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EXHIBIT 4.2
AGREEMENT AND PLAN OF EXCHANGE
BY AND AMONG
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
BIT GROUP SERVICES, INC.
AND
THE HOLDERS OF THE
OUTSTANDING CAPITAL STOCK
OF
BIT GROUP SERVICES, INC.
DECEMBER 15, 1997
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TABLE OF CONTENTS
Page
1. AGREEMENT FOR EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Exchange of Shares and Other Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Aggregate Consideration from BrightStar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Payment of Exchange Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Assignment and Assumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6.1 Assumption of obligations pursuant to MGCO Warrant. . . . . . . . . . . . . . . . . . . . . 4
1.6.2 Assumption of obligations pursuant to BGCA Option . . . . . . . . . . . . . . . . . . . . . . 4
1.7 Cancellation of BrightStar Stock Held by the Company . . . . . . . . . . . . . . . . . . . . . . . . . 4
2. THE RESTRICTED STOCK EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Exchange for Restricted Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. SHARE REPURCHASE AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Delivery of Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2.1 Closing of the Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2.2 Closing of the Restricted Stock Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2.3 Assignments of Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2.4 Payment In Full Satisfaction of All Rights . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Stock Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Shareholder Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.4 Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.5 Capitalization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.6 Company Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.7 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6. REPRESENTATIONS AND WARRANTIES OF BRIGHTSTAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.2 Capitalization of BrightStar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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7. CERTAIN COVENANTS AND AGREEMENTS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.2 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.3 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.4 Agreements of Shareholders to be Effective Upon Closing . . . . . . . . . . . . . . . . . . . . . . . 9
8. CONDITIONS PRECEDENT; CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.1 Conditions Precedent to the Obligations of BrightStar . . . . . . . . . . . . . . . . . . . . . . . . 9
8.1.1 Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.1.2 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.2 Conditions Precedent to the Obligations of the Shareholders and the Company . . . . . . . . . . . . . 9
8.2.1 Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.2.2 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.3 Deliveries by the Shareholders at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.3.1 Documents, Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.4 Conditions Precedent to the IPO Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.4.1 IPO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.5 Delivery of the Closing Exchange Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9. SURVIVAL, INDEMNIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.2.1 BrightStar Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.2.2 Minimum Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.2.3 BrightStar Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.3 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.4 Procedures for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.4.1 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.4.2 Legal Defense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.4.3 Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.4.4 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.5 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10.1 Grounds for Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10.1.1 Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10.1.2 After the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11.1 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11.2 Further Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.3 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.4 Exhibits and Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.5 Sections and Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.8 CONTROLLING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.9 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.10 No Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.11 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.12 No Employee Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.13 Non-Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.14 When Effective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.15 Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.16 Number and Gender of Words . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.17 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.18 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.19 No Rule of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.20 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Schedule 1.2 Common Stock Owned by the Shareholders
Exhibit 3.1 Stock Repurchase Agreement
Exhibit 4.1 Letter of Transmittal from Shareholders
Exhibit 4.2 Escrow Agreement
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AGREEMENT AND PLAN OF EXCHANGE
This AGREEMENT AND PLAN OF EXCHANGE (this "Agreement") made effective
as of December 15, 1997, by and among BRIGHTSTAR INFORMATION TECHNOLOGY GROUP,
INC., a Delaware corporation (the "BrightStar"), BIT GROUP SERVICES, INC., a
Delaware corporation (the "Company"), BIT INVESTORS, LLC, a Texas limited
liability company ("BITI"), and the undersigned holders ("Managers") of
outstanding capital stock of the Company (collectively, BITI and the Managers
are the "Shareholders");
WHEREAS, the Shareholders are owners of all of the issued and
outstanding capital stock of the Company; and
WHEREAS, BrightStar and the Shareholders desire to provide for the
transfer (the "Exchange") by the Shareholders to BrightStar of all the
outstanding shares of capital stock of the Company in exchange for common stock
of BrightStar; and
WHEREAS, the Exchange is one of several related transactions involving
the assignment of property to BrightStar in exchange for common stock and cash
of BrightStar as part of an overall plan that includes an initial public
offering of BrightStar common stock, par value $.001 per share ("BrightStar
Common Stock"); and for federal income tax purposes, it is intended that this
Exchange and the other related exchange transactions with BrightStar shall
qualify as exchanges under the provisions of Section 351 of the Internal
Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the board of directors of the Company has adopted and
approved the respective Agreements and Plan of Exchange (collectively, the
"Acquisition Agreements") with each of Xxxxx X. Xxxxxxxxx and Associates, Inc.,
a Texas corporation ("Xxxxxxxxx"), Integrated Controls, Inc., a Louisiana
corporation ("ICON"), Mindworks Professional Education Group, Inc., an Arizona
corporation ("Mindworks"), Software Consulting Services America, LLC., a
California limited liability company ("SCS America"), Software Consulting
Services Pty. Ltd., a company chartered under the laws of Victoria, Australia,
in its capacity as trustee of the SCS Unit Trust ("SCS Australia"), Software
Innovators, Inc., an Arkansas corporation ("SII"), and Zelo Group, Inc., a
California corporation ("Zelo") (collectively, Xxxxxxxxx, ICON, Mindworks, SCS
America, SCS Australia, SII and Zelo are the "Acquired Companies"); and
WHEREAS, The Company owns 100 shares of BrightStar Common Stock, being
all of the issued and outstanding shares of BrightStar Common Stock as of the
date hereof, and as a result of the transactions contemplated herein, the
Company will become a wholly owned subsidiary of BrightStar;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, and intending to
be legally bound hereby, the parties agree as follows:
1. AGREEMENT FOR EXCHANGE
1.1 Exchange of Shares and Other Consideration. The Shareholders
agree to assign, transfer and deliver to BrightStar all right, title and
interest in and to all of the outstanding shares of
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common stock of the Company ("Company Common Stock") in exchange for the
Exchange Consideration (as defined below) which BrightStar hereby agrees to
pay, assign, transfer and deliver to the Shareholders in accordance with this
Agreement.
