EXHIBIT 10.2
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ASSET SALE AGREEMENT
BY AND BETWEEN
TELECARE, INC.
AND
PREMIERE COMMUNICATIONS, INC.
DATED AS OF AUGUST 25, 2000
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TABLE OF CONTENTS
ARTICLE 1 SALE AND PURCHASE OF CERTAIN ASSETS............................ 1
1.01 Sale and Purchase of Certain Assets................................ 1
1.02 Excluded Assets.................................................... 2
1.03 Purchase Price..................................................... 3
1.04 Purchase Price Allocation.......................................... 3
1.05 Tax and Accounting Treatment of Transaction........................ 4
1.06 Assignment of Certain Contracts.................................... 4
ARTICLE II ASSUMPTION OF LIABILITIES AND CONTRACTUAL OBLIGATIONS......... 4
2.01 General............................................................ 4
2.02 Non-Assumed Liabilities............................................ 5
2.03 No Intention to Benefit Third Parties.............................. 5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER..................... 5
3.01 Capacity and Validity.............................................. 5
3.02 Organization....................................................... 5
3.03 No Conflict........................................................ 5
3.04 Title to Assets; Encumbrances; Condition........................... 5
3.05 Compliance with Law................................................ 5
3.06 Brokers and Finders................................................ 6
3.07 Income Statements.................................................. 6
3.08 No Material Adverse Change......................................... 6
3.09 Taxes.............................................................. 6
3.10 Litigation......................................................... 6
3.11 Non-Competition and Confidentiality Agreements..................... 6
3.12 Statements True and Correct........................................ 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER................... 6
4.01 Organization....................................................... 6
4.02 Capacity and Validity.............................................. 7
4.03 No Conflict........................................................ 7
4.04 Brokers and Finders................................................ 7
4.05 Compliance with Law................................................ 7
4.06 Financial Statements and Tax Returns............................... 7
4.07 Insurance Policies................................................. 7
4.08 Statements True and Correct........................................ 8
ARTICLE V COVENANTS AND ADDITIONAL AGREEMENTS OF SELLER AND PURCHASER.... 8
5.01 License and Marketing Names........................................ 8
5.02 Expenses........................................................... 8
5.03 Employees.......................................................... 9
5.04 Aid in Transition.................................................. 9
5.05 Covenant of Non-Solicitation and Non-Competition by Seller......... 10
5.06 Take or Pay Agreement.............................................. 10
5.07 ▇▇▇▇▇▇▇▇ Contract.................................................. 10
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5.08 Management Services Contract....................................... 10
5.09 Amendment of Carrier Agreement..................................... 11
5.10 Deliveries by Purchaser............................................ 11
5.11 Guarantee by ▇▇▇▇▇▇▇▇▇............................................. 11
5.12 Purchaser Financing................................................ 11
ARTICLE IV SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION 11
6.01 Survival of Representations and Warranties......................... 11
6.02 Indemnification by Seller.......................................... 11
6.03 Indemnification by Purchaser....................................... 13
6.04 No Consequential Damages........................................... 13
ARTICLE VII MISCELLANEOUS................................................ 13
7.01 Notices............................................................ 14
7.02 Entire Agreement, Modifications, Amendments and Waivers............ 14
7.03 Successors and Assigns............................................. 14
7.04 Table of Contents; Captions; References............................ 14
7.05 Pronouns........................................................... 14
7.06 Governing Law...................................................... 14
7.07 Arbitration........................................................ 15
7.08 Severability....................................................... 15
7.09 Remedies Not Exclusive............................................. 15
7.10 Counterparts and Interpretations................................... 15
7.11 Seller's Knowledge................................................. 16
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INDEX OF EXHIBITS AND SCHEDULES
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Exhibit 1.03(a) Form of Note A
Exhibit 1.03(b) Form of Note B
Exhibit 5.06 Form of Take-or-Pay Agreement
Exhibit 5.08 Form of Management Services Agreement
Exhibit 5.11 Form of Guarantee by ▇▇▇▇▇▇▇▇▇
Schedule 1.01(a)(i) Revenue Stream
Schedule 1.01(a)(ii) Customer and Marketing "Partner" Contracts
Schedule 1.01(e) Bloomington Assets
Schedule 1.02 Excluded Assets
Schedule 1.04 Purchase Price Allocation
Schedule 3.03 No Conflict
Schedule 3.04 Title to Assets; Encumbrances; Condition
Schedule 3.05 Compliance with Law
Schedule 3.07 Seller Income Statements
Schedule 4.03 Purchaser: No Conflict
Schedule 4.05 Purchaser: Compliance with Law
Schedule 4.06 Purchaser and ▇▇▇▇▇▇▇▇▇ Financial Statements and Tax
Returns
Schedule 4.07 Purchaser Insurance Coverage
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ASSET SALE AGREEMENT
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THIS ASSET SALE AGREEMENT (this "Agreement") dated as of the 25th day of
August, 2000, is made and entered into by and between TELECARE, INC., an Indiana
corporation, wholly-owned by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇"), with its
headquarters and principal place of business located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Purchaser") and PREMIERE COMMUNICATIONS, INC., a
Florida corporation, with its headquarters and principal place of business
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Seller").
BACKGROUND
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This Agreement sets forth the terms and conditions upon which Seller shall
sell to Purchaser, and upon which Purchaser shall purchase, certain of the
assets of Seller's retail calling card business (the "Business").
Certain terms used in this Agreement are defined in Article VII hereof.
AGREEMENT
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In consideration of the foregoing, the mutual agreements, covenants,
representations and warranties contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
subject to the terms and conditions hereinafter set forth, the parties hereto
agree as follows:
ARTICLE I
SALE AND PURCHASE OF CERTAIN ASSETS
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1.01 Sale and Purchase of Certain Assets. Subject to the terms and
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conditions contained in this Agreement, Purchaser hereby purchases from Seller,
and Seller hereby sells, conveys, transfers, assigns, and delivers to Purchaser,
for the purchase price set forth in Section 1.02 below, all of the following
assets of Seller to the extent that such assets are used solely in connection
with the Business, free and clear of any and all liens, claims or encumbrances
of any kind or nature whatsoever other than the Assumed Liabilities ("Liens"):
a. Customer and "Partner" Contracts - all customer and marketing
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"partner" contracts related to the Business and reflected in the
revenue stream identified on Schedule 1.01(a)(i), including but not
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limited to those marketing "partner" contracts listed on Schedule
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1.01(a)(ii) (the "Contracts");
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b. Accounts Receivable - those certain accounts receivable (net of
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allowance or reserve for doubtful or uncollectible accounts) in
existence on the date hereof and that relate exclusively to the
Contracts (the "Accounts Receivable"), provided, however, that as a
result of the operation of the Management Services Agreement (as
defined in Section 5.08 below), in lieu of the Accounts Receivable,
Purchaser will take the accounts receivable (net of allowance or
reserve for uncollectible accounts) in existence on the date of the
termination of the Management Services Agreement and that relate
exclusively to the Contracts;
c. Databases - all marketing databases (i) of current active and former
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users of the services provided by the Business, (ii) related to the
Contracts and (iii) otherwise related to the Business, in each case
only to the extent such databases are legally transferable by Seller
without the consent or approval of any third party (collectively, the
"Databases");
d. Marketing Names - royalty free, licenses to the following product,
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service and marketing names utilized in the Business in the last five
(5) years to the extent such names are owned by Seller: "Premiere
Worldlink", "Afcom(R)" and "National Collegiate(TM)" (collectively,
the "Marketing Names"), provided, however, that (i) the licenses to
"Premiere Worldlink" and "Afcom(R)" will be non-exclusive while the
license to "National Collegiate(TM)" will be exclusive, and (ii) the
rights to the "Premiere Worldlink" and "Afcom(R)" names shall be
limited to one year from the date of this Agreement; in addition,
Seller shall transfer all of its right, title and interest in and to
the name "National Collegiate(TM)" and any associated registered marks
therewith to Purchaser upon payment in full of all amounts owing under
Note A and Note B;
e. Bloomington Assets - (i) all assets of Seller listed on Schedule
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1.01(e), which are located in the offices of the Business located at
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and (ii)
the lease of the real property used in the Business and located at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Bloomington Assets");
f. Marketing Materials - all material marketing materials, including
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those in printed and electronic form, files and images, in Seller's
possession on the date of this Agreement that were created by Seller
for marketing to the customers who are parties to the Contracts (the
"Marketing Materials"); and
g. Files and Records - all books, records, accounting records, customer
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lists, call detail records, files and documents relating to the
Business, but not the corporate minute books, corporate seals,
consolidated financial statements or tax records of Seller (the
"Business Records"), provided, however, that Seller will not deliver
the Business Records until the termination of the Management Services
Agreement and provided further that Seller may, at its expense, make
and retain copies of the Business Records prior to their transfer to
Purchaser. Further, Purchaser shall allow Seller reasonable access to
the Business Records for a period of seven (7) years from the date
hereof and, prior to the end of such seven year period, shall notify
Seller in writing at least 90 days prior to any destruction of any of
such Business Records and shall offer Seller the opportunity to retain
such Business Records in lieu of their destruction.
The Contracts, the Accounts Receivable, the Databases, the Bloomington Assets,
the Marketing Materials, and the Business Records are collectively referred to
as the "Assets" and individually referred to as an "Asset."
1.02 Excluded Assets. Notwithstanding the foregoing Section 1.01 or
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any other provision of this Agreement to the contrary, Seller shall retain all
assets not specifically identified in paragraphs (a) through (g) of Section 1.01
(the "Excluded Assets"), including, but not limited to, (i) any contracts
related to (A) the corporate calling card business of Seller and its
subsidiaries (including, without limitation, the business known as "Access One")
and (B) the personal assistant and Orchestrate(R) products and services
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offered by Seller or its subsidiaries (collectively, those contracts described
in the foregoing clauses A and B shall be the "Excluded Contracts"); (ii) cash
and bank accounts of the Business; (iii) aggregate intercompany accounts
receivable and accounts payable, if any, (iv) any intellectual property rights
of any type whatsoever, including without limitation, tradenames, trade marks,
service marks, copyrights, patents, or licenses; (v) information concerning
customers, prospective customers and other third parties as such information is
used in or relates to Excluded Assets or aspects of Seller's businesses other
than the Business; (v) personal effects of the current and former owners and
employees of the Business; (vi) the assets listed on Schedule 1.02; (vii)
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transmission related equipment and call center equipment; (viii) any and all
state and federal governmental authorizations, permits and certificates,
including without limitation any certificates to provide telecommunications
services and (ix) all assets of Seller that are used in connection with the
Business but that are also used by Seller other than in connection with the
Business.
1.03 Purchase Price. The purchase price for the Assets (the "Purchase
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Price") shall be $6,552,000 and shall be paid according to the following terms:
a. Note A. Purchaser will issue to Seller a promissory note
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substantially in the form attached hereto as Exhibit 1.03(a) in the
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original principal amount of $4,162,000 ("Note A"). Note A will be
a senior secured note due 180 days from the date of this Agreement.
Note A shall bear interest at the rate of 8.0% per annum for the
first 90 days, and 10.0% per annum thereafter. All interest shall
accrue monthly and be added to the principal balance of Note A.
Note A shall be secured by the Assets, a security interest in the
stock of Purchaser and the personal guarantee of ▇▇▇▇▇▇▇▇▇, in each
case as evidenced by documentation and filing as shall be
reasonably satisfactory to Seller.
b. Note B. Purchaser will issue to Seller a contingent promissory note
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substantially in the form of Exhibit 1.03(b) in a variable
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principal amount from $0 to $2,390,000 (subject to increase
pursuant to the terms of Section 5.07 of this Agreement) ("Note
B"). Note B will be a junior secured note due one year from the
date of this Agreement. Note B shall bear interest at the rate of
12.0% per annum. Note B shall share a first security interest in
the Assets and the guarantee securing Note A, but shall be
subordinated to any future debt that replaces Note A, which
subordination is subject to negotiation with the new lender and
Seller.
c. Adjustments to Purchase Price. If the number of customers that have
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had usage of the services of the Business during the months of
April, May or June, 2000 (the "Active Customers") is less than
100,000, then Note A shall be reduced by the same percentage by
which the number of Active Customers is less than 100,000.
Similarly, Seller shall reimburse Purchaser for the amount, if any,
by which 95% of the Accounts Receivable (net of allowance or
reserve for doubtful or uncollectible accounts) have not been
collected within 180 days after the date of the termination of the
Management Services Agreement, provided that payments will be
applied to the oldest Accounts Receivable outstanding first.
1.04 Purchase Price Allocation. Seller and Purchaser shall jointly
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prepare a schedule allocating the Purchase Price and, as required by applicable
law, the Assumed Liabilities among the Assets as set forth on Schedule 1.04 (the
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"Allocation Schedule") for purposes of filings under Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code"). Seller and Purchaser
each shall execute and file with the IRS in a timely manner Form 8594, and all
federal, state, local and foreign tax returns, in accordance with such final
allocation. Neither Purchaser nor Seller shall file a tax return or take any
position with any taxing authority that is inconsistent with such final
allocation.
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1.05 Tax and Accounting Treatment of Transaction. The parties
acknowledge and agree that, notwithstanding the date of the execution and
delivery of this Agreement on August 25, 2000 and the ultimate closing of the
transaction thereafter, for both tax and accounting purposes the transactions
contemplated by this Agreement shall be effective as of August 1, 2000. Further,
the parties acknowledge and agree that Note B is so contingent and uncertain as
to be not susceptible of valuation as of the date of this Agreement and,
accordingly, will not be considered part of the Purchase Price unless and until
the contingencies are resolved.
1.06 Assignment of Certain Contracts.
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(a) Nothing contained in this Agreement shall be construed as an
attempt to agree to assign any contract that is in law non-assignable without
the consent of any other party thereto, unless such consent shall have been
given. To the extent any such necessary consent has not been obtained, in order
that the full value of every such contract that is included within the Assets
may be realized, at Purchaser's request and direction, Seller shall take all
such action as shall in the reasonable opinion of Purchaser be necessary or
proper (i) in order to preserve for the benefit of Purchaser the rights and
obligations of Seller under such Contract, and (ii) to facilitate the collection
of the monies due and payable, or to become due and payable, to Seller pursuant
to every such contract, and Seller shall remit such monies to Purchaser within
five (5) business days of collection.
