOCs") and GTE Corporation ("GTE") to permit their customers to
switch to another competing Local Exchange Carrier ("LEC") and still retain
their same telephone number. The Company believes its MAS will encourage the
LECs to offer unbundled local service elements to other carriers as required by
the Telecommunications Act. Management believes this is currently the greatest
hurdle for the RBOCs to overcome in achieving their long standing goal of entry
into the long distance business within their regions.
Switched Virtual Circuit ("SVC'). The Company is in the process of
developing an SVC product expected to provide carriers with a cheaper
alternative to permanent virtual circuit (i.e., point-to-point) products offered
today. The advantage of a SVC is that when the circuit is not utilized, the
capacity can be allocated for another use. A permanent virtual circuit must
allocate bandwidth to the user regardless of whether there is traffic flowing
over the circuit.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 1.2
(ASSUMED LIABILITIES)
As of 12/31/98, the TeleHub Technologies Corporation liabilities
included:
Balance
@ 12/31/98
----------
$ 17,104,999 - Intercompany payables to TeleHub(1)
1,373,660 - Accounts Payable
160,600 - Accrued Expenses
534,333 - Accrued Bonuses
203,446 - Accrued Vacation
46,375 - Deferred gain on sale/leaseback of equipment
-----------
$ 19,423,413 Total Liabilities(2)
============
Other obligations assumed by the transfer of contracts from TeleHub and TTC to
the Company as set forth in Schedule 4.13.
_____________________________________________________
1 All intercompany payables to TeleHub shall be satisfied at the Closing by the
payment to TeleHub of $22,000,000.
2 At Closing the total assumed liabilities shall not exceed $2,500,000.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.1
(JURISDICTIONS IN WHICH TELEHUB , TTC AND THE COMPANY
ARE QUALIFIED TO CONDUCT BUSINESS)
Company State Date Qualified
------- ----- --------------
TeleHub Nevada 10/26/96
TeleHub California 2/10/97
TeleHub Illinois 5/30/97
TeleHub New York 2/10/97
TCC Nevada 3/2/98
TCC California 7/29/98
TCC Illinois 7/27/98
COMPANY ? ?
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.3
(NO VIOLATIONS OF LAWS OR CONFLICTS WITH CONTRACT)
The performance of this Agreement and Other Agreements and the
consummation of the transfer of the Assets and the other transactions
contemplated by this Agreement or Other Agreements by TeleHub, TTC and the
Company require the consent of a majority of the holders of TeleHub's Aggregate
Principal Amount $125,000,000 13-7/8 Series B Senior Discount Notes due 2005.
Such consent will be obtained by Closing. No further consents will be required.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.4
(TELEHUB OWNERSHIP IN OTHER COMPANIES)
Name Owner Interest
---- ----- --------
TeleHub Network Services Corporation TeleHub 100%
TeleHub Leasing Corporation TeleHub 100%
Advanced Satellite Networks Pty, Limited TeleHub 49%
(Australian limited partnership)
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.8
(TITLE TO ASSETS)
As of 12/31/98, the TeleHub Technologies Corporations assets were as follows:
- Prepaid Expenses
- Deposits
- Fixed Assets
o Leasehold Improvements - See Attached Exhibit A
o Network Equipment - See Attached Exhibit A
o Computer Equipment - See Attached Exhibit A
o Furniture & Fixtures - See Attached Exhibit A
o Trade Show Fixtures - See Attached Exhibit A
o Computer Software - See Attached Exhibit A
Assets that are not carried on the books are equipment financed by
operating leases (see Schedule 4.13) and the intellectual property.
None of TeleHub, TTC nor the Company has good and marketable title to
Assets having a value of Five Hundred Thirty-Two Thousand One Hundred
Thirty-Eight Dollars ($532,138.00) shown in the attached Exhibit A to this
Schedule 4.8. These Assets are indicated on the attached Exhibit A by a "TTC"
signification next to the particular Asset's listing. The Assets shown in the
attached Exhibit A are pledged to Phoenix Leasing Incorporated ("Phoenix
Leasing") as security for payment under a lease of equipment with Phoenix
Leasing. These Assets will be transferred and delivered at Closing subject to
this security interest.