1.2 Aggregate Consideration from BrightStar. The aggregate
consideration to be delivered by BrightStar in connection with the Exchange
shall be the number of validly issued, fully paid and non-assessable shares of
BrightStar Common set forth opposite each Shareholder's name below (the
"Exchange Consideration"):
Exchange Consideration
Number of Shares of in Shares of
Shareholder Company Common Stock BrightStar Common Stock
----------- --------------------- -----------------------
BITI 100,000 BITI Exchange Amount (1)
Xxxxxx X. Xxxxxx 5,190 42,900(2)
Xxxxxxxx X. Xxxx 8,469 70,000(2)
Xxxxxx X. Xxxxxxx 7,259 60,000(2)
Xxxxxx X. Xxxxxx 7,259 60,000(2)
Xxxx X. Xxxxx 2,420 20,000(2)
Xxxxxxx X. Xxxxxx 7,259 60,000(2)
Tarrant Xxxxxxx 4,102 33,900(2)
------- ------
TOTAL 41,958 346,800(2)(3)
______________________
(1) The "BITI Exchange Amount" is that number of shares of BrightStar
Common Stock as shall equal 3,588,735 minus the sum of (a) 346,800
and (b) the Business Acquisition Shares (as defined below).
(2) Subject to reduction (but not increase), on a pro rata basis with all
other Shareholders (other than BITI), in proportion to the total
number of shares of Company Common Stock held by such Shareholders,
only in the event that the BITI Exchange Amount is equal to zero, such
that the total number of shares of BrightStar Common Stock issuable as
Exchange Consideration to those Shareholders will equal 3,588,735
minus the Business Acquisition Shares .
(3) Represents total shares to be received in the Exchange excluding the
BITI Exchange Amount.
1.3 Payment of Exchange Consideration. All of the Exchange
Consideration shall be paid and delivered by BrightStar to the Escrow Agent
(defined below) for release to the Shareholders on the IPO Closing Date.
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1.4 Fractional Shares. No fractional shares of BrightStar Common
Stock will be issued pursuant to this Agreement, and if any Shareholder would
otherwise be entitled to receive a fractional share of BrightStar Common Stock
but for this provision, that Shareholder will be entitled to receive a cash
payment for and in lieu thereof in the amount (rounded upward to the nearest
whole cent) equal to that Shareholder's fractional interest in a share of
BrightStar Common Stock multiplied by the IPO Price.
1.5 Certain Definitions. The following terms shall have the
meaning ascribed below for purposes of this Agreement:
(i) "Business Acquisition Shares" means the total number
of shares of BrightStar Common Stock issuable to the owners of the
Acquired Companies in connection with the Acquisition Agreements,
assuming that all shares issuable upon satisfaction of the condition
set forth in Subsection 1.5(b) of the SCS Australia Acquisition
Agreement will be issued, and excluding (i) all shares issuable to key
employees of SCS Australia pursuant to Section 6.6 of the SCS
Australia Acquisition Agreement, and (ii) all shares issuable with
respect to the 1998 financial performance of SII to former
shareholders of SII, as set forth in Section 1.2.2 of the SII
Acquisition Agreement; and
(ii) "IPO" means BrightStar's first underwritten public
offering of BrightStar Common Stock (other than any offering pursuant
to any registration statement (a) relating to any capital stock of
BrightStar or options, warrants or other rights to acquire any such
capital stock issued or to be issued primarily to directors, officers
or employees of BrightStar or any of its subsidiaries, (b) relating to
any employee benefit plan or interest therein, (c) relating
principally to any preferred stock or debt securities of BrightStar,
or (d) filed pursuant to Rule 145 under the Securities Act of 1933, as
amended ("Securities Act"), or any successor or similar provision).
(iii) "IPO Closing Date" means the date that BrightStar
receives funds in consideration for the sale of its securities in the
IPO.
(iv) "IPO Price" means the initial price per share to the
public for shares of BrightStar Common Stock in the IPO.
1.6 Assignment and Assumption. The Company does hereby assign to
BrightStar all of the Company's rights in, to and under all contracts and
agreements of the Company (subject, in each case where applicable to any
necessary consents of the other parties to those contracts and agreements).
BrightStar does hereby assume and agree to pay, perform or discharge any and
all liabilities or obligations of the Company, whether accrued, absolute,
contingent or otherwise, under all contracts and agreements of the Company
(subject, in each case where applicable to any necessary consents of the other
parties to those contracts and agreements) including, without limitation: (i)
all of the Company's liabilities and obligations under the various letters of
intent that the Company has entered into during 1997 for purposes of acquiring
either the ownership of or certain assets of various target companies; (ii) all
of the Company's liabilities and obligations under that certain Loan Agreement
and related Promissory Note dated as of October 16, 1997 with BITI as lender,
together with all advances thereunder, and all extensions and renewals thereof;
(iii) all of the Company's
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obligations arising under or in connection with that certain engagement letter,
dated as of August 14, 1997, between the Company and XxXxxxxxx, Xxxxxxxx &
Company, Inc. ("MGCO"), whereby MGCO has agreed to provide certain financial
advisory services to the Company ("MGCO Engagement"); (iv) all of the Company's
obligations arising under or in connection with that certain consulting
agreement, dated as of September 26, 1997, between the Company and
Xxxxxx-Xxxxxxxx Capital Advisors, LLC ("BGCA"), whereby BGCA has agreed to
provide certain consulting services to the Company. The Company expressly does
not assign to BrightStar, and BrightStar expressly does not assume from the
Company, any liabilities or obligations except as specifically set forth in
this Section 1.6.
1.6.1 Assumption of obligations pursuant to MGCO Warrant.
Pursuant to the terms of the MGCO Engagement, BrightStar shall assume,
effective as of the IPO Closing Date, all of the Company's obligations under
the terms of the warrant issued to MGCO pursuant to the MGCO Engagement (the
"MGCO Warrant"), including the obligation to issue shares of common stock upon
the exercise of such warrant, provided that all references contained in the
MGCO Warrant with respect to the Company Common Stock shall be deemed to be
references to BrightStar Common Stock.