(b) Purchaser shall be entitled to the benefits accruing after the
date of this Agreement of any such non-assigned contract to the extent that,
pursuant to the following sentence, Purchaser performs all of Seller's
obligations due to be performed under such non-assigned contract. Seller will
remit to Purchaser payments Seller receives under such non-assigned contract to
the extent that Purchaser has performed Seller's obligations to which such
payments relate. Purchaser, at its expense, shall perform all of Seller's
obligations due to be performed under any such non-assigned contract that is
included among the Assumed Liabilities to the extent (i) Purchaser can perform
such obligations without violating the terms of such non-assigned contract and
(ii) Purchaser is being provided the benefits of such non-assigned contract.
ARTICLE II
ASSUMPTION OF LIABILITIES AND CONTRACTUAL OBLIGATIONS
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2.01 General. As further consideration for the Assets, Purchaser
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shall assume, pay, perform and discharge when due any and all liabilities,
indebtedness, and obligations of any type, whether accrued, contingent, matured,
unmatured, or otherwise, related to, directly or indirectly, or arising out of
the Business or the Assets but shall only include that portion of such
liabilities, indebtedness and obligations that arise after or relate to the
period after the date of this Agreement (other than with respect to the Call &
Fly(R) program of the Business, which shall include all liabilities,
indebtedness and obligations relating thereto) (the "Assumed Liabilities"),
including without limitation, (i) those liabilities and obligations that arise
after the date of this Agreement under or with respect to the Contracts; (ii)
all liabilities and obligations that arise after the date of this Agreement
under or with respect to the real property lease of the property at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇; (iii) all liabilities and
obligations arising out of or related to the Call & Fly(R) program of the
Business, whether accrued or arising prior to or after the date of this
Agreement; and (iv) all governmentally imposed regulatory fees or surcharges
that
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arise after the date of this Agreement, including, without limitation,
Universal Service Fund, Federal Excise Tax, applicable state taxes,
Telecommunications Relay Service and payphone surcharges.
2.02 Non-Assumed Liabilities. Except for the Assumed Liabilities and
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as otherwise specifically included in this transaction by mutual agreement,
Purchaser shall not be responsible for any acts, omissions, or liabilities of
Seller or its employees and agents performed or incurred by them prior to the
date of this Agreement.
2.03 No Intention to Benefit Third Parties. Except as specifically set
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forth in Article VI, this Agreement is not intended to, and shall not, (i)
benefit any person other than Seller and Purchaser or (ii) create any third
party beneficiary right in any person.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller hereby represents and warrants to Purchaser as follows:
3.01 Capacity and Validity. Seller has the corporate power, capacity
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and authority necessary to enter into and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement have been approved by
all necessary action of the Board of Directors and the Shareholder(s) of Seller.
This Agreement has been duly executed and delivered by duly authorized officers
of Seller, and such agreement constitutes a legal, valid and binding obligation
of Seller, enforceable against Seller, in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other Laws affecting creditors' rights generally.
3.02 Organization. Seller is a corporation duly organized, validly
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existing and in good standing under the laws of Florida and has full corporate
power and authority to own, lease and operate its assets and to carry on its
business.
3.03 No Conflict. Except as disclosed in Schedule 3.03, neither the
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execution, delivery and performance of this Agreement by Seller nor the
consummation by Seller of the transactions contemplated hereby or thereby will
(i) conflict with or result in a violation, contravention or breach of any of
the terms, conditions or provisions of the Articles of Incorporation, as
amended, of Seller, or (ii) result in the violation by Seller of any law or
governmental order.
3.04 Title to Assets; Encumbrances; Condition. Except for the Assumed
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Liabilities and except as set forth in Schedule 3.04, Seller has good, valid and
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marketable title to its material Assets free and clear of any and all Liens.
3.05 Compliance with Law. Except as set forth in Schedule 3.05, Seller
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has materially complied with and is in material compliance with all material
laws and governmental orders applicable to, required of or binding on Seller,
the Assets or the Business, except to the extent that any such non-compliance
would not have a material adverse effect on the Assets or the Business. No
written notices from any governmental authority or agency with respect to any
failure or alleged failure of Seller, the Assets or the Business to comply with
any material law or governmental order have been received by
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Seller, except to the extent such failure or alleged failure of Seller to comply
would not have a material adverse effect on the Assets or the Business.
3.06 Brokers and Finders. No finder or any agent, broker or other Person
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acting pursuant to authority of Seller is entitled to any commission or finder's
fee from Seller in connection with the transactions contemplated by this
Agreement.
3.07 Income Statements. To the best of Seller's knowledge, the income
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statements for January to July 2000 attached as Schedule 3.07 (the "Income
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Statements"), fully reflect the costs that are both direct and variable and that
are associated with the Business in all material respects. Notwithstanding the
foregoing, Purchaser acknowledges and agrees that transmission costs are
overstated due, in part, to the fact that the Income Statements do not fully
reflect the benefit of the Worldcom credit. Purchaser also acknowledges and
agrees that the Income Statements specifically do not accurately reflect the
fixed costs associated with the Business.
3.08 No Material Adverse Change. Seller has no knowledge of any facts
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that would lead Seller to reasonably believe that the decline in the revenue of
the Business will accelerate. Since July 25, 2000, there has not been, occurred
or arisen any change in or event affecting the Business, the Assets, or the
Assumed Liabilities that has had a material adverse effect on the Business, the
Assets or Assumed Liabilities and there has not occurred any strike or labor
dispute or any casualty, loss, damage or destruction (whether or not covered by
insurance) of any of the Assets that exceeds $50,000.
3.09 Taxes. Seller is current on all of the material Universal Service
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Fund payments and Federal Excise Tax payments owed by Seller with respect to the
operation of the Business prior to the date of this Agreement or Seller will
make such payments promptly after the date of this Agreement.
3.10 Litigation. There is no pending or, to Seller's knowledge,
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threatened litigation to which Seller is a party and that would reasonably be
expected to have a material adverse effect on the Business, the Assets, the
transaction contemplated by this Agreement, or the Management Services
Agreement.
3.11 Non-Competition and Confidentiality Agreements. To Seller's
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knowledge, and except with respect to D. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, none of its current or
former employees are in material violation of their confidentiality or non-
competition agreements with Seller as such agreements relate to the Business.
3.12 Statements True and Correct. No representation or warranty made
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by Seller nor any statement, certificate or instrument furnished or to be
furnished to Purchaser pursuant to this Agreement or any other document,
agreement or instrument referred to herein or therein contains or will contain
any untrue statement of material fact or omits or will omit to state a material
fact necessary to make the statements contained therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
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Purchaser hereby represents and warrants to Seller that:
4.01 Organization. Purchaser is a corporation duly organized and validly
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existing under the laws of the State of Indiana with the full corporate power
and authority to carry on its business and to own, lease and operate its assets.
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4.02 Capacity and Validity. Purchaser has the corporate power, capacity and
---------------------
authority necessary to enter into and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement have been approved by all necessary
action of the Board of Directors and shareholders of Purchaser. This Agreement
has been executed and delivered by duly authorized officers of Purchaser and
constitutes the legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other Laws
affecting creditors' rights generally.
4.03 No Conflict. Except as disclosed in Schedule 4.03, neither the
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execution, delivery and performance of this Agreement by Purchaser nor the
consummation by Purchaser of the transactions contemplated hereby, will (i)
conflict with or result in a violation, contravention or breach of any of the
terms, conditions or provisions of the Articles of Incorporation, as amended, or
By-Laws, as amended, of Purchaser, (ii) result in a violation, contravention or
breach under, or require the consent or approval of any party to, any contract,
license or permit to which Purchaser is a party or by which Purchaser is bound,
(iii) result in the violation of any law or governmental order or (iv) result in
the creation or imposition of any Lien.
4.04 Brokers and Finders. With the exception of Periculum Capital Company,
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LLC, whose fees and expenses will be borne exclusively by Purchaser, no finder
or any agent, broker or other Person acting pursuant to authority of Purchaser
or any of its shareholders is entitled to any commission or finder's fee in
connection with the transactions contemplated by this Agreement.
4.05 Compliance with Law. Except as set forth in Schedule 4.05, Purchaser
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has materially complied with and is in material compliance with all material
laws and governmental orders applicable to, required of or binding on Purchaser
and its assets and businesses, except to the extent that any such non-compliance
would not have a material adverse effect on Purchaser or its assets or
businesses. No written notices from any governmental authority or agency with
respect to any failure or alleged failure of Purchaser or its assets or
businesses to comply with any material law or governmental order have been
received by Purchaser, except to the extent such failure or alleged failure of
Purchaser to comply would not have a material adverse effect on Purchaser or its
assets or businesses.
4.06 Financial Statements and Tax Returns. Schedule 4.06 contains a correct
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and complete copy of the federal income tax returns, as filed with the Internal
Revenue Service, of each of ▇▇▇▇▇▇▇▇▇ and Purchaser for each of the last three
(3) fiscal years. Schedule 4.06 also contains for each of ▇▇▇▇▇▇▇▇▇ and
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Purchaser a correct and complete copy of the balance sheet as of the end of each
of the last three (3) fiscal years and the statements of income and cash flows
for each of the fiscal years then ended (collectively, the "Financial
Statements"). Each of the Financial Statements are true, correct and complete,
are based on the books and records of ▇▇▇▇▇▇▇▇▇ and Purchaser, respectively,
fairly present the financial condition and, results of operations and cash flows
of ▇▇▇▇▇▇▇▇▇ and Purchaser, respectively, as of the dates and for the periods
indicated therein.
4.07 Insurance Policies. Schedule 4.07 contains a correct and complete list
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of all insurance policies held or owned by Purchaser and now in force and
Schedule 4.07 indicates the name of the insurer, the type of policy, the risks
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covered thereby, the amount of the premiums, the term of each policy, the policy
number and the amounts of coverage and deductible in each case and all
outstanding claims thereunder. All such policies are in full force and effect
and are enforceable in accordance with their terms.
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4.08 Statements True and Correct. No representation or warranty made by
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Purchaser, nor any statement, certificate or instrument furnished or to be
furnished to Seller pursuant to this Agreement or any other document, agreement
or instrument referred to herein or therein, contains or will contain any untrue
statement of material fact or omits or will omit to state a material fact
necessary to make the statements contained therein not misleading.
ARTICLE V
COVENANTS AND ADDITIONAL AGREEMENTS
------------------------------------
OF SELLER AND PURCHASER
-----------------------
5.01 License of Marketing Names. Seller hereby grants to Purchaser (i) a
--------------------------
royalty free, exclusive and non-transferable license to use the trade name
National Collegiate(TM), until such time as the trade name National
Collegiate(TM) is transferred to Purchaser pursuant to Section 1.01(d), to the
extent that such name is owned by Seller, solely in connection with the Business
and subject to the Terms and Conditions in the following sentence and (ii) a
royalty free, non-exclusive and non-transferable license for one year from the
date of this Agreement to use the trade names "Premiere Worldlink" and
"Afcom(R)", to the extent that such names are owned by Seller, solely in
connection with the Business and subject to the Terms and Conditions in the
following sentence. The licenses granted to Purchaser pursuant to this Section
5.01 shall be subject to the following terms and conditions (the "Terms and
Conditions"):
(a) Purchaser shall not be allowed to utilize any specific Marketing Name
other than National Collegiate(TM) as part of its corporate or
business name;
(b) Purchaser shall not attempt to register any specific Marketing Name
other than National Collegiate(TM) in its name or on behalf of Seller
in any jurisdiction;
(c) Purchaser shall not challenge Seller's ownership or rights in and to
the Marketing Names; provided, however, that with respect to National
Collegiate(TM), this condition will expire upon payment in full of all
amounts owing under Note A and Note B;
(d) All goodwill arising out of Purchaser's use of the Marketing Names
shall inure to the benefit of Seller;
(e) The breach or violation of any provision of the Marketing Names
license granted by Seller to Purchaser herein shall give Seller the
right to terminate such Marketing Name license immediately upon notice
to Purchaser;
(f) Seller may terminate any of the foregoing licenses to Purchaser at any
time that Purchaser's use of any of the licensed trade names is
damaging to the trade names or the goodwill represented by such trade
names.
5.02 Expenses.
--------
(a) All sales, use, transfer and all other non-income taxes, and any
fees incurred in connection with the purchase and sale of the Assets (the
"Transfer Taxes") shall be born by Purchaser. Seller shall file all necessary
tax returns and other documents required to be filed with respect to all such
Transfer Taxes. The parties will cooperate to the extent reasonably necessary
to make such filings or returns as may be required.
(b) Except as provided below, regardless of whether the transactions
contemplated by this Agreement are consummated, each of Seller and Purchaser
shall be responsible for all expenses and fees incurred by it or him in
connection with the preparation, negotiation or consummation of this Agreement
and the transactions contemplated hereby.
-8-
(c) All property, ad valorem, real estate, and other similar taxes and
all regulatory and governmental fees with respect to the Assets or the Business
shall be apportioned for the accounts of Seller and Purchaser based on the date
of this Agreement.
5.03 Employees. During the term of the Management Services Agreement,
---------
Purchaser shall not take any action that could undermine Seller's ability to
perform its obligations under the Management Services Agreement. Purchaser
acknowledges that its hiring Seller's employees during the term of the
Management Services Agreement without Seller's consent could undermine Seller's
ability to so perform and could otherwise harm Seller. Consequently, for these
and other reasons, during the term of the Management Services Agreement,
Purchaser shall not hire or solicit any employees of Seller without the Seller's
prior written consent, provided, however, that Purchaser may solicit, but not
hire, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ during the term of the Management Services Agreement as
long as he is an employee of Seller or an affiliate of Seller. In the event that
Purchaser hires ▇▇. ▇▇▇▇▇▇▇▇ after the termination of the Management Services
Agreement, Seller will waive the relevant provisions of ▇▇. ▇▇▇▇▇▇▇▇'▇
Confidentiality Agreement with Seller solely to the extent necessary for ▇▇.
