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EXHIBIT 10.48
STOCK PURCHASE AGREEMENT
BY AND AMONG
BRITE VOICE SYSTEMS, INC.
BVS INVESTCO, INC.
"SELLER"
TSL SERVICES, INC.
THE "COMPANY"
AND
PROFITSOURCE CORPORATION
"BUYER"
NOVEMBER 30, 1998
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TABLE OF CONTENTS
1. Sale and Transfer.........................................................1
1.1. Assets...........................................................1
1.2. Assumption of Certain Liabilities................................1
1.3. Capital Stock....................................................2
1.4. Closing..........................................................2
2. Representations and Warranties of Brite and Seller.........................2
2.1. Organization and Authority.......................................2
2.2. Authorization of Agreement.......................................2
2.3. Acquired Assets..................................................3
2.4. Financial Condition..............................................3
2.5. Certain Property of Brite.......................................4
2.6. Year 2000 Compliance.............................................6
2.7. No Conflict or Violation.........................................7
2.8. Labor and Employment Matters.....................................7
2.9. Employee Plans...................................................7
2.10. Litigation......................................................8
2.11. Certain Agreements..............................................9
2.12. Compliance with Applicable Law.................................10
2.13. Licenses.......................................................10
2.14. Accounts Receivable............................................11
2.15. Intercompany and Affiliate Transactions; Insider Interests.....11
2.16. Insurance......................................................11
2.17. Customers......................................................12
2.18. No Undisclosed Liabilities.....................................12
2.19. Environmental Matters..........................................12
2.20. Taxes..........................................................13
2.21. Brokers........................................................14
2.22. The Company....................................................15
2.23. Seller.........................................................15
2.24. Ownership of Capital Stock.....................................15
2.25. Consents.......................................................16
2.26. Accuracy of Information........................................16
3. Representations and Warranties of Buyer...................................16
3.1. Organization and Corporate Authority............................16
3.2. No Conflict or Violation........................................17
3.3. Accuracy of Information.........................................17
4. Certain Understandings and Agreements of the Parties......................17
4.1. Access..........................................................17
4.2. Confidentiality.................................................17
4.3. Consolidation Transactions......................................18
4.4. Certain Changes and Conduct of Business.........................18
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4.5. Restrictive Covenants...........................................20
4.6. Taxes...........................................................21
4.7. Access to Records and Files.....................................25
4.8. Cooperation in Litigation.......................................25
4.9. Employment......................................................25
4.10. Change of Name.................................................26
4.11. Collection of Accounts Receivable..............................26
4.12. Best Efforts...................................................26
4.13. Bulk Sales Laws................................................27
4.14. Closing Date Net Worth.........................................27
4.15. Further Assurances.............................................27
4.16. Notice of Breach...............................................27
4.17. Contracts and Licenses.........................................27
4.18. Supplemental Disclosure........................................28
4.19. HSR............................................................28
4.20. Competing Proposals............................................28
4.21. Series A Preferred Stock.......................................28
4.22. Employee Plans.................................................28
4.23. Real Property Leases...........................................29
5. Survival; Indemnification.................................................29
5.1. Survival........................................................29
5.2. Indemnification by Brite........................................30
5.3. Indemnification by Buyer........................................30
5.4. Indemnification Procedure.......................................31
5.5. Payment.........................................................32
5.6. Set-Off.........................................................32
5.7. Limitations.....................................................32
6. Conditions to Closing.....................................................33
6.1. Conditions to Obligations of Each Party.........................33
6.2. Conditions to Obligations of Buyer..............................33
6.3. Conditions to Obligations of Seller.............................36
7. Miscellaneous.............................................................37
7.1. Termination.....................................................37
7.2. Notices.........................................................38
7.3. Assignability and Parties in Interest...........................39
7.4. Governing Law...................................................39
7.5. Counterparts....................................................39
7.6. Publicity.......................................................39
7.7. Complete Agreement..............................................40
7.8. Modifications, Amendments and Waivers...........................40
7.9. Headings; References............................................40
7.10. Severability...................................................40
7.11. Due Diligence Investigation....................................40
7.12. Expenses of Transactions.......................................40
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7.13. Arbitration....................................................40
7.14. Submission to Jurisdiction.....................................42
7.15. Attorneys' Fees................................................42
7.16. Enforcement of the Agreement...................................43
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EXHIBITS
A. Form of Seller Contribution Agreement
B. Form of Company Contribution Agreement
C. Form of Warrant
D. Form of Employee General Release Agreement
E. Form of Employment Agreements
F. Form of Opinion of Counsel to Brite and Seller
G. Form of Opinion of Counsel to the Buyer
H. Form of Stockholder Agreement
SCHEDULES
1.1(a) Acquired Assets
1.1(b) Excluded Assets
1.2 Assumed Liabilities
1.4 Purchase Price
2 Schedule of Exceptions
2.3 Acquired Assets
2.4 Financial Statements
2.5(a) Real Property
2.5(b) Personal Property
2.5(c) Proprietary Rights
2.5(c)(iii) Software Licenses
2.6 Year 2000 Compliance
2.7 Conflicts/Violations
2.8 Employees
2.9 Employee Plans
2.10 Litigation
2.11 Contracts
2.12 Compliance with Applicable Law
2.13 Licenses
2.14 Accounts Receivable
2.16 Insurance
2.17 Customers
2.22(c)-1 Certificate of Incorporation of the Company
2.22(c)-2 Bylaws of the Company
2.23(b)-1 Certificate of Incorporation of Seller
2.23(b)-2 Bylaws of Seller
2.25 Consents/Notices
4.9 Employees to be Employed by the Company
6.2 Certain Employees
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and
entered into as of November 30, 1998 by and among Brite Voice Systems, Inc., a
Kansas corporation ("BRITE"), BVS Investco, Inc., a newly formed Delaware
corporation and wholly owned subsidiary of Brite ("SELLER"), TSL Services, Inc.,
a newly formed Delaware corporation and wholly owned subsidiary of Seller (the
"COMPANY") and ProfitSource Corporation, a Delaware corporation or its assignee
("BUYER").
A. Brite, acting through its Telecom Services Limited division,
is engaged in the business of telecommunications cost control, including,
without limitation, the provision of billing verification services, call
accounting services, software development, managed invoice processing, and
professional technical temporary staffing (the "BUSINESS").
B. Brite desires to sell and assign to Buyer, and Buyer desires
to purchase and assume from Brite, those certain assets, rights and obligations
of Brite described herein related to the Business by transferring such assets,
rights and obligations to the Seller, which in turn will transfer such assets,
rights and obligations to the Company, and will transfer all of the issued and
outstanding capital stock of the Company to Buyer, all on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual representations, warranties and agreements set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. SALE AND TRANSFER
1.1 ASSETS.
(a) Acquired Assets. On the terms and subject to the conditions set
forth in this Agreement, on December 1, 1998, (i) Brite, pursuant to a
Contribution Agreement in substantially the form attached hereto as Exhibit A
(the "SELLER CONTRIBUTION AGREEMENT") shall convey, transfer, assign, sell and
deliver to Seller, and Seller shall acquire and accept, all of the assets,
properties and rights of Brite listed on Schedule 1.1(a) (the "ACQUIRED
ASSETS"); and (ii) Seller, pursuant to a Contribution Agreement in substantially
the form attached hereto as Exhibit B (the "COMPANY CONTRIBUTION AGREEMENT")
shall convey, transfer, assign, sell and deliver to the Company, and the Company
shall acquire and accept, all of the Acquired Assets.
(b) Excluded Assets. Notwithstanding anything contained in Section
1.1(a) to the contrary, Brite will not transfer to Seller or the Company and
neither Seller nor the Company will receive, any of the assets listed on
Schedule 1.1(b) (the "EXCLUDED ASSETS"), all of which shall be retained by
Brite.
1.2 ASSUMPTION OF CERTAIN LIABILITIES. On the terms and subject to
the conditions set forth in this Agreement, immediately before the Closing,
Seller, pursuant to the Seller Contribution Agreement and the Company, pursuant
to the Company Contribution Agreement,
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shall assume those certain liabilities and obligations of Brite identified on
Schedule 1.2 (the "ASSUMED LIABILITIES"). The Company will not assume, and will
not be obligated or liable for, any liability of Brite or Seller not listed on
Schedule 1.2 including, without limitation, accounts payable incurred other than
in the ordinary course of business or other indebtedness of Brite or Seller.
Buyer and the Company will be indemnified pursuant to Section 5.2 from and
against any claims in respect of any debts, obligations or liabilities of Brite
or Seller of any nature whatsoever other than the Assumed Liabilities.
1.3 CAPITAL STOCK. In connection with the transfers described in
Sections 1.1 and 1.2, the Company will issue to Seller 45,000 shares of the
Company's Common Stock, $0.001 per share, which Shares shall be validly issued,
fully paid, and non-assessable (the "SHARES").
1.4 SALE AND PURCHASE. On the Closing Date (as hereinafter defined)
Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Shares,
for the purchase price set forth in Schedule 1.4 (the "PURCHASE PRICE").
1.5 CLOSING. The closing of the sale and purchase of the Shares (the
"CLOSING") will take place at the offices of Gibson, Dunn & Crutcher LLP, 4 Park
Plaza, Irvine, California, on the earliest practicable date, as determined by
Buyer (the "CLOSING DATE") after all the conditions set forth in Section 6 have
either been satisfied or, in the case of conditions not met, waived by the party
entitled to the benefit of such conditions. Buyer shall provide notice (the
"CLOSING NOTICE") to Brite informing Brite of the date selected as the Closing
Date. At the Closing, Seller shall deliver to Buyer or its designees a stock
certificate, duly endorsed in blank (or accompanied by duly executed stock
powers), representing the Shares being sold by Seller and each other instrument
of transfer Buyer may reasonably request to vest effectively in Buyer good and
valid title to the Shares, free and clear of any liens, pledges, options,
security interest, trusts, encumbrances or other rights or interests of any
person or entity, together with any taxes, direct or indirect, attributable to
such transfer of the Shares, and Buyer shall thereupon pay to Seller the
Purchase Price.
2. REPRESENTATIONS AND WARRANTIES OF BRITE AND SELLER. Each representation and
warranty contained in this Section 2 is qualified by the disclosures made in the
disclosure schedule attached hereto as Schedule 2 (the "DISCLOSURE SCHEDULE").
This Section 2 and the Disclosure Schedule shall be read together as an
integrated provision. Brite and Seller represent and warrant to Buyer that:
2.1 ORGANIZATION AND AUTHORITY. Brite is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Kansas, with full corporate power and authority to carry on the Business as it
is now and has since its organization been conducted and as proposed to be
conducted, and to own or lease and operate the Acquired Assets. Seller and the
Company are corporations duly organized, validly existing and in good standing
under the laws of the State of Delaware.
2.2 AUTHORIZATION OF AGREEMENT. Brite and Seller have all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement and all other agreements and
instruments to be executed by the parties hereto in connection herewith,
together with all other documents to be delivered in connection
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herewith or therewith, (collectively, the "TRANSACTION DOCUMENTS"), have been
(or upon execution will have been) duly executed and delivered by Brite, Seller
and the Company and effectively authorized by all necessary action, corporate or
otherwise, and constitute (or upon execution will constitute) legal, valid and
binding obligations of Brite, Seller and the Company, as the case may be, except
as such enforceability may be limited by general principles of equity and
bankruptcy, insolvency, reorganization and moratorium and other similar laws
relating to creditors' rights (the "BANKRUPTCY EXCEPTION.")
2.3 ACQUIRED ASSETS.
(a) Ownership. Before the transfers to Seller and the Company
described in Section 1.1, Brite is the lawful and sole owner of and has the
right to use and transfer to Seller, and Seller has the right to receive from
Brite and immediately transfer to the Company, each of the Acquired Assets. The
Acquired Assets are free and clear of all liens, mortgages, pledges, security
interests, restrictions, prior assignments, encumbrances and claims of any kind.
The execution and delivery of the Seller Contribution Agreement by Brite and
Seller and the Company Contribution Agreement by Seller and the Company will
vest good and marketable title to the Acquired Assets in the Company, free and
clear of all liens, mortgages, pledges, security interests, restrictions, prior
assignments, encumbrances and claims of any kind.
(b) Sufficiency of Assets. Except for the Excluded Assets, the
Acquired Assets (i) constitute all of the assets and properties used by Brite in
connection with the operation of the Business; and (ii) are sufficient and
adequate to conduct the Business.
2.4 FINANCIAL CONDITION.
(a) Financial Statements. Schedule 2.4 sets forth the balance sheets
of the Business as of December 31, 1996 and December 31, 1997 and the related
statements of income and cash flow of the Business for the fiscal years then
ended (the "ANNUAL FINANCIAL STATEMENTS") and the balance sheet, and the related
statements of income and cash flow of the Business for the nine month period
ended September 30, 1998 (the "INTERIM FINANCIAL STATEMENTS," and with the
Annual Financial Statements, the "FINANCIAL STATEMENTS"). The Financial
Statements (i) were prepared in accordance with the books and records of Brite;
(ii) were prepared in accordance with generally accepted accounting principles
consistently applied; (iii) fairly present the financial condition and the
results of the operations of the Business as at the relevant dates thereof and
for the periods covered thereby; (iv) contain and reflect all necessary
adjustments and accruals for a fair presentation of the financial condition and
the results of the operations of the Business as a stand alone entity without
affiliation with Brite for the periods covered by the Financial Statements
(except that the Interim Financial Statements are subject to year-end
adjustments, the net effect of which will not represent a Material Adverse
Change); (v) contain and reflect adequate provisions for all reasonably
anticipated liabilities, excluding those for all taxes, federal, state, local or
foreign, with respect to the period then ended and all prior periods; (vi)
reflect accurately in all material respects the assets, liabilities, costs and
expenses of the Business as at the relevant date thereof and for the period
covered thereby; (vii) do not contain any items of a special or nonrecurring
nature, except as expressly stated therein; and (viii) are in all material
respects accurate, complete and correct. The Financial Statements accurately
reflect all information normally reported to the independent public accountants
of Brite for the
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preparation of its financial statements. There have been no changes in
accounting principles or practices during the periods covered by the Financial
Statements.
(b) Absence of Certain Changes. Since September 30, 1998 there has
not been any Material Adverse Change, or any event, action, or circumstance of
the kind described in Section 4.4. For purposes of this Agreement, a "MATERIAL
ADVERSE CHANGE" means any event, circumstance, condition, development or
occurrence causing, resulting in, having, or that could reasonably be expected
to have, a material adverse effect on the financial condition, business,
prospects, properties or results of operations of the Business, the Company, or
the Acquired Assets.
2.5 CERTAIN PROPERTY OF BRITE.
(a) Real Property. Brite does not own any real property used in
connection with the Business. Schedule 2.5(a) sets forth a true and complete
list of all real properties leased by Brite for use in connection with the
Business, including a brief description of the operating facilities located
thereon, the annual rent payable thereon, the length of the term, any option to
renew with respect thereto and the notice and other provisions with respect to
termination of rights to the use thereof.