1.6.2 Assumption of obligations pursuant to BGCA Option.
Pursuant to terms of the BGCA Engagement, BrightStar shall assume, effective as
of the IPO Closing Date, all of the Company's obligations under terms of the
option issued to BGCA pursuant to the BGCA Engagement (the "BGCA Option"),
including the obligation to issue shares of common stock upon the exercise of
such option, provided that all references contained in the BGCA Warrant with
respect to the Company Common Stock shall be deemed to be references to
BrightStar Common Stock.
1.7 Cancellation of BrightStar Stock Held by the Company. All
shares of BrightStar Common Stock that are owned by the Company shall be
canceled and retired and shall cease to exist and no stock of BrightStar or
other consideration shall be delivered in exchange therefor.
2. THE RESTRICTED STOCK EXCHANGE
2.1 Exchange for Restricted Common Stock. Each of the Managers
hereby agrees to exchange (the "Restricted Stock Exchange") any and all shares
of BrightStar Common Stock included in the Exchange Consideration received by
them pursuant to Section 1.2 above (the "Exchangeable Shares") for shares of
restricted common stock, par value $.001 per share of BrightStar ("Restricted
Common Stock") as shall be required to ensure that the aggregate voting power
of all BrightStar Common Stock received by all shareholders of Xxxxxxxxx will
exceed the aggregate voting power of all BrightStar capital stock held by the
Managers and Xxxxxxx X. Xxxxxx, in the aggregate (collectively, the Managers
and such persons are the "Founders"), immediately following the acquisition of
Xxxxxxxxx pursuant to the Xxxxxxxxx Acquisition Agreement (the "Xxxxxxxxx
Acquisition"). For purposes of the Restricted Stock Exchange, only the shares
of BrightStar Common Stock received by the Managers pursuant to the exchange
described in Section 1.2 above, and all additional shares received in
connection with stock splits, share dividends or distributions with respect
thereto, shall be deemed to be Exchangeable Shares. The Restricted Stock
Exchange shall be consummated only in the event that the Company successfully
closes the IPO within one year following the date of this Agreement, and only
to the extent that the aggregate voting
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power of all BrightStar capital stock held by the Founders would exceed the
aggregate voting power of all BrightStar Common Stock received by shareholders
of Xxxxxxxxx in the Xxxxxxxxx Acquisition (without giving effect to the
Restricted Stock Exchange). In such event, the Restricted Stock Exchange shall
occur with respect to Exchangeable Shares held by each Manager, pro rata, in
proportion to the total number of Exchangeable Shares held by all Managers in
the aggregate, and shall be consummated immediately following the Xxxxxxxxx
Acquisition. BrightStar agrees to issue and deliver Restricted Common Stock to
the Managers in exchange for shares of BrightStar Common Stock pursuant to
terms of the Restricted Stock Exchange described above.
3. SHARE REPURCHASE AGREEMENTS
3.1 Delivery of Stock Repurchase Agreements. Each of Xxxxxxxx X.
Xxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx (the
"Participating Managers") hereby agree to execute and deliver a stock
repurchase agreement on the Closing Date in the form attached hereto as Exhibit
3.1 (the "Stock Repurchase Agreements") granting to BrightStar the option to
repurchase the shares of BrightStar Common Stock included in the Exchange
Consideration received by each of the Participating Managers pursuant to
Section 1.2 above, and shares of Restricted Common Stock, if any, received by
the Participating Managers pursuant to the Restricted Stock Exchange, under
certain terms and conditions provided in the Share Repurchase Agreements.
4. THE CLOSING
4.1 Delivery of Company Common Stock. Prior to the Closing (as
defined below), BrightStar will deliver to each Shareholder a letter of
transmittal, in substantially the form attached hereto as Exhibit 4.1, to be
used by the Shareholders for surrendering to BrightStar certificates
representing all the Company Common Stock in exchange for the right to receive
the Exchange Consideration. On the Closing Date, certificates for all of the
Company Common Stock held by the Shareholders will be delivered by the
Shareholders to the Escrow Agent in accordance with the Escrow Agreement for
the benefit of BrightStar together with properly completed and executed letters
of transmittal.
4.2 Closing. A closing into Escrow (the "Closing") will take
place at the offices of Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx in
Houston, Texas at the time and on the day that BrightStar and its underwriters
agree on the IPO Price for shares of BrightStar Common Stock offered in
BrightStar's IPO (the "Pricing Date") as set forth in an executed underwriting
agreement, but in no event later than December 31, 1998 (the "Closing Date");
provided that each of the conditions precedent to the obligations of the
parties to effect the Closing pursuant to Article 8 of this Agreement are then
satisfied or waived by the applicable party. At the Closing, the parties will
deliver or cause to be delivered into escrow with the escrow agent ("Escrow
Agent") under the Escrow Agreement set forth in Exhibit 4.2 hereto, the
documents described in Sections 4.2.1 and 4.2.2 below. On the IPO Closing
Date, such documents shall be delivered out of escrow to the parties designated
to receive such documents under this Agreement in accordance with the Escrow
Agreement and Article 8 of this Agreement.
4.2.1 Closing of the Exchange. On the Closing Date, (i)
BITI and the Managers, respectively, will deliver certificates evidencing all
outstanding shares of Company Common Stock
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to the Escrow Agent in accordance with the Escrow Agreement for the benefit of
BrightStar together with properly completed and executed letters of
transmittal, (ii) BrightStar will issue and deliver to the Escrow Agent
certificates in the name of BITI and the Managers, respectively, representing
the number of shares of BrightStar Common Stock to be received by the
Shareholders in the Exchange according to the provisions in Section 1.2 above,
(iii) BrightStar and each of the Participating Managers will execute and
deliver a Stock Repurchase Agreement to the Escrow Agent; (iv) BrightStar and
the Company will execute and deliver to the Escrow Agent any further documents
or instruments necessary or desirable to consummate the assignment of rights
and assumption of obligations of the Company described in Section 1.6 above,
(v) BITI will execute and deliver to the Escrow Agent a letter of transmittal
directing BrightStar and its transfer agent to reissue in the name of the
respective Managers certain shares of BrightStar Common Stock formerly held by
BITI and representing such Managers' distributive shares of BITI assets in
accordance with the Regulations of BITI in connection with the dissolution and
liquidation of BITI, and (vi) the Company will deliver to the Escrow Agent any
and all of its certificates representing BrightStar Common Stock to be
surrendered for cancellation.
