EXHIBIT 2.4
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AGREEMENT AND PLAN OF ACQUISITION
THIS AGREEMENT AND PLAN OF ACQUISITION (this "Agreement") is entered
into this 30TH day of September, 1998, by and among Executive Telecard, Ltd.
d/b/a eGlobe, Inc., a Delaware corporation ("Acquiror"), UCI Tele Networks,
Ltd., a corporation established under the laws of the Republic of Cyprus
("UCI"), and United Communications International LLC, a Wyoming limited
liability company ("UCI Sole Shareholder").
WHEREAS, the parties hereto wish to provide that, upon the terms and
subject to the conditions of this Agreement, Acquiror will acquire all issued
and outstanding shares of UCI from UCI Sole Shareholder.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I.
THE ACQUISITION
SECTION 1.1. THE ACQUISITION.
Upon the terms and subject to the conditions set forth in this
Agreement, on the Closing Date (as defined in Section 1.2) Acquiror shall
acquire all of the common stock issued and outstanding of UCI (the
"Acquisition") from UCI Sole Shareholder.
SECTION 1.2. CLOSING DATE.
At the Closing (as defined in Section 1.3), the parties hereto shall
cause the Acquisition to be consummated in accordance with the provisions of
this Agreement and applicable law. Such date is referred to herein as the
"Closing Date."
SECTION 1.3. CLOSING.
Subject to the terms and conditions of this Agreement, the closing of
the Acquisition (the "Closing") will take place as promptly as practicable after
satisfaction of the latest to occur or, if permissible, waiver of the conditions
set forth in Article IX hereof (the "Closing Date"), at the offices of Acquiror,
1720 S. Bellaire
Street, Denver, CO 80222, unless another date or place is agreed to in writing
by the parties hereto.
ARTICLE II.
PURCHASE PRICE
SECTION 2.1. PURCHASE PRICE.
At the Closing Date, all of the shares of UCI Common Stock shall be
purchased by Acquiror for the following purchase price:
(a) Purchase Price. Subject to the adjustments set forth in Section
2.1(b), all of the shares of common stock, par value one Cyprus pound per share,
of UCI ("Company Common Stock") owned by UCI Sole Shareholder shall be purchased
by Acquiror for (i) 125,000 shares of common stock of Acquiror ("Acquiror Common
Stock"), plus (ii) the amount of U.S. TWO MILLION ONE HUNDRED THOUSAND DOLLARS
($2,100,000) payable as follows and subject to the adjustments as set forth
below (the "Purchase Price"). The $2,100,000 portion of the Purchase Price shall
be paid as follows:
(i) U.S.$75,000 will be payable on the Closing Date.
(ii) U.S.$500,000 shall be paid in the form of a note ("Purchase
Note") with interest to accrue at the rate of 8% per annum, which
Purchase Note shall be due and payable on any date that is no
later than 180 days following the Closing Date. UCI shall receive
on the Closing Date as additional consideration Warrants
("Warrants") to purchase 50,000 shares of Acquiror Common Stock,
with an exercise price equal to the closing sales price of a
share of Acquiror Common Stock as reported on NASDAQ NMS at the
close of business on the Closing Date. In the event that Acquiror
defaults on the Purchase Note, Acquiror shall pay off the
Purchase Note with Acquiror Common Stock, the number of shares of
Acquiror Common Stock to be issued upon such default to be
determined by dividing (x) the amount of unpaid principal and
interest on the Purchase Note on the date of default by (y) the
closing sales price of Acquiror Common Stock as reported on
NASDAQ NMS on the date of default. The shares of Acquiror Common
stock issuable upon such default shall be in addition to the
Warrants and shall not be subject to the trading restrictions set
forth in Section 2.1(b)(i) of this Agreement. In the event that
Acquiror defaults on the Purchase Note and Acquiror's closing
stock price as quoted on the NASDAQ NMS on the date of default is
below
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$1.00 per share on the day of default, then UCI Sole Shareholder
shall be entitled to either (i) a number of shares of Acquiror
Common Stock determined in the manner set forth in the preceding
sentence or (ii) the return of the UCI shares purchased
hereunder. The Purchase Note will serve as security and as an
escrow account for the payment of any items referenced as
covenants, conditions, warranties and indemnifications set forth
herein by UCI and UCI Sole Shareholder.
(iii)U.S.$500,000 shall be paid in the form of a note ("Escrow Note")
with interest to accrue at the rate of 8% per annum, which Escrow
Note together with accrued interest shall be due and payable on
the date that is 18 months following the Closing Date. The Escrow
Note will serve as security and as an escrow account for the
payment of any items referenced as covenants, conditions,
warranties and indemnifications set forth herein, commencing 181
days after the Closing Date.
(iv) U.S.$1,025,000 ("Anniversary Payment"), shall be paid on the
first anniversary of the Closing Date or December 1, 1999 (such
date being referred to as the "Adjustment Date"), whichever is
later shall be adjusted as set forth below. On the Closing Date,
Acquiror shall issue a note ("Anniversary Payment Note") to UCI
Sole Shareholder evidencing its obligation to make the
Anniversary Payment. There shall be no interest payable under
this Note.
(v) Interest on the two U.S.$500,000 notes (parts (ii) and (iii)
above) shall be paid monthly.
(b) Delivery of 125,000 Shares of Acquiror Common Stock. The Purchase
Price shall be subject to the following adjustments:
(i) The UCI Sole Shareholder shall receive 50% of the shares of
Acquiror Common Stock (62,500) on the Closing Date and 50% of the shares of
Acquiror Common Stock (62,500) 12 months after the Closing Date. Acquiror shall
register all stock transferred to UCI Sole Shareholder under this Agreement by
promptly filing an S-3 Registration Statement with the Securities and Exchange
Commission covering all shares and shares issuable upon exercise of the Warrants
under this Agreement. UCI Sole Shareholder and its owners, officers or nominees
agree not to trade more than 10,000 shares of Acquiror Common Stock in any one
calendar month, provided, however, that any unsold shares below the 10,000 per
calendar month shall cumulate and be saleable in later months. The provisions of
this paragraph not withstanding, trading on any one day shall not exceed 10,000
shares.
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(c) Adjustment to Purchase Price.
(i) In the event that the closing sales price on NASDAQ NMS of
the Acquiror Common Stock on the Adjustment Date is less than $8.00, on the
Adjustment Date Acquiror shall issue to UCI Sole Shareholder additional shares
of Acquiror Common Stock (in addition to the 125,000 shares of Acquiror Common
Stock) determined by subtracting (x) $1,000,000 divided by the closing sales
price on NASDAQ NMS of the Acquiror Common Stock on the Adjustment Date, from
(y) 125,000.
(ii) In the event that UCI does not achieve 100% of its projected
revenue of U.S.$3,000,000 (THREE MILLION U.S. DOLLARS) for the 12 month period
ending on the Adjustment Date, the number of shares of Acquiror Common Stock
issuable to UCI Sole Shareholder and the payment of the Anniversary Payment of
the Purchase Price payable on the Adjustment Date shall be adjusted so that
Acquiror shall pay less cash and shall issue fewer shares of Acquiror Common
Stock as an adjustment to the Purchase Price (the "Projection Adjustment"). For
each 10% by which the projected revenue is less than 100% of the $3,000,000
amount to be achieved, there shall be a 10% reduction both in 1) the Anniversary
Payment, and 2) the number of shares of Acquiror Common Stock issuable to UCI
Sole Shareholder pursuant to Section 2.1(c)(i) of this Agreement; provided,
however, the reduction in the number of shares of Acquiror Common Stock pursuant
to (2) above shall be determined by multiplying (x) the percentage by which
projected revenue for the 12 months ending on the Adjustment Date is less than
$3,000,000 by (y) the number of shares of Acquiror Common Stock issuable to UCI
Sole Shareholder according to the formula set forth above in Section 2.1(c)(i).
The parties agree that Acquiror, in its sole discretion, may reject or accept
proposed business based on commercial feasibility and that neither UCI nor UCI
Sole Shareholder shall make any claim that declined business be included in the
revenue calculation on the Adjustment Date.
