EXHIBIT 10.3
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is made on January 27, 1999 by and between RFC
CAPITAL CORPORATION (the "Seller") and USC TELECOM, INC., a Delaware corporation
("Purchaser") under the following circumstances:
RECITALS
A. The Seller desires to sell all right, title and interest of Brittan
Communications International Corporation, a Texas corporation ("BCI") in and to
certain assets as more particularly described hereinafter (the "BCI Assets"),
pursuant to a voluntary surrender and peaceful repossession by the Seller as a
secured creditor under Section 9-503 of Article 9 of the Uniform Commercial
Code, Texas Business Commerce Code, Chapter 9, and Ohio Revised Code, Chapter
1309 (collectively, the "UCC") and a sale or disposition of the BCI Assets under
Section 9-504 of the UCC (the "Foreclosure"). BCI utilized the BCI Assets in
connection with its business conducted under the name "BCI."
B. The Purchaser desires to purchase the BCI Assets for such consideration
as is hereinafter more fully set forth.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
SECTION 1.1 SALE OF ASSETS. Seller hereby sells, and Purchaser hereby
purchases, all right, title and interest of BCI in and to the following BCI
Assets (the "Assets"):
1.1.1 EQUIPMENT. All equipment, machinery, tools, fixtures,
furnishings and furniture of BCI and used by BCI in its business;
1.1.2 CUSTOMER BASE. All of BCI's past, present and future customer
contracts, agreements, LOA's (i.e. letters of agency or other
authorizations obtained by BCI), any customer lists relating thereto and
any information regarding prospective customers and contracts, agreements,
LOA's or other arrangements and all of the goodwill and other intangible
assets associated with any of the foregoing and used by BCI in its
business;
1.1.3 RECEIVABLES. All of BCI's accounts, accounts receivable or
receivables (a) arising from the provision or sale of telecommunication
services, including any services or sales ancillary thereto by BCI,
including the right to payment of any interest or finance charges and other
obligations of a payor (as used herein, the term "Payor" means the party
obligated to make payments in respect to any Receivable) with respect
thereto, (b) all security interests or liens in properties subject thereto
from time to time purporting to secure payment by any Payor, (c) all
rights, remedies, guaranties, indemnities and warranties and proceeds
thereof, proceeds of insurance policies, UCC financing statements and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable, including, but not
limited to, any Billing and Collection Agreement and any Clearinghouse
Agreement, and (d) all collections, records and proceeds with respect to
any of the foregoing; except that the term Receivables shall not include
any Purchased Receivable, as that term is defined in that certain
Receivables Sale Agreement dated as of June 29, 1998 by and between BCI, as
Seller, and RFC Capital Corporation, as Purchaser (the "Sale Agreement";
1.1.4 LIFE INSURANCE. Proceeds of a certain Key Man Life Insurance
Policy in the face amount of $1,000,000 on the life of Xxx X. Xxxxxxx (the
"Insurance Policy");
1.1.5 OTHER ASSETS. All of BCI's contract rights with U.S. Billing,
Inc. and/or Billing Concepts, Inc.
SECTION 1.2 EXCLUDED ASSETS. The Seller shall retain: (i) any cash or all
cash equivalents of BCI in which Seller has an interest as of the date hereof;
and (ii) any Purchased Receivables as that term is defined in the Sale Agreement
(collectively "Excluded Assets").
SECTION 1.3 LIABILITIES ASSUMED. Except as set forth herein and except as
set forth in a certain Assumption Agreement between the Seller and Purchaser of
even date herewith (the "Assumption Agreement"), Purchaser assumes no debts,
liabilities and/or obligations in connection with the purchase of the Assets.
Purchaser shall have no obligation to maintain the effectiveness of the
Insurance Policy or pay any premium with respect thereto, however Purchaser
shall advise the Seller of any notice of lapse of the Insurance Policy and, upon
request of the Seller, shall reassign the Insurance Policy to the Seller or
otherwise assist the Seller in maintaining the Insurance Policy in effect as
collateral security for the obligations of the Purchaser assumed hereby or in
the Assumption Agreement.
