STOCK PURCHASE AGREEMENT
BY AND AMONG
COMMUNICATION TELESYSTEMS INTERNATIONAL D.B.A. WORLDXCHANGE
COMMUNICATIONS,
GOLD & APPEL TRANSFER S.A.,
ROGER B. ABBOTT, ROSALIND ABBOTT
AND
EDWARD S. SOREN
SEPTEMBER ___, 1998
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TABLE OF CONTENTS
PAGE
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2. PURCHASE AND SALE OF THE INITIAL SHARES . . . . . . . . . . . . . . . .4
3. SALE OF REMAINING SHARES . . . . . . . . . . . . . . . . . . . . . . .4
3.1 Sale of Remaining Shares . . . . . . . . . . . . . . . . . . . .4
3.2 Conditions Precedent to Sale of Remaining Shares . . . . . . . .4
3.3 HSR Filings . . . . . . . . . . . . . . . . . . . . . . . . . . .5
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . .5
4.1 Organization and Corporate Power . . . . . . . . . . . . . . . .5
4.2 Capital Stock and Related Matters . . . . . . . . . . . . . . . .5
4.3 Authorization; No Conflicts . . . . . . . . . . . . . . . . . . .6
4.4 Governmental Consent, etc. . . . . . . . . . . . . . . . . . . .6
4.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . .6
4.6 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . .6
4.7 Accuracy of Information . . . . . . . . . . . . . . . . . . . . .7
4.8 No Material Adverse Change . . . . . . . . . . . . . . . . . . .7
4.9 Conformity with Law; Litigation . . . . . . . . . . . . . . . . .7
4.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
4.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . .7
4.12 Government Authorizations . . . . . . . . . . . . . . . . . . . .7
4.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
4.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
RELATING TO EACH SHAREHOLDER . . . . . . . . . . . . . . . . . . . . .8
5.1 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
5.2 Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . .8
5.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . .8
5.4 Relationships with Related Persons . . . . . . . . . . . . . . .8
6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER . . . . . . . . . . . .8
6.1 Organization and Related Matters . . . . . . . . . . . . . . . . .8
6.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . .8
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PAGE
6.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . .8
6.4 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . .9
6.5 Investment Representations . . . . . . . . . . . . . . . . . . .9
7. TRANSFER OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.1 Restrictive Legends . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Notice of Proposed Transfers . . . . . . . . . . . . . . . . . 10
7.3 Permitted Transfers . . . . . . . . . . . . . . . . . . . . . . 11
8. COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . 11
8.1 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.2 Board Matters . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.3 Rule 144 Filing . . . . . . . . . . . . . . . . . . . . . . . . 11
8.4 Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . 12
8.5 Registration Rights . . . . . . . . . . . . . . . . . . . . . . 12
8.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . 12
8.7 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 12
9. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.1 Obligations of the Company . . . . . . . . . . . . . . . . . . 12
9.2 Obligations of the Shareholders . . . . . . . . . . . . . . . . 13
9.3 Obligations of the Purchaser . . . . . . . . . . . . . . . . . 13
9.4 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.5 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . 13
10. CO-SALE RIGHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10.1 Co-Sale Procedure . . . . . . . . . . . . . . . . . . . . . . . 13
10.2 Limitation on Co-Sale Right . . . . . . . . . . . . . . . . . . 14
11. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11.1 Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . 14
11.2 Survival of Representations and Warranties . . . . . . . . . . 14
11.3 Schedules; Exhibits; Integration . . . . . . . . . . . . . . . 15
11.4 Best Efforts; Further Assurances . . . . . . . . . . . . . . . 15
11.5 Governing Law and Forum Selection . . . . . . . . . . . . . . . 15
11.6 No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 15
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PAGE
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.9 Publicity and Reports . . . . . . . . . . . . . . . . . . . . . 16
11.10 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 16
11.11 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . 16
11.12 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.13 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.14 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.15 Representation By Counsel; Interpretation . . . . . . . . . . . 17
11.16 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.17 No Consequential Damages . . . . . . . . . . . . . . . . . . . 18
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SCHEDULES AND EXHIBITS
Schedule 4.2 Equity Securities
Schedule 4.16 Directors and Officers Liability Insurance
Schedule 5.1 Equity Securities Owned by the Shareholders
Schedule 8.1 Compensation of the Shareholders
Schedule 10.2 Sample Calculation of Co-Sale Right
Exhibit A Registration Rights Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is dated as of
September __, 1998, by and among COMMUNICATION TELESYSTEMS INTERNATIONAL D.B.A.
