STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of March 10, 1997 (this
"Agreement") by and between Xx. Xxxxxx Xxxxxxxx (the "Seller") and each of the
several Purchasers whose names appear on the signature pages hereof (each a
"Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller is the owner beneficially and of record of
19,860,000 shares of common stock, par value $.01 per share (the "Common Stock")
of Tel-Save Holdings, Inc., a Delaware corporation (the "Company");
WHEREAS, the Seller desires to (i) sell, in the aggregate,
3,911,000 shares of Common Stock (the "Firm Shares") to the several Purchasers
in accordance with their Purchaser Commitments (as defined herein), and (ii) to
place an additional 1,564,400 of shares of Common Stock in escrow (the "Escrow
Shares") for the benefit of the several Purchasers, in proportion to their
Purchase Commitments, for distribution to the several Purchasers under the terms
of this Agreement and the Escrow Agreement dated the date hereof among the
Company and the Escrow Agent for the benefit of the several Purchasers (in the
form attached hereto as Annex A, the "Escrow Agreement") (the Firm Shares and
the Escrow Shares, together, are referred to herein as the "Shares"); and
WHEREAS, the Company and the several Purchasers have,
simultaneously herewith, entered into a Registration Rights Agreement, dated the
date hereof (in the form attached hereto as Annex B, the "Registration Rights
Agreement"), granting to the Purchaser certain registration rights in connection
with the Shares.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows:
1. Purchase and Sale of the Firm Shares; Deposit of Escrow Shares. At
the Closing hereinafter provided for and subject to all of the terms and
conditions hereinafter contained, the Seller agrees (a) to sell to each of the
several Purchasers the Firm Shares in the amount set forth next to the name of
such Purchasers
under the column headed "Purchase Commitment" on the signature pages hereto and
the Purchaser agrees to purchase such Firm Shares, and (b) the Seller agrees to
deposit with the Escrow Agent, in accordance with the Escrow Agreement, the
Escrow Shares.
2. Purchase Price. At the Closing, each of the several Purchasers shall
pay to the Seller an amount equal to the product of $16.50 times the number of
Firm Shares representing such Purchaser's Purchase Commitment.
3. Representations and Warranties and Covenants of the Seller
(a) The Seller represents and warrants to the Purchasers:
(i) At the Closing, the Seller shall have the unrestricted
right to sell, assign and deliver the Firm Shares to the Purchasers and
the Escrow Shares to the Escrow Agent and to deliver title to such
Shares free and clear of any liens or encumbrances other than
restrictions on the Escrow Shares arising hereunder and under the
Escrow Agreement.
(ii) The Seller has capacity, power and authority to enter
into this Agreement and consummate the transactions contemplated
hereby.
(iii) The Seller has duly and validly authorized, executed and
delivered this Agreement and the Escrow Agreement and this Agreement
and the Escrow Agreement constitute a valid and binding obligation of
the Seller.
(iv) The Seller has not directly or indirectly sold or
disposed of, or attempted or offered to sell or dispose of, the Shares
or similar securities to, or solicited offers to buy any Shares from,
or otherwise approached or negotiated with respect to the Shares or
similar securities with, any person that might be considered to be an
offeree in connection with the sale of the Shares or similar
securities, except the Purchasers and not more than ten (10) other
institutional investors, each of which was offered all or a portion of
the Shares as a private sale for investment. The Shares were not
offered or sold by any form of general solicitation or general
advertising, including, but not limited to, (a) any
-2-
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or
radio or (b) any seminar or meeting whose attendees had been invited
by any general solicitation or general advertising.
(v) The Seller is not prompted to sell the Shares due to its
knowledge of any material nonpublic information concerning or affecting
the Company, its business relationships, markets or personnel.
