STOCK PURCHASE AGREEMENT
BY AND AMONG
COMMUNICATION TELESYSTEMS INTERNATIONAL D.B.A. WORLDXCHANGE
COMMUNICATIONS,
WORLDXCHANGE B.V.B.A.
WXL INTERNATIONAL - AUSTRALIA, INC.
THE TVG ASIAN COMMUNICATIONS FUND
WARNA GERAKAN SDN BHD
WORLDXCHANGE PTY. LTD.
AND
CERTAIN INDIVIDUALS NAMED HEREIN
AUGUST 24, 1999
1. DEFINITIONS.............................................................................................1
1.1 Definitions.............................................................................................1
2. PURCHASE AND SALE OF THE COMPANY SHARES; THE CLOSING; POST-CLOSING DELIVERIES...........................4
2.1 Purchase and Sale of the Company Shares.................................................................4
2.2 The Closing.............................................................................................5
2.3 Closing Conditions......................................................................................5
2.3.1 Mutual Condition........................................................................................5
2.3.2 Conditions to the Obligation of TVG to Close............................................................5
2.3.3 Conditions to the Obligation of the CTS Parties to Close................................................5
2.4 Post-Signing Deliveries.................................................................................6
3. REPRESENTATIONS AND WARRANTIES OF CTS AND WXBV..........................................................6
3.1 Organization and Corporate Power........................................................................6
3.2 Capital Stock and Related Matters.......................................................................6
3.3 Authorization; No Conflicts.............................................................................6
3.4 Governmental Consent, etc...............................................................................7
3.5 No Brokers or Finders...................................................................................7
3.6 Accuracy of Information.................................................................................7
3.7 Investment Representations..............................................................................7
4. REPRESENTATIONS AND WARRANTIES OF TVG...................................................................8
4.1 Organization and Related Matters........................................................................8
4.2 Authorization...........................................................................................8
4.3 No Conflicts............................................................................................8
4.4 No Brokers or Finders...................................................................................8
4.5 Ownership...............................................................................................8
4.6 Title...................................................................................................8
4.7 Right to Transfer.......................................................................................8
4.8 Investment Representations..............................................................................9
4.9 Governmental Consent, etc...............................................................................9
5. TRANSFER OF SHARES OF CTS STOCK........................................................................10
5.1 Restrictive Legends....................................................................................10
5.2 Notice of Proposed Transfers...........................................................................10
5.3 Permitted Transfers....................................................................................10
6. CERTAIN COVENANTS......................................................................................11
6.1 Termination of Company Shareholders' Deed and Company Subscription Agreement...........................11
6.2 General Release........................................................................................11
6.3 Financial Statements...................................................................................12
6.4 Preemptive Rights......................................................................................12
6.5 Best Efforts...........................................................................................13
6.6 Rule 144 Filing........................................................................................13
6.7 Resignation of John Troy...............................................................................13
7. INDEMNIFICATION........................................................................................13
7.1 Obligations of CTS.....................................................................................14
7.2 Obligations of TVG.....................................................................................14
7.3 Procedure..............................................................................................14
7.3.1 Certificate............................................................................................14
7.3.2 Defense................................................................................................14
7.3.3 Subrogation of Indemnifying Party......................................................................14
7.4 Exclusive Remedy.......................................................................................15
8. CO-SALE RIGHT..........................................................................................15
8.1 Co-Sale Procedure......................................................................................15
8.2 Limitation on Co-Sale Right; Exercises of Right Prior to Closing.......................................15
9. GENERAL................................................................................................16
9.1 Amendments;Waivers.....................................................................................16
9.2 Survival of Representations and Warranties.............................................................16
9.3 Integration............................................................................................17
9.4 Best Efforts; Further Assurances.......................................................................17
9.4.1 Standard...............................................................................................17
9.4.2 Limitation.............................................................................................17
9.5 Governing Law and Forum Selection......................................................................17
9.6 No Assignment..........................................................................................17
9.7 Headings...............................................................................................17
9.8 Counterparts...........................................................................................17
9.9 Publicity and Reports..................................................................................17
9.10 Confidentiality........................................................................................18
9.11 Parties in Interest....................................................................................18
9.12 Notices................................................................................................18
9.13 Expenses...............................................................................................19
9.14 Waiver.................................................................................................19
9.15 Representation By Counsel; Interpretation..............................................................19
9.16 Severability...........................................................................................19
9.17 No Consequential Damages...............................................................................20
9.18 Termination............................................................................................20
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is dated
August 24, 1999, by and among WORLDXCHANGE B.V.B.A., a Belgium corporation
("WXBV"), THE TVG ASIAN COMMUNICATIONS FUND, a Cayman Islands corporation
("TVG"), COMMUNICATION TELESYSTEMS INTERNATIONAL, a California corporation
("CTS") and, for the limited purposes set forth herein, WORLDXCHANGE PTY. LTD.,
an Australian corporation (the "COMPANY"), WARNA GERAKAN SDN BHD, a Malaysian
corporation ("WGSB"), WXL INTERNATIONAL - AUSTRALIA, INC., a Delaware
corporation ("WXL") and certain individuals named herein.
The parties hereby agree as follows:
1. DEFINITIONS.
1.1 DEFINITIONS. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, the terms
defined in this SECTION 1.1 have the meanings assigned to them in this SECTION
1.1 and include the plural as well as the singular; the words "herein,"
"hereof," "hereto" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Section, Subsection or other
subdivision; unless the context otherwise requires, and all accounting terms not
otherwise defined herein have the meanings assigned under generally accepted
accounting principles.
As used in this Agreement, the following definitions shall
apply.
"AFFILIATE" means a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, a specified Person. In the case of TVG, Affiliate shall
also mean any current or future investment fund that is managed by the Telecom
Venture Group Limited (which currently manages TVG), any investor in TVG or such
fund, or any custodian of TVG (currently State Street Australia Limited) or such
fund.
"AGREEMENT" means this Agreement by and among WXBV, TVG, CTS
and, for the limited purposes set forth herein, the Company, WGSB and WXL, and
the individuals named herein as amended or supplemented together with all
Schedules attached or incorporated by reference.
"APPROVAL" means any approval, authorization, consent,
qualification or registration, or any waiver of any of the foregoing, required
to be obtained from, or any notice, statement or other communication required to
be filed with or delivered to, any Governmental Entity or any other Person.
"AUDITORS" means Ernst & Young LLP, independent public
accountants to the Company.
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"AVAILABLE SHARES" means, collectively, (i) the Offered Shares
and (ii) the number of shares of Stock offered for sale by TVG pursuant to
SECTION 8.1.
"CASH" has the meaning specified in SECTION 2.1.
"CERTIFICATE" has the meaning specified in SECTION 7.3.1.
"CLOSING" has the meaning specified in SECTION 2.2.
"CLOSING DATE" has the meaning specified in SECTION 2.2.
"COMPANY" means WorldxChange Pty. Ltd., an Australian
corporation.
"COMPANY SHAREHOLDERS' DEED" has the meaning specified in
SECTION 6.1.
"COMPANY SHARES" means the 46,968 ordinary shares of the
Company acquired by WGSB pursuant to the Company Subscription Agreement and
subsequently transferred to TVG.
