EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), entered into this 10th day
of July, 1998, by and among AMERICAN UNITED GLOBAL, INC., a Delaware corporation
("AUGI"), CONNECTSOFT COMMUNICATIONS CORPORATION, a Delaware corporation
("CCC"), CONNECTSOFT HOLDING CORP., a Washington corporation ("Connectsoft") and
EXECUTIVE TELECARD, LTD., a Delaware corporation ("EXTEL") and C-SOFT
ACQUISITION CORP., a Delaware corporation, and a wholly-owned subsidiary of
EXTEL (the "Buyer).
W I T N E S S E T H :
WHEREAS, CCC is engaged in the business of developing a unified,
intelligent communications system which it markets under the name FreeAgent(TM)
(the "FreeAgent Technology"); and
WHEREAS, Connectsoft owns and (through an affiliate, InterGlobe
Networks, Inc. ("InterGlobe")) operates a central telecommunications network
center (the "CNOC") located in Seattle, Washington and the hardware networking
equipment, computers and software associated therewith (the "CNOC Business");
and
WHEREAS, the Buyer is interested in acquiring substantially all of the
assets and business associated with the FreeAgent Technology and the CNOC
Business (collectively, referred to herein as the "Businesses"); and
WHEREAS, each of CCC and Connectsoft (hereinafter individually and
collectively referred to as the "Seller") has agreed to sell (a) all or
substantially all of the tangible and intangible assets of CCC, including
without limitation, all software, engineering, developments and technology
associated with the FreeAgent Technology, and (b) the hardware networking
equipment, computers and software relating to the CNOC Business (collectively,
the "Assets"), and the Businesses, to the Buyer, and the Buyer has agreed to
purchase such Assets and the Businesses, all upon the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth, the sufficiency of which is hereby
acknowledged, the parties hereby covenant and agree as follows:
1. ASSETS.
1.1 Acquired Assets. Subject to the terms and conditions of this
Agreement, on the Closing Date (as such term is hereinafter defined), the Seller
shall sell, transfer and deliver to the Buyer, and the Buyer shall purchase and
receive from the Seller, the Assets, including, but not limited to, the
following:
(a) All items of tangible fixed assets, furniture, fixtures,
machinery, equipment, computers, computer systems and vehicles of CCC and
Connectsoft which are used in the operation of the Businesses, and which are set
forth on Schedule 1.1(a) hereto (collectively, the "Fixed Assets"), all of which
are presently held by CCC other than the CNOC, which is presently held by
Connectsoft;
(b) All inventory and supplies of the Seller;
(c) All trade names, trademarks, patents, copyrights, customer
lists, supplier lists, trade secrets, computer software programs, engineering,
technical information, and other such knowledge and information constituting the
"know-how" of the Seller;
(d) The goodwill of the Businesses and their value as going
concerns;
(e) To the extent assignable, all licenses and permits of the
Seller;
(f) All books, records, printouts, drawings, data, files, notes,
notebooks, accounts, invoices, correspondence and memoranda of the Seller; and
(g) All other rights and assets of any kind, tangible or
intangible, of the Seller (including the Material Contracts listed on Schedule
5.8 hereto, which Buyer specifically assumes the obligations thereunder) whether
or not reflected in their internal financial statements or on their books and
records.
On the Closing Date, the Seller shall execute and deliver to the Buyer a bill of
sale in respect of the Assets, all in the form of Exhibit A annexed hereto and
made a part hereof.
1.2 Excluded Assets. Notwithstanding anything in this Agreement to the
contrary, the Assets shall not include, and the Seller shall retain (a) all
cash, marketable securities, accounts receivable and notes receivable of the
Seller, (b) those specific assets of the Seller relating to the Businesses which
are identified on Schedule 1.2 to this Agreement, (c) all bank accounts of the
Seller, (d) all rights to any tax refunds of the Seller, (e) the Seller's stock
record books, minute books, and tax returns, (f) all of the Seller's rights
under this Agreement, and (g) those miscellaneous other assets or properties of
each of CCC and Connectsoft which are not related to either the FreeAgent
Technology or the CNOC Business and which are identified on Schedule 1.2
(collectively, the "Excluded Assets").
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2. LIABILITIES.
2.1 Assumed Liabilities. Subject to the terms and conditions of
this Agreement, on the Closing Date, the Seller shall assign to the Buyer, and
the Buyer shall assume and agree to pay and perform when due, only the specific
liabilities, obligations and indebtedness, including without limitation trade
payables and obligations under capitalized leases of CCC relating to the Assets,
which are listed on Schedule 2.1 to this Agreement, as same are constituted on
the Closing Date (collectively, the "Assumed Liabilities") and the Material
Contracts listed on Schedule 5.8. On the Closing Date, the Buyer shall execute
and deliver to the Seller an assumption agreement in respect of the Assumed
Liabilities and the Material Contracts, all in the form of Exhibit B annexed
hereto.
2.2 Limitation on Amount and Timing of Payment of Assumed
Liabilities.
(a) Notwithstanding the provisions of Section 2.1 above or
any other provision of this Agreement it is expressly understood and agreed
by and among the parties hereto that (i) the Buyer shall not assume more than
$4,500,000 in the aggregate principal amount of Assumed Liabilities, and (ii)
the Buyer shall not be required to pay more than $500,000 in the aggregate
principal amount of Assumed Liabilities on or before April 30, 1999.
(b) In the event the Buyer is required to pay more than
$500,000 in the aggregate principal amount of Assumed Liabilities on or before
April 30, 1999, then Buyer, as its sole remedy for any breach under Section
2.2(a)(ii), shall have the right to borrow from AUGI the positive difference of
(i) the amount the Buyer is required to pay of the Assumed Liabilities on or
before April 30, 1999, less (ii) $500,000. The obligation of AUGI to loan such
funds to Buyer shall be conditioned upon a certificate of the Buyer's Chief
Financial Officer representing the amount the Buyer is required to pay in cash
of the Assumed Liabilities on or before April 30, 1999. The loan shall be
evidenced by a promissory note in the form attached hereto as Exhibit C. Buyer
shall have no remedy for a breach of Section 2.2(a)(ii) if Buyer waives
extension of the UPS Note as a condition to Closing under Section 10.1(i)
herein.
2.3 Excluded Liabilities. Except for the Assumed Liabilities and
the Material Contracts, the Buyer shall not assume, and shall have no liability
for, any debts, liabilities, executory obligations, claims or expenses of the
Seller of any kind, character or description, whether accrued, absolute,
contingent or otherwise, including, without limitation, any liabilities relating
to the Seller's conduct of the Businesses prior to the Closing Date (the
"Excluded Liabilities"). The Seller shall be solely liable and responsible to
make timely payment when due of all such Excluded Liabilities.
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3. CONSIDERATION.
3.1 Consideration to the Seller. The entire purchase price for the
Assets (the "Consideration") shall consist of (i) the assumption by the Buyer of
the Assumed Liabilities, and the Buyer's payment and performance, when due, of
all such Assumed Liabilities, subject only to the provisions of Section 2.2 of
this Agreement, and (ii) the rights granted under the Letter Agreement to be
delivered at the Closing in the form annexed hereto as Exhibit E.
3.2 Allocation of Purchase Price. The fair market values of the
Assets and the allocation of the Purchase Price among the Assets for purposes of
Section 1060 of the Internal Revenue Code shall be as agreed between Buyer and
Seller on or before the Closing Date and included as Schedule 3.2 and Buyer and
Seller agree to be bound by such fair market value determination and allocation
and to complete and attach Internal Revenue Service Form 8594 to their
respective tax returns accordingly. If Buyer and Seller can not agree on the
allocation, the Purchase Price shall be allocated among the Assets by Seller's
outside accountants which determination shall be final.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND AUGI. In
connection with the sale of the Assets to the Buyer and in order to induce the
Buyer to enter into this Agreement, each of CCC, Connectsoft and AUGI hereby
jointly and severally represents and warrants to the Buyer, as of the date of
this Agreement (unless otherwise indicated), as follows:
4.1 Organization, Good Standing and Qualification. CCC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, Connectsoft is a corporation duly organized, validly
existing and in good standing under the laws of the State of Washington, and
AUGI is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, each with full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and to own its assets and conduct its business
as owned and conducted on the date hereof. The Seller is duly qualified to
operate its respective businesses as a foreign corporation under the laws of
each jurisdiction where the nature of its businesses or the location of its
properties makes such qualification necessary and the failure to be so qualified
would have a material adverse effect on the subject Seller or its assets,
properties, businesses or financial condition (a "Material Adverse Effect").
4.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by the Seller and AUGI have been duly and validly authorized
by the Board of Directors of the Seller, and by AUGI (as the sole stockholder of
each of CCC and Connectsoft). No further corporate authorization is required on
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the part of each Seller or AUGI to consummate the transactions contemplated
hereby.
4.3 Valid and Binding Agreements. This Agreement, and, when
executed, all other agreements, instruments of transfer or assignment, documents
and other instruments delivered, constitute and will constitute the legal, valid
and binding obligation of the Seller and AUGI (to the extent a party thereto),
enforceable against the Seller and AUGI in accordance with their respective
terms, except to the extent limited by bankruptcy, insolvency, reorganization
and other laws affecting creditors' rights generally, and except that the remedy
of specific performance or similar equitable relief is available only at the
discretion of the court before which enforcement is sought.