(vi) The Seller has made available to the Purchaser copies of
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995 and all other filings by Company under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and the filings by Company
under the Securities Act of 1933, as amended (the "Securities Act"), in
each case since January 1, 1996 and as filed with the Securities and
Exchange Commission (the "Commission"). The Company has filed all
reports, registration statements and other documents (the "SEC
Reports") required to be filed under the Exchange Act and the rules and
regulations thereunder, and the SEC Reports complied, in all material
respects, with the requirements of the Exchange Act. As of their
respective dates, the SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
Seller has made available to each Purchaser a reasonable opportunity to
discuss with the Seller any questions such Purchaser may have in
connection with such Purchaser's acquisition of the Shares or with
respect to the Company. Since December 31, 1996, there has not been any
change in the business, property, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, that
would have a material adverse effect on the business of the Company.
(vii) Based on the Purchaser's representations and warranties,
the offer, issue and sale of the Firm Shares are exempt from
registration under the Securities Act.
-3-
(viii) Neither the execution and delivery by the Seller, nor the
consummation by the Seller of the transactions contemplated hereby in accordance
with the terms hereof will violate, or conflict with, or result in a breach of
any provision of, or constitute a default under, any material agreement to which
the Seller is a party.
(b) Except for the disposition of up to 1,564,400 shares of
Common Stock by the Seller to a charitable foundation and the subsequent
disposition of such shares by such foundation, the Seller shall not sell,
assign, transfer or otherwise dispose of any additional shares of Common Stock
for a period of twelve (12) months from the date hereof (the "Lock-up Period");
provided, however, that if the current market price of the Common Stock shall
increase by an amount greater than 20% from the Initial Price (as defined in
Section 8(d)) for a period of twenty (20) consecutive trading days, the Lock-up
Period shall be reduced to ninety (90) days. Notwithstanding the previous
sentence, the Seller shall be released from the restrictions of this paragraph
(b) in the event that a third party makes an offer to purchase a majority of the
outstanding shares of Common Stock of the Company.
4. Representations and Warranties and Covenants of the Purchaser
(a) Each of the several Purchasers represents and covenants
and warrants, with respect to itself:
(i) Such Purchaser has full power and authority to enter into
this Agreement and consummate the transactions contemplated hereby.
(ii) Such Purchaser has duly and validly authorized, executed
and delivered this Agreement and this Agreement constitutes a valid and
binding obligation of such Purchaser.
(iii) The transactions contemplated under this Agreement do
not require any filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of
1976, as amended.
(iv) Such Purchaser is an "accredited investor" as such term
is defined under Rule 501 of Regulation D of the Securities Act of
1933, as amended, and such Purchaser has such knowledge and experience
in financial and business matters that
-4-
it is capable of evaluating the merits and risks of its purchase of
the Shares.
(v) Such Purchaser is acquiring the Shares to be purchased or
received by it hereunder for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof.
(b) Each of the several Purchasers agrees with the Seller that
from date of the Closing to the Escrow Settlement Date (as defined herein), that
such Purchaser shall not engage in any short selling activities with respect to
the Company's Common Stock.
5. Conditions to Obligations of the Seller. The obligation of the
Seller to deliver to each of the several Purchasers the certificate or
certificates representing the number of Firm Shares reflected in such
Purchaser's Purchase Commitment shall be subject to the fulfillment of the
following conditions by such Purchaser:
(a) The representations and warranties of such Purchaser
contained in this Agreement shall be true and correct as if made at and as of
the time of the Closing and all of the covenants and agreements under this
Agreement to be complied with and performed by such Purchaser on or before the
Closing shall have been complied with and performed.
(b) No order shall have been issued by any court or regulatory
body enjoining or delaying the consummation of the transactions contemplated
hereby.
6. Conditions to Obligations of the Purchaser. The obligations of each
of the several Purchasers under this Agreement shall be subject to the
fulfillment of the following conditions:
(a) All of the representations and warranties of the Seller
contained in this Agreement shall be true and correct as if made at and as of
the time of the Closing and all of the covenants and agreements under this
Agreement to be complied with and performed by the Seller on or before the
Closing shall have been complied with and performed.
