EXHIBIT 10.4
AMENDMENT NO. 3 TO ASSET PURCHASE AGREEMENT
Amendment No. 3 to Asset Purchase Agreement (the "Amendment") is
entered into as of this 17th day of June, 1999 by and among American United
Global, Inc. ("AUGI"), Connectsoft Communications Corporation ("CCC"),
Connectsoft Holding Corp. ("Connectsoft"), Executive TeleCard, Ltd., doing
business as eGlobe ("EXTEL"), C-Soft Acquisition Corp. (the "Buyer") and Vogo
Networks, LLC, a Delaware limited liability company of which eGlobe is the only
member ("Vogo LLC").
WHEREAS, AUGI, CCC, Connectsoft, EXTEL and the Buyer entered into an
Asset Purchase Agreement dated July 10, 1998 (the "Purchase Agreement"); and
WHEREAS, the parties desire to make certain amendments to the Purchase
Agreement.
NOW THEREFORE, the parties hereto do hereby agree as follows:
1. Vogo LLC shall be substituted for C-Soft Acquisition Corp. for all
purposes under the Purchase Agreement and shall be the "Buyer" thereunder. All
references in the representations and warranties of Vogo LLC (as the Buyer)
shall be deemed to refer to Vogo LLC being a newly formed (on May 13, 1999)
Delaware limited liability company of which eGlobe is the only member, and of
the Agreement being a valid and binding obligation of Vogo LLC from and after
execution of this Amendment by the parties hereto. The references to the Buyer
and corporate documents and certificates of the Buyer in Section 11.2(b)(i)
through (iv) shall be deleted in their entirety.
2. The Purchase Agreement shall be amended by adding to the definition
of "Assets", as Section 1.1(h) (and moving the "and" from after Section 1.1(f)
to after Section 1.1(g)), the following:
(h) Not less than $300,000 in cash, and a Note in the amount of
$200,000 of which AUGI is the maker, due in full (without interest)
on July 15, 1999 (the "AUGI Note"), which Note will be in the form
attached hereto as Exhibit C."
3. The Purchase Agreement shall be amended by adding, at the end of
Section 1.2(a), the following:
(other than the $300,000 in cash and AUGI Note referred to in Section
1.1(h))."
4. The Purchase Agreement shall be amended by replacing Schedule 2.1 of
the Purchase Agreement, which refers to (and defines) the Assumed Liabilities,
and Schedule 5.8 of the Purchase Agreement, which refers to Material Contracts,
with the Schedules attached hereto as Schedules A and B. For the avoidance of
doubt, the parties acknowledge and agree that the liabilities listed on Schedule
A shall not include any obligations of AUGI, CCC or Connectsoft to UPS or any of
its affiliates ("UPS Liabilities"), and that such obligations shall not be
Assumed Liabilities for purposes of the Purchase Agreement.
5. Section 2.2 of the Purchase Agreement and Exhibit C referred to
therein shall be amended by deleting all of said section and exhibit in their
entirety.
6. Section 3.1 of the Purchase Agreement shall be amended by deleting
all of said section and replacing the deleted language with a new Section 3.1
that reads as follows:
"3.1 Consideration to the Seller. The entire purchase price for the
Assets (the "Consideration") shall consist of (i) the assumption by the
Buyer of the Assumed Liabilities, and the Buyer's agreement to pay and
perform, when due, all of such Assumed Liabilities; (ii) the issuance
by EXTEL of one (1) share of its 6% Series H Cumulative Convertible
Redeemable Preferred Stock, par value $.001 per share, of EXTEL ("EXTEL
Convertible Preferred Stock"), the terms of which are set forth in the
Certificate of Designations for the EXTEL Convertible Preferred Stock
in the form attached hereto as Exhibit D; and (iii) a Note, in the form
attached hereto as Exhibit E (the "EXTEL Note"), in the amount of
$500,000, of which $200,000 is contingent upon the payment in full by
AUGI under the $200,000 AUGI Note."
7. The Purchase Agreement shall be amended by adding new Sections 6.3,
6.4 and 6.5 that read as follows:
6.3 No Registration Under the Securities Act. AUGI and the Seller
understand that the shares of EXTEL Convertible Preferred Stock and the
EXTEL Note to be issued under this Agreement have not been and will not
be registered under the Securities Act of 1933, as
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amended (the "Securities Act"), in reliance upon exemptions
contained in the Securities Act or interpretations thereof, and neither
such shares of EXTEL Convertible Preferred Stock, the EXTEL Common
Stock issuable upon conversion thereof, nor the EXTEL Note
(collectively, the "EXTEL Securities"), can be offered for sale, sold
or otherwise transferred unless such shares or note are so registered
or qualify for exemption from registration under the Securities Act.
6.4 Acquisition for Investment. The EXTEL Securities are being (or
will be) acquired in good faith by the Seller and AUGI solely for their
own account, for investment and not with a view toward resale or other
distribution within the meaning of the Securities Act. The EXTEL
Securities will not be offered for sale, sold or otherwise transferred
by the Seller or AUGI without either registration or exemption from
registration under the Securities Act.