4.2.2 Closing of the Restricted Stock Exchange. If the
conditions for the Restricted Stock Exchange provided in Section 2.1 above are
satisfied, on the Closing Date, (i) each of the Managers shall deliver written
instructions to the Escrow Agent on the Closing Date, effective as of the IPO
Closing Date, directing BrightStar and its transfer agent to issue and deliver
to such Manager a certificate representing number of shares of Restricted
Common Stock equal to such Manager's pro rata portion of the total number of
Exchangeable Shares held by all of the Managers in the aggregate, and directing
BrightStar and its transfer agent to issue a new share certificate evidencing
his remaining shares BrightStar Common Stock, and (ii) the Escrow Agent shall
direct BrightStar and its transfer agent to issue and deliver to Escrow Agent
for the benefit of the Managers the share certificates in accordance with such
written instructions.
4.2.3 Assignments of Company Common Stock. It is agreed
that no assignment, transfer or other disposition of record or beneficial
ownership of any shares of Company Common Stock may be made on or after the
date hereof other than as provided herein.
4.2.4 Payment In Full Satisfaction of All Rights. The
delivery of the Exchange Consideration to the Shareholders with respect to
shares of the Company Common Stock shall be deemed to be payment in full
satisfaction of all rights pertaining to the outstanding shares.
5. REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
The Shareholders hereby represent and warrant to BrightStar as follow:
5.1 Stock Ownership. Each Shareholder owns, beneficially and of
record, with full power to vote, transfer and assign, the number of shares of
Company Common Stock set forth opposite such Shareholder's name on Schedule
1.2, and such shares are so held by the Shareholder free and clear of all
liens, encumbrances and adverse claims whatsoever.
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5.2 Shareholder Authority. Each Shareholder has full right,
power, legal capacity and authority to (i) execute, deliver and perform this
Agreement, and all other documents and instruments referred to herein or
contemplated hereby to be executed, delivered and/or performed by the
Shareholders (each a "Shareholder Related Document") and (ii) consummate the
transactions contemplated herein and thereby. This Agreement has been duly
executed and delivered by each of the Shareholders and constitutes, and each
Shareholder Related Document, when duly executed and delivered by the
Shareholders will constitute, legal, valid and binding obligations of each of
the Shareholders enforceable against the Shareholder in accordance with their
respective terms and conditions, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (whether applied in a proceeding at law or in equity).
5.3 Consents. No approval, consent, order or action of or filing
with any court, administrative agency, governmental authority or other third
party is required for the execution, delivery or performance by any of the
Shareholders of this Agreement or any Shareholder Related Document other than
filings related to the IPO. The execution, delivery and performance by any of
the Shareholders of this Agreement and the Shareholder Related Documents do not
violate any mortgage, indenture, contract, agreement, lease or commitment or
other instrument of any kind to which any of the Shareholders is a party or by
which any of the Shareholders or the Shareholders' assets or properties may be
bound or affected or any law, rule or regulation applicable to any of the
Shareholders or any court injunction, order or decree or any valid and
enforceable order of any governmental agency in effect as of the date hereof
having jurisdiction over any of the Shareholders.
5.4 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is duly qualified or licensed as a foreign corporation authorized to do
business in all other states in which any of its assets or properties may be
situated or where the business of the Company is conducted except where the
failure to obtain such qualification or license will not have a material
adverse effect on the Company.
5.5 Capitalization of the Company. The total authorized capital
stock of the Company is 200,000 shares of Company Common Stock, $.001 par
value, of which an aggregate of 141,958 shares are issued and outstanding and
held of record and beneficially by the Shareholders, and of which 0 are held in
the treasury of the Company. The outstanding shares of Company Common Stock
have been duly and validly authorized and issued, and are fully paid and
non-assessable. Except for the outstanding shares of Company Common Stock
owned beneficially and of record by the Shareholders, shares issuable pursuant
to the MGCO Warrant and the BGCA Option, and shares issuable under the
Acquisition Agreements, there are no outstanding shares of capital stock,
convertible or exchangeable securities, subscriptions, calls, options,
warrants, rights or other agreements or commitments of any character relating
to the issuance or sale of any shares of capital stock of, or other equity
ownership interest in, the Company.
5.6 Company Authority. The Company has full right, power, legal
capacity and authority to execute, deliver and perform this Agreement and all
documents and instruments referred to in the Agreement or herein or
contemplated hereby or thereby to be executed, delivered and/or performed by
the Company (the "Company Related Documents") and to consummate the
transactions contemplated hereby and thereby. All of the Company Related
Documents, when duly executed and
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delivered by the Company, will constitute, legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity).
5.7 Consents. No approval, consent, order or action of or filing
with any court, administrative agency, governmental authority or other third
party is required for the execution, delivery or performance by the Company of
the Company Related Documents.
6. REPRESENTATIONS AND WARRANTIES
OF BRIGHTSTAR
BrightStar hereby represents and warrants to the Shareholders as
follows:
6.1 Organization. BrightStar is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
BrightStar is duly qualified or licensed as a foreign corporation authorized to
do business in all states in which any of its assets or properties may be
situated or where its business is conducted except where the failure to obtain
such qualification or license would not have a material adverse effect on
BrightStar.
6.2 Capitalization of BrightStar. The total authorized capital
stock of BrightStar is as set forth in BrightStar's private offering
memorandum, dated November 14, 1997, together with a supplement thereto dated
as of December 16, 1997 (the "Offering Memorandum") . The outstanding shares
of BrightStar Common Stock have been duly and validly authorized and issued,
and are fully paid and non-assessable.
6.3 Authority. BrightStar has the requisite, power and authority
to execute, deliver and perform this Agreement and all documents and
instruments referred to herein or contemplated hereby (the "BrightStar Related
Documents") and to consummate the transactions contemplated herein and thereby.
