STOCK PURCHASE AGREEMENT
DATED AS OF DECEMBER 31, 1998
BY AND AMONG
COMMUNICATION TELESYSTEMS INTERNATIONAL d/b/a
WORLDXCHANGE COMMUNICATIONS
WXL INTERNATIONAL - NEW ZEALAND, INC.
WORLDXCHANGE LIMITED
ROGER B. ABBOTT
ROSALIND R. ABBOTT
EDWARD S. SOREN
ERIC G. LIPOFF
RICHARD VINCENT
TABLE OF CONTENTS
Page
----
ARTICLE I
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II
2.1 Purchase and Sale of Stock of the Company . . . . . . . . . . . . . . .2
2.2 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.3 Effect of Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.4 Delivery of the Shares. . . . . . . . . . . . . . . . . . . . . . . . .2
2.5 Delivery of Shareholder Waivers . . . . . . . . . . . . . . . . . . . .2
2.6 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.7 Condition Precedent to Closing. . . . . . . . . . . . . . . . . . . . .3
ARTICLE III
3.1 Incorporation, Stock, Etc.. . . . . . . . . . . . . . . . . . . . . . .3
3.2 Title to Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
3.3 Authority; Binding Effect . . . . . . . . . . . . . . . . . . . . . . .4
3.4 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE IV
4.1 Representations and Warranties. . . . . . . . . . . . . . . . . . . . .4
ARTICLE V
5.1 Amendment and Modifications . . . . . . . . . . . . . . . . . . . . . .5
5.2 Waiver of Compliance. . . . . . . . . . . . . . . . . . . . . . . . . .5
5.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.4 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.5 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.7 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.10 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.11 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.12 Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
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EXHIBITS
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Exhibit A Shareholder Consent and Waiver
SCHEDULES
- ---------
Schedule A-1 List of Shareholders, Shares Owned and Addresses
Schedule 3.1(b) Company - Incorporation, Stock, Etc.
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and
entered into as of this 31st day of December, 1998, by and among Communication
TeleSystems International d/b/a/ WorldxChange Communications, a California
corporation ("CTS"), WXL International - New Zealand, Inc., a Delaware
corporation ("WXL"), WorldxChange Limited, a New Zealand corporation (the
"COMPANY"), and each of the following shareholders of the Company: Roger B.
Abbott, Rosalind R. Abbott, Edward S. Soren, Eric G. Lipoff and Richard
Vincent (each a "SHAREHOLDER" and collectively, the "SHAREHOLDERS").
RECITALS
A. As of the date of this Agreement, the issued stock of the
Company is owned by the Shareholders in the amounts set forth opposite each such
Shareholder's name on SCHEDULE A-1 hereto, and such shares constitute 100% of
the issued stock of the Company.
B. On the Closing Date, WXL will acquire all of the issued
stock of the Company from the Shareholders on the terms and conditions provided
for herein.
C. The acquisition by WXL of the Shares (as defined in Section
2.1 hereof) of the Company solely in consideration for shares of common stock of
CTS as contemplated by this Agreement is intended by the parties to qualify as a
stock-for-stock exchange under section 368(a)(1)(B) of the Internal Revenue Code
of 1986, as amended (the "Code").
D. For accounting purposes, it is intended that the
acquisition of the Shares be accounted for as a "pooling-of-interests."
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties to this Agreement
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement and the Exhibits
and Schedules delivered pursuant to this Agreement, the following definitions,
in addition to those set forth elsewhere in this Agreement, shall apply:
"Closing" means the consummation of the transactions contemplated
by this Agreement.
"Closing Date" means the date specified in Section 2.6 of this
Agreement.
"OIC" means the New Zealand Overseas Investment Commission.
"Person" means any individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated organization or
governmental entity.
"Restrictions" shall mean all liens, pledges, encumbrances,
security interests, changes, voting trusts, agreements, rights, options,
warrants, claims, taxes, contracts, calls, commitments, equities, demands,
rights of first refusal, security agreements, assessments, charges, conditions
or other restrictions, other than those in favor of WXL created by this
Agreement.