WORLDXCHANGE COMMUNICATIONS, a California corporation (the "COMPANY"), GOLD &
APPEL TRANSFER S.A., a British Virgin Islands corporation (the "PURCHASER"),
ROGER B. ABBOTT, ROSALIND ABBOTT and EDWARD S. SOREN (each of Messrs. Abbott and
Soren and Ms. Abbott is a "SHAREHOLDER" and collectively they are the
"SHAREHOLDERS").
The parties hereby agree as follows:
1. DEFINITIONS.
1.1 DEFINITIONS.
1.1.1 For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires,
(a) the terms defined in this SECTION 1 have the meanings
assigned to them in this SECTION 1 and include the plural as well as the
singular,
(b) 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
(c) all accounting terms not otherwise defined herein have
the meanings assigned under generally accepted accounting principles.
1.2 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.
"AGREEMENT" means this Agreement by and among the Company, the
Purchaser and the Shareholders as amended or supplemented together with all
Schedules and Exhibits 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.
"ATOCHA" means Atocha, L.P. a Texas limited partnership.
"AUDITORS" means Ernst & Young LLP, independent public accountants to
the Company.
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"AVAILABLE SHARES" means, collectively, (i) the Offered Shares, (ii)
the number of shares of Stock offered for sale by the Purchaser pursuant to
SECTION 10.1, and (iii) the number of shares of Stock offered for sale by Atocha
pursuant to Section 10.1 of that certain Stock Purchase Agreement, dated as of
the date hereof, by and between the Company, Atocha, and the other parties
thereto.
"BALANCE SHEET DATE" means September 30, 1997.
"COMPANY" means Communication TeleSystems International d.b.a.
WorldxChange Communications, a California corporation.
"CONTRACT" means any agreement, arrangement, bond, commitment,
franchise, indemnity, indenture, instrument, lease, license or understanding,
whether or not in writing.
"CO-SALE NOTICE" has the meaning specified in SECTION 10.1.
"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 (including,
without limitation, common stock and preferred stock) or other equity interest
in the Company or any securities convertible into or exchangeable for capital
stock of the Company or any other rights (statutory, contractual or otherwise),
warrants or options to acquire any of the foregoing securities.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"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.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the related regulations and published interpretations.
"HSR FILINGS" means the filing of a premerger notification and report
form by each of the Company and the Purchaser (with respect to the transactions
contemplated by this Agreement) with the Federal Trade Commission and the
Antitrust Division of the Department of Justice.
"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.
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"INITIAL SHARES", means 788,127 shares of Stock to be issued by the
Company pursuant to Section 2.
"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 the Company 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.
"OFFERING MEMORANDUM" means that certain preliminary offering
circular, prepared by the Company, dated May 4, 1998 (the "PRELIMINARY OFFERING
CIRCULAR") as supplemented by a supplement to the Preliminary Offering Circular,
prepared by the Company, dated September 28, 1998, in the form delivered to
Purchaser on September 29, 1998.
"OFFERED SHARES" has the meaning specified in SECTION 10.1.
"OFFEROR" has the meaning specified in SECTION 10.1.
"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.
"PROCEEDING" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, any Governmental Entity or arbitrator.
"PURCHASE PRICE" has the meaning specified in SECTION 2.
"PURCHASER" means Gold & Appel Transfer S.A., a British Virgin Islands
corporation.
"REMAINING SHARES" means 871,087 shares of Stock to be issued by the
Company at the Second Closing.
"SEC" means the Securities and Exchange Commission or any successor
entity.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLERS" means, collectively, the Company and the Shareholders.
"SELLING SHAREHOLDER" has the meaning specified in SECTION 10.1.
"STOCK" means the common stock of the Company, no par value.
"SUBSIDIARY" means any Person in which the Company 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.
2. PURCHASE AND SALE OF THE INITIAL SHARES.
Simultaneously with the execution and delivery of this Agreement, the
Purchaser shall deliver by wire transfer of immediately available funds the
amount of $10,000,000 (the "PURCHASE PRICE") to the Company against delivery by
the Company to the Purchaser of a certificate, issued in the name of the
Purchaser, evidencing the Initial Shares. Each of the following documents must
have been delivered to Purchaser as of the date of this Agreement: (i) an
opinion of O'Melveny & Myers LLP reasonably acceptable to Purchaser and (ii)
such other documents as Purchaser may reasonably request for the purpose of
facilitating the consummation of the sale of the Initial Shares.