(i) Until transfer to the Company pursuant to Section 1.1,
Brite has a valid leasehold in the real property shown in Schedule
2.5(a), as leased by it, in each case under written leases that are
valid and enforceable (except as enforceability may be limited by the
Bankruptcy Exception) (each lease being referred to herein as a "REAL
PROPERTY LEASE", and collectively the "REAL PROPERTY LEASES") and to the
knowledge of Brite each Real Property Lease is a valid and binding
obligation of each of the other parties thereto (except as
enforceability may be limited by the Bankruptcy Exception);
(ii) Brite is not, and Brite and Seller do not have any
knowledge that any other party to any Real Property Lease is, in default
with respect to any material term or condition thereof, and Brite and
Seller do not have any knowledge that any event has occurred which
through the passage of time or the giving of notice, or both, would
constitute a default thereunder or would cause the acceleration of any
obligation of any party thereto or the creation of a lien or encumbrance
upon any asset of Seller.
(b) Personal Property. Schedule 2.5(b) lists all , furniture,
fixtures, equipment and other items of tangible personal property owned or
leased by Brite and used in connection with the Business, other than Excluded
Assets (the "PERSONAL PROPERTY"). All items of Personal Property are in good
operating condition and repair. Schedule 2.5(b) correctly identifies each item
of Personal Property as owned or leased by Brite. The items of Personal Property
identified as owned are Acquired Assets, and the items of Personal Property
identified as leased are leased pursuant to lease agreements that are Acquired
Assets. All of such leases are valid and in full force and effect and none of
such Personal Property is subject to any sublease, license or other agreement
granting to any person any right to use such property (each such lease,
sublease, license or other agreement, a "PERSONAL PROPERTY LEASE" and
collectively the "PERSONAL PROPERTY LEASES"). Prior to transfer pursuant to
Section 1.1 Brite is not in breach of or default,
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and no event has occurred which, with due notice or lapse of time or both, may
constitute such a breach or default, under any Personal Property Lease.
(c) Proprietary Rights.
(i) Schedule 2.5(c) sets forth a true and complete list of all
Proprietary Rights (either registered, applied for, or common law) owned by,
registered in the name of, licensed to, or otherwise used by Brite in connection
with the Business. For purposes of this Agreement "PROPRIETARY RIGHTS" means
trademarks and service marks (registered or unregistered), trade dress, trade
names including, without limitation, the names "TSL", "Telecom Services
Limited", "TOMS", "Fraud-Check, and "EZ-View" and other names and slogans
embodying business or product goodwill or indications of origin associated with
the Business, all applications or registrations in any jurisdiction pertaining
to the foregoing and all goodwill associated therewith, as well as the following
used in connection with the Business, but specifically excluding any such
Proprietary Rights used by Brite in the Business and in other aspects of its
business: (i) patents, patentable inventions, discoveries, improvements, ideas,
know-how, formulas, methodologies, processes, technology and computer programs,
software and databases (including source code, object code, development
documentation, programming tools, drawings, specifications and data) associated,
developed or used in connection with the Business, and all applications or
registrations in any jurisdiction pertaining to the foregoing, including all
reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof; (ii) trade secrets, know-how, including confidential and
other non-public information associated, developed or used in connection with
the Business, and the right in any jurisdiction to limit the use or disclosure
thereof; (iii) copyrights in writings, designs, mask works or other works
associated, developed or used in connection with the Business, and registrations
or applications for registration of copyrights in any jurisdiction; (iv)
licenses, including, without limitation, software licenses, immunities,
covenants not to sue and the like relating to any of the foregoing; (v) Internet
Web sites, domain names and registrations or applications for registration
thereof associated, developed or used in connection with the Business; (vi)
customer lists associated, developed or used in connection with the Business;
(vii) books and records describing or used in connection with any of the
foregoing; (viii) claims or causes of action arising out of or related to
infringement or misappropriation of any of the foregoing.
(ii) Until transfer pursuant to Section 1.1, all of the Proprietary
Rights used in connection with the Business are owned by Brite free and clear of
any and all liens, security interests, claims, charges and encumbrances or are
used by Brite pursuant to a valid and enforceable license granting rights
sufficiently broad to permit the historical and anticipated uses of such
Proprietary Rights in connection with the Business. Brite, and after transfer
pursuant to Section 1.1, the Company, has the right and authority to use the
Proprietary Rights in connection with the conduct of the Business in the manner
presently conducted.
(iii) Schedule 2.5(c)(iii) identifies any licenses, sublicenses or
other agreements used in connection with the Business pursuant to which Brite
grants a license to any person to use the Proprietary Rights or is a licensee of
any of the Proprietary Rights.
(iv) The grants, registrations and applications included in or
applicable to the Proprietary Rights have not lapsed, expired or been abandoned
and no application or registration
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thereof is the subject of any proceeding before any court, arbitrator, state,
local or foreign government agency, regulatory body, or other governmental
authority or any department, agency, board, commission, bureau or
instrumentality of any of the foregoing (each a "GOVERNMENTAL ENTITY," and
collectively "GOVERNMENTAL ENTITIES"). There have not been any actions or other
judicial or adversary proceedings involving Brite or Seller concerning any of
the Proprietary Rights, nor to the knowledge of Brite or Seller, is any such
action or proceeding threatened.
(v) To the knowledge of Brite and Seller, the conduct of the
Business does not conflict with valid patents, trademarks, trade secrets or
trade names, or other intellectual property of others. To the knowledge of Brite
and Seller, there are no conflicts with or infringements of any of the
Proprietary Rights by any third party.
(vi) Until transfer pursuant to Section 1.1, Brite, is the sole
owner of all trade secrets, including, without limitation, customer lists,
formulas, inventions, processes, know-how, computer programs and routines
associated, developed or used by Brite or its Affiliates in connection with the
Business (the "TRADE SECRETS"), free and clear of any liens, encumbrances,
restrictions, or legal or equitable claims of others, and has taken all
reasonable security measures to protect the secrecy, confidentiality, and value
of the Trade Secrets.
(vii) To the knowledge of Brite and Seller, all the Trade Secrets
are presently valid and protectible and are not part of the public knowledge or
literature; and have not, to the knowledge of Brite and Seller, been used,
divulged, or appropriated for the benefit of any past or present employees or
other persons, or to the detriment of Brite and Seller or the Business.
2.6 YEAR 2000 COMPLIANCE. All date-related output, calculations or
results before, during or after the calendar year 2000 that are produced or used
by any material hardware, software, firmware or facilities systems (the
"COMPUTER SYSTEMS") used by Brite in connection with the Business are Year 2000
Compliant. For purposes of this section, "YEAR 2000 COMPLIANT" means:
(a) All dates receivable by the Computer Systems, as well as
calculations, output and results will (i) include a consistent-length century
indicator of at least two base ten digits, and (ii) have date elements in
interfaces and data storage that will permit specifying the century to eliminate
date ambiguity;
(b) When any date data is represented without a century, either in an
interface or in data storage, the correct century will be unambiguous for all
manipulations involving that data;
(c) Data calculations involving either a single century or multiple
centuries will neither (i) cause an abnormal ending or operation, nor (ii)
generate incorrect results or results inconsistent with output or results from
any other century;
(d) When sorting by date, all records will be sorted in accurate
chronological sequence; and when the date is used as a key, records will be read
and written in accurate chronological sequence; and
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(e) Leap years will be determined by the following standard: (i) if
dividing the year by 4 yields an integer, it is a leap year, except for years
ending in 00, but (ii) a year ending in 00 is a leap year if dividing it by 400
yields an integer.
2.7 NO CONFLICT OR VIOLATION. The execution, delivery and performance
by Brite, Seller and the Company of this Agreement and the Transaction Documents
and the consummation of the transactions contemplated hereby do not and will
not: (i) violate or conflict with any provision of the charter documents or
bylaws of Brite, Seller or the Company; (ii) violate any provision or
requirement of any domestic or foreign, national, state, or local law, statute,
judgment, order, writ, injunction, decree, award, rule, or regulation of any
Governmental Entity applicable to Brite, Seller or the Company or the Business;
(iii) violate, result in a breach of, constitute (with due notice or lapse of
time or both) a default or cause any obligation, penalty, premium or right of
termination to arise or accrue under any Contract (as hereinafter defined); (iv)
result in the creation or imposition of any lien, charge or encumbrance of any
kind whatsoever upon any of the Acquired Assets; or (v) result in the
cancellation, modification, revocation or suspension of any license, permit,
certificate, franchise, authorization or approval issued or granted by any
Governmental Entity in connection with the Business (each a "LICENSE", and
collectively, the "LICENSES").
2.8 LABOR AND EMPLOYMENT MATTERS. Schedule 2.8 lists all employees,
independent contractors and other persons employed or engaged by Brite in
connection with the Business (the "BUSINESS PERSONNEL") immediately prior to the
transfers described in Section 1.1, including date of employment or retention,
current title and compensation. There is no employment agreement, collective
bargaining agreement or other labor agreement applicable to any of the Business
Personnel to which Brite is a party or by which it is bound. Brite has complied
in all material respects with all applicable laws, rules and regulations
relating to the employment of all Business Personnel, including those related to
wages, hours, collective bargaining and the payment and withholding of taxes and
other sums as required by appropriate Governmental Entities and has withheld and
paid to the appropriate Governmental Entities or is holding for payment not yet
due to such authorities, all amounts required to be withheld from Business
Personnel and is not liable for any arrears of wages, taxes, penalties or other
sums for failure to comply with any of the foregoing. There is no unfair labor
practice complaint against Brite pending before the National Labor Relations
Board or any state or local agency with respect to the Business or any Business
Personnel; pending labor strike or other material labor trouble affecting Brite
with respect to the Business or any Business Personnel; material labor grievance
pending against Brite with respect to the Business or any Business Personnel;
pending representation question respecting any Business Personnel; pending
arbitration proceedings with respect to the Business or any Business Personnel
arising out of or under any collective bargaining agreement to which Brite is a
party; or to the knowledge of Brite or Seller, any basis for which a claim with
respect to the Business or any Business Personnel may be made under any
collective bargaining agreement to which Brite is a party.
2.9 EMPLOYEE PLANS.
(a) Schedule 2.9 sets forth a true and complete list of all bonus,
pension, stock option, stock purchase, benefit, welfare, profit-sharing,
deferred compensation, retainer, consulting, retirement, welfare, disability,
vacation, severance, hospitalization, insurance, incentive, deferred
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compensation and other similar fringe or employee benefit plans, funds, programs
or arrangements, whether written or oral, in each of the foregoing cases which
cover, are maintained for the benefit of, or relate to any or all current or
former Business Personnel, and any other entity ("ERISA AFFILIATE") related to
it under Section 414(b), (c), (m) and (o) of the Internal Revenue Code (the
"CODE") (the "EMPLOYEE PLANS"). With respect to each Employee Plan, Brite will
make available to Buyer upon request, to the extent applicable, true and
complete copies of (i) all plan documents, (ii) the most recent determination
letter received from the Internal Revenue Service, (iii) the most recent
application for determination filed with the Internal Revenue Service, (iv) the
latest actuarial valuations, (v) the latest financial statements, (vi) the
latest Form 5500 Annual Report, including Schedule A and Schedule B thereto,
(vii) all related trust agreements, insurance contracts or other funding
arrangements which implement any of such Employee Plans, (viii) all Summary Plan
Descriptions and summaries of material modifications and all modifications
thereto communicated to employees, and (ix) in the case of stock options or
stock appreciation rights issued under any Employee Plan, a list of holders,
dates of grant, number of shares, exercise price per share and dates
exercisable. Neither Brite nor any ERISA Affiliate of Brite has any liability or
contingent liability with respect to the Employee Plans, nor will any of the
Acquired Assets be subject to any lien, charge or claim relating to the
obligations of Brite with respect to Business Personnel or Employee Plans.
(b) Neither Brite nor any ERISA Affiliate sponsors or has sponsored,
maintained, contributed to, incurred an obligation to contribute to or withdraw
from, any Multi-Employer Plan (as defined in Section 4000(a)(3) of ERISA) or any
Multiple-Employer Plan (as defined in ERISA Sections 4063 or 4064 or Code
Section 413) related to Business Personnel, whether or not terminated, for which
any withdrawal or partial withdrawal liability has been or could be incurred,
whether or not any such liability has been asserted by or on behalf of any such
plan.
(c) There are no contracts, agreements, plans or arrangements
covering any Business Personnel with "change of control" or similar provisions
(each, a "CHANGE OF CONTROL ARRANGEMENT"). There is no contract, agreement, plan
or arrangement covering Brite, or any Business Personnel, that individually or
collectively could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G of the Code. Neither Brite or
any of its ERISA Affiliates has incurred any liability with respect to Business
Personnel under the Worker Adjustment Retraining and Notification Act or any
similar state law relating to employment termination in connection with a mass
layoff, plant closing or similar event, and the transactions contemplated by
this Agreement will not give rise to any such liability.
2.10 LITIGATION. There are no claims, actions, suits, proceedings,
labor disputes or investigations pending or, to the knowledge of Brite and
Seller, threatened before any Governmental Entity of any nature, brought by or
against Brite, Seller or the Company, the officers, directors, employees, agents
of Brite, Seller, or any of their respective Affiliates involving, affecting or
relating to the Business or any Acquired Assets, Assumed Liabilities, or
Business Personnel, or operations of Brite and Seller or the transactions
contemplated by this Agreement. None of Brite, Seller, the Company or any of the
Acquired Assets is subject to any order, writ, judgment, award, injunction or
decree of any Governmental Entity. For purposes of this Agreement, "AFFILIATE"
shall have the meaning ascribed to such term in Rule 405 under the Securities
Act of 1933, as amended. Buyer and the Company will be indemnified pursuant to
Section 5.2 from and against any claims listed on, or arising out of, the items
disclosed on
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Schedule 2.10. Buyer shall assume responsibility for the lawsuit filed by Brite
against Donaldson, Lufkin & Jenrette described on Schedule 2.10.
2.11 CERTAIN AGREEMENTS.
(a) Schedule 2.11 sets forth a true and complete list of all material
contracts, agreements, instruments, licenses, commitments and other arrangements
relating to or affecting the Business or the Acquired Assets, including, without
limitation, all written, or to the knowledge of Brite and Seller, oral, (i)
contracts, agreements and commitments not made in the ordinary course of
business, (ii) agency and brokerage agreements, (iii) service and other customer
contracts, (iv) contracts, loan agreements, letters of credit, repurchase
agreements, mortgages, security agreements, guarantees, pledge agreements, trust
indentures, promissory notes and other documents or arrangements relating to the
borrowing of money or for lines of credit, (v) tax sharing agreements, real
property leases or any subleases relating thereto, personal property leases,
employee plans, employment and labor agreements, any material agreement relating
to Proprietary Rights (including service agreements relating thereto) and
insurance contracts, (vi) agreements and other arrangements for the sale of any
assets, property or rights other than in the ordinary course of business or for
the grant of any options or preferential rights to purchase any assets, property
or rights, (vii) documents granting any power of attorney with respect to the
affairs of the Business, (viii) suretyship contracts, performance bonds, working
capital maintenance or other forms of guaranty agreements, (ix) contracts or
commitments related to the Business limiting or restraining Brite or any
Business Personnel from engaging or competing in any lines of business or with
any person or entity, (x) partnership or joint venture agreements, (xi) material
licenses, including, without limitation, material software licenses, and (xii)
all amendments, modifications, extensions or renewals of any of the foregoing
(each a "CONTRACT," and collectively, the "CONTRACTS.") Notwithstanding Sections
2.11(b)-(f) below, with respect to service and other customer contracts referred
to in (iii) above, other than the 1998 Contracts (as defined below), Brite and
Seller make no representations or warranties as to whether each Contract is
valid, binding and enforceable against the parties thereto in accordance with
its terms, whether each Contract is in full force and effect on the date hereof,
whether the Contracts provide for the consent of any party thereto, or whether
the Contracts would be breached by, or confer additional rights to any party as
a result of, the transactions contemplated hereby. For purposes hereof "1998
CONTRACTS" refer to those Contracts either (A) entered into during calendar year
1998 or (B) from which revenues were derived during calendar year 1998. Each of
the 1998 Contracts is identified by an asterisk on Schedule 2.11.