None of TeleHub, TTC nor the Company has good and marketable title to
Assets shown in the attached Exhibit B having a value of One Hundred Thirty-Two
Thousand Two Hundred Fifty-Two Dollars ($132,252.00). These Assets are pledged
to Siemens as security for payment under an equipment lease with Siemens. These
Assets will be transferred and delivered at Closing subject to this security
interest.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT A TO SCHEDULE 4.8
-------------------------
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT B TO SCHEDULE 4.8
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.9
(CONDITION OF ASSETS)
NO EXCEPTIONS.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.10
(REAL ESTATE)
1. Office Lease Agreement commencing July 1, 1996 between T.R.L.P., and Illinois
Joint Venture (the "Landlord") and TeleHub Network Services Corporation TNS (the
"Tenant") expiring June 30, 2003 for 16,398 square feet of building space
located at 0000 Xxx-Xxxxx Xxxxxxx, Xxxxxx, Xxxxxxxx 00000.
a. Lease Amendment, dated February 11, 1998, for 18,522 square feet
of building space located at 0000 Xxx-Xxxxx Xxxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000.
b. Lease Amendment, dated February 11, 1998, for 18,522 square feet
of building space located at 0000 Xxx-Xxxxx Xxxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000.
c. Lease Amendment, dated October 16, 1998, for 18,522 square feet of
building space located at 0000 Xxx-Xxxxx Xxxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000. This amendment extends lease expiration
date to September 30, 2006.
d. Lease Amendment, dated October 16, 1998, for 18,522 square feet of
building space located at 0000 Xxx-Xxxxx Xxxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000. This amendment extends lease expiration
date to September 30, 2006.
(See Exhibit A Attached)
2. Office Lease Agreement commencing January 15, 1999 between T.R.L.P., an
Illinois Partnership (the "Landlord") and TeleHub Communications Corporation TCC
(the "Tenant") expiring December 31, 2004 for 6,772 square feet of building
space located at 0000 Xxx-Xxxxx Xxxxxxx, Xxxxxx, Xxxxxxxx 00000.
(See Exhibit B Attached)
3. Office Lease Agreement commencing May 9, 1998 between Xxxxxx/Xxxxxx Family
Limited Partnership, a Missouri Limited Partnership (the "Landlord") and
Axis Solutions, LLC (the "Tenant")3 and expiring June 30, 1999., for space
located at 000 Xxxxxxxx, XXXX 000, Xxxxxx Xxxx, Xxxxxxxx 00000.
a. Lease Amendment, dated October 14, 1998. This Amendment, among
other things, extends the Lease expiration date to September 30,
2000.
(See Exhibit C Attached)
These leases will not be assigned to the Company at this time. The
Company currently occupies or will occupy all of the above space. TeleHub will
continue to pay the rent (under "allocated expenses" category) for all of this
space.
--------
3 TTC pays the rent on this Lease for TTC space in Kansas City, Missouri,
utilized by Xxxx X. Xxxxxx, TTC's President, and other TTC personnel at that
location.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT A TO SCHEDULE 4.10
--------------------------
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT B TO SCHEDULE 4.10
--------------------------
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT C TO SCHEDULE 4.10
--------------------------
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.12
(INTELLECTUAL PROPERTY)
FILED U.S. PATENT APLICATIONS
Name Patent
----------- Date Filed Application # Status
---------- ------------- ------
Secured Virtual Access Services Platform 12/9/97 08/987,343 Pending
Enhanced Virtual Access Services Platform 12/5/97 08/986,214 Pending
Narrow-to-Broadband Virtual Access Services Platform 12/5/97 08/986,216 Pending
FILED INTERNATIONAL PATENTS
TeleHub filed an application in the U.S. Receiving Office of the PTO on
December 2, 1998, claiming the December 5, 1997 priority date of the U.S.
patents filed for the Enhanced Virtual Access Services Platform and the
Narrow-to-Broadband Virtual Access Services Platform.