(iii) In the event that UCI achieves more than 100% of its
projected revenue of $3,000,000 for the 12 month period ending on the Adjustment
Date, the payment of the Anniversary Payment payable on the Adjustment Date
shall be adjusted so that Acquiror shall pay more cash as an adjustment to the
Purchase Price. For each 10% by which projected revenue exceeds 100% of the
$3,000,000 to be achieved, there shall be a 10% increase in the Anniversary
Payment of the Purchase Price payable on the Adjustment Date; provided, however,
such additional cash payment shall not exceed $300,000.00.
(iv) For purposes of the Projection Adjustment, if any, projected
revenue includes only business that is actually recorded as revenue and is
likely to be collected by UCI. Noting that adjustments are based on revenue
alone, Acquiror in its sole discretion may decline business that does not meet
projected margin targets or is commercially unreasonable for UCI or Acquiror.
(v) Acquiror shall pay to UCI U.S.$20,000 per month as a working
capital contribution. Such payments shall be made on the first day of each month
following the execution of this Agreement and shall be retroactive to
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September 1, 1998 and shall be paid each month for six months until the Purchase
Note is paid. Amounts paid under this subsection will not be deducted from the
purchase price.
(vi) In the event that Acquiror consummates its private placement
financing, the following shall apply: (a) if Acquiror receives a gross amount of
U.S.$10 million to U.S.$19,999,999 in such private placement, Acquiror shall
repay on the closing date of the private placement financing fifty percent (50%)
of outstanding principal and interest on the Purchase Note; and (b) if Acquiror
receives a gross amount of U.S.$20 million in such private placement, Acquiror
shall repay on the closing date of the private placement financing one hundred
percent (100%) of outstanding principal and interest on the Purchase Note.
SECTION 2.2. EXCHANGE OF CERTIFICATES AND NOTES.
At the Closing, UCI shall deliver to Acquiror certificates evidencing
all of the outstanding shares of Company Common Stock as of the Closing Date
duly endorsed in blank or with duly executed stock powers attached. In exchange
therefor, Acquiror shall deliver to UCI Sole Shareholder at Closing a
certificate evidencing the whole shares of Acquiror Common Stock issuable
pursuant to Section 2.1(a), any cash payments to be paid to UCI Sole Shareholder
pursuant to Article II, and the Purchase Note, the Escrow Note and the
Anniversary Payment Note.
SECTION 2.3. STOCK TRANSFER BOOKS.
At the Closing Date, the stock transfer books of UCI with respect to
all shares of capital stock of UCI shall be closed and no further registration
of transfers of such shares of capital stock shall thereafter be made on the
records of UCI.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF UCI
AND UCI SOLE SHAREHOLDER
UCI and UCI Sole Shareholder hereby jointly and severally represent
and warrant to Acquiror as follows:
SECTION 3.1. ORGANIZATION AND QUALIFICATION.
UCI is a corporation duly organized, validly existing and in good
standing under the laws of Cyprus. UCI has the requisite power and authority to
own, operate, lease and otherwise to hold and operate its assets and properties
and to carry on its business as now being conducted and as proposed to be
conducted
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and to perform the terms of this Agreement and the transactions contemplated
hereby. UCI is duly qualified to conduct its business, and is in good standing,
in each jurisdiction in which the character of its properties owned, operated or
leased or the nature of its activities makes such qualification necessary. UCI
has no subsidiaries or any equity interest or other investment in any person.
SECTION 3.2. MEMORANDUM AND ARTICLES OF ASSOCIATION.
UCI has heretofore delivered to Acquiror a complete and correct copy
of the memorandum of association and articles of association of UCI, each as
amended to date. Such memorandum of association and articles of association are
in full force and effect. UCI is not in violation of any of the provisions of
its memorandum and articles of association.
SECTION 3.3. CAPITALIZATION.
(a) The authorized capital stock of UCI consists of fifty thousand
(50,000) shares of Company Common Stock, (50,000 Cyprus pounds or 1 pound each)
of which fifty thousand (50,000) shares are issued and outstanding. All of the
issued and outstanding shares of Company Common Stock are owned beneficially and
of record by UCI Sole Shareholder, free and clear of all Encumbrances, except
that, as required by Cyprus law, one share is registered in the name of a
nominee. There are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of UCI or obligating UCI to issue or sell any shares of capital
stock of, or other equity interests in UCI, including any securities directly or
indirectly convertible into or exercisable or exchangeable for any capital stock
or other equity securities of UCI. There are no outstanding obligations of UCI
to repurchase, redeem or otherwise acquire any shares of its capital stock or
make any investment (in the form of a loan, capital contribution or otherwise)
in any other person. All of the issued and outstanding shares of Company Common
Stock have been duly authorized and validly issued in accordance with applicable
laws and are fully paid and nonassessable and not subject to preemptive rights.
No shares of capital stock of UCI have been reserved for any purpose.
(b) UCI has no outstanding indebtedness for borrowed money, except for
operating expenses incurred in the ordinary course of business.
SECTION 3.4. AUTHORITY.
Except for UCI Stockholder Approval (as defined in Section 3.21), the
execution and delivery of this Agreement by UCI and the consummation by UCI of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action and no other corporate proceedings on the part of
UCI
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are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by UCI
and constitutes a legal, valid and binding obligation of UCI, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights generally and
by the application of general principles of equity.
SECTION 3.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Schedule 3.5, the execution and delivery of
this Agreement by UCI do not, and the performance by UCI of its obligations
under this Agreement will not, (i) conflict with or violate the memorandum and
articles of association of UCI, (ii) conflict with or violate any Law applicable
to UCI or the Assets, or (iii) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which UCI is a party or
by which UCI is bound or by which any of the Assets is subject.
(b) Except as set forth in Schedule 3.5, the execution and delivery of
this Agreement by UCI does not, and the performance of this Agreement by UCI
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Government Entity.
SECTION 3.6. FINANCIAL STATEMENTS.
UCI has prepared the financial statements attached hereto as Schedule
3.6. UCI has no liabilities, contingent or absolute, matured or unmatured, known
or unknown, except for liabilities incurred in the ordinary course of business,
and those liabilities described on Schedule 3.6. These liabilities, if any,
would not have a Company Material Adverse Effect.
SECTION 3.7. ACCOUNTS RECEIVABLE.
The accounts receivable of UCI shown on Schedule 3.6, if any, or
thereafter acquired by UCI, have been collected or are collectible in amounts
not less than the amounts thereof carried on the books of UCI.
SECTION 3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since July 28, 1998 (the "Letter of Intent Date"), there has been no
Company Material Adverse Effect. Since the Letter of Intent Date, UCI has
conducted its business in the ordinary course, and UCI has not (a) paid any
dividend or distribution in respect of, or redeemed or repurchased any of, its
capital
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stock; (b) incurred loss of, or significant injury to, any of the Assets,
whether as the result of any natural disaster, labor trouble, accident, other
casualty, or otherwise; (c) incurred, or become subject to, any obligation or
liability (absolute or contingent, matured or unmatured, known or unknown),
except current liabilities incurred in the ordinary course of business; (d)
mortgaged, pledged or subjected to any Encumbrance any of the Assets; (e) sold,
exchanged, transferred or otherwise disposed of any of the Assets except in the
ordinary course of business, or canceled any debts or claims; (f) written down
the value of any Assets or written off as uncollectible any Accounts Receivable,
except write downs and write-offs in the ordinary course of business, none of
which, individually or in the aggregate, are material; (g) entered into any
transactions other than in the ordinary course of business; (h) made any change
in any method of accounting or accounting practice; or (i) made any agreement to
do any of the foregoing.
SECTION 3.9. OWNERSHIP AND CONDITION OF THE ASSETS.
(a) UCI is the sole and exclusive legal and equitable owner of and has
good and marketable title to the Assets and, except as set forth in Schedule
3.9(a), such Assets are free and clear of all Encumbrances. No person or
Government Entity has an option to purchase, right of first refusal or other
similar right with respect to all or any part of the Assets. All of the personal
property of UCI is in good working order and repair, ordinary wear and tear
excepted, and is suitable and adequate for the uses for which it is intended or
is being used.
(b) UCI represents and warrants that it owns no hardware, computer
software, and other technology (collectively, the "Company Technology").
SECTION 3.10. LEASES.