(b) To the knowledge of Brite and Seller, each Contract is valid,
binding and enforceable against the parties thereto in accordance with its
terms, except as such enforceability may be limited by the Bankruptcy Exception,
and is in full force and effect on the date hereof. Brite has performed all
obligations required to be performed by it under, and is not in material default
or breach of, any Contract, and no event has occurred which, with due notice or
lapse of time or both, would constitute such a default.
(c) To the knowledge of Brite and Seller, no other party to any
Contract is in default in respect thereof, and no event has occurred which, with
due notice or lapse of time or both, would constitute such a default.
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(d) There are no pending or anticipated material disputes with any
party to any material Contract, and to the knowledge of Brite and Seller, no
party to any Contract intends to cancel or terminate any such agreement, whether
as a result of the transactions contemplated by this Agreement or otherwise.
(e) Brite has delivered to Buyer or its representatives true and
complete originals or copies of all the Contracts and a copy of every Material
Notice received by Brite since January 1, 1996 with respect to any of the
Contracts. For purposes hereof, "MATERIAL NOTICE" includes only those notices
received alleging a material breach of a Contract or serious performance issues
that could lead to cancellation or material modification of a contract or
intention to terminate or materially modify a contract, and is not intended to
include routine correspondence.
(f) None of the Contracts provides for consent of any party thereto,
or would be breached by, or confer additional rights to any party as a result
of, the transactions contemplated hereby.
2.12 COMPLIANCE WITH APPLICABLE LAW. The operations of the Business
are, and have been, conducted in substantial compliance with all applicable
laws, regulations, orders and other requirements of all Governmental Entities
having jurisdiction over the Business and its assets, properties and operations.
Brite has not received any notice of any violation of any such law, regulation,
order or other legal requirement, and is not in default with respect to any
order, writ, judgment, award, injunction or decree of any Governmental Entity,
applicable to the Business or any of the Acquired Assets. To the knowledge of
Brite and Seller, there are no proposed changes in any such laws, rules or
regulations (other than laws of general applicability) that would adversely
affect the transactions contemplated by this Agreement or all or a substantial
part of the Business or any of the Acquired Assets.
2.13 LICENSES.
(a) Schedule 2.13 sets forth a true and complete list of all Licenses
issued or granted to Brite in connection with the Business, and all pending
applications therefor. Such Licenses constitute all consents, approvals,
authorizations and other requirements prescribed by any law, rule or regulation
which must be obtained or satisfied by Brite in connection with the Business or
that are necessary for the execution, delivery and performance by Brite, Seller
and the Company of this Agreement and the other Transaction Documents. The
Licenses are sufficient and adequate in all material respects to permit the
continued lawful conduct of the Business in the manner now conducted and the
ownership, occupancy and operation of its properties for their present uses and
the execution, delivery and performance of this Agreement. No jurisdiction in
which Brite is not qualified or licensed as a foreign corporation in connection
with the Business has demanded or requested that it qualify or become licensed
as a foreign corporation. Brite has delivered to Buyer or its representatives
true and complete copies of all the Licenses together with all amendments and
modifications thereto.
(b) Each License has been issued to, and duly obtained and fully paid
for by Brite and is valid, in full force and effect, and not subject to any
pending or known threatened administrative or judicial proceeding to suspend,
revoke, cancel or declare such License invalid in any respect. Brite is not in
violation in any material respect of any of the Licenses. The
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Licenses have never been suspended, revoked or otherwise terminated, subject to
any fine or penalty, or subject to judicial or administrative review, for any
reason other than the renewal or expiration thereof.
2.14 ACCOUNTS RECEIVABLE. Schedule 2.14 sets forth a list of all
accounts receivable of Brite that have arisen in connection with the Business as
of October 31, 1998. Not later than December 16, 1998, Seller shall provide a
list of all accounts receivable of Brite that have arisen in connection with the
Business as of December 1, 1998 (the "ACCOUNTS RECEIVABLE"), including their
aging. All accounts receivable as of October 31, 1998, and all Accounts
Receivable as of December 1, 1998 will represent valid obligations arising from
sales actually made or services actually performed in the ordinary course of
business that are current and collectible in amounts not less than the aggregate
amount thereof carried (or to be carried) on the books of Brite and reflected in
the Financial Statements, and are not and will not be subject to any valid
counterclaims or set-offs. No more than twenty-five percent (25%), exclusive of
accounts specifically reserved for as bad debts as reflected in the Financial
Statements and as supported in the schedules to the Financial Statements, of the
total dollar value of the Accounts Receivable is past due more than ninety (90)
days and none of the Accounts Receivable in excess of sixty days are subject to
any dispute or contingency.
2.15 INTERCOMPANY AND AFFILIATE TRANSACTIONS; INSIDER INTERESTS.
(a) There are no material transactions, intercompany agreements or
arrangements of any kind, direct or indirect, related to the Business, between
Brite and any director, officer, employee, stockholder, relative or Affiliate of
Brite, including, without limitation, loans, guarantees or pledges to, by or for
Brite or from, to, by or for any of such persons, that are either (i) currently
in effect, or (ii) reflected in Brite's financial results.
(b) No officer, director or shareholder of Brite, or any Affiliate of
any such person, now has, or within the last two years had, either directly or
indirectly:
(i) an equity or debt interest in any corporation,
partnership, joint venture, association, organization or other person or
entity which furnishes or sells, or during such period furnished or
sold, services or products to Brite in connection with the Business, or
purchased, or during such period purchased from Brite, any goods or
services in connection with the Business, or otherwise does, or during
such period did, business with Brite in connection with the Business;
(ii) a beneficial interest in any contract, commitment or
agreement to which Brite is or was a party or under which it was
obligated or bound or to which its properties may be or may have been
subject in connection with the Business, other than commitments or
agreements between Brite and such persons in their capacities as
employees, officers or directors of Brite; or
(iii) any rights in or to any of the assets, properties or
rights used by Brite in the Business.
2.16 INSURANCE. Schedule 2.16 sets forth a true and correct list of
all current insurance policies of any nature whatsoever maintained by Brite in
connection with the Business and the
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annual or other premiums payable thereunder. There are no outstanding
requirements or recommendations by any insurance company that issued any such
policy or by any Board of Fire Underwriters or other similar body exercising
similar functions or by any Governmental Entity that require or recommend any
changes in the conduct of the Business, or any repairs or other work to be done
on or with respect to any of the properties or assets of Brite associated with
the Business. Brite has not received any notice or other communication from any
of its insurance companies within the three (3) years preceding the date hereof
canceling or materially amending or materially increasing the annual or other
premiums payable under any of such insurance policies, and to the knowledge of
Brite, no such cancellation, amendment or increase of premiums is threatened.
2.17 CUSTOMERS. Schedule 2.17 sets forth a true and complete list of
the fifteen (15) largest customers of the Business, together with revenues to
the Business from each such customer during the most recent complete fiscal year
and the current fiscal year to the date hereof. None of such customers has given
notice to Brite of an intention to terminate or materially impair its business
relationship with Brite and Brite and Seller have no knowledge of any event that
would precipitate the impairment, or termination of, or the failure to renew, or
entitle any such customer to terminate, such business relationship.
2.18 NO UNDISCLOSED LIABILITIES. Except as and to the extent
specifically reflected or reserved against in the Interim Financial Statements
or as disclosed in this Agreement or the schedules hereto, and except as
incurred in the ordinary course of business since the date of the Interim
Financial Statements, Brite and Seller have no liabilities or obligations of any
nature, whether absolute, accrued, contingent or otherwise, and whether due or
to become due (including, without limitation, any liability for taxes and
interest, penalties and other charges payable with respect to any such liability
or obligation) which in the aggregate would result in a Material Adverse Change
and no facts or circumstances exist which, with notice or the passage of time or
both, could reasonably be expected to result in any claims against or
obligations or liabilities of Brite or Seller in connection with the Business.
2.19 ENVIRONMENTAL MATTERS. Notwithstanding anything to the contrary
contained in this Agreement:
(a) The operations of the Business comply and have at all times
complied with all applicable laws, regulations and other requirements of
Governmental Entities or duties under the common law relating to toxic or
hazardous substances, wastes, pollution or to the protection of health, safety
or the environment (collectively, "ENVIRONMENTAL LAWS") and have obtained and
maintained in effect all licenses, permits and other authorizations or
registrations (collectively "ENVIRONMENTAL PERMITS") required under all
Environmental Laws and are in compliance with all such Environmental Permits.
(b) Brite has not performed, failed to perform or suffered any act
which could give rise to, or otherwise incurred, liability to any person
(governmental or not) in connection with the Business under the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
et seq. ("CERCLA"), or any other Environmental Laws, nor has it received notice
of any such liability or any claim therefor.
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(c) To the knowledge of Brite and Seller, no hazardous substance,
hazardous waste, contaminant, pollutant or toxic substance (as such terms are
defined in or otherwise subject to any applicable Environmental Law and
collectively referred to herein as "HAZARDOUS MATERIALS") has been released,
placed, disposed of or otherwise come to be located on, at, beneath or near any
of the assets or properties owned or leased by it at any time in connection with
the Business or any other property in violation of any Environmental Laws or
that could subject it to liability under any Environmental Laws.
(d) Brite has not in connection with the Business exposed any
Business Personnel or third party to any Hazardous Materials or conditions that
could subject it to any material liability under any Environmental Laws.
(e) Brite does not now own or operate, and has never owned or
operated, aboveground or underground storage tanks in connection with the
Business.
(f) To the knowledge of Brite and Seller, with respect to any or all
of the real properties leased at any time by Brite in connection with the
Business, there are no asbestos-containing materials, urea formaldehyde
insulation, polychlorinated biphenyls or lead-based paints present at any such
properties.
(g) There are no ongoing investigations or negotiations, pending or
threatened administrative, judicial or regulatory proceedings, any threatened
actions or claims, or consent decrees or other agreements in effect that relate
to environmental conditions in, on, under, about or related to Brite , its
operations or the real properties leased at any time by Brite in each case in
connection with the Business or the Acquired Assets.
(h) Brite has delivered to Buyer copies of all environmental
assessments, audits, studies and other environmental reports in its possession
or reasonably available to it relating to the Business or the Acquired Assets.
2.20 TAXES.
(a) (i) All Tax Returns that are required to be filed by or with respect
to Brite or Seller have been duly filed and are correct and complete in all
respects; (ii) all Taxes owed or required to be withheld and paid over by Brite
or Seller have been paid in full; (iii) none of the Tax Returns referred to in
clause (i) contains any position which is or would be subject to penalties under
Section 6662 of the Internal Revenue Code of 1986, as amended (the "CODE") (or
any corresponding provision of state, local or foreign Tax law); (iv) the Tax
Returns referred to in clause (i) have either been examined by the Internal
Revenue Service or the appropriate state, local or foreign taxing authority or
the period for assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired; (v) all deficiencies asserted or assessments
made as a result of any such examinations have been paid in full; (vi) no issues
that have been raised by the relevant taxing authority in connection with the
examination of any of the Tax Returns referred to in clause (i) are currently
pending; (vii) there is no dispute or claim concerning any liability for Taxes
against Brite or Seller either claimed or raised by any authority in writing or
to which any director or officer or employee responsible for Tax matters of
Brite or Seller has personal knowledge based upon personal contact with any
agent of such authority; (viii) no waivers of statutes of limitation have been
given by or required with respect
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to any Taxes of Brite or Seller; (ix) the unpaid Taxes of Brite or Seller do not
(or of Company immediately after its formation, will not) exceed the reserve for
Tax liability (excluding any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth or included in Brite's
most recent balance sheet, Seller's most recent balance sheet, (or the Company's
balance sheet); and (x) to the knowledge of Brite and Seller (or any director,
officer or employee responsible for the Tax matters of Brite or Seller) (A)
there is no investigation or other proceeding pending, threatened or expected to
be commenced by any taxing authority for any jurisdiction in which Brite or
Seller does not file tax returns that may be subject to a given Tax liability in
such jurisdiction, and (B) there is no meritorious basis for such an
investigation or other proceeding that would result in such an assessment.
(b) No tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfers contemplated by this Agreement.
(c) Company will have no liability for Taxes of any person (other than
Company) under Treasury Regulations Section 1.1502-6, as a transferee or
successor, or otherwise.
(d) As a result of Buyer's purchase of the Shares, neither Company nor
Buyer will be obligated to make a payment to an individual arising from
employment or an independent contractor relationship with Brite, Seller or
Company that would be a "parachute payment" to a "disqualified individual" as
those terms are defined in Section 280G of the Code without regard to whether
such payment is reasonable compensation for personal services performed or to be
performed in the future.
(e) Company will not be a party to or bound by any tax indemnity, tax
sharing or tax allocation agreement or arrangement on or immediately after
December 1, 1998.
(f) Seller is eligible to make an election under Section 338(h)(10) of
the Code (and any comparable election under state, local or foreign tax law)
with respect to the Company and the purchase of Shares under this Agreement.
(g) For purposes of this Agreement (i) the term "TAX" or "TAXES" means
any income, corporation, gross receipts, profits, gains, capital stock, capital
duty, franchise, withholding, social security, unemployment, disability,
property, wealth, welfare, stamp, excise, occupation, sales, use, value added,
alternative minimum, estimated or other similar tax (including any fee,
assessment, or other charge in the nature of or in lieu of any tax) imposed by
any governmental entity (whether national, local, municipal or otherwise) or
political subdivision thereof, and any interest, penalties, additions to tax or
additional amounts in respect of the foregoing, and including any transferee or
secondary liability in respect of any tax (whether imposed by law, contractual
agreement or otherwise) and any tax as a result of being a member of any
affiliated, consolidated, combined, unitary or similar group; and (ii) the term
"TAX RETURNS" (or "TAX RETURN" when used in the singular form) means all
returns, declarations, reports, statements and other documents required to be
filed in respect of Taxes, and any claims for refunds of Taxes, including any
amendments or supplements to any of the foregoing.
2.21 BROKERS. Except for Ladenburg Thalmann & Co. Inc., whose
commissions, fees, expenses and other compensation shall be paid by Brite, no
broker, finder, investment banker, or other person is entitled to any brokerage,
finders or other fee or commission in connection with the transaction
contemplated by this Agreement, based upon arrangements made by or on behalf of
Brite or its Affiliates.
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2.22 THE COMPANY.
(a) Except for execution and delivery of this Agreement, and other than
as agreed upon in writing by Buyer, the Company has had, and before the transfer
to the Company of the Acquired Assets as described in Section 1.1 and the
assumption by the Company of the Assumed Liabilities as described in Section
1.2, the Company will have had, no assets, liabilities, business, or operations.