"COMPANY SUBSCRIPTION AGREEMENT" has the meaning specified in
SECTION 6.1.
"CONTRACT" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, lease, license or understanding,
whether or not in writing.
"CTS" means Communication TeleSystems International, a
California corporation.
"CTS PARTIES" has the meaning specified in SECTION 2.3.3.
"CTS RELEASEES" has the meaning specified in SECTION 6.2.
"CTS STOCK" has the meaning specified in SECTION 2.1.
"E&Y OPINION" has the meaning specified in SECTION 2.3.2(ii).
"ENCUMBRANCE" means any claim, charge, easement, encumbrance,
lease, covenant, security interest, lien, option, pledge, rights of others, or
restriction (whether on voting, sale, transfer, disposition or otherwise),
whether imposed by agreement, understanding, law, equity or otherwise, except
for any restrictions on transfer generally arising under any applicable federal
or state securities law.
"EQUITY SECURITIES" means any capital stock of the Company or
other equity interest in the Company or any securities convertible into or
exchangeable for capital stock of the Company or any other rights, warrants or
options to acquire any of the foregoing securities.
"FIRB" has the meaning specified in SECTION 2.3.1.
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"GAAP" means generally accepted accounting principles in the
United States, as in effect from time to time.
"GOVERNMENTAL ENTITY" means any government or any agency,
bureau, board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state or
local, domestic or foreign.
"INDEMNIFIABLE CLAIM" means any Loss for or against which any
party is entitled to indemnification under this Agreement; "INDEMNIFIED PARTY"
means the party entitled to indemnity hereunder; and "INDEMNIFYING PARTY" means
the party obligated to provide indemnification hereunder.
"INDEMNIFIED PARTY" has the meaning specified in SECTION
7.3.1.
"INDEMNIFYING PARTY" has the meaning specified in SECTION
7.3.1
"LAW" means any constitutional provision, statute or other
law, rule, regulation, or interpretation of any Governmental Entity and any
Order.
"LOSS" means any action, cost, damage, disbursement, expense,
liability, loss, deficiency, diminution in value, obligation, penalty or
settlement of any kind or nature, whether foreseeable or unforeseeable,
including but not limited to, interest or other carrying costs, penalties,
legal, accounting and other professional fees and expenses incurred in the
investigation, collection, prosecution and defense of claims and amounts paid in
settlement, that may be imposed on or otherwise incurred or suffered by the
specified person, but excluding any consequential damages.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
the financial condition and business operations of CTS and its Subsidiaries
taken as a whole.
"MATERIAL CONTRACT" means any Contract material to the
business of the subject Person as of the date hereof.
"OFFERED SHARES" has the meaning specified in SECTION 8.1.
"O'MELVENY OPINION" has the meaning specified in SECTION
2.3.2(ii).
"ORDER" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"PERSON" means an association, a corporation, an individual, a
partnership, a trust or any other entity or organization, including a
Governmental Entity.
"PURCHASE FUNDS" has the meaning specified in SECTION 6.4.2.
"PREEMPTIVE RIGHTS CERTIFICATES" has the meaning specified in
SECTION 6.4.2.
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"PROSPECTUS" means the prospectus relating to CTS in the form
attached as EXHIBIT F.
"REGISTRATION RIGHTS AGREEMENT" means that certain
Registration Rights Agreement, dated the date hereof, between CTS and TVG, in
the form attached as EXHIBIT E.
"SEC" means the Securities and Exchange Commission or any
successor entity.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHAREHOLDER" and "SHAREHOLDERS" each has the meaning
specified in SECTION 8.1.
"STOCK" means the common stock of CTS, no par value.
"SUBSIDIARY" means any Person in which the subject Person has
a direct or indirect equity or ownership interest in excess of 50%.
"TAX" or "TAXES" means all federal, state, local or foreign
net or gross income, gross receipts, net proceeds, sales, use, ad valorem, value
added, franchise, bank shares, withholding, payroll, employment, excise,
property, deed, stamp, alternative or add-on minimum, environmental or other
taxes, assessments, duties, fees, levies or other governmental charges of any
nature whatsoever, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto.
"TROY" has the meaning specified in SECTION 2.3.3.
"TVG" means the TVG Asian Communications Fund, a Cayman
Islands corporation.
"TVG RELEASEES" has the meaning specified in SECTION 6.2.
"WALKER OPINION" has the meaning specified in SECTION
2.3.3(ii).
"WXL" means WXL International - Australia, Inc., a Delaware
corporation.
"WXBV" means WorldxChange B.V.B.A., a Belgium corporation.
2. PURCHASE AND SALE OF THE COMPANY SHARES; THE CLOSING;
POST-CLOSING DELIVERIES.
2.1 PURCHASE AND SALE OF THE COMPANY SHARES. Subject to the terms and
conditions of this Agreement, at the Closing, TVG shall deliver to WXBV
certificates evidencing the Company Shares against the delivery by WXBV to TVG
of (a) certificates representing a total of 1,450,000 shares of Stock (such
shares, the "CTS STOCK") and (b) a cashier's check made payable to TVG in the
amount of $1,000 (the "CASH"). Subject to the terms and conditions of this
Agreement, the Company Shares shall be delivered to WXBV, and the CTS Stock and
the
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Cash shall be conveyed to TVG (such transaction, the "TRANSACTION") free and
clear of any Encumbrances whatsoever. WXBV shall be responsible for any
payment of the Australian Stamp Duty in connection with the share transfers
by TVG contemplated by this Agreement and shall indemnify TVG against any
such duty or any liability related thereto.
2.2 THE CLOSING. The closing of the Transaction (the "CLOSING") shall
take place at the offices of Baker & McKenzie, 101 West Broadway, Suite 1200,
San Diego, California (or such other location as WXBV and TVG may agree in
writing) on the later to occur of (i) September 1, 1999 or (ii) the first date
on which all of the conditions to Closing have been satisfied or waived in
writing by the party entitled to the performance or satisfaction thereof. The
date on which the Closing occurs is referred to herein as the "CLOSING DATE".
2.3 CLOSING CONDITIONS.
2.3.1 MUTUAL CONDITION. The obligation of each of the parties to close
the Transaction shall be subject to either (i) the receipt by one or
more of CTS, WXBV or TVG of a letter or other written notice from the
Australian Foreign Investment Review Board ("FIRB") confirming that the
Australian Commonwealth Government does not object to the Transaction
or (ii) the requisite amount of time shall have elapsed from the date
that the required information regarding the Transaction is filed with
the FIRB (or other appropriate entity), such that, based on the advice
of legal counsel (provided such legal counsel is reasonably acceptable
to WXBV and TVG), the Treasurer of the Commonwealth of Australia has
become precluded from making an order in respect of the Transaction
under the Foreign Acquisitions and Takeovers Act 1975 (Cth).
2.3.2 CONDITIONS TO THE OBLIGATION OF TVG TO CLOSE. The obligation of
TVG to close the Transaction shall be subject to the satisfaction or
written waiver by TVG of all of the following additional conditions:
(i) CERTIFICATES EVIDENCING THE CTS STOCK; CASH. WXBV shall
have delivered to TVG certificates representing the CTS Stock, in form
and substance reasonably satisfactory to TVG, together with the
cashier's check for the Cash.