This Agreement has been duly executed and delivered by BrightStar and
constitutes, and all BrightStar Related Documents, when executed and delivered
by BrightStar will constitute, legal, valid and binding obligations of
BrightStar, enforceable in accordance with their respective terms and
conditions except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
applied in a proceeding at law or in equity).
6.4 Consents. No approval, consent, order or action of or filing
with any court, administrative agency, governmental authority or other third
party is required for the execution, delivery or performance by BrightStar of
this Agreement or BrightStar Related Documents or the consummation by
BrightStar of the transactions contemplated hereby, except for the filing of
BrightStar's registration statement with respect to the IPO (including all
amendments thereto, the "Registration Statement") with the U.S. Securities and
Exchange Commission ("SEC") pursuant to the Securities Act and the SEC's
declaration of effectiveness of such Registration Statement and the
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completion of all necessary filings required under, and the obtaining of all
necessary consents and approvals required pursuant to, state securities or
"blue sky" laws in connection with the IPO.
7. CERTAIN COVENANTS AND AGREEMENTS OF SHAREHOLDERS
The Shareholders further jointly and severally agree with BrightStar
that from the date hereof through the Closing Date:
7.1 Conduct of Business. The Shareholders shall cause the Company
to conduct its operations according to its ordinary and usual course of
business to preserve substantially intact its business organization, keep
available the services of its officers and employees, and maintain its present
relationships with licensors, suppliers, distributors, customers and others
having significant business relationships with it.
7.2 Cooperation. The Shareholders will cooperate fully with
BrightStar, and will cause the Company to cooperate fully with BrightStar, as
to arrangements for the consummation of the transactions contemplated hereby in
an orderly fashion.
7.3 Filings. The Shareholders will make, and cause the Company to
make, all filings which are required to be made by them to lawfully consummate
the transactions contemplated hereby.
7.4 Agreements of Shareholders to be Effective Upon Closing.
Effective upon Closing, and without further action on the part of any party or
other person, the Shareholders covenant and agree that the Shareholders do
hereby (i) release, acquit and forever discharge the Company from any and all
liabilities, obligations, claims, demands, actions or causes of action arising
from or relating to any event, occurrence, act, omission or condition occurring
or existing on or prior to the Closing Date, including, without limitation, any
claim for indemnity or contribution from the Company in connection with the
obligations or liabilities of the Shareholders hereunder; (ii) waive all
breaches, defaults or violations of any agreement applicable to the Company
Common Stock and agree that any and all such agreements are terminated as of
the Closing Date, and (iii) waive any and all preemptive or other rights to
acquire any shares of capital stock of the Company and release any and all
claims arising in connection with any prior default, violation or failure to
comply with or satisfy any such preemptive or other rights.
8. CONDITIONS PRECEDENT; CLOSING DELIVERIES
8.1 Conditions Precedent to the Obligations of BrightStar. The
obligations of BrightStar to effect the Closing under this Agreement are
subject to the satisfaction of each of the following conditions, unless waived
by BrightStar in writing to the extent permitted by applicable law.
8.1.1 Performance of Covenants. The Shareholders shall
have performed and complied with all covenants of this Agreement to be
performed or complied with by them at or prior to the Closing Date.
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8.1.2 Closing Deliveries. All documents required to be
executed or delivered at Closing by the Shareholders pursuant to Sections 4.2.1
and 4.2.2 of this Agreement shall have been so executed and delivered.
8.2 Conditions Precedent to the Obligations of the Shareholders
and the Company. The obligations of the Shareholders to effect the Closing
under this Agreement are subject to the satisfaction of each of the following
conditions, unless waived by the Shareholders in writing.
8.2.1 Performance of Covenants. BrightStar shall have
performed and complied with all covenants of this Agreement to be performed or
complied with by them at or prior to the Closing Date.
8.2.2 Closing Deliveries. All documents required to be
executed or delivered at Closing by BrightStar pursuant to Sections 4.2.1 and
4.2.2 of this Agreement shall have been so executed and delivered.
8.3 Deliveries by the Shareholders at the Closing. In accordance
with Section 4.2 above, at the Closing, simultaneously with the deliveries by
BrightStar specified in Sections 4.2.1 and 4.2.2 below, and in addition to any
deliveries required to be made by the Shareholders pursuant to any other
transaction document at the Closing, the Shareholders shall deliver or cause to
be delivered to the Escrow Agent the following:
8.3.1 Documents, Stock Certificates. The Shareholders
shall execute and deliver, and shall cause the Company to execute and deliver,
the documents, certificates, opinions, instruments and agreements required to
be executed and delivered by the Company or its officers or directors or the
Shareholders at the Closing as contemplated hereby or as may be reasonably
requested by BrightStar and shall deliver or cause to be delivered the
documents and evidence required under this Agreement. Stock certificates
representing all of the outstanding Company Common Stock and properly executed
and completed letters of transmittal shall be delivered by the Shareholders to
the Escrow Agent.
8.4 Conditions Precedent to the IPO Closing. The obligations of
the parties to consummate the share exchange transaction under this Agreement
on the IPO Closing Date are subject to the satisfaction of each of the
following conditions (unless waived by each of the parties in writing):
8.4.1 IPO. BrightStar shall have completed the IPO on
terms described in the Registration Statement, and the net proceeds thereof
shall have been received by BrightStar.
8.5 Delivery of the Closing Exchange Consideration. On the
Closing Date, BrightStar shall deliver the Closing Exchange Consideration to
the Escrow Agent. On the IPO Closing Date, provided the conditions precedent
to the IPO Closing are then satisfied, the Escrow Agent shall release and
deliver all the Exchange Consideration to the Shareholders, and the Escrow
Agent shall release and deliver all other documents and certificates held in
escrow to the appropriate parties.
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9. SURVIVAL, INDEMNIFICATIONS
9.1 Survival. The representations and warranties set forth in
this Agreement and the other documents, instruments and agreements contemplated
hereby shall survive for a period of 12 months after the date hereof (the
"Survival Period"). The liabilities of the parties under their respective
representations and warranties shall expire as of the expiration of the
Survival Period and no claim for indemnification may thereafter be made with
respect to any breach of any representation or warranty, except to the extent
that written notice of such breach shall have been given to the party against
which such claim is asserted on or before the date of such expiration. The
covenants and agreements of the parties herein and in other documents and
instruments executed and delivered in connection with the closing of the
transactions contemplated hereby shall survive for the maximum period permitted
by law.