Between December 1, 1998 and the Closing Date, the Company will have no
operations other than operation of the Business in the ordinary course. At the
Closing, the only assets of the Company will be the Acquired Assets and the only
obligations of the Company will be the Assumed Liabilities, and such other
assets or liabilities as arise due to the operation of the Business in the
ordinary course between December 1, 1998 and the Closing Date.
(b) The Company has, and before the issuance described in Section 1.3,
the Company will have had, no issued or outstanding capital stock or other
securities. At the Closing, the only issued or outstanding capital stock or
other securities of the Company will be the Shares, and there will be no
outstanding options or rights to acquire capital stock or other securities.
(c) Complete and accurate copies of the Certificate of Incorporation and
bylaws of the Company are attached hereto as Schedules 2.22(b)-1 and 2.22(b)-2,
respectively.
2.23 SELLER.
(a) Except for execution and delivery of this Agreement, and other than
as agreed upon in writing, Seller has had, and before the transfers as
contemplated by Section 1.1 hereof, Seller will have had, no assets,
liabilities, business, or operations. On December 1,1998, the only assets of
Seller will be the Shares.
(b) Complete and accurate copies of the Certificate of Incorporation and
bylaws of Seller are attached hereto as Schedules 2.23(c)-1 and 2.23(c)-2,
respectively.
2.24 OWNERSHIP OF CAPITAL STOCK.
(a) The authorized capital stock of the Company consists of One Hundred
Thousand (100,000) shares, of which Ninety Thousand (90,0000) shares shall be
common stock having a par value of $.001 per share (the "COMMON STOCK"), and Ten
Thousand (10,000) shares of preferred stock having a par value of $.001 per
share, including Five Thousand (5,000) shares of Series A Preferred Stock. As of
the Closing there will be Forty-Five Thousand (45,000) shares of Common Stock
issued and outstanding. There is no other issued and outstanding capital stock
of the Company.
(b) As of the Closing, the Shares will be all of the issued and
outstanding capital stock of the Company and will be validly issued and
outstanding, fully paid and non-assessable. Neither Seller nor the Company has
granted, issued or agreed to grant or issue any other equity interests in the
Company and there are no outstanding options, warrants, subscription rights,
securities that are convertible into or exchangeable for, or any other
commitments of any character relating to, any equity interests of the Company.
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(c) As of the Closing, the Seller will have good and valid title to, and
sole record and beneficial ownership of, the Shares, free and clear of any
claims, liens, pledges, options, security interests, trusts encumbrances or
other rights or interests of any person or entity and the Seller has the
absolute and unrestricted right, power and authority and capacity to enter into
this Agreement.
(d) All dividends, distributions and redemptions made or to be made by
the Company with respect to its equity interests have complied or will comply
with applicable law.
(e) All offers and sales of capital stock of the Company prior to the
date hereof were exempt from the registration requirements of the Securities Act
of 1933, as amended (the "SECURITIES ACT"), and were registered or qualified
under or exempt from all applicable state securities laws.
(f) The Company does not own, and did not own at any time, directly or
indirectly, either of record or beneficially, any equity interest in any entity,
and does not have the right to acquire any equity interest in any entity.
2.25 CONSENTS.
Schedule 2.25 lists all consents and notices required to be obtained or
given by or on behalf of the Company or the Stockholder before consummation of
the transactions contemplated by this Agreement in compliance with all
applicable laws, rules, regulations, or orders of any Governmental Entity, or
the provisions of any material Contract, and all such consents have been duly
obtained and are in full force and effect except where the failure to obtain
such consent will not have a Material Adverse Effect.
2.26 ACCURACY OF INFORMATION. None of the representations or
warranties or information provided and to be provided by Brite and Seller to
Buyer in this Agreement, the Disclosure Schedule, schedules or exhibits hereto,
or in any of the other Transaction Documents contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary in order to make the statements and facts contained herein or therein
not false or misleading. The descriptions set forth in the Disclosure Schedule
are accurate descriptions of the matters disclosed therein. Copies of all
documents heretofore or hereafter delivered or made available to Buyer pursuant
hereto were or will be complete and accurate records of such documents.
3. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants
to Brite and Seller that:
3.1 ORGANIZATION AND CORPORATE AUTHORITY. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. This Agreement
and the Transaction Documents have been (or upon execution will have been) duly
executed and delivered by Buyer and effectively authorized by all necessary
action, corporate or otherwise, and constitute (or upon execution will
constitute) legal, valid and binding obligations of Buyer, except as such
enforceability may be limited by the Bankruptcy Exception.
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3.2 NO CONFLICT OR VIOLATION. The execution, delivery and performance
by Buyer of this Agreement and the Transaction Documents and the consummation of
the transactions contemplated hereby do not and will not: (i) violate or
conflict with any provision of the charter documents of Buyer; or (ii) violate
any provision or requirement of any domestic or foreign, national, state or
local law, statute, judgment, order, writ, injunction, decree, award, rule, or
regulation of any Governmental Entity applicable to Buyer.
3.3 ACCURACY OF INFORMATION. None of the representations or
warranties or information provided and to be provided by Buyer to Brite and
Seller in this Agreement, the schedules or exhibits hereto, or any of the other
Transaction Documents contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact necessary in
order to make the statements and facts contained herein or therein, not false or
misleading.
4. CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES.
4.1 ACCESS. Brite shall afford, to Buyer and Buyer's accountants,
counsel and representatives, full access during normal business hours throughout
the period prior to the Closing Date (or the earlier termination of this
Agreement) to all of the properties, books, Contracts and records of Brite
related to the Business (including, without limitation, Brite's accounting
records, the workpapers of Brite's independent accountants, and all
environmental studies, reports and other environmental records) and, during such
period, shall furnish promptly to Buyer all information concerning the Business,
Acquired Assets, Assumed Liabilities, and Business Personnel as Buyer may
reasonably request.
4.2 CONFIDENTIALITY. For purposes hereof, Brite, Seller and the
Company will keep the matters contemplated herein and all information provided
by Buyer related to Buyer and the Consolidation Transaction (as defined in
Section 4.3) and potential participants therein, including without limitation
Deloitte & Touche LLP, confidential, and will not provide information about such
matters to any party or use such information except to the extent necessary to
effect the transactions contemplated hereby. Buyer will keep the matters
contemplated herein and all information provided by Brite related to the
Business and Brite confidential, and will not provide information about such
matters to any party or use such information except to the extent necessary to
effect the transactions contemplated hereby. Buyer and Brite shall each cause
their respective Affiliates, officers, directors, employees, agents, and
advisors to keep confidential all information received in connection with the
transactions contemplated hereby. Brite acknowledges that Buyer may provide
information about the Business to other participants in the Consolidation
Transaction. If this Agreement terminates without consummation of the Closing,
Buyer and Brite shall, and shall cause their Affiliates to, each maintain the
confidentiality of any information obtained from the other in connection with
the transactions contemplated hereby, the Consolidation Transaction, and Buyer's
business plans (the "INFORMATION"), other than Information that (i) was in the
public domain before the date of this Agreement or subsequently came into the
public domain other than as a result of disclosure by the party to whom the
Information was delivered; or (ii) was lawfully received by a party from a third
party free of any obligation of confidence of or to such third party; or (iii)
was already in the possession of the party prior to receipt thereof, directly or
indirectly, from the other party; or (iv) is required to be disclosed in a
judicial or administrative proceeding after giving the other party as much
advance notice of the possibility of such disclosure as practicable
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so that the other party may attempt to stop such disclosure; or (v) is
subsequently and independently developed by employees, consultants or agents of
the party to whom the Information was delivered without reference to the
Information. If this Agreement terminates without consummation of the Closing,
Buyer and Brite shall each return to the other all material containing or
reflecting Information provided by the other, shall not retain any copies,
extracts, or other reproductions thereof or derived therefrom, and shall
thereafter refrain from using the Information and shall maintain its
confidentiality pursuant to this Agreement.
4.3 CONSOLIDATION TRANSACTIONS Concurrent with the transaction
contemplated hereby, Buyer is acquiring in a series of transactions various
other companies engaged in the business of cost reduction, cost recovery and
profit enhancement services by means of mergers into Buyer, or acquisitions by
Buyer of all or substantially all of the assets or stock or other equity
interests of such companies (collectively, the "CONSOLIDATION TRANSACTIONS").
Brite, Seller, and the Company acknowledge that as a result of the complexity of
the transactions contemplated hereby and the Consolidation Transactions, the
Closing contemplated hereby and the closing of the Consolidation Transactions
must be concurrent at a time designated by Buyer. Accordingly, Brite, Seller,
and the Company shall upon receipt of the Closing Notice but prior to the
Closing Date (i) provide any outstanding documentation required to effect the
Closing pursuant to this Agreement in escrow pending release upon authorization
of Seller and Brite at the Closing, (ii) complete performance of their
respective obligations hereunder and under the other Transaction Documents to be
performed by the Closing, and (iii) update the schedules hereto and any other
documentation or information provided to Buyer during the course of this
transaction such that all such disclosures shall be accurate and current as of
the Closing Date.
4.4 CERTAIN CHANGES AND CONDUCT OF BUSINESS.
(a) From and after the date of this Agreement and until the Closing (or
the earlier termination of this Agreement), except as required or permitted
pursuant to the terms hereof, Brite, Seller and the Company shall not:
(i) make any material change in the conduct of the
Business; or terminate or amend any Contract or enter into any new
contract related to the Business calling for payments by Brite in excess
of $100,000 over the life of the contract or series of related
contracts, without the prior written consent of Buyer, which may not be
unreasonably withheld;
(ii) make any change in the charter documents or bylaws of
the Company or permit the Company to have any assets, liabilities,
business, or operations other than operations in the ordinary course of
the Business, or to issue any shares of capital stock or equity
securities or grant any option, warrant or right to acquire any capital
stock or equity securities or issue any security convertible into or
exchangeable for the capital stock of Brite:
(iii) make any sale, assignment, transfer, lease,
abandonment or other conveyance of any of the Acquired Assets or any
part thereof, except transactions required pursuant to existing
Contracts set forth in Schedule 2.11 and dispositions of
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inventory or worn out or obsolete equipment for fair or reasonable value
in the ordinary course of business consistent with past practices;
(iv) subject any of the Acquired Assets , or any part
thereof, to any lien, security interest, charge, interest or other
encumbrance, or suffer such to be imposed other than such liens,
security interests, charges, interests or other encumbrances as may
arise in the ordinary course of business consistent with past practices;
(v) enter into any new (or amend any existing) employee
benefit plan, program or arrangement or any employment, severance or
consulting agreement related to any Business Personnel, or grant any
increase in the compensation or benefits payable or to become payable to
(A) any executive or the Business, or (B) any Business Personnel other
than executives except in accordance with pre-existing contractual
provisions applicable to such non-executives;
(vi) make or commit to make any capital expenditure in
connection with the Business in excess of $10,000 or to invest, advance,
loan, pledge or donate any monies to any customers or other persons or
entities or to make any similar commitments with respect to outstanding
bids or proposals in connection with the Business;
(vii) take any other action that would cause any of the
representations and warranties made herein not to remain true and
correct in all material respects;
(viii) make any change in any revenue recognition or cost
allocation practices or method of accounting or accounting principle,
method, estimate or practice related to the Business except for any such
change required by reason of a concurrent change in GAAP, or write down
the value of any Acquired Assets or write-off as uncollectible any
Accounts Receivable included in the Acquired Assets except in the
ordinary course of business consistent with past practices;
(ix) settle, release or forgive any material claim or
litigation or waive any material right related to the Business;
(x) prior to December 1, 1998, permit Seller to have any
interest in any Acquired Assets or Assumed Liabilities or any
involvement with the Business;
(xii) delay payment of payables or accelerate collection
of receivables relative to Brite's historical practices regarding the
timing of such payments and collections; or
(xi) commit itself to do any of the foregoing.
(b) From and after the date hereof and until December 1, 1998 (or the
earlier termination of this Agreement), Brite shall, and from December 1, 1998
to the Closing Date, the Company shall:
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(i) maintain, in all material respects, the properties of
Brite associated with the Business in accordance with present practices
and in a condition suitable for their current use;
(ii) continue to conduct the Business in the ordinary
course consistent with past practices;
(iii) keep the books of account, records and files
associated with the Business in the ordinary course and in accordance
with existing practices;
(iv) continue to maintain existing business relationships
with suppliers and customers of the Business except to the extent that
such relationships are, at the same time, judged in good faith to be
non-beneficial;
(v) maintain and comply with all Licenses;
(vi) comply with all Environmental Laws applicable to the
Business, and upon receipt of notice that there exists a violation of
any such Environmental Law, immediately notify Buyer in writing and
promptly (and in any event within the time permitted by the applicable
Governmental Entity) (A) as to areas over which Brite or Seller
exercises control, remove or remedy such violation in accordance with
all Environmental Laws; and (B) as to other areas, use its best efforts
to have such violation removed or remedied in accordance with all
Environmental Laws; and
(vii) keep in full force and effect any insurance policies
comparable in amount and scope to coverage maintained by Brite (or on
behalf of it) related to the Business or the Acquired Assets on the date
hereof.
4.5 RESTRICTIVE COVENANTS.
(a) Non-Competition. After the Closing, without the prior written
consent of Buyer, Brite and Seller will not, directly or indirectly engage or
become interested in, as owner, employee, partner, through equity ownership,
investment of capital, lending of money or property, rendering of services, or
otherwise, either alone or in association with others, any business competitive
with the Business (including within the definition of the Business, without
limitation, any business of the type or types conducted by Brite through its
Telecom Services division at any time during the two (2) year period preceding
the Closing Date or under development by Brite in connection with the Business
on the Closing Date) in any county or any other political subdivision of any
state of the United States of America or of any other country in the world where
Brite conducted the Business at any time during the two (2) year period
preceding the Closing Date. This covenant not to compete shall extend for a
period of three (3) years from the Closing Date. The parties hereto agree that
the duration and area for which the covenant not to compete set forth in this
Section 4.4 is to be effective are reasonable.
(b) Confidentiality. Brite and Seller acknowledge their intent to
fully and effectively convey to Buyer all Proprietary Rights to be transferred
to Buyer pursuant hereto, including, without limitation, each Trade Secret.
Accordingly, notwithstanding the expiration of the covenant not to compete set
forth in this Section 4.4 Brite and Seller shall at all times keep
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confidential and shall not disclose to others any Proprietary Rights and shall
not use or permit to be used any Proprietary Rights for any purpose other than
performance of obligations to Buyer.
(c) Non-Diversion. For a period of three (3) years following the date
hereof Brite and Seller shall not, and shall not permit any of their Affiliates
to, divert or attempt to divert or take advantage of or attempt to take
advantage of any actual or potential business or opportunities related to the
Business.
(d) Non-Recruitment. For a period of three (3) years following the
date hereof, Brite and Seller will not, and shall not permit any of their
Affiliates to, hire away, or cause any other person to hire away, any of the
Business Personnel hired or retained by the Company after the Closing, or any
employee of Buyer or its Affiliates, or directly or indirectly entice or solicit
or seek to induce or influence any of such persons to leave their employment.