TeleHub filed two applications in the Taiwanese Patent Office on
December 4, 1998 claiming the December 5, 1997 priority date of the U.S. filed
patents regarding the Enhanced Virtual Access Platform and the
Narrow-to-Broadband Virtual Access Services Platform.
COPYRIGHTS
TTC is in the process of obtaining copyright protection for the
VASP(TM) software and related software and documentation.
TRADEMARKS & SERVICE MARKS
TeleHub has filed trademark/service xxxx applications for the name
"TeleHub" but has not filed any applications concerning VASP(TM). TeleHub's
rights to the VASP(TM) name arise under common law.
Attached as Exhibit A is a copy of TeleHub's Invention Assignment and
Confidentiality Covenant.
Pending or Threatened Litigation
None.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT A TO SCHEDULE 4.12
--------------------------
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.13
(CONTRACTS, ETC. RELATING TO ASSETS OR BUSINESS)
CONTRACTS, ETC. CURRENTLY IN THE NAME OF TTC:
(TO BE ASSIGNED TO THE COMPANY AT CLOSING)
All permits, licenses, franchises, authorizations, approvals,
public utility permits and other certificates of need or
authority - see Schedule 4.26
Insurance - see Schedule 4.16
All of any other agreements and instruments which are binding
on TTC or any of its property or pursuant to which it derives
any material benefit - see Schedule 4.26
Bank Account at The First National Bank of Chicago, 000 Xxxx
Xxxxx Xxxxxx, Xx. Xxxxxxxx, XX 00000, Account Name: TeleHub
Technologies Corporation, ABA # 000000000, Account #
1115001079242, Authorized Signers: Xxxxxx Xxxxxx, Xxxx Xxxxxx,
Xxxx Xxxxxx and Xxxxxxx Xxxxxxx
CONTRACTS ETC. CURRENTLY IN THE NAME OF TELEHUB OR TNS:
(TO BE ASSIGNED TO THE COMPANY AT CLOSING)
All patents, trademarks, trade names, copyrights - see
Schedule 4.12
All employment or consulting agreements - see Schedule 4.22
All software usage license agreements - see Schedule 4.26
Westel license agreement - see Schedule 4.26
Newbridge license agreement - see Schedule 4.26
CONTRACTS, ETC. CURRENTLY IN THE NAME OF TELEHUB OR TNS:
(NOT TO BE ASSIGNED TO THE COMPANY AT CLOSING)
Leases - see Schedule 4.10
Operating leases - See Exhibit A attached
All pension, retirement, bonus, deferred compensation, stock
purchase, profit sharing or similar plans - see Schedule 4.18
All agreements, contracts or other commitments that would
limit the ability of TTC to compete in any line of business or
with any person or in any geographical area or otherwise to
conduct its business as presently conducted ar to use or
disclose any information in its possession - see Schedule 4.25
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.14
(FINANCIAL STATEMENTS AND RELATED MATTERS)
The following TTC financial information as of 12/31/98 is attached:
1) Balance sheet - See Exhibit A attached
2) Profit and loss - See Exhibit B Attached
There are no other liabilities.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT A TO SCHEDULE 4.14
--------------------------
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT B TO SCHEDULE 4.14
--------------------------
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.15
(CHANGES SINCE THE BALANCE SHEET DATE)
Anticipated Changes
Anticipated balance sheet changes since 12/31/98 are as follows:
o Forecasted changes in the normal course of business as set forth in
Exhibit A attached
o Balance Sheet items to be transferred at time of move to a new
building as set forth in Exhibit B attached
Employee Compensation
TTC has committed to increase all employee salaries by three percent
(3%) effective April 1, 1999. This commitment was made February 1, 1999 and is
reflected in the forecasted changes in the balance sheet. In March or April 1999
TeleHub shall pay bonuses which were fully accrued on TTC's balance sheet as of
12/31/98 to employees assigned to TTC as set forth as "Accrued Bonuses" on
Schedule 1.2.