9.2 Indemnification.
9.2.1 BrightStar Indemnified Parties. Subject to the
provisions of Sections 9.1 and 9.3 hereof, the Shareholders shall indemnify,
save and hold harmless BrightStar, the Company and any of their assignees
(including lenders) and all of their respective officers, directors, employees,
representatives, agents, advisors and consultants and all of their respective
heirs, legal representatives, successors and assigns (collectively the
"BrightStar Indemnified Parties") from and against any and all damages,
liabilities, losses, claims, deficiencies, penalties, interest, expenses,
fines, assessments, charges and costs, including reasonable attorneys' fees and
court costs (collectively "Losses") arising from, out of or in any manner
connected with or based on:
(i) any breach of any covenant of any Shareholders or the
Company or the failure by any Shareholder or the Company to perform
any obligation of any Shareholder or the Company contained herein or
in any Company Related Document or Shareholder Related Document;
(ii) any inaccuracy in or breach of any representation or
warranty of any Shareholder contained herein or in any Shareholder
Related Document;
(iii) any inaccuracy in or breach of any representation or
warranty of the Company contained herein or in any Company Related
Document; and
(iv) indemnification payments made by the Company to the
Company's present or former officers, directors, employees, agents,
consultants, advisors or representatives in respect of actions taken
or omitted to be taken prior to the Closing.
Notwithstanding the foregoing, the foregoing indemnities shall not apply to the
extent that such Losses are reimbursed to BrightStar Indemnified Parties under
provisions of any errors and omissions or professional liability insurance
policy containing waiver of subrogation provisions applicable to claims
relating to such Losses. The foregoing indemnities shall not limit or
otherwise adversely affect the Shareholder Indemnified Parties' rights of
indemnity for Losses under Section 9.2.3.
9.2.2 Minimum Losses. For purposes of this Section 9.2.2,
Losses shall be calculated with respect to any inaccuracy or breach of any
representation or warranty of any
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Shareholder contained herein or in any Shareholder Related Document without
giving effect to any clause which would permit such inaccuracy or breach up to
an amount which would have an adverse effect on the properties, assets,
financial position, results of operations, long-term debt, other indebtedness,
cash flows or contingent liabilities of the Company in an amount of $5,000 or
more. The Shareholders shall have no obligation under Section 9.2.1 until the
aggregate amount of all such Losses equal or exceed $25,000, at which time the
Shareholders shall be subject to the provisions of Section 9.2.1 with respect
to all Losses of BrightStar Indemnified Parties, including the first $5,000 of
Losses.
9.2.3 BrightStar Indemnity. Subject to the provisions of
Sections 9.1 and 9.3, BrightStar shall indemnify, save and hold harmless the
Shareholders and the Shareholders' legal representatives, successors and
assigns (the "Shareholder Indemnified Parties") from and against all Losses
arising from, out of or in any manner connected with or based on:
(i) any breach of any covenant of BrightStar or the
failure by BrightStar to perform any of its obligations contained
herein or in BrightStar Related Documents;
(ii) any inaccuracy in or breach of any representation or
warranty of BrightStar contained herein or in BrightStar Related
Documents; and
(iii) any act, omission, event, condition or circumstance
occurring or existing at any time after (but not on or before) the
Closing Date and involving or relating to the assets, properties,
businesses or operations of the Company; provided, however, that this
clause (iii) shall not apply to any Losses to the extent that such
Losses result from the Shareholders' acts or omissions after the
Closing Date as an officer, director and/or employee of BrightStar,
the Surviving Corporation and/or any other affiliate of BrightStar.
The foregoing indemnities shall not limit or otherwise adversely affect
BrightStar Indemnified Parties' rights of indemnity for Losses under Section
9.2.1.
9.3 Limitations. The aggregate liability of the Shareholders
under Section 9.2.1 shall not exceed the cash amount equal to the aggregate of
the Exchange Consideration with BrightStar Common Stock being valued at the IPO
Price for such purpose. The aggregate liability of BrightStar under Section
9.2.3 shall not exceed the cash amount equal to the aggregate of the Exchange
Consideration with BrightStar Common Stock being valued at the IPO Price for
such purpose.
9.4 Procedures for Indemnification.
9.4.1 Notice. The party (the "Indemnified Party") that may
be entitled to indemnity hereunder shall give prompt notice to the party
obligated to give indemnity hereunder (the "Indemnifying Party") of the
assertion of any claim, or the commencement of any suit, action or proceeding
in respect of which indemnity may be sought hereunder. Any failure on the part
of any Indemnified Party to give the notice described in this Section 9.4.1
shall relieve the Indemnifying Party of its obligations under this Article 9
only to the extent that such Indemnifying Party has been prejudiced by the lack
of timely and adequate notice (except that the Indemnifying Party shall not be
liable for any expenses incurred by the Indemnified Party during the period in
which the
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Indemnified Party failed to give such notice). Thereafter, the Indemnified
Party shall deliver to the Indemnifying Party, promptly (and in any event
within 10 days thereof) after the Indemnified Party's receipt thereof, copies
of all notices and documents (including court papers) received by the
Indemnified Party relating to such claim, action, suit or proceeding.
9.4.2 Legal Defense. BrightStar shall have the obligation
to assume the defense or settlement of any third-party claim, suit, action or
proceeding in respect of which indemnity may be sought hereunder, provided that
(i) the Shareholders shall at all times have the right, at their option, to
participate fully therein, and (ii) if BrightStar does not proceed diligently
to defend the third-party claim, suit, action or proceeding within 10 days
after receipt of notice of such third-party claim, suit, action or proceeding,
the Shareholders shall have the right, but not the obligation, to undertake the
defense of any such third-party claim, suit, action or proceeding.