4.4 Disclosure and Duty of Inquiry. No representation or warranty
by the Seller or AUGI in this Agreement and no statement or information
contained in the schedules hereto or any certificate furnished or to be
furnished to the Buyer hereunder 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. The Buyer is not nor will it be
required to undertake any independent investigation to determine the truth,
accuracy and completeness of the representations and warranties made by the
Seller and AUGI pursuant to this Article 4.
5. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF AUGI AND THE SELLER.
In connection with the sale of the Assets to the Buyer and in order to induce
the Buyer to enter into this Agreement, each of CCC, Connectsoft and AUGI hereby
jointly and severally represents and warrants to the Buyer, as of the date of
this Agreement (unless otherwise indicated), as follows:
5.1 No Breach of Statute or Contract. Neither the execution and
delivery of this Agreement by the Seller, nor compliance with the terms and
provisions of this Agreement, will: (a) violate any statute or regulation of any
governmental authority, domestic or foreign, affecting the Seller, (b) except as
set forth in Schedule 5.1 to this Agreement, require the issuance of any
authorization, license, consent or approval of any federal or state governmental
agency or any other person; or (c) except as set forth in Schedule 5.1 to this
Agreement, conflict with or result in a breach of any of the terms, conditions
or provisions of the certificate of incorporation or by-laws of the Seller or
any judgment, order, injunction, decree, agreement or instrument to which the
Seller is a party, or by which the Seller is bound, or constitute a default
thereunder.
5.2 Title to and Condition of Purchased Assets. The Seller owns, or
leases the Assets listed on Schedule 1.1(a) as being leased, and as of the
Closing Date will have good and marketable title in and to, or a valid leasehold
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interest in, all of the Assets, free and clear of all liens, liabilities,
charges, claims, options, restrictions on transfer or other encumbrances of any
nature whatsoever, except for (a) liens or encumbrances disclosed in Section 5.2
to this Agreement; and (b) miscellaneous materialmen's or mechanics liens or
liens for current taxes not yet due and payable or which are being contested in
good faith by appropriate proceedings and which are listed on Schedule 5.2
(collectively, "Permitted Liens"). All material items of machinery, equipment,
vehicles, and other personal property owned or leased by the Seller are listed
in Schedule 5.2 to this Agreement and, except as and to the extent disclosed in
Schedule 5.2 to the Agreement, all such personal property is included in the
Assets and is in good operating condition and repair (reasonable wear and tear
excepted) and is adequate for its use in the Seller's Businesses as presently
conducted. The Assets constitute all of the assets and properties which are
required for the Seller's Businesses as presently conducted and as proposed to
be conducted by the Seller as of the date hereof.
5.3 Ownership of Businesses. No portion of the Businesses is owned
or operated by any person or entity other than the Seller, except that
InterGlobe operates the CNOC.
5.4 Form SB-2 Information; Financial Statements. CCC has furnished
to EXTEL a copy of the Form SB-2 Registration Statement of CCC, as filed with
the Securities and Exchange Commission ("SEC") on September 4, 1997 (the
"Registration Statement"), which Registration Statement has not, as yet, been
declared effective by the SEC. On or before the closing of the transactions
contemplated by this Agreement, such Registration Statement shall be withdrawn.
Annexed hereto as Schedule 5.4 is an unaudited balance sheet of CCC as at April
30, 1998 and the unaudited statement of income (loss) of CCC for the nine months
ended April 30, 1998 (collectively, the "April 1998 Financial Statements"). The
April 1998 Financial Statements were prepared by management of CCC, fairly set
forth the assets and liabilities and financial conclusion of CCC and its results
of operations as at April 30, 1998 and for the fiscal period then ended, and
were prepared in accordance with generally accepted accounting principles,
consistent with those of prior periods, subject only to the absence of financial
statement footnotes (which would not differ materially from those of the most
recent audited financial statements) and year end audit adjustments (which would
not be material). The financial statements included in the Registration
Statement (a copy of which has been provided to the Buyer) present fairly, in
all material respects, the financial condition of CCC as of July 31, 1997 and
the results of operations and cash flows for the respective periods then ended
and have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved. The
financial statements referred to in this Section 5.4 do not reflect the
operations of any business or any portion of Seller's Businesses not included in
the Assets. Except as expressly set forth in the April 1998 Financial Statements
and those financial statements included in the Registration Statement, as
disclosed pursuant to this Agreement, or non-material
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liabilities arising in the normal course of the Seller's Businesses since April
30, 1998, except for the Assumed Liabilities, there are no liabilities or
obligations (including, without limitation, any tax liabilities or accruals)
of the Seller, including any contingent liabilities, that are, in the aggregate,
material to the Seller.
5.5 No Material Changes. Except as otherwise described in Schedule
5.5 to this Agreement, since July 31, 1997, there has been no material adverse
change in the financial condition, operations, or Businesses of the Seller, or
any damage, destruction, or loss (whether or not covered by insurance) of the
Assets materially and adversely affecting the financial condition, operations,
or Businesses of the Seller, provided, that the offering of the Businesses and
the Assets for sale, the preparation for such sale pursuant to the terms and
conditions of this Agreement, and the public disclosure of the same shall not
constitute such a material adverse change.
5.6 Insurance Policies. Schedule 5.6 to this Agreement contains a
true and correct schedule of all insurance coverages held by the Seller
concerning the Businesses and the Seller's assets and properties. To the
Seller's knowledge, the Seller is not in violation of any requirements of any
its insurance carriers, and the Seller has received no written notice of any
default or violation under or in respect of any of the foregoing.
5.7 Permits and Licenses. Except as set forth in Schedule 5.7, the
Seller possesses (and there are included in the Assets being transferred to the
Buyer) all required permits, licenses and/or franchises, from whatever
governmental authorities or agencies (domestic and/or foreign) requiring the
same and having jurisdiction over the Seller, necessary in order to operate the
Businesses in the manner presently conducted, all of which permits, licenses
and/or franchises are valid, current and in full force and effect, except where
the failure to have or maintain any such permit, license and/or franchise would
not have or could not reasonably be expected to have a material adverse effect
on the Assets or the Businesses. The Seller has heretofore conducted the
Businesses in compliance in all material respects with the requirements of such
permits, licenses and/or franchises, and the Seller has not received written
notice of any default or violation in respect of or under any of such permits,
licenses and/or franchises, except where such default would not have or could
not reasonably be expected to have a Material Adverse Effect on the Assets or
the Businesses.
5.8 Contracts and Commitments.
(a) Schedule 5.8 to this Agreement lists all material contracts
contracts, leases, commitments, technology agreements, software development
agreements, software licenses, indentures and other agreements to which the
Seller is a party (collectively, "Material Contracts"), all of which are
included in the Assets except as indicated in Schedule 5.8 except that Schedule
5.8 need not list any such
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agreement that is listed on any other schedule hereto, or was entered into
in the ordinary course of the Businesses of the Seller and that, in any case:
(i) is for the purchase of supplies or other inventory items in the ordinary
course of the Businesses; (ii) is related to the purchase or lease of any
capital asset involving aggregate payments of less than $25,000 per annum; or
(iii) may be terminated without penalty, premium or liability by the Seller on
not more than thirty (30) days' prior written notice; provided however, that
Schedule 5.8 shall list all technology agreements, software development
agreements and software licenses involving the Seller and all Assumed
Liabilities, regardless of the duration thereof or the amount of payments called
for or required thereunder, other than standard software licenses of software
products available to the Businesses' customers generally.
(b) Except as set forth in Schedule 5.8 to this Agreement, all
Material Contracts are in full force and effect, and the Seller is in compliance
in all material respects with all of the Material Contracts and with all Assumed
Liabilities, and has not received any written notice that any party to any
Material Contract is in material breach or default of such Material Contract or
is now subject to any condition or event which has occurred and which, after
notice or lapse of time or both, would constitute a material default by any
party under any such Material Contract. Except as set forth in Schedule 5.8 to
this Agreement, none of the Material Contracts will be voided, revoked or
terminated, or voidable, revocable or terminable, upon and by reason of the
assignment thereof to the Buyer pursuant to this Agreement. The Seller has
delivered true and correct copies of all Material Contracts to the Buyer.
(c) To the best of each Seller's knowledge, no purchase
commitment by the Seller relating to the Businesses is materially in excess of
the normal, ordinary and usual requirements of the Businesses.
(d) Except as set forth in Schedule 5.8 to this Agreement, the
Seller does not have any outstanding contracts with or commitments to officers,
employees, technicians, agents, consultants or advisors relating to the
Businesses that are not cancelable by the Seller without penalty, premium or
liability (for severance or otherwise) on less than thirty (30) days' prior
written notice.
5.9 Customers and Suppliers. Except as set forth in Schedule
5.9 to this Agreement, the Seller has not received any written notice of any
claim by or dispute with, or any existing, announced or anticipated changes in
the policies of, any material clients, customers, referral sources or suppliers
of the Seller which would have a Material Adverse Effect on the Businesses as
presently conducted.
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5.10 Labor, Benefit and Employment Agreements.