ARTICLE II
THE PURCHASE
2.1 PURCHASE AND SALE OF STOCK OF THE COMPANY. Subject to and
upon the terms and conditions set forth in this Agreement, the Shareholders
shall sell, transfer, convey, assign and deliver to WXL, and WXL shall accept
and receive from the Shareholders, at the Closing hereunder, all of the issued
ordinary shares of capital stock of the Company (the ordinary shares of the
capital stock of the Company being acquired by WXL hereunder shall be referred
to herein collectively as the "SHARES" and each a "SHARE"). The Shares shall be
conveyed by the Shareholders to WXL free and clear of all Restrictions
whatsoever.
2.2 CONSIDERATION. In exchange for the transfer of the Shares
by the Shareholders to WXL, and subject to the terms and conditions of this
Agreement, at the Closing, CTS shall issue and transfer two hundred seventy
eight (278) shares of its common stock for each Share held by a Shareholder.
Neither WXL nor CTS shall transfer any consideration to the Shareholders, other
than the shares of common stock of CTS, as provided herein.
2.3 EFFECT OF EXCHANGE. Until a Shareholder exchanges his/her
Company stock certificates for CTS stock certificates, such Shareholder will not
be a shareholder of CTS for any purpose.
2.4 DELIVERY OF THE SHARES. At the Closing, each of the
Shareholders shall tender to WXL the certificates representing the Shares (if
certificated), together with the transfers of the Shares to WXL, in registerable
form, duly executed by the Shareholders, or such other appropriate documentation
evidencing the transfer of such Shareholder's Shares pursuant to this Agreement,
which documentation shall be in form and substance acceptable to WXL.
2.5 DELIVERY OF SHAREHOLDER WAIVERS. At the Closing, each of
the Shareholders shall deliver to each of CTS and WXL a Shareholder Consent and
Waiver in the form of EXHIBIT A hereto, duly executed.
2.6 CLOSING. The Closing of the transactions contemplated by
this
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Agreement shall occur at the offices of CTS at 9999 Willow Creek Road, San
Diego, California, no later than three (3) days after the OIC approval has been
obtained, or at such other location, time and date as the parties hereto shall
agree in writing.
2.7 CONDITION PRECEDENT TO CLOSING. The Closing shall not
occur until OIC approval for this transaction is obtained. All parties shall
use their best efforts to obtain OIC approval in an expeditious manner. In the
event that OIC approval is not obtained by April 30, 1999, CTS or any of the
Shareholders may elect to cancel this transaction by providing notice to all
other parties to this Agreement, in which case no party shall have any further
rights or obligations under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
The Company and each of the Shareholders hereby represent and
warrant, jointly and severally, to WXL, in each case as of the date of this
Agreement, as follows:
3.1 INCORPORATION, STOCK, ETC.
(a) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of New
Zealand, with all requisite power and authority to own its
properties and assets and to carry on the business in which
it is now engaged.
(b) The issued shares of the Company are as set forth on
SCHEDULE 3.1(b) hereto. All of the issued shares of the
capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable.
Except as set forth on SCHEDULE 3.1(b), as of the Closing
Date, the Company is not bound by any subscription, option,
warrant, conversion privilege, or other right, call,
agreement or commitment to issue or sell, or any
obligation, agreement or commitment to purchase or
otherwise acquire any of its stock or any securities
convertible into or exchangeable for any of its stock.
None of the stock of the Company has been issued in
violation of any preemptive or contractual rights of any
Person. All of the stock of the Company has been issued in
compliance with all applicable securities laws, and there
are no shareholders' agreements, voting trusts or similar
agreements that are in effect with respect to any of such
stock at the Closing Date, except as set forth on SCHEDULE
3.1(b).
3.2 TITLE TO STOCK. Each Shareholder is the beneficial and
record owner of all of the Shares listed next to such Shareholder's name on
SCHEDULE A-1. The Shares are not subject to any Restrictions that, as of the
Closing, have not been or will not be waived or terminated, and each Shareholder
has good and marketable title to such
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Shareholder's Shares, free and clear of any Restrictions.
3.3 AUTHORITY; BINDING EFFECT. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary action on the part of the Company, the Company has all requisite
corporate power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and is the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights generally.