(ii) OPINIONS. WXBV shall have delivered to TVG (i) the legal
opinion of O'Melveny & Myers LLP, dated the date of such delivery, in
the form attached hereto as EXHIBIT A (the "O'MELVENY OPINION") and
(ii) the legal opinion of Moret Ernst & Young, dated the date of such
delivery, in the form attached hereto as EXHIBIT C (the "E&Y OPINION").
(iii) REGISTRATION RIGHTS AGREEMENT. CTS shall have delivered
to TVG the Registration Rights Agreement, duly executed by CTS.
2.3.3 CONDITIONS TO THE OBLIGATION OF THE CTS PARTIES TO CLOSE. The
obligation of each of WXBV, CTS, WxL, Roger B. Abbott, Rosalind Abbott
and Edward S. Soren (collectively, the "CTS PARTIES") to close the
Transaction shall be subject to the satisfaction or written waiver by
WXBV of all of the following additional conditions:
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(i) CERTIFICATES EVIDENCING THE COMPANY SHARES. TVG shall
have delivered to WXBV the certificates representing the Company
Shares, accompanied by share transfers executed in blank, and in
proper form for transfer on the books of the Company, all in form and
substance reasonably satisfactory to WXBV.
(ii) OPINION. TVG shall have delivered to WXBV the legal
opinion of W.S. Walker & Co., dated the date of such delivery, in the
form attached hereto as EXHIBIT B (the "WALKER OPINION").
(iii) REGISTRATION RIGHTS AGREEMENT. TVG shall have delivered
to CTS the Registration Rights Agreement, duly executed by CTS.
(iv) RESIGNATION OF JOHN TROY. TVG shall have caused to be
delivered to the Board of Directors of the Company (with a copy thereof
delivered to WXBV) a letter from and executed by John Troy ("TROY") in
which Troy resigns, contingent upon the occurrence of and effective as
of the Closing, from the Board of Directors of the Company, which
letter shall be in the form attached as EXHIBIT D.
2.4 POST-SIGNING DELIVERIES. Not later than September 6, 1999,
irrespective of whether any of the other closing conditions specified in
SECTION 2.3 have been satisfied by such date, (a) TVG shall deliver to WXBV
the Walker Opinion; and (b) WXBV shall deliver to TVG the E&Y Opinion and the
O'Melveny Opinion.
3. REPRESENTATIONS AND WARRANTIES OF CTS AND WXBV.
Except as otherwise disclosed in the Prospectus, CTS and WXBV
jointly and severally represent and warrant to TVG that:
3.1 ORGANIZATION AND CORPORATE POWER. As of the date hereof and the
Closing Date, (a) each of CTS and WXBV is and will be a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and country of Belgium, respectively, and (b) each of CTS and WXBV
has and will have all requisite corporate power and authority necessary to own
and operate its properties and to carry on its business as now conducted and as
presently proposed to be conducted. The copies of CTS's charter documents and
bylaws provided to TVG reflect all amendments made thereto at any time prior to
the date of this Agreement and are correct and complete. CTS is duly qualified
to do business as a foreign corporation and is in good standing under the laws
of each state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification, except where the failure to be so qualified would
not have a Material Adverse Effect.
3.2 CAPITAL STOCK AND RELATED MATTERS. The shares of CTS Stock, when
delivered to TVG pursuant hereto, will be duly authorized and validly issued,
fully paid and non-assessable.
3.3 AUTHORIZATION; NO CONFLICTS. The execution, delivery and
performance of this Agreement by each of CTS and WXBV has been duly and validly
authorized by the respective
6
Boards of Directors of CTS and WXBV. This Agreement constitutes the legally
valid and binding obligation of CTS and WXBV, enforceable against CTS and
WXBV in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws and equitable principles relating to or limiting creditors
rights generally. The execution, delivery and performance of this Agreement
by CTS and WXBV will not violate, or constitute a breach or default (whether
upon lapse of time and/or the occurrence of any act or event or otherwise)
under, the respective charter documents or bylaws of CTS and WXBV or any of
the respective Material Contracts of CTS and WXBV, result in the imposition
of any material Encumbrance against any material asset or properties of CTS
or any Subsidiary, or violate any Law.
3.4 GOVERNMENTAL CONSENT, ETC. Except for FIRB approval and those other
approvals that have been obtained, no Approval is required for WXBV or CTS to
deliver the CTS Stock and the Cash to TVG pursuant to this Agreement.
3.5 NO BROKERS OR FINDERS. No agent, broker, finder, or investment or
commercial banker, or other Person or firm engaged by or acting on behalf of CTS
and/or WXBV or its Affiliates in connection with the negotiation, execution or
performance of this Agreement and/or the transactions contemplated hereby, is or
will be entitled to any brokerage or finder's or similar fee or other commission
as a result of this Agreement or the transactions contemplated hereby.
3.6 ACCURACY OF INFORMATION. As of the date hereof, the Prospectus does
not contain any untrue statement of a material fact, or fail to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.7 INVESTMENT REPRESENTATIONS. WXBV has not been attracted to the
purchase of the Company Shares by any publication or any advertising, and the
transactions contemplated by this Agreement are not being effected by or through
a broker-dealer. WXBV is an "accredited investor" within the meaning of Rule 501
of Regulation D promulgated by the SEC, as presently in effect. WXBV understands
that (i) neither the Company Shares nor the sale thereof to it has been
registered under the Securities Act, or under any state securities law, (ii) no
registration statement has been filed with the SEC, nor with any other
regulatory authority and that, as a result, any benefit which might normally
accrue to an investor such as WXBV by an impartial review of such a registration
statement by the SEC or other regulatory commission will not be forthcoming; and
(iii) the Company Shares are characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from TVG in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances. WXBV acknowledges that
(i) it is represented by counsel, (ii) it has received and carefully reviewed
all information it considers necessary or appropriate for deciding whether to
acquire the Company Shares; (iii) as a result of its knowledge of the
telecommunications industry, its prior indirect ownership of a majority of the
capital stock of the Company and its prior overall experience in financial
matters, it is properly able to evaluate the capital structure of the Company
and its Subsidiaries and the risks inherent therein; and (iv) it has been given
the
7
opportunity to obtain any additional information or documents from, and to
ask questions and receive answers of, the officers and representatives of the
Company to the extent necessary to evaluate the merits and risks related to
its investment in the Company.
4. REPRESENTATIONS AND WARRANTIES OF TVG. TVG represents and warrants
to WXBV and CTS that:
4.1 ORGANIZATION AND RELATED MATTERS. As of the date hereof and the
Closing Date, TVG (a) is and will be a corporation duly organized, validly
existing and in good standing under the laws of the Cayman Islands and (b) has
and will have all requisite corporate power and authority to execute, deliver
and perform this Agreement and to consummate the transactions contemplated
hereby.
4.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of TVG. This
Agreement constitutes the legal, valid and binding obligation of TVG,
enforceable against TVG in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating to or
limiting creditors' rights generally.