(a) Except as set forth in Schedule 5.10 to this Agreement, the
Seller is not a party to and does not have any commitment or obligation in
respect of (i) any collective bargaining agreement or other labor agreement
relating to any employees of the Seller, or (ii) any agreement with respect to
the employment or compensation of any non-hourly and/or non-union employee(s) of
the Businesses. Schedule 5.10 sets forth the amount of all compensation or
remuneration (including any discretionary bonuses) paid by the Seller during the
1997 calendar year to employees or consultants of the Seller who presently
receive aggregate compensation or remuneration at an annual rate in excess of
$35,000.
(b) No union is now certified or, to the best of the Seller's
knowledge, claims to be certified, as a collective bargaining agent to represent
any employees of the Seller, and there are no labor disputes existing or, to the
best of the Seller's knowledge, threatened, involving strikes, slowdowns, work
stoppages, job actions or lockouts of any employees of the Seller.
(c) With respect to any "multiemployer plan" (as defined in
Section 3(37) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) to which the Seller or any of its past or present affiliates has at
any time been required to make contributions, neither the Seller nor any of its
past or present affiliates has, at any time on or after April 29, 1980, suffered
or caused any "complete withdrawal" or "partial withdrawal" (as such terms are
respectively defined in Sections 4203 and 4205 of ERISA) therefrom on its part.
(d) Except as disclosed in Schedule 5.10, the Seller does not
maintain, or have any liabilities or Assumed Liabilities of any kind with
respect to, any bonus, deferred compensation, pension, profit sharing,
retirement or other such benefit plan, and does not have any potential or
contingent liability in respect of any actions or transactions relating to any
such plan other than to make contributions thereto if, as and when due in
respect of periods subsequent to the date hereof. Without limitation of the
foregoing, (i) the Seller has made all required contributions to or in respect
of any and all such benefit plans, (ii) no "accumulated funding deficiency" (as
defined in Section 412 of the Internal Revenue Code of 1986, as amended (the
"Code")) has been incurred in respect of any of such benefit plans, and the
present value of all vested accrued benefits thereunder does not, on the date
hereof, exceed the assets of any such plan allocable to the vested accrued
benefits thereunder, (iii) there has been no "prohibited transaction" (as
defined in Section 4975 of the Code) with respect to any such plan, and no
transaction which could give rise to any tax or penalty under Section 4975 of
the Code or Section 502 of ERISA, and (iv) there has been no "reportable event"
(within the meaning of Section 4043(b) of ERISA) with respect to any such plan.
All of such plans which constitute, are intended to constitute, or have been
treated by the Seller as "employee pension
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benefit plans" or other plans within Section 3 of ERISA have been determined by
the Internal Revenue Service to be "qualified" under Section 401(a) of the Code,
and have been administered and are in compliance with ERISA and the Code; and
the Seller does not have any knowledge of any state of facts, conditions or
occurrences such as would impair the "qualified" status of any of such plans.
All of the matters listed on Schedule 5.10 shall constitute Excluded
Liabilities.
(e) Except for the group insurance programs listed in Schedule
5.10, the Seller does not maintain any medical, health, life or other employee
benefit insurance programs or any welfare plans (within the meaning of Section
3(1) of ERISA) for the benefit of any current or former employees, and, except
as required by law, the Seller does not have any liability, fixed or contingent,
for health or medical benefits to any former employee.
5.11 Accounts Payable. Except as set forth in Schedule 5.11, the
Seller is current in its payment of all accounts payable relating to the
Businesses, and has received no notice, not subsequently withdrawn or cured,
from any vendor, supplier or other person with respect to non-payment or late
payment of any accounts payable of the Businesses, or any threatened suspension
or termination of the provision of goods or services to the Businesses, which
suspension or termination would have a Material Adverse Effect on the financial
condition, operations, or Businesses of the Seller.
5.12 Compliance with Laws.
(a) To the Seller's knowledge, the Seller is in compliance in
all material respects with all laws, statutes, regulations, rules and ordinances
applicable to the conduct of its Businesses as presently constituted; and the
Seller has received no written notice of any default or violation under or in
respect of any of the foregoing.
(b) Without limitation of Section 5.12(a) above, except as set
forth on Schedule 5.12 to this Agreement, to the best of the Seller's knowledge
the Seller has not, at any time during the three (3) year period prior to the
date hereof, (i) handled, stored, generated, processed or disposed of any
hazardous substances in violation of any federal, state or local environmental
laws or regulations, or (ii) otherwise committed any material violation of any
federal, state or local environmental laws or regulations (including, without
limitation, the provisions of the Environmental Protection Act, the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, and other applicable environmental statutes and regulations) or any
material violation of the Occupational Safety and Health Act.
(c) Except as set forth in Schedule 5.12 to this Agreement,
neither the Seller nor, to the best of the Seller's knowledge, any of the
Seller's directors or officers has received any written notice of default or
violation,
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nor, to the best of the Seller's knowledge, is the Seller or any of its
directors or officers in default or violation, with respect to any judgment,
order, writ, injunction, decree, demand or assessment issued by any court or any
federal, state, local, municipal or other governmental agency, board,
commission, bureau, instrumentality or department, domestic or foreign, relating
to any aspect of the Seller's Businesses, affairs, properties or assets. Neither
the Seller nor, to the best of the Seller's knowledge, any of its directors or
officers, has received written notice of, been charged with, or is under
investigation with respect to, any violation of any provision of any federal,
state, local, municipal or other law or administrative rule or regulation,
domestic or foreign, relating to any aspect of the Seller's Businesses, affairs,
properties or assets, which violation would have a Material Adverse Effect on
the financial condition, operations, or Businesses of the Seller or upon any
material portion of the Assets.
(d) Schedule 5.12 sets forth the date(s) of the last known
audits or inspections (if any) of the Seller conducted by or on behalf of the
Environmental Protection Agency, the Occupational Safety and Health
Administration, the federal Department of Health and Human Services and/or any
agency thereof (including, without limitation, the Health Care Financing
Administration) or intermediary acting on its behalf, any corresponding or
comparable state or local governmental department, agency or authority, and any
other governmental and/or quasi-governmental agency (federal, state and/or
local).
5.13 Litigation. Except as disclosed in Schedule 5.13 to this
Agreement, there is no suit, action, arbitration, or legal, administrative or
other proceeding, or governmental investigation (including, without limitation,
any claim alleging the invalidity, infringement or interference of any patent,
patent application, or rights thereunder owned or licensed by the Seller)
pending, or to the best knowledge of the Seller, threatened, by or against the
Seller that relates in any material way to the Businesses or any of the Assets.
All of the matters listed on Schedule 5.13 shall constitute Excluded
Liabilities. The Seller is not aware of any state of facts, events, conditions
or occurrences which might properly constitute grounds for or the basis of any
suit, action, arbitration, proceeding or investigation against or with respect
to the Seller or that relate in any material way to the Businesses or any of the
Assets, which, if adversely determined, would have a Material Adverse Effect on
the financial condition, operations, or Businesses of the Seller or upon any
material portion of the Assets.
5.14 Intellectual Property.
(a) Schedule 5.14 to this Agreement sets forth a list and
brief description of the nature and ownership of: (i) all patents, patent
applications, copyright registrations and applications, registered trade names,
and trademark registrations and applications, both domestic and foreign, which
are presently owned, filed or held by the Seller and/or any of its directors,
officers, stockholders or employees and which in any material way relate to or
are used in the Businesses; (ii) all licenses, both domestic and foreign, which
are owned or controlled by the Seller and/or any of its directors, officers,
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stockholders, or employees and which in any material way relate to or are used
in the Businesses; and (iii) all franchises, licenses and/or similar
arrangements granted to the Seller by others and/or to others by the Seller.
None of the patents, patent applications, copyright registrations or
applications, registered trade names, trademark registrations or applications,
franchises, licenses or other arrangements set forth or required to be set forth
in Schedule 5.14 is subject to any pending challenge known to the Seller.
(b) Schedule 5.14 also lists (i) the jurisdictions in which
such intellectual property 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 the Seller is a party and pursuant
to which any person is authorized to use any Intellectual Property (as defined
herein), and (iii) licenses, sublicenses and other agreements as to which the
Seller is a party and pursuant to which the Seller is authorized to use any
third party patents, trademarks or copyrights, including software ("Third Party
Intellectual Rights") which are incorporated in, are or form a part of any
product of the Seller.
(c) Schedule 5.14 lists all hardware, computer software,
identifiable know-how (and the manner in which such know-how is memorialized)
and other identifiable technology (collectively, the "Seller Technology") which
the Seller owns or licenses and is included in the Assets, and the nature of the
Seller's rights in each item of Seller Technology. Schedule 5.14 also describes
the technology design and development that is currently ongoing or planned for
1998.
(d) The Seller 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 its business as presently
conducted and as proposed to be conducted or included or proposed to be included
in its products or proposed products.
(e) To the knowledge of the Seller, there is no unauthorized
use, disclosure, infringement or misappropriation of any Intellectual Property
rights of the Seller, any trade secret material to the Seller or any
Intellectual Property right of any third party to the extent licensed by or
through the Seller by any third party, including any employee or former employee
of the Seller. Except as set forth in Schedule 5.14, the Seller has never
entered into any
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agreement to indemnify any other person against any charge of infringement of
any Intellectual Property. Except as set forth in Schedule 5.14, there are no
royalties, fees or other payments payable by the Seller to any person by reason
of the ownership, use, sale or disposition of Intellectual Property.