The execution, delivery and performance by the Shareholders of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary action on the part of the Shareholders, and
each of the Shareholders has the power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby. This Agreement
has been duly executed and delivered by each of the Shareholders and is the
valid and binding agreement of each Shareholder, enforceable against each
Shareholder in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally.
3.4 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 the Company or the Shareholders in connection with the negotiation,
execution or performance of this Agreement or the transaction contemplated by
this Agreement, is or will be entitled to any brokerage or finder's or similar
fee or other commission as a result of this Agreement or such transaction.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WXL AND CTS
4.1 REPRESENTATIONS AND WARRANTIES. WXL and CTS hereby
represent and warrant to each of the Shareholders, in each case as of the date
of this Agreement, as follows:
(a) INCORPORATION. WXL is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware, and CTS is a corporation duly organized, validly
existing and in good standing under the laws of the State of
California.
(b) AUTHORITY; BINDING EFFECT. (i) The execution, delivery and
performance by each of WXL and CTS of this Agreement and the
consummation of the transactions contemplated hereby by WXL and
CTS have been duly and validly authorized by all necessary
corporate action on
4
the part of WXL and CTS, respectively; (ii) each of WXL and CTS
has all requisite corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby;
and (iii) this Agreement has been duly executed and delivered by
each of WXL and CTS and is the valid and binding agreement of each
of them, enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 AMENDMENT AND MODIFICATIONS. Subject to applicable law,
this Agreement may be amended, modified and supplemented only by written
agreement between the parties hereto which states that it is intended to be a
modification of this Agreement.
5.2 WAIVER OF COMPLIANCE. Any failure of the Company and the
Shareholders, on the one hand, or WXL or CTS, on the other, to comply with any
obligation, covenant, agreement or condition herein may be expressly waived in
writing by the other party, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
5.3 EXPENSES. The parties agree that all fees and expenses
incurred by them in connection with this Agreement and the transaction
contemplated hereby shall be borne by the party incurring such fees and
expenses, including, without limitation, all fees of counsel, investment bankers
and accountants.
5.4 FURTHER ASSURANCES. Each party shall execute and deliver
after the Closing such further certificates, agreements and other 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. Notwithstanding the foregoing, the Shareholders shall not be obligated
to incur any financial obligation or other liability other than as expressly
provided herein. WXL and/or CTS, as applicable, shall file all notices, reports
and returns (the "Tax Reports") necessary in connection with qualification of
the transactions contemplated hereunder as a stock-for-stock exchange under
section 368(a)(1)(B) of the Code and to comply with section 367(b) of the Code
and final and temporary regulations thereunder. The Shareholders agree to
cooperate in such filing of the Tax Reports and shall comply with all reporting
requirements applicable to such Shareholders (including reporting on IRS Form
5471, if applicable).
5.5 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
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partial exercise preclude any further or other exercise of such or any other
right.
5.6 NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given upon receipt if delivered by hand or mailed,
certified or registered mail with postage prepaid:
(a) if to WXL or CTS, to:
Communication TeleSystems International
d/b/a WorldxChange Communications
9999 Willow Creek Road
San Diego, California 92131
Attention: General Counsel
or such other person or address as WXL and/or CTS, as the case may be,
shall furnish to each of the Shareholders in writing;
(b) if to a Shareholder, to the address for each such
Shareholder listed on SCHEDULE A-1 hereto, or to such other person
or address as such Shareholder shall furnish to WXL and CTS in
writing.
5.7 ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other party.
5.8 GOVERNING LAW. This Agreement and the legal relations
among the parties hereto shall be governed by and construed in accordance with
the laws of the State of California, as applied to contracts entered into and to
be wholly performed within such State, without giving effect to conflict of
laws.
5.9 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
5.10 HEADINGS. The headings of the Sections and Articles of
this Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
5.11 ENTIRE AGREEMENT. This Agreement, including the Exhibits
and Schedules hereto, and the other documents and certificates delivered
pursuant to the
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terms hereof, set forth the entire agreement and understanding of the parties
hereto in respect of the subject matter contained herein, and supersede all
prior agreements, promises, covenants, letters of intent, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto.