SECTION 1.4 PURCHASE PRICE. The purchase price for the Assets (the
"Purchase Price") shall be payable by Purchaser to Seller as set forth in
Exhibit 1.4 attached hereto and incorporated herein.
SECTION 1.5 SECURITY INTEREST. Purchaser hereby grants to the Seller a
security interest in all of the Assets, including all cash and noncash proceeds
thereof and any replacements or substitutions therefor. The security interest
granted herein shall secure Purchaser's obligation to pay the Purchase Price to
the Seller, as well as each of Purchaser's undertakings to the Seller hereunder.
ARTICLE 2
THE CLOSING
SECTION 2.1 THE CLOSING. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Seller, Columbus, Ohio
on January 27, 1999 (the "Closing
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Date"), unless the parties may mutually agree upon some other date (and, if so
agreed, the definition of Closing Date shall be deemed modified to mean such
other date) or place in writing.
SECTION 2.2 DELIVERIES BY SELLER. On the Closing Date, Seller shall
deliver to Purchaser, in addition to any other items specified elsewhere in this
Agreement, the following:
2.2.1 XXXX OF SALE. Xxxx of Sale in the form attached hereto as
Exhibit 2.2.1 ( the "Xxxx of Sale").
2.2.2 POSSESSION. Possession of the Assets.
SECTION 2.3 DELIVERIES BY PURCHASER. On the Closing Date, Purchaser shall
deliver to Seller the Purchase Price, in addition to all other items specified
elsewhere in this Agreement.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
The Seller makes the following representations, warranties and covenants to
Purchaser:
SECTION 3.1 AUTHORIZATION. The Seller has full power to execute, deliver
and perform its obligations under this Agreement. This Agreement is the legal,
valid and binding obligation of Seller, enforceable against the Seller in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium or other laws affecting the enforcement of
creditors rights generally or by equitable principles.
SECTION 3.2 TITLE TO PROPERTY. At the Closing, the Seller shall transfer
all right, title and interest of BCI in the Assets in accordance with the terms
of and pursuant to the Xxxx of Sale.
SECTION 3.3 NO BREACH OF STATUTE, DECREE, OR CONTRACT. The execution,
delivery and performance of this Agreement does not breach any applicable
statute, regulation or ordinance of any governmental authority, and does not
conflict with or result in a breach of or default under any of the terms,
conditions or provisions of any documents regulating the conduct of the Seller's
business, or any order, writ, injunction, decree, contract, agreement or
instrument to which the Seller is a party or by which the Assets may be bound,
and does not result in the creation or imposition of any lien, charge or
encumbrance of any nature upon any of the Assets and does not give to others any
interest or rights in, or with respect to, any of the Assets, except to
Purchaser as provided hereunder.
SECTION 3.4 LITIGATION; ORDERS. There is no suit, action, claim,
administrative or arbitration or other proceeding, investigation or inquiry of
any kind (collectively, "Actions") pending or, to the Seller's knowledge,
threatened against or affecting any of the Assets, or the ability of the Seller
to consummate the transactions contemplated by this Agreement, by any person,
corporation, partnership, firm, association, business entity, organization or
other enterprise, or by an administrative agency or other governmental body.
There is no outstanding order, writ, injunction or decree of any kind
(collectively, "Orders") of any court, administrative agency, other governmental
body or arbitration tribunal against or affecting any of the Assets, or the
ability of the Seller to consummate the transactions contemplated by this
Agreement.
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SECTION 3.5 CONSENTS. All consents, if any, necessary in connection with
the consummation of the sale of Assets have been made, filed, given or obtained.
SECTION 3.6. LIENS. Seller makes no representation, warranty or covenant
to Purchaser as to the priority of its security interests and liens upon the
Assets.
