1
CONTRIBUTION/EXCHANGE AGREEMENT
of
AUGUST 11, 2000
among
TELDAFAX AKTIENGESELLSCHAFT
and
NETNET TELEKOMMUNIKATIONS GMBH
and
NEWTEL COMMUNICATIONS GMBH
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This CONTRIBUTION / EXCHANGE AGREEMENT (the "Agreement") is made on 11 August
2000 (the "Signing Date") by
1. TelDaFax Aktiengesellschaft, a public stock corporation under the laws
of Germany, ( "TDF")
and
2. Netnet Telekommunikations GmbH, a company with limited liability under
the laws of Germany, ("Netnet"),
and
3. NewTel Communications GmbH, a company with limited liability under the
laws of Germany, ("NewTel"),
(together the "Companies").
PREAMBLE
A. World Access, Inc., a public stock corporation under the laws of
Delaware, U.S.A., ("WA") intends to acquire a majority stake in TDF. WA
has entered into a share purchase and transfer agreement with certain
shareholders of TDF, dated June 14, 2000, (the "Purchase and Transfer
Agreement") for the acquisition of 41.62% of the issued shares in TDF
(the "Share Purchase and Transfer Agreement").
B. TDF supports WA's intention as it is convinced that the acquisition by
WA of such majority stake and the combination of their respective
German businesses is for the benefit of, and in the best interests of,
both companies and their shareholders.
C. The Companies are wholly owned subsidiaries of WA.
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D. TDF is registered in the commercial register in the local court of
Marburg under HR B 2174. The share capital of TDF currently amounts to
EURO 87,954,360, divided into 33,828,600 non par value shares. TDF has
an authorised capital (genehmigtes Kapital) in an aggregate nominal
amount of EURO 42,900,000 and a conditional capital in the amount of
EURO 42,900,000 to cover the issue of convertible bonds. The shares of
TDF are admitted to the Frankfurt Stock Exchange and listed on the
segment Neuer Markt and on EASDAQ.
E. The management board (Vorstand) of TDF with the consent of the
supervisory board (Aufsichtsrat) is entitled to increase the capital of
TDF by the amount of the authorised capital to the exclusion of
subscription rights of the existing shareholders if, inter alia, the
newly issued shares are used to acquire other businesses. The Vorstand
now intends to make use of this authority to acquire the businesses
operated by the Companies.
F. WA intends to cause the businesses operated by the Companies to be
contributed to TDF against the issue of the shares available under the
authorised capital (genehmigtes Kapital) of TDF to the Companies.
G. For German tax purposes the contribution of the businesses operated by
the Companies shall constitute a transfer of each of the Company's
entire business (Geschaftsbetrieb im Ganzen). For purposes of applying
U.S. federal income tax law under the United States Internal Revenue
Code of 1986, as amended (the "Internal Revenue Code") and the
regulations issued thereunder to the transactions set forth in this
Agreement, and depending upon the ultimate percentage of outstanding
TDF shares WA acquires in TDF, the transfer of the business operated by
NewTel to TDF in exchange for the issuance of TDF shares may be treated
as a taxable sale of such assets under Section 1001 of the Internal
Revenue Code, but the transfer of the assets and liabilities comprising
the business operated by Netnet in exchange for the issuance of TDF
shares is intended to and shall be treated as a tax-free
"reorganisation" under Section 368 (a)(1)(C) of the Internal Revenue
Code. In this regard, this Agreement is intended and shall constitute a
"plan of reorganisation" within the meaning of U.S. Treasury Regulation
Section 1.368-2(g).
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Therefore, the Parties agree as follows:
SS. 1
DEFINITIONS
Agreement Caption
Application ss. 2.5
Balance Sheet Assets ss. 3/2
Business ss. 2.1
Companies Caption
Contribution Balance Sheets ss. 3.1
Internal Revenue Code Preamble G
Netnet Caption
New Shares ss. 9.1
NewTel Caption
Purchase and Transfer Agreement Preamble A
Share Purchase and Transfer Agreement Preamble A
Signing Date Caption
TDF Caption
Transferred Assets ss. 3.3
Transfer Date ss. 2.4
WA Preamble A
SS. 2
CONTRIBUTION OF THE BUSINESSES / ISSUANCE OF SHARES
2.1 Pursuant to the terms and conditions set forth in this Agreement, each
of the Companies agrees to transfer to TDF and TDF accepts the transfer
of each Company's entire business (Geschaftsbetrieb im Ganzen) with all
assets, liabilities
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and contracts (the "Business") operated by each of the Companies as a
contribution in kind (Sacheinlage) against the issue of new shares to
the respective Company. The transfers of the Companies' Businesses are
set out in more detail in ss.ss. 3 to 8 hereto. The transfer or
assignment of the Business shall not include such liabilities under
contracts and any other legal position owed by each of the Companies to
WA and/or its other subsidiaries.