4.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, by TVG
will not violate, or constitute a breach or default whether upon lapse of time
and/or the occurrence of any act or event or otherwise under (i) the charter
documents or bylaws of TVG, (ii) any Material Contract to which TVG is a party
(after giving effect to the provisions of SECTION 6.1 hereof), or (iii) any Law
to which TVG is subject.
4.4 NO BROKERS OR FINDERS. No agent, broker, finder or investment or
commercial banker, or other Person or firms engaged by or acting on behalf of
TVG or its Affiliates in connection with the negotiation, execution or
performance of this Agreement and/or the transactions contemplated hereby, is or
will be entitled to any broker's or finder's or similar fees or other
commissions as a result of this Agreement or the transactions contemplated
hereby.
4.5 OWNERSHIP. As of the date hereof and the Closing, (a) TVG is and
will be the record and beneficial owner of all of the Company Shares; (b) such
Company Shares represent and will represent the entire ownership interest of TVG
in the Company; c) TVG has and will have no other Equity Securities of the
Company, and (d) WGSB has no Equity Securities of the Company.
4.6 TITLE. As of the date hereof and the Closing, TVG has and will have
good and marketable title to the Company Shares, free and clear of any
Encumbrances.
4.7 RIGHT TO TRANSFER. TVG has full legal right and power to transfer
and deliver to WXBV the Company Shares.
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4.8 INVESTMENT REPRESENTATIONS. This Agreement is made with TVG in
reliance upon TVG's representation to WXBV and CTS, which by TVG's execution of
this Agreement TVG hereby confirms, that (i) the CTS Stock is being acquired for
investment for TVG's own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof, and that TVG has no present
intention of selling, granting any participation in, or otherwise distributing
the same; (ii) TVG does not have any Contract, undertaking, agreement or
arrangement with any Person to sell, transfer or grant participations to any
Person with respect to any shares of the CTS Stock (except that TVG has the
legal obligation to transfer to its investors assets at the end of the fund
life); and (iii) TVG is not an underwriter of the CTS Stock within the meaning
of Section 2(11) of the Securities Act.
TVG has not been attracted to the purchase of the CTS Stock by any publication
or any advertising, and the transactions contemplated by this Agreement are not
being effected by or through a broker-dealer.
TVG has no intent or expectation, and there is no agreement or commitment by
WXBV or CTS, that, at any time on or after the Closing Date, TVG will
participate in the making of basic business decisions of CTS or otherwise
participate directly in the operations of CTS.
TVG is an "accredited investor" within the meaning of Rule 501 of Regulation D
promulgated by the SEC, as presently in effect.
TVG understands that (i) neither the CTS Stock nor the sale thereof to it has
been registered under the Securities Act, or under any state securities law,
(ii) no registration statement has been filed with the SEC, nor with any other
regulatory authority and that, as a result, any benefit which might normally
accrue to an investor such as TVG by an impartial review of such a registration
statement by the SEC or other regulatory commission will not be forthcoming; and
(iii) the shares of the CTS Stock are characterized as "restricted securities"
under the federal securities laws inasmuch as they are being acquired from WXBV
and CTS in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances.
TVG acknowledges that (i) it is represented by counsel, (ii) it has received and
carefully reviewed a copy of the Prospectus and this Agreement; (iii) it has
received all information it considers necessary or appropriate for deciding
whether to acquire the CTS Stock; (iv) as a result of its knowledge of the
telecommunications industry, its study of the aforementioned documents and its
prior overall experience in financial matters, it is properly able to evaluate
the capital structure of CTS, the business of CTS and its Subsidiaries and the
risks inherent therein; and (v) it has been given the opportunity to obtain any
additional information or documents from, and to ask questions and receive
answers of, the officers and representatives of CTS to the extent necessary to
evaluate the merits and risks related to its investment in the CTS.
4.9 GOVERNMENTAL CONSENT, ETC. Except for those that have been
obtained, no Approval is required for TVG to convey and deliver the Company
Shares to WXBV pursuant to this Agreement
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5. TRANSFER OF SHARES OF CTS STOCK. TVG expressly acknowledges
and agrees that the shares of CTS Stock delivered to TVG pursuant hereto
shall be subject to certain restrictions on transfer which conditions are
intended to assure compliance with the provisions of the Securities Act and
state securities laws in respect of the transfer of any of such shares of the
CTS Stock. Such restrictions on transfer are set forth below in SECTIONS 5.1,
5.2 and 5.3.
5.1 RESTRICTIVE LEGENDS. Unless and until otherwise permitted by this
Agreement, the certificates representing the CTS Stock shall be stamped or
otherwise imprinted with legends in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED UNLESS PRIOR WRITTEN NOTICE OF THE
HOLDER'S INTENTION TO TRANSFER SUCH SECURITIES IS GIVEN TO THE COMPANY
AND UNLESS SUCH SECURITIES ARE REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933 OR AN EXEMPTION FROM REGISTRATION OR
QUALIFICATION IS AVAILABLE AND THE COMPANY HAS RECEIVED A WRITTEN
OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE
COMPANY, TO SUCH EFFECT."
TVG expressly acknowledges and agrees that CTS may order its transfer agents to
stop the transfer of any shares of the CTS Stock bearing a legend required by
this SECTION 5.1 until the conditions herein with respect to transfer of such
securities have been satisfied.
5.2 NOTICE OF PROPOSED TRANSFERS. Subject to SECTION 5.1, prior to any
transfer or attempted transfer of the shares of the CTS Stock bearing the legend
in SECTION 5.1, TVG shall give CTS written notice of its intention to do so,
describing briefly the nature of any such proposed transfer. If, in the written
opinion of counsel for holder, addressed to CTS and TVG, in form and substance
reasonably acceptable to CTS, the proposed transfer may be effected without
registration of such shares of the CTS Stock, the shares of the CTS Stock
proposed to be transferred may be transferred in accordance with the terms of
said notice and in compliance with applicable state securities laws and
regulations. CTS shall not be required to effect any such transfer prior to the
receipt of such favorable opinion or opinions; provided that if the proposed
transfer is governed by Rule 144 promulgated by the SEC, or any successor rule,
such opinion shall not be required, but CTS may prevent such transfer until it
receives evidence satisfactory to it and its counsel that the transfer complies
with Rule 144. Each transfer shall comply with all applicable SEC rules and
applicable state securities laws.
5.3 PERMITTED TRANSFERS. Notwithstanding anything to the contrary in
this Agreement, TVG may transfer the CTS Stock to any Affiliate of TVG (a
"PERMITTED TRANSFEREE") in accordance with the provisions of SECTIONS 5.1 and
5.2; provided that the transferee shall hold
10
such shares of CTS Stock subject to the same restrictions applicable to its
transferor and shall agree in writing to be bound by the terms of this
Agreement.