3. SALE OF REMAINING SHARES.
3.1 SALE OF REMAINING SHARES. Subject to Section 3.2, on or before
January 29, 1999 the Purchaser shall deliver by wire transfer of immediately
available funds the amount of $10,000,000 to the Company against the delivery by
the Company to the Purchaser of a certificate, issued in the name of the
Purchaser, evidencing the Remaining Shares (the "Second Closing"). The date on
which the Second Closing occurs shall be the "Second Closing Date."
3.2 CONDITIONS PRECEDENT TO SALE OF REMAINING SHARES. The
obligations of the Company and the Purchaser to sell and purchase the Remaining
Shares, respectively, are subject to the satisfaction, at or prior to the Second
Closing, of each of the following conditions (any of which may be waived by the
agreement of both parties, in whole or in part):
(a) NO PROHIBITION. Neither the consummation nor the performance of
any of the transactions contemplated by this Agreement at the Second Closing
will, directly or indirectly (with or without notice or lapse of time),
materially contravene or conflict with, or result in a material violation of,
any applicable Law or Order.
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(b) HSR APPROVAL. Any waiting period applicable to the transactions
contemplated by this Agreement under the HSR Act shall have expired or been
terminated prior to January 29, 1999.
3.3 HSR FILINGS. The Company and the Purchaser each agree to use
best efforts to cause the HSR Filings to be made promptly after the execution
and delivery of this Agreement. The Company and the Purchaser each agree to
furnish each other with such necessary information and reasonable assistance
as the other may request in connection with the HSR Filings.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as otherwise disclosed in the Offering Memorandum or as set forth in
the attached Schedules, the Company represents and warrants that as of the date
hereof:
4.1 ORGANIZATION AND CORPORATE POWER. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. The Company has all requisite corporate power and authority
necessary to (i) execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby and (ii) own and operate its properties and
to carry on its business as now conducted and as presently proposed to be
conducted. The copies of the Company's charter documents and bylaws furnished to
the Purchaser's counsel reflect all amendments made thereto at any time prior to
the date of this Agreement and are correct and complete. The Company 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.
4.2 CAPITAL STOCK AND RELATED MATTERS. The authorized capital stock
of the Company is as set forth in its articles of incorporation and the
outstanding capital stock, options and other rights to acquire capital stock and
shares reserved for issuance are as set forth in SCHEDULE 4.2. Except as set
forth in SCHEDULE 4.2 and as contemplated by this Agreement, as of the date of
this Agreement: (i) the Company will not have outstanding any stock or
securities convertible or exchangeable for any shares of capital stock, nor will
there be outstanding any rights or options to subscribe for or to purchase any
capital stock or any stock or securities convertible into or exchangeable for
any capital stock of the Company, and (ii) the Company will not be subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock. All of the outstanding shares of capital
stock of the Company have been duly authorized and validly issued and are fully
paid and nonassessable. The Initial Shares and the Remaining Shares, when issued
and sold in accordance with the terms of this Agreement, will be duly authorized
and validly issued, fully paid and nonassessable.
4.3 AUTHORIZATION; NO CONFLICTS. The execution, delivery and
performance of this Agreement by the Company and the consummation of the
transaction contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company. This Agreement
constitutes the legally valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. The execution, delivery and
performance of this Agreement by the Company will not (i) conflict with,
violate, or constitute a
5
breach or default (whether upon lapse of time and/or the occurrence of any act
or event or otherwise) under, the charter documents or bylaws of the Company or
any Material Contract of the Company, result in the imposition of any material
Encumbrance against any material asset or properties of the Company or any
Subsidiary, or violate any material Law or Order.
4.4 GOVERNMENTAL CONSENT, ETC. Except for the HSR Filings, no
further permit, consent, Approval, authorization of, declaration to, or filing
with any Governmental Entity is required in connection with the execution,
delivery and performance of this Agreement by the Company or the consummation by
the Company of any transactions contemplated hereby, except as have already been
obtained or accomplished.