5.12 THIRD PARTIES. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or corporation other than the
parties hereto and their successors or assigns, any rights or remedies under or
by reason of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and their respective corporate seals to be affixed hereto,
all as of the day and year first above written.
"CTS"
COMMUNICATION TELESYSTEMS INTERNATIONAL d/b/a
WORLDXCHANGE COMMUNICATIONS,
a California corporation
By: /s/ Edward S. Soren
----------------------------
Name: Edward S. Soren
Title: Chairman of the Board
"WXL"
WXL INTERNATIONAL - NEW ZEALAND, INC.,
a Delaware corporation
By: /s/ Edward S. Soren
----------------------------
Name: Edward S. Soren
Title: President
"COMPANY"
WORLDXCHANGE LIMITED,
a New Zealand corporation
By: /s/ Roger B. Abbott
----------------------------
Name: Roger B. Abbott
Title: Director
S-1
"SHAREHOLDERS"
/s/ Roger B. Abbott
- -----------------------------
ROGER B. ABBOTT
/s/ Rosalind R. Abbott
- -----------------------------
Rosalind R. Abbott
/s/ Edward S. Soren
- -----------------------------
Edward S. Soren
/s/ Eric G. Lipoff
- ------------------------------
Eric G. Lipoff
/s/ Richard Vincent
- ------------------------------
Richard Vincent
S-2
SCHEDULE A-1
LIST OF SHAREHOLDERS,
SHARES OWNED AND ADDRESSES
NAME AND ADDRESS SHARES HELD
- --------------------- -----------
Roger B. Abbott 292
9999 Willow Creek Road
San Diego, CA 92131
Rosalind Abbott 292
9999 Willow Creek Road
San Diego, CA 92131
Edward S. Soren 291
9999 Willow Creek Road
San Diego, CA 92131
Eric G. Lipoff 100
9999 Willow Creek Road
San Diego, CA 92131
Richard Vincent 25
1 Elizabeth Plaza
Level 4, Educom House
North Sydney, NSW 2060
Australia
Schedule A-1
SCHEDULE 3.1(b)
INCORPORATION, STOCK, ETC.
1. The number of issued shares of the Company are 1,000.
2. Steven Stanford has an option to subscribe for, and be issued with, 53
ordinary shares in the capital of the Company pursuant to that certain
Agreement Granting Option to Purchase Shares dated August 1, 1997, by and
between the Company and Steven Stanford.
Schedule 3.1(b)
EXHIBIT A
SHAREHOLDER CONSENT AND WAIVER
WORLDXCHANGE LIMITED,
A NEW ZEALAND CORPORATION
The undersigned, a shareholder of WorldxChange Limited, a New Zealand
corporation (the "Company"), hereby consents to the sale by the shareholders of
the Company of all of the issued ordinary shares of the Company (the "Shares")
to WXL International - New Zealand, Inc., a Delaware corporation ("WXL"), and in
connection with such sale of the Shares to WXL, hereby waives all pre-emptive
rights conferred upon such shareholder pursuant to Section 13 of the
Constitution of the Company, effective as of December 31, 1998.
SHAREHOLDER
/s/ Roger B. Abbott
Name: Roger B. Abbott
Number of Shares Held: 292
Exhibit A
EXHIBIT A
SHAREHOLDER CONSENT AND WAIVER
WORLDXCHANGE LIMITED,
A NEW ZEALAND CORPORATION
The undersigned, a shareholder of WorldxChange Limited, a New Zealand
corporation (the "Company"), hereby consents to the sale by the shareholders of
the Company of all of the issued ordinary shares of the Company (the "Shares")
to WXL International - New Zealand, Inc., a Delaware corporation ("WXL"), and in
connection with such sale of the Shares to WXL, hereby waives all pre-emptive
rights conferred upon such shareholder pursuant to Section 13 of the
Constitution of the Company, effective as of December 31, 1998.