Schedule 3.10 lists and briefly describes all leases and other
agreements under which UCI is lessee or lessor of any Asset, or holds, manages
or operates any Asset owned by any third party, or under which any Asset owned
by UCI is held, operated or managed by a third party. UCI is the owner and
holder of all leasehold estates purported to be granted to UCI by the leases
described in Schedule 3.10 and UCI is the owner of all equipment, machinery and
other Assets thereon or in buildings and structures thereon, in each case free
and clear of all Encumbrances. Each such lease and other agreement is in full
force and effect and constitutes a legal, valid and binding obligation of, and
is legally enforceable against, the respective parties thereto and grants the
leasehold estate it purports to grant free and clear of all Encumbrances. All
necessary governmental approvals with respect thereto have been obtained, all
necessary filings or registrations therefor have been made, and there have been
no threatened cancellations thereof and are no outstanding disputes thereunder.
UCI has performed in all material respects all obligations thereunder required
to be performed by UCI to date. No party is in default in any material respect
under any of the foregoing, and there has
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not occurred any event which (whether with or without notice, lapse of time or
the happening or occurrence of any other event) would constitute such a default.
SECTION 3.11. OTHER AGREEMENTS.
Schedule 3.11 lists all agreements to which UCI is a party or by which
UCI is bound, and UCI has delivered to Acquiror true and correct copies of all
such agreements. Each such agreement is in full force and effect and constitutes
a legal, valid and binding obligation of, and is legally enforceable against,
the respective parties thereto. All necessary governmental approvals with
respect thereto have been obtained, all necessary filings or registrations
therefor have been made, and there have been no threatened cancellations thereof
and are no outstanding disputes thereunder. UCI has in all material respects
performed all the obligations thereunder required to be performed by UCI to
date. No party is in default in any material respect under any of the agreements
described in Schedule 3.11, and there has not occurred any event which (whether
with or without notice, lapse of time or the happening or occurrence of any
other event) would constitute such a default.
SECTION 3.12. REAL PROPERTY.
Schedule 3.12 contains a list and brief description of all leasehold
interests in real estate, easements, rights to access, rights-of-way and other
real property interests which are owned, leased, used or held for use by UCI
(collectively, the "Real Property"). The Real Property described in Schedule
3.12 constitutes all real property interests necessary to conduct the business
and operations of UCI as now conducted. UCI is not aware of any easement or
other real property interest, other than those described in Schedule 3.12, that
is required, or that has been asserted by a Government Entity or other person to
be required, to conduct the business and operations of UCI. UCI has delivered to
Acquiror true and complete copies of all deeds, leases, easements, rights-of-way
and other instruments pertaining to the Real Property (including any and all
amendments and other modifications of such instruments). All Real Property
(including the improvements thereon) (i) is in good condition and repair
consistent with its present use, (ii) is available to UCI for immediate use in
the conduct of UCI's business and operations, and (iii) complies in all material
respects with all applicable building or zoning codes and the regulations of any
Government Entity having jurisdiction.
SECTION 3.13. ENVIRONMENTAL MATTERS.
(a) UCI represents and warrants that it has no physical plant or other
fixed assets, owned or leased, and has conducted no activities that would entail
compliance or non-compliance with any Environmental Laws (as defined below).
There are no pending or, to the knowledge of UCI or UCI Sole Shareholder,
threatened actions, suits, claims, legal proceedings or other proceedings based
on, and UCI has not directly or indirectly received any notice of any complaint,
order,
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directive, citation, notice of responsibility, notice of potential
responsibility, or information request from any Government Entity or any other
person arising out of or attributable to: (i) the current or past presence at
any part of the Real Property of Hazardous Materials (as defined below) or any
substances that pose a hazard to human health or an impediment to working
conditions; (ii) the current or past release or threatened release into the
environment from the Real Property (including, without limitation, into any
storm drain, sewer, septic system or publicly owned treatment works) of any
Hazardous Materials or any substances that pose a hazard to human health or an
impediment to working conditions; (iii) the off-site disposal of Hazardous
Materials originating on or from the Real Property; (iv) any facility operations
or procedures of UCI which do not conform to requirements of the Environmental
Laws; or (v) any violation of Environmental Laws at any part of the Real
Property or otherwise arising from UCI's activities involving Hazardous
Materials.
(b) As used herein, these terms shall have the following meanings:
(i) "Environmental Laws" means all applicable foreign, federal,
state and local laws (including the common law), rules, requirements and
regulations relating to pollution, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or protection of human health as it relates to the environment
including, without limitation, laws and regulations relating to releases of
Hazardous Materials, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials or relating to management of asbestos in buildings.
(ii) "Hazardous Materials" means wastes, substances, or materials
(whether solids, liquids or gases) that are deemed hazardous, toxic, pollutants,
or contaminants, including without limitation, substances defined as "hazardous
substances", "toxic substances", "radioactive materials", or other similar
designations in, or otherwise subject to regulation under, any Environmental
Laws.
SECTION 3.14. LITIGATION.
There is no action, suit, investigation, claim, arbitration or
litigation pending or, to the knowledge of UCI and UCI Sole Shareholder,
threatened against or involving UCI, the Assets or the business and operations
of UCI, at law or in equity, or before or by any court, arbitrator or Government
Entity. UCI is not operating under or subject to any judgment, writ, order,
injunction, award or decree of any court, judge, justice or magistrate,
including any bankruptcy court or judge, or any order of or by any Government
Entity.
SECTION 3.15. COMPLIANCE WITH LAWS; LICENSES AND PERMITS.
UCI has complied and is in compliance with all laws, ordinances,
regulations, awards, orders, judgments, decrees and injunctions applicable to
UCI,
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the Assets and UCI's business and operations, including all federal, state and
local laws, ordinances, regulations and orders pertaining to employment or
labor, safety, health, environmental protection, zoning and other matters. UCI
has obtained and holds all permits, licenses and approvals (none of which has
been modified or rescinded and all of which are in full force and effect) from
all governmental authorities necessary to conduct the business and operations of
UCI as now conducted and as proposed to be conducted and to own, use and
maintain the Assets.
SECTION 3.16. INTELLECTUAL PROPERTY.
(a) UCI owns, or is licensed or otherwise possesses all necessary
rights to use all patents, trademarks, trade names, service marks, copyrights
and any applications therefor, maskworks, net lists, schematics, technology,
know-how, trade secrets, inventory, ideas, algorithms, processes, computer
software programs and applications (in both source code and object code form),
and tangible or intangible proprietary information or material ("Intellectual
Property") that are used or marketed in the business of UCI as presently
conducted and as proposed to be conducted or included or proposed to be included
in UCI's products or proposed products.
(b) Schedule 3.16 lists all (i) patents, registered and unregistered
trademarks, trade names and service marks, registered and unregistered
copyrights, and maskworks, included in the Intellectual Property, including the
jurisdictions in which each such Intellectual Property right has been issued or
registered or in which any application for such issuance and registration has
been filed, (ii) licenses, sublicenses and other agreements as to which UCI is a
party and pursuant to which any person is authorized to use any Intellectual
Property, and (iii) licenses, sublicenses and other agreements as to which UCI
is a party and pursuant to which UCI is authorized to use any third party
patents, trademarks or copyrights, including software ("Third Party Intellectual
Property Rights") which are incorporated in, are or form a part of any UCI
product.
(c) To the knowledge of UCI, there is no unauthorized use, disclosure,
infringement or misappropriation of any Intellectual Property rights of UCI, any
trade secret material to UCI, or any Intellectual Property right of any third
party to the extent licensed by or through UCI, by any third party, including
any employee or former employee of UCI. Except as set forth in Schedule 3.16,
UCI has not entered into any agreement to indemnify any other person against any
charge of infringement of any Intellectual Property. Except as set forth in
Schedule 3.16, there are no royalties, fees or other payments payable by UCI to
any person by reason of the ownership, use, sale or disposition of Intellectual
Property.
(d) UCI is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of it obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Intellectual Property or Third Party Intellectual Property Rights.