9.4.3 Settlement. The Indemnifying Party shall not be
required to indemnify the Indemnified Party with respect to any amounts paid in
settlement of any third-party suit, action, proceeding or investigation entered
into without the written consent of the Indemnifying Party; provided, however,
that if the Indemnified Party is a BrightStar Indemnified Party, such
third-party suit, action, proceeding or investigation may be settled without
the consent of the Indemnifying Party on 10 days' prior written notice to the
Indemnifying Party if such third-party suit, action, proceeding or
investigation is then unreasonably interfering with the business or operations
of the Company and the settlement is commercially reasonable under the
circumstances; and provided further, that if the Indemnifying Party gives 10
days' prior written notice to the Indemnified Party of a settlement offer which
the Indemnifying Party desires to accept and to pay all Losses with respect
thereto ("Settlement Notice") and the Indemnified Party fails or refuses to
consent to such settlement within 10 days after delivery of the Settlement
Notice to the Indemnified Party, and such settlement otherwise complies with
the provisions of this Section 9.4, the Indemnifying Party shall not be liable
for Losses arising from such third-party suit, action, proceeding or
investigation in excess of the amount proposed in such settlement offer.
Notwithstanding the foregoing, no Indemnifying Party will consent to the entry
of any judgment or enter into any settlement without the consent of the
Indemnified Party, if such judgment or settlement imposes any obligation or
liability upon the Indemnified Party other than the execution, delivery or
approval thereof and customary releases of claims with respect to the subject
matter thereof.
9.4.4 Cooperation. The parties shall cooperate in
defending any such third-party suit, action, proceeding or investigation, and
the defending party shall have reasonable access to the books and records, and
personnel in the possession or control of the Indemnified Party that are
pertinent to the defense. The Indemnified Party may join the Indemnifying
Party in any suit, action, claim or proceeding brought by a third party, as to
which any right of indemnity created by this Agreement would or might apply,
for the purpose of enforcing any right of the indemnity granted to such
Indemnified Party pursuant to this Agreement.
9.5 Subrogation. Each Indemnifying Party hereby waives for itself
and its affiliates any rights to subrogation against any Indemnified Party or
its insurers for Losses arising from any third-party claims for which it is
liable or against which it indemnifies any Indemnified Party and, if necessary,
each Indemnifying Party shall obtain waivers of such subrogation from its
insurers.
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10. TERMINATION
10.1 Grounds for Termination. This Agreement may be terminated
only as provided below.
10.1.1 Prior to Closing. The parties may terminate this
Agreement at any time prior to the Closing only as provided below:
(i) Mutual Consent. BrightStar and the
Shareholders may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(ii) Termination by BrightStar. BrightStar may
terminate this Agreement by giving written notice thereof to
the Shareholders at any time prior to the Closing in the event
that the IPO Closing Date shall not have occurred on or before
December 31, 1998 by reason of the failure of any condition
precedent under Section 8.1 hereof (unless the failure results
primarily from BrightStar itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(iii) Termination by the Shareholders . The
Shareholders may terminate this Agreement by giving written
notice thereof to BrightStar at any time prior to Closing by
reason of the failure of any condition precedent under Section
8.2 hereof (unless the failure results primarily from the
Shareholders breaching any representation, warranty, or
covenant contained in this Agreement).
10.1.2 After the Closing Date. This agreement may be
terminated after the Closing only as follows:
(i) Termination of Underwriting Agreement. Upon
termination, prior to the successful completion of the IPO, of
the agreement between BrightStar and certain investment
banking firms (the "Underwriting Agreement") under which such
firms agree to purchase shares of BrightStar Common Stock from
BrightStar on a firm commitment basis for resale to the public
initially at the IPO Price, BrightStar or the Shareholders may
each terminate this Agreement by providing written notice to
the other.
(ii) Automatic Termination. This Agreement shall
terminate automatically and without action on the part of any
party hereto if the IPO is not consummated within 10 business
days after the Closing.
10.2 Effect of Termination. If this Agreement is terminated as
permitted under Section 10.1, such termination shall be without liability of
any party to any other party, except that such termination shall be without
prejudice to any and all remedies the parties may have against each other for
breach of this Agreement.
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11. MISCELLANEOUS
11.1 Notice. Any notice, delivery or communication required or
permitted to be given under this Agreement shall be in writing, and shall be
mailed, postage prepaid, or delivered, to the addresses given below, or sent by
telecopy to the telecopy numbers set forth below, as follows:
To the Shareholders:
c/o BIT Investors, LLC
00000 Xxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attn: President
To BrightStar:
BrightStar Information Technology Group, Inc.
00000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: President
or other such address as shall be furnished in writing by any such party to the
other party, and such notice shall be effective and be deemed to have been
given as of the date actually received.
To the extent any notice provision in any other agreement, instrument
or document required to be executed or executed by the parties in connection
with the transactions contemplated herein contains a notice provision which is
different from the notice provision contained in this Section 11.1 with respect
to matters arising under such other agreement, instrument or document, the
notice provision in such other agreement, instrument or document shall control.
11.2 Further Documents. The Shareholders shall, at any time and
from time to time after the date hereof, upon request by BrightStar and without
further consideration, execute and deliver such instruments or other documents
and take such further action as may be reasonably required in order to perfect
any other undertaking made by the Shareholders hereunder.
11.3 Assignability. The Shareholders shall not assign this
Agreement in whole or in part without the prior written consent of BrightStar,
except by the operation of law. BrightStar may assign its rights under this
Agreement, the Company Related Documents and the Shareholder Related Documents
without the consent of the Shareholders; provided, however, that no such
assignment shall affect the Shareholders' right to receive the Exchange
Consideration. After the Closing Date, the Company may assign its rights under
this Agreement, the Company Related Documents and the Shareholder Related
Documents without the consent of the Shareholders.
11.4 Exhibits and Schedules. The Exhibits and Schedules (and any
appendices thereto) referred to in this Agreement are and shall be incorporated
herein and made a part hereof.
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11.5 Sections and Articles. Unless the context otherwise requires,
all Sections, Articles, Schedules and Exhibits referred to herein are,
respectively, sections and articles of, and schedules and exhibits to, this
Agreement.