Share Distributions
On March 1, 1999, TTC distributed 16,705,667 shares of its common stock
to TeleHub as a share dividend under Nevada Corporation Law Section 78.215.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT A TO SCHEDULE 4.15
--------------------------
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT B TO SCHEDULE 4.15
--------------------------
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.16
(INSURANCE)
1. Insurance Summary for TNS and TCC, prepared by BGS Insurance Agency, Inc.
for the period from April 17, 1997 to April 17, 1998, covering property
located at Gurnee, IL, Chicago, IL, New York, NY, Los Angeles, CA, and
Walnut Creek, CA. The summary includes information regarding coverage of
personal property, property in open, property of others, electronic data
processing coverage, and commercial auto policies.
2. ERISA Compliance Bond for TNS 401(k) Plan (Bond # B279 10 000 for $50,000;
valid 6/19/97 to 6/19/98) issued by Reliance Insurance Co., together with
Reliance Fidelity binder (valid 6/19/97 to 8/19/97 or acceptance of bond).
3. Insurance Policy for 401(k) Plan (ERISA bond) (Crime Policy #1638794 for
$50,000; valid 6/19/98 until cancelled) issued by Hanover Insurance.
4. Insurance Binders (temporary coverage)
a. TCC D&O Insurance Binder from Xxxxxxxxx Xxxxx Insurance Services, Inc.
(agent) for policy from Lloyd's of London [Binder #13001; $2 million
policy limits; valid 6/6/97 - 7/6/97; $18,000 premium & exclusions for
Cam-Net, prior and pending litigation, IPO].
b. TCC D&O Insurance Binder from Xxxxxxxxx Xxxxx Insurance Services, Inc.
(agent) for policy from Admiral Insurance [Binder #13002; $3 million
policy limits; valid 6/6/97 - 7/6/97; $18,000 premium & exclusions for
nuclear energy and prior & pending litigation].
i. Cover letter, dated June 9, 1997, from Xxxxxxxxx & Xxxxx to TCC
confirming coverage from Lloyds of London and Admiral Insurance
Co. for Director and Officer Liability coverage totaling
$5,000,000.
ii. Disclaimer that D&O insurance policies which TCC applies to
purchase are issued by insurers not licensed in California.
iii. Letter, dated July 30, 1997, to add Xxxxx Xxxxx as an
additional named insured.
c. TCC D&O Insurance Binder from Xxxxxxxxx Xxxxx Insurance Services, Inc.
(agent) for policy from Reliance Insurance Company [Binder #15065;
$5 million policy limits; valid 3/5/98 - 4/5/98; $22,000 premium &
exclusions for prior and pending itigation].
5. TCC D&O Liability Insurance Policy from Lloyd's of London [Certificate #
DOM 3000502; $2 million policy limits; valid 6/6/97 to 6/6/98; $18,000
premium; specifically excluding Cam-Net, prior & pending litigation on
6/6/97, IPO and nuclear incidents]. a. Endorsement (1/30/98) adding Xxxxxx
Xxxxxxx as additional insured. b. Extension of policy [valid 3/5/98 to
3/5/99; $10,410 additional premium].
6 TCC D&O Liability Excess Insurance Policy from Admiral Insurance Co.
[Policy #1215517; $3 million policy limits; valid 6/6/97 to 6/6/98; $18,000
premium & exclusions for nuclear energy and prior & pending litigation on
6/6/97]. a. Extension of policy [valid 3/5/98 to 3/5/99; $11,107 additional
premium].
7. TCC D&O Insurance Policy from Xxxxxxxxx Xxxxx Insurance Services, Inc.
(agent) for policy from Reliance Insurance Company [Policy #NDA 0144895; $5
million policy limits; valid 3/5/98 - 3/5/99; $22,000 premium & exclusions
for prior and pending litigation].