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(e) UCI (i) has not been served with process, and is not aware that
any person is intending to serve process on UCI, in any suit, action or
proceeding which involves a claim of infringement of any patents, trademarks,
service marks, copyrights or violation of any trade secret or other proprietary
right of any third party and (ii) has not brought any action, suit or proceeding
for infringement of Intellectual Property or breach of any license or agreement
involving Intellectual Property against any third party. The business of UCI as
presently conducted and as proposed to be conducted, and UCI's products or
proposed products do not infringe any patent, trademark, service mark,
copyright, trade secret or other propriety right of any third party.
SECTION 3.17. TAXES AND ASSESSMENTS.
UCI has (i) duly and timely paid all Taxes (as defined below) which
have become due and payable by it; (ii) UCI has received no notice of, nor does
UCI have any knowledge of, any notice of deficiency or assessment or proposed
deficiency or assessment from any taxing Government Entity; and (iii) to UCI's
knowledge, there are no audits pending and there are no outstanding agreements
or waivers by UCI that extend the statutory period of limitations applicable to
any federal, state, local, or foreign tax returns or Taxes. As used herein, the
term "Taxes" shall mean all federal, state, local and foreign taxes (including,
without limitation, income, profit, franchise, sales, use, VAT, real property,
personal property, ad valorem, excise, employment, social security and wage
withholding taxes) and installments of estimated taxes, assessments,
deficiencies, levies, imports, duties, license fees, registration, fees,
withholdings or other similar charges of every kind, character or description
imposed by any governmental authorities, and any interest, penalties or
additions to tax imposed thereon or in connection therewith.
SECTION 3.18. EMPLOYMENT MATTERS.
(a) UCI does not have any Employee Benefit Plan.
(b) There are no collective bargaining agreements applicable to any
UCI employees and UCI has no duty to bargain with any labor organization with
respect to any such persons. There is not pending any demand for recognition or
any other request or demand from a labor organization for representative status
with respect to any persons employed by UCI.
(c) UCI has no employees.
SECTION 3.19. TRANSACTIONS WITH RELATED PARTIES.
Except as set forth in Schedule 3.19, neither any present or former
officer, director, stockholder or person known by UCI or UCI Sole Shareholder to
be an affiliate of UCI, nor any person known by UCI or UCI Sole Shareholder to
be an
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affiliate of any such person, is currently a party to any transaction or
agreement with UCI, including, without limitation, any agreement providing for
the employment of, furnishing of services by, rental of Assets from or to, or
otherwise requiring payments to, any such officer, director, stockholder or
affiliate.
SECTION 3.20. INSURANCE.
UCI represents and warrants that it has no insurance policies in force
and effect.
SECTION 3.21. VOTING REQUIREMENTS.
UCI Sole Shareholder owns all of the issued and outstanding capital
stock of UCI. The affirmative vote of the UCI Sole Shareholder (the "Company
Stockholder Approval") is the only vote of the holders of any class or series of
UCI's capital stock necessary to approve and adopt this Agreement and the
transactions contemplated hereby, including the Acquisition.
SECTION 3.22. BROKERS.
Except as set forth on Schedule 3.23, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of UCI or UCI Sole Shareholder.
SECTION 3.23. DISCLOSURE.
No representations or warranties by UCI or UCI Sole Shareholder in
this Agreement and no statement or information contained in the Schedules hereto
or any certificate furnished or to be furnished by UCI or UCI Sole Shareholder
to Acquiror pursuant to the provisions of this Agreement (taken collectively),
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was made, in order to make the statements herein or therein not
misleading.
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ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES
OF UCI SOLE SHAREHOLDER AND UCI
SECTION 4.1. TITLE TO COMPANY COMMON STOCK.
The UCI Sole Shareholder is and as of the Closing Date will be the
sole legal, beneficial and record owner of all of the issued and outstanding
shares of capital stock of UCI.
SECTION 4.2. AUTHORITY AND CAPACITY.
UCI Sole Shareholder has full legal right, capacity, power and
authority to execute and deliver this Agreement and all other documents,
instruments, certificates and agreements executed or to be executed by it
pursuant hereto, and to consummate the transactions contemplated hereby and
thereby.
SECTION 4.3. ABSENCE OF VIOLATION.
Except as set forth on Schedule 3.5, the execution, delivery and
performance by UCI Sole Shareholder of this Agreement and all other documents,
instruments, certificates and agreements contemplated hereby to which it is a
party, the fulfillment of and the compliance with the respective terms and
provisions hereof and thereof, and the consummation of the transactions
contemplated hereby and thereby, do not and will not (a) conflict with, or
violate any provision of, any Laws having applicability to it; or (b) conflict
with, or result in any breach of, or constitute a default under, any agreement
to which it is a party.
SECTION 4.4. RESTRICTIONS AND CONSENTS.
There are no agreements, Laws or other restrictions of any kind to
which UCI Sole Shareholder is party or subject that would prevent or restrict
the execution, delivery or performance of this Agreement by it.
SECTION 4.5. BINDING OBLIGATION.
This Agreement constitutes, and each document, instrument, certificate
and agreement to be executed by UCI Sole Shareholder pursuant hereto, when
executed and delivered in accordance with the provisions hereof, shall
constitute, a valid and binding obligation of it, enforceable in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
applicability relating
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to or affecting creditors' rights generally and by the application of general
principles of equity.
SECTION 4.6. COMPLIANCE WITH FOREIGN CORRUPT PRACTICES ACT.
UCI and UCI Sole Shareholder represent and warrant that they are not
in violation of the Foreign Corrupt Practices Act of 1977, as amended, which
prohibits businesses and businesspeople from providing any payment or gratuity
to foreign officials in exchange or obtaining or retaining business.
SECTION 4.7. CYTA CONTRACT AND ANTICIPATED CONTRACTS.
UCI and UCI Sole Shareholder represent and warrant that the UCI Sole
Shareholder's contract with CYTA is lawfully executed and duly authorized by all
necessary authorities and entities and has been assigned to UCI. UCI and UCI
Sole Shareholder represent and warrant that the ownership of UCI by Acquiror as
a result of the Acquisition shall not cause the CYTA contract to be cancelled.
Additionally UCI and UCI Sole Shareholder represent and warrant that the pending
contracts of UCI with NetFon S.A. and Amerikios Corp. and other anticipated
contracts are and shall be duly authorized and executed by appropriate officers
and executives of the contracting parties and will have all necessary regulatory
and governmental approvals.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants to UCI and UCI Sole Shareholder as
follows:
SECTION 5.1. ORGANIZATION AND QUALIFICATION.
Acquiror is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Acquiror has the requisite
power and authority to own, lease and operate its assets and properties, to
carry on its business as now being conducted and to perform the terms of this
Agreement and the transactions contemplated hereby. Acquiror is duly qualified
to conduct its business, and is in good standing, in each jurisdiction where the
ownership or leasing of its properties or the nature of its activities in
connection with the conduct of its business makes such qualification necessary.
SECTION 5.2. CERTIFICATE OF INCORPORATION AND BYLAWS.
Acquiror has heretofore delivered to UCI a complete and correct copy
of the certificate of incorporation and the bylaws of Acquiror, each as amended
to date.
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Such certificate of incorporation and bylaws are in full force and effect.
Acquiror is not in violation of any of the provisions of its certificate of
incorporation or bylaws or other organizational or governing document.
SECTION 5.3. CAPITALIZATION.
The authorized capital stock of Acquiror consists of: (i) one hundred
million (100,000,000) shares of Acquiror Common Stock of which _______ shares
are issued and outstanding on the date of execution of this Agreement; and (ii)
five million (5,000,000) shares of preferred stock, par value $.01 per share, of
which [___] shares are issued and outstanding. Except as set forth in Schedule
5.3, there are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
Acquiror or obligating Acquiror to issue or sell any shares of capital stock of,
or other equity interests in Acquiror, including any securities directly or
indirectly convertible into or exercisable or exchangeable for any capital stock
or other equity securities of Acquiror. Except as set forth in Schedule 5.3,
there are no outstanding obligations of Acquiror to repurchase, redeem or
otherwise acquire any shares of its capital stock or make any investment (in the
form of a loan, capital contribution or otherwise) in any other person.
SECTION 5.4. AUTHORITY.