(e) Remedies. The covenants contained in Section 4.4 impose a
reasonable restraint on Brite and Seller in light of the activities and business
of Brite and Seller and future plans of Buyer. Brite and Seller acknowledge that
if Brite or Seller violates any of the covenants contained in this Section 4.4
(collectively, the "RESTRICTIVE COVENANTS"), it will be difficult to determine
the resulting damages to Buyer and, in addition to any other remedies Buyer may
have, (i) Buyer shall be entitled to temporary injunctive relief without being
required to post a bond and permanent injunctive relief without the necessity of
proving actual damages, and (ii) Buyer shall have the right to offset payment
obligations to Seller to the extent of any money damages incurred or suffered by
Buyer. The Prevailing Party (as defined in Section 7.15) shall be reimbursed by
the non-prevailing party for all costs including reasonable attorneys' fees and
expenses that may be incurred in enforcing or defending, to any extent, any of
the Restrictive Covenants, whether or not litigation is actually commenced and
including litigation of any appeal defended by Buyer where such party succeeds
in enforcing any of the Restrictive Covenants. Buyer may elect to seek one or
more remedies at its discretion on a case by case basis. Failure to seek any or
all remedies in one case shall not restrict Buyer from seeking any remedies in
another situation. Such action by Buyer shall not constitute a waiver of any of
its rights.
(f) Severability and Modification of any Unenforceable Covenant. Each
of the Restrictive Covenants will be read and interpreted with every reasonable
inference given to its enforceability. However, if any term, provision or
condition of the Restrictive Covenants is held by a court or arbitrator to be
invalid, void or unenforceable, the remainder of the provisions thereof shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated. If a court or arbitrator should determine any of the Restrictive
Covenants are unenforceable because of over-breadth, then the court or
arbitrator shall modify such covenant so as to make it enforceable to the
fullest extent the court or arbitrator deems reasonable and enforceable under
the prevailing circumstances. The covenant not to compete shall be deemed to be
a series of separate covenants, one for each and every county of each and every
state of the United States of America and each and every political subdivision
of each and every country outside the United States of America where the
Business was conducted before the Closing.
4.6 TAXES.
(a) Brite's Responsibilities for Taxes. Brite and Seller shall be liable
for, and shall defend, indemnify and hold harmless Buyer and its directors,
officers, employees, attorneys
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and agents from and against any and all Taxes of any kind or character that are
(i) imposed on Seller, Brite or its group (other than Company) for any taxable
year or (ii) imposed on Company, or for which Company may otherwise be liable,
for any taxable year or period that ends on or before the Closing Date and, with
respect to any taxable year or period beginning before and ending after the
Closing Date, the portions of such taxable year ending on and including the
Closing Date. Without limiting the generality of the foregoing, such
indemnification obligation of Brite and Seller shall include (i) any obligation
to contribute to the payment of a tax determined on a consolidated, combined or
unitary basis with respect to a group of corporations that includes or included
Company and Taxes resulting from Company ceasing to be affiliated with Brite
(or, if applicable, to be a member of Brite's consolidated, combined or unitary
group) or attributable to the election to be made under Section 338(h)(10) of
the Code, and (ii) any deferred income recharacterized as income by reason of
Treasury Regulations Section 1.1502-13 and Treasury Regulations Section
1.1502-14 and any excess loss accounts taken into income under Treasury
Regulations Section 1.1502-19 (and any similar state, local or foreign
provision). The indemnification obligation provided hereunder shall include
indemnification for costs and expenses, including reasonable attorney's fees and
expenses and other costs and expenses associated with defense of a claim or
incurred in obtaining indemnification hereunder, whether or not they are
incurred in a formal proceeding.
(b) Brite's Tax Return Filing Obligations. Brite shall file or cause to
be filed when due (i) all consolidated, combined or unitary Tax Returns that are
required to be filed by or with respect to Company for taxable years or periods
ending on or before the Closing Date and (ii) all other Tax Returns that are
required to be filed by or with respect to Company that are due on or prior to
the closing Date, and Brite shall pay any Taxes due in respect of (i) or (ii)
above. Brite will take no position (unless required by law) or make any election
on such Tax Returns that would adversely affect the Tax position of Company
after the Closing Date.
(c) Buyer's Responsibilities for Taxes. Buyer shall be liable for all
Taxes of Company for any taxable year or period that begins after November 30,
1998 and, with respect to any taxable year or period beginning before and ending
after November 30, 1998, the portion of such taxable year beginning after
November 30, 1998.
(d) Buyer's Tax Return Filing Obligations. Buyer shall file or cause to
be filed when due all Tax Returns that are required to be filed by or with
respect to Company, other than the consolidated, combined or unitary Tax Returns
referred to in Section 4.5(b) above, that are due after the Closing Date, and
Buyer shall pay any Taxes due in respect of the Tax Returns described above,
subject to reimbursement by Brite for Taxes Brite or Seller is liable for under
Section 4.5(a) above.
(e) Taxes for Short Taxable Year. Whenever it is necessary to determine
the liability under this Section 4.5 for Taxes of Company for a portion of a
taxable year or period that begins before and ends after November 30, 1998, the
determination of the Taxes of Company for the portion of the year or period
ending on, and the portion of the year or period beginning after November 30,
1998, shall be determined by assuming that Company had a taxable year or period
which ended at the close of November 30, 1998 and that Company closed its books
at that time.
(f) Review of Tax Returns and Other Filings. To the extent that one
party (the "nonfiling party") would be liable under this Section 4.5 for Taxes
payable with respect to,
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or would otherwise be subject to increased liability for Taxes as a result of,
Tax Returns or other filings filed by another party (the "other party"), the
other party shall allow the nonfiling party adequate opportunity to review and
comment on such Tax Returns or other filings and shall not file such Tax Returns
or other filings without the consent of the nonfiling party; provided, such
nonfiling party agrees that it is liable for such Taxes hereunder and, provided
further, that such consent shall not be unreasonably withheld.
(g) Contest Provisions. Buyer, Seller and Brite shall promptly notify
each other in writing upon receipt by any of them, or any of their affiliates,
or Company, of notice of any pending or threatened federal, state, local, or
foreign tax audits or assessments which may materially affect the tax
liabilities of Savings for which Brite or Seller would be required to indemnify
Buyer pursuant to this Agreement.
Brite shall have the sole right to represent Company's interests in any
tax audit or administrative or court proceeding relating to taxable periods
ending on or before the Closing Date, and to employ counsel of its choice, at
its expense. Notwithstanding the foregoing, Brite (i) shall consult with Buyer
with respect to the resolution of any issue that would affect Buyer or Company
in any way and to any extent, in the taxable periods subject to such proceeding
or any other taxable periods (including, but not limited to, any resolution that
would result in the imposition of income tax deficiencies, the reduction of
asset basis or cost adjustments, the lengthening of any amortization of
depreciation periods, the denial of amortization or depreciation deductions, or
the reductions of loss or credit carry forwards to Company or Buyer), and (ii)
shall not settle any such issue or file any amended return relating to such
issue, without the consent of Buyer, which consent shall not be unreasonably
withheld.
Brite and Seller shall be entitled to participate at Brite's expense in
the defense of any claim for Taxes for a period described in Section 4.5(e) for
the portion of the year or period ending on November 30, 1998 that is the
subject of indemnification by Brite hereunder. Neither Company nor Buyer may
agree to settle any such claim for Taxes for the portion of the year or period
ending on November 30, 1998 that is the subject of indemnification by Brite
hereunder without the prior written consent of Brite, which consent shall not be
unreasonably withheld. Brite shall not settle any such claim, or take any other
action with respect to such claim, without the consent of Buyer, which shall not
be unreasonably withheld.
(h) Termination of Tax Allocation Agreements. Any tax allocation or
sharing agreement or arrangement, whether or not written, that may have been
entered into by Seller, Brite or any member of Brite's group and Company shall
be terminated as to Company as of December 1, 1998, and no payments which are
owed by or to Company pursuant thereto shall be made thereunder.
(i) Section 338(h)(10). At the request of Buyer, Seller shall make a
joint election with Buyer under Section 338(h)(10) of the Code and under any
similar provisions of state or foreign law with respect to the purchase of
Company's Shares. Seller and Brite represent that Seller's sale of the Shares of
Company is eligible for such election. If the election is made, Seller and Buyer
shall on the Closing Date exchange completed and executed copies of Internal
Revenue Service Form 8023, required schedules thereto, and any similar state and
foreign forms. If Buyer determines that any changes are required in these forms
as a result of information which is first available after the Closing Date,
Seller will promptly cooperate with respect to such changes.
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If an election under Section 338(h)(10) of the Code is made, Brite and
Buyer will (i) cause their respective accountants to negotiate in good faith, on
their behalf, and agree to, or (ii) appoint an appraiser to determine, a
purchase price and an allocation of that price among the assets of Company that
are deemed to have been acquired pursuant to Section 338(h)(10) of the Code or
state or foreign law equivalent. Company and Brite shall use the asset values
determined from such allocation for purposes of all reports and returns with
respect to Taxes, including Internal Revenue Service Form 8594 or any equivalent
statement.
(j) Efforts to Obtain Certain Documents. Brite and Seller shall, upon
request, use their reasonable best efforts to obtain any certificate or other
document from any governmental authority or any other person as may be necessary
to mitigate, reduce or eliminate any tax that could be imposed on Company
(including, but not limited to, with respect to the transactions contemplated by
this Agreement).
(k) Cooperation after Closing. After the Closing Date, Brite, Seller and
Buyer shall:
(i) assist (and cause their respective affiliates to assist) the
other party in preparing any Tax Returns or reports which such other party is
responsible for preparing and filing in accordance with this Section 4.5;
(ii) cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Return of Company;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to Taxes
of Company;
(iv) provide timely notice to the other in writing of any pending or
threatened tax audits or assessments of Company for taxable periods for which
the other may have a liability under this Agreement;
(v) furnish the other with copies of all correspondence received
from any taxing authority in connection with any tax audit or information
request with respect to any such taxable period;
(vi) retain and (upon the other party's request) provide records and
information that are reasonably relevant to any audit, litigation or other
proceeding or to tax matters pertinent to Company relating to any taxable year
or period beginning before the Closing Date until the expiration of the statute
of limitations (and any extensions thereof) of the respective taxable periods
and give the other party reasonable written notice prior to transferring,
destroying or discarding any such records and information; provided, if Buyer so
requests, after receiving notice that such records are to be destroyed or
discarded, Brite shall allow Buyer to take possession of such books and records;
and, provided further, that Buyer shall not be required to give such notice to
Brite after the expiration of the statute of limitations (and any extensions
thereof known to Buyer) of the respective tax period to which such books and
records relate;
(vii) provide, upon request, all information that may be required
for reporting pursuant to Section 6043 of the Code and the regulations
thereunder; and
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(viii) abide by all record retention agreements entered into with
any taxing authority.
(l) Transfer Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including penalties and interest)
incurred in connection with the transactions contemplated by this Agreement
shall be paid by Brite when due, and Brite will, at its expense, file all
necessary Tax Returns or other forms for such Taxes and other documentation with
respect to all such matters. If required by applicable law, Buyer will join in
the execution of any such returns or documentation.
4.7 ACCESS TO RECORDS AND FILES. Brite shall have the right for a
period of three (3) years following the Closing Date to have reasonable access
to such books, records and accounts, correspondence, production records,
employment records and other similar information as are included in the Acquired
Assets pursuant to this Agreement for the limited purposes of concluding its
involvement in the Business prior to the Closing Date. Buyer shall have the
right for a period of three (3) years following the Closing Date to have
reasonable access to those books, records and accounts, correspondence, and
other records which are retained by Brite pursuant to the terms of this
Agreement to the extent that any of the foregoing relate to Business or the
Acquired Assets.
4.8 COOPERATION IN LITIGATION. Each party will fully cooperate with
the other in the defense or prosecution of any litigation or proceeding already
instituted or which may be instituted hereafter against or by such party
relating to or arising out of the conduct of the Business prior to or after
December 1, 1998(other than litigation between Buyer and/or its Affiliates or
assignees, on the one hand, and Brite and/or its Affiliates or assignees, on the
other hand, arising out of the transactions contemplated by this Agreement). The
party requesting such cooperation shall pay the out-of-pocket expenses
(including reasonable legal fees and disbursements) of the party providing such
cooperation and of its officers, directors, employees and agents reasonably
incurred in connection with providing such cooperation, but shall not be
responsible to reimburse the party providing such cooperation for such party's
time spent in such cooperation or the salaries or costs of fringe benefits or
other similar expenses paid by the party providing such cooperation to its
officers, directors, employees and agents while assisting in the defense or
prosecution of any such litigation or proceeding.
4.9 EMPLOYMENT.
(a) Other than as listed on Schedule 1.2, neither the Company nor
Buyer shall assume any liabilities or obligations of Brite or Seller to any
current or former employee or agent of Brite or Seller. Brite and Seller shall
be solely responsible for, and neither the Company nor Buyer shall have, any
liability or obligation to or in respect of any employee or agent or former
employee or former agent of Brite or Seller or their beneficiaries and
dependents, including, without limitation, any liability or obligation (i)
arising from such employee or agent's actual or constructive termination by
Brite or Seller, or any notice and/or payment in lieu of notice required by
applicable law in connection with such termination, (ii) in respect of any
compensation, tenure, seniority, benefit or welfare plan or arrangement of any
kind, (iii) to trusts or other funds or any Governmental Entity, with respect to
unemployment compensation benefits, social security benefits, fringe benefits or
any other benefits or obligations, or (iv) for salaries, vacation and holiday
pay, sick pay, bonuses and other forms of compensation, or
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(v) arising from the participation and/or accrual of benefits or compensation
under, or failure to participate in or to accrue compensation or benefits under,
any Employee Plans or other employee arrangement of Brite or Seller. Except as
otherwise provided in Section 4.8(b), neither the Company nor Buyer shall have
any obligation to any employee or agent of Brite or Seller to employ or engage
any such employee or agent.
(b) Schedule 4.9 sets forth a list of all Business Personnel to whom
Buyer intends, through the Company, to offer employment or engagements
comparable to those with Brite as of the date hereof. Buyer shall, through the
Company, offer employment or such similar engagements to all of the persons
listed on Schedule 4.9 at such salaries, wages or compensation rates and such
medical insurance and other benefits as Buyer may determine At any time after
the Closing Buyer may, but is in no way obligated to, offer employment or
similar engagements to Business Personnel not listed on Schedule 4.9. Effective
as of December 1, 1998, all employees of Brite employed by the Company shall
cease to participate in or accrue benefits under any Employee Plan or
arrangements maintained by Brite, except with respect to continued participation
in medical, life and disability coverages.
(c) If any of the Business Personnel elects to become employed or
engaged by the Company, the employment or relationship between such employee or
agent and Brite shall first terminate and such employee or agent shall then be
employed or engaged by the Company according to policies and procedures
determined by Buyer.
4.10 CHANGE OF NAME. Promptly after the Closing Date Brite and its
Affiliates will discontinue using the names "Telecom Services Limited", "TSL" or
any other names confusingly similar to "Telecom Services Limited", "TSL" or any
other name or names under which, at any time, the Business was conducted.
4.11 COLLECTION OF ACCOUNTS RECEIVABLE.
(a) Not later than December 16, 1998, Brite shall deliver to Buyer a
list of all Accounts Receivable outstanding on December 1, 1998, all of which
will be included in the Acquired Assets.