6. CERTAIN COVENANTS.
6.1 TERMINATION OF COMPANY SHAREHOLDERS' DEED AND COMPANY SUBSCRIPTION
AGREEMENT. Contingent upon the occurrence of and effective as of the Closing,
WXL, WGSB, WXBV, TVG and the Company mutually agree that that certain
Shareholders' Deed by and among WXL, WGSB, and the Company (the "COMPANY
SHAREHOLDERS' DEED") shall be terminated and shall cease to be of any further
force or effect, and none of WXL, WGSB, TVG, WXBV or the Company shall have any
further rights, duties, obligations or liabilities whatsoever thereunder. Also
contingent upon the occurrence of and effective as of the Closing, WXL, WGSB,
WXBV, CTS, TVG and the Company further mutually agree that certain Subscription
Agreement by and among WXL, CTS, WGSB and the Company (the "COMPANY SUBSCRIPTION
AGREEMENT") shall be terminated and shall cease to be of any force or effect,
and none of CTS, WXL, WGSB or the Company shall have any further rights, duties,
obligations or liabilities whatsoever thereunder.
6.2 GENERAL RELEASE. Contingent upon the occurrence of and effective as
of the Closing, (a) each of TVG and WGSB agrees not to sue and fully releases
and discharges the Company, WXL, WXBV and CTS, including, without limitation,
their respective directors, officers, employees, shareholders, representatives,
agents, assigns and successors, past and present (collectively, the "CTS
RELEASEES"), with respect to and from any and all claims, issuances of the
Company's stock, notes or other securities, any demands, rights, liens,
agreements, contracts (including, without limitation, the Company Subscription
Agreement and/or the Company Shareholders' Deed), covenants, actions, suits,
causes of action, obligations, debts, costs, expenses, damages, judgments,
orders and liabilities of whatever kind or nature in law, equity or otherwise,
whether now known or unknown, and whether or not concealed or hidden, all of
which each of TVG and/or WGSB now owns or holds or has at any time owned or held
against the CTS Releasees; and (b) each of WXBV, CTS, WXL and the Company agrees
not to sue and fully releases and discharges TVG and WGSB, including, without
limitation, its directors, officers, employees, shareholders, representatives,
agents, assigns and successors, past and present (collectively, the "TVG
RELEASEES"), with respect to and from any and all claims, issuances of the
Company's stock, notes or other securities, any demands, rights, liens,
agreements, contracts (including, without limitation, the Company Subscription
Agreement and/or the Company Shareholders' Deed), covenants, actions, suits,
causes of action, obligations, debts, costs, expenses, damages, judgments,
orders and liabilities of whatever kind or nature in law, equity or otherwise,
whether now known or unknown, and whether or not concealed or hidden, all of
which WXBV, CTS, WXL and/or the Company now owns or holds or has at any time
owned or held against the TVG Releasees.
It is the intention of WXBV, CTS, WXL, WGSB, TVG and the Company that
the foregoing releases be effective as a bar to each and every claim, demand and
cause of action hereinabove specified. In furtherance of this intention, each of
WXBV, CTS, WXL, WBSG, TVG and the Company hereby expressly waives, effective as
of the Closing Date, any and all
11
rights and benefits conferred upon each such party by the provisions of
Section 1542 of the California Civil Code and expressly consents that this
release shall be given full force and effect according to each and all of its
express terms and provisions, including as well, those related to unknown and
unsuspected claims, demands and causes of action, if any, as those relating
to any other claims, demands and causes of action hereinabove specified, but
only to the extent such section is applicable to releases such as this.
Section 1542 provides:
"A general release does not extend to claims which
the creditor does not know or suspect to exist in his favor at the time
of executing the release, which if known by him must have materially
affected his settlement with the debtor."
Nothing in this SECTION 6.2 shall in any way affect any rights that any
party hereto may have against any other party under this Agreement, including,
without limitation, any right of indemnification pursuant to this Agreement.
6.3 FINANCIAL STATEMENTS. Contingent upon the occurrence of and
effective as of the Closing, CTS agrees to deliver to TVG so long as TVG shall
own the CTS Stock (i) unaudited quarterly financial statements of CTS within 45
days after the end of each fiscal quarter of CTS that occurs after the Closing
and (ii) audited annual financial statements of CTS within 150 days after the
end of each fiscal year of CTS that occurs after the Closing.
6.4 PREEMPTIVE RIGHTS.
6.4.1 Subject to SECTION 6.4.2 and to the terms and condition of this
SECTION 6.4.1, TVG shall have the right to subscribe to any additional
(i) issuances of shares of capital stock of CTS occurring on or after
the date hereof, (ii) issuances of securities convertible into shares
of capital stock of CTS occurring on or after the date hereof, or (iii)
grants of options to purchase shares of capital stock of CTS, other
than grants to employees, directors or consultants of CTS (and the
issuance of shares upon exercise of such options), for cash occurring
on or after the date hereof, on the same terms of such offerings to the
extent equal to the proportion which the total shares of Stock then
held by TVG bears to CTS's fully-diluted capitalization (on an
as-converted and as-exercised basis). Such right is exercisable within
ten (10) days after the receipt by TVG of written notice relating to
such issuance. Such right extends to the same proportion of the new
issue of shares, convertible securities or options as TVG's proportion
of CTS's fully-diluted capitalization. Notwithstanding the foregoing,
TVG's right to purchase new issues of shares or convertible securities
or options does not extend to (i) the issuance of shares upon the
conversion or exercise of options or other convertible securities
either (A) outstanding on the Closing Date, or (B) with respect to
which options or other convertible securities TVG had preemptive rights
under this SECTION 6.4.1; or (ii) securities issued solely in exchange
for shares, convertible securities or options issued in connection with
any merger, reorganization or acquisition. The preemptive rights held
by TVG pursuant to this Section 6.4 shall terminate and be of no
further force or effect upon the first to occur of (i) the termination
of this Agreement pursuant to SECTION 9.18 hereof; or (ii) immediately
prior to the listing of shares of the common stock of CTS on a
securities
12
exchange or qualification of such shares for trading on an
over-the-counter system selected by CTS.
6.4.2 Notwithstanding any contrary term or provision of this Agreement,
if TVG shall be entitled to preemptive rights pursuant to SECTION 6.4.1
with respect to any securities of CTS issued or to be issued before the
Closing has occurred, then, if TVG shall exercise such rights, (i) TVG
shall deliver to an escrow agent reasonably mutually acceptable to TVG
and CTS, via wire transfer of immediately available funds, the purchase
price (the "PURCHASE FUNDS") for the securities of CTS to be purchased
pursuant to such preemptive rights; (ii) CTS shall deliver to such
escrow agent the certificates or instruments representing the
securities to be so purchased by TVG (the "PREEMPTIVE RIGHTS
CERTIFICATES"); and (iii) TVG and CTS shall enter into an escrow
agreement with such escrow agent that shall provide for the escrow
agent to hold such funds and certificates and/or instruments until the
first to occur of (1) the satisfaction of the mutual condition to
closing specified in SECTION 2.3.1 hereof, in which event the escrow
agent shall release the Preemptive Rights Certificates to TVG and the
Purchase Funds to CTS promptly after the satisfaction of such
condition; (2) the termination of this Agreement pursuant to SECTION
9.18, in which event the escrow agent shall release the Preemptive
Rights Certificates to CTS and the Purchase Funds to TVG promptly after
such termination of this Agreement; or (3) the escrow agent's receipt
of a final, non-appealable determination of a court of competent
jurisdiction or a joint written instruction executed by CTS and TVG
instructing the escrow agent what to do with the Preemptive Rights
Certificates and Purchase Funds, in which event the escrow agent shall
act on such judicial determination or joint written instructions
without further question.