(f) The Seller is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in material breach of any license, sublicense or other
agreement relating to the Intellectual Property or Third Party Intellectual
Property Rights.
(g) The Seller has not (i) been served with process, or is
aware that any person is intending to serve process on the Seller, 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) brought any action, suit or
proceeding for infringement of Intellectual Property against any third party. To
the knowledge of the Seller, the business of the Seller as presently conducted
and as proposed to be conducted, the Seller's products or proposed products do
not infringe any patent, trademark, service mark, copyright, trade secret or
other proprietary right of any third party.
(h) The Seller has made available to the Buyer copies of all
agreements executed by officers, employees and consultants of the Seller
regarding the protection of proprietary information and the assignment to the
Seller of any Intellectual Property arising from services performed for the
Seller by such persons.
(i) The Seller has, to the extent it deemed necessary and
appropriate, obtained or entered into written agreements with third parties in
connection with the disclosure to, or use or appropriation by, third parties, of
trade secret or proprietary Intellectual Property owned by the Seller and not
otherwise protected by a patent, a patent application, copyright, trademark, or
other registration or legal scheme ("Confidential Information"), and does not
know of any situation involving such third party use, disclosure or
appropriation of Confidential Information where the lack of such a written
agreement is likely to result in any material adverse effect on the Seller or
the Assets.
5.15 Sensitive Payments. To the best of the Seller's knowledge,
the Seller has not (a) made any contributions, payments or gifts to or for the
private use of any governmental official, employee or agent where either the
payment or the purpose of such contribution, payment or gift is illegal under
the laws of the United States or the jurisdiction in which made, (b) established
or maintained any unrecorded fund or asset for any purpose or made any false or
artificial entries on its or their books, or (c) made any payments to any person
with
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the intention that any part of such payment was to be used for any purpose other
than that described in the documents supporting the payment.
5.16 Real Property. Except as set forth in Schedule 5.16 to this
Agreement, the Seller neither owns or has any interest of any kind (whether
ownership, lease, or otherwise) in any real property except to the extent of the
Seller's leasehold interests under the leases for its Businesses premises, true
and complete copies of which leases (including all amendments thereto) are
annexed to Schedule 5.16 (the "Leases"). The Seller, and to the knowledge of the
Seller, the landlords thereunder, are presently in compliance with all of their
respective Assumed Liabilities under the Leases, and the premises leased
thereunder are in good condition (reasonable wear and tear excepted) and are
adequate for the operation of the Seller's Businesses as presently conducted.
5.17 Status of Payment Obligations in Respect of Assumed
Liabilities. Schedule 5.17 annexed hereto sets forth the current status of all
payment obligations of the Seller and/or AUGI in respect of each of the Assumed
Liabilities set forth on Schedule 2.1 annexed hereto.
5.18 Disclosure and Duty of Inquiry. Sellers have filed all tax
returns required to be filed (except for returns that have been properly
extended) and have paid all taxes shown as owing (other than taxes currently
being contested in good faith by appropriate proceedings, for which amounts have
been reserved in accordance with generally accepted accounting principles
("GAAP")). No tax returns are currently the subject of audit and there has been
no extension of time for assessment of taxes or waiver of the statute of
limitations with respect to taxes. Neither Seller is party to any tax sharing or
allocation agreement and neither has ever been a member of an affiliated group
filing a consolidated federal income tax return. The Buyer is not nor will it be
required to undertake any independent investigation to determine the truth,
accuracy and completeness of the representations and warranties made by the
Seller pursuant to this Article 5.
6. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF AUGI. In connection
connection with the sale of the Assets to the Buyer and in order to induce the
Buyer to enter into this Agreement, AUGI hereby represents and warrants to the
Buyer, as of the date of this Agreement (unless otherwise indicated), as
follows:
6.1 Absence of Undisclosed Liabilities. Except as expressly set
forth in the Registration Statement or as disclosed pursuant to schedules to
this Agreement, or arising in the normal course of the Seller's Businesses since
July 31, 1997, to the best of AUGI's knowledge there are no liabilities or
obligations (including, without limitation, any tax liabilities or accruals) of
either Seller, including any contingent liabilities, that are, in the aggregate,
material to the Businesses or which could have Material Adverse Effect on the
Assets, other than the Assumed Liabilities identified on Schedule 2.1. To the
best of AUGI's
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knowledge, the amount of each of the Assumed Liabilities is correctly set
forth on Schedule 2.1 in all material respects and, subject to obtaining an
extension of the UPS Note (as herein described), not more than $500,000 of such
Assumed Liabilities will be payable on or before April 30, 1999.
6.2 Disclosure and Duty of Inquiry. The Buyer is not nor will it be
required to undertake any independent investigation to determine the truth,
accuracy and completeness of the representations and warranties made by AUGI
pursuant to this Article 6.
7. REPRESENTATIONS AND WARRANTIES OF EXTEL AND THE BUYER In connection
with the purchase of the Assets from the Seller hereunder, EXTEL and the Buyer
hereby jointly and severally represent and warrant to the Seller and AUGI as
follows:
7.1 Organization, Good Standing and Qualification. Each of EXTEL
and the Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all necessary power and
authority to execute and deliver this Agreement, to perform the Assumed
Liabilities hereunder, and to consummate the transactions contemplated hereby.
Each of EXTEL and the Buyer has all requisite corporate power and authority to
own its properties and to conduct its business as currently conducted, and to
execute, deliver and perform its Assumed Liabilities under this Agreement. The
Buyer is a wholly-owned subsidiary of EXTEL.
7.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by EXTEL and the Buyer have been duly and validly authorized
by all necessary and appropriate action by the respective Board of Directors and
stockholders of EXTEL and the Buyer; and EXTEL and the Buyer each have the full
legal right, power and authority to execute and deliver this Agreement, to
perform the Assumed Liabilities hereunder, and to consummate the transactions
contemplated hereby. No further corporate authorization is necessary on the part
of EXTEL or the Buyer to consummate the transactions contemplated hereby.
7.3 Valid and Binding Agreement. This Agreement and, when executed
and delivered, all other agreements, instruments of transfer or assignment,
documents, and other instruments, constitute and will constitute the legal,
valid and binding obligation of EXTEL and the Buyer, enforceable against EXTEL
and the Buyer in accordance with their respective terms, except, in each case,
to the extent limited by bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally, and except that the remedy of specific
performance or similar equitable relief is available only at the discretion of
the court before which enforcement is sought.
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7.4 No Breach of Statute or Contract. Neither the execution and
delivery of this Agreement, nor compliance with the terms and provisions of this
Agreement or such other agreements on the part of EXTEL or the Buyer will: (a)
violate any statute or regulation of any governmental authority, domestic or
foreign, affecting EXTEL or the Buyer; (b) require the issuance of any
authorization, license, consent or approval of any federal or state governmental
agency (except to the extent that EXTEL or the Buyer may be required to be
qualified as a foreign corporation in certain jurisdictions in which it is not
currently so qualified, and to the extent that EXTEL or the Buyer may be
required to reapply for any permits, licenses and/or franchises which are not
assignable as part of the Assets and any consent of EXTEL's current lenders as
may be required); or (c) conflict with or result in a breach of any of the
terms, conditions or provisions of any judgment, order, injunction, decree,
note, indenture, loan agreement or other agreement or instrument to which EXTEL
or the Buyer is a party, or by which EXTEL or the Buyer is bound, or constitute
a default thereunder.
7.5 Disclosure. EXTEL and the Buyer have previously delivered to
the Seller and AUGI a true and correct copy of the Annual Report on Form 10-K
for the year ended March 31, 1998, as filed by EXTEL with the SEC, including
therein audited and unaudited financial information (the "EXTEL Public
Filings"). The EXTEL Public Filings comply with the SEC disclosure requirements
applicable thereto and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in light of the circumstances under
which it was made, in order to make the statements therein not misleading. Since
the date of the most recent EXTEL Public Filings, (a) there has been no material
change in the capitalization of EXTEL or the Buyer, (b) the businesses of EXTEL,
the Buyer and their respective subsidiaries have been operated in the normal
course, and (c) there has been no material adverse change in the financial
condition, operations or businesses of EXTEL, the Buyer, or their respective
subsidiaries (taken as a consolidated whole) from that reflected in such report.
7.6 Litigation. There is no suit, action, arbitration, or legal,
administrative or other proceeding, or governmental investigation pending, or to
the knowledge of EXTEL or the Buyer, threatened, against EXTEL or the Buyer (i)
which challenges EXTEL's or the Buyer's ability to consummate the transactions
provided for herein, or (ii) materially restricts or affects the business
operations of EXTEL or the Buyer either before or after the Closing.
7.7 Disclosure and Duty of Inquiry. No representations or
warranties by Buyer or EXTEL in this Agreement and no statement or information
contained in the schedules hereto or any certificate furnished or to be
furnished to Seller or AUGI hereunder 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. The Seller and AUGI are
not and will not be required to
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undertake any independent investigation to determine the truth, accuracy and
completeness of the representations and warranties made by EXTEL and the Buyer
in this Article 7.
8. PRE-CLOSING COVENANTS. Each of the Seller and AUGI covenants
covenants and agrees that, from April 15, 1998 (the date of execution of a
letter of intent regarding the transactions contemplated hereby) through and
including the Closing Date:
8.1 Representations and Warranties. The representations and
warranties contained in Articles 4 and 5 of this Agreement shall be true and
correct in all material respects as of the Closing Date as if made on such date.