(b) Brite and Seller hereby authorize Buyer and the Company to open
any and all mail addressed to Brite (if delivered to Buyer or the Company) if
received on or after December 1, 1998 and hereby grants to Buyer and the Company
a power of attorney to endorse and cash any checks or instruments made payable
or endorsed to Brite or Seller or its order and received by Buyer or the
Company.
Brite and Seller shall forward promptly to Buyer any monies, checks or
instruments received by Brite or Seller after the Closing with respect to the
Accounts Receivable.
4.12 BEST EFFORTS. Upon the terms and subject to the conditions of
this Agreement, each of the parties hereto shall use its best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable consistent with applicable law to cause the
fulfillment of the conditions to Closing set forth herein and to consummate and
make effective in the most expeditious manner practicable the transactions
contemplated hereby.
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4.13 BULK SALES LAWS. Brite and Seller shall comply with the
provisions of any applicable bulk sales laws applicable to the transactions
contemplated hereby, and shall be responsible and liable for the costs of any
non-compliance, irrespective of which party is obligated under such laws.
4.14 CLOSING DATE NET WORTH. On December 1, 1998, the Company will
have a net worth, calculated in accordance with GAAP, of at least Three Million
Six Hundred Thousand Dollars ($3,600,000).
4.15 FURTHER ASSURANCES. Upon the reasonable request of a party or
parties hereto at any time after the Closing Date, the other party or parties
shall forthwith execute and deliver such further instruments of assignment,
transfer, conveyance, endorsement, direction or authorization and other
documents as the requesting party or parties or its or their counsel may
reasonably request in order to perfect title of Buyer and its successors and
assigns to the Shares and title of the Company and its successors and assigns to
the Acquired Assets and otherwise to effectuate the purposes of this Agreement.
4.16 NOTICE OF BREACH. At all times before the Closing, and thereafter
until the second anniversary of the Closing Date, each of the parties hereto
shall promptly give written notice with particularity of any breach or
inaccuracy of any representation, warranty, agreement or covenant of such party
contained herein or in any other Transaction Document to the parties to whom or
which such representation, warranty or covenant was made.
4.17 CONTRACTS AND LICENSES.
(a) Brite shall use its best efforts to obtain all necessary consents,
waivers, authorizations and approvals of all persons, firms or corporations
required in connection with the execution, delivery and performance by Brite and
the Company of this Agreement
(b) To the extent that the terms of any Contract or License require the
consent of any third party to avoid giving any third party the right to cancel
or terminate the Contract or License or impose extra charges or penalties in
connection with the transactions contemplated by this Agreement, the assignment
thereof to the Company will be deferred until such consent is received. With
respect to Contracts, pending receipt of such consents, Brite will, to the
extent legally permissible, subcontract performance to the Company, and the
Company will receive in respect of its subcontract performance all payments
earned under the Contract. If subcontracting is not permissible, then pending
assignment the parties will cooperate to determine a reasonable arrangement that
is designed to provide for Buyer the benefits intended to be assigned to the
Company (and indirectly to Buyer) under the relevant Contract or License,
including, without limitation, enforcement for the account of Buyer of any and
all rights of Brite against the other party to any Contract arising out of the
breach of cancellation of Contract by such other party. However, notwithstanding
this Section 4.17(b), Brite will not be required to conduct the Business after
the Closing, and Buyer will reimburse Brite for costs incurred by Brite pursuant
to this Section 4.17(b) and will indemnify Brite against liabilities incurred in
performance under this Section 4.17(b) pursuant to Section 5.3. The
reimbursement and indemnification described in the preceding sentence shall not
be subject to Section 5.7.
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4.18 SUPPLEMENTAL DISCLOSURE. At the Closing, Brite shall promptly
supplement or amend each of the schedules and the Disclosure Schedule with
respect to any matter hereafter arising which, if existing or occurring at or
prior to the date hereof, would have been required to be set forth or listed in
the schedule or the Disclosure Schedule or which is necessary to complete or
correct any information in the schedules or the Disclosure Schedule.
4.19 HSR. Buyer and Brite shall cooperate in preparing and delivering
to the Department of Justice and the Federal Trade Commission notification of
the transactions contemplated hereby pursuant to, and shall use their best
efforts to obtain early termination of the waiting period under, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT"). Buyer
shall pay all filing fees payable under the HSR Act in connection with the
transactions contemplated hereby . Each of Buyer and Brite shall pay its own
costs incurred in preparation of all reports and notifications required under
the HSR Act.
4.20 COMPETING PROPOSALS.
(a) Brite shall not, directly or indirectly, initiate, solicit,
encourage or participate in any discussions or negotiations with, or provide any
nonpublic information to, any person or entity concerning any potential offer
(other than as described herein) to acquire the Business or any assets thereof
or interests therein, or any other transaction or arrangement that would
interfere with the transactions contemplated hereby (a "COMPETING PROPOSAL");
(b) Brite shall promptly communicate to Buyer the existence or
occurrence and terms of any Competing Proposal or contact related thereto which
Brite or any of its employees, directors, or agents may receive in respect of
any such proposed transaction and the identity of the person, entity or group
from whom such proposal or contact was received; and
(c) Brite shall not transfer or hypothecate the Business or any
assets thereof or interests therein except to Buyer, or enter into any agreement
with any person other than Buyer in connection with any of the foregoing.
4.21 SERIES A PREFERRED STOCK. Buyer shall not amend the Articles of
Incorporation of the Company in any manner which will diminish the rights of the
Series A Preferred Stock delivered to Seller as a portion of the Purchase Price
pursuant to Schedule 1.4.
4.22 EMPLOYEE PLANS.
(a) Effective as of December 1, 1998 and contingent upon the Closing,
Transferred Employees shall cease to accrue benefits under the Brite Voice
Systems, Inc. 401(k) Plan ("Seller's 401(k) Plan"). Seller shall (1) cause the
account of each Transferred Employee who has an accrued benefit in Seller's
401(k) Plan as of the Closing to become 100% vested and (2) cause the account of
each Transferred Employee in Seller's 401(k) Plan to include an allocable share
of such contributions as would have been made between the last date of
contribution and December 1, 1998 in the same manner as if the transaction
contemplated by this Agreement had not occurred. As soon as practicable
following December 1, 1998, Seller shall segregate, in accordance with the
spin-off provisions of Code Section 414(l), the accounts of the Transferred
Employees under Seller's 401(k) Plan and shall transfer such account balances to
the trustee of a 401(k) Plan maintained by Buyer for such Transferred Employees
in a manner
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consistent with Code Section 414(l). All such transfers from Seller's 401(k)
Plan shall be in the form of cash or cash equivalents. For purposes of this
Section 4.22, the term Transferred Employee shall mean each employee of Seller
who as of the Closing becomes an employee of Buyer, in each case whether or not
actively employed on such date.
(b) Seller shall treat the transaction contemplated by this Agreement
as a termination of employment with respect to the Transferred Employees for
Seller's health plans, and shall be responsible to provide health care
continuation coverage under Seller's health plans pursuant to the provisions of
the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), effective
as of Closing. Buyer shall not assume, and Seller agrees to be solely
responsible for, all liabilities with respect to COBRA coverage for Transferred
Employees for qualifying events arising on or prior to December 1, 1998.
4.23 REAL PROPERTY LEASES.
In the event that prior to the Closing Brite and Seller have failed to
obtain Consents to the transfer of the Real Property Leases from Brite to the
Company:
(a) Brite, Seller, the Company and Buyer shall continue to use their
best efforts to obtain such Consents after the Closing Date.
(b) Prior to the execution of the consent necessary to transfer a
Real Property Lease, Brite shall remain liable to the landlord and his
successors and assigns upon such Real Property Lease; provided, however that
Brite's liability is subject to Buyer's obligation to indemnify Brite, without
regard to the Threshold described in Section 5.7, for any amounts that Brite may
be required to pay under such Real Property Lease which the Company, had the
lease been assigned, should have paid after December 1, 1998 under such Real
Property Lease.
(c) With respect to any Real Property Lease which is terminated by
the lessor because of the change in tenancy from Brite to the Company, Brite
shall reimburse Buyer and the Company (and shall indemnify Buyer and the Company
without regard to the Threshold described in Section 5.7), for (i) any increased
rent payment incurred by Buyer or the Company to another landlord for comparable
replacement space for a term corresponding to the original Real Property Lease
term and for (ii) any and all costs incurred by Buyer and the Company associated
with relocating from the original space to the replacement space.
5. SURVIVAL; INDEMNIFICATION.
5.1 SURVIVAL. The representations and warranties made in this
Agreement or in any exhibit, schedule, or any Transaction Document or
certificate shall survive any investigation made by any party hereto and the
Closing of the transactions contemplated hereby until the second anniversary of
the Closing Date, except those representations and warranties contained in (i)
Section 2.12 (Compliance with Law), 2.20 (Taxes), and 2.21 (Brokers), which will
survive until the expiration (including extensions) of the applicable statute of
limitations; (ii) Section 2.19 (Environmental Matters), which will survive until
the seventh anniversary of the Closing Date; and (iii) Sections 2.3 (Acquired
Assets) and 2.22 (The Company) and 2.23 (The Seller), which will survive
indefinitely. As to any matter which is based upon willful fraud by the
indemnifying party, the representations and warranties set forth in this
Agreement shall
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expire only upon expiration of the applicable statute of limitations. No party
will be liable to another under any warranty or representation after the
applicable expiration of such warranty or representation; provided however, if a
claim or notice is given under this Section 5 with respect to any representation
or warranty prior to the applicable expiration date, such claim may be pursued
to resolution notwithstanding expiration of the representation or warranty under
which the claim was brought. Any investigations made by or on behalf of any of
the parties prior to the date hereof shall not affect any of the parties'
obligations hereunder. Completion of the transactions contemplated hereby shall
not be deemed or construed to be a waiver of any right or remedy of any of the
parties.
5.2 INDEMNIFICATION BY BRITE. Subject to the limits set forth in this
Section 5, Brite, Seller and their successors and assigns shall jointly and
severally indemnify, defend and hold harmless Buyer and, if the transactions
contemplated hereby are consummated, the Company, and their respective
Affiliates, and the officers, directors, employees and agents of any of them,
from and against any and all claims, losses, damages, liabilities obligations,
assessments, penalties and interest, demands, actions and expenses (including,
without limitation, settlement costs and any legal, accounting and other
expenses for investigating or defending any actions or threatened actions)
("LOSSES") reasonably incurred by any such indemnitee, arising out of or in
connection with any of the following:
(a) the operations of Brite or Seller and the ownership or operation
of the Excluded Assets including, without limitation, the operation or
maintenance of the Employee Plans at any time before or after the Closing;
(b) the ownership or operation of the Acquired Assets or Business before
December 1, 1998;
(c) any obligations of the Company accrued or arising from actions
taken by Brite, Seller or the Company before December 1, 1998 other than the
Assumed Liabilities;
(d) any untruth or inaccuracy of any representation or warranty made by
Brite, Seller or the Company in this Agreement or any Transaction Document;
(e) the breach of any covenant, agreement or obligation of Brite, Seller
or the Company contained in this Agreement or any Transaction Document;
(f) any claims against, or liabilities or obligations of, Brite or
Seller not specifically assumed by Buyer pursuant to this Agreement;
(g) employment or retention by Brite or its Affiliates of any persons
and termination of such employment or retention; and
(h) any tax liability arising or resulting from the structure of the
transactions contemplated by this Agreement.
5.3 INDEMNIFICATION BY BUYER. Subject to the limits set forth in this
Section 5, Buyer and, if the transactions contemplated hereby are consummated,
the Company, shall indemnify, defend and hold harmless Brite and its Affiliates
and the officers, directors, employees and
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agents of any of them from and against any and all Losses reasonably incurred by
any such indemnitee arising out of or in connection with any of the following:
(a) the ownership and operation of the Acquired Assets and the Business
after December 1, 1998;
(b) any untruth or inaccuracy of any representation or warranty made by
Buyer in this Agreement or any other Transaction Document;
(c) the breach of any covenant, agreement or obligation of Buyer
contained in this Agreement or any Transaction Document;
(d) any claims against, or liabilities or obligations of, Brite
specifically assumed by the Company pursuant to this Agreement;
(e) employment or retention by Buyer or its Affiliates of any persons
and termination of such employment or retention and;
(f) any obligations of the Company accrued or arising from actions taken
by Buyer or the Company after the Closing.
5.4 INDEMNIFICATION PROCEDURE.
(a) Whenever any claim shall arise for indemnification hereunder (a
"CLAIM"), the party entitled to indemnification (the "INDEMNITEE") shall
promptly give written notice to the party obligated to provide indemnity (the
"INDEMNITOR") with respect to the Claim after the receipt by the Indemnitee of
reliable information of the facts constituting the basis for the Claim; but the
failure to timely give such notice shall not relieve the Indemnitor from any
obligation under this Agreement, except to the extent, if any, that the
Indemnitor is materially prejudiced thereby.
(b) Upon receipt of written notice from the Indemnitee of a Claim,
the Indemnitor shall provide counsel (such counsel subject to the reasonable
approval of the Indemnitee) to defend the Indemnitee against the matter from
which the Claim arose, at the Indemnitor's sole cost, risk and expense. The
Indemnitee shall cooperate in all reasonable respects, at the Indemnitor's sole
cost, risk and expense, with the Indemnitor in the investigation, trial, defense
and any appeal arising from the matter from which the Claim arose; provided,
however, that the Indemnitee may (but shall not be obligated to) participate in
any such investigation, trial, defense and any appeal arising in connection with
the Claim. If the Indemnitee's participation in any such investigation, trial,
defense and any appeal arising from such Claim relates to a legal position or
defense that varies materially from the legal positions or defenses pursued by
the Indemnitor, and if the Indemnitee reasonably believes that the Indemnitee's
interests will be adversely and materially affected if such legal position or
defense is not pursued, the Indemnitor shall bear the expense of the
Indemnitee's separate participation, including all fees, costs and expenses of
one separate counsel for the Indemnitee (or multiple Indemnitees). If the
Indemnitee elects to so participate, the Indemnitor shall cooperate with the
Indemnitee, and the Indemnitor shall deliver to the Indemnitee or its counsel
copies of all pleadings and other information within the Indemnitor's knowledge
or possession reasonably requested by the Indemnitee or its counsel
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that is relevant to the defense of such Claim and that will not prejudice the
Indemnitor's position, claims or defenses. The Indemnitee and its counsel shall
maintain confidentiality with respect to all such information consistent with
the conduct of a defense hereunder. The Indemnitor shall have the right to elect
to settle any claim for monetary damages only without the Indemnitee's consent,
if the settlement includes a complete release of the Indemnitee. If the
settlement does not include such a release, it will be subject to the consent of
the Indemnitee, which will not be unreasonably withheld. The Indemnitor may not
admit any liability of the Indemnitee or waive any of the Indemnitee's rights
without the Indemnitee's prior written consent, which will not be unreasonably
withheld. If the subject of any Claim results in a judgment or settlement, the
Indemnitor shall promptly pay such judgment or settlement.