6.5 BEST EFFORTS. CTS shall use its best efforts to cause FIRB approval
of the transactions contemplated hereby to be obtained as soon as practicable.
WXBV and TVG shall cooperate fully in such efforts. CTS and WXBV shall use its
best efforts to provide to TVG such information as shall be reasonably requested
with respect to WXBV and otherwise reasonably cooperate in order that TVG may
provide to the Australian Tax Authorities such information as they may require
related to the transfer of stock contemplated by this Agreement and the prior
transfer from WGSB to TVG.
6.6 RULE 144 FILING. After CTS's Stock is registered under the
Securities Exchange Act of 1934, and until all of the CTS Stock has been
publicly sold or is eligible for sale under Rule 144(k) under the Securities
Act, CTS shall use best efforts to file the reports required under Rule
144(c)(1) under the Securities Act in order to permit sales of the CTS Stock by
TVG pursuant to Rule 144.
6.7 RESIGNATION OF JOHN TROY. Each of TVG and Troy shall take all
actions necessary or appropriate to cause the resignation of Troy from the Board
of Directors of the Company to be and become effective as of (and subject to the
occurrence of) the Closing.
7. INDEMNIFICATION.
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7.1 OBLIGATIONS OF CTS. Subject to SECTION 7.3.1, CTS and WXBV agree to
indemnify and hold harmless TVG from and against any and all Losses of
TVG based upon or arising from any inaccuracy in or breach or
nonperformance of any of the representations, warranties, or covenants
made by WXBV or CTS in this Agreement.
7.2 OBLIGATIONS OF TVG. Subject to SECTION 7.3.1, TVG agrees to
indemnify and hold harmless each of CTS, WXBV and the Company from and
against any and all Losses of CTS, WXBV and/or the Company based upon
or arising from any inaccuracy in or breach or nonperformance of any of
the representations, warranties or covenants made by TVG in this
Agreement.
7.3 PROCEDURE
7.3.1 CERTIFICATE. As soon as reasonably practicable after the
incurrence of a Loss or Losses which is or are reasonably likely to
give rise to indemnification hereunder, such party (the "INDEMNIFIED
PARTY") shall deliver to the party required to provide indemnity
hereunder (the "INDEMNIFYING PARTY") a certificate (a "CERTIFICATE"),
which Certificate shall (i) state that the Indemnified Party has paid
or properly accrued Losses, or anticipates that it will incur liability
for Losses; and (ii) specify in reasonable detail each individual item
of Loss included in the amount so stated, the date such item was paid
or properly accrued, the basis for any anticipated liability and the
nature of the misrepresentation, breach of warranty or breach of
covenant or claim to which such item is related and the computation of
the amount to which such Indemnified Party claims to be entitled
hereunder, provided, however, that subject to SECTION 9.2, no delay on
the part of such party in providing such Certificate shall relieve the
Indemnifying Party from any obligation to indemnify under this
Agreement unless (and then only to the extent) the Indemnifying Party
thereby is prejudiced.
7.3.2 DEFENSE. If any claim, demand or liability is asserted by any
third party against any Indemnified Party, the Indemnifying Party
shall, upon the written request of the Indemnified Party, defend any
actions or proceedings brought against the Indemnified Party in respect
of matters embraced by the indemnity. If, after a request to defend any
action or proceeding, the Indemnifying Party neglects to defend the
Indemnified Party, a recovery against the latter suffered by it in good
faith, is conclusive in its favor against the Indemnifying Party,
provided however that, if the Indemnifying Party has not received
reasonable notice of the action or proceeding against the Indemnified
Party, or is not allowed to control its defense, judgment against the
Indemnified Party is only presumptive evidence against the Indemnifying
Party. The parties shall cooperate in the defense of all third party
claims which may give rise to Indemnifiable Claims hereunder. In
connection with the defense of any claim, each party shall make
available to the party controlling such defense, any books, records or
other documents within its control that are reasonably requested in the
course of such defense.
7.3.3 SUBROGATION OF INDEMNIFYING PARTY. If the Indemnified Party
receives payment or other indemnification from an Indemnifying Party
hereunder, the Indemnifying Party
14
shall be subrogated to the extent of such payment or indemnification
to all rights in respect of the subject matter of such claim to
which the Indemnified Party may be entitled, to institute
appropriate action for the recovery thereof, and the Indemnified Party
agrees reasonably to assist and cooperate with the Indemnifying Party
at no expense to the Indemnified Party in enforcing such rights.
7.4 EXCLUSIVE REMEDY. This SECTION 7 shall be the exclusive remedy of
each of the parties hereto for any Loss of such party based upon or arising from
any inaccuracy in or breach or nonperformance of any of the representations,
warranties, or covenants made by any other party to this Agreement.
8. CO-SALE RIGHT.
8.1 CO-SALE PROCEDURE. Subject to SECTION 8.2, if, at any time on or
after the date hereof, any of Mr. Roger B. Abbott, Ms. Rosalind Abbott or Mr.
Edward S. Soren (each of Messrs. Abbott and Soren and Ms. Abbott is a
"SHAREHOLDER" and collectively, they are the "SHAREHOLDERS") desire to sell,
assign or otherwise transfer any shares of Stock owned by such Shareholder
(except for a sale, assignment or transfer to a family member of such
Shareholder, provided (i) that the shares of Stock so transferred shall
thereafter remain subject to this SECTION 8 as though the transferee were a
Shareholder and (ii) the transferee agrees in writing to be bound by this
SECTION 8), then such Shareholder (collectively with any other selling
Shareholder, the "SELLING SHAREHOLDER") shall first give written notice (the
"CO-SALE NOTICE") to TVG specifying the following: (i) the name and address of
the proposed purchaser (the "OFFEROR"); (ii) the number of shares of Stock
offered for sale to the Offeror by the Selling Shareholder (the "OFFERED
SHARES"); the price or amount per share of Stock to be paid (and other
consideration, if any) or delivered to the Selling Shareholder for the Offered
Shares; and (iv) all other material terms and conditions of the proposed sale.
Within five business days after receipt of the Co-Sale Notice, TVG may elect by
written notice to the Selling Shareholder to sell to the Offeror a number of
shares of Stock not to exceed the product of (i) a fraction where the numerator
is the Offered Shares and the denominator is the total number of shares of Stock
(including the Offered Shares) then held by the Shareholders, multiplied by (ii)
the number of shares of Stock then owned by TVG; provided, however, that TVG
shall have the right, which right may be exercised by TVG one time only, to sell
to the Offeror a number of shares of Stock (to the extent such shares of Stock
are actually owned by TVG) equal to double the number of shares allowed to be
sold (before application of this proviso) by TVG pursuant to this SECTION 8.1.