SECTION 3.7 COMPLIANCE WITH UCC. Seller has complied with all
requirements of the UCC in connection with the Foreclosure and the sale and
purchase of the Assets contemplated hereby, and every aspect of the Foreclosure
and the sale and purchase of the Assets contemplated hereby was commercially
reasonable.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants as follows:
SECTION 4.1 AUTHORIZATION. Purchaser has full power to execute, deliver
and perform its obligations under this Agreement. This Agreement is 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, moratorium or other laws affecting the enforcement of
creditors rights generally or by equitable principles.
SECTION 4.2 LITIGATION; ORDERS. There are no Actions pending or, to
Purchaser' knowledge, threatened against Purchaser, and no Orders against
Purchaser, that may have the effect of prohibiting the sale and purchase
contemplated by this Agreement.
SECTION 4.3 NO BREACH OF STATUTE, DECREE, OR CONTRACT. The execution,
delivery and performance of this Agreement does not breach any applicable
statute, regulation or ordinance of any governmental authority, and does not
conflict with or result in a breach of or default under any of the terms,
conditions or provisions of any documents regulating the conduct of Purchaser's
business, or any order, writ, injunction, decree, contract, agreement or
instrument to which Purchaser is a party or by which the Assets may be bound.
SECTION 4.4 CONSENTS. Purchaser is not required to make, file, give or
obtain any consents with, to or from any persons or governmental authorities or
private agencies in connection with the purchase of the Assets.
ARTICLE 5
COVENANTS OF SELLER
SECTION 5.1 FURTHER ASSURANCES. From time to time, whether at or after
the Closing, Seller will execute and deliver such further instruments and take
such other action as may be necessary to carry out the terms of this Agreement,
and will take no action that will prevent its performance of this Agreement in
accordance with its terms.
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ARTICLE 6
COVENANTS OF PURCHASER
SECTION 6.1 REMOVAL OF ASSETS. At the Closing, Purchaser shall receive
and accept actual or constructive possession of the Assets, and Purchaser
accepts such Assets "AS IS, WHERE IS," without warranty, and Purchaser assumes
all risk of loss with respect thereto. Purchaser shall remove the Assets from
BCI's place of business within fourteen (14) days from the date of the Closing.
The removal of the Assets by Purchaser shall be done by it and its agents in a
manner so as not to cause any destruction or damage to the business premises of
BCI and not to destroy or damage in any manner the business records of BCI, the
Excluded Assets or the records pertaining thereto. Upon the removal of the
Assets, Purchaser shall repair any damage caused by it or its agents and shall
leave the location in a broom clean condition.
Section 6.2 FURTHER ASSURANCES. From time to time, whether at or after
the Closing, Purchaser will execute and deliver such further instruments and
take such other action as may be necessary to carry out the terms of this
Agreement, and will take no action that will prevent its performance of this
Agreement in accordance with its terms.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1 SURVIVAL. The representations and warranties of the parties
hereto included or provided for in this Agreement shall survive for a period of
four years from the date of this Agreement and shall thereafter expire and be of
no further force or effect, provided that a notice of a breach of such
representations or warranties delivered prior to such expiration shall extend
the survival of the representations and warranties with respect to the subject
of the notice.
SECTION 7.2 COUNTERPARTS. This Agreement may be executed in one or more
counterparts (each of which shall be considered an original but all of which
together shall be deemed to constitute one and the same Agreement), and shall
become effective when one or more counterparts have been signed by each of the
parties and delivered to the other party.
SECTION 7.3 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without reference to
the choice of law principles thereof. The parties agree that all actions or
proceedings arising or in connection with this Agreement, any documents
incorporated herein or executed in connection herewith shall be tried and
litigated only in the Federal District Court for the Southern District of Ohio
or the State Courts of Franklin County. The parties hereto waive any right each
may have to assert the doctrine of forum non conveniens or to object to venue to
the extent that any proceeding that is brought in accordance with this section.
Service of process, sufficient for personal jurisdiction in any action in
connection with this Agreement may be made to the addressees set forth in
Section 7.6.