(c) If the Indemnitor fails to assume the defense of the subject of
any Claim in accordance with the terms of Section 5.4(b), or if the Indemnitor
fails diligently to prosecute such defense, the Indemnitee may defend against
the subject of the Claim, at the Indemnitor's sole cost, risk and expense, in
such manner and on such terms as the Indemnitee deems appropriate, including,
without limitation, settling the subject of the Claim after giving reasonable
notice to the Indemnitor. If the Indemnitee defends the subject of a Claim in
accordance with this Section, the Indemnitor shall cooperate with the Indemnitee
and its counsel, at the Indemnitor's sole cost, risk and expense, in all
reasonable respects, and shall deliver to the Indemnitee or its counsel copies
of all pleadings and other information within the Indemnitor's knowledge or
possession reasonably requested by the Indemnitee or its counsel that are
relevant to the defense of the subject of any such Claim and that will not
prejudice the Indemnitor's position, claims or defenses. Indemnitee shall
maintain confidentiality with respect to all such information consistent with
the conduct of a defense hereunder.
(d) The obligation of the Indemnitor to indemnify the Indemnitee
against Losses arising under this Agreement shall be in addition to any other
obligations the Indemnitor might otherwise have and any other rights the
Indemnitee might otherwise have.
5.5 PAYMENT. All payments owing under this Section 5 will be made
promptly as indemnifiable Losses are incurred. If the Indemnitee defends the
subject matter of any Claim in accordance with Section 5.4(c) or proceeds with
separate counsel in accordance with Section 5.4(b), the expenses (including
attorneys' fees) incurred by the Indemnitee shall be paid by the Indemnitor in
advance of the final disposition of such matter as incurred by the Indemnitee,
if the Indemnitee undertakes in writing to repay any such advances in the event
that it is ultimately determined that the Indemnitee is not entitled to
indemnification under the terms of this Agreement or applicable law.
5.6 SET-OFF. In addition to any rights of set off or other rights
that any of the Indemnitees may have at common law, by statute or otherwise,
each Indemnitee, notwithstanding Section 5.7, shall have the right to set off
any amount that is owed by such Indemnitee to an Indemnitor against any amount
otherwise payable by the Indemnitor to the Indemnitee.
5.7 LIMITATIONS. Notwithstanding any provision of this Agreement to
the contrary, except as otherwise contemplated in Section 5.6 and Section
4.17(b), no party shall have any obligation to indemnify any person entitled to
indemnity under this Section 5 or to pay damages
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in respect of contract claims arising under this Agreement or any other
Transaction Document unless the persons so entitled to indemnity or recovery
thereunder have suffered Losses in an aggregate amount attributable to all
claims and obligors in excess of Two Hundred Thousand Dollars ($200,000) (the
"THRESHOLD"). Once the aggregate amount of Losses exceeds the Threshold, persons
entitled to recovery shall be entitled to recover the full amount of all Losses,
including any amounts which constituted the Threshold. No person shall be
entitled to indemnification under this Section 5 for Losses directly or
indirectly caused by a breach by such person of any representation, warranty,
covenant or other agreement set forth in this Agreement or any duty to the
potential Indemnitor.
6. CONDITIONS TO CLOSING.
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The obligations of
Brite, Seller and the Company, on the one hand, and Buyer, on the other hand, to
consummate the transactions contemplated hereby shall be subject to the
fulfillment, before the Closing Date, of the conditions set forth in this
Section 6.1, any one or more of which may be waived in writing by the party
entitled to the benefit of such condition; provided, however, that such waiver
will not diminish such party's right to indemnification pursuant to Section 5,
unless so stated, and provided further that Brite, Seller and the Company will
be required to perform their obligations hereunder, notwithstanding lack of
fulfillment of the conditions set forth in this Section 6.1, if Buyer agrees in
writing to be liable for, and to indemnify Brite and Seller from and against,
any obligations that Brite and Seller would incur as a result of consummating
the transactions contemplated hereby notwithstanding the fact that the
conditions in this Section 6.1 have not been fulfilled.
(a) No Action or Proceeding. No preliminary or permanent injunction
or other order issued by any Governmental Entity that declares this Agreement
invalid in any material respect or prevents or would be violated by the
consummation of the transactions contemplated hereby, or which materially
adversely affects the assets, properties, operations, prospects, net income or
financial condition of Brite or Seller is in effect; and no action or
proceeding, has been instituted or threatened by any Governmental Entity, other
person, or entity which seeks to prevent or delay the consummation of the
transactions contemplated by this Agreement or which challenges the validity or
enforceability of this Agreement the result of which could constitute a Material
Adverse Change.
(b) Compliance with Law. There shall have been obtained all permits,
approvals, and consents of all Governmental Entities that counsel for Buyer or
for Brite and Seller may reasonably deem necessary or appropriate so that
consummation of the transactions contemplated by this Agreement will be in
compliance with applicable laws, including, without limitation, expiration or
termination of the waiting period prescribed by the HSR Act.
6.2 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate the transactions contemplated hereby are subject to the fulfillment,
at or before the Closing Date, of the conditions set forth in this Section 6.2,
any one or more of which may be waived by Buyer in its discretion; provided
however, such waiver will not waive or diminish Buyer's right to indemnification
pursuant to Section 5, unless so stated:
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(a) Representations and Warranties True. The representations and
warranties of Brite, Seller and the Company contained in this Agreement or in
any Transaction Document delivered pursuant hereto shall be true and correct in
all material respects as of the date hereof and on the Closing Date, and at the
Closing Brite, Seller and the Company shall each have delivered to Buyer a
certificate dated the Closing Date to such effect signed by the President or any
Vice President and the Secretary or any Assistant Secretary of Brite, Seller and
the Company.
(b) Performance of Brite and Seller. Brite, Seller and the Company
have performed in all material respects all obligations required to be performed
by them under this Agreement on or before the Closing Date, and at the Closing
Brite shall have delivered to Buyer a certificate to such effect dated the
Closing Date and signed by the President or any Vice President and the Secretary
or any Assistant Secretary of Brite.
(c) Consents to Assignments of Certain Contracts. All necessary
consents to the assignment of all Contracts requiring consents as a condition to
their assignment to and assumption by the Company as described herein shall have
been obtained in written instruments reasonably satisfactory to Buyer.
(d) Additional Closing Documents of Brite. Buyer has received, or is
receiving at the Closing, all of the following, each duly executed by the
parties thereto (other than Buyer) and dated the Closing Date (or an earlier
date satisfactory to Buyer), in form and substance satisfactory to Buyer:
(i) Copies, certified by the Secretary or an Assistant
Secretary of Brite and Seller of resolutions of the Board of Directors
of Brite and Seller authorizing the execution, delivery and performance
of this Agreement and the Transaction Documents and the consummation of
the transactions contemplated hereby;
(ii) Leasehold deeds of trust or similar forms of
conveyance in proper statutory form for recording duly executed and
acknowledged by Brite and Seller covering the Real Property Leases to be
conveyed to the Company pursuant to this Agreement;
(iii) Such further instruments of sale, transfer,
conveyance, assignment or delivery covering the Acquired Assets, or any
part thereof, as Buyer may reasonably require to assure the full and
effective sale, transfer, conveyance, assignment or delivery to the
Company of the Acquired Assets to be transferred pursuant to this
Agreement; and
(iv) Such other documents as Buyer may reasonably request.
(e) Consents and Approvals. All consents, waivers, authorizations and
approvals of any Governmental Entity, and of any other person or entity,
required under the Contracts, Licenses or otherwise in connection with the
execution, delivery and performance of this Agreement, the absence of which
could result in material liability or a Material Adverse Change or the
cancellation or adverse change in terms of, or payments under, any Contract,
have been duly obtained in form reasonably satisfactory to Buyer and are in full
force and effect on the Closing Date.
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(f) No Adverse Changes. Between the date of this Agreement and the
Closing Date there shall not have occurred any Material Adverse Change or any
event or circumstance that may result in a Material Adverse Change.
(g) Due Diligence. Buyer is satisfied with the results of its due
diligence review of the Acquired Assets, the business, operations, financial
condition and prospects of the Business.
(h) Financing. Buyer shall have available, on commercially reasonable
terms reasonably satisfactory to Buyer, debt financing sufficient to finance the
Cash Payment (as defined in Schedule 1.4), and to provide Buyer with adequate
working capital following the Closing.
(i) Bulk Sales. Brite and Seller shall have complied, on their behalf
and on behalf of Buyer, with all bulk sales laws applicable to the transactions
contemplated hereby, including requirements imposed upon Buyer under applicable
law.
(j) Audit. A review of the books, records and results of operations
of the Business as of September 30, 1998 has been completed and Buyer is
satisfied that the results thereof are substantially consistent with the
unaudited financial statements of the Business through the same period and other
information provided to Buyer by Brite and do not reflect any Material Adverse
Change since December 31, 1997.
(k) Employee Matters. Buyer is reasonably assured that the employees
and independent contractors identified on Schedule 4.9 are of a quantity and
having the skills sufficient for the operation of the Business, and are
continuing their employment or affiliation with the Company after the Closing on
terms acceptable to Buyer, Buyer has received an Employee General Release
Agreement in the form of Exhibit D hereto executed by each such employee or
independent contractor, and the persons listed on Schedule 6.2 shall have
entered into employment contracts substantially in the form attached hereto as
Exhibit E.
(l) Opinion of Counsel. Buyer has received a favorable opinion, dated
as of the Closing Date, from counsel to Brite and Seller in substantially the
form of Exhibit F. In giving such opinion, such counsel may rely upon
certificates of public officials, upon opinions of local counsel and, as to
matters of fact, upon a certificate of Brite, or its officers, and such counsel
may assume that this Agreement has been duly authorized, executed and delivered
by Buyer.
(m) Legal Matters. All Transaction Documents required to be executed
or delivered by or on behalf of Brite, Seller and the Company under this
Agreement, and all other actions and proceedings required to be taken by or on
behalf of either of them in furtherance of the transactions contemplated hereby,
are in form and substance reasonably satisfactory to counsel for Buyer.
(n) Stockholder Agreement. Buyer has received an executed Stockholder
Agreement substantially in the form of Exhibit H.
(o) Certificates. Seller shall have delivered to Buyer the
certificates representing the Shares and the stock certificates or stock powers
as described in Section 1.4.
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(p) Stock Books. The Company shall have delivered the stock books,
stock ledgers, minute books and corporate seals of the Company.
(q) Other Closing Documents. Buyer has received such other duly
executed certificates, instruments and documents in confirmation of the
representations and warranties of Brite, Seller and the Company or in
furtherance of the transactions contemplated by this Agreement as Buyer or its
counsel may reasonably request.
6.3 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Brite and
Seller to consummate the transactions contemplated hereby are subject to the
fulfillment, at or before the Closing Date, of the conditions set forth in this
Section 6.3 any one or more of which may be waived by Brite and Seller and the
Company in writing in its discretion; provided however, such waiver will not
waive or diminish the right of Seller to indemnification pursuant to Section 5,
unless so stated:
(a) Representations and Warranties True. The representations and
warranties of Buyer contained in this Agreement or in any Transaction Document
shall be true and correct in all material respects on the date hereof, and at
the Closing Buyer shall have delivered to Brite a certificate to such effect
dated the Closing Date, signed by the President or any Vice President and the
Secretary or any Assistant Secretary of Buyer.
(b) Performance of Covenants. Each of the obligations of Buyer to be
performed on or before the Closing Date pursuant to the terms of this Agreement
shall have been duly performed on or before the Closing Date, and at the Closing
Buyer shall have delivered to Brite a certificate to such effect dated the
Closing Date signed by the President or any Vice President and the Secretary or
any Assistant Secretary of Buyer.
(c) Authority. All actions required to be taken by, or on the part
of, Buyer to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby shall have been
duly and validly taken by the Board of Directors of Buyer.
(d) Additional Closing Documents of Buyer. Buyer has executed and
delivered, or is executing and delivering at the Closing the following
documents, each dated the Closing Date:
(i) Copies, certified by the Secretary or an Assistant
Secretary of Buyer, of resolutions of its Board of Directors authorizing
the execution and delivery of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated hereby;
and
(ii) Such other closing documents as Brite may reasonably
request.
(e) Consents and Approvals. All consents, waivers, authorizations and
approvals of any Governmental Entity, and of any other person or entity,
required in connection with the execution, delivery and performance of this
Agreement, the absence of which could result in material liability to Brite,
have been duly obtained and are in full force and effect on the Closing Date;
provided however, that Brite, Seller and the Company will be required to perform
their obligations hereunder, notwithstanding lack of fulfillment of the
conditions set forth in this
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Section 6.3(e), if Buyer agrees in writing to be liable for, and to indemnify
Brite and Seller from and against, any obligations that Brite or Seller would
incur as a result of consummating the transactions contemplated hereby
notwithstanding the fact that the conditions in this Section 6.3(e) have not
been fulfilled.
(f) Opinion of Counsel. Brite has received a favorable opinion, dated
as of the Closing Date, from counsel to Buyer, in substantially the form of
Exhibit G. In giving such opinion, such counsel may rely upon certificates of
public officials, upon opinions of local counsel and, as to matters of fact,
upon a certificate of Buyer, and such counsel may assume that this Agreement has
been duly authorized, executed and delivered by Brite.
(g) Purchase Price. Seller has received:
(i) the Cash Payment (as defined in Schedule 1.4);
(ii) the Warrants (as defined in Schedule 1.4); and
(iii) certificates representing the Preferred Stock (as
defined in Schedule 1.4).
(h) Legal Matters. All Transaction Documents required to be executed
or delivered by or on behalf of Buyer under this Agreement, and all other
actions and proceedings required to be taken by or on behalf of Buyer in
furtherance of the transactions contemplated hereby, are in form and substance
reasonably satisfactory to counsel for Brite .
(i) Other Closing Documents. Brite has received such other duly
executed certificates, instruments and documents in confirmation of the
representations and warranties of Buyer or in furtherance of the transactions
contemplated by this Agreement as Brite may reasonably request.
7. MISCELLANEOUS.
7.1 TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated (a) by Buyer, if (i) Brite, Seller or the Company fails
to comply in any material respect with any of its or their covenants or
agreements contained herein, or (ii) any of the representations and warranties
of Brite, Seller or the Company are breached or is inaccurate in any material
way; or (b) by Brite, or Buyer if (i) a Governmental Entity has issued a
non-appealable order, decree or ruling or taken any other action (which order,
decree or ruling the parties hereto have used their best efforts to lift), which
permanently restrains, enjoins or otherwise prohibits the transactions
contemplated by this Agreement; or (ii) a condition to its performance hereunder
has not been satisfied or waived prior to November 30, 1998. Notwithstanding the
foregoing, a party may not terminate this Agreement if the event giving rise to
the termination right results from the willful failure of such party to perform
or observe any of the covenants or agreements set forth herein to be performed
or observed by such party or if such party is, at such time, in material breach
of this Agreement.
In the event of termination of this Agreement pursuant to this Section
7.1, written notice shall be given forthwith by the terminating party to the
other parties and this Agreement will
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terminate and the transactions contemplated hereby will be abandoned, without
further action by any party. If this Agreement is terminated as provided herein,
no party to this Agreement will have any liability or further obligation to any
other party to this Agreement except as provided in Sections 2.21 (Brokers), 4.2
(Confidentiality), 5 (Survival; Indemnification), 7.12 (Expenses), 7.13
(Arbitration), 7.14 (Submission to Jurisdiction) and 7.15 (Attorneys' Fees), and
except that termination of this Agreement will not affect any liability of any
party for any breach of this Agreement prior to termination, or any breach at
any time of the provisions hereof surviving termination.