▇▇▇▇▇▇▇▇ to perform the duties of his employment with Purchaser. After the date
of termination of the Management Services Agreement, Purchaser shall have no
obligation or responsibility for hiring any employees of Seller, although after
the date of termination of the Management Services Agreement certain employees
may be hired by Purchaser in its sole discretion as new employees and Purchaser
may interview such employees prior to the date of termination of the Management
Services agreement if it first obtains the written consent of Seller. With the
exception of liability and claims involving or arising from acts or omissions of
Purchaser or its employees or representatives, Seller agrees to be responsible
for any and all liability which may arise as the result of wage claims, benefits
claims, or other employment-related claims of any sort whatsoever made by any
employee, including those retained as new hires by Purchaser, for wages and
benefits earned, and acts or omissions performed, prior to the date of their
termination of employment by Seller. To the extent legally possible at no
additional cost to Seller, Seller shall keep in force any confidentiality and
non-compete agreements with current or past employees, as they may affect the
use of the Assets to be acquired herein. Seller also agrees to provide its
commercially reasonable assistance to Purchaser in the enforcement of such
Agreements. In no event, however, shall Seller be held liable if any of its
current or past employees do not comply with the provisions of any
confidentiality and non-compete agreements or if any such agreements are found
to be unenforceable or inapplicable in part or in full. Purchaser and Seller
hereby acknowledge that Purchaser will be deemed to be a successor in interest
to the rights and protections in such confidentiality and non-compete agreements
that are applicable to the Assets and the Business. Notwithstanding the
foregoing, Seller is not assigning or conveying its interest in such
confidentiality and non-competition agreements and Seller is retaining all
rights and protections applicable to it or its ongoing business under such
agreements.
5.04 Aid in Transition. After the date of this Agreement, each of Seller,
-----------------
on the one hand, and Purchaser, on the other hand, shall use its commercially
reasonable best efforts to fully and completely cooperate in the prompt and
complete transfer of the Assets to Purchaser other than Assets not transferred
until the termination of the Management Services Agreement and other than those
Assets required by Seller to perform its obligations under the Management
Services Agreement. For six (6) months after the date of the termination of the
Management Services Agreement, or whatever time it takes to complete the
transfer, Seller's employees shall use their commercially reasonable efforts to
assist in any final transition related issues. Notwithstanding the foregoing,
Seller shall promptly prepare, or cause its agent to promptly prepare (i) all
filings with federal, state and local governmental and regulatory authorities
necessary to transfer the Assets to Purchaser, and (ii) a form of customer
notification to be submitted to all affected customers of Seller describing the
transfer of the Assets to Purchaser. If any governmental or regulatory authority
rejects or requests supplementary information regarding a filing, Seller shall
cause its agent to
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amend such filing, supply additional information or make a new filing, as may be
necessary. Seller shall submit all required filings to the applicable
governmental or regulatory authorities within forty-five (45) days following the
date of this Agreement, and shall distribute the customer notification to all
affected customers of Seller not later than the earlier of (i) January 25, 2001
or (ii) thirty (30) days after the termination of the Management Services
Agreement. Purchaser and Seller shall apportion between them all costs and
expenses of submitting or distributing the filings or notifications required
pursuant to this Section 5.04, based on whether the applicable jurisdiction
required the filing to be made by Purchaser or by Seller, respectively.
5.05 Covenant of Non-Solicitation and Non-Competition by Seller. Seller
----------------------------------------------------------
acknowledges that Purchaser has a legitimate commercial interest in preventing
direct competition with the Business by Seller. Seller also acknowledges that
it will completely withdraw from the business of providing stand-alone calling
card services on a retail basis through affinity relationships. Accordingly, as
long as Purchaser is not in default under this Agreement or either Note A or
Note B, for a period of three (3) years from the date of this Agreement, Seller
and its subsidiaries, affiliates or assignees will not compete directly with the
Business by soliciting the parties to the Contracts in connection with a calling
card product substantially similar to the retail calling cards sold by the
Business on the date of this Agreement unless such calling card functionally is
sold as part of a bundled offering of other products. Seller agrees that it
will not undertake a direct mailing or marketing effort with respect to the
parties to the Contracts, however, Purchaser recognizes that there may be
coincidental cross marketing in Seller's attempts to market its non-stand-alone
calling card services through partner programs or through the acquisition of
customer lists. Notwithstanding the foregoing provisions of this Section 5.05,
nothing contained in this Agreement shall limit the right of Seller and its
subsidiaries, affiliates and assigns to continue their respective businesses
relating to the Premiere Corporate Calling Card business (including without
limitation, the Access One product), personal assistant business (including
without limitation, its long-distance calling feature), and other products
through the channels of co-branding or private labeling (such as
"Orchestrate(R)") despite the fact that such businesses may include products
that include calling card functionality as a part of such products.
Notwithstanding any other provision of this Agreement to the contrary (including
the other provisions of this Section 5.05), Seller's covenants in this Section
5.05 shall not prevent Seller, its successors or assigns from engaging in any
business entered into as a result of a merger, acquisition or other business
continuation.
5.06 Take or Pay Agreement. Simultaneously with the execution and delivery
---------------------
of this Agreement, Purchaser and Seller shall enter into an amendment to the
Carrier Agreement described in Section 5.09 in the form attached hereto as
Exhibit 5.06 which shall become effective upon the payment in full of all
------------
amounts owed under Note A.
5.07 ▇▇▇▇▇▇▇▇ Contract. Purchaser and Seller shall each bear one-half of
-----------------
the $400,000 owed to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") for the termination of the
prior agreement between Seller and ▇▇▇▇▇▇▇▇. Seller shall pay its one-half
($200,000) on the earlier of (i) 180 days after the date of this Agreement or
(ii) February 28, 2001 and Purchaser shall pay its one-half ($200,000) on the
earlier of (i) one year after the date of this Agreement or (ii) August 31,
2001. In the event that Purchaser defaults in its payment to ▇▇▇▇▇▇▇▇, Seller
at its sole option and discretion may pay such amount to ▇▇▇▇▇▇▇▇, in which
event the principal amount of Note B shall automatically without further action
on the part of Seller or Purchaser be increased by $200,000.
5.08 Management Services Contract. Seller and Purchaser shall enter into
----------------------------
a Management Services Agreement, substantially in the
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form of Exhibit 5.08 pursuant to which Seller shall manage the Business for the
------------
account of Purchaser during the period that Note A is outstanding (the
"Management Services Agreement").
5.09 Amendment of Carrier Agreement. Seller and Purchaser agree that in
------------------------------
connection with the execution and delivery of this Agreement, they shall enter
into an amendment to the Carrier Agreement dated March 1, 1996, by and between
Seller and Purchaser, providing that immediately upon the execution and delivery
of this Agreement, the per minute platform cost shall be limited to a maximum of
1.5 cents.
5.10 Deliveries by Purchaser. Simultaneously with the execution and
-----------------------
delivery of this Agreement, Purchaser shall deliver to Seller the following:
(a) articles or certificate of incorporation certified by the
secretary of state of the jurisdiction of incorporation of Purchaser along with
a certificate of existence for Purchaser;
(b) bylaws of Purchaser certified by its corporate secretary;
(c) copies, certified by the duly qualified and acting Secretary or
Assistant Secretary of Purchaser, of resolutions adopted by the Board of
Directors of Purchaser approving this Agreement and the consummation of the
transactions contemplated hereby; and
(d) a written legal opinion from counsel to Purchaser in form and
content reasonably satisfactory to Seller and its counsel and generally in a
form typical for transactions of this type.
5.11 Guarantee by ▇▇▇▇▇▇▇▇▇. Simultaneously with the execution and delivery
----------------------
of this Agreement, ▇▇▇▇▇▇▇▇▇ shall execute and deliver a Guarantee in the form
of Exhibit 5.11 attached hereto, pursuant to which ▇▇▇▇▇▇▇▇▇ shall guarantee the
------------
prompt and absolute payment and performance of each obligation of Purchaser
under Note A and Note B (the "Guarantee").
5.12 Purchaser Financing. Purchaser shall use its best efforts and will
-------------------
retain the services of an investment banker to obtain third party financing in
an amount sufficient to allow Purchaser to repay all amounts owing under Note A
and Note B.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION
--------------------------------------------------------------
6.01 Survival of Representations and Warranties. All of Seller's and
------------------------------------------
Purchaser's representations, warranties, covenants, and agreements as set forth
in this Agreement shall survive the date hereof for a period of six (6) months
after the date of this Agreement or, with respect to covenants and agreements to
be performed in the future, six (6) months after the date for performance of
such covenant or agreement.
6.02 Indemnification by Seller.
-------------------------
(a) Seller agrees to indemnify, defend, and hold harmless Purchaser
and each of its directors, officers, shareholders, employees, affiliates and
assigns (the "Purchaser Indemnified Parties") from and against any and all
direct causes of action, suits, losses, damages, liabilities, costs, and
expenses
-11-
(collectively, "Losses") asserted against, imposed upon or incurred by any of
the foregoing by reason of, resulting from, arising out of, based upon or
otherwise in respect of the following:
(i) any inaccuracy in any representation or warranty made by Seller
pursuant to this Agreement; and
(ii) any breach of any covenant or agreement made or to be performed
by Seller pursuant to this Agreement;
(b) Notwithstanding the foregoing or anything else in this
Agreement to the contrary, Seller shall not indemnify the Purchaser Indemnified
Parties pursuant to this Section 6.02 for any claims related to the Business
unless and until the aggregate amount of such claims exceeds $75,000 and then
only for the amount by which all such claims exceed $75,000. In addition, in no
event shall Seller's aggregate liability pursuant to Section 6.02 exceed
$1,500,000. Seller shall have the right at its own cost and expense to undertake
to defend against any claim or cause of action under the hold harmless and
indemnity provisions of this Section 6.02. Purchaser shall provide written
notice of any third party claims that may arise under this Section 6.02 promptly
after Purchaser's receipt of notice of any such claim from any third party. If
Purchaser fails to provide prompt notice of any third party claim to Seller,
Seller will not have any indemnification obligations for such claim.
(c) To the extent that any Losses for which indemnification is
sought under Section 6.02 is covered by insurance held by such Purchaser
Indemnified Party such Purchaser Indemnified Party shall be entitled to
indemnification only with respect to Losses that are in excess of the cash
proceeds received by such indemnified party pursuant to such insurance. If such
Purchaser Indemnified Party receives such cash insurance proceeds, then the
amount payable by Seller pursuant to such indemnification claim shall be reduced
by the amount of such proceeds, whether such proceeds were received prior to or
after the time such indemnification claim is paid. If, pursuant to the preceding
sentence, the insurance proceeds are received by the Purchaser Indemnified Party
after the indemnification claim is paid, the Purchaser Indemnified Party shall
promptly remit such insurance proceeds (to the extent of the paid
indemnification claim) to the indemnifying party. Purchaser hereby agrees to
file claims under any of its insurance policies covering Losses to the same
extent that such party would normally file claims under its insurance policies
in the ordinary course of its business.
(d) The amount of any indemnity payments for Losses under
Section 6.02 hereof shall be (i) decreased to reflect actual tax savings, if
any, to the Purchaser Indemnified Party resulting from the Losses giving rise to
such indemnity payments and (ii) increased to reflect the actual additional
taxes, if any, payable by such Purchaser Indemnified Party as a result of the
receipt of such payments, in each case subject to the limitations on
indemnification contained in this Section 6.02. If an indemnity payment is made
prior to the filing of relevant tax returns, the amount shall be determined on
an estimated basis. Proper adjustment shall be made if the actual tax savings or
actual additional taxes differ from the estimated amount.
(e) Purchaser and Seller acknowledge and agree that from and
after the date hereof the indemnification provisions in this Article VI shall be
the sole and exclusive remedy of Purchaser and the other Purchaser Indemnified
Parties with respect to this Agreement.
(f) Seller, at its option, shall be entitled to offset any
amount owed by Seller pursuant to this Section 6.02 against either Note A or
Note B.
-12-
6.03. Indemnification by Purchaser. Purchaser agrees to indemnify, defend
----------------------------
and hold harmless Seller and its directors, officers, employees, Affiliates and
assigns (collectively, the "Seller Indemnified Parties") from and against all
direct Losses asserted against, imposed upon or incurred by any of the foregoing
by reason of, resulting from, arising out of, based upon or otherwise in respect
of the following:
(a) any inaccuracy in any representation or warranty made by
Purchaser pursuant to this Agreement; and
(b) any breach of any covenant or agreement made or to be performed
by Purchaser pursuant to this Agreement.
(c) Purchaser and Seller acknowledge and agree that from and after
the date hereof the indemnification provisions in this Article VI shall be the
sole and exclusive remedy of Seller and the other Seller Indemnified Parties
with respect to this Agreement. The foregoing sentence shall not diminish,
modify or otherwise affect any of the terms, including without limitation, any
of the remedies available to Purchaser or Seller, under the Management Services
Agreement, Note A, Note B or any of the security documents relating to Note A
and Note B, including without limitation, the security agreement, the pledge
agreement and the Guarantee.
Purchaser shall have the right at its own cost and expense to undertake to
defend against any claim or cause of action under the hold harmless and
indemnity provisions of this Section 6.03. Seller agrees to provide written
notice of any third party claims that may arise under this Section 6.03 promptly
after Seller's receipt of notice of any such claim from any Third party. If
Seller fails to provide prompt notice of any third party claim to Purchaser,
Purchaser will not have any indemnification obligations for such claim.
6.04 No Consequential Damages. In no event shall either Seller or
------------------------
Purchaser be liable to any Purchaser Indemnified Party or any Seller Indemnified
party for indirect, incidental, exemplary, special, punitive or consequential
damages. Such excluded damages shall include but not be limited to lost
profits.
ARTICLE VII
MISCELLANEOUS
-------------
7.01 Notices. Except as otherwise expressly set forth in this Agreement,
-------
all notices, demands and other communications to be given or delivered under or
by reason of the provisions of this Agreement will be in writing and will be
deemed to have been given when delivered personally, or by documented overnight
delivery service, or sent by telecopy, telex, or other electronic transmission
service, provided a confirmation copy is also sent no later than the next
business day by first class mail, return receipt requested. Notices, demands
and communications to Purchaser or Premiere will, unless another address is
specified in writing, be sent to the address indicated below:
If to Premiere, to: Premiere Communications, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to: ▇▇▇▇▇▇ & Bird LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to
Purchaser to: Telecare Systems, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
7.02 Entire Agreement, Modifications, Amendments and Waivers. This
-------------------------------------------------------
Agreement, the Schedules, the Exhibits and the Other Agreements constitute the
entire agreement with respect to the subject matter hereof and thereof and
supersede all prior and contemporaneous agreements and understandings of the
parties with respect thereto. No change, alteration, modification or addition
to this Agreement shall be effective unless in writing and properly executed by
the parties hereto.
7.03 Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of and be enforceable by the parties hereto, and
their respective estates, successors, legal or personal representatives, heirs,
distributees, designees and assigns, but no assignment shall relieve any party
of the obligations hereunder.
7.04 Table of Contents; Captions; References. The table of contents and
---------------------------------------
the captions and other headings contained in this Agreement as to the contents
of particular articles, sections, paragraphs or other subdivisions contained
herein are inserted for convenience of reference only and are in no way to be
construed as part of this Agreement or as limitations on the scope of the
particular articles, sections, paragraphs or other subdivisions to which they
refer and shall not affect the interpretation or meaning of this Agreement.