8.2 Access to Information.
(a) The Seller shall permit the Buyer and its counsel,
accountants and other representatives, upon reasonable advance notice to the
Seller, during normal business hours and without undue disruption of the
Businesses of the Seller, to have reasonable access to all properties, books,
accounts, records, contracts, documents and information relating to the
Businesses and, to the extent reasonably required by the Buyer for its due
diligence, the Seller. The Buyer and its representatives shall also be permitted
to freely consult with the Seller's counsel concerning the Businesses.
(b) Each of the Seller and AUGI will make available to the
Buyer and its accountants all financial records relating to the Seller and
the Businesses, and shall cause the Seller's accountants to cooperate with the
Buyer's accountants and make available to the Buyer's accountants all work
papers and other materials developed by or in the possession of the Seller's
accountants, for the purpose of assisting the Buyer's accountants in the
performance of an audit of the Businesses for all periods subsequent to January
1, 1996.
8.3 Conduct of Businesses in Normal Course. The Seller shall carry
on the Businesses in substantially the same manner as heretofore conducted and
as provided under the Management Agreement dated April 15, 1998, and shall not
make or institute any unusual or novel methods of service, sale, purchase,
lease, management, accounting or operation that will vary materially from those
methods used by the Seller as of the date hereof, without in each instance
obtaining the prior written consent of the Buyer.
8.4 Preservation of Businesses and Relationships. The Seller shall,
without making or incurring any unusual commitments or expenditures, use all
reasonable efforts to preserve its business organization intact, and preserve
its present relationships with referral sources, clients, customers, suppliers
and others having business relationships with the Seller.
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8.5 Maintenance of Insurance. The Seller shall continue to carry
its existing insurance, to the extent obtainable upon reasonable terms.
8.6 Corporate Matters. The Seller shall not, without the prior
written consent of the Buyer:
(a) amend, cancel or modify any Material Contract or enter
into any material new agreement, commitment or transaction except, in each
instance, in the ordinary course of business;
(b) modify in any material respect (i) any material agreement
relating to the Businesses to which the Seller is a party or by which it may be
bound, or (ii) any policies, procedures or methods of doing business relating to
the Businesses, except in each case in the ordinary course of business;
(c) except pursuant to commitments in effect on the date
hereof (to the extent disclosed in this Agreement or in any schedule hereto),
make any capital expenditure(s) or commitment(s), whether by means of purchase,
lease or otherwise, or any operating lease commitment(s), in excess of $50,000
in the aggregate;
(d) dispose of or transfer any Asset outside of the ordinary
course of business, or sell, assign or dispose of any capital asset(s) with a
net book value in excess of $15,000 as to any one item or $50,000 in the
aggregate;
(e) materially change its method of collection of accounts or
notes receivable, or accelerate or slow in any material respect its payment of
accounts payable;
(f) forgive any obligation or performance (past, present or
future) owed to the Businesses, except for any intercompany obligation owed by
AUGI or its Affiliates to the Seller;
(g) incur any material liability or indebtedness except, in
each instance, in the ordinary course of business
(h) subject any of the assets or properties of the Businesses
to any further liens or encumbrances, other than Permitted Liens;
(i) make any payments to any Affiliate of the Seller; or
(j) agree to do, or take any action in furtherance of, any of
the foregoing.
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9. ADDITIONAL AGREEMENTS OF THE PARTIES.
9.1 Confidentiality. Notwithstanding anything to the contrary
contained in this Agreement, and subject only to any disclosure requirements
which may be imposed upon any party under applicable state or federal securities
or antitrust laws, it is expressly understood and agreed by the parties that,
except with respect to matters or information which are publicly available other
than by reason of a breach of this Section 9.1, (i) this Agreement, the
schedules hereto, and the conversations, negotiations and transactions relating
hereto and/or contemplated hereby, and (ii) all financial information, business
records and other non-public information concerning either party which the other
party or its representatives has received or may hereafter receive, shall be
maintained in the strictest confidence by the recipient and its representatives,
and shall not be disclosed to any person that is not associated or affiliated
with the recipient and involved in the transactions contemplated hereby, without
the prior written approval of the party which provided the information. The
parties hereto shall use their best efforts to avoid disclosure of any of the
foregoing or undue disruption of any of the business operations or personnel of
the parties, and no party shall issue any press release or other public
announcement regarding the transactions contemplated hereby without the prior
approval of each other party (such approval not to be unreasonably withheld or
delayed) unless otherwise required under applicable laws and regulations,
including SEC rules and regulations. In the event that the transactions
contemplated hereby shall not be consummated for any reason, each party
covenants and agrees that neither it nor any of its representatives shall retain
(other than information which is publicly available other than by reason of a
breach of this Section 9.1) any documents, lists or other writings of any other
party which it may have received or obtained in connection herewith or any
documents incorporating any of the information contained in any of the same (all
of which, and all copies thereof in the possession or control of the recipient
or its representatives, shall be returned to the party which provided the
information).
9.2 Exclusivity. From the date hereof through any termination of
this Agreement in accordance with Section 13 below, the Seller and AUGI shall
not (and shall not permit any of their stockholders, directors, officers,
Affiliates, agents or representatives to) negotiate with or enter into any other
commitments, agreements or understandings with any person, firm or corporation
(other than its Affiliates) in respect of any sale of capital stock or assets of
the Seller, any merger, consolidation or corporate reorganization, or any other
such transaction relating to the Seller or the Businesses.
9.3 Bill of Sale; Transfer Documents; Assumption Agreement.
(a) On the Closing Date, the Seller shall execute and
deliver to the Buyer a bill of sale in respect of the Assets in substantially
the form of
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Exhibit A annexed hereto (the "Bill of Sale"). In addition, to the extent that
specific assignments may be necessary or appropriate in respect of any of the
Assets, and/or to the extent that any of the Assets are represented by
certificates of title or other documents, then the Seller shall execute and
deliver to the Buyer any and/or additional transfer documents, and shall endorse
to and in the name of the Buyer all certificates of title and other such
documents, as may be necessary or appropriate in order to effect the full
transfer to the Buyer or its designee(s) of all of the Assets.
(b) On the Closing Date, the Seller and the Buyer shall
execute and deliver to one another an assignment and assumption agreement in
respect of the Assumed Liabilities in substantially the form of Exhibit B
annexed hereto (the "Assumption Agreement"). In addition, to the extent that
specific assignments may be required in order to effect the assignment to and
assumption by the Buyer of any particular Assumed Liabilities, the Seller and
the Buyer shall execute and deliver to one another such additional assignment
and assumption documents.
9.4 Additional Agreements and Instruments. On or before the Closing
Date, the Seller, AUGI, EXTEL, and the Buyer shall execute, deliver and file all
exhibits, agreements, certificates, instruments and other documents, not
inconsistent with the provisions of this Agreement, which, in the opinion of
counsel to the parties hereto, shall reasonably be required to be executed,
delivered and filed in order to consummate the transactions contemplated by this
Agreement.
9.5 Non-Interference. Neither EXTEL, the Buyer, the Seller, nor
AUGI shall cause to occur any act, event or condition which would cause any of
their respective representations and warranties made in this Agreement to be or
become untrue or incorrect in any material respect as of the Closing Date, or
would interfere with, frustrate or render unreasonably expensive the
satisfaction by the other party or parties of any of the conditions precedent
set forth in Sections 10 and 11 below.
9.6 Management Agreement. On the Closing Date, the Management
Agreement dated April 15, 1998, as amended June 22, 1998, shall terminate as
provided in Section 5.2(ii) of the Management Agreement; provided however,
within 13 months of the Closing Date, EXTEL or Buyer shall pay AUGI in the
amount of $150,000 as reimbursement for advances of expenses by AUGI to CCC. The
obligation shall be evidenced by a promissory note to be delivered at the
Closing in the form attached hereto as Exhibit D.
9.7 Letter Agreement. On the Closing Date, AUGI and the Seller, on
the one hand, and EXTEL and the Buyer, on the other hand, shall execute and
deliver to each other the letter agreement in the form annexed hereto as Exhibit
E.
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10. CONDITIONS PRECEDENT
10.1 Conditions to Obligations of EXTEL and Buyer. The obligations
of EXTEL and the Buyer to consummate the transactions contemplated by this
Agreement are further subject to the satisfaction, at or before the Closing
Date, of all the following conditions, any one or more of which may be waived in
writing by the Buyer:
(a) Accuracy of Representations and Warranties. All
representations and warranties made by the Seller and/or AUGI in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
as though such representations and warranties were made on and as of that date.
(b) Performance. The Seller and AUGI shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by them on or before the Closing Date.
(c) Certification. The Buyer shall have received a
certificate, dated the Closing Date, signed by the Seller and AUGI, certifying,
in such detail as the Buyer and its counsel may reasonably request, that the
conditions specified in Sections 10.1(a) and 10.1(b) above have been fulfilled.
(d) Resolutions. The Buyer shall have received certified
resolutions of the Board of Directors and the sole stockholder of the Seller and
of the Board of Directors of AUGI, in form reasonably satisfactory to counsel
for the Buyer, authorizing the Seller's and AUGI's execution, delivery and
performance of this Agreement and all actions to be taken by the Seller and AUGI
hereunder.