8. Commercial Lines Coverage from Transcontinental Insurance Company
[Policy #B1 55892777; valid 4/17/96 to 4/17/97; $992 premium].
a. Commercial Property Coverage from Transcontinental Insurance Company
[$30,000 limits]
b. Commercial General Liability Coverage from Transcontinental Insurance
Company
[$1-2 million limit]
c. Commercial Inland Marine Coverage (computers) from Transcontinental
Insurance Company
[$50,000 limit]
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.16
(INSURANCE)
(Continued)
9. Renewal Declaration for Commercial Lines Coverage from Transcontinental
Insurance Company [Policy #C1 55892777; valid 4/17/98 to 4/17/99].
a. Commercial Property Coverage from Transcontinenta Insurance
Company [$1 million limit; $1,246
premium].
b. Commercial General Liability Coverage from Transcontinental
Insurance Company [$1-2 million limit; $17,961 premium].
c. Amendment to Commercial General Liability Coverage from
Transcontinental Insurance Company (5/18/98) [$20,470
additional premium].
d. Commercial Inland Marine Coverage (computers & equipment) from
Transcontinental Insurance Company [$50.5 million limit;
$50,050 premium].
10. Commercial General Umbrella from Continental Casualty Company
[Policy #B1 68117719; $3 million limit; valid 11/18/96 to 11/18/97; $990
premium].
11. Renewal Declaration for Commercial General Umbrella from Continental
Casualty Company [Policy #C1 72657831; $3 million limit; valid 4/17/98 to
4/17/99; $4,950 premium]. a. Amendment to Commercial General Umbrella from
Continental Casualty Company [Policy #B1 68117719; $5
million limit; valid 4/17/98 to 4/17/99; $873 additional premium].
12. Renewal Declaration for Commercial Inland Marine (Transportation Coverage)
from Transcontinental Insurance Company [Policy #C1 72623355; $1.5 million
limit; valid 7/01/98 to 7/01/99; $3,000 premium].
13. Renewal Declaration for Business Auto Coverage from Transcontinental
Insurance Company [Policy #C1 72657845; $1 million limit; valid 4/17/97 to
4/17/98; $990 premium].
14. Renewal Declaration for Business Auto Coverage from Transcontinental
Insurance Company [Policy #C1 72657845; $1 million limit; valid 4/17/98 to
4/17/99; $4,692 premium].
a. Endorsement change adding additional vehicle from Transcontinental
Insurance Company [Policy #C1 72657845; $1 million limit; valid 9/1/98
to 4/17/99; $881 additional premium].
b. Endorsement change adding additional vehicle from Transcontinental
Insurance Company [Policy #C1 72657845; $1 million limit; valid 10/9/98
to 4/17/99; $646 additional premium].
c. Endorsement change adding additional vehicle from Transcontinental
Insurance Company [Policy #C1 72657845; $1 million limit; valid
12/21/98 to 4/17/99; $176 additional premium].
15. Workers Compensation & Employers Liability Policy from Continental Casualty
Company [Policy #WCB 1 55892780; $500,000 limit; valid 4/17/96 to 4/17/97;
$572 premium].
16. Workers Compensation Policy from American Manufacturers Mutual Insurance
Company [Policy #3BH 040534-00; $1,000,000 limit; valid 12/31/98 to
12/31/99; $55,894 premium].
17. Employment Practices Liability Policy from Admiral Insurance Company
[Policy #4233744; $3,000,000 limit; valid 12/31/98 to 12/31/99; $17,640
premium].
ALL OF THE FOREGOING POLICIES COVER THE COMPANY, ASSETS ASSIGNED TO THE COMPANY
AND THE COMPANY'S EMPLOYEES.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.16
(INSURANCE)
(Continued)
18. Xxxxxxx XxXxxxxxxx
a. Policy Illustration Explanation for Key Man Term Life Insurance
Application for Xxxxxxx XxXxxxxxxx, dated May 18, 1998.
b. Life Insurance Policy for Xxxxxxx XxXxxxxxxx from Valley Forge
Insurance Co. (Policy # VICP006673; $5,000,000 policy limits; valid
6/8/98 to 6/8/2057; $4,376.5 annual premium).
19. Xxx Xxxxxxxx
a. Life Insurance Policy for Xxx Xxxxxxxx from Valley Forge Insurance Co.