2.2 The Companies and TDF hereby make all declarations and, unless
expressly provided otherwise herein, consummate all actions which are
required to effect the transfer of the Businesses. To the extent that
certain declarations and actions are specifically mentioned in this
Agreement, this is done for the purpose of emphasis and clarification
only.
2.3 The transfers of the Businesses shall become effective between the
parties (schuldrechtlich) and (unless the consent of any third party is
required and outstanding at the Transfer Date) also with title effect
towards third parties (dinglich) upon registration of the capital
increase in the commercial register of TDF contemplated by this
Agreement (the "Transfer Date").
2.4 It is understood that (i) the management board (Vorstand) of TDF and
(ii) the supervisory board (Aufsichtsrat) of TDF each have agreed in
principle to adopt the capital increase contemplated hereby in order to
issue the number of shares to the Companies as set forth in ss. 9. TDF
undertakes to arrange for filing of the registration of the capital
increase contemplated hereby (the "Application") on or immediately
after the period for the acceptance of the Tender Offer contemplated by
the Share Purchase and Transfer Agreement has expired, unless it turns
out that following the Tender Offer WA will not own 50% of the
outstanding shares in TDF. TDF further undertakes to consult with the
competent commercial register in order to ensure registration of the
capital increase as soon as possible after filing.
2.5 The parties to this Agreement shall have the right to withdraw
(zurucktreten) from this Agreement (i) if the Closing Conditions of the
Share Purchase and Transfer Agreement have not been satisfied by
October 31, 2000 or (ii) if one of the parties
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of the Share Purchase and Transfer Agreement has withdrawn therefrom,
or (iii) if the auditor (Sacheinlagenprufer) does not confirm the value
of the Business to cover the total contribution amount.
SS. 3
TRANSFER OF ASSETS OF THE COMPANIES
3.1 As of the Transfer Date, each of the Companies hereby transfers to TDF
and TDF hereby accepts the transfer of all assets which are included in
the balance sheet of each Company as of December 31, 1999, which are
attached as Exhibit 3.1 to 3.3 (the "Contribution Balance Sheets"). In
particular all moveable assets (bewegliche Sachen) which are located at
the locations described in Exhibit 3.4 shall be transferred to TDF
including all furniture and computer hardware.
3.2 As of the Transfer Date, each of the Companies transfers to TDF and TDF
hereby accepts the transfer of, title to all assets, which are not,
need not or cannot be accounted for in the Contribution Balance Sheets,
but which are directly and indirectly attributable to the Businesses,
including any and all goods of minor or little value (all these assets
hereinafter referred to as "Balance Sheet Assets").
3.3 As of the Transfer Date each of the Companies hereby transfers to TDF
and TDF hereby accepts the transfer of all additions to the Balance
Sheet Assets since December 31, 1999. Those Balance Sheet Assets which
have been sold since December 31, 1999 or which no longer assist, are
not subject to the transfer of assets under this Section 3 (the Balance
Sheet Assets as adjusted are referred to as the "Transferred Assets").
3.4 As of the Transfer Date ach of the Companies and TDF agree that title
and rights to usage as well as encumbrances on the Transferred Assets
shall pass to TDF. To the extent that the Transferred Assets are not
directly owned by the respective Company, this Company hereby assigns
to TDF its right to demand delivery and to take possession of the
respective assets. TDF hereby accepts such assignments.
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3.5 Possession to movable assets which are transferred in accordance with
this Section shall pass from the respective Company to TDF effective as
at the Transfer Date. To the extent that movable assets are not in the
possession of the respective Companies as of the Transfer Date, each
Company hereby assigns to TDF the right to require redelivery or
surrender of such assets. TDF hereby accepts such assignment.
3.6. To the extent that any of the Transferred Assets under this Section are
subject to reservation of title by supplier or transfer of title for
security purposes, each Company hereby transfers to TDF as of the
Transfer Date its contingent right to acquire title to such assets
(Anwartschaftsrecht). TDF hereby accepts such assignment.
SS. 4
ASSIGNMENT OF RECEIVABLES
4.1 As of the Transfer Date each of the Companies hereby assigns to TDF and
TDF hereby accepts the assignment of, all accounts receivable as well
as all other rights and claims of each of the Company, accounted for in
the referenced Balance Sheets taking into account additions, disposals
and discharges pursuant to ss. 3.3 of this Agreement.