6.5 Evaluation of Merits and Risks of Investment. The Seller and
AUGI have such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and risks of
their investment in the EXTEL Securities Stock. The Seller and AUGI
understand and are able to bear any economic risks associated with such
investment (including, without limitation, the necessity of holding
such shares for an indefinite period of time). AUGI and the Seller (as
a corporation wholly owned by AUGI) are "accredited investors" as
defined in Regulation D promulgated under the Securities Act. The
Seller and AUGI confirm that EXTEL has made available to them and their
representatives and agents the opportunity to ask questions of the
officers and management employees of EXTEL about the business and
financial condition of EXTEL as the Seller and AUGI or their
representatives have requested.
8. Sections 9.6 and 9.7 of the Purchase Agreement and Exhibits D and E
referred to therein shall be amended by deleting all of said sections and
exhibits in their entirety, and any promissory note delivered to AUGI under
the Purchase Agreement, or the Management Agreement dated as of July 1998 among
certain of the parties hereto (in each case as amended), is hereby superseded
(and canceled) by the transactions contemplated hereby, and shall be marked
"Void" and returned to the maker thereof.
9. Section 13.2(c) of the Purchase Agreement shall be amended by
replacing the reference to June 30, 1999 with the date that is one year from
the date hereof.
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10. Sections 14.1 and 14.2 of the Purchase Agreement shall be amended
by deleting all of said Sections and replacing the deleted language with new
Sections 14.1, 14.2, 14.3 and 14.4 (and existing Sections 14.3 and 14.4, and
references thereto, shall be renumbered appropriately) that read as follows :
"14.1 Indemnification of the Seller and AUGI for Assumed
Liabilities. The Buyer does hereby irrevocably, absolutely and
unconditionally indemnify, defend and hold harmless the Seller and
AUGI, and each of them, individually and severally, to the fullest
extent permitted by law, from and against any claim against the Seller
or AUGI in respect of any act, omission, neglect, breach or failure by
Buyer to timely and fully pay and perform each and every one of the
Assumed Liabilities and Material Contracts, when due ("AUGI Group
Assumed Liability Indemnified Amounts"). The Buyer covenants and agrees
to fully pay each of the Seller and AUGI, within twenty-four (24) hours
of written demand therefor, for any payments made or amounts which the
Seller or AUGI becomes legally obligated to pay (and reimburse Seller
and AUGI, to the extent payment is made by them) in connection with any
of the AUGI Group Assumed Liability Indemnified Amounts.
"14.2 Indemnification by EXTEL for Certain Assumed Liabilities.
EXTEL does hereby irrevocably, absolutely and unconditionally
indemnify, defend and hold harmless AUGI from and against any claim
against AUGI in respect of any act, omission, neglect, breach or
failure by Buyer to timely and fully pay, when due, those Assumed
Liabilities which consist of liabilities to T&W which are guaranteed by
or primary obligations of AUGI ("AUGI Direct Obligations"). EXTEL
covenants and agrees to fully pay AUGI, within twenty-four (24) hours
of written demand therefor, for any payments made or amounts which AUGI
becomes legally obligated to pay (and reimburse AUGI, to the extent
payment is made by it) in connection with any of the AUGI Direct
Obligations. Notwithstanding the foregoing, the obligations of EXTEL
under this Section 14.2 shall be unsecured and subordinated in all
respects to EXTEL's existing and future obligations to IDT Corporation
and to EXTL Investors.
14.3 Indemnification of the Seller and AUGI for Certain Taxes.
EXTEL does hereby irrevocably, absolutely and unconditionally
indemnify, defend and hold harmless the Seller and AUGI, and each of
them, individually and severally, to the fullest extent permitted by
law, from and against any claim against the Seller or AUGI as a result
of, arising from or in connection with any claim by any taxing
authority for Taxes of or relating to EXTEL, including (but not limited
to) all Taxes attributable to the business and operations of EXTEL
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prior to the Closing Date (the "AUGI Group Indemnified Tax Amounts").
For purposes of this Agreement, "Taxes" shall mean all federal, state,
county, local and other taxes, including, without limitation, income
taxes, estimated taxes, withholding taxes, excise taxes, sales taxes,
use taxes, gross receipt taxes, franchise taxes, employment and payroll
related taxes, property taxes and import duties, whether or not
measured in whole or in part by net income, and all deficiencies or
other additions to tax, interest and penalties owed by it in connection
with any such taxes. EXTEL covenants and agrees to fully pay and
reimburse each of the Seller and AUGI, within twenty-four (24) hours of
written demand therefor, for any payments made or amounts which the
Seller or AUGI becomes legally obligated to pay in connection with the
AUGI Group Indemnified Tax Amounts.