(Policy # VICP006160; $1,000,000 policy limits; valid 2/9/98 to
2/9/2008; $1,564.20 initial annual premium).
b. Absolute Assignment of Xxxxxxxx Life Insurance Policy #VICP006160 to
TCC, dated March 16, 1998.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.17
(LICENSES AND PERMITS)
TeleHub is organized under the laws of Nevada and is in good standing
in that state. TeleHub holds appropriate certificates to conduct business as a
foreign corporation in New York, Illinois and California (See Schedule 4.1) and
is in good standing in those states.
TTC is organized under the laws of Nevada and is in good standing in
that state. TTC holds appropriate certificates to conduct business as a foreign
corporation in Illinois and California (See Schedule 4.1) and is in good
standing in those states.
These authorizations described above are valid and in effect and
neither TeleHub nor TTC has received any notice of their cancellation,
termination or non-renewal.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.18
(EMPLOYEE BENEFIT PLANS)
TeleHub Communications Corporation
Employee Benefit Plans
Medical Plan Options
Dental Plan
Vision Plan
Life Insurance
Accidental Death and Dismemberment
Voluntary Life Insurance Plan
Voluntary Long Term Disability Plan
Cafeteria Plan
Flexible Spending Account Plan
- Dependent Care Reimbursement Account
- Health Care Reimbursement Account
401 (k) Plan
Employee Assistance Plan
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.22
(EMPLOYEE AND CONSULTING AGREEMENTS AND ARRANGEMENTS)
TTC entered into an Employment Agreement with Xxxx X. Xxxxxx, III,
dated October 1, 1998.
TTC entered into an Employment Agreement with Xxxx Xxxxx, dated March
16, 1968.
TeleHub has assigned Employment Agreements with the following persons
to TTC as of March 2, 1999:
a. Xxxxxxx X. Xxxxxxxx - Employment Agreement between Xxxxxxx X.
Xxxxxxxx and TNS dated April 17, 1997
b. Xxxx Xxxxxxx - Employment Agreement between Xxxxxxx X. Xxxxxxx
and TNS dated March 28, 1997
c. Xxxx Xxxx - Employment Agreement between Xxxxxxx X. Xxxx and
TNS dated June 20, 1997
d. Xxxx Xxxxx - Employment Agreement between Xxxxxxx Xxxxx and
TNS dated January 13, 1997
e. Xxxxxxx X. XxXxxxxxxx - Employment Agreement between Xxxxxxx
X. XxXxxxxxxx and TeleHub dated January 2, 1997.
f. Xxxxx X. Xxxxxxx - Employment Agreement between Xxxxx X.
Xxxxxxx and TeleHub Network Services Corporation dated January
1, 1997.
All of these Employment Agreements include incentive compensation and
bonus arrangements.
Attached as Exhibit A is a list of employees currently assigned to TTC.
All of the Employment Agreements listed above and all of the employees
currently assigned to TTC shall be assigned to the Company at Closing.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT A TO SCHEDULE 4.22
--------------------------
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.23
(LIABILITIES NOT DISCLOSED IN FINANCIAL STATEMENTS OR BALANCE SHEET)
NONE
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.24
(INTERCOMPANY SERVICES)
The Company shall pay to TeleHub the actual cost of the following items
allocated to the Company:
office lease rent and amortization of lease prepayments;
equipment lease rent amortization of lease prepayments;
insurance premiums;
payroll;
telephone and other telecommunications;
utilities;
audit fees;
and legal fees.
The Company TTC shall pay to each of TeleHub and Newbridge a management
fee of $25,000 per month.
The Company shall pay to TeleHub a fee of $50,000 each month for the
following services that TeleHub shall perform or arrange to be performed for the
Company:
accounting and finance services, and;
human resource services.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.25
(TERRITORIAL RESTRICTIONS)
NONE
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
Schedule 4.26
(Licensing Arrangements)
TeleHub/Westel Joint Venture
TeleHub entered into a Software License Agreement as of July 1, 1998
with respect to the VASP(TM) (the ASoftware License Agreement@) with Citizen
Services Limited, a British Virgin Islands corporation (ACitizen@). TeleHub also
entered into a Pre-Organization Agreement with Citizen as of July 1, 1998 (the
APre-Organization Agreement@).