(e) Absence of Litigation. No action, suit or proceeding by or
before any court or any governmental body or authority, against either the
Seller or AUGI or pertaining to the transactions contemplated by this Agreement
or their consummation, shall have been instituted on or before the Closing Date,
which action, suit or proceeding would, if determined adversely, have a Material
Adverse Effect.
(f) Due Diligence. The Buyer shall have completed, to its
satisfaction, due diligence of the properties and assets of the Businesses,
contracts, agreements, books, records and documents relating to the Seller and
the Assets.
(g) Consents. All necessary consents of third parties required
for the consummation of this Agreement and the proposed transaction, including:
(i) any parties to any Material Contracts (including, without limitation,
contracts with customers of the Businesses), and any licensing authorities which
are material to the Businesses, and (ii) any governmental authorities or
agencies to
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the extent required to be obtained prior to the Closing in
connection with the transactions contemplated by this Agreement, shall have been
obtained and true and complete copies thereof delivered to the Buyer.
(h) Material Adverse Effect. On the Closing Date, there shall
not have occurred any event or condition materially and adversely affecting the
Assets or the financial condition, operations or Businesses of the Seller,
except as disclosed in this Agreement or the schedules hereto on the date
hereof.
(i) Extension of UPS Note. AUGI shall have obtained prior to
the Closing Date, an extension until not earlier than November 1999 of the $1.5
million note of Connectsoft and AUGI payable to UPS, which is currently due and
payable on April 30, 1999 (the "UPS Note").
(j) Intercompany Obligations. The Buyer shall have received
from AUGI and its Affiliates written releases or other assurances, in form and
substance reasonably satisfactory to the Buyer, that AUGI and its Affiliates
will not assert against the Buyer or the Assets or any of Buyer's Affiliates any
claims in respect of obligations owed by the Seller to AUGI and its Affiliates,
except for the Note to be delivered at the Closing in the form annexed hereto as
Exhibit D.
(k) Additional Working Capital. EXTEL shall have obtained a
minimum of $1.0 million of additional working capital financing for the
Businesses upon such terms and conditions as shall be reasonably acceptable to
EXTEL.
(l) Bill of Sale. On or before the Closing Date, the Seller
shall have executed and delivered the Bill of Sale to the Buyer.
(m) Keyman Agreement. On or before the Closing Date, Howard
Katz shall have entered into an employment agreement with EXTEL on terms and
conditions mutually agreeable to Howard Katz and EXTEL.
(n) Non-Disclosure Agreements. All employees of CCC shall have
executed and delivered to CCC (and Buyer shall have received copies thereof)
Non-Disclosure Agreements in form and substance reasonably satisfactory to
Buyer.
10.2 Conditions to Obligations of AUGI and Seller. The
obligations of AUGI and the Seller to consummate the transactions contemplated
by this Agreement are further subject to the satisfaction, at or before the
Closing Date, of all the following conditions, any one or more of which may be
waived in writing by AUGI:
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(a) Accuracy of Representations and Warranties. All
representations and warranties made by EXTEL and the Buyer in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
as though such representations and warranties were made on and as of that date.
(b) Performance. EXTEL and the Buyer shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by EXTEL and the Buyer on or before the Closing Date.
(c) Certification. The Seller and AUGI shall have received a
certificate, dated the Closing Date, executed by EXTEL and the Buyer,
certifying, in such detail as the Seller and AUGI and their counsel may
reasonably request, that the conditions specified in Sections 10.2(a) and
10.2(b) above have been fulfilled.
(d) Resolutions. The Seller and AUGI shall have received
certified resolutions of the Board of Directors and sole stockholder of the
Buyer and of the Board of Directors of EXTEL, in form reasonably satisfactory to
counsel for the Seller and AUGI, authorizing the Buyer's and EXTEL's execution,
delivery and performance of this Agreement and all actions to be taken by the
Buyer and EXTEL hereunder.
(e) Consents. All necessary consents of third parties required
for the consummation of this Agreement and the proposed transaction, including:
(i) any parties to any Material Contracts (including, without limitation,
contracts with customers of the Businesses), and any licensing authorities which
are material to the Businesses, and (ii) any governmental authorities or
agencies to the extent required to be obtained prior to the Closing in
connection with the transactions contemplated by this Agreement, shall have been
obtained and true and complete copies thereof delivered to the Buyer.
(f) Assumption Agreement. The Buyer shall have executed and
delivered to the Seller the Assumption Agreement.
(g) Promissory Note. The Buyer and EXTEL shall have executed
and delivered to AUGI the Note in the form annexed hereto as Exhibit D.
(h) Letter Agreement. The Buyer and EXTEL shall have executed
and delivered to AUGI and the Seller the letter agreement in the form annexed
hereto as Exhibit E.
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11. CLOSING.
11.1 Place and Date of Closing. Unless this Agreement shall be
terminated pursuant to Section 13 below, the consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of the Buyer, or such other location as is agreed to between the parties, at
10:00 A.M. local time on the date that is three (3) business days after the
satisfaction of all conditions to Closing set forth herein, it being understood
that the parties hereto shall use their best efforts to satisfy the conditions
precedent to Closing, in each case on or before July 15, 1998 (the date of the
Closing being referred to in this Agreement as the "Closing Date"). If,
notwithstanding the parties' best efforts, such conditions shall not have been
satisfied by such date, then the Closing Date shall be extended to the date that
is three (3) Businesses days after the satisfaction of all such conditions, but
which shall not in any case be later than July 31, 1998 ("Outside Closing
Date"), unless the parties hereto agree in writing otherwise.
11.2 Deliveries at Closing. At the Closing, the Seller and the
Buyer, respectively, will deliver the following documents:
(a) The Seller and AUGI will deliver or cause to be delivered
to EXTEL and to the Buyer:
(i) a copy of the by-laws of the Seller and resolutions
adopted by the Seller's Board of Directors and sole stockholder approving the
transactions contemplated by this Agreement, certified by the Secretary of the
Seller as of the Closing Date;
(ii) a copy of the certificate of incorporation of the
Seller, with all amendments thereto, together with a long form good standing
certificate and tax clearance certificate, certified by the Secretary of State
of the Seller's state of incorporation as of a date no later than five (5) days
before the Closing Date;
(iii) certificate(s) by the Secretaries of the Seller and
of AUGI, dated as of the Closing Date, attesting to the authority and verifying
the signature of each person who signed this Agreement or any other agreement,
instrument or certificate delivered in connection with the transactions
contemplated hereby on behalf of the Seller and AUGI, respectively;
(iv) all agreements, authorizations, exemptions, waivers
and consents of any third persons or entities required to be obtained by the
Seller or AUGI hereunder or generally necessary for the consummation by the
Seller and AUGI of the transactions contemplated by this Agreement;
(v) sufficient, original, executed copies of assignments
of patents, trademarks and/or copyrights, in form and substance
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acceptable to the Buyer, such that there is one original version for each
group of patents, trademarks and copyrights;
(vi) certificate(s), dated the Closing Date, signed by the
chief financial officer of each of the Seller and AUGI that the conditions
specified in Section 10.2(a) and (b) hereof have been fulfilled in all respects;
(vii) assignment of leases for each Lease; and
(viii) such other specific instruments of sale,
conveyance, assignment, transfer, and delivery as are required to vest good and
marketable title to the Assets in the Buyer.
(b) EXTEL and the Buyer will deliver or cause to be
delivered to the Seller and to AUGI:
(i) a copy of the by-laws of the Buyer and resolutions
adopted by the Buyer's Board of Directors and sole stockholder approving the
transactions contemplated by this Agreement, certified by the Secretary of the
Buyer as of the Closing Date;
(ii) a copy of the certificate of incorporation of the
Buyer, with all amendments thereto, together with a long form good standing
certificate and tax clearance certificate, certified by the Secretary of State
of the Buyer's state of incorporation as of a date no later than five (5) days
before the Closing Date;
(iii) certificate(s) by the Secretaries of EXTEL and of
the Buyer, dated as of the Closing Date, attesting to the authority and
verifying the signature of each person who signed this Agreement or any other
agreement, instrument or certificate delivered in connection with the
transactions contemplated hereby on behalf of EXTEL and the Buyer, respectively;
(iv) certificate(s), dated the Closing Date, signed by the
chief financial officer of each of EXTEL and the Buyer that the conditions
specified in Section 10.1(a) and (b) hereof have been fulfilled in all respects;
and
(v) such other specific instruments of conveyance,
assignment, transfer, and delivery as are required to confirm that the Buyer
shall have assumed the payment and performance of the Assumed Liabilities and
the performance of the Material Contracts.