(b) No order shall have been issued by any court or regulatory
body enjoining or delaying the consummation of the transactions contemplated
hereby.
-5-
(c) Simultaneously with the execution of this Agreement, the
Seller shall have executed and delivered the Escrow Agreement and the Company
shall have executed and delivered the Registration Rights Agreement, each
substantially in the form attached hereto as Annex A and B, respectively.
7. The Closing
(a) The Closing shall take place at 9:00 a.m. local time on
March 10, 1997 at the offices of Xxxxxx & Xxxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx,
X.X. 00000, or at such other time and place as the Seller and the Purchasers may
mutually agree.
(b) At the Closing, the Seller shall deliver to each Purchaser
one or more certificates in transferable form representing that number of Firm
Shares equal to such Purchaser's Purchase Commitment; each such certificate
shall be duly endorsed in blank with signatures guaranteed or accompanied by
stock powers duly endorsed in blank with signatures guaranteed and with all
necessary documentary stamps duly affixed and cancelled. Each Purchaser shall
deliver to the Seller a bank cashier's or certified check, or shall cause the
wire transfer of funds to an account or accounts designated by the Seller, in
the amount determined with respect to such Purchaser in accordance with Section
2.
(c) At the Closing, the Seller shall deliver to the Escrow
Agent a certificate or certificates representing an aggregate of 1,564,400
shares of Common Stock, for deposit with the Escrow Agent pursuant to the terms
of the Escrow Agreement. Each such certificate shall be endorsed in blank with
signatures guaranteed or accompanied by stock powers duly endorsed in blank with
signatures guaranteed and with all necessary documentary stamps duly affixed and
cancelled. The Seller shall be deemed to be the beneficial owner of the Escrow
Shares until the Determination Date, as of which date the beneficial ownership
of the Shares shall be determined by the Escrow Agent in accordance with the
provisions of Section 8 hereof.
8. Purchaser's Rights with Respect to Escrow Shares
(a) On the third business day after the Determination Date
(the "Escrow Settlement Date"), each of the several Purchasers shall be entitled
to receive from
-6-
the Escrow Agent, the number of Escrow Shares (which shall mean the Escrow
Shares and any Registrable Securities as defined in the Registration Rights
Agreement issued with respect thereto) calculated as provided below:
(i) If the percentage decrease, if any, in the Determination
Price from the Initial Price is less than forty percent (40%), then
each Purchaser shall receive that number of Escrowed Shares equal to
the product of (x) the number of Firm Shares purchased by such
Purchaser pursuant to Section 1 and (y) the percentage difference
between the Determination Price and the Initial Price. For example, if
the Initial Price is $16.50 and the Determination Price is $14.50 (a
12% decrease) and the Purchaser has purchased 1,000 Firm Shares, the
Purchaser would receive 120 Escrow Shares.
(ii) If the percentage decrease, if any, in the Determination
Price from the Initial Price is forty percent (40%) or greater, then
the Purchaser shall receive that number of Escrowed Shares equal to the
product of (x) the Firm Shares purchased by such Purchaser pursuant to
Section 1 and (y) forty percent (40%). For example, if the Initial
Price is $16.50 and the Determination Price is $8.00 (51% decrease),
and the Purchaser has purchased 1,000 Firm Shares, the Purchaser would
receive 400 Escrow Shares.
(iii) The Seller shall be entitled to receive any Escrow
Shares not allocated to the several Purchasers under the terms of
clauses (i) and (ii) above and the Seller shall be entitled to receive
all of the Escrow Shares if the Determination Price is higher than or
equal to the Initial Price. For example, if the Initial Price is $16.50
and the Determination Price is $22.00, all of the Escrow Shares shall
be delivered to the Seller and the Purchasers shall receive no Escrow
Shares.
(b) If the amount of the Escrow Shares calculated in
accordance with paragraph (a) for any Purchaser includes fractional shares, such
fractional shares shall be rounded to zero and no Shares or cash compensation
will be distributed to the Purchasers on account of such fractional amounts.