4.5 FINANCIAL STATEMENTS.
4.5.1 AUDITED FINANCIAL STATEMENTS. The Company has delivered to
the Purchaser consolidated balance sheets for the Company and its
Subsidiaries at September 30, 1997, 1996 and 1995 and the related
consolidated statements of operations, changes in stockholder's equity
and changes in financial position or cash flow for the periods then
ended. All such financial statements have been examined by the
Auditors whose reports thereon are included with such financial
statements. All such financial statements have been prepared in
conformity with GAAP. Such statements of operations and cash flow
present fairly in all material respects the results of operations and
cash flows of the Company and its Subsidiaries for the respective
periods covered, and the balance sheets present fairly in all material
respects the financial condition of the Company and its Subsidiaries
as of their respective dates.
4.5.2 UNAUDITED INTERIM FINANCIAL STATEMENTS. The Company has
delivered to the Purchaser a consolidated balance sheet for the
Company and its Subsidiaries at August 31, 1998, and the related
consolidated statements of operations for the eleven months then ended
(the "Interim Statements"). The Interim Statements have been prepared
in conformity with GAAP applied on a consistent basis except for (i)
changes, if any, disclosed therein (except for the absence of notes
and normal year-end adjustments consistent with past practices) and
(ii) information in the Interim Statements concerning EBITDA, which is
not determined in accordance with GAAP. The statements of operations
present fairly the results of operations of the Company and its
Subsidiaries for the period covered, and the balance sheet presents
fairly in all material respects the financial condition of the Company
as of the date of the balance sheet.
4.6 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 its Affiliates in connection with the negotiation, execution or
performance of this Agreement or the transactions 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 transactions.
4.7 ACCURACY OF INFORMATION. As of the date hereof, the Offering
Memorandum does not contain any untrue statement of a material fact, or fail to
state any
6
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.
4.8 NO MATERIAL ADVERSE CHANGE. Since the Balance Sheet Date, there
has not been any Material Adverse Effect.
4.9 CONFORMITY WITH LAW; LITIGATION. To the knowledge of the
Company, the Company has complied with all Laws applicable to it or to the
operation of its business and has not received any written notice of any
violation of, liability or potential responsibility under, any such Law which
has not heretofore been cured and for which there is no remaining liability,
other than, in each case, those not having a Material Adverse Effect.
4.10 ERISA. Each Company employee benefit plan that is subject to
ERISA has been administered in compliance with the applicable requirements of
ERISA, except for such noncompliance, if any, that in the aggregate, would not
have a Material Adverse Effect.
4.11 ENVIRONMENTAL MATTERS. To the knowledge of the Company, all real
property now or previously owned, operated or leased by the Company and located
in the United States has been operated by the Company in compliance with all
applicable Environmental Laws, except for such noncompliance, if any, that would
not have a Material Adverse Effect. As used herein, "Environmental Law" means
any federal, state, or local law, statute, rule or regulation governing or
relating to the environment or to occupational health and safety.
4.12 GOVERNMENT AUTHORIZATIONS. The Company has all federal, state
and local governmental licenses, permits and other authorizations, including
without limitation all licenses and authorizations required by the United State
Federal Communications Commission (the "FCC") and by state public utilities
commissions (collectively, "Company Permits"), necessary to conduct the
Company's business as presently conducted, except where the failure to hold any
such licenses, permits and other authorizations would not result in a Material
Adverse Effect.
4.13 TAXES. To the knowledge of the Company, all Taxes owed by the
Company have been paid or accrued on the Company's financial statements, except
where the failure to pay or accrue such Taxes would not result in a Material
Adverse Effect.
4.14 INSURANCE. SCHEDULE 4.14 sets forth a true and correct
description of the directors and officers liability insurance policy currently
maintained by the Company. There have been no claims made against such insurance
policy.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS RELATING TO EACH
SHAREHOLDER.
Each Shareholder represents and warrants to the Purchaser as of the
date hereof as follows with respect to such Shareholder:
5.1 OWNERSHIP. Such Shareholder is the record and beneficial owner
of the number of Equity Securities set forth in SCHEDULE 5.1 across from such
Shareholder's name; such Equity Securities represent the entire ownership
interest of such Shareholder in the Company; and such Shareholder has no other
Equity Securities of the Company.
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5.2 BINDING AGREEMENT. This Agreement has been duly executed and
delivered by or on behalf of such Shareholder, and this Agreement is a legal,
valid and binding obligation of such Shareholder, enforceable against such
Shareholder in accordance with its terms.
5.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by the
Shareholder 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)
any Material Contract to which the Shareholder is a party or (ii) any material
Law or Order to which the Shareholder is subject.