4.2 To the extent that the transfer of receivables pursuant to Subsection 1
requires the consent of third parties, each Company will take every
action, in order to obtain such consent. If such consent to the
transfer of a receivable claims is withheld, the respective Company and
TDF will treat each other as if the relevant receivable had been
transferred as of the Transfer Date.
SS. 5
ASSIGNMENT OF TRADEMARKS AND SOFTWARE
As of the Transfer Date each of the Companies hereby assigns to TDF and TDF
hereby accepts an assignment of, all trademarks, software and other intellectual
property rights
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which form part of their respective Business as of the Transfer
Date including, without limitation, the trademarks and software listed in
Exhibit 5 together will all rights and obligations relating thereto. In due
course, after the Transfer Date, the respective Company and TDF will take all
this actions reasonably required to have TDF registered as the new owner of
trademarks and other intellectual property rights.
SS. 6
TRANSFER OF INTANGIBLE ASSETS AND OF ALL BOOKS AND RECORDS
As of the Transfer Date each of the companies hereby assigns to TDF and TDF
hereby accepts the assignment of, all intangible assets forming part of the
business as of the Transfer Date, including without limitation, all goodwill,
customer relations and all rights in the name of the respective Company as well
as all books, records, certificates deeds and other information relating to its
Business.
SS. 7
ASSIGNMENT OF CONTRACTS, LEGAL POSITIONS AND LIABILITIES
7.1 As of the Transfer Date each of the companies hereby assigns to TDF and
TDF hereby accepts the assignment of all contracts and, to the extent
assignable, contract offers, memberships, approvals, licences and other
legal relations forming part of the business as of the Transfer Date
except contracts and any other legal positions owed to WA and/or its
other subsidiaries. The aforementioned assignment of contracts shall
include but not be limited to the contracts which are listed in Exhibit
7.1.
7.2 As of the Transfer Date each Company hereby assigns to TDF and TDF
hereby accepts the assignment of all obligations shown in the balance
sheets taking into account all additions, disposals and discharges
since December 31, 1999, except liabilities owed by each of the
Companies to WA and/or its other subsidiaries under contracts and any
other legal position. The assignment shall also include liabilities
under contracts and other legal positions assigned in accordance with
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Subsection 1, tax liabilities and other liabilities arising from the
operations of the respective Company.
7.3 To the extent that the assignment of contracts, legal positions,
liabilities in accordance with this Section requires the consent of the
relevant creditors and counterparties, respectively, the Company and
TDF will use reasonable efforts to obtain such consent to wherever
reasonably possible. If any creditor or counterparty withholds its
consent, the parties will treat each other as if the relevant liability
or contract had been transferred as of the Transfer Date not only with
internal but also with external effect. In particular any liabilities
and contracts shall be performed by TDF on behalf of the respective
Company but for the account of TDF and TDF shall indemnify and hold the
respective Company harmless against all damages, costs and expenses
suffered or incurred in connection with any contract, legal position
and liability which is assigned to TDF in accordance with this
Agreement. If a Company is held liable by any third party for
fulfilment of any liability or contract which is, or, if they existed
as stated by the relevant third party, would be assigned by the Company
to TDF in accordance with this Agreement and, if TDF does therefore not
fulfil the liability or contract as demanded by the third party, then
TDF shall be responsible for handling the further proceedings
including, but not limited to, any litigation and shall advance to the
Company all funds reasonably required to defend itself against any
claims stated by the third party without prejudice to its obligation to
indemnify and hold the Company harmless in accordance with the
proceeding provisions.
SS. 8
TRANSFER OF EMPLOYMENTS AND OF PENSION LIABILITIES
8.1 All rights and obligations under any employment agreement to which any
of the Companies is party as employer as of the Transfer Date shall
transfer to TDF as at that date in accordance with ss. 613a of the
German Civil Code (BGB).
8.2 TDF shall indemnify and hold each Company harmless against all damages,
costs and expenses suffered or incurred in connection with any
liability towards actually
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or former employees of the Companies which are transferred to TDF in
accordance with Subsection 1. The provisions in ss. 7.3 apply
accordingly.
SS. 9
CONSIDERATION
9.1 As consideration for the contribution of the Businesses of the
Companies, TDF shall issue in total 2.546.239 non par value shares; of
these shares TDF shall issue
9.1.1 to Netnet 1,620,334 non par value shares representing a
capital of Euro 1,620,334 at a subscription amount of Euro
8,90 per share or a total contribution amount of Euro
14,420,972.60;
9.1.2 to NewTel 925,905 non par value shares representing a capital
of Euro 925,905 as a subscription amount of Euro 8.90 per
share, or a total contribution amount of Euro 8,240,554.50.