11.6 Entire Agreement. This Agreement constitutes the full
understanding of the parties, a complete allocation of risks between them and a
complete and exclusive statement of the terms and conditions of their agreement
relating to the subject matter hereof and supersedes any and all prior
agreements, whether written or oral, that may exist between the parties with
respect thereto. Except as otherwise specifically provided in this Agreement,
no conditions, usage of trade, course of dealing or performance, understanding
or agreement purporting to modify, vary, explain or supplement the terms or
conditions of this Agreement shall be binding unless hereafter made in writing
and signed by the party to be bound, and no modification shall be effected by
the acknowledgment or acceptance of documents containing terms or conditions at
variance with or in addition to those set forth in this Agreement. No waiver
by any party with respect to any breach or default or of any right or remedy
and no course of dealing shall be deemed to constitute a continuing waiver of
any other breach or default or of any other right or remedy, unless such waiver
be expressed in writing signed by the party to be bound. Failure of a party to
exercise any right shall not be deemed a waiver of such right or rights in the
future.
11.7 Headings. Headings as to the contents of particular articles
and sections are for convenience only and are in no way to be construed as part
of this Agreement or as a limitation of the scope of the particular articles or
sections to which they refer.
11.8 CONTROLLING LAW. THE VALIDITY, INTERPRETATION AND PERFORMANCE
OF THIS AGREEMENT AND ANY DISPUTE CONNECTED HEREWITH SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE
EXTENT THE APPLICABLE CORPORATE LAW MANDATORILY APPLIES WITH RESPECT THERETO.
11.9 No Third Party Beneficiaries. Except as set forth in Article
9, no person or entity not a party to this Agreement shall have rights under
this Agreement as a third party beneficiary or otherwise.
11.10 Amendments and Waivers. This Agreement may be amended by
BrightStar and the Shareholders; provided that all amendments to this Agreement
must be by an instrument in writing signed on behalf of BrightStar and the
Shareholders. Any term or provision of this Agreement (other than the
requirements for shareholder approvals) may be waived in writing at any time by
the party which is, or whose shareholders are, entitled to the benefits
thereof.
11.11 No Employee Rights. Nothing herein expressed or implied shall
confer upon any employee of the Company, any other employee or legal
representatives or beneficiaries of any thereof any rights or remedies,
including any right to employment or continued employment for any specified
period, of any nature or kind whatsoever under or by reason of this Agreement,
or shall cause the employment status of any employee to be other than
terminable at will.
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11.12 Non-Recourse. No recourse for the payment of any amounts due
hereunder or for any claim based on this Agreement or the transactions
contemplated hereby or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of BrightStar in this Agreement
shall be had against any incorporator, organizer, promoter, shareholder,
officer, director, employee or representative as such (other than the
Shareholders as set forth herein), past, present or future, of BrightStar or of
any successor corporation, whether by virtue of any constitution, statute or
rule of law, or by enforcement of any assessment or penalty or otherwise; it
being expressly understood that all such liability is hereby expressly waived
and released as a condition of, and as a consideration for, the execution of
this Agreement.
11.13 When Effective. This Agreement shall become effective only
upon the execution and delivery of one or more counterparts of this Agreement
by each of BrightStar and the Shareholders.
11.14 Number and Gender of Words. Whenever herein the singular
number is used, the same shall include the plural where appropriate and words
of any gender shall include each other gender where appropriate.
11.15 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or future laws,
such provisions shall be fully severable as if such invalid or unenforceable
provisions had never comprised a part of the Agreement; and the remaining
provisions of the Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal, invalid
or unenforceable provision, there shall be automatically as a part of this
Agreement, a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
11.16 Multiple Counterparts. This Agreement may be executed in a
number of identical counterparts. If so executed, each of such counterparts is
to be deemed an original for all purposes and all such counterparts shall,
collectively, constitute one agreement, but, in making proof of this Agreement,
it shall not be necessary to produce or account for more than one such
counterpart.
11.17 No Rule of Construction. All of the parties hereto have been
represented by counsel in the negotiations and preparation of this Agreement;
therefore, this Agreement will be deemed to be drafted by each of the parties
hereto, and no rule of construction will be invoked respecting the authorship
of this Agreement.
11.18 Expenses. Each of the parties shall bear all of their own
expenses in connection with the negotiation and closing of this Agreement and
the transactions contemplated hereby.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered on the date first hereinabove written.
BRIGHTSTAR:
BRIGHTSTAR INFORMATION
TECHNOLOGY GROUP, INC.
By: /s/ XXXXXXXX X. XXXX
------------------------------------------
Xxxxxxxx X. Xxxx, President
BIT GROUP SERVICES, INC.
By: /s/ XXXXXXXX X. XXXX
------------------------------------------
Xxxxxxxx X. Xxxx, President
SHAREHOLDERS:
BIT INVESTORS, LLC
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------
Xxxxxx X. Xxxxxxx, Manager
/s/ XXXXXX X. XXXXXX
---------------------------------------------
Xxxxxx X. Xxxxxx
/s/ XXXXXXXX X. XXXX
---------------------------------------------
Xxxxxxxx X. Xxxx
/s/ XXXXXX X. XXXXXXX
---------------------------------------------
Xxxxxx X. Xxxxxxx
/s/ XXXXXX X. XXXXXX
---------------------------------------------
Xxxxxx X. Xxxxxx
/s/ XXXX X. XXXXX
---------------------------------------------
Xxxx X. Xxxxx
/s/ XXXXXXX X. XXXXXX
---------------------------------------------
Xxxxxxx X. Xxxxxx
/s/ TARRANT XXXXXXX
---------------------------------------------
Tarrant Xxxxxxx
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SCHEDULE 1.2
COMMON STOCK OWNED BY THE SHAREHOLDERS
Shareholder Number of Shares
----------- ----------------
BIT Investors, LLC 100,000
Xxxxxx X. Xxxxxx 5,190
Xxxxxxxx X. Xxxx 8,469
Xxxxxx X. Xxxxxxx 7,259
Xxxxxx X. Xxxxxx 7,259
Xxxx X. Xxxxx 2,420
Xxxxxxx X. Xxxxxx 7,259
Tarrant Xxxxxxx 4,102
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