5.4 RELATIONSHIPS WITH RELATED PERSONS. The section titled "Certain
Relationships and Related Transactions" in the Offering Memorandum, as of the
date hereof, does not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser represents
and warrants that:
6.1 ORGANIZATION AND RELATED MATTERS. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
British Virgin Islands. The Purchaser has all requisite corporate power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby.
6.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement by the Purchaser and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Purchaser. This Agreement constitutes the legally valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms.
6.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, by
the Purchaser 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 the Purchaser, (ii) any Material
Contract to which the Purchaser is a party, or (iii) any material Law or
Order to which the Purchaser is subject.
6.4 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
Purchaser or its Affiliates in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated by this
Agreement, is or will be entitled to any broker's or finder's or similar fee or
other commission as a result of this Agreement or such transactions.
6.5 INVESTMENT REPRESENTATIONS.
6.5.1 This Agreement is made with the Purchaser in reliance upon
the Purchaser's representation to the Company, which by the
Purchaser's execution of this Agreement, the Purchaser hereby
confirms, that (i) the Initial and
8
Remaining Shares are being acquired for investment for the Purchaser'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 the Purchaser has
no present intention of selling, granting any participation in, or
otherwise distributing the same; and (ii) the Purchaser 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 of the Initial Shares or Remaining Shares.
6.5.2 The Purchaser has not been attracted to the purchase of the
Initial Shares or Remaining Shares by any publication or any
advertising, and the transactions contemplated by this Agreement are
not being effected by or through a broker-dealer.
6.5.3 The Purchaser is an "accredited investor" within the meaning
of Rule 501 of Regulation D promulgated by the SEC, as presently in
effect.
6.5.4 The Purchaser understands that (i) neither the Initial
Shares or the Remaining 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 the Purchaser by an
impartial review of such a registration statement by the SEC or other
regulatory commission will not be forthcoming; and (iii) the Initial
Shares and the Remaining Shares are characterized as "restricted
securities" under the federal securities laws inasmuch as they are
being acquired from the Company 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. In this
connection, the Purchaser represents that it is familiar with the
SEC's Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
6.5.5 The Purchaser acknowledges that (i) it is represented by
counsel, (ii) it has received and carefully reviewed a copy of the
Offering Memorandum and this Agreement; (iii) it has received all
information it considers necessary or appropriate for deciding whether
to purchase the Initial Shares and the Remaining Shares; (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 the Company, the business of the Company 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 the Company to the extent necessary to evaluate the
merits and risks related to its investment in the Company.
7. TRANSFER OF SHARES. The Initial Shares and the Remaining Shares are not
transferable except upon the conditions specified in this SECTION 7, which
conditions are intended
9
to assure compliance with the provisions of the Securities Act and state
securities laws in respect of the transfer of any of such Initial Shares or
Remaining Shares.
7.1 RESTRICTIVE LEGENDS. Unless and until otherwise permitted by
this Agreement, the Initial Shares and the Remaining Shares issued or
transferred to the Purchaser pursuant to this Agreement shall be stamped or
otherwise imprinted with legends in substantially the following forms:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS AND THUS MAY NOT BE TRANSFERRED UNLESS REGISTERED OR
QUALIFIED UNDER THAT ACT OR SUCH LAWS OR UNLESS AN EXEMPTION FROM
REGISTRATION OR QUALIFICATION IS AVAILABLE."
"SUCH SECURITIES ARE ALSO SUBJECT TO THE RESTRICTIONS ON
TRANSFER CONTAINED IN A STOCK PURCHASE AGREEMENT, DATED AS OF
SEPTEMBER __, 1998, BY AND AMONG COMMUNICATION TELESYSTEMS
INTERNATIONAL D.B.A. WORLDXCHANGE COMMUNICATIONS, GOLD & APPEL
TRANSFER S.A., ROGER B. ABBOTT, ROSALIND ABBOTT, AND EDWARD S. SOREN,
COPIES OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF THE COMPANY."
The Company may order its transfer agents to stop the transfer of any Initial
Shares or Remaining Shares bearing a legend required by this SECTION 7.1 until
the conditions herein with respect to transfer of such securities have been
satisfied.
7.2 NOTICE OF PROPOSED TRANSFERS. Subject to SECTION 7.1, prior to
any transfer or attempted transfer of the Initial Shares or Remaining Shares
bearing the legend in SECTION 7.1, the Purchaser or its permitted assignee,
transferee or donee (the "Holder") shall give the Company 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 the Company and
the Holder, in form and substance reasonably acceptable to the Company, the
proposed transfer may be effected without registration of such Initial Shares or
Remaining Shares, the Initial Shares or Remaining Shares 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. The Company
shall not be required to effect any such transfer prior to the receipt of such
favorable opinion; 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 the Company 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.