SHAREHOLDER
/s/ Rosalind Abbott
Name: Rosalind Abbott
Number of Shares Held: 292
Exhibit A
EXHIBIT A
SHAREHOLDER CONSENT AND WAIVER
WORLDXCHANGE LIMITED,
A NEW ZEALAND CORPORATION
The undersigned, a shareholder of WorldxChange Limited, a New Zealand
corporation (the "Company"), hereby consents to the sale by the shareholders of
the Company of all of the issued ordinary shares of the Company (the "Shares")
to WXL International - New Zealand, Inc., a Delaware corporation ("WXL"), and in
connection with such sale of the Shares to WXL, hereby waives all pre-emptive
rights conferred upon such shareholder pursuant to Section 13 of the
Constitution of the Company, effective as of December 31, 1998.
SHAREHOLDER
/s/ Edward S. Soren
Name: Edward S. Soren
Number of Shares Held: 291
Exhibit A
EXHIBIT A
SHAREHOLDER CONSENT AND WAIVER
WORLDXCHANGE LIMITED,
A NEW ZEALAND CORPORATION
The undersigned, a shareholder of WorldxChange Limited, a New Zealand
corporation (the "Company"), hereby consents to the sale by the shareholders of
the Company of all of the issued ordinary shares of the Company (the "Shares")
to WXL International - New Zealand, Inc., a Delaware corporation ("WXL"), and in
connection with such sale of the Shares to WXL, hereby waives all pre-emptive
rights conferred upon such shareholder pursuant to Section 13 of the
Constitution of the Company, effective as of December 31, 1998.
SHAREHOLDER
/s/ Eric G. Lipoff
Name: Eric G. Lipoff
Number of Shares Held: 100
Exhibit A
EXHIBIT A
SHAREHOLDER CONSENT AND WAIVER
WORLDXCHANGE LIMITED,
A NEW ZEALAND CORPORATION
The undersigned, a shareholder of WorldxChange Limited, a New Zealand
corporation (the "Company"), hereby consents to the sale by the shareholders of
the Company of all of the issued ordinary shares of the Company (the "Shares")
to WXL International - New Zealand, Inc., a Delaware corporation ("WXL"), and in
connection with such sale of the Shares to WXL, hereby waives all pre-emptive
rights conferred upon such shareholder pursuant to Section 13 of the
Constitution of the Company, effective as of December 31, 1998.
SHAREHOLDER
/s/ Richard Vincent
Name: Richard Vincent
Number of Shares Held: 25
Exhibit A
RESOLUTION ADOPTED BY SOLE DIRECTOR
OF
WXL INTERNATIONAL -- NEW ZEALAND, INC.
The undersigned, being the sole director of WXL International - New
Zealand, Inc. (the "Corporation") a Delaware corporation, hereby adopt and
consent to the following resolutions:
RESOLVED, that the Corporation is authorized to purchase all of the
outstanding shares in WorldxChange Limited, a New Zealand corporation, on the
terms and conditions set forth in that certain Stock Purchase Agreement, a copy
of which is attached hereto as Exhibit "A".
NOW, THEREFORE, BE IT RESOLVED, that the Stock Purchase Agreement is
hereby adopted and approved.
RESOLVED FURTHER, that the sole director and any officer of this
Corporation is authorized, in the name and on behalf of this Corporation, to
execute and deliver the Stock Purchase Agreement in the form and substance as
approved by the executing officer, such approval to be conclusively evidenced by
such officer's or officers' execution thereof.
RESOLVED FURTHER, that the sole director and any officer of this
Corporation is authorized and empowered and on behalf of this Corporation, to
take any and all actions in execute any and all such documents, each as he deems
necessary or advisable to carry out fully the intent and purposes of the
foregoing resolutions and each of the transactions contemplated thereby, the
taking of such action or the execution of such document to be conclusive
evidence as the same of deemed necessary or advisable.
RESOLVED FURTHER, that any and all actions hereto for hereafter take in
the name and on behalf of this Corporation by any officer, agent or counsel of
this Corporation in connection with or related to the matters in or contemplated
by the foregoing resolutions be, and they hereby are adopted, affirmed, approved
and ratified in all respects as the acts and deeds of this Corporation.
Dated: December 31, 1998
/s/ Edward S. Soren
- --------------------------------
Edward Soren, Sole Director