The execution and delivery of this Agreement by Acquiror has been
approved by all corporate authority of Acquiror including approval by Acquiror's
Board of Directors. The execution and delivery of this Agreement by Acquiror and
the consummation by Acquiror of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate actions and no other
corporate proceedings on the part of Acquiror are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Acquiror and constitutes a legal, valid
and binding obligation of Acquiror, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally and by the application of
general principles of equity.
SECTION 5.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Schedule 5.5, the execution and delivery of
this Agreement by Acquiror do not, and the performance by Acquiror of its
obligations under this Agreement will not, (i) conflict with or violate the
certificate of incorporation or bylaws of Acquiror, (ii) conflict with or
violate any Law applicable to Acquiror or its assets and properties, or (iii)
result in any breach of or
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constitute a default under any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Acquiror is a party or by which Acquiror is bound, or by which any of
its properties or assets is subject.
(b) Except as set forth in Schedule 5.5, the execution and delivery of
this Agreement by Acquiror do not, and the performance of this Agreement by
Acquiror will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Government Entity.
SECTION 5.6. FINANCIAL STATEMENTS.
The audited balance sheet of Acquiror as of the end of the fiscal year
ending March 31, 1998, and the audited statement of income and cash flows for
such fiscal year fairly present, in all material respects, the financial
condition of Acquiror as of the respective dates and the results of operations
and cash flows for the respective periods indicated and will have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis. Except as reflected in the audited balance sheet of Acquiror
as of March 31, 1998 (the "Acquiror Balance Sheet Date"), Acquiror has no
liabilities, contingent or absolute, matured or unmatured, known or unknown,
except for liabilities incurred in the ordinary course of business since the
Acquiror Balance Sheet Date that would not have an Acquiror Material Adverse
Effect.
SECTION 5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as set forth in Schedule 5.7, since March 31, 1998, Acquiror
has not incurred any material liability, except in the ordinary course of its
business consistent with its past practices, and Acquiror has conducted its
business in the ordinary course consistent with its past practices. Except as
set forth in Schedule 5.7, since March 31, 1998, there has not been any change
in the business, condition (financial or otherwise) or results of operations of
Acquiror, including any transaction, commitment, dispute, damage, destruction or
loss, whether or not covered by insurance, or other event of any character
(whether or not in the ordinary course of business) individually or in the
aggregate which has had, or is reasonably likely to have, an Acquiror Material
Adverse Effect.
SECTION 5.8. AGREEMENTS.
Except as set forth in Schedule 5.8, all agreements that are or will
be required to be filed as exhibits to the Form S-3 (collectively, the "Acquiror
Material Contracts") to be filed by Acquiror with the SEC registering all shares
of Acquiror Common Stock issuable pursuant to this Agreement are valid and in
full force and effect on the date hereof, and Acquiror has not (and has no
knowledge that any
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party thereto has) violated any provision of, or committed or failed to perform
any act which with or without notice, lapse of time or both would constitute a
default under the provisions of, any Acquiror Material Contract, except for
defaults which would not reasonably be expected to have an Acquiror Material
Adverse Effect.
SECTION 5.9. LITIGATION.
Except as set forth in Schedule 5.9, there is no action, suit,
investigation, claim, arbitration or litigation pending or, to the knowledge of
Acquiror, threatened against or involving Acquiror or the business and
operations of Acquiror, at law or in equity, or before or by any court,
arbitrator or Government Entity. Acquiror is not operating under or subject to
any judgment, writ, order, injunction, award or decree of any court, judge,
justice or magistrate, including any bankruptcy court or judge, or any order of
or by any Government Entity.
SECTION 5.10. TAXES AND ASSESSMENTS.
Acquiror has (i) duly and timely paid all Taxes which have become due
and payable by it; (ii) Acquiror has received no notice of, nor does Acquiror
have any knowledge of, any notice of deficiency or assessment or proposed
deficiency or assessment from any taxing Government Entity; and (iii) to
Acquiror's knowledge, there are no audits pending and there are no outstanding
agreements or waivers by Acquiror that extend the statutory period of
limitations applicable to any federal, state, local, or foreign tax returns or
Taxes.
SECTION 5.11. VOTING REQUIREMENTS.
The affirmative vote of Acquiror Board of Directors is the only vote
necessary to approve, adopt and consummate the transactions under this
Agreement, which vote has been obtained prior to Acquiror's execution of this
Agreement.
SECTION 5.12. BROKERS.
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Acquiror.
SECTION 5.13. DISCLOSURE.
No representations or warranties by Acquiror in this Agreement and no
statement or information contained in the Schedules hereto or in Form S-3 to be
filed by Acquiror with the SEC or any certificate furnished or to be furnished
by Acquiror to UCI pursuant to the provisions of this Agreement (taken
collectively), contains or will contain any untrue statement of a material fact
or omits or will
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omit to state any material fact necessary, in light of the circumstances under
which it was made, in order to make the statements herein or therein not
misleading.
ARTICLE VI
COVENANTS
SECTION 6.1. AFFIRMATIVE COVENANTS OF UCI.
UCI and UCI Sole Shareholder hereby covenant and agree that, prior to
the Closing Date, unless otherwise expressly contemplated by this Agreement or
consented to in writing by Acquiror, UCI shall (a) operate its business in the
usual and ordinary course consistent with past practices and in accordance with
applicable Laws; (b) preserve substantially intact its business organization,
maintain its rights and franchises, use its best efforts to retain the services
of its respective principal officers and key employees and maintain its
relationship with its respective suppliers, contractors, distributors, customers
and others having business relationships with it; and (c) maintain and keep its
properties and assets in as good repair and condition as at present, ordinary
wear and tear excepted.
SECTION 6.2. NEGATIVE COVENANTS OF UCI.
Except as expressly contemplated by this Agreement or otherwise
consented to in writing by Acquiror, from the date hereof until the Closing
Date, UCI shall not, and UCI Sole Shareholder shall cause UCI not to, do any of
the following:
(a) (i) increase the compensation payable to or to become payable to
any of its directors, officers or employees, except for increases in salary,
wages or bonuses payable or to become payable in the ordinary course of business
and consistent with past practice; (ii) grant any severance or termination pay
to, or enter into or modify any employment or severance agreement with, any of
its directors, officers or employees; or (iii) adopt or amend any employee
benefit plan or arrangement, except as may be required by applicable Law;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of, any of its capital stock;
(c) (i) redeem, repurchase or otherwise reacquire any share of its
capital stock or any securities or obligations convertible into or exchangeable
for any share of its capital stock, or any options, warrants or conversion or
other rights to acquire any shares of its capital stock or any such securities
or obligations; (ii) effect any reorganization or recapitalization; or (iii)
split, combine or reclassify
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any of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of, or in substitution for, shares of
its capital stock;
(d) (i) issue, deliver, award, grant or sell, or authorize or propose
the issuance, delivery, award, grant or sale (including the grant of any
Encumbrances) of, any shares of any class of its capital stock (including shares
held in treasury) or other equity securities, any securities or obligations
directly or indirectly convertible into or exercisable or exchangeable for any
such shares or securities, or any rights, warrants or options directly or
indirectly to acquire any such shares or securities; or (ii) amend or otherwise
modify the terms of any such securities, obligations, rights, warrants or
options in a manner inconsistent with the provisions of this Agreement or the
effect of which shall be to make such terms more favorable to the holders
thereof;
(e) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets of any other person (other than the purchase of inventory in
the ordinary course of business and consistent with past practice), or make or
commit to make any capital expenditures other than capital expenditures in the
ordinary course of business consistent with past practice and in amounts which
are set forth and described in UCI's 1998 Capital Budget, a true and complete
copy of which has been provided to Acquiror and other than expenditures in
connection with the consummation of the Acquisition;
(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, any of its assets except for dispositions in the ordinary
course of business and consistent with past practice;
(g) propose or adopt any amendments to its memorandum and articles of
association;
(h) (i) change any of its methods of accounting in effect at January
1, 1998, or (ii) make or rescind any express or deemed election relating to
taxes, settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, except, in
the case of clause (i) or clause (ii), as may be required by law or generally
accepted accounting principles, consistently applied;
(i) prepay, before the scheduled maturity thereof, any of its
long-term debt, or incur any obligation for borrowed money, whether or not
evidenced by a note, bond, debenture or similar instrument, other than trade
payables incurred in the ordinary course of business consistent with past
practices and payables in connection with consummation of the Acquisition;
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(j) enter into or modify in any material respect any agreement which,
if in effect as of the date hereof, would have been required to be disclosed on
Schedule 3.11;
(k) take any action that would or could reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being untrue or in any of the conditions to the Acquisition set forth in Article
VIII not being satisfied; or
(l) agree in writing or otherwise to do any of the foregoing.