14.4 Indemnification of the Buyer and EXTEL. Each of AUGI,
Connectsoft and CCC does hereby jointly and severally, irrevocably,
absolutely and unconditionally indemnify, defend and hold harmless the
Buyer and EXTEL from and against (i) any claim against EXTEL as a
result of, arising from or in connection with any claim by any taxing
authority for Taxes of or relating to AUGI, Connectsoft or CCC,
including (but not limited to) all Taxes attributable to the business
and operations of any of them prior to the Closing Date (the "EXTEL
Group Indemnified Tax Amounts"), and (ii) any claim against the Buyer
or EXTEL in respect of any act, omission, neglect, breach or failure by
AUGI, Connectsoft or CCC to timely and fully pay, when due, UPS
Liabilities. Each of AUGI, Connectsoft and CCC jointly and severally
covenants and agrees to fully pay and reimburse the Buyer and EXTEL, as
appropriate, within twenty-four (24) hours of written demand therefor,
for any payments made or amounts which the Buyer or EXTEL becomes
legally obligated to pay in connection with any UPS Liabilities."
11. AUGI and the Seller shall, and shall ensure that their
respective affiliates shall, afford to EXTEL and the Buyer, and their respective
officers, employees, accountants, consultants and legal counsel, access at any
time and from time to time following the date hereof, but during business days
and normal business hours, to the books, records and other information
(including without limitation, operating and financial information), contracts,
facilities and premises relating to the Assets, the Seller and all other
companies, divisions or other entities or portions thereof that EXTEL and Buyer
may reasonably request for purposes of preparing audited financial statements
pursuant to EXTEL's reporting requirements under the Securities Act of 1933 and
the Securities Exchange Act of 1934 (the "Securities Laws"), make available the
personnel, accountants and other representatives having knowledge regarding the
same and cooperate with and furnish assistance to EXTEL and the Buyer (provided
that
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AUGI and the Seller shall not be obligated to incur any non-minimal cost or
expense), as EXTEL or the Buyer may reasonably request in connection with the
preparation of financial statements with respect to the Assets and Assumed
Liabilities and the business represented thereby being acquired under the
Purchase Agreement. In connection with an audit of such financial statements, if
required, AUGI and its financial and other management agree to provide certain
representations in the form of a representation letter to BDO ▇▇▇▇▇▇▇, LLP,
independent certified public accountants, in accordance with generally accepted
auditing standards. The provision of such financial statement representations
and information and assistance shall be reasonably prompt. AUGI and the Seller
shall ensure that none of such information is destroyed during the three year
period commencing on the closing date unless EXTEL and the Buyer have been
afforded a reasonable opportunity to obtain and make copies of the information.
Any document or information produced or disclosed pursuant to this Section 11 in
any form is Confidential Information and EXTEL and Buyer shall not permit the
duplication, use, or disclosure of any such Confidential Information by or to
any third party (other than officers, employees, accountants, consultants and
legal counsel) except as required pursuant to the Securities Laws and permitted
hereunder, unless such duplication, use or disclosure is specifically authorized
by AUGI or the Seller in writing prior to any disclosure. EXTEL and Buyer shall
use commercially reasonable diligence, and in no event less than that degree of
care that such party uses in respect to its own confidential information of like
nature, to prevent the unauthorized disclosure or reproduction of such
information.
12. EXTEL and the Buyer have previously delivered to the Seller and
AUGI true and correct copies of its Annual Report on Form 10K, filed April 16,
1999 and Registration Statement on Form S-1 effective May 28, 1999 (the "Recent
Public Filings"). The Recent Public Filings comply as to form with the
disclosure requirements applicable thereto and do not contain any false and
misleading statement or omit any fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. Since the date of the most recent of the Recent Public Filings, (a)
there has been no material change in the capitalization of EXTEL or the Buyer,
(b) the businesses of EXTEL, the Buyer and their respective subsidiaries have
been operated in the normal course, and (c) there has been no material adverse
change in the financial condition, operations or businesses of EXTEL, the Buyer,
and their respective subsidiaries (taken as a consolidated whole) from that
reflected in such report (except as indicated in any later filing with the
Securities and Exchange Commission).
13. Copies of all notices to the Buyer shall be sent to the Buyer at
its principal place of business, attention "President."
14. Capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Purchase Agreement. All terms and provisions
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of the Purchase Agreement and amendments thereto, as amended hereby, shall
continue in full force and effect, and are hereby confirmed in all respects.
15. This Amendment No. 3 to Asset Purchase Agreement may be executed in
several counterparts, each of which is an original, but all of which together
constitute one and the same agreement. The descriptive headings in this
Amendment No. 3 to Asset Purchase Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
16. This Amendment No. 3 to Asset Purchase Agreement is governed by,
and shall be construed in accordance with, the laws of the State of Delaware.
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IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date first set forth above.
AMERICAN UNITED GLOBAL, INC.
By:__________________________________
Name/Title:__________________________
CONNECTSOFT COMMUNICATIONS
CORPORATION
By:__________________________________
Name/Title:__________________________
CONNECTSOFT HOLDING CORP.
By:__________________________________
Name/Title:__________________________
C-SOFT ACQUISITION CORP.
By:__________________________________
Name/Title:__________________________
EXECUTIVE TELECARD, LTD.
By:__________________________________
Name/Title:__________________________
VOGO NETWORKS, LLC
BY ITS MEMBER:
EXECUTIVE TELECARD, LTD.
By:__________________________________
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