The issued shares are hereinafter together referred to as the
"New Shares".
9.2 Upon issuance the New Shares will be duly and validly authorised, fully
paid and non assessable and free of pre-emptive or similar rights or
encumbrances.
9.3 In its tax balance sheet TDF shall be obliged to continue to account
for the assets transferred under this Agreement at their book value.
SS. 10
REPRESENTATIONS AND WARRANTIES
The Companies and WA do not give any representations and warranties with respect
to their Businesses. Any obligations of the Companies vis-a-vis TDF under the
applicable laws remain unaffected by this exclusion.
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SS. 11
CONDUCT OF THE BUSINESSES OF WA AND TDF
Each of the Companies undertakes to TDF and TDF undertakes to each of the
Companies to procure that (i) the Businesses of the Companies and TDF,
respectively, during the period from the date hereof to the registration with
the commercial register of the New Shares, are conducted in the ordinary course
except with the prior written approval of the other party, (ii) no steps are
taken by the Companies and TDF, as the case may be, which are or could be, using
a sound commercial judgment, detrimental to the transaction contemplated by this
Agreement and that (iii) no action is taken by the Companies and / or TDF which
would require their respective shareholders' or supervisory board's approval.
SS. 12
COSTS
Each party shall bear the cost of its own legal and other advisors incurred in
connection with the negotiation, execution and completion of this Agreement and
the transactions contemplated hereby as well as any personal taxes arising
therefrom. All notary's fees relating to the contribution in kind shall be borne
by TDF.
SS. 13
NOTICES
Any notices provided or required under the terms of this Agreement shall be
given in writing and shall be effective immediately when provided by facsimile
transmission or personal delivery, or five days after being sent by
internationally recognised courier, and addressed as follows:
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(a) If to the Companies:
World Access, Inc.
c/o GAEDERTZ, Frankfurt office
Bockenheimer Landstra(beta)e 98 - 100,
60323 Frankfurt am Main,
Fax-No.: ++49 69 7941 100
with copy to:
World Access, Inc.,
Attn.: W. Tod Chmar, Executive Vice President
945 East Paces Ferry Road, Suite 2200,
Atlanta, GA 30326,
U.S.A.
Fax-No.: ++1 404 233 2280
(b) If to TDF:
TelDaFax AG,
Attn.: Dr. Henning F. Klose
Rudolf-Breitscheid-Stra(beta)e
35010 Marburg/Lahn
Fax-No.: ++49 6421 181 1210
SS. 14
MUTUAL ASSISTANCE
The parties undertake to co-operate with and to provide each other with all
necessary information required for any regulatory filings, in particular, but
not limited to, all filings with the Securities Exchange Commission.
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SS. 15
MISCELLANEOUS
15.1 This Agreement shall be governed by and construed in accordance with
the laws of the Federal Republic of Germany. The courts in Frankfurt am
Main shall have non-exclusive jurisdiction.
15.2. The authentic text of this Agreement shall be the English text.
However, if any German translations have been provided in brackets,
such German terms shall prevail. Each of the Companies confirms that it
is fully aware of the contents of all Exhibits including those which
are in the German language. For purposes of the registration, a German
translation of this Agreement will be prepared.
15.3 The parties to this Agreement shall keep this Agreement confidential
and shall only make public announcements as to its contents upon mutual
agreement. This does not apply to any disclosure required under the
applicable laws, by governmental regulatory bodies, under banking
covenants or stock exchange regulations (including the U.S. Securities
Exchange Commission and Nasdaq National Market) to which a party to
this Agreement is subject to. The content of such disclosure will be
communicated to either party prior to the disclosure.
15.4 This Agreement, together with the agreements mentioned herein and the
Side Letter between the Parties and others of even date, sets forth the
entire agreement and understanding of the Parties with respect to the
subject matter hereof. This Agreement will be executed in five
counterparts.
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15.5 No amendment to this Agreement shall be of any effect unless it is in
writing and signed for or on behalf of the parties hereto. This shall
also apply to any amendment of the present section.
15.6 If any of the provisions of this Agreement shall be or become invalid,
this shall not affect the validity of the remaining provisions. The
parties undertake to replace any invalid provisions by such provisions
as shall come as close as possible to their commercial intentions in a
legally valid manner. The same shall apply if this Agreement should
contain an unintentional gap.
/s/ Dr. Achim Herfs
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TelDaFax Aktiengesellschaft
/s/ Thomas Sievert
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Netnet Telekommunikations GmbH
/s/ Thomas Sievert
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NewTel Communications GmbH