Except as specifically provided herein, all references in this Agreement to
"Section" or "Article" shall be deemed to be references to a Section or Article
of this Agreement.
7.05 Pronouns. All pronouns used herein shall be deemed to refer to the
--------
masculine, feminine or neuter gender as the context requires.
7.06 Governing Law. The construction, validity and performance of this
-------------
Agreement shall be governed by the laws of Georgia, without regard to choice of
law principles thereunder.
-14-
7.07 Arbitration. Prior to submission to arbitration, the non-defaulting
-----------
party shall have provided to the breaching or defaulting party written notice of
its breach of, or default under, the terms of this Agreement. After such
notice, the defaulting party shall have thirty (30) days in which to cure such
breach or default, during which time the parties will attempt to resolve
promptly and in good faith, any controversy or claim arising out of or relating
to this Agreement by negotiations between representatives of the parties who
have authority to settle the controversy. The parties may agree to use other
alternative dispute resolution procedures, including mediation, mini-trial, or
other procedures involving a neutral advisor. Within ten (10) days after
receipt of the written notice from the non-defaulting party, the receiving party
shall submit to the other a written response. If the matter has not been
resolved within twenty (20) days of receipt of the disputing party's notice, or
if either party will not meet within ten (10) days of receipt of the disputing
party's notice, either party may initiate arbitration in accordance with the
terms of this Section 7.07 after the thirty (30) day period referred to in the
first sentence.
(a) Any dispute, controversy or claim arising out of, in connection
with, or related to this Agreement or any modification, extension or breach
thereof, including any claim for damages or rescission, or both, not resolved by
the foregoing negotiation procedures shall be finally settled by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, as in effect at the time of the initiation of
arbitration. The arbitration shall be held before one arbitrator mutually
agreed to by Seller and Purchaser. In the event that Seller and Purchaser
cannot mutually agree on an arbitrator within 5 business days, then the
arbitration shall be held before a panel of three arbitrators, one to be
selected by Seller, one to be selected by Purchaser, and the third by agreement
of the two arbitrators selected by the parties. The arbitration shall be held
in Atlanta, Georgia. The arbitration proceedings, submissions and award shall
be in English.
(b) The parties consent to the jurisdiction of any state or federal
court of competent subject matter jurisdiction, and hereby waive any defense
based on personal jurisdiction or venue, for all purposes in connection with the
arbitration, including (a) confirmation or vacating of the arbitration award;
(b) enforcement of the arbitration award; (c) issuance of provisional remedies
to protect rights, interests, assets or property and to ensure ultimate
satisfaction of the arbitration award, including but not limited to temporary or
preliminary injunctive relief. The parties may, without inconsistency with this
agreement to arbitrate, seek from any court having jurisdiction any interim
measures or provisional remedies pending the establishment of the arbitral
tribunal and until the arbitral tribunal's final award has been satisfied. The
parties agree that the award made by the arbitrator shall be final and binding
on the parties, and they waive any right to appeal the arbitral award, to the
extent such an appeal may be lawfully waived.
7.08 Severability. Should any term or provision of this Agreement be held
------------
to be invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
7.09 Remedies Not Exclusive. No remedy conferred by any of the specific
----------------------
provisions of this Agreement is intended to be, nor shall be, exclusive of any
other remedy available at law, in equity or otherwise.
7.10 Counterparts and Interpretations. This Agreement may be executed in
--------------------------------
any number of counterparts, each of which shall be an original; but all of such
counterparts shall together constitute one and the same instrument.
-15-
7.11 Seller's Knowledge. For purposes of this Agreement "Seller's
------------------
knowledge" and the "best of Seller's knowledge" and words of similar import
shall mean the actual knowledge of ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇
▇▇▇▇▇▇▇▇▇.
[Signatures on Following Page]
-16-
IN WITNESS WHEREOF, this Agreement has been executed and delivered under
seal as of the day and year first above written.
PURCHASER:
---------
TELECARE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------
Title: President
Attest:
/s/ ▇▇▇▇▇▇. ▇. ▇▇▇▇▇▇▇▇▇
-------------------------
Its: Secretary
[CORPORATE SEAL]
SELLER:
------
PREMIERE COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Title: Executive Vice President
Attest:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Its: Assistant Secretary
[CORPORATE SEAL]
-17-
EXHIBIT 1.03(a)
---------------
NOTE A
$4,162,000.00 Date: August 25, 2000
FOR VALUE RECEIVED, TELECARE, INC., an Indiana corporation (the "Debtor"),
hereby promises to pay to the order of PREMIERE COMMUNICATIONS, INC. (hereafter,
together with any holder hereof, called "Holder") at the offices of the Holder
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other
place as the Holder may designate in writing to the Debtor, in lawful money of
the United States of America, and in immediately available funds, the principal
sum of FOUR MILLION ONE HUNDRED SIXTY TWO THOUSAND AND 00/100 DOLLARS
($4,162,000.00) together with interest on the principal balance from time to
time outstanding hereunder (computed on the basis of a 360-day year and actual
number of days elapsed) from the date hereof through November 25, 2000 at a per
annum rate equal to eight percent (8%) and thereafter until paid in full at a
per annum rate equal to ten percent (10%).
Principal and accrued interest thereon shall be payable hereunder in one
balloon payment on February 25, 2001. Interest shall accrue monthly and be
added to the principal balance hereunder on the first business day of each
calendar month until all principal and interest hereunder has been paid in full.
Interest shall accrue on any amount past due hereunder at a rate equal to five
percent (5%) per annum in excess of the interest rate otherwise payable
hereunder. All such interest shall be due and payable on demand.
Notwithstanding any terms or provisions contained herein or elsewhere, in
no event shall the aggregate amount of Interest (as defined below) contracted
for, reserved, charged, collected, taken or received by the Holder pursuant to
this Note exceed the maximum amount permissible (the "Maximum Rate") under the
------------
Usury Laws (as defined below). Neither the exercise by the Holder of its rights
to accelerate the payment or the maturity of any indebtedness evidenced by this
Note, nor the prepayment by the Debtor of any of the indebtedness evidenced by
this Note, nor the occurrence of any other event or contingency whatsoever,
shall entitle the Holder to charge, collect or receive Interest in excess of the
Maximum Rate and in no event shall the Debtor be obligated to pay Interest
exceeding the Maximum Rate. All agreements, conditions or stipulations, if any,
which may in any event or contingency operate to bind, obligate or compel the
Debtor to pay Interest exceeding the Maximum Rate shall be without binding force
or effect, at law or in equity, but only to the extent of the excess of Interest
over such Maximum Rate. If any Interest is contracted for, charged, collected,
taken or received in excess of the Maximum Rate ("Excess"), the Debtor
------
acknowledges and agrees that any such obligation, charge, collection or receipt
shall be the result of a bona fide error, and such Excess, to the extent
received, shall be applied first to reduce the principal hereof and the balance
of such Excess, if any, shall be returned to the Debtor; it being the express
intent of the Debtor and the Holder that the Debtor will not pay and the Holder
not receive, charge or collect, directly or indirectly, interest in excess of
the Maximum Rate. By the execution of this Note, the Debtor covenants and
agrees that (i) the credit or return of any Excess shall constitute the
acceptance by the Debtor of such Excess, and (ii) the Debtor shall not seek or
pursue (and hereby waives to the fullest extent permitted by law) any other
remedy, legal or equitable, against the Holder, based in whole or in part upon
contracting for, charging, collecting or receiving any Interest in excess of the
Maximum Rate. For the purpose of determining whether or not any Excess has been
contracted for, charged, collected or received by the Holder, all Interest at
any time contracted for, charged, collected or received from the Debtor in
connection with the indebtedness evidenced by this Note shall, to the extent
permitted by the Usury Laws, be amortized, prorated, allocated and spread in
equal parts throughout the full term of this
Note. The Debtor and the Holder agree, to the maximum extent permitted under the
Usury Laws, to (i) characterize any non-principal payment as an expense rather
than as Interest and (ii) exclude voluntary prepayments and the effects thereof.
For purposes hereof, the term "Interest" shall mean any and all interest, fees,
--------
premiums and other charges for the use of money or the extension of credit and
shall include any "interest" (or any amount or sum deemed to be "interest")
under and as defined in the Usury Laws; and the term "Usury Laws" shall mean any
----------
applicable laws, statutes (including, without limitation, Title 7, Chapter 4 of
the Official Code of Georgia), rules, regulations or ordinances limiting,
governing or otherwise regulating the rate or amount of Interest or the manner
which Interest may be calculated, charged, collected, paid, contracted for or
disclosed.
The Debtor, and the Holder by accepting this Note, each agree and stipulate
that the only charge imposed upon the Debtor for the use of money in connection
with this Note is and shall be the interest described in the first paragraph
hereof.
Each of the following events shall constitute an "Event of Default" under
this Note: (a) failure of the Debtor to pay any principal, interest or other
amount due hereunder when due, or the Debtor shall in any way fail to comply
with the other terms, covenants or conditions contained in this Note; (b) any
oral or written representation or warranty made at any time by the Debtor to the
Holder shall prove to have been incorrect or misleading in any material respect
when made; (c) a default, event of default, or event which with the giving of
notice or the passage of time or both would constitute a default or event of
default, shall have occurred under any other document, instrument, contract or
agreement now or hereafter entered into by the Debtor and Holder or executed by
the Debtor in favor of the Holder, including that certain Contingent Note dated
the date hereof and made by the Debtor in favor of the Holder and any security
agreement, pledge agreement or other similar agreement securing the obligations
hereunder or thereunder, or the Debtor shall in any way fail to comply with the
terms, covenants or conditions contained in any such document, instrument,
contract or agreement; (d) a default, event of default, or event which with the
giving of notice or the passage of time or both would constitute a default or
event of default, shall have occurred under any document, instrument, contract
or agreement (i) evidencing or securing indebtedness of the Debtor for borrowed
money or (ii) material to the financial condition of the Debtor; (e) a final
judgment or order for the payment of money, or any final order granting
equitable relief, shall be entered against the Debtor and such judgment or order
has or will have a materially adverse effect on the financial condition of the
Debtor; (f) a warrant, writ of attachment, levy or other similar process shall
be issued against any property of the Debtor; (g) the Debtor shall (i) commence
a voluntary case under the Bankruptcy Code of 1978, as amended or other federal
bankruptcy law (as now or hereafter in effect); (ii) file a petition seeking to
take advantage of any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition for adjustment of debts;
(iii) consent to or fail to contest in a timely and appropriate manner any
petition filed against it in an involuntary case under such bankruptcy laws or
other laws; (iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a
receiver, custodian, trustee, or liquidator of itself or of a substantial part
of its property, domestic or foreign; (v) be unable to, or admit in writing its
inability to, pay its debts as they become due; (vi) make a general assignment
for the benefit of creditors; or (vii) make a conveyance fraudulent as to
creditors under any state or federal law; or (h) a case or other proceeding
shall be commenced against the Debtor in any court of competent jurisdiction
seeking (i) relief under the Bankruptcy Code of 1978, as amended or other
federal bankruptcy law (as now or hereafter in effect) or under any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or adjustment of debts or (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like for the Debtor or all or any substantial part
of the assets, domestic or foreign, of the Debtor.
-2-
Thirty (30) days after the Holder has notified the Debtor of the occurrence
of an Event of Default (other than an Event of Default described in clauses (a),
(d), (g) or (h) of the definition thereof), if such Event of Default has not
been cured, any and all of the loans and the Debtor's other obligations
hereunder, at the option of the Holder, and without further demand or notice of
any kind, may be immediately declared, and thereupon shall immediately become in
default and due and payable and the Holder may exercise any and all rights and
remedies available to it at law, in equity or otherwise. Five (5) days after
the Holder has notified the Debtor of the occurrence of an Event of Default
described in clauses (a) or (d) of the definition of "Event of Default," if such
Event of Default has not been cured, any and all of the loans and the Debtor's
other obligations hereunder, at the option of the Holder, and without further
demand or notice of any kind, may be immediately declared, and thereupon shall
immediately become in default and due and payable and the Holder may exercise
any and all rights and remedies available to it at law, in equity or otherwise.
Immediately, upon the occurrence of an Event of Default described in clause (g)
or (h) of the definition thereof, any and all of the loans and the Debtor's
other obligations hereunder, without demand or notice of any kind, shall
immediately become in default and due and payable and the Holder may exercise
any and all rights and remedies available to it at law, in equity or otherwise.
The Debtor shall pay all expenses incurred by the Holder in the collection
of this Note (other than in connection with the scheduled payments of principal
and interest under this Note), including, without limitation, the reasonable
fees and disbursements of counsel to the Holder, if this Note is collected by or
through an attorney-at-law.
Time is of the essence of this Note.
To secure the payment of this Note and, all other indebtedness or liability
of the Debtor to the Holder, however and whenever incurred or evidenced, whether
direct or indirect, absolute or contingent, or due or to become due, the Debtor
hereby grants to the Holder a security interest in, and collaterally assigns to
the Holder, all property of the Debtor of every kind and description now or
hereafter in the possession or control of the Holder for any reason.
In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, the Debtor hereby authorizes the
Holder, at any time or from time to time, without notice to the Debtor or to any
other person or entity, any such notice being hereby expressly waived, to set-
off and to appropriate and to apply any and all indebtedness at any time held or
owing by the Holder or any affiliate of the Holder, to or for the credit or the
account of the Debtor, against and on account of all obligations of the Debtor
owing hereunder or otherwise to the Holder, irrespective of whether or not the
Holder shall have declared any or all of such obligations of the Debtor to be
due and payable, and although such obligations shall be contingent or unmatured.
THE DEBTOR AGREES THAT ALL OF ITS PAYMENT OBLIGATIONS HEREUNDER SHALL BE
ABSOLUTE, UNCONDITIONAL AND, FOR THE PURPOSES OF MAKING PAYMENTS HEREUNDER, THE
DEBTOR HEREBY WAIVES ANY RIGHT TO ASSERT ANY SETOFF, COUNTERCLAIM OR CROSS-
CLAIM.
FURTHER, THE DEBTOR WAIVES (I) ANY NOTICE OR HEARING PRIOR TO THE TAKING
POSSESSION OR CONTROL BY THE HOLDER OF ANY COLLATERAL GIVEN BY THE DEBTOR, (II)
THE POSTING OF ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR
TO ALLOWING THE HOLDER TO EXERCISE ANY OF ITS RIGHTS OR REMEDIES, INCLUDING THE
ISSUANCE OF AN IMMEDIATE WRIT OF
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POSSESSION AND (III) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION OF
LAWS.
THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF COUNSEL AND WITH A
FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF.
No delay or failure on the part of the Holder in the exercise of any right
or remedy shall operate as a waiver thereof, and no single or partial exercise
by the Holder of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy.
All amendments to this Note, and any waiver or consent of the Holder, must
be in writing and signed by the Holder and the Debtor.
The Debtor hereby waives presentment, demand, notice of dishonor, protests
and all other notices whatever.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF GEORGIA.
This Note shall be binding upon the successors and assigns of the Debtor.
A Holder of this Note may assign or transfer this Note to any person or entity
without notice to, or the consent of, the Debtor. The Debtor may not assign any
of its obligations hereunder to any person or entity.
Any notice to be given hereunder shall be in writing, shall be sent to the
Holder's address as specified in the first paragraph hereof or the Debtor's
addresses set forth below its signature hereto, as the case may be, and shall be
deemed received (i) on the earlier of the date of receipt or the date three
business days after deposit of such notice in the United States mail, if sent
postage prepaid, certified mail, return receipt requested or (ii) when actually
received, if personally delivered.
[Signatures on Next Page]
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IN WITNESS WHEREOF, the Debtor has executed and delivered this Note A under
seal as of the date and year first written above.
TELECARE, INC.
By:
------------------------------
Title:
------------------------
[CORPORATE SEAL]
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-5-
EXHIBIT 1.03(b)
---------------
CONTINGENT NOTE
Date: August 25, 2000
FOR VALUE RECEIVED, TELECARE, INC. (the "Debtor"), subject to the terms of
this Note, hereby unconditionally promises to pay to the order of PREMIERE
COMMUNICATIONS, INC. (hereafter, together with any holder hereof, called
"Holder") at the offices of the Holder located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as the Holder may designate in
writing to the Debtor, in lawful money of the United States of America, and in
immediately available funds, the Contingent Amount Due (as defined below) plus
the amount, if any, of the ▇▇▇▇▇▇▇▇ Addition (as defined below), together with
interest on the principal balance from time to time outstanding hereunder
(computed on the basis of a 360-day year and actual number of days elapsed) from
August 25, 2001 at a per annum rate equal to twelve percent (12%).
Notwithstanding the foregoing, in the event that prior to August 25, 2001 Debtor
pays to the order of Holder in immediately available funds the amount indicated
on Schedule A to this Contingent Note, then the Contingent Amount Due shall
----------
automatically be deemed to be the amount indicated on Schedule A to this
----------
Contingent Note.
For purposes of this Contingent Note, the term "Customer Contracts" shall
mean the contracts for retail calling card services between Premiere
Communications, Inc. ("Premiere") and each of its customers of such service who
were active during any portion of the three month period of April, May and June,
2000 (the "Customers"). For the purposes of this Contingent Note, the
"Contingent Amount Due" shall mean a variable amount between $0 and $2,390,000,
which amount shall be determined as follows: (A) the variable amount shall be
$1,195,000 if on or before February 25, 2001 Holder has made all necessary
filings with, and received all necessary approvals, consents and authorizations
from, or has otherwise satisfied any notification requirements imposed by, any
and all applicable state governmental and regulatory authorities (collectively,
"Regulatory Filings and Approvals") necessary to allow Premiere to sell a
sufficient number of its Customer Contracts representing at least fifty percent
(50%) of the number of its customers to Debtor; (B) the variable amount shall be
$0 and this Contingent Note shall be null, void and of no further force or
effect if Holder has not made or obtained the Regulatory Filings and Approvals
necessary to allow Premiere to sell the number of the Customer Contracts
described in the foregoing clause (A); and (C) the variable amount shall
increase (up to an aggregate maximum of $2,390,000) by the product of (i) $24
multiplied by (ii) the number of Customer Contracts for which Holder, prior to
August 25, 2001, has made or obtained all Regulatory Filings and Approvals in
excess of 50% of the number of Customer Contracts; provided, however, a state
governmental and regulatory authority's approval, consent or authorization with
respect to Holder's sale of the Customer Contracts to Debtor in a state shall be
presumed for purposes of the foregoing clauses (A) through (C) if Holder cannot
make or obtain the Regulatory Filings or Approvals due in whole or significant
part to any of Debtor's prior, current or future acts, omissions or
non-compliance with any legal or regulatory requirements in such state.
For purposes of this Contingent Note, the term "▇▇▇▇▇▇▇▇ Addition" means
the amount, if any, that Holder at its sole option and discretion pays to ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") upon the default of Debtor in its obligation to pay to
▇▇▇▇▇▇▇▇ $200,000 on the earlier of (i) one year after the date of this
Contingent Note or (ii) August 31, 2001 pursuant to Section 5.07 of that certain
Asset Sale Agreement dated as of the date of this Note by and between Debtor and
Premiere.
The principal balance shall be payable ON DEMAND on or after August 25,
2001. Interest shall accrue monthly from and after August 25, 2001 and be added
to the principal balance hereunder on the first business day of each calendar
month until all principal and interest hereunder has been paid in full. All such
interest shall be due and payable on demand.
Notwithstanding any terms or provisions contained herein or elsewhere, in
no event shall the aggregate amount of Interest (as defined below) contracted
for, reserved, charged, collected, taken or received by the Holder pursuant to
this Contingent Note exceed the maximum amount permissible (the "Maximum Rate")
------------
under the Usury Laws (as defined below). Neither the exercise by the Holder of
its rights to accelerate the payment or the maturity of any indebtedness
evidenced by this Contingent Note, nor the prepayment by the Debtor of any of
the indebtedness evidenced by this Note, nor the occurrence of any other event
or contingency whatsoever, shall entitle the Holder to charge, collect or
receive Interest in excess of the Maximum Rate and in no event shall the Debtor
be obligated to pay Interest exceeding the Maximum Rate. All agreements,
conditions or stipulations, if any, which may in any event or contingency
operate to bind, obligate or compel the Debtor to pay Interest exceeding the
Maximum Rate shall be without binding force or effect, at law or in equity, but
only to the extent of the excess of Interest over such Maximum Rate. If any
Interest is contracted for, charged, collected, taken or received in excess of
the Maximum Rate ("Excess"), the Debtor acknowledges and agrees that any such
------
obligation, charge, collection or receipt shall be the result of a bona fide
error, and such Excess, to the extent received, shall be applied first to reduce
the principal hereof and the balance of such Excess, if any, shall be returned
to the Debtor; it being the express intent of the Debtor and the Holder that the
Debtor will not pay and the Holder not receive, charge or collect, directly or
indirectly, interest in excess of the Maximum Rate. By the execution of this
Contingent Note, the Debtor covenants and agrees that (i) the credit or return
of any Excess shall constitute the acceptance by the Debtor of such Excess, and
(ii) the Debtor shall not seek or pursue (and hereby waives to the fullest
extent permitted by law) any other remedy, legal or equitable, against the
Holder, based in whole or in part upon contracting for, charging, collecting or
receiving any Interest in excess of the Maximum Rate. For the purpose of
determining whether or not any Excess has been contracted for, charged,
collected or received by the Holder, all Interest at any time contracted for,
charged, collected or received from the Debtor in connection with the
indebtedness evidenced by this Contingent Note shall, to the extent permitted by
the Usury Laws, be amortized, prorated, allocated and spread in equal parts
throughout the full term of this Contingent Note. The Debtor and the Holder
agree, to the maximum extent permitted under the Usury Laws, to (i)
characterize any non-principal payment as an expense rather than as Interest and
(ii) exclude voluntary prepayments and the effects thereof. For purposes
hereof, the term "Interest" shall mean any and all interest, fees, premiums and
--------
other charges for the use of money or the extension of credit and shall include
any "interest" (or any amount or sum deemed to be "interest") under and as
defined in the Usury Laws; and the term "Usury Laws" shall mean any applicable
----------
laws, statutes (including, without limitation, Title 7, Chapter 4 of the
Official Code of Georgia), rules, regulations or ordinances limiting, governing
or otherwise regulating the rate or amount of Interest or the manner which
Interest may be calculated, charged, collected, paid, contracted for or
disclosed.
The Debtor, and the Holder by accepting this Contingent Note, each agree
and stipulate that the only charge imposed upon the Debtor for the use of money
in connection with this Contingent Note is and shall be the interest described
in the first paragraph hereof.
Each of the following events shall constitute an "Event of Default" under
this Contingent Note: (a) failure of the Debtor to pay any principal, interest
or other amount due hereunder when due, or the Debtor shall in any way fail to
comply with the other terms, covenants or conditions
-2-
contained in this Contingent Note; (b) any oral or written representation or
warranty made at any time by the Debtor to the Holder shall prove to have been
incorrect or misleading in any material respect when made; (c) a default, event
of default, or event which with the giving of notice or the passage of time or
both would constitute a default or event of default, shall have occurred under
any other document, instrument, contract or agreement now or hereafter entered
into by the Debtor and Holder or executed by the Debtor in favor of the Holder,
including that certain Note A dated the date hereof and made by the Debtor in
favor of the Holder ("Note A") and any security agreement, pledge agreement or
other similar agreement securing the obligations hereunder or thereunder, or the
Debtor shall in any way fail to comply with the terms, covenants or conditions
contained in any such document, instrument, contract or agreement; (d) a
default, event of default, or event which with the giving of notice or the
passage of time or both would constitute a default or event of default, shall
have occurred under any document, instrument, contract or agreement (i)
evidencing or securing indebtedness of the Debtor for borrowed money or (ii)
material to the financial condition of the Debtor; (e) a final judgment or order
for the payment of money, or any final order granting equitable relief, shall be
entered against the Debtor and such judgment or order has or will have a
materially adverse effect on the financial condition of the Debtor; (f) a
warrant, writ of attachment, levy or other similar process shall be issued
against any property of the Debtor; (g) the Debtor shall (i) commence a
voluntary case under the Bankruptcy Code of 1978, as amended or other federal
bankruptcy law (as now or hereafter in effect); (ii) file a petition seeking to
take advantage of any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition for adjustment of debts;
(iii) consent to or fail to contest in a timely and appropriate manner any
petition filed against it in an involuntary case under such bankruptcy laws or
other laws; (iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a
receiver, custodian, trustee, or liquidator of itself or of a substantial part
of its property, domestic or foreign; (v) be unable to, or admit in writing its
inability to, pay its debts as they become due; (vi) make a general assignment
for the benefit of creditors; or (vii) make a conveyance fraudulent as to
creditors under any state or federal law; or (h) a case or other proceeding
shall be commenced against the Debtor in any court of competent jurisdiction
seeking (i) relief under the Bankruptcy Code of 1978, as amended or other
federal bankruptcy law (as now or hereafter in effect) or under any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or adjustment of debts or (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like for the Debtor or all or any substantial part
of the assets, domestic or foreign, of the Debtor.
Thirty (30) days after the Holder has notified the Debtor of the occurrence
of an Event of Default (other than an Event of Default described in clauses (a),
(d), (g) or (h) of the definition thereof), if such Event of Default has not
been cured, the Contingent Amount Due shall automatically mean $2,390,000
notwithstanding any other provision of this Contingent Note to the contrary,
which without further demand or notice of any kind thereupon shall immediately
become in default and due and payable and the Holder may exercise any and all
rights and remedies available to it at law, in equity or otherwise. Five (5)
days after the Holder has notified the Debtor of the occurrence of an Event of
Default described in clauses (a) or (d) of the definition of "Event of Default,"
if such Event of Default has not been cured, the Contingent Amount Due shall
automatically mean $2,390,000 notwithstanding any other provision of this
Contingent Note to the contrary, which without further demand or notice of any
kind thereupon shall immediately become in default and due and payable and the
Holder may exercise any and all rights and remedies available to it at law, in
equity or otherwise. Immediately, upon the occurrence of an Event of Default
described in clause (g) or (h) of the definition thereof, the Contingent Amount
Due shall automatically mean $2,390,000 notwithstanding any other provision of
this Contingent Note to the contrary, which without further demand or notice of
any
-3-
kind thereupon shall immediately become in default and due and payable and the
Holder may exercise any and all rights and remedies available to it at law, in
equity or otherwise.
This Contingent Note shall be subordinated to any future debt that replaces
Note A, which subordination is subject to negotiation with the new lender and
Holder.
The Debtor shall pay all expenses incurred by the Holder in the collection
of this Note (other than in connection with the scheduled payments of principal
and interest under this Contingent Note), including, without limitation, the
reasonable fees and disbursements of counsel to the Holder, if this Contingent
Note is collected by or through an attorney-at-law.
Time is of the essence of this Contingent Note.
To secure the payment of this Contingent Note and, all other indebtedness
or liability of the Debtor to the Holder, however and whenever incurred or
evidenced, whether direct or indirect, absolute or contingent, or due or to
become due, the Debtor hereby grants to the Holder a security interest in, and
collaterally assigns to the Holder, all property of the Debtor of every kind and
description now or hereafter in the possession or control of the Holder for any
reason.
In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, the Debtor hereby authorizes the
Holder, at any time or from time to time, without notice to the Debtor or to any
other person or entity, any such notice being hereby expressly waived, to set-
off and to appropriate and to apply any and all indebtedness at any time held or
owing by the Holder or any affiliate of the Holder, to or for the credit or the
account of the Debtor, against and on account of all obligations of the Debtor
owing hereunder or otherwise to the Holder, irrespective of whether or not the
Holder shall have declared any or all of such obligations of the Debtor to be
due and payable, and although such obligations shall be contingent or unmatured.
THE DEBTOR AGREES THAT ALL OF ITS PAYMENT OBLIGATIONS HEREUNDER SHALL BE
ABSOLUTE, UNCONDITIONAL AND, FOR THE PURPOSES OF MAKING PAYMENTS HEREUNDER, THE
DEBTOR HEREBY WAIVES ANY RIGHT TO ASSERT ANY SETOFF, COUNTERCLAIM OR CROSS-
CLAIM.
FURTHER, THE DEBTOR WAIVES (I) ANY NOTICE OR HEARING PRIOR TO THE TAKING
POSSESSION OR CONTROL BY THE HOLDER OF ANY COLLATERAL GIVEN BY THE DEBTOR, (II)
THE POSTING OF ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR
TO ALLOWING THE HOLDER TO EXERCISE ANY OF ITS RIGHTS OR REMEDIES, INCLUDING THE
ISSUANCE OF AN IMMEDIATE WRIT OF POSSESSION AND (III) THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTION OF LAWS.
THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF COUNSEL AND WITH A
FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF.
No delay or failure on the part of the Holder in the exercise of any right
or remedy shall operate as a waiver thereof, and no single or partial exercise
by the Holder of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy.
-4-
All amendments to this Contingent Note, and any waiver or consent of the
Holder, must be in writing and signed by the Holder and the Debtor.
The Debtor hereby waives presentment, demand, notice of dishonor, protests
and all other notices whatever.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF GEORGIA.
This Note shall be binding upon the successors and assigns of the Debtor.
A Holder of this Contingent Note may assign or transfer this Contingent Note to
any person or entity without notice to, or the consent of, the Debtor. The
Debtor may not assign any of its obligations hereunder to any person or entity.
Any notice to be given hereunder shall be in writing, shall be sent to the
Holder's address as specified in the first paragraph hereof or the Debtor's
addresses set forth below its signature hereto, as the case may be, and shall be
deemed received (i) on the earlier of the date of receipt or the date three
business days after deposit of such notice in the United States mail, if sent
postage prepaid, certified mail, return receipt requested or (ii) when actually
received, if personally delivered.
[Signatures on Next Page]
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IN WITNESS WHEREOF, the Debtor has executed and delivered this Contingent
Note under seal as of the date and year first written above.
TELECARE, INC.
By:
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Title:
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[CORPORATE SEAL]
Address for Notices:
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EXHIBIT 5.06
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AMENDMENT #2 TO CARRIER AGREEMENT
This Amendment #2 is entered into as of August __, 2000 (the "Effective Date")
to that certain Carrier Agreement between PREMIERE COMMUNICATIONS, INC., a
corporation under the laws of Florida ("Premiere"), and Telecare, Inc., a
corporation under the laws of Indiana ("Customer"), dated as of January 11,
1999, as amended, (the "Agreement"). In the event of any conflict between the
terms of this Amendment and the terms of the Agreement, the terms of this
Amendment shall control. Capitalized terms not defined herein shall have the
meaning ascribed to them in the Agreement.
RECITALS:
Whereas, the parties entered into the Agreement; and
Whereas, the parties have entered into separate agreements wherein Customer is
purchasing certain assets related to Premiere's Retail Calling Card business.
In payment for such assets, Customer is issuing to Premiere, among other things,
a promissory note ("Note A").
Whereas, associated with the sale of assets described above, the parties entered
into a Management Services Agreement under which Premiere will manage certain
assets and business on behalf of Customer until Customer pays off Note A.
NOW, THEREFORE, in consideration of the mutual obligations, premises and
undertakings set forth below, the parties agree as follows:
AGREEMENT:
1. Upon payment of Note A to Premiere by Customer, Customer shall begin buying
from Premiere transmission and platform services for long-distance
telephone calls (the "Services"). The rates for such services shall be
based on the following formula: ((inbound cost per minute multiplied by
1.20) + outbound cost) multiplied by 1.8085) + $0.015 per minute. Upon
commencement of Customer's purchase of the Services, Premiere will provide
Customer with a matrix detailing the rates per the formula above. At the
beginning of each calendar month thereafter, the rates shall be adjusted
based on Premiere's cost to buy the Services. Such rates are for platform
and transmission charges only and do not include any taxes, payphone
surcharges, USF or other add-on charges.
2. Customer agrees to purchase the Services on a take-or-pay basis for three
(3) calendar quarters commencing on the first calendar quarter following
the payment of Note A. Such total commitment shall vary depending upon the
when Note A is paid off by Customer. If Customer pays off Note A within
ninety (90) days after it is issued (the "Issue Date"), then the total
commitment shall be seven million dollars ($7,000,000). If Customer pays
off Note A between ninety-one and one hundred eighty (91-180) days after
the Issue Date, then the total commitment shall be six million dollars
($6,000,000). If Customer pays off Note A more than one hundred eighty
(180+) days after the Issue Date, then the total commitment shall be five
million dollars ($5,000,000).
3. For the first (1/st/) calendar quarter of Customer's take-or-pay
commitment, Customer shall purchase at least two million dollars
($2,000,000) worth of the Services. For the second (2/nd/) calendar quarter
of Customer's take-or-pay commitment, Customer shall purchase at least two
million dollars ($2,000,000) worth of the Services. For the third
(3/rd/)calendar quarter of
Customer's take-or-pay commitment, Customer's commitment shall equal three,
two or one million dollars ($3,000,000 or $2,000,000 or $1,000,000)
depending upon when Note A is paid off as provided above.
4. Customer shall pay for its actual usage of the Services on a monthly basis
on thirty (30) day net terms, provided that payment for the final month of
each calendar quarter shall include both actual usage for such month and
the amount, if any, by which the aggregate payments for the calendar
quarter are less than the minimum quarterly commitment for such quarter. If
the call volume for any calendar quarter does not meet or exceed the
minimum take-or-pay commitment for such quarter, Customer may roll over up
to ten percent (10%) of that quarter's commitment to be added to the
commitment for the next calendar quarter.
5. After the expiration of the initial three calendar quarters and payment of
all amounts due for usage and take-or-pay commitments, the rate for
domestic calls shall be reduced to $0.090 per minute for domestic United
States calls for the remainder of the term of the Agreement.
6. If the Agreement is terminated or expires before Customer fulfills its
obligations with regard to its take-or-pay commitment, then the terms of
Sections 1, 2, 3 and 4 of this Amendment #2 shall survive such termination
or expiration and shall continue and remain in effect until Customer's
obligations are fulfilled.
Except as described above, all other terms and conditions of the Agreement shall
remain in full force and effect.
Exhibit 1 is attached hereto and incorporated herein.
IN WITNESS WHEREOF, the parties executed this Amendment #2 as of the date first
set forth above.
TELECARE, INC. PREMIERE COMMUNICATIONS, INC.:
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Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇ Name:
Title: President Title:
EXHIBIT 5.08
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MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (this "Agreement") is executed as of
August 25, 2000, but with the parties express intention that this Agreement be
effective for tax and accounting purposes as of August 1, 2000, by and between
Telecare, Inc., an Indiana corporation ("Purchaser") and Premiere
Communications, Inc., a Florida corporation ("Premiere").
WHEREAS, prior to the date hereof, Premiere owned and operated its retail
calling card business (the "Business"); and
WHEREAS, pursuant to that certain Asset Sale Agreement by and among
Purchaser and Premiere dated August 25, 2000 (the "Sale Agreement"), Purchaser
has agreed to purchase, and Premiere has agreed to sell, substantially all of
the assets used exclusively in the Business (capitalized words not otherwise
defined herein shall have the meaning ascribed to them in the Sale Agreement);
and
WHEREAS, as a material inducement to Purchaser to enter into the Sale
Agreement, Premiere has agreed to provide certain services to Purchaser relating
exclusively to the Business on the terms and subject to the conditions set forth
herein; and
WHEREAS, Premiere and Purchaser recognize that Purchaser will need a period
of time to fully transfer the Business and to establish its own infrastructure
related to the Business (the "Transition Period") and that during the Transition
Period, Purchaser will need certain services to be provided by Premiere; and
WHEREAS, Premiere and Purchaser have determined that the period of time
needed to fully transfer the Business should coincide with the term of Note A;
NOW, THEREFORE, in consideration of the Sale Agreement, the mutual promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Services.
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(a) General.
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Subject to the terms and provisions of this Agreement and subject to
the payment of the fees set forth in Section 2(a) and solely in connection
with the Business, Premiere shall provide to Purchaser the services that it
had been providing for itself in the use of the Assets and the operation of
the Business but only as and to the extent reflected in the revenue and
expenses of the Business for the six months prior to the date of this
Agreement (collectively, the "Services"). Unless otherwise agreed by the
Managing Committee (as defined in Section 3), during the Term of this
Agreement, Premiere shall
use its commercially reasonable efforts to provide the Services (which
Services shall be provided pursuant to Premiere's existing operating
authority until such time as Premiere has obtained the consent or approval,
or otherwise has complied with any applicable notice requirements, of all
applicable federal or state governmental or regulatory authorities having
jurisdiction with respect to the transfer of the Business) in the same
manner and with the same level of care as Premiere performed such Services
in the six months prior to the date of this Agreement. By way of
illustration and not as an expansion of the Services, Premiere will provide
Purchaser with general services of a financial, technical, commercial,
administrative and advisory nature, including those services listed on
Exhibit A hereto. The Services may be expanded beyond the definition of the
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first sentence of this Section 1 only with the prior written consent of
Premiere, which consent may be withheld for any reason in Premiere's sole
and absolute discretion.
(b) Use of Assets.
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In connection with the performance of the Services, Premiere shall
have access to and the full and complete use of the Assets, including, but
not limited to, the Databases, the Marketing Names, the Bloomington Assets
and the Marketing Materials, solely so that it may fulfill its obligations
under this Agreement.
(c) Contract Management.
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As an example of the Services and not in addition thereto, Premiere
shall use its commercially reasonable efforts to manage, maintain, operate
and perform on behalf of and for the benefit of Purchaser any
responsibilities, duties and obligations of Purchaser as the assignee of
the Contracts. Premiere shall consult with Purchaser and keep Purchaser
advised as to all material matters and decisions affecting the Contracts;
and shall refrain from altering, modifying, amending, or waiving any terms
or provisions of the Contracts without the prior written consent of ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇"), which consent shall not be withheld or delayed
unreasonably, except in the reasonable and ordinary course of performing
any duties and obligations with respect to the Contracts.
Premiere shall have the authority to enter into and maintain in effect
such contracts, licenses, agreements and other undertakings on behalf of
Purchaser and in Purchaser's name as Premiere shall from time to time
reasonably consider appropriate, provided, however, that Premiere shall not
enter into any marketing contracts or any contracts that extend beyond the
term of this Agreement, in either case without the prior written consent of
▇▇▇▇▇▇▇▇▇, which consent shall not be withheld or delayed unreasonably.
Premiere specifically acknowledges that, except as set forth in the
preceding sentence or elsewhere in this Agreement, it is not authorized to,
and shall not, sell, assign, materially breach, or default with respect to
any Contract or part thereof, or commit any other action with respect to
the Contracts that is contrary to the terms of this Agreement.
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2. Costs of Services.
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(a) Monthly Fees.
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The monthly fees for the Services during the Term of this
Agreement shall be equal to one hundred percent (100%) of the cash receipts
of the Business for each such month. During the Term of this Agreement,
Premiere shall pay all of the expenses relating to the operations of the
Business out of its monthly fee for the Services. Pursuant to Premiere's
covenant in the preceding sentence, Premiere also (i) shall pay all
accrued, but unpaid operating expenses of the Business that exist at the
date of the termination of this Agreement and that were incurred in the
ordinary course of business and (ii) shall pay all current liabilities for
actual redemption arising out of the Call & Fly(R) program of the Business,
so long as Telecare or Purchaser or any of their respective representatives
or affiliates have not taken any action that, directly or indirectly, in
whole or in part, increased the number or amount of such redemptions or the
liability therefor.
(b) Purchaser Directed Expenditures.
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During the period covered by this Agreement, Purchaser may direct
Premiere in the expenditure of up to ten percent (10%) of the cash receipts
of the Business towards the following expenses:
(i) New customer acquisition costs, including sales and
marketing activities relating directly and exclusively to the
acquisition or generation of new customers ("New Customer
Acquisition Costs") or costs relating to the marketing of
additional services to existing customers of the Business;
(ii) Up to $50,000 of aggregate costs of Purchaser associated
with the consummation of the transactions contemplated by the
Sale Agreement, which shall include, without limitation, legal
fees, but which costs shall not include any costs associated with
investment bankers fees, costs or expenses or any other costs
related, directly or indirectly, to obtaining the third party
financing necessary to repay Note A and Note B; and
(iii) Up to $200,000 of aggregate costs associated with the
transition of the Business to Purchaser, provided that (with the
sole exception of up to $10,000 a month to be paid to ▇▇▇▇▇▇▇
▇▇▇▇▇▇ or any other head of sales and marketing for Telecare)
none of these transition costs may be allocated to or otherwise
spent for existing personnel of Telecare or Purchaser.
(c) Marketing Incentive Payments.
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To motivate Purchaser to implement effective marketing programs
and to compensate Purchaser for its successes, Premiere will pay to
Purchaser, in cash, a marketing incentive fee equal to 20% of any amount by
which the cash receipts of the
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Business exceed $9,400,000 during the Term of this Agreement. Conversely,
if the cash receipts of the Business during the Term of this Agreement are
less than $9,400,000, Purchaser will pay to Premiere, in cash, an amount
equal to 20% of the difference between $9,400,000 and the actual revenues.
Any payments required pursuant to this paragraph (c) shall be made within
thirty (30) days after the termination of this Agreement has expired.
(d) Purchaser's Right of Audit and Inspection.
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At any time during the Term of this Agreement and for sixty (60)
days thereafter, Purchaser shall have the right, upon advance written
notice to Premiere and at such reasonable times during normal business
hours as Premiere may designate to Purchaser, (i) to inspect and copy, at
Purchaser's expense, the books, records and tax returns of Premiere for the
purpose of determining the accuracy of (a) Premiere's calculation of the
cash receipts of the Business and (b) the management reports referred to in
Section 4, and (ii) to have its independent auditors audit such amounts.
In no event shall such inspection, copying or audit disrupt the normal
operations of the Business. If Purchaser should dispute Premiere's
calculation of cash receipts of the Business based on any such inspection
or audit, then Purchaser and Premiere shall submit such dispute to binding
arbitration pursuant to the provisions of Section 11. In no event shall
Purchaser be entitled to inspect or audit the books and records of the
Business more than once every three months during the Term of this
Agreement. All audits requested by Purchaser during the Term of this
Agreement or for sixty (60) days thereafter, must be completed by the
seventy-fifth (75) day following the termination of this Agreement.
3. Managing Committee
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During the Term of this Agreement, certain decisions affecting the
management of the Business will be made by a managing committee consisting of
three members (the "Managing Committee").
(a) Membership.
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The initial three members of the Managing Committee shall be ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇. In the event that either ▇▇.
▇▇▇▇ or ▇▇. ▇▇▇▇▇▇▇▇ become unable to serve on the Managing Committee,
their successors will be chosen by Premiere, provided, however, that
Premiere will not remove ▇▇. ▇▇▇▇ or ▇▇. ▇▇▇▇▇▇▇▇ from the Managing
Committee so long as they are employees of Premiere. Should ▇▇. ▇▇▇▇▇▇▇▇▇
become unable to serve on the Managing Committee, his successor will be
chosen by Purchaser. Except as provided above, each of Purchaser and
Premiere shall be entitled at any time, and from time to time, and for any
reason (or for no reason) to designate for removal its appointed member or
members of the Managing Committee and to name a replacement for that member
or members. Prior to replacing any member or members of the Managing
Committee, the party making the replacement shall provide the other party
an opportunity to meet, interview and make comments with respect to the
suitability of the
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person or persons sought to be replacement members of the Managing
Committee. However, the selection of the replacement member or members
shall ultimately be left to the discretion of the parties as described
above.