ARTICLE VII.
ADDITIONAL AGREEMENTS
SECTION 7.1. PREPARATION OF THE FORM S-3.
As soon as practicable following the date of this Agreement, UCI and
Acquiror shall prepare and Acquiror shall file with the Securities and Exchange
Commission (the "SEC") a registration statement on Form S-3 (the "Form S-3
Registration Statement") registering all shares of Acquiror Common Stock to be
issued to UCI Sole Shareholder under this Agreement.
SECTION 7.2. CONSENTS AND APPROVALS; FILINGS AND NOTICES.
UCI and UCI Sole Shareholder shall use reasonable efforts to as
promptly as possible make all filings with, provide all notices to and obtain
all consents and approvals from third parties required to be obtained by UCI in
connection with the transactions contemplated hereunder, including, without
limitation, all filings, if any, with notices to and consents and approvals from
Government Entities and other persons.
SECTION 7.3. ACCESS AND INFORMATION.
From the date hereof to the Closing Date, UCI shall afford to Acquiror
and its officers, employees, accountants, consultants, legal counsel,
representatives of current and prospective sources of financing for the
Acquisition (which Acquiror shall advise UCI in writing of such sources) and
other representatives of Acquiror full and complete access during normal
business hours to the properties, books, records, contracts, facilities,
premises, and equipment relating to the Assets and UCI (including without
limitation, operating and financial information with respect to UCI) as Acquiror
may reasonably request, provided that Acquiror and its agents, employees and
financing sources enter into a commercially reasonable confidentiality and
nondisclosure agreement with UCI and UCI Sole Shareholder.
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SECTION 7.4. CONFIDENTIALITY.
Each party shall hold in strict confidence all documents and
information concerning the other and its business and properties (except that
either party may disclose such documents and information to any Government
Entity reviewing the transactions contemplated hereby or as required in either
party's judgment pursuant to any legal requirement or in furtherance of the
transactions contemplated herein), and if the transactions contemplated hereby
should not be consummated, such confidence shall be maintained, and all such
documents and information (in whatever form) and copies thereof shall
immediately thereafter be destroyed, or returned to the party originally
furnishing same.
SECTION 7.5. FURTHER ACTION; REASONABLE BEST EFFORTS.
Each of the parties shall use reasonable best efforts to take, or
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under applicable Laws or otherwise to
consummate and make effective the transactions contemplated by this Agreement as
promptly as practicable, including, without limitation, using its reasonable
best efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Government Entities and parties to
contracts with UCI and Acquiror as are necessary for the transactions
contemplated herein.
SECTION 7.6. PUBLIC ANNOUNCEMENTS.
Each of UCI Sole Shareholder, UCI, Acquiror and Acquisition Sub shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Acquisition and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by Law.
SECTION 7.7. NO SOLICITATION.
During the term of this Agreement, neither UCI, UCI Sole Shareholder
nor any of their affiliates or any person acting on behalf of such party shall
(a) solicit or favorably respond to indications of interest from, or enter into
negotiations with, any third party for any proposed merger, consolidation, sale
or acquisition of UCI, the Assets or any capital stock of UCI or (b) furnish or
cause to be furnished any nonpublic information concerning UCI to any person
other than in the ordinary course of business or pursuant to applicable Law and
after prior written notice to Acquiror.
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SECTION 7.8. STOCK ACQUISITION LISTING.
Acquiror shall use all reasonable efforts to cause the shares of
Acquiror Common Stock to be issued pursuant to this Agreement and registered
under the Form S-3 Registration Statement to be approved for listing on the
Nasdaq NMS, subject to official notice of issuance, prior to the first date on
which such shares of Acquiror Common Stock are issuable.
SECTION 7.9. BLUE SKY.
Acquiror shall use reasonable efforts to obtain prior to the Closing
Date any necessary blue sky permits and approvals required to permit the
distribution of the shares of the Acquiror Common Stock to be issued in
accordance with the provisions of this Agreement.
ARTICLE VIII.
CLOSING CONDITIONS
SECTION 8.1. CONDITIONS TO OBLIGATIONS OF ACQUIROR, UCI AND UCI SOLE
SHAREHOLDER TO EFFECT THE ACQUISITION.
The respective obligations of Acquiror, UCI and UCI Sole Shareholder
to effect the Acquisition and the other transactions contemplated herein shall
be subject to the satisfaction at or prior to the Closing Date of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) Approvals. UCI Sole Shareholder shall have approved this
Acquisition. The Board of Directors of Acquiror has approved the Acquisition
prior to the date of execution of this Agreement.
(b) No Order. No Government Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, judgment,
injunction or other order (whether temporary, preliminary or permanent), in any
case which is in effect and which prevents or prohibits consummation of the
Acquisition or any other transactions contemplated in this Agreement; provided,
however, that the parties shall use their reasonable efforts to cause any such
decree, judgment, injunction or other order to be vacated or lifted, and any
such action or proceeding to be dismissed.
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SECTION 8.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF ACQUIROR.
The obligations of Acquiror to effect the Acquisition and the other
transactions contemplated in this Agreement are also subject to the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) Representations and Warranties. The representations and warranties
of UCI and UCI Sole Shareholder made in this Agreement shall be true and correct
in all material respects, on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date (provided that any representation or warranty contained herein that
is qualified by a materiality standard shall not be further qualified hereby),
except for representations and warranties that speak as of a specific date or
time other than the Closing Date (which need only be true and correct in all
material respects as of such date or time). Acquiror shall have received a
certificate of UCI and a certificate of UCI Sole Shareholder to that effect.
(b) Agreements and Covenants. The agreements and covenants of UCI and
UCI Sole Shareholder required to be performed on or before the Closing Date
shall have been performed in all material respects. Acquiror shall have received
a certificate of UCI and a certificate of UCI Sole Shareholder to that effect.
(c) Legal Proceedings. No action or proceeding before any Government
Entity shall have been instituted or threatened (and not subsequently settled,
dismissed, or otherwise terminated) which is reasonably expected to restrain,
prohibit or invalidate the Acquisition or other transactions contemplated by
this Agreement other than an action or proceeding instituted or threatened by
Acquiror.
(d) No Company Material Adverse Effect. Since the date of this
Agreement, no Company Material Adverse Effect shall have occurred and be
continuing.
(e) Required Consents. UCI shall have delivered to Acquiror at or
before Closing all consents, assignments or notices necessary to be obtained or
made by UCI in connection with the transactions contemplated by this Agreement.
(f) Noncompetition Agreement. UCI Sole Shareholder and Messrs.
Critides and Adamides shall have executed and delivered to Acquiror at or before
Closing a noncompetition agreement in form and substance reasonably satisfactory
to Acquiror providing, among other things, that UCI Sole Shareholder and/or
Messrs. Critides and Adamides shall not compete with the business of Acquiror or
UCI for a period of three (3) years after the Closing Date. The non-competition
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agreement with Adamides will not restrict him from representing
telecommunications companies as a lawyer.
(g) Employment Agreement and Consulting Agreements. Mr. Christos
Mouroutis shall have executed and delivered to Acquiror at or before Closing an
employment agreement in form and substance reasonably satisfactory to Acquiror.
Each of James Critides and Adamos Adamides shall have executed and delivered at
or before Closing a consulting agreement in form and substance reasonably
satisfactory to Acquiror.
(h) Legal Opinions. Acquiror shall have received an opinion from
Scordis, Papapetrou & Co., special Cyprus counsel to UCI in form and substance
reasonably satisfactory to Acquiror.
(i) Other Closing Documents. The Stockholders and UCI shall have
executed and/or delivered to Acquiror such additional documents, certificates,
opinions and agreements as Acquiror may reasonably request, including but not
limited to the assignment of the CYTA contract from UCI Sole Shareholder to UCI
including all necessary approvals, and (ii) UCI and NetFon S.A. and duly
authorized and executed contracts between (i) UCI and Amerikios Corp.