Pursuant to an option deed entered into on July 9, 1998 between Citizen
and Westel Group Limited, an Australian corporation (AWestel@) (the AOption
Deed@), Westel exercised its option and settlement of the Option Deed took place
on January 13, 1999. At such settlement, the Software License Agreement and the
Pre-Organization Agreement were assigned by Citizen to Westel under Assignment
dated January 13, 1999 (the AAssignment@).
The Pre-Organization Agreement sets out the structure of a joint
venture between TeleHub and Westel. A new company currently being incorporated
in Western Australia under the name Advanced Satellite Networks Pty Ltd (AASN@)
is being established to exploit the VASP(TM) in Australia and other selected
markets world wide. ASN will be developed as a wholesale international
telecommunications service provider, specializing in data and voice services and
also offering integrated voice/data/video services. It will offer these services
primarily to other carriers, government agencies, and medium to large business
markets in Australia and in selected overseas destinations.
TeleHub and Westel will enter into an Operating Agreement to establish
ASN, which Operating Agreement shall materially incorporate all terms set forth
in the Pre-Organization Agreement. Under the Operating Agreement, TeleHub and
Westel will have the following ownership structure and make the following
contributions:
Member Shares Voting Power Initial Capital Contribution
--------------------------------------------------------------------------------
TeleHub 49 49% VASP(TM)Software License Agreement
Westel 51 51% Agreement to provide US $5,000,000 of funding
TeleHub, under the Software License Agreement, granted a non-exclusive,
non-royalty-bearing, nontransferable worldwide license to use the VASP(TM) and
Documentation only on Westel'
s System, as such capitalized terms are defined
therein, provided that in the event the System incorporates land-based cable
connectivity on an as-needed basis, at least 90% of the System shall be
satellite-based.
Under the Software License Agreement, TeleHub is obligated to deliver
the VASP(TM) to Westel for testing on a date to be mutually agreed on by the
parties. The testing period is 30 days following receipt of VASP(TM). Within 45
days of Westel's acceptance of the VASP(TM), TeleHub must deliver a complete
copy of the then-current version of the VASP(TM) and all Documentation, as such
term is defined in the Software License Agreement.
TeleHub's duties and obligations under the Software License Agreement
include assistance in installation and testing, error correction, maintenance
and support of the VASP(TM).
TeleHub is not obligated to pay any royalties to Westel under the
Software License Agreement.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
TeleHub will assign software licensed and rights under Pre-Organization
and Operating Agreement to the Company.
TTC/Siemens Information and Communications Network, Inc.
TTC granted Siemens Information and Communications Network, Inc.
("Siemens") an Original Equipment Manufacturer ("OEM") (MBI) Software License on
December 10, 1998, under which TTC agreed to license to Siemens a VASP(TM) for
laboratory use ("Lab System") in North America.
TeleHub/Newbridge
TeleHub granted Newbridge Networks Corporation a license dated December
24, 1997 to use VASP(TM) on an experimental basis in connection with the sale of
Newbridge Network Corporation equipment to TeleHub Network Services Corporation,
a wholly owned subsidiary of TeleHub.
Software Usage Licenses
1. [DGM&S] Omni Soft Platform End User License, dated September 12, 1996,
between TTC and Dale, Gesek, XxXxxxxxxx & Xxxxxxxx, Inc.
2. [Sun] License & Password Distribution Center Letter, dated July 8,
1996, by Sun Microsystems to Xxx Xxxx (TeleHub employee/consultant) for
SunSoft VWS C++.
3. [Oracle] Business Alliance Program Agreement, dated January 3, 1997,
between TCC and Oracle Corporation.
a. Runtime Sublicense Addendum, dated January 3, 1997, between TCC
and Oracle.
b. Full Use and Deployment Sublicense Addendum, dated January 3,
between TCC and Oracle Corporation. 1998.
3. [Sterling Commerce] Software License Agreement, executed by TCC on
April 30, 1997.
4. [Trillium Digital System] Software License Agreement, executed by TNS
on October 15, 1997. An Amendment to the Software License Agreement
entered into as of October 15, 1997 is being reviewed by the parties.