SECTION 7.4 ENTIRE AGREEMENT. This Agreement and the Exhibit hereto
constitute the entire agreement among the parties and supersedes all prior
written or oral agreements and understandings
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among the parties, and there are no representations, warranties, covenants,
agreements or understandings among the parties other than those set forth or
referred to herein or therein.
SECTION 7.5 EXPENSES. Except as set forth in this Agreement, all legal
and other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses.
SECTION 7.6 NOTICES. All notices, demands or other communications which
may be or are required to be given by any party to any other party pursuant to
this Agreement, shall be in writing and shall be mailed by certified mail,
return receipt requested, postage prepaid, or transmitted by hand delivery,
national overnight express, telegram or facsimile transmission, addressed as
follows:
If to Seller: RFC Capital Corporation
000 X. Xxxxxxxx Xx.
Xxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxx
Fax: (000) 000-0000
With a copy to: Porter, Wright, Xxxxxx & Xxxxxx
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000-0000
Fax Number: 000-000-0000
Attention: Xxxx X. Xxxxxx, Esq.
If to Purchaser: USC Telecom, Inc.
0000 Xxxx Xxxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx
until such time as either party notifies the other of a change of address. Each
notice or other communication which shall be mailed, delivered or transmitted in
the manner described above shall be deemed sufficiently given and received for
all purposes at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, or the affidavit of messenger or telefax
transmission log being deemed conclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation. Delivery of the
notices to the persons who are to receive copies of such notices, as provided
for in this Section 7.6, shall constitute effective delivery of notice to the
parties hereto.
SECTION 7.7 CAPTIONS. The captions in this Agreement are for convenience
and information only, are not an integral part of this Agreement and are not to
be considered in the interpretation of any part hereof.
SECTION 7.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns; provided, however, that
neither the Seller nor Purchaser shall assign their respective rights under this
Agreement without the prior written consent of the other party.
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SECTION 7.9 INTERPRETATION, NO PRESUMPTION. This Agreement has been
negotiated and incorporates the suggestions of the parties hereto. Therefore,
no presumptions shall arise favoring any party by virtue of the authorship of
any of its provisions.
SECTION 7.10 WAIVER OF A JURY TRIAL. THE SELLER AND PURCHASER ACKNOWLEDGE
AND AGREE THAT THERE MAY BE A CONSTITUTIONAL RIGHT TO A JURY TRIAL IN CONNECTION
WITH ANY CLAIM, DISPUTE OR LAWSUIT ARISING BETWEEN OR AMONG THEM, BUT THAT SUCH
RIGHT MAY BE WAIVED. ACCORDINGLY, EACH PARTY AGREES THAT NOTWITHSTANDING SUCH
CONSTITUTIONAL RIGHT, IN THIS COMMERCIAL MATTER EACH PARTY BELIEVES AND AGREES
THAT IT SHALL BE IN ITS BEST INTEREST TO WAIVE SUCH RIGHT, AND, ACCORDINGLY,
HEREBY WAIVE SUCH RIGHT TO A JURY TRIAL, AND FURTHER AGREES THAT THE BEST FORUM
FOR HEARING ANY CLAIM, DISPUTE OR LAWSUIT, IF ANY, ARISING IN CONNECTION WITH
THIS AGREEMENT SHALL BE A COURT OF COMPETENT JURISDICTION SITTING WITHOUT A
JURY.
SECTION 7.11 LIMITATION OF DAMAGES. The Seller and Purchaser agree that
any claim for damages arising hereunder shall be limited to actual damages or
losses sustained by the aggrieved party, not to exceed the Purchase Price, and
shall not include any compensatory, consequential, exemplary or punitive
damages, fees or costs of any type.