(b) Managing Committee Decisions.
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(i) ▇▇▇▇▇▇▇▇▇, or his successor, is entitled to direct the
marketing efforts related to New Customer Acquisition Costs,
subject to (a) the 10% limitation identified in Section 2(b) and
(b) the authority of Premiere to veto all such marketing efforts
that are not lawful. All sales and marketing decisions relating
to current customers must be approved by ▇▇▇▇▇▇▇▇▇.
(ii) Aside from the up to $10,000 a month to be paid to ▇▇▇▇▇▇▇
▇▇▇▇▇▇ or any other head of sales and marketing for Telecare
pursuant to Section 2(b)(iii) above, all expenditures on existing
personnel of Purchaser or otherwise related to the Business must
be approved by a unanimous vote of the Managing Committee.
(iii) All decisions related to cost-cutting initiatives may be
made at the sole discretion of ▇▇▇▇▇▇▇▇▇.
4. Reporting. Premiere shall provide Purchaser with the management
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reports listed on Exhibit B at the frequency indicated on Exhibit B.
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5. Term. This Agreement shall continue in force and effect, and Premiere
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shall provide the Services hereunder, for the period from the date hereof until
the date on which Note A is fully paid and satisfied and, accordingly, no longer
outstanding (the "Term"). Notwithstanding the foregoing sentence, Premiere, at
its option and in its sole and absolute discretion, may elect to terminate this
Agreement at the time of, or at any time after, an uncured default by Purchaser
under the Sale Agreement, this Agreement or Note A.
6. Liability and Indemnification. Purchaser and ▇▇▇▇▇▇▇▇▇ shall be liable
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for their own acts and omissions, and those of their respective directors,
officers, employees, shareholders, representatives, agents and invitees, in
connection with this Agreement or otherwise, and shall indemnify and hold
harmless Premiere and its affiliates, and their respective directors, officers,
employees, shareholders, representatives, agents and invitees, against any
claims, actions, compensatory damages, losses or liabilities arising from any
such acts or omissions. Premiere shall be liable for its own gross negligence
and its willful acts of misconduct in connection with this Agreement, and shall
indemnify and hold harmless Purchaser and its affiliates, and their respective
directors, officers, employees, agents shareholders, representatives, agents and
invitees, against any claims, actions, compensatory damages, losses or
liabilities arising from its own gross negligence and any willful acts of
misconduct by it.
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In no event shall either party be liable to the other party for indirect,
incidental, exemplary, special, punitive or consequential damages. Such damages
shall include but not be limited to lost income or profits.
At Premiere's option, any amounts owed to Purchaser or ▇▇▇▇▇▇▇▇▇ as a
result of this Section 6 may be offset against Note A or Note B.
7. Insurance. As of the date of this Agreement, Purchaser has binding
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insurance policies ("Purchaser's Insurance") in place that provide insurance
coverage with respect to the Business and the Assets as evidenced by Purchaser's
certificates of insurance attached hereto as Exhibit C. Purchaser's Insurance
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names Premiere as an additional named insured. Purchaser shall maintain at all
times during the Term of this Agreement insurance policies with no lesser
coverage and otherwise no less favorable to the Business, the Assets, Purchaser
or Premiere than the coverage evidenced by Exhibit C. Purchaser acknowledges
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that all insurance carried by Purchaser is primary and non-contributory.
8. Force Majeure. Any delays in or failure of performance by Premiere
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shall not constitute a default hereunder if and to the extent such delay or
failure of performance is caused by occurrences beyond the reasonable control of
Premiere, including, but not limited to, acts of God or the public enemy,
expropriation or confiscation of facilities, compliance with any order or
request of any governmental authority, acts of war; riots or strikes or other
concerted acts of personnel, or any causes, whether or not of the same class or
kind as those specifically named above, that are not within the reasonable
control of Premiere.
9. Confidentiality. Any and all information which is not generally known
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to the public which is exchanged between the parties in connection with this
Agreement, or which is directly or indirectly obtained by one party from the
other in connection with the performance of the Services hereunder, whether of a
technical or business nature, shall be considered to be confidential. The
parties agree that confidential information shall not be disclosed to any third
party or parties without the written consent of the other party. Each party
shall take reasonable measures to protect against, and shall be liable for,
disclosure of confidential information by its directors, officers, employees,
shareholders, representatives, agents and invitees. Confidential information
shall not include any information (i) which is or becomes part of the public
domain, (ii) which is obtained from third parties who are not bound by
confidentiality obligations or (iii) which is required to be disclosed by law,
regulation, legal process or the rules of any state or federal regulatory agency
or any national stock exchange or any national automated quotation system. It is
further understood and agreed that money damages would not be a sufficient
remedy for any breach of this Section 10 and that the non-breaching party shall
be entitled to specific performance as a remedy for any such breach. Such remedy
shall not be deemed to be the exclusive remedy for such breach but shall be in
addition to all other remedies available hereunder, at law or in equity, to the
non-breaching party. The provisions of this section shall survive the
termination of this Agreement.
10. Independent Contractor Status. Premiere shall be deemed to be an
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independent contractor to Purchaser and employees of Premiere shall at all times
be regarded as employees of
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Premiere. Nothing contained in this Agreement shall create or be deemed to
create an employment, agency, joint venture or partnership relationship between
Purchaser and Premiere.
11. Arbitration. Prior to submission to arbitration, the non-defaulting
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party shall have provided to the breaching or defaulting party thirty (30) days'
prior written notice of its breach or, or default under, the terms of this
Agreement during which thirty (30) days' the defaulting party shall have the
right to cure such breach or default and during which the parties will attempt
to resolve promptly and in good faith, any controversy or claim arising out of
or relating to this Agreement by negotiations between representatives of the
parties who have authority to settle the controversy. The parties may agree to
use other alternative dispute resolution procedures, including mediation, mini-
trial, or other procedures involving a neutral advisor. Within ten (10) days
after receipt of the written notice from the non-defaulting party, the receiving
party shall submit to the other a written response. If the matter has not been
resolved within twenty (20) days of receipt of the disputing party's notice, or
if either party will not meet within ten (10) days of receipt of the disputing
party's notice, either party may initiate arbitration in accordance with the
terms of this Section 11 after the thirty (30) day period referred to in the
first sentence.
(a) Any dispute, controversy or claim arising out of, in connection
with, or related to this Agreement or any modification, extension or breach
thereof, including any claim for damages or rescission, or both, not resolved by
the foregoing negotiation procedures shall be finally settled by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, as in effect at the time of the initiation of
arbitration. The arbitration shall be held before one arbitrator mutually
agreed to by Premiere and Purchaser. In the event that Premiere and Purchaser
cannot mutually agree on an arbitrator within 5 business days, then the
arbitration shall be held before a panel of three arbitrators, one to be
selected by Premiere, one to be selected by Purchaser, and the third by
agreement of the two arbitrators selected by the parties. The arbitration shall
be held in Atlanta, Georgia. The arbitration proceedings, submissions and award
shall be in English. In the event that the dispute being arbitrated pursuant to
this Section 11 arises out of the calculation of the cash receipts of the
Business pursuant to Section 2(d), then the arbitrator or arbitrators shall be
qualified and experienced in matters relating to accounting.
(b) The parties consent to the jurisdiction of any state or federal
court of competent subject matter jurisdiction, and hereby waive any defense
based on personal jurisdiction or venue, for all purposes in connection with the
arbitration, including (a) confirmation or vacating of the arbitration award;
(b) enforcement of the arbitration award; (c) issuance of provisional remedies
to protect rights, interests, assets or property and to ensure ultimate
satisfaction of the arbitration award, including but not limited to temporary or
preliminary injunctive relief. The parties may, without inconsistency with this
agreement to arbitrate, seek from any court having jurisdiction any interim
measures or provisional remedies pending the establishment of the arbitral
tribunal and until the arbitral tribunal's final award has been satisfied. The
parties agree that the award made by the arbitrator shall be final and binding
on the parties, and they waive any right to appeal the arbitral award, to the
extent such an appeal may be lawfully waived.
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12. Entire Agreement, Amendment and Waiver.
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This Agreement constitutes the entire agreement with respect to the subject
matter hereof and thereof and supersedes all prior and contemporaneous
agreements and understandings of the parties with respect thereto. No change,
alteration, modification or addition to this Agreement shall be effective unless
in writing and properly executed by the parties hereto.
13. Notices. Except as otherwise expressly set forth in this Agreement,
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all notices, demands and other communications to be given or delivered under or
by reason of the provisions of this Agreement will be in writing and will be
deemed to have been given when delivered personally, or by documented overnight
delivery service, or sent by telecopy, telex, or other electronic transmission
service, provided a confirmation copy is also sent no later than the next
business day by first class mail, return receipt requested. Notices, demands and
communications to Purchaser or Premiere will, unless another address is
specified in writing, be sent to the address indicated below:
If to Premiere, to: Premiere Communications, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ & Bird LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Telecare
or Purchaser, to: Telecare Systems, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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14. Assignment. This Agreement may not be assigned by Purchaser without
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the prior written consent of Premiere, which Premiere may withhold in its sole
and absolute discretion. This Agreement shall be binding upon and shall inure to
the benefit of and be enforceable by Premiere and its successors, and assigns.
15. Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
effect of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
16. No Third Party Beneficiaries. This Agreement does not create any
----------------------------
rights in any person or party who is not a party to this Agreement.
17. No Strict Construction. The language used in this Agreement will be
----------------------
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any person.
18. Section Headings. The headings of sections contained in this
----------------
Agreement are provided for convenience only.
19. Complete Agreement. This document and the documents referred to
------------------
herein or attached hereto contain the complete agreement between the parties and
supersede any prior understandings, agreements or representations by or between
the parties, written or oral which may have related to the subject matter hereof
in any way, other than the Sale Agreement.
20. Governing Law. The substantive law (and not the law of conflicts or
-------------
choice of law) of the State of Georgia will govern all questions concerning the
construction, validity and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement.
21. Counterparts. This Agreement may be executed in one or more
------------
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
22. Further Assurances. At any time and from time to time after the date
------------------
hereof, at any party's request, and without further consideration, the other
parties shall promptly execute
9
and deliver all such further agreements, certificates, instruments and
documents, and perform such further actions, as a party may reasonably request
in order to fully consummate the transactions contemplated hereby and carry out
the purposes and intent of this Agreement, including without limitation, aiding
in the transition of the Business to Purchaser after the termination of this
Agreement.
[Signatures on the Following Page]
10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the day and year first above written.
TELECARE, INC.
By:
--------------------------
Title:
-----------------------
Attest:
----------------------------
Its:
------------------------
[CORPORATE SEAL]
PREMIERE COMMUNICATIONS, INC.
By:
--------------------------
Title:
-----------------------
Attest:
----------------------------
Its:
------------------------
[CORPORATE SEAL]
11
Exhibit A
Services
Exhibit B
Management Reports
Exhibit C
Certificates of Insurance
EXHIBIT 5.11
------------
GUARANTY
THIS GUARANTY dated as of August 25, 2000 executed and delivered by ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ (the "Guarantor") in favor of PREMIERE COMMUNICATIONS, INC. (the
"Seller").
WHEREAS, pursuant to that certain Asset Sale Agreement dated as of August
25, 2000 (as the same may be amended, modified, supplemented or extended from
time to time, the "Agreement"; terms used herein and not defined herein have
their respective defined meanings as set forth in the Agreement) by and between
Telecare, Inc. (the "Purchaser") and the Seller, the Seller has made available
to the Purchaser certain financial accommodations on the terms and conditions
set forth in the Agreement;
WHEREAS, the Guarantor owns 100% of the issued and outstanding shares of
the Purchaser;
WHEREAS, the Guarantor will benefit, as a direct shareholder of the
Purchaser, from the consummation of the transactions under the Agreement;
WHEREAS, the Guarantor is therefore willing to guarantee the payment and
performance in full of all of the Guaranteed Obligations of the Purchaser (as
defined below); and
WHEREAS, it is a condition precedent to the Seller making such financial
accommodations to the Purchaser that the Guarantor execute and deliver this
Guaranty.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Guarantor, the Guarantor
agrees as follows:
Section 1. Guaranty. The Guarantor hereby, irrevocably and
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unconditionally, guarantees the due and punctual payment and performance when
due, whether at stated maturity, by acceleration or otherwise, of the following
(the following collectively referred to as the "Guaranteed Obligations"): (a)
all obligations of the Purchaser under the Agreement and the documents and
instruments executed in connection therewith, including, without limitation, the
principal of, and interest on, amounts owing by the Purchaser to the Seller
under that certain Note A dated August 25, 2000 made by the Purchaser in favor
of the Seller and that certain Contingent Note dated August 25, 2000 made by the
Purchaser in favor of the Seller (together, the "Notes") and (b) any and all
extensions, renewals, modifications, amendments or substitutions of the
foregoing.
Section 2. Guaranty of Payment and Not of Collection. This Guaranty is a
-----------------------------------------
guaranty of payment and performance, and not of collection, and a debt of the
Guarantor for its own account. Accordingly, the Seller shall not be obligated
or required before enforcing this Guaranty against the Guarantor: (a) to pursue
any right or remedy the Seller may have against the Purchaser or any other
guarantor of the Guaranteed Obligations or commence any suit or other proceeding
against the Purchaser or any other guarantor of the Guaranteed Obligations in
any court or other tribunal; (b) to make any claim in a liquidation or
bankruptcy of the Purchaser or any other guarantor of the Guaranteed
Obligations; or (c) to make demand of the Purchaser or any other guarantor of
the Guaranteed Obligations or to enforce or seek to enforce or realize upon any
collateral security held by the Seller which may secure any of the Guaranteed
Obligations. In this connection, the Guarantor hereby waives the right of the
Guarantor to
require any holder of the Guaranteed Obligations to take action against the
Purchaser as provided in Official Code of Georgia Annotated (S)10-7-24.