-7-
(c) The right to receive the Escrow Shares as set forth in
paragraph (a) above shall only be available to the several Purchasers in
accordance with their respective Purchase Commitments. A Purchaser's right to
receive the Escrow Shares may not be assigned or transferred to any other person
by such Purchaser.
(d) For purposes of this Section 8, the following terms have
the following meanings.
"Determination Date" shall mean the fifth business day after
the date on which the Company publicly announces its
financial results for the third quarter of 1997.
"Determination Price" shall mean the Price per share of
Common Stock at the Determination Date and shall be deemed
to be the average of the daily closing price for 20
consecutive NASDAQ trading days before the Determination
Date. The closing price for each day shall be the last sale
price regular way or, in case no such reported sale takes
place on such day, the average of the last reported bid and
lowest reported asked prices as reported by NASDAQ, or other
similar organization if NASDAQ is no longer reporting such
information, or if not so available, the fair market price
as determined in good faith by the Board of Directors of the
Company.
"Initial Price" shall mean $16.50.
(e) At any time before the Determination Date, the Seller
shall have the right to substitute for the Escrow Shares an amount in cash equal
to the Initial Price times the number of Escrow Shares on deposit. In the event
that cash is substituted for the Escrow Shares, any person's right to receive a
specified number of Escrow Shares hereunder shall be deemed to be converted into
the right to receive cash in an amount equivalent to the number of Escrow Shares
allocated to such person times the Initial Price.
-8-
9. Registration Rights and the Purchaser Put
(a) The Seller shall use all reasonable efforts to cause
the Company to register the Shares on an appropriate registration statement to
be filed under the Securities Act relating to the subsequent sale by each of the
several Purchasers of the Shares acquired by them hereunder, in accordance with
the terms of the Registration Rights Agreement. If for any reason a registration
statement with respect to the Shares beneficially owned by the Purchasers fails
to become effective on or before the 90th calendar day after the date of the
Closing (the "Final Registration Date"), the Seller agrees with each Purchaser
to repurchase, at the option of each Purchaser, in the manner and upon the
conditions set forth herein, the Firm Shares acquired by such Purchaser
hereunder for a repurchase price (the "Repurchase Price") equal to (A) the
product of Initial Price and the number of Firm Shares tendered for repurchase
to the Seller by such Purchaser (the "Base Resale Price"), plus (B) an amount
equal to the product of 7.0% and the Base Resale Price.
(b) Any Purchaser who wishes to exercise its rights under
Section 9(a) hereof must notify the Seller in writing within five (5) business
days after the Final Registration Date of the number of Firm Shares such
Purchaser intends to tender for repurchase (the "Repurchase Notice"). The Seller
and such Purchaser shall agree upon a date to close the repurchase (a
"Repurchase Settlement Date"), which date shall be a business day not later than
10 business days after the Repurchase Notice was delivered to the Purchaser. On
the Repurchase Settlement Date and on receipt of the funds as provided in the
next sentence, the Purchaser shall deliver to the Seller certificates in
transferable form representing the Firm Shares to be repurchased by the Seller,
each duly endorsed in blank with signatures guaranteed or accompanied by stock
powers duly endorsed in blank with signatures guaranteed and with all necessary
documentary stamps duly affixed and cancelled. The Seller shall deliver to the
Purchaser a bank cashier's or certified check, or shall cause the wire transfer
of funds to an account or accounts designated by the Purchaser, in the amount of
the Repurchase Price due to such Purchaser in accordance with Section 9(a).
-9-
Each Purchaser delivering Firm Shares for repurchase represents and
warrants thereby that the Purchaser has the unrestricted right to sell, assign
and deliver to the Seller title to the Firm Shares tendered, free and clear of
any liens or encumbrances.
10. Expenses. Other than as set forth with respect to the Seller and
the Company in the Registration Rights Agreement and the Escrow Agreement, each
party hereto will pay its own expenses in connection with the transactions
contemplated hereby, whether or not such transactions shall be consummated.