8.2 LIMITATION ON CO-SALE RIGHT; EXERCISES OF RIGHT PRIOR TO CLOSING.
If the Offeror does not wish to purchase the full amount of Available Shares,
then TVG shall be entitled to sell to the Offeror a number of shares of Stock
not to exceed the product of (i) a fraction where the numerator is the number of
shares of Stock offered for sale by TVG pursuant to SECTION 8.1 and the
denominator is the number of Available Shares, multiplied by (ii) the total
number of shares of Stock which the Offeror is willing to purchase in total from
the Selling Shareholder and TVG. Notwithstanding any contrary provision of this
Agreement (but subject to the last sentence of this SECTION 8.2), if TVG shall
be entitled to co-sale rights pursuant to SECTION 8.1 and/or SECTION 8.2 with
respect to a sale, assignment or other transfer by a Selling Shareholder
proposed to be
15
effected prior to the Closing and the applicable Offeror declines to agree to
purchase TVG's shares when and if they are delivered to TVG pursuant to this
Agreement, then TVG shall have the right, upon written notice delivered to
the Selling Shareholder (at the address given in SECTION 9.12 for CTS) not
later than three business days after the Offeror shall have so informed TVG,
to require the Selling Shareholder (on a pro rata basis, based on the number
of Offered Shares proposed to be sold by each Shareholder (if more than one)
comprising the Selling Shareholder) to purchase the shares that TVG would
otherwise be entitled to sell to the Offeror pursuant to SECTION 8.1 and/or
SECTION 8.2, on the same terms and conditions as would have applied in the
sale to the Offeror, with such sale to the Selling Shareholder to be effected
upon (and subject to the occurrence of) the Closing. Notwithstanding the
foregoing or any other provision of this Agreement, the co-sale rights set
forth in SECTION 8.1 and the first two sentences of this SECTION 8.2 shall
terminate and be of no further force or effect upon the first to occur of the
following: (i) the CTS Stock then held by TVG may be sold under Rule 144 of
the Securities Act and the disposition of all of the CTS Stock may be
completed within six (6) months; (ii) the CTS Stock then held by TVG is
listed on a securities exchange or qualified for trading on an
over-the-counter system selected by CTS; or (iii) this Agreement is
terminated pursuant to SECTION 9.18 hereof
9. GENERAL.
9.1 AMENDMENTS; WAIVERS. This Agreement and any schedule attached
hereto may be amended only by agreement in writing of all parties. No waiver of
any provision nor consent to any exception to the terms of this Agreement shall
be effective unless in writing and signed by the party to be bound and then only
to the specific purpose, extent and instance so provided.
9.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding any
other term or provision of this Agreement, (A) all representations and
warranties of WXBV, CTS and TVG set forth in this Agreement or expressly
incorporated herein by reference shall, as of the first anniversary of the
Closing Date, expire and terminate and be of no further force or effect;
provided, however, that (i) the representations and warranties set forth in
SECTION 3.6 (Accuracy of Information) shall survive until the thirtieth day
following delivery to TVG of audited financial statements for CTS for the fiscal
year ended September 30, 1999 (if such date is later than the first anniversary
of the Closing Date), and (ii) Sections 3.1 (Organization and Corporate Power),
3.2 (Capital Stock and Related Matters), 4.1 (Organization and Related Matters),
4.5 (Ownership) and 4.6 (Title), 4.7 (Right to Transfer) and 4.8 (Binding
Agreement) shall survive indefinitely; (B) no claim for indemnification under
SECTION 7 for breach of a representation or warranty may be brought unless the
representation or warranty on which such claim is based continues to survive at
the time a Certificate relating to such claim has been delivered in accordance
with SECTION 7.3.1 hereof, and if such Certificate is delivered within such
period, all rights to indemnification with respect to such claim shall continue
in force and effect; and (C) except as to claims that are the subject of a
Certificate delivered prior to the first anniversary of the Closing Date and
except as to those representations and warranties that survive indefinitely
pursuant to the provision in the first sentence of this SECTION 9.2, as of the
first anniversary of the Closing Date, each of CTS, WXBV and TVG shall be deemed
to have irrevocably waived and released any and all rights and remedies any of
them may have with respect to any inaccuracy in
16
or breach or nonperformance of any of the representations, warranties, or
covenants made by any party to this Agreement.
9.3 INTEGRATION. This Agreement constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings of the parties in connection therewith.
9.4 BEST EFFORTS; FURTHER ASSURANCES
9.4.1 STANDARD. Each party will use its best efforts to fulfill all
obligations on its part to be performed and fulfilled under this
Agreement, to the end that the transactions contemplated by this
Agreement shall be effected substantially in accordance with its terms
as soon as reasonably practicable. The parties shall cooperate with
each other in such actions and in securing requisite Approvals. Each
party shall deliver such further documents and take such other actions
as the other party may reasonably request to consummate or implement
the transactions contemplated hereby or to evidence such events or
matters.
9.4.2 LIMITATION. As used in this Agreement, the term "best efforts"
shall not mean efforts which require the performing party to do any act
that is unreasonable under the circumstances, to make any capital
contribution or to expend any funds other than reasonable out-of-pocket
expenses incurred in satisfying its obligations hereunder, including
but not limited to the fees, expenses and disbursements of its
accountants, actuaries, counsel and other professionals.
9.5 GOVERNING LAW AND FORUM SELECTION. This Agreement is to be
construed and enforced in accordance with the internal laws of the State of
California. The parties consent to the jurisdiction of all federal and state
courts in California. Any civil action or other legal proceeding arising out of
or relating to this Agreement shall be brought and heard only in a federal or
state court located in San Diego County, California, and all parties waive any
right to have such action or proceeding transferred to another location.
9.6 NO ASSIGNMENT. Neither this Agreement nor any rights or obligations
under it are assignable except as to a Permitted Transferee as defined in
SECTION 5.3.
9.7 HEADINGS. The descriptive headings of the Sections and Subsections
of this Agreement are for convenience only and do not constitute a part of this
Agreement.
9.8 COUNTERPARTS. This Agreement and any amendment hereto or any other
document delivered pursuant hereto may be executed in one or more counterparts
and by different parties in separate counterparts. All of such counterparts
shall constitute one and the same agreement (or other document) and shall become
effective (unless otherwise provided therein) when one or more counterparts have
been signed by each party and delivered to the other party.
9.9 PUBLICITY AND REPORTS. TVG, CTS and WXBV shall coordinate all
publicity relating to the transactions contemplated by this Agreement and no
party shall issue any press release,
17
publicity statement or other public notice relating to this Agreement, or the
transactions contemplated by this Agreement, without obtaining the prior
written consent of each of the parties to this Agreement except to the extent
that a particular action is required by applicable Law.
9.10 CONFIDENTIALITY. All information disclosed by any party (or its
representatives) whether before or after the date hereof, in connection with the
transactions contemplated by, or the discussions and negotiations preceding,
this Agreement to any other party (or its representatives) shall be kept
confidential by such other party and its representatives and shall not be used
by any such Persons other than as contemplated by this Agreement, except to the
extent that such information (i) was known by the recipient when received, (ii)
it is or hereafter becomes lawfully obtainable from other sources, (iii) is
necessary or appropriate to disclose to a Governmental Entity having
jurisdiction over the parties, (iv) as may otherwise be required by Law or (v)
to the extent such duty as to confidentiality is waived in writing by the other
party.