This amendment will amend the Licensee from TNS to TTC. In addition,
please note the following amendments to the Trillium license agreement:
a. First amendment, dated as of November 25, 1997, to obtain a
sub-license for an additional Trillium product in exchange for
the return or destruction of another Trillium product;
b. Second amendment, dated as of December 31, 1997 to obtain a
sub-license for an additional Trillium product; and
c. Third amendment, dated as of March 11, 1998 to add sub-licenses
for additional Trillium products.
6. [SNMP Research International] Software License Agreement, executed by
TNS on October 23, 1997.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
7. [Adax] End- User Agreement with Limited Distribution Rights, executed
by TNS, effective as of November 21, 1997.
8. [Platinum Technology] Master Product License Agreement, executed TNS,
dated December 31, 1997.
9. [Talarian Corporation] Nonexclusive Software OEM Agreement dated as of
January 1, 1999. Parties (TTC and Talarian) are reviewing final,
execution copy and expect to sign by end of next week.
10. [Xxxxxxxx Systems] Source Code License agreement. Xxx Xxxxxxxx is
reviewing final, execution copy. As soon as Xx. Xxxxxxxx provides
comments, we will move toward execution.
11. [Rogue Wave Software] Single User License on Shrink Wrap basis -- no
signatures required
12. [Seagate Software] License Agreement and Limited Warranty on Shrink
Wrap basis -- no signatures required
Any Software Usage License Agreements executed by TNS will be amended by
Closing to assign the License to the Company.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.28
(PRODUCT WARRANTIES)
TTC extended a Warranty to Siemens Information and Communications
Networks, Inc. ("Siemens") in an OEM Software License Agreement, effective
December 14, 1998. The warranty period is 180 days from installation for Source
Code and 180 days from delivery for Error Correction.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 4.29
(GUARANTEES)
Continuing Guaranty, dated July 8, 1997, by TeleHub in favor of Phoenix Leasing
Incorporated at the request of TNS.
Guaranty of Equipment Lease, dated November 11, 1996, by TeleHub in favor of
DSCF.
Guaranty, executed December 11, 1997, by TeleHub to Newbridge Leasing.
Guaranty, executed December 1, 1998 by TeleHub to FINOVA.
Personal Guaranty by Xx. XxXxxxxxxx of the Lease Agreement, May 28, 1996,
between Access Point Communications Corp. ("APCC", Xx. XxXxxxxxxx is a principal
of APCC) and AT&T Capital Leasing Services, Inc. for Micron Electronics
Mini-Tower Desktop computer system
Personal Guaranty by Xx. XxXxxxxxxx of the Equipment Lease Agreement, dated June
20, 1996, between TNS and AT&T Capital Leasing Services, Inc. for computer
systems
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 5.1
(JURISDICTIONS IN WHICH NEWBRIDGE IS QUALIFIED TO CONDUCT BUSINESS)
Newbridge is a Canadian corporation and is not qualified to business as a
foreign corporation in any of the 00 Xxxxxx Xxxxxx.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 5.6
(NEWBRIDGE LITIGATION)
NONE
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 9.3
(FIXED ASSETS TO BE PURCHASED
JANUARY 1, 1999 - MARCH 31, 1999
FOR USE BY THE COMPANY)
TTC will purchase various computer equipment systems as fixed assets between
January 1, 1999 and March 31, 1999 to be transferred to the Company; the
liability for such purchases will be included in the $2,500,000 assumed
liabilities limit set forth in Schedule 1.2
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
SCHEDULE 11.1
(EMPLOYEES TO BE HIRED)
The list of employees assigned to the Company is attached as Exhibit A.
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT A TO SCHEDULE 11.1
--------------------------
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT A
(FORM OF STOCKHOLDERS AGREEMENT)
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT B
(FORM OF OPTION AGREEMENT)
ORGANIZATIONAL AGREEMENT
Schedules & Exhibits
EXHIBIT C
(FORM OF SOFTWARE LICENSE)
EXHIBIT D
(FORM OF DEVELOPMENT PLAN)