11. Survival. All covenants, agreements, representations and warranties
made herein shall survive the execution and delivery of this Agreement and the
sale of the Shares pursuant hereto.
12. Brokerage. Each party hereto will indemnify and hold harmless the
others against and in respect of any claim for brokerage or other commissions
relative to this Agreement or to the transactions contemplated hereby, based in
any way on agreements, arrangements or understandings made or claimed to have
been made by such party with any third party.
13. Notices. All notices or communications shall be in writing and
sufficient if sent first class certified mail, return receipt requested, postage
prepaid or hand delivered, addressed as specified herein (i) if to any
Purchaser, to the address set forth below under such Purchaser's name on the
signature pages hereof; and (ii), if to the Seller:
Xx. Xxxxxx Xxxxxxxx
Chairman of the Board and
Chief Executive Officer
Tel-Save, Inc.
0000 Xxxxx 000
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
The parties may change the address to which notices or
communications are to be sent to it by giving written notice of any such change
in the manner provided for herein.
-10-
14. Assignment. Neither this Agreement nor any right hereunder shall be
assigned by the Seller or by any Purchaser.
15. Successors. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Seller and each of the several
Purchasers.
16. Entire Agreement. This Agreement, together with the Registration
Rights Agreement and the Escrow Agreement, constitutes the entire agreement and
understanding among the parties hereto in respect of the transactions
contemplated hereby, and supersedes all prior agreements, arrangements and
understandings relating to the subject matter hereof.
17. Amendment; Waiver. This Agreement may not be amended or modified
except by a writing or writings signed by the party against whom the
modification or amendment is sought to be enforced. Each party may, at its
option, waive in writing any and all conditions herein contained to which its
obligations hereunder are subject.
18. Miscellaneous; Descriptive Headings. (a) The rights and obligations
of each of the Purchasers herein with respect to the Seller shall be several and
not joint. Nothing in this Agreement shall constitute an agreement between a
Purchaser, on the one hand, and any other Purchaser or Purchasers, on the other.
(b) The descriptive headings contained in this Agreement
are for convenience of reference and shall not affect in any way the meaning or
interpretation of this Agreement.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
-11-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
XXXXXX XXXXXXXX
-----------------------------
MASSACHUSETTS FINANCIAL SERVICES
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
(000) 000-0000 (Fax)
By:
------------------------------
Name:
-------------------------
Title:
------------------------
Purchase Commitment:
------------------------------
PUTNAM OTC EMERGING GROWTH FUND
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
(000) 000-0000 (Fax)
By:
------------------------------
Name:
-------------------------
Title:
------------------------
Purchase Commitment:
------------------------------
CONSECO CAPITAL MANAGEMENT
00000 X. Xxxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
(000) 000-0000 (Fax)
By:
------------------------------
Name:
-------------------------
Title:
------------------------
Purchase Commitment:
------------------------------
-12-
MFS/SUN LIFE SERIES TRUST on behalf of
CAPITAL APPRECIATION SERIES
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
(000) 000-0000 (Fax)
By:
------------------------------
Name:
-------------------------
Title:
------------------------
Purchase Commitment:
------------------------------
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
on behalf of CAPITAL APPRECIATION VARIABLE
ACCOUNT, a separate account
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
(000) 000-0000 (Fax)
By:
------------------------------
Name:
-------------------------
Title:
------------------------
Purchase Commitment:
------------------------------
MFS GROWTH OPPORTUNITIES FUND
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
(000) 000-0000 (Fax)
By:
------------------------------
Name:
-------------------------
Title:
------------------------
Purchase Commitment:
------------------------------
-13-
MFS SERIES TRUST II on behalf of
MFS EMERGING GROWTH FUND
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
(000) 000-0000 (Fax)
By:
------------------------------
Name:
-------------------------
Title:
------------------------
Purchase Commitment:
------------------------------
- 14 -