9.11 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure to the benefit of each party, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement. Nothing in this
Agreement is intended to relieve or discharge the obligation of any third person
to any party to this Agreement.
9.12 NOTICES. Any notice or other communication hereunder must be given
in writing and (i) delivered in person, (ii) transmitted by telex, telefax or
telecommunications mechanism or (iii) mailed by certified or registered mail,
postage prepaid), receipt requested as follows:
IF TO WXBV OR CTS, ADDRESSED TO:
WORLDxCHANGE
9999 Willow Creek Road
San Diego, California 92131
Attn: Legal Department
Facsimile No. (619) 452-3780
WITH A COPY TO:
O'Melveny & Myers LLP
610 Newport Center Drive
Newport Beach, California 92660
Attn: David A. Krinsky, Esq.
Facsimile No. (949) 823-6994
18
IF TO TVG, ADDRESSED TO:
The TVG Asian Communications Fund
c/o Telecom Venture Group Limited
2015 Jardine House
1 Connaught Place Central
Hong Kong
Attention: John Troy
Facsimile No.: (852) 2147-3320
WITH A COPY TO:
Baker & McKenzie
101 West Broadway
Suite 1200
San Diego, California 92101
Attention: John Hentrich, Esq.
Facsimile No.: (619) 236-0429
or to such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (A) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this
SECTION 9.12 and an appropriate answer back is received, (B) if given by mail,
three days after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (C) if given by any other means, when
actually received at such address.
9.13 EXPENSES. Each Party shall pay its own expenses incident to the
negotiation, preparation and performance of this Agreement and the transactions
contemplated hereby, including but not limited to the fees, expenses and
disbursements of such party's respective investment bankers, accountants and
counsel.
9.14 WAIVER. No failure on the part of any party to exercise or delay
in exercising any right hereunder shall be deemed a waiver thereof, nor shall
any single or partial exercise preclude any further or other exercise of such or
any other right.
9.15 REPRESENTATION BY COUNSEL; INTERPRETATION. Each party hereto
acknowledges that such party has been represented by counsel in connection with
this Agreement and the transactions contemplated by this Agreement. Accordingly,
any rule of Law, including but not limited to Section 1654 of the California
Civil Code, or any legal decision that would require interpretation of any
claimed ambiguities in this Agreement against the party that drafted it has no
application and is expressly waived. The provisions of this Agreement shall be
interpreted in a reasonable manner to effect the intent of the parties hereto.
9.16 SEVERABILITY. If any provision of this Agreement is determined to
be invalid, illegal or unenforceable by any Governmental Entity, the remaining
provisions of this Agreement
19
to the extent permitted by Law shall remain in full force and effect provided
that the economic and legal substance of the transactions contemplated is not
affected in any manner materially adverse to any party. In event of any such
determination, the parties agree to negotiate in good faith to modify this
Agreement to fulfill as closely as possible the original intents and purposes
hereof.
9.17 NO CONSEQUENTIAL DAMAGES. Notwithstanding anything to the contrary
elsewhere in this Agreement, no party (or its Affiliates) shall, in any event,
be liable to any other party (or its Affiliates) for any consequential damages,
including, but not limited to, loss of revenue or income, or loss of business
reputation or opportunity relating to the breach or alleged breach of this
Agreement. The foregoing shall not be deemed to limit TVG's right to specific
performance with respect to SECTIONS 6.3, 6.4, 6.6, 8.1 or 8.2.
9.18 TERMINATION. Notwithstanding any contrary provision of this
Agreement, (i) TVG shall, so long as it is not then in material breach of any
provision of this Agreement, be entitled to terminate this Agreement if the
mutual condition to closing provided in SECTION 2.3.1 has not been satisfied
by November 23, 1999 and (ii) WXBV shall, so long as it is not then in
material breach of any provision of this Agreement, be entitled to terminate
this Agreement if the mutual condition to closing provided in SECTION 2.3.1
has not been satisfied by the later of (A) November 23, 1999 or (B) ninety
days from the date that the filing of the required notice with respect to the
Transaction is made with the FIRB. To exercise the termination right provided
in this SECTION 9.18, the party entitled to terminate this Agreement shall
give written notice to all other parties hereto of its desire to terminate
this Agreement. The termination of this Agreement pursuant to this SECTION
9.18 shall become effective upon the date of the terminating party's dispatch
of the written notice of termination delivered pursuant to this Agreement.
Except for any liability for any breaches by a party of this Agreement
occurring or arising prior to the effective date of the termination of this
Agreement, no party shall have any liability hereunder upon the termination
of this Agreement.
20
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and year
first above written.
WXBV: TVG:
WORLDXCHANGE B.V.B.A., a Belgium THE TVG ASIAN COMMUNICATIONS FUND,
corporation a Cayman Islands corporation
By: /s/ Edward S. Soren By: /s/ John Troy
------------------------------- ----------------------------------
Its: President Its:
------------------------------- ----------------------------------
CTS: WXL:
COMMUNICATION TELESYSTEMS WXL INTERNATIONAL-
INTERNATIONAL, a California AUSTRALIA, INC., a Delaware corporation
corporation
By: /s/ Edward S. Soren By: /s/ Edward S. Soren
------------------------------- ----------------------------------
Its: Executive Vice President Its: President
------------------------------- ----------------------------------
WARNA GERAKAN SDN BHD,
a Malaysian corporation
By: /s/ Edward Sippel
--------------------------------
Its:
-------------------------------
21
The Company hereby agrees to be bound by the provisions of SECTIONS 6.1 and 6.2,
it being understood that SECTIONS 6.1 and 6.2 are the only Sections which are
applicable to the Company and therefore such Sections are the only Sections by
which the Company shall be considered bound under this Agreement.
WORLDxCHANGE PTY. LTD.
By: /s/ Edward S. Soren
------------------------------------
Title: Director
---------------------------------
Each of Roger B. Abbott, Rosalind Abbott and Edward Soren hereby agrees to be
bound by the covenants contained in SECTIONS 8.1 and 8.2, it being understood
that SECTIONS 8.1 and 8.2 are the only Sections which are applicable to any of
the undersigned and therefore such Sections are the only Sections by which the
undersigned shall be considered bound under this Agreement.
/s/ Roger B. Abbott /s/ Rosalind Abbott /s/ Edward S. Soren
- ----------------------- ----------------------- -----------------------
Roger B. Abbott Rosalind Abbott Edward S. Soren
Troy hereby agrees to be bound by the covenants contained in SECTION 6.7, it
being understood that SECTION 6.7 is the only Section that is applicable to Troy
and therefore such Section is the only Section by which the undersigned shall be
considered bound under this Agreement.
/s/ John Troy
- ------------------------
John Troy
22
LIST OF OMITTED EXHIBITS
The following Exhibits to the Stock Purchase Agreement have
been omitted from this Exhibit and shall be furnished supplementally to the
Commission upon request:
Exhibit A - Opinion of O'Melveny & Myers LLP
Exhibit B - Opinion of W.S. Walker & Co.
Exhibit C - Opinion of Moret Ernst & Young
Exhibit D - Form of Troy Resignation Letter
Exhibit E - Registration Rights Agreement
Exhibit F - Prospectus