SECTION 8.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF UCI AND UCI SOLE
SHAREHOLDER.
The obligations of UCI and UCI Sole Shareholder to effect the
Acquisition and the other transactions contemplated in this Agreement are also
subject to the following conditions any or all of which may be waived, in whole
or in part, to the extent permitted by applicable law:
(a) Representations and Warranties. The representations and warranties
of Acquiror made in this Agreement shall be true and correct in all material
respects, on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date
(provided that any representation or warranty contained herein that is qualified
by a materiality standard shall not be further qualified hereby), except for
representations and warranties that speak as of a specific date or time other
than the Closing Date (which need only be true and correct in all material
respects as of such date or time). UCI shall have received a certificate of the
Chief Executive Officer or Chief Financial Officer of Acquiror.
(b) Agreements and Covenants. The agreements and covenants of Acquiror
required to be performed on or before the Closing Date shall have been performed
in all material respects. UCI shall have received a certificate of the Chief
Executive Officer or Chief Financial Officer of Acquiror to that effect.
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(c) Legal Proceedings. No action or proceeding before any Government
Entity shall have been instituted or threatened (and not subsequently settled,
dismissed, or otherwise terminated) which is reasonably expected to restrain,
prohibit or invalidate the Acquisition or other transactions contemplated by
this Agreement other than an action or proceeding instituted or threatened by
UCI or UCI Sole Shareholder.
(d) Other Closing Documents. Acquiror shall have executed and/or
delivered to UCI Sole Shareholder and UCI such additional documents,
certificates, opinions and agreements as UCI Sole Shareholder and UCI may
reasonably request including but not limited to an employment agreement for Mr.
Christos Mouroutis. Each of James Critides and Adamos Adamides shall have
executed and delivered at or before Closing a consulting agreement in form and
substance reasonably satisfactory to them.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. TERMINATION.
This Agreement may be terminated at any time prior to the Closing
Date:
(a) by mutual written consent of Acquiror and UCI;
(b) by Acquiror if UCI or UCI Sole Shareholder shall have breached any
of its representations, warranties, covenants or agreements contained in this
Agreement, or any such representation or warranty shall have become untrue, in
any such case such that the conditions precedent to the obligations of Acquiror
to close specified in Section 9.2 will not be satisfied;
(c) by UCI if Acquiror shall have breached any of its representations,
warranties, covenants or agreements contained in this Agreement, or any such
representation or warranty shall have become untrue, in any such case such that
the conditions precedent to the obligation of UCI to close specified in Section
9.3, will not be satisfied;
(d) by either Acquiror or UCI if any decree, permanent injunction,
judgment, order or other action by any court of competent jurisdiction or any
Government Entity preventing or prohibiting consummation of the Acquisition
shall have become final and nonappealable;
(e) by either Acquiror or UCI if the Closing has not occurred on or
prior to December 31, 1998 (unless such date shall be extended by the mutual
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written consent of the parties); provided, that the right to terminate this
Agreement under this Section 10.1(e) shall not be available to any party whose
breach of representations, warranties, covenants or agreements contained in this
Agreement has been the cause of, or resulted in, the failure of the Closing to
occur by such date or the inability of such condition to be satisfied; or
(f) by Acquiror upon written notice to UCI at anytime until October
20, 1998 if Acquiror in its sole and absolute discretion is not satisfied with
the results of its due diligence investigation of UCI or the Assets.
SECTION 9.2. EFFECT OF TERMINATION.
If this Agreement is terminated pursuant to Section 10.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of any party hereto, except that the provisions of
Sections 8.4 and 12.11 shall not be extinguished but shall survive such
termination, and nothing herein shall relieve any party from liability for any
breach hereof and each party shall be entitled to any remedies at law or in
equity for such breach.
SECTION 9.3. AMENDMENT.
This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 9.4. WAIVER.
At any time prior to the Closing Date, the parties may (a) extend the
time for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant to this
Agreement and (c) waive compliance by the other party with any of the agreements
or conditions contained in this Agreement. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Agreement or under any other instrument or
document given in connection with or pursuant to this Agreement shall impair any
such right, power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power or privilege,
or the exercise of any other right, power or privilege.
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ARTICLE X
SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION; REMEDIES
SECTION 10.1. SURVIVAL OF REPRESENTATIONS.
All representations, warranties, covenants, indemnities and other
agreements made by any party to this Agreement herein or pursuant hereto, shall
be deemed made on and as of the Closing Date as though such representations,
warranties, covenants, indemnities and other agreements were made on and as of
such date, and all such representations, warranties, covenants, indemnities and
other agreements shall survive the Closing Date and any investigation, audit or
inspection at any time made by or on behalf of any party hereto, as follows: (a)
unless otherwise specified below, representations and warranties shall survive
for a period of two (2) years after the Closing Date; (b) representations and
warranties with respect to Taxes shall survive until the expiration of the
applicable statute of limitations; (c) representations, warranties and covenants
for matters relating to title to the capital stock of UCI and the Assets shall
continue in full force and effect in perpetuity; and (d) the covenants and
agreements in this Article XI and the covenants and agreements which by their
terms survive the Closing Date shall continue in full force and effect until
fully discharged. Notwithstanding anything herein to the contrary, any
representation, warranty, covenant or agreement which is the subject of a claim
which is asserted in writing prior to the expiration of the applicable period
set forth above shall survive with respect to such claim or dispute until the
final resolution thereof.
SECTION 10.2. AGREEMENT OF UCI SOLE SHAREHOLDER TO INDEMNIFY.
Subject to the conditions and provisions of this Article XI, UCI Sole
Shareholder hereby agrees to indemnify, defend and hold harmless Acquiror and
its officers, directors, employees, agents and representatives (collectively,
the "Acquiror Indemnified Persons") from and against and in respect of all
Losses resulting from, imposed upon or incurred by the Acquiror Indemnified
Persons, directly or indirectly, by reason of or resulting from any
misrepresentation or breach of any representation or warranty, or noncompliance
with any conditions or other agreements, given or made by it or UCI in this
Agreement or in any document, certificate or agreement furnished by or on behalf
of any such party pursuant to this Agreement up to an aggregate limit of Five
Hundred Thousand U.S. Dollars ($500,000). UCI Sole Shareholder's indemnification
shall supported until maturity by the Purchase Note and Escrow Note each in the
amount of $500,000 due UCI Sole Shareholder under this agreement, provided that
at any time no more than one of such Notes shall be escrowed. It shall be a
condition to the right of any Acquiror Indemnified Person to indemnification
pursuant to this Section that such Acquiror
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Indemnified Person shall assert a claim for such indemnification within the
applicable survival periods set forth in Section 11.1 hereof.
SECTION 10.3. AGREEMENT OF ACQUIROR TO INDEMNIFY.
Subject to the conditions and provisions of this Article XI, Acquiror
hereby agrees to indemnify, defend and hold harmless UCI Sole Shareholder and
its members and managers from and against and in respect of all Losses resulting
from, imposed upon or incurred by UCI Sole Shareholder and its members and
managers, directly or indirectly, by reason of or resulting from any
misrepresentation or breach of any representation or warranty, or noncompliance
with any conditions or other agreements, given or made by Acquiror in this
Agreement or in any document, certificate or agreement furnished by or on behalf
of Acquiror pursuant to this Agreement up to an aggregate limit of Five Hundred
Thousand U.S. Dollars ($500,000). It shall be a condition to the rights of UCI
Sole Shareholder and its members and managers to indemnification pursuant to
this Section that such party shall assert a claim for such indemnification
within the applicable survival periods set forth in Section 11.1 hereof.
SECTION 10.4. CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of UCI Sole Shareholder and Acquiror
hereunder with respect to their respective indemnities pursuant to this Article
XI, resulting from any Third Party Claim shall be subject to the following terms
and conditions:
(a) The party seeking indemnification (the "Indemnified Party") must
give the other party (the "Indemnifying Party"), notice of any Third Party Claim
which is asserted against, imposed upon or incurred by the Indemnified Party and
which may give rise to liability of the Indemnifying Party pursuant to this
Article XI, stating (to the extent known or reasonably anticipated) the nature
and basis of such Third Party Claim and the amount thereof; provided that the
failure to give such notice shall not affect the rights of the Indemnified Party
hereunder except to the extent that the Indemnifying Party shall have suffered
actual material damage by reason of such failure.