SECTION 7.12 INDEMNIFICATION. (a) The Seller hereby agrees to indemnify,
defend and hold harmless Purchaser and its directors, officers, employees and
agents, from and against any action, demand, suit, cause of action, proceeding
or counterclaim threatened or brought against such party by a third party who is
not the Purchaser or an affiliate of the Purchaser or anyone claiming by or
through the Purchaser or an affiliate of the Purchaser, based upon a claim
which, if true, would mean that (i) the Seller had breached any of the
representations, warranties or covenants set forth in this Purchase Agreement or
in the Xxxx of Sale of even date herewith, (ii) the Seller had failed to proceed
in a commercially reasonable manner, as that term is used in the UCC and under
applicable case law interpreting that term, or (iii) the sale and purchase of
the Assets contemplated hereby would constitute a fraudulent transfer under
federal or state law; provided, that such indemnification shall be limited to:
(x) all costs of defense (including, but not limited to, reasonable
investigation costs, reasonable attorney fees and all other reasonable costs of
defending any such claim), (y) any monetary amounts required to settle any such
action or to satisfy any judgment, order, award or similar requirement entered
in such action, and (z) any actual monetary damages incurred by the Purchaser.
(b) On the date on which any payment is due from the Seller to Purchaser
under Section 7.12(a), to the extent Purchaser's operation, sale, use or
collections with respect to the Assets has resulted in Purchaser obtaining cash
flow in excess of the expected cash flow from the Assets (the "Excess Value"),
the Excess Value shall be a dollar-for-dollar credit against any liability of
the Seller to the Purchaser under the indemnity set forth in Section 7.12(a).
(c) The Seller hereby agrees to indemnify, defend and hold harmless
Purchaser and its directors, officers, employees and agents from and against any
fees, costs or expenses incurred by or on behalf of Purchaser or any of its
affiliates as a result of any fines, penalties, charges or other requirements
imposed upon Purchaser or any of its affiliates by any telecommunications
regulatory body, including, without limitation, the Federal Communications
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Commission or the Texas Public Utilities Commission, with respect to the
purchase and operation of the Assets; provided, however, that, Seller shall only
be responsible for up to $100,000 of any fines, penalties or other charges
imposed upon Purchaser or any of its affiliates by any such regulatory body and
shall, in no event, be responsible for (i) the approximately $1.2 million fine
currently pending against BCI by the Federal Communications Commission or (ii)
any fines, penalties or other charges imposed as a result of the conduct of
Purchaser following the purchase of the Assets.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties as of the day and year first above written.
SELLER:
RFC CAPITAL CORPORATION
By: /S/ Xxxx X. Xxxxxxx
---------------------------
Title: Vice President
PURCHASER:
USC TELECOM, INC.
By: /S/ Xxxxxxxx Xxxxxx
---------------------------
Title: President
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SCHEDULE 1.4
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. Purchaser, or any affiliate thereof including EqualNet Communications Corp.
("ECC"), shall convey to Seller the right to purchase from ECC 300,000
shares of ECC's common stock, $.01 par value, on terms specified and
described more fully as set forth in that certain Common Stock Purchase
Warrant of even date hereof and by reference made a part hereof, which
right to purchase such shares shall vest and be exercisable as of the
Issuance Date (as defined in such Common Stock Purchase Warrant).
. Purchaser agrees to assume pursuant to that certain Assumption Agreement of
even date herewith that certain Promissory Note dated as of June 29, 1998,
and any and all documents and instruments executed in conjunction
therewith, by and between the Seller and BCI and as of the Closing Date
evidencing indebtedness to the Seller in an amount equal to $1,513,781.25,
which such indebtedness shall be amortized pursuant to a Loan Amortization
Schedule set forth at Schedule 1 attached hereto.
. The assumption by Purchaser of that certain Receivables Sale Agreement
dated June 29, 1998, as amended, by and between the Seller and BCI pursuant
to the Assumption Agreement.
. The assumption by Purchaser of that certain One Plus Billing and
Information Management Services Agreement dated January 17, 1998 by and
between Billing Concepts Inc. dba U.S. Billing and BCI.
. Such other terms, conditions, payments, obligations, or consideration,
inclusive of assumed payment arrearages or debts, paid to Qwest
Communications Company or any other creditor of BCI by Purchaser.
COLUMBUS/0504311.06
May 19, 1999 (1:28PM)
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