12. TERMINATION OF AGREEMENT.
12.1 General. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the
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Closing: (a) by the mutual written consent of the parties hereto; (b) by EXTEL
and the Buyer, on the one hand, or by the Seller and AUGI, on the other hand,
if: (i) a material breach shall exist with respect to the written
representations and warranties made by the other party or parties, as the case
may be, which breach shall not have been cured within thirty (30) days after
notice thereof to such other party or parties; (ii) the other party or parties,
as the case may be, shall take any action prohibited by this Agreement, if such
actions shall or may have a Material Adverse Effect on the financial condition,
operations, or Businesses of the Seller or on any material portion of the Assets
and/or the consummation of the transactions contemplated hereby, and such breach
shall not have been cured, if the same is capable of cure, within thirty (30)
days after notice thereof to the breaching party, (iii) the other party or
parties, as the case may be, shall not have furnished, upon reasonable notice
therefor, such certificates and documents required in connection with the
transactions contemplated hereby and matters incidental thereto as it or they
shall have agreed to furnish, and it is reasonably unlikely that the other party
or parties will be able to furnish such item(s) prior to the Outside Closing
Date specified below, or (iv) any consent of any third party to the transactions
contemplated hereby (whether or not the necessity of which is disclosed herein
or in any schedule hereto) is reasonably necessary to prevent a default under
any outstanding material obligation of EXTEL, the Buyer, AUGI or the Seller, and
such consent is not obtainable, after good faith efforts to obtain the same,
without material cost or penalty (unless the party or parties not seeking to
terminate this Agreement agrees or agree to pay such cost or penalty); or (c) by
EXTEL or the Buyer, on the one hand, or by the Seller and AUGI, on the other
hand, at any time on or after the Outside Closing Date, if the transactions
contemplated hereby shall not have been consummated prior thereto, and the party
directing termination shall not then be in breach or default of any obligations
imposed upon such party by this Agreement.
12.2 Effect of Termination. In the event of termination by
either party as above provided in this Section 12, prompt written notice shall
be given to the other party. Termination of this Agreement shall not relieve any
party of any of its obligations pursuant to Section 9.1 above, and shall not
relieve any breaching party from liability for any breach of this Agreement.
13. INDEMNIFICATION. It is expressly understood and agreed by and among
all parties to this Agreement that the indemnification provisions set forth in
this Article 13 are in addition to, and not in lieu of, the respective
indemnification obligations of each of EXTEL and AUGI as are set forth in
Article 14 herein. In the event and to the extent that there shall be any
inconsistency between the rights and obligations contained in this Article 13
and to Article 14, the terms and conditions of Article 14, shall, in all
respects, govern.
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13.1 General.
(a) Without prejudice to any rights of contribution as between
the Seller and AUGI, from and after the Closing Date, the Seller and AUGI shall
jointly and severally defend, indemnify and hold harmless the Buyer and its
stockholders, affiliates, officers, directors, employees and agents (each a
"Buyer Indemnified Person") from, against and in respect of any and all claims,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including costs of investigation, interest, penalties and
reasonable attorneys' fees, that the Buyer may incur, sustain or suffer
("Losses") as a result of (i) any breach of, or failure by the Seller or AUGI to
perform, in any material respect, any of the representations, warranties,
covenants or agreements of the Seller or AUGI contained in this Agreement, or
(ii) any failure by the Seller to pay or perform when due (or any imposition on
the Buyer or EXTEL) any of its retained liabilities (including any liabilities
of the Business or the Seller which are not Assumed Liabilities).
(b) Without prejudice to any rights of contribution as
between the Buyer and EXTEL, from and after the Closing Date, the Buyer and
EXTEL shall jointly and severally defend, indemnify and hold harmless the Seller
and AUGI, and their respective stockholders, affiliates, officers, directors,
employees and agents (each a "Seller Indemnified Person") from, against and in
respect of any and all claims, losses, costs, expenses, obligations,
liabilities, damages, recoveries and deficiencies, including costs of
investigation, interest, penalties and reasonable attorneys' fees, that the
Seller or AUGI may incur, sustain or suffer as a result of (i) any breach of, or
failure by the Buyer or EXTEL to perform, in any material respect, any of the
representations, warranties, covenants or agreements of the Buyer or EXTEL
contained in this Agreement, or (ii) any failure by the Buyer to pay or perform
(or any imposition on the Seller or AUGI) when due any of the Assumed
Liabilities.
13.2 Limitations on Certain Indemnity.
(a) Notwithstanding any other provision of this
Agreement to the contrary, the Seller and AUGI shall not be liable to the Buyer
with respect to Losses unless and until, and then only to the extent that, the
aggregate amount of all Losses incurred by the Buyer shall exceed the sum of
$50,000 (the "Basket"); provided, however, that the Basket shall not be
available with respect to any Losses involving proven fraud by the Seller or
AUGI. The Seller and AUGI shall thereafter be liable for all Losses in excess of
the Basket, provided that the Seller's and AUGI's maximum aggregate liability in
respect of all Losses shall not, in the absence of proven fraud by the Seller or
AUGI in respect of any particular Losses, in any event exceed the limitations
set forth in Section 13.2(b) below.
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(b) Except with respect to any Losses involving proven fraud
by the Seller or AUGI, the Seller and AUGI shall only be required, in the
aggregate, to pay indemnification hereunder, after application of the Basket, up
to a maximum amount equal to the Consideration.
(c) The Buyer shall be entitled to indemnification by the
Seller and AUGI for Losses only in respect of claims for which notice of claim
shall have been given to the Seller and AUGI on or before June 30, 1999, or,
with respect to Losses relating to a breach of any warranties in respect of
taxes, the expiration of the final statute of limitations for those tax returns
covered by the tax warranties contained herein; provided, however, that the
Buyer shall not be entitled to indemnification from the Seller or AUGI in the
event that the subject claim for indemnification relates to a third-party claim
and the Buyer delayed giving notice thereof to the Seller and AUGI to such an
extent as to cause material prejudice to the defense of such third-party claim.
This Section 13.2(c) shall not apply to any failure by the Seller to pay when
due any of its retained liabilities.
13.3 Claims for Indemnity. Whenever a claim shall arise for
which any party shall be entitled to indemnification hereunder, the indemnified
party shall notify the indemnifying party in writing (which may include
facsimile transmission) within three (3) Business days of the indemnified
party's first receipt of notice of, or the indemnified party's obtaining actual
knowledge of, such claim, and in any event within such shorter period as may be
necessary for the indemnifying party or parties to take appropriate action to
resist such claim. Such notice shall specify all facts known to the indemnified
party giving rise to such indemnity rights and shall estimate (to the extent
reasonably possible) the amount of potential liability arising therefrom. If the
indemnifying party shall be duly notified of such dispute, the parties shall
attempt to settle and compromise the same or may agree to submit the same to
arbitration or, if unable or unwilling to do any of the foregoing, such dispute
shall be settled by appropriate litigation, and any rights of indemnification
established by reason of such settlement, compromise, arbitration or litigation
shall promptly thereafter be paid and satisfied by those indemnifying parties
obligated to make indemnification hereunder.
13.4 Right to Defend. If the facts giving rise to any claim for
indemnification shall involve any actual or threatened action or demand by any
third party against the indemnified party or any of its Affiliates, the
indemnifying party or parties shall be entitled (without prejudice to the
indemnified party's right to participate at its own expense through counsel of
its own choosing), at their expense and through counsel of their own choosing,
to defend or prosecute such claim in the name of the indemnifying party or
parties, or any of them, or if necessary, in the name of the indemnified party.
In any event, the indemnified party shall give the indemnifying party advance
written notice of any proposed compromise or settlement of any such claim. If
the remedy sought in any such action or demand is solely money damages, the
indemnifying party shall have five
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(5) Business Days after receipt of such notice of settlement to object to the
proposed compromise or settlement, and if it does so object, the indemnifying
party shall be required to undertake, conduct and control, though counsel of
its own choosing and at its sole expense, the settlement or defense thereof,
and the indemnified party shall cooperate with the indemnifying party in
connection therewith.
14. INDEMNIFICATION - ASSUMED LIABILITIES/MATERIAL CONTRACTS
14.1. Indemnification of the Seller and AUGI. Each of EXTEL and
Buyer does hereby jointly and severally, irrevocably, absolutely and
unconditionally indemnify, defend and hold harmless the Seller and AUGI, and
each of them, individually and severally, to the fullest extent permitted by
law, from and against any claim against the Seller or AUGI in respect of (i) any
act, omission, neglect, breach or failure by EXTEL and/or Buyer, or either of
them, to timely and fully pay and perform each and every one of the Assumed
Liabilities and Material Contracts, when due, and (ii) as a result of, arising
from or in connection with any claim by any taxing authority for Taxes of or
relating to EXTEL or Buyer, including (but not limited to) all Taxes
attributable to the business and operations of any of them after the Closing
Date (all of the foregoing being referred to collectively as the "AUGI Group
Indemnified Amounts"), except to the extent provided in Sections 2.2(b) and
14.2. Each of the Buyer and EXTEL jointly and severally covenants and agrees to
fully pay and reimburse each of the Seller and AUGI, within twenty-four (24)
hours of written demand therefor, for any payments made or amounts which the
Seller or AUGI becomes legally obligated to pay in connection with any of the
AUGI Group Indemnified Amounts, except to the extent provided in Sections 2.2(b)
and 14.2.