7.3 PERMITTED TRANSFERS. Notwithstanding anything to the contrary in
this Agreement, Purchaser may transfer Initial Shares or Remaining Shares to any
Affiliate of Purchaser in accordance with the provisions of Section 7.1 and 7.2;
provided that the transferee shall hold such Initial Shares or Remaining Shares
subject to the same restrictions applicable to its transferor and shall agree in
writing to be bound by the terms of this Agreement.
10
8. COVENANTS OF THE COMPANY.
8.1 RESTRICTIONS. For a period of three years from the date of this
Agreement, the Company shall not: (i) issue any Equity Securities to the
Shareholders or immediate family members of the Shareholders, except that the
Company may issue 883,069 shares of Stock to the Shareholders in connection with
the sale of the Shareholders' stock in WorldxChange Limited, a New Zealand
corporation, to a wholly owned subsidiary of the Company, (ii) increase the
salary, bonuses, options or payments through consulting agreements or otherwise
(the "Compensation") payable to the Shareholders beyond that set forth in
SCHEDULE 8.1, (iii) increase the Compensation of immediate family members of the
Shareholders other than in amounts consistent with past practices for non-family
members or (iv) engage in any other transactions with immediate family member
employees, except as permitted in subsection (iii). During the third year from
the date of this Agreement, if the Company has not completed an initial public
offering of its securities, the Compensation payable to each Shareholder shall
not exceed 200% of the total Compensation paid to such Shareholder during the
second year after the date of this Agreement.
8.2 BOARD MATTERS. Beginning on the date that the Purchaser
purchases the Remaining Shares from the Company pursuant to SECTION 3.1, and
until the earlier to occur of (i) such time as the Purchaser and Atocha,
collectively, do not own at least five percent of the issued and outstanding
Stock, or (ii) such time as the Company becomes subject to the reporting
requirements of Section 13 of the Exchange Act, the Purchaser shall have the
right to designate one (1) nominee to the Company's Board of Directors.
Notwithstanding the foregoing, (i) prior to such time as the Company becomes
subject to Section 13, such nominee shall be Walt Anderson, unless Mr. Anderson
is unable to serve due to a physical or mental incapacity, in which case the
Purchaser has the right to designate another nominee, and (ii) the Purchaser
shall have the right to designate one (1) nominee to the Company's initial Board
of Directors after the Company becomes subject to Section 13, provided that if
such nominee is not Mr. Anderson, the nominee shall be subject to the approval
of the Company.
8.3 RULE 144 FILING. After the Company's Common Stock is registered
under the Exchange Act, and until the Initial Shares and the Remaining Shares
held by Purchaser have all been publicly sold or are eligible for sale under
Rule 144(k) under the Securities Act, the Company 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 Initial Shares and Remaining Shares by Purchaser pursuant
to Rule 144.
8.4 PREEMPTIVE RIGHTS. Purchaser shall have the right to subscribe
to any additional (i) issuances of shares of capital stock of the Company, (ii)
issuances of securities convertible into shares of capital stock of the Company,
or (iii) grants of options to purchase shares of capital stock of the Company,
other than grants to employees, directors or consultants of the Company (and the
issuance of shares upon exercise of such options), for cash, on the same terms
of such offerings to the extent equal to the proportion which the number of
Initial Shares and Remaining Shares then held by Purchaser bears to the
Company's fully-diluted capitalization (on an as-converted and as-exercised
basis). Such right is exercisable within ten (10) days after the receipt of
written notice relating to such issuances by the Purchaser. Such right extends
to the same proportion of the new issue of shares, convertible securities or
options as the Purchaser's proportion of the outstanding shares. Purchaser's
right to purchase new issues of
11
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 date hereof, or (B) with respect to
which options or other convertible securities Purchaser had preemptive rights
under this Section 8.4, or (ii) securities issued solely in exchange for shares,
convertible securities or options issued in connection with any merger,
reorganization or acquisition (including, without limitation, the proposed
transactions described in Section 8.7 below). The preemptive rights held by the
Purchaser pursuant to this Section 8.4 shall terminate immediately prior to the
closing of an initial public offering of the Company's securities and shall not
apply to any issuance of securities in such offering.