(b) Subject to Section 11.4(c) below, the Indemnifying Party shall
have the right to undertake, by counsel or other representatives of its own
choosing, the defense of such Third Party Claim at the Indemnifying Party's risk
and expense.
(c) In the event that (i) the Indemnifying Party shall elect not to
undertake such defense, (ii) within a reasonable time after notice from the
Indemnified Party of any such Third Party Claim, the Indemnifying Party shall
fail to undertake to defend such Third Party Claim, or (iii) there is a
reasonable
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probability that such Third Party Claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or other money
payments, then the Indemnified Party (upon further written notice to the
Indemnifying Party) shall have the right to undertake the defense, compromise or
settlement of such Third Party Claim, by counsel or other representatives of its
own choosing, on behalf of and for the account and risk of the Indemnifying
Party. In the event that the Indemnified Party undertakes the defense of a Third
Party Claim under this Section 11.4(c), the Indemnifying Party shall pay to the
Indemnified Party, in addition to the other sums required to be paid hereunder,
the reasonable costs and expenses incurred by the Indemnified Party in
connection with such defense, compromise or settlement as and when such costs
and expenses are so incurred.
(d) Anything in this Section 11.4 to the contrary notwithstanding, (i)
the Indemnifying Party shall not, without the Indemnified Party's written
consent, settle or compromise such Third Party Claim or consent to entry of any
judgment which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such Third Party Claim in form and substance
satisfactory to the Indemnified Party; (ii) in the event that the Indemnifying
Party undertakes the defense of such Third Party Claim, the Indemnified Party,
by counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to participate in the defense, compromise or
settlement thereof and each party and its counsel and other representatives
shall cooperate with the other party and its counsel and representatives in
connection therewith; and (iii) in the event that the Indemnifying Party
undertakes the defense of such Third Party Claim, the Indemnifying Party shall
have an obligation to keep the Indemnified Party informed of the status of the
defense of such Third Party Claim and furnish the Indemnified Party with all
documents, instruments and information that the Indemnified party shall
reasonably request in connection therewith.
(e) Claims for indemnification by Acquiror Indemnified Persons up to
the $500,000 limitation shall be satisfied solely by a reduction in amounts due
under the Purchase Note or Escrow Note, as applicable. No claim for
indemnification may be made by Acquiror Indemnified Persons until the amount of
the claim or claims exceeds $25,000.
SECTION 10.5. NO RECOURSE AGAINST UCI.
The UCI Sole Shareholder hereby irrevocably waives any and all right
to recourse against UCI with respect to any misrepresentation or breach of any
representation, warranty or indemnity, or noncompliance with any conditions or
covenants, given or made by UCI Sole Shareholder or UCI in this Agreement or any
document, certificate or agreement entered into or delivered pursuant hereto.
The Stockholders shall not be entitled to contribution from, subrogation to or
recovery
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against UCI with respect to any liability of UCI Sole Shareholder or UCI that
may arise under or pursuant to this Agreement or the transactions contemplated
hereby.
SECTION 10.6. REMEDIES CUMULATIVE.
The remedies provided herein shall be cumulative and shall not
preclude the assertion by the parties hereto of any other rights or the seeking
of any other remedies against the other, or their respective successors or
assigns.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1. NOTICES.
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered, mailed or transmitted, and shall be effective upon receipt,
if delivered personally, mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses (or
at such other address for a party as shall be specified by like changes of
address) or sent by electronic transmission to the telecopier number specified
below:
(a) If to Acquiror:
eGlobe, Inc.
Telecopier No.: (303) 782-9628
Attention: Ronald Fried and Colin Smith
(b) If to UCI:
UCI Tele Networks, Ltd.
Telecopier No.: (212) 843-9435 and 011 3575 372 282
Attention: Christos Mouroutis, James Critides, Adamos
Adamides
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(c) If to UCI Sole Shareholder
United Communications International LLC
Address: c/o William T. Cruse & Company
425 Park Avenue, 27th Floor
New York, NY 10022
Telecopier No. (212) 843-9435
Attention: James Critides, Adamos Adamides, Christos
Mouroutis
SECTION 11.2. CERTAIN DEFINITIONS.
For purposes of this Agreement, the term:
(a) "affiliate" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person.
(b) "Assets" shall mean the assets, rights and properties, whether
owned, leased or licensed, real, personal or mixed, tangible or intangible, that
are used, useful or held for use in connection with the business of UCI.
(c) "Acquiror Material Adverse Effect" means any material adverse
effect on the assets, business, financial condition or results of operations of
the Acquiror and its subsidiaries, taken as a whole.
(d) "Company Material Adverse Effect" means any material adverse
effect on the Assets or on the business, financial condition or results of
operations of UCI.
(e) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise.
(f) "Encumbrances" means mortgages, liens, pledges, encumbrances,
security interests, deeds of trust, options, encroachments, reservations,
orders, decrees, judgments, restrictions, charges, contract rights, claims or
equity of any kind.
(g) "Government Entity" means any United States or other national,
state, municipal or local government, domestic or foreign, any subdivision,
agency, entity, commission or authority thereof, or any quasi-governmental or
private body exercising any regulatory, taxing, importing or other governmental
or quasi-governmental authority.
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(h) "Laws" means all foreign, federal, state and local statues, laws,
ordinances, regulations, rules, resolutions, orders, determinations, writes,
injunctions, awards (including, without limitation, awards of any arbitrator),
judgments and decrees applicable to the specified persons or entities.
(i) "Losses" means all demands, losses, claims, actions or causes of
action, assessments, damages, liabilities, costs and expenses, including,
without limitation, interest, penalties and reasonable attorneys' fees and
disbursements.
(j) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group.
(k) "subsidiary" means a corporation, partnership, joint venture or
other entity of which UCI owns, directly or indirectly, at least 50% of the
outstanding securities or other interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body or otherwise exercise control of such entity.
(l) "Third Party Claim" means any claim or other assertion of
liability by a third party.
SECTION 11.3. HEADINGS.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
SECTION 11.4. SEVERABILITY.
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 11.5. ENTIRE AGREEMENT.
This Agreement (together with the Exhibits, the Schedules and the
other documents delivered pursuant hereto) constitutes the entire agreement of
the parties and supersede all prior agreements and undertakings, both written
and
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oral, between the parties, or any of them, with respect to the subject matter
hereof, including, without limitation, the Letter of Intent entered into as of
March 20, 1998 by the parties hereto and, except as otherwise expressly provided
herein, are not intended to confer upon any other person any rights or remedies
hereunder.
SECTION 11.6. SPECIFIC PERFORMANCE.
The transactions contemplated by this Agreement are unique.
Accordingly, each of the parties acknowledges and agrees that, in addition to
all other remedies to which it may be entitled, each of the parties hereto is
entitled to a decree of specific performance, provided such party is not in
material default hereunder.
SECTION 11.7. ASSIGNMENT.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other party.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
SECTION 11.8. THIRD PARTY BENEFICIARIES.
This Agreement shall be binding upon and inure solely to the benefit
of each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement, except for the
Acquiror Indemnified Persons under Article XI hereof.
SECTION 11.9. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
SECTION 11.10. COUNTERPARTS.
This Agreement may be executed and delivered in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed and delivered shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement.
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SECTION 11.11. FEES AND EXPENSES.
Except as otherwise provided for in this Agreement, each party hereto
shall pay its own fees, costs and expenses incurred in connection with this
Agreement and in the preparation for and consummation of the transactions
provided for herein.
IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT AND
PLAN OF MERGER to be executed and delivered as of the date first written above.
EXECUTIVE TELECARD, LTD. D/B/A
EGLOBE, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
UCI TELE NETWORKS, LTD.
By:
----------------------------------------
Name:
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Title:
-------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
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UNITED COMMUNICATIONS INTERNATIONAL LLC
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
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