Section 3. Guaranty Absolute. The Guarantor guarantees that the
-----------------
Guaranteed Obligations will be paid strictly in accordance with the terms of the
documents evidencing the same, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Seller with respect thereto. The liability of the Guarantor under
this Guaranty shall be absolute and unconditional in accordance with its terms
and shall remain in full force and effect without regard to, and shall not be
released, suspended, discharged, terminated or otherwise affected by, any
circumstance or occurrence whatsoever, including, without limitation, the
following (whether or not the Guarantor consents thereto or has notice thereof):
(a) (i) any change in the amount, interest rate or due date or other term of any
Guaranteed Obligations, or (ii) any change in the time, place or manner of
payment of all or any portion of the Guaranteed Obligations, or (iii) any
amendment or waiver of, or consent to the departure from or other indulgence
with respect to, the Agreement, the Notes, or any other document or instrument
evidencing any Guaranteed Obligations, or (iv) any renewal, extension, addition,
or supplement to, or deletion from, or any other action or inaction under or in
respect of, the Agreement, the Notes, or any other documents, instruments or
agreements relating to the Guaranteed Obligations or any other instrument or
agreement referred to therein or evidencing any Guaranteed Obligations or any
assignment or transfer of any of the foregoing; (b) any lack of validity or
enforceability of the Agreement, the Notes, or any other document, instrument or
agreement referred to therein or evidencing any Guaranteed Obligations or any
assignment or transfer of any of the foregoing; (c) any furnishing to the Seller
of any additional security for the Guaranteed Obligations, or any sale,
exchange, release or surrender of, or realization on, any collateral security
for the Guaranteed Obligations; (d) any settlement or compromise of any of the
Guaranteed Obligations, any security therefor, or any liability of any other
party with respect to the Guaranteed Obligations, or any subordination of the
payment of the Guaranteed Obligations to the payment of any other liability of
the Purchaser; (e) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to the
Guarantor or the Purchaser or any other person, or any action taken with respect
to this Guaranty by any trustee or receiver, or by any court, in any such
proceeding; (f) any application of sums paid by the Purchaser or any other
person with respect to the liabilities of the Purchaser to the Seller,
regardless of what liabilities of the Purchaser remain unpaid; (g) any defect,
limitation or insufficiency in the borrowing powers of the Purchaser or in the
exercise thereof; (h) any act or failure to act by the Seller which may
adversely affect the Guarantor's subrogation rights, if any, against the
Purchaser to recover payments made under this Guaranty; or (i) any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Guarantor.
Section 4. Action with Respect to Guaranteed Obligations. The Seller may,
---------------------------------------------
at any time and from time to time, without the consent of, or notice to, the
Guarantor, and without discharging the Guarantor from its obligations hereunder
take any and all actions described in Section 3 above and may otherwise: (a)
amend, modify, alter or supplement the terms of any of the Guaranteed
Obligations, including, but not limited to, extending or shortening the time of
payment of any of the Guaranteed Obligations or increasing, decreasing or
otherwise changing the interest rate or fees that may accrue on any of the
Guaranteed Obligations; (b) amend, modify, alter or supplement the Agreement or
the Notes or any other document evidencing any Guaranteed Obligations; (c)
release any person liable in any manner for the payment or collection of the
Guaranteed Obligations; (d) exercise, or refrain from exercising, any rights
against the Purchaser or any other person; and (f) apply any sum, by whomsoever
paid or however realized, to the Guaranteed Obligations in such order as the
Seller shall elect.
Section 5. Waiver. The Guarantor, to the fullest extent permitted by law,
------
hereby waives notice of acceptance hereof or any presentment, demand, protest or
notice of any kind, and any other act or thing, or
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omission or delay to do any other act or thing, which in any manner or to any
extent might vary the risk of the Guarantor or which otherwise might operate to
discharge the Guarantor from its obligations hereunder.
Section 6. Inability to Accelerate Loan. If the Seller or the holder of
----------------------------
any of the Guaranteed Obligations is prevented under applicable law or otherwise
from demanding or accelerating payment thereof by reason of any automatic stay
or otherwise, the Seller or such holder shall be entitled to receive from the
Guarantor, upon demand therefor, the sums which otherwise would have been due
had such demand or acceleration occurred.
Section 7. Reinstatement of Guaranteed Obligations. If claim is ever made
---------------------------------------
upon the Seller for repayment or recovery of any amount or amounts received in
payment or on account of any of the Guaranteed Obligations, and the Seller
repays all or part of said amount by reason of (a) any judgment, decree or order
of any court or administrative body having jurisdiction over the Seller or any
of its property, or (b) any settlement or compromise of any such claim effected
by the Seller with any such claimant (including the Purchaser or a trustee in
bankruptcy for the Purchaser), then, and in such event, the Guarantor agrees
that any such judgment, decree, order, settlement or compromise shall be binding
on it, notwithstanding any revocation hereof or the cancellation of the
Agreement, the Notes, or any other instrument evidencing any liability of the
Purchaser, and the Guarantor shall be and remain liable to the Seller for the
amounts so repaid or recovered to the same extent as if such amount had never
originally been paid to the Seller.
Section 8. Waiver of Subrogation. The Guarantor hereby forever waives and
---------------------
releases any and all claims or causes of action the Guarantor may have against
the Purchaser or any other Loan Party or any other Person arising by reason of
any payment by the Guarantor to the Seller pursuant to this Guaranty, whether
such claim or cause of action arises by way of any common-law right of
subrogation, by way of any other applicable law or statutes, or by way of any
written or oral agreement between the Guarantor and the Purchaser. This waiver
of subrogation is for the benefit of the Purchaser and the Seller and the
foregoing waiver may not be revoked by the Guarantor without the prior, written
consent of the Seller.
Section 9. Payments Free and Clear. All sums payable by the Guarantor
-----------------------
hereunder, whether of principal, interest, fees, expenses, premiums or
otherwise, shall be paid in full, without set-off or counterclaim or any
deduction or withholding whatsoever (including any withholding tax or liability
imposed by any governmental agency or authority, wherever located, or any
statute, rule or regulation promulgated thereby), and in the event that the
Guarantor is required by such applicable law or by such governmental agency or
authority to make any such deduction or withholding, the Guarantor shall pay to
the Seller such additional amount as will result in the receipt by the Seller of
the full amount payable hereunder had such deduction or withholding not occurred
or been required.
Section 10. Subordination Of the Purchaser's Obligations To the Guarantor.
-------------------------------------------------------------
As an independent covenant, the Guarantor hereby expressly covenants and agrees
for the benefit of the Seller that all obligations and liabilities owing by the
Purchaser to the Guarantor of whatsoever description ("Junior Claims") shall be
subordinate and junior in right of payment to all obligations of the Purchaser
to the Seller under the terms of the Agreement and the other Loan Documents
("Senior Claims"). If a Default shall occur, then, unless and until such Default
shall have been cured, waived, or shall have ceased to exist, no direct or
indirect payment (in cash, property, securities by setoff or otherwise) shall be
made by the Purchaser to the Guarantor on account of or in any manner in respect
of any Junior Claim and the Guarantor shall not receive or accept any such
direct or indirect payment. In the event of a Proceeding (as hereinafter
defined), all Senior Claims shall first be paid in full before any direct or
indirect payment or distribution (in cash, property, securities by setoff or
otherwise) shall be made to the Guarantor on account
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of or in any manner in respect of any Junior Claim. For the purposes of the
previous sentence and the next Section, "Proceeding" means the Purchaser or the
Guarantor shall commence a voluntary case concerning itself under the Bankruptcy
Code of 1978, as amended (the "Bankruptcy Code") or any other applicable
bankruptcy laws; or any involuntary case is commenced against the Purchaser or
the Guarantor; or a custodian (as defined in the Bankruptcy Code or any other
applicable bankruptcy laws) is appointed for, or takes charge of, all or any
substantial part of the property of the Purchaser or the Guarantor, or the
Purchaser or the Guarantor commences any other proceedings under any
reorganization arrangement, adjustment of debt, relief of debtor, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Purchaser or the Guarantor, or any such
proceeding is commenced against the Purchaser or the Guarantor, or the Purchaser
or the Guarantor is adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered; or the Purchaser
or the Guarantor suffers any appointment of any custodian or the like for it or
any substantial part of its property; or the Purchaser or the Guarantor makes a
general assignment for the benefit of creditors; or the Purchaser or the
Guarantor shall fail to pay, or shall state that it is unable to pay, or shall
be unable to pay, its debts generally as they become due; or the Purchaser or
the Guarantor shall call a meeting of its creditors with a view to arranging a
composition or adjustment of its debts; or the Purchaser or the Guarantor shall
by any act or failure to act indicate its consent to, approval of or
acquiescence in any of the foregoing; or any corporate action shall be taken by
the Purchaser or the Guarantor for the purpose of effecting any of the
foregoing. In the event any direct or indirect payment or distribution is made
to the Guarantor in contravention of this Section 10, such payment or
distribution shall be deemed received in trust for the benefit of the Seller and
shall be immediately paid over to the Seller for application against the
Guaranteed Obligations in accordance with the terms of the Agreement.
Section 11. Automatic Acceleration in Certain Events. In the event of a
----------------------------------------
Proceeding, all Guaranteed Obligations shall automatically become immediately
due and payable by the Guarantor, without notice or other action on the part of
the Seller, and regardless of whether payment of the Guaranteed Obligations by
the Purchaser has then been accelerated.
Section 12. Information. The Guarantor assumes all responsibility for
-----------
being and keeping itself informed of the Purchaser's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
the Guarantor assumes and incurs hereunder, and agrees that the Seller will not
have any duty to advise the Guarantor of information known to it or any of them
regarding such circumstances or risks.
Section 13. Covenant. Until the Guaranteed Obligations have been
--------
indefeasibly paid and performed in full, the Guarantor hereby covenants and
agrees with the Seller that Parent Guarantor shall not merge or consolidate with
any other person or sell, lease or transfer or otherwise dispose of all or a
substantial portion of its assets to any person or entity.
Section 14. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
Section 15. Arbitration.
-----------
(a) Any dispute, controversy or claim arising out of, in connection with,
or related to this Agreement or any modification, extension or breach thereof,
including any claim for damages or rescission, or both, not resolved by the
foregoing negotiation procedures shall be finally settled by binding arbitration
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association, as in effect at the time of the initiation of arbitration. The
arbitration shall be held before
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one arbitrator mutually agreed to by Seller and Purchaser. In the event that
Seller and Purchaser cannot mutually agree on an arbitrator within 5 business
days, then the arbitration shall be held before a panel of three arbitrators,
one to be selected by Seller, one to be selected by Purchaser, and the third by
agreement of the two arbitrators selected by the parties. The arbitration shall
be held in Atlanta, Georgia. The arbitration proceedings, submissions and award
shall be in English.
(b) The parties consent to the jurisdiction of any state or federal court
of competent subject matter jurisdiction, and hereby waive any defense based on
personal jurisdiction or venue, for all purposes in connection with the
arbitration, including (a) confirmation or vacating of the arbitration award;
(b) enforcement of the arbitration award; (c) issuance of provisional remedies
to protect rights, interests, assets or property and to ensure ultimate
satisfaction of the arbitration award, including but not limited to temporary or
preliminary injunctive relief. The parties may, without inconsistency with this
agreement to arbitrate, seek from any court having jurisdiction any interim
measures or provisional remedies pending the establishment of the arbitral
tribunal and until the arbitral tribunal's final award has been satisfied. The
parties agree that the award made by the arbitrator shall be final and binding
on the parties, and they waive any right to appeal the arbitral award, to the
extent such an appeal may be lawfully waived.
Section 16. Loan Accounts. The Seller may maintain books and accounts
-------------
setting forth the amounts of principal, interest and other sums paid and payable
with respect to the Guaranteed Obligations, and in the case of any dispute
relating to any Guaranteed Obligation, the entries in such account shall be
binding upon the Guarantor as to the outstanding amount of such Guaranteed
Obligations and the amounts paid and payable with respect thereto absent
manifest error. The failure of the Seller to maintain such books and accounts
shall not in any way relieve or discharge the Guarantor of any of its
obligations hereunder.
Section 17. Waiver of Remedies. No delay or failure on the part of the
------------------
Seller in the exercise of any right or remedy it may have against the Guarantor
hereunder or otherwise shall operate as a waiver thereof, and no single or
partial exercise by the Seller of any such right or remedy shall preclude other
or further exercise thereof or the exercise of any other such right or remedy.
Section 18. Waiver of Exemptions. To the fullest extent permitted by law,
--------------------
the Guarantor hereby waives and agrees not to claim any and all homestead and
other exemptions allowed by the Constitution or laws of the United States of
America, the State of Indiana or any other state or district of the United
States of America.
Section 19. Successors and Assigns. Each reference herein to the Seller
----------------------
shall be deemed to include the Seller's successors and assigns (including, but
not limited to, any holder of the Guaranteed Obligations) in whose favor the
provisions of this Guaranty also shall inure, and each reference herein to the
Guarantor shall be deemed to include the Guarantor's executors, administrators,
successors and assigns, upon whom this Guaranty also shall be binding. The
Seller may assign, transfer or sell any Guaranteed Obligation to any person or
entity without the consent of, or notice to, the Guarantor and without
releasing, discharging or modifying the Guarantor's obligations hereunder. The
Guarantor hereby consents to the delivery by the Seller to any assignee or
transferee of any financial or other information regarding the Purchaser or the
Guarantor. The Guarantor not may assign or transfer its obligations hereunder
to any person or entity.
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Section 20. Survival of Agreement. All agreements, representations and
---------------------
warranties made herein shall survive the execution and delivery of this Guaranty
and the Agreement and the consummation of the transactions thereunder.
Section 21. Amendments. This Guaranty may not be amended except in
----------
writing signed by the Seller and the Guarantor.
Section 22. Payments/Expenses. All payments made by the Guarantor
-----------------
pursuant to this Guaranty shall be made in the lawful currency of the United
States of America, in immediately available funds to the main office of the
Seller, not later than 11:00 a.m., Atlanta time, on the date three business days
after demand therefor. The Guarantor shall pay, on demand, all costs and
expenses incurred by the Seller in the collection and enforcement of this
Guaranty including the fees and disbursements of counsel to the Seller if
collection is sought by or through an attorney.
Section 23. Notices. All notices, demands or other communications to the
-------
Guarantor hereunder shall be in writing and shall be made in accordance with the
terms of the Agreement.
Section 24. Severability. In case any provision of this Guaranty shall be
------------
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 25. Headings. Section headings used in this Guaranty are for
--------
convenience only and shall not affect the construction of this Guaranty.
[Signatures on Next Page]
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IN WITNESS WHEREOF, the Guarantor has duly executed and delivered this Guaranty
as of the date and year first written above.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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