8.5 REGISTRATION RIGHTS. The Company and Purchaser, concurrently
with the Closing, shall execute and deliver a Registration Rights Agreement
substantially in the form attached hereto as EXHIBIT A.
8.6 FINANCIAL STATEMENTS. For as long as Purchaser and Atocha,
collectively, own five percent or more of the issued and outstanding Stock, the
Company agrees to deliver to Purchaser (i) unaudited quarterly financial
statements within 45 days after the end of each fiscal quarter of the Company
and (ii) audited annual financial statements within 150 days after the end of
each fiscal year of the Company.
8.7 SUBSIDIARIES. The Company agrees to use best efforts to cause
the pending mergers of WorldxChange Limited (New Zealand) and CTS Telcom, Inc.
to be completed on or prior to March 31, 1999. In the event such mergers are not
completed by such date, for as long as Purchaser and Atocha, collectively, own
five percent or more of the issued and outstanding Stock, the Purchaser shall
have the right to approve all inter-company transactions between such affiliated
companies and the Company.
9. INDEMNIFICATION.
9.1 OBLIGATIONS OF THE COMPANY. The Company agrees to indemnify and
hold harmless the Purchaser from and against any and all Losses of the Purchaser
based upon or arising from any inaccuracy in or breach or nonperformance of any
of the representations, warranties, or covenants made or obligations undertaken
by the Company in this Agreement.
9.2 OBLIGATIONS OF THE SHAREHOLDERS. Each Shareholder agrees to
indemnify and hold harmless the Purchaser from and against any and all Losses of
the Purchaser based upon or arising from any inaccuracy in or breach or
nonperformance of any of the representations, warranties, or covenants made by
such Shareholder in this Agreement.
9.3 OBLIGATIONS OF THE PURCHASER. The Purchaser agrees to indemnify
and hold harmless the Company from and against any and all Losses of the Company
based upon or arising from, any inaccuracy in or breach or nonperformance of any
of the representations, warranties or covenants made by the Purchaser in this
Agreement.
9.4 PROCEDURE.
9.4.1 NOTICE. Any party seeking indemnification with respect to
any Loss shall give notice to the party required to provide indemnity
hereunder (the "INDEMNIFYING PARTY").
12
9.4.2 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 does not
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.
9.5 EXCLUSIVE REMEDY. This Section 9 shall be the exclusive remedy
of the parties 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.
Notwithstanding the foregoing, Purchaser shall have the right to the remedy of
specific performance with respect to Sections 3.1, 8.2, 8.3, 8.4, 8.6, 8.7 and
10.
10. CO-SALE RIGHT.
10.1 CO-SALE PROCEDURE. If any of the Shareholders desire to sell,
assign or otherwise transfer any 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 10 as though the transferee were a Shareholder and
(ii) the transferee agrees in writing to be bound by this SECTION 10), then
such Shareholder (collectively with any other selling Shareholder, the
"SELLING SHAREHOLDER") shall first give written notice (THE "CO-SALE NOTICE")
to the Purchaser 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,
the Purchaser 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 the Purchaser; PROVIDED, HOWEVER, that the Purchaser shall have the right,
which right may be exercised by the Purchaser one time only, to sell to the
Offeror a number of shares of Stock equal to double the number of shares
allowed to be sold (before application of this proviso) by the Purchaser
pursuant to this SECTION 10.1.
10.2 LIMITATION ON CO-SALE RIGHT. If the Offeror does not wish to
purchase the full amount of Available Shares, then the Purchaser shall be
entitled to sell to the Offeror a
13
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 the Purchaser
pursuant to SECTION 10. 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 from the Selling Shareholder, the Purchaser and Atocha.
SCHEDULE 10.2 provides a sample calculation of the application of SECTION 10.1
and SECTION 10.2. The co-sale rights set forth in Sections 10.1 and 10.2 shall
terminate upon such time as the Initial Shares and the Remaining Shares then
held by the Purchaser (i) may be sold under Rule 144 of the Securities Act and
the disposition of all such Initial Shares and Remaining Shares may be completed
within six (6) months and (ii) are listed on a securities exchange or qualified
for trading on an over-the-counter system selected by the Company.
11. GENERAL.
11.1 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.
11.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as set forth
in the following sentence, all representations and warranties of the Company,
each Shareholder and the Purchaser set forth in this Agreement or expressly
incorporated herein by reference shall, as of the first anniversary of the date
of this Agreement, expire and terminate and be of no further force or effect.