7.2 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed given upon personal delivery
or three (3) days after being mailed by certified or registered mail, postage
prepaid, return receipt requested, or one (1) business day after being sent via
a nationally recognized overnight courier service if overnight courier service
is requested from such service or upon receipt of electronic or other
confirmation of transmission if sent via facsimile to the parties, their
successors in interest or their assignees at the following addresses and
telephone numbers, or at such other addresses or telephone numbers as the
parties may designate by written notice in accordance with this Section 7.2:
If to Buyer: President
ProfitSource Corporation
695 Town Center Drive, Suite 400
Costa Mesa, California 92626
Tel: (949) 429-5500
Fax: (949) 429-5599
With a copy to: Brian W. Copple
Gibson, Dunn & Crutcher LLP
4 Park Plaza, Jamboree Center
Irvine, California 92614
Tel: (949) 451-3874
Fax: (949) 451-4220
If to Brite or Seller:
Brite Voice Systems, Inc.
250 International Parkway, Suite 300
Heathrow, Florida 32746
Attn: Glenn Etherington, CFO
Tel: (407) 357-1002
Fax: (407) 357-1400
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With a copy to: Thomas P. Garretson
Triplett, Woolf & Garretson, LLC
2959 North Rock Road, Suite 300
Wichita, Kansas 67226
Tel: (316) 630-8100
Fax: (316) 630-8101
7.3 ASSIGNABILITY AND PARTIES IN INTEREST. This Agreement and any of
the rights, interests or obligations hereunder may not be assigned by any of the
parties hereto, except that Buyer may assign its rights and obligations under
this Agreement in whole or in part to any Affiliate or Affiliates of Buyer or
any successor to all or substantially all of the Business or assets of Buyer and
Brite may assign its rights and obligations under this Agreement in whole or in
part to any Affiliate or Affiliates of Brite or any successor to all or
substantially all of the Business or assets of Brite with the written consent of
Buyer, which consent may not be unreasonably withheld. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective permitted successors and assigns. Nothing in this Agreement will
confer upon any person or entity not a party to this Agreement, or the legal
representatives of such person or entity, any rights or remedies of any nature
or kind whatsoever under or by reason of this Agreement.
7.4 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, without
regard to its choice-of-law principles.
7.5 COUNTERPARTS. Facsimile transmission of any signed original
document and/or retransmission of any signed facsimile transmission will be
deemed the same as delivery of an original. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute but one and the same instrument.
7.6 PUBLICITY. Prior to the Closing Date, no party may, nor may it
permit its Affiliates to, issue or cause the publication of any press release or
other announcement with respect to this Agreement or the transactions
contemplated hereby without the consent of the other parties. Notwithstanding
the foregoing, in the event any such press release or announcement is required
by law to be made by the party proposing to issue the same, such party shall
consult in good faith with the other party prior to the issuance of any such
press release or announcement. Buyer acknowledges that upon the execution of
this Agreement Brite is required by law to announce its existence.
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7.7 COMPLETE AGREEMENT. This Agreement, the exhibits and schedules
hereto, and the Transaction Documents contain or will contain the entire
agreement between the parties hereto with respect to the transactions
contemplated herein and shall supersede all previous oral and written and all
contemporaneous oral negotiations, commitments, and understandings.
7.8 MODIFICATIONS, AMENDMENTS AND WAIVERS. At any time prior to the
Closing Date or termination of this Agreement, any party may, (a) waive any
inaccuracies in the representations and warranties of any other party contained
in this Agreement or in any Transaction Document; and (b) waive compliance by
any other party with any of the covenants or agreements contained in this
Agreement. No waiver of any of the provisions of this Agreement will be
considered, or will constitute, a waiver of any of the rights of remedies, at
law or equity, of the party entitled to the benefit of such provisions unless
made in writing by the party entitled to the benefit of such provision.
7.9 HEADINGS; REFERENCES. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References herein to Sections, Schedules and
Exhibits refer to the referenced Sections, Schedules or Exhibits hereof unless
otherwise specified.
7.10 SEVERABILITY. Any provision of this Agreement which is invalid,
illegal, or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality, or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal, or unenforceable in any other jurisdiction.
7.11 DUE DILIGENCE INVESTIGATION. All representations and warranties
contained herein which are made to the knowledge of a party shall require that
such party make reasonable investigation and inquiry with respect thereto to
ascertain the correctness and validity thereof.
7.12 EXPENSES OF TRANSACTIONS. All fees, costs and expenses incurred
by Buyer in connection with the transactions contemplated by this Agreement
shall be borne by Buyer, and all fees, costs, and expenses incurred by Brite,
Seller and the Company in connection with the transactions contemplated by this
Agreement shall be borne by Brite.
7.13 ARBITRATION.
(a) Any controversy or claim arising out of or relating to this
Agreement shall be solely and finally settled by arbitration administered by the
American Arbitration Association (the "AAA") in accordance with its Commercial
Arbitration Rules as then in effect (the "RULES"), except to the extent such
rules or procedures vary from the following provisions. The arbitration shall be
conducted by one independent and impartial arbitrator, appointed by the AAA;
provided however, if the claim and any counterclaim, in the aggregate, exceed
Two Hundred Thousand Dollars ($200,000) (the "THRESHOLD"), exclusive of interest
and attorneys' fees, the dispute shall be heard and determined by three (3)
arbitrators as provided herein (such arbitrator or arbitrators are hereinafter
referred to as the "ARBITRATOR"). The judgment of the award rendered by the
Arbitrator may be entered in any court having jurisdiction thereof. The
arbitration proceedings shall be held in New York, New York unless the parties
otherwise agree to another location.
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(b) If a party hereto determines to submit a dispute for arbitration
pursuant to this Section 7.13, such party shall furnish the other party with
whom it has the dispute with a notice of arbitration as provided in the Rules
(an "ARBITRATION NOTICE") which, in addition to the items required by the Rules,
shall include a statement of the nature, with reasonable detail, of the dispute.
If a party has a counterclaim against the other party, such party shall furnish
the party with whom it has the dispute a notice of such claim as provided in the
Rules (a "NOTICE OF COUNTERCLAIM") within ten (10) days of receipt of the
Arbitration Notice, which, in addition to the items required by the Rules, shall
include a statement of the nature, with reasonable detail, of the dispute. A
copy of the Arbitration Notice shall be concurrently provided to the AAA, along
with a copy of this Agreement, and if pursuant to Section 7.11(a) one (1)
Arbitrator is to be appointed, a request to appoint the Arbitrator. A copy of
the Notice of Counterclaim shall be concurrently provided to the AAA. If the
claim set forth in the Notice of Counterclaim causes the aggregate amount in
dispute to exceed the Threshold, the Notice of Counterclaim shall so state. If
pursuant to Section 7.11(a) three (3) Arbitrators are to be appointed, within
fifteen (15) days after receipt of the Arbitration Notice, each party shall
select one person to act as Arbitrator and the two selected shall select a third
arbitrator within ten (10) days of their appointment. If the Arbitrators
selected by the parties are unable or fail to agree upon the third arbitrator
within such time, the third arbitrator shall be selected by the AAA. Each
Arbitrator shall be a practicing attorney or a retired or former judge with at
least twenty (20) years experience with and knowledge of securities laws,
complex business transactions, and mergers and acquisitions.
(c) Once an Arbitrator is assigned to hear the matter, the Arbitrator
shall schedule a pre-hearing conference to reach agreement on procedural and
scheduling matters, arrange for the exchange of information, obtain stipulations
and attempt to narrow the issues.
(d) At the pre-hearing conference, the Arbitrator shall have the
discretion to order, to the extent the Arbitrator deems relevant and
appropriate, that each party may (i) serve a maximum of no more than twenty (20)
requests for the production of documents and one set of ten (10) interrogatories
(without subparts) upon the other parties; and (ii) depose a maximum of three
(3) witnesses. All objections are reserved for the arbitration hearing except
for objections based on privilege and proprietary or confidential information.
The response to the document demand, the documents to be produced, and the
responses to the interrogatories shall be exchanged thirty (30) days later. Each
deposition must be concluded within four (4) hours and all depositions must be
taken within thirty (30) days of the pre-hearing conference. Any party deposing
an opponent's expert must pay the expert's fee for attending the deposition. All
discovery disputes shall be decided by the Arbitrator.
(e) The parties must file briefs with the Arbitrator at least three
(3) days before the arbitration hearing, specifying the facts each intends to
prove and analyzing the applicable law. The parties have the right to
representation by legal counsel throughout the arbitration proceedings. The
presentation of evidence at the arbitration hearing shall be governed by the
Federal Rules of Evidence. Oral evidence given at the arbitration hearing shall
be given under oath. Any party desiring a stenographic record may secure a court
reporter to attend the arbitration proceedings. The party requesting the court
reporter must notify the other parties and the Arbitrator of the arrangement in
advance of the hearing, and must pay for the cost incurred.
(f) Each party may be joined as an additional party to an arbitration
involving other parties. If more than one arbitration is begun and any party
contends that two or more
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arbitrations are substantially related and that the issues should be heard in
one proceeding, the Arbitrator selected in the first-filed of such proceedings
shall determine whether, in the interests of justice and efficiency, the
proceedings should be consolidated before that Arbitrator.
(g) The Arbitrator's award shall be in writing, signed by the
Arbitrator and shall contain a concise statement regarding the reasons for the
deposition of any claim.
(h) To the extent permissible under applicable law, the award of the
Arbitrator shall be final. It is the intent of the parties that the arbitration
provisions hereof be enforced to the fullest extent permitted by applicable law.
7.14 SUBMISSION TO JURISDICTION. All actions or proceedings arising in
connection with this Agreement for preliminary or injunctive relief or matters
not subject to arbitration, if any, shall be tried and litigated exclusively in
the State and Federal courts located in New York, New York. The aforementioned
choice of venue is intended by the parties to be mandatory and not permissive in
nature, thereby precluding the possibility of litigation between the parties
with respect to or arising out of this Agreement in any jurisdiction other than
that specified in this paragraph. Each party hereby waives any right it may have
to assert the doctrine of forum non conveniens or similar doctrine or to object
to venue with respect to any proceeding brought in accordance with this
paragraph, and stipulates and acknowledges that it has had sufficient minimum
contacts with New York such that the State and Federal courts located in the New
York, New York shall have in personam jurisdiction over each of them for the
purpose of litigating any dispute, controversy, or proceeding brought in
accordance with this paragraph. Each party hereby authorizes and accepts service
of process sufficient for personal jurisdiction in any action against it as
contemplated by this paragraph by registered or certified mail, return receipt
requested, postage prepaid, to its address for the giving of notices as set
forth in Section 7.2. Nothing herein shall affect the right of any party to
serve process in any other manner permitted by law.
7.15 ATTORNEYS' FEES. If Buyer or any of its Affiliates, successors or
assigns brings any action, suit, counterclaim, cross-claim, appeal, arbitration,
or mediation for any relief against Brite or Seller or any of their Affiliates
successors or assigns, or if Brite or Seller or any of their Affiliates
successors or assigns brings any action, suit, counterclaim, cross-claim,
appeal, arbitration, or mediation for any relief against Buyer or any of its
Affiliates, successors or assigns, declaratory or otherwise, to enforce the
terms hereof or to declare rights hereunder (collectively, an "ACTION"), in
addition to any damages and costs which the prevailing party otherwise would be
entitled, the non-prevailing party shall pay to the prevailing party a
reasonable sum for attorneys' fees and costs (at the prevailing party's
attorneys' then-prevailing rates) incurred in bringing and prosecuting such
Action and/or enforcing any judgment, order, ruling, or award (collectively, a
"DECISION") granted therein, all of which shall be deemed to have accrued on the
commencement of such Action and shall be paid whether or not such action is
prosecuted to a Decision. Any Decision entered in such Action shall contain a
specific provision providing for the recovery of attorneys' fees and costs
incurred in enforcing such Decision.
For the purposes of this Section, attorneys' fees shall include, without
limitation, fees incurred in the following: (1) postjudgment motions and
collection actions; (2) contempt
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proceedings; (3) garnishment, levy and debtor and third party examinations; (4)
discovery; and (5) bankruptcy litigation.
For purposes of this paragraph, "PREVAILING PARTY" includes, without
limitation, a party who agrees to dismiss an action on the other party's payment
of the sum allegedly due or performance of the covenants allegedly breached, or
who obtains substantially the relief sought by it. If there are multiple claims,
the prevailing party shall be determined with respect to each claim separately.
The prevailing party shall be the party who has obtained the greater relief in
connection with any particular claim, although, with respect to any claim, it
may be determined that there is no prevailing party.
7.16 ENFORCEMENT OF THE AGREEMENT. Brite, Seller, the Company and
Buyer acknowledge that irreparable damage would occur if any of the obligations
of Brite, Seller and the Company under this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Buyer will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
by Brite, Seller or the Company and to enforce specifically the terms and
provisions hereto, this being in addition to any other remedy to which Buyer is
entitled at law or in equity.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first above written.
BRITE VOICE SYSTEMS, INC.
By: /s/ STANLEY G. BRANNAN
-----------------------------------
Name: Stanley G. Brannan
-----------------------------------
Title: President
-----------------------------------
BVS INVESTCO, INC.
By: /s/ Daniel F. Lindley
-----------------------------------
Name: Daniel F. Lindley
-----------------------------------
Title: Asst. Secretary
-----------------------------------
TSL SERVICES, INC.
By: /s/ Daniel F. Lindley
-----------------------------------
Name: Daniel F. Lindley
-----------------------------------
Title: Asst. Secretary
-----------------------------------
- ------------------------------------
PROFITSOURCE CORPORATION
By: /s/ David Ehlen
-----------------------------------
Name: David Ehlen
-----------------------------------
Title: CEO
-----------------------------------
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SCHEDULE 1.4
PURCHASE PRICE
In exchange for the Shares, Buyer shall pay an aggregate purchase price
as described below:
(i) Buyer shall pay to Seller at the Closing Nineteen Million Two
Hundred Eighty Seven Thousand Five Hundred Dollars ($19,287,500) in cash, by
wire transfer to such account as may be specified by Seller in writing (the
"CASH PAYMENT");
(ii) Buyer shall deposit into the Escrow Account (as such term is
defined in the Escrow Agreement) Two Hundred Twelve Thousand Five Hundred
Dollars ($212,500) in cash which shall be managed in accordance with the terms
of the Escrow Agreement of even date herewith by and among the parties hereto.
(iii) Buyer shall cause the Company to issue to Seller 5,000
shares of the Company's Series A Preferred Stock, described more particularly in
the Company's Certificate of Incorporation set forth in Schedule 2.22(c)-1 (the
"PREFERRED STOCK"), and
(iv) Buyer shall cause the Company to issue to Seller warrants in
the form of Exhibit C to purchase shares of the Company's Common Stock,
representing 10.0% of the fully diluted equity of the Company as of the Closing
Date (the "WARRANTS").
(v) In accordance with the terms of that certain amendment to the
Letter of Understanding by and among Brite, National Benefits Consultants, LLC
and Buyer, dated as of September 2, 1998 (the "THIRD AMENDMENT"), the Five
Hundred Thousand Dollars ($500,000) delivered by Buyer to Brite pursuant to the
terms of Amendment No. 3 shall be considered a portion of the Purchase Price.