14.2 Indemnification of the Buyer and EXTEL. Each of AUGI,
Connectsoft and CCC does hereby jointly and severally, irrevocably, absolutely
and unconditionally indemnify, defend and holds harmless the Buyer and EXTEL,
and each of them, individually and severally, to the fullest extent permitted by
law, from and against any claim against the Buyer or EXTEL in respect of (i) any
act, omission, neglect, breach or failure by AUGI, Connectsoft and/or CCC, or
any of them, to timely and fully pay and perform (a) each and every one of the
Excluded Liabilities, when due, and (b) any of the Assumed Liabilities, but only
to the extent that the aggregate principal amount of all such Assumed
Liabilities shall exceed $4,500,000 and (ii) as a result of, arising from or in
connection with any claim by any taxing authority for Taxes of or relating to
AUGI, Connectsoft or CCC, including (but not limited to) all Taxes attributable
to the business and operations of any of them prior to the Closing Date (all of
the foregoing being referred to collectively as the "EXTEL Group Indemnified
Amount"). For purposes of this Agreement, "Taxes" shall mean all federal, state,
county, local and other taxes, including, without limitation, income taxes,
estimated taxes, withholding taxes, excise taxes, sales taxes, use taxes, gross
receipt taxes, franchise taxes, employment
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and payroll related taxes, property taxes and import duties, whether or not
measured in whole or in part by net income, and all deficiencies or other
additions to tax, interest and penalties owed by it in connection with any such
taxes. Each of AUGI, Connectsoft and CCC jointly and severally covenants and
agrees to fully pay and reimburse each of the Buyer and EXTEL, within
twenty-four (24) hours of written demand therefor, for any payments made or
amounts which the Buyer or EXTEL becomes legally obligated to pay in connection
with any of the EXTEL Group Indemnified Amount.
14.3 Claims for Indemnity. Whenever a claim shall arise for
which any party shall be entitled to indemnification hereunder, the indemnified
party shall promptly notify the indemnifying party in writing (which may include
facsimile transmission) following the indemnified party's receipt of notice of,
or the indemnified party's obtaining actual knowledge of, such claim. Such
notice shall specify all facts known to the indemnified party giving rise to
such indemnity rights and shall estimate (to the extent reasonably possible) the
amount of potential liability arising therefrom.
14.4 Right to Defend. If the facts giving rise to any claim for
indemnification shall involve any actual or threatened action or demand by any
third party against the indemnified party or any of its affiliates, the
indemnifying party or parties shall be entitled (without prejudice to the
indemnified party's right to participate at its own expense through counsel of
its own choosing), at their expense and through counsel of their own choosing,
to defend or prosecute such claim in the name of the indemnifying party or
parties, or any of them, or if necessary, in the name of the indemnified party.
In any event, the indemnified party shall give the indemnifying party advance
written notice of any proposed compromise or settlement of any such claim. If
the remedy sought in any such action or demand is solely money damages, the
indemnifying party shall have three (3) days after receipt of such notice of
settlement to object to the proposed compromise or settlement, and if it does so
object, the indemnifying party shall be required to undertake, conduct and
control, though counsel of its own choosing and at its sole expense, the
settlement or defense thereof, and the indemnified party shall cooperate with
the indemnifying party in connection therewith.
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15. POST-CLOSING EVENTS. The parties hereby further agree
that, from and after the Closing:
15.1 Books and Records. At any time and from time to time from and
after the Closing Date, the Buyer shall permit the Seller and/or AUGI to have
access, during normal business hours and without undue disruption of the Buyer's
Businesses, to those books and records transferred to the Buyer as part of the
Assets, for purposes of preparing any tax filings or any other legitimate
purpose of the Seller and/or AUGI. Such books and records may be made available
at any location where the Buyer maintains same, and all costs and expenses
relating to such access and inspection shall be the responsibility of the Seller
and/or AUGI. In the event that, at any time and from time to time after the
Closing Date, the Buyer shall determine to destroy or dispose of any such books
and records, the Buyer shall give notice thereof to the Seller and/or AUGI not
less than thirty (30) days prior to such disposition, and the Seller and/or AUGI
shall have the right, at their own cost and expense, to take possession of such
books and records prior to their disposition.
15.2 Employees. The Buyer hereby confirms its intention to retain,
as of the Closing Date, the employees of the Businesses identified on Schedule
15.2, provided that the Buyer shall at all times retain the absolute discretion
to terminate, dismiss, reassign or otherwise modify the terms of employment of
any or all of such employees. The Buyer shall retain full discretion as to the
nature and extent of benefits to be provided to employees for periods from and
after the Closing Date.
15.3 Further Assurances. From time to time from and after the
Closing Date, the parties will take any and all such action and execute and
deliver to one another any and all further agreements, instruments, certificates
and other documents, as may reasonably be requested by any other party in order
more fully to consummate the transactions contemplated hereby, and to effect an
orderly transition of the ownership and operations of the Businesses.
16 COSTS.
16.1 Finder's or Broker's Fees. The Buyer and EXTEL (on the one
hand) and the Seller and AUGI (on the other hand) represents and warrants that
neither they nor any of their respective Affiliates have dealt with any broker
or finder in connection with any of the transactions contemplated by this
Agreement, and no broker or other person is entitled to any commission or
finder's fee in connection with any of these transactions.
16.2 Expenses. The Buyer, the Seller and AUGI shall each pay all of
their own respective costs and expenses incurred or to be incurred by them,
respectively, in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement.
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17. FORM OF AGREEMENT.
17.1 Effect of Headings. The Section headings used in this
Agreement and the titles of the schedules hereto are included for purposes of
convenience only, and shall not affect the construction or interpretation of any
of the provisions hereof or of the information set forth in such schedules.
17.2 Entire Agreement; Waivers. This Agreement (including the
schedules and exhibits hereto) constitutes the entire agreement between the
parties pertaining to the subject matter hereof, and supersedes all prior
agreements or understandings as to such subject matter. No party hereto has made
any representation or warranty or given any covenant to the other except as set
forth in this Agreement and the schedules and exhibits hereto. No waiver of any
of the provisions of this Agreement shall be deemed, or shall constitute, a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless executed in
writing by the party making the waiver.
17.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18. PARTIES.
18.1 Parties in Interest. Nothing in this Agreement, whether
expressed or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective successors and permitted assigns, nor is anything in this Agreement
intended to relieve or discharge the Assumed Liabilities or liability of any
third persons to any party to this Agreement, nor shall any provision give any
third persons any right of subrogation or action over or against any party to
this Agreement.
18.2 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on or
telecopied to the party to whom notice is to be given (telecopy confirmation
received by the transmitting party), one day after being deposited for overnight
delivery with a recognized overnight courier service in a properly addressed
package with all charges prepaid or billed to the account of the sender, or on
the third day after mailing if mailed to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
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(a) If to the Seller or AUGI:
Connectsoft, Inc.
c/o American United Global, Inc.
11130 NE 33rd Place, Suite 250
Bellevue, Washington 98004
Attn: Mr. Robert M. Rubin
Fax No.: (425) 822-9095 and (516) 254-2136
with a copy sent concurrently to:
Jay M. Kaplowitz, Esq.
Gersten, Savage, Kaplowitz & Fredericks, LLP
101 East 52nd Street
New York, New York 10022
Fax No.: (212) 980-5192
(b) If to the Buyer:
Executive TeleCard, Ltd.
4260 East Evans Avenue
Denver, Colorado 80222
Attn: Christopher Vizas
Fax No.: (303) 692-0965
with a copy sent concurrently to:
Stephen Kaufman, Esq.
Hogan & Hartson, LLP
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Fax No.: (202) 637-5910
or to such other address or telecopier number as any party shall have specified
by notice in writing given to all other parties.
19. MISCELLANEOUS.
19.1 Amendments and Modifications. No amendment or modification
of this Agreement or any exhibit or schedule hereto shall be valid unless made
in writing and signed by the party to be charged therewith.
19.2 Non-Assignability; Binding Effect. Neither this Agreement,
nor any of the rights or liabilities of the parties hereunder, shall be
assignable by any party hereto without the prior written consent of all other
parties hereto, except that the Buyer may, without requirement of any consent of
AUGI or
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the Seller, assign the Buyer's rights to indemnification hereunder to any
secured lender to the Buyer from time to time. Otherwise, this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
19.3 Governing Law; Jurisdiction. This Agreement shall be
construed and interpreted and the rights granted herein governed in accordance
with the laws of the State of Delaware applicable to contracts made and to be
performed wholly within such State. Except as otherwise provided in Section 13.3
and Section 14.3 above, any claim, dispute or controversy arising under or in
connection with this Agreement or any actual or alleged breach hereof shall be
settled exclusively by arbitration in accordance with the commercial arbitration
rules of the American Arbitration Association then obtaining. As part of his or
her award, the arbitrator shall make a fair allocation of the fee of the
American Arbitration Association, the cost of any transcript, and the parties'
reasonable attorneys' fees, taking into account the merits and good faith of the
parties' claims and defenses. Judgment may be entered on the award so rendered
in any court having jurisdiction. Any process or other papers hereunder may be
served by registered or certified mail, return receipt requested, or by personal
service, provided that a reasonable time for appearance or response is allowed.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement
on and as of the date first set forth above.
AMERICAN UNITED GLOBAL, INC.
By:_________________________________________
Name:
Title:
CONNECTSOFT COMMUNICATIONS
CORPORATION
By:_________________________________________
Name:
Title:
CONNECTSOFT HOLDING CORP.
By:_________________________________________
Name:
Title:
C-SOFT ACQUISITION CORP.
By:_______________________________________
Name:
Title
EXECUTIVE TELECARD, LTD.
By:_______________________________________
Name:
Title
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