Notwithstanding the foregoing, (i) the representations and warranties set forth
in Section 4.7 (Accuracy of Information) shall survive until the thirtieth day
following delivery by the Company to the Purchaser of audited financial
statements for the fiscal year ended September 30, 1999, and (ii) the
representations and warranties set forth in Section 4.2 (Capital Stock and
Related Matters) and Section 5.1 (Ownership) shall survive indefinitely. As of
the termination of the respective representations, warranties and covenants as
provided in this Agreement, the Company, each Shareholder and the Purchaser
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 or breach or
nonperformance of any of the representations, warranties, or covenants made by
any party to this Agreement.
11.3 SCHEDULES; EXHIBITS; INTEGRATION. Each schedule and exhibit
delivered pursuant to the terms of this Agreement shall be in writing and shall
constitute a part of this Agreement. This Agreement, together with such
schedules and exhibits, 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.
11.4 BEST EFFORTS; FURTHER ASSURANCES.
11.4.1 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
14
other party may reasonably request to consummate or implement the
transactions contemplated hereby or to evidence such events or
matters.
11.4.2 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.
11.5 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 California, and all parties waive any right to have such
action or proceeding transferred to another location.
11.6 NO ASSIGNMENT. Neither this Agreement nor any rights or
obligations under it are assignable, except pursuant to a permitted transfer by
Purchaser in accordance with Section 7.3 above.
11.7 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.
11.8 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.
11.9 PUBLICITY AND REPORTS. The Company and the Purchaser shall
coordinate all publicity relating to the transactions contemplated by this
Agreement and no party shall issue any press release, 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.
11.10 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, provided that the disclosing party give
reasonable notice to the other parties and the opportunity to protect any
15
such confidential information, (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.
11.11 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.
11.12 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 PURCHASER, ADDRESSED TO:
Gold & Appel Transfer S.A.
P.O. Box 985
Wickhams Cay Road Town
Tortula, British Virgin Islands
WITH A COPY TO:
Mr. Walt Anderson
Entree International
3050 K Street, N.W. Suite 250
Washington D.C., 20036
Facsimile No: (202) 736-5065
IF TO THE COMPANY OR THE SHAREHOLDERS, ADDRESSED TO:
WORLDxCHANGE
9999 Willow Creek Road
San Diego, California 92131
Attn: Roger B. Abbott
Facsimile No: (619) 625-0217
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
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)
16
this SECTION 11.12 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.
11.13 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. Purchaser will pay one-half and the Company will pay one-half of the
HSR Act filing fee.
11.14 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.
11.15 REPRESENTATION BY COUNSEL; INTERPRETATION. The Sellers and the
Purchaser each acknowledge that each party to this Agreement 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 Purchaser and the Sellers.
11.16 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 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.
11.17 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 Purchaser's right to
specific performance with respect to Sections 3.1, 8.2, 8.3, 8.4, 8.6, 8.7 and
10.
17
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.
COMPANY: PURCHASER:
COMMUNICATION TELESYSTEMS GOLD & APPEL TRANSFER S.A., a
INTERNATIONAL D.B.A. British Virgin Islands corporation
WORLDXCHANGE
COMMUNICATIONS, a California
corporation
By: [ILLEGIBLE]
-------------------------------
Its: Power of Attorney in Fact
-------------------------------
By: /s/ Roger B. Abbott
--------------------------
Its: CEO
--------------------------
SHAREHOLDER: SHAREHOLDER:
ROGER B. ABBOTT ROSALIND ABBOTT
/s/ Roger B. Abbott /s/ Rosalind Abbott
- -------------------------------- -------------------------------
SHAREHOLDER:
EDWARD S. SOREN
/s/ Edward S. Soren
- -------------------------------
18
LIST OF OMITTED SCHEDULES
The following Schedules to the Stock Purchase Agreement dated
September 29, 1998 (Gold & Appel Transfer S.A.) have been omitted from this
Exhibit and shall be furnished supplementally to the Commission upon request:
Schedule 4.2 - Equity Securities
Schedule 4.16 - Directors and Officers Liability Insurance
Schedule 5.1 - Equity Securities Owned by the Shareholders
Schedule 8.1 - Compensation of the Shareholders
Schedule 10.2 - Sample Calculation of Co-Sale Right
Exhibit A - Registration Rights Agreement