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EXHIBIT 2.8
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PURCHASE AGREEMENT
AMONG
PENTASTAR COMMUNICATIONS, INC.,
OC MERGERCO 4, INC.,
VSI NETWORK SOLUTIONS, INC.
AND
THE SHAREHOLDER
OF
VSI NETWORK SOLUTIONS, INC.
AS OF FEBRUARY 18, 2000
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TABLE OF CONTENTS
Page
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1. Definitions...........................................................................................................1
2. Purchase and Sale.....................................................................................................1
2.1. Basic Transaction............................................................................................1
2.2. Assumption of Certain Liabilities............................................................................1
2.3. Purchase Price; Payment......................................................................................2
2.4. Sales Taxes, Etc.............................................................................................4
2.5. The Closing..................................................................................................4
2.6. Deliveries at the Closing....................................................................................4
3. Representations and Warranties........................................................................................4
3.1. Representations and Warranties of the Company and the Shareholder............................................4
3.2. Representations and Warranties of PentaStar.................................................................16
3.3. Survival of Representations.................................................................................17
3.4. Representations as to Knowledge.............................................................................17
4. Pre-Closing Covenants................................................................................................18
4.1. General.....................................................................................................18
4.2. Operation and Preservation of Business......................................................................18
4.3. Full Access.................................................................................................18
4.4. Notice of Developments......................................................................................18
4.5. Exclusivity.................................................................................................18
4.6. Announcements; Securities Law Restrictions..................................................................18
4.7. Bulk Sales Laws.............................................................................................19
4.8 Shareholders' Meeting.......................................................................................19
4.9 Specified Consents..........................................................................................19
4.10 Termination Expenses........................................................................................20
5. Post-Closing Covenants...............................................................................................20
5.1. Further Assurances..........................................................................................20
5.2. Transition..................................................................................................20
5.3. Cooperation.................................................................................................20
5.4. Confidentiality.............................................................................................20
5.5. Financial Statements........................................................................................20
5.6. Satisfaction of Liabilities.................................................................................21
5.7. Repurchase of Unpaid Receivables............................................................................21
5.8. Transfer Restrictions.......................................................................................22
6. Conditions to Closing................................................................................................23
6.1. Conditions to Obligation of PentaStar.......................................................................23
6.2. Conditions to Obligation of the Company and the Shareholder.................................................24
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7. Remedies for Breaches of This Agreement..............................................................................25
7.1. Indemnification Provisions for Benefit of PentaStar.........................................................25
7.2. Indemnification Provisions for Benefit of the Company and the Shareholder...................................27
7.3. Matters Involving Third Parties.............................................................................28
7.4. Right of Offset.............................................................................................29
7.5. Other Remedies..............................................................................................29
8. Termination..........................................................................................................29
8.1. Termination of Agreement....................................................................................29
8.2. Effect of Termination.......................................................................................29
8.3. Confidentiality.............................................................................................29
9. Miscellaneous........................................................................................................29
9.1. No Third-Party Beneficiaries................................................................................29
9.2. Entire Agreement............................................................................................29
9.3. Succession and Assignment...................................................................................29
9.4. Counterparts................................................................................................30
9.5. Headings....................................................................................................30
9.6. Notices.....................................................................................................30
9.7. Governing Law...............................................................................................30
9.8. Amendments and Waivers......................................................................................30
9.9. Severability................................................................................................31
9.10. Expenses....................................................................................................31
9.11. Arbitration.................................................................................................31
9.13. Incorporation of Exhibits...................................................................................32
9.14. Shareholder's Agent.........................................................................................32
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Exhibits:
Exhibit 1.1(a) Exhibit 3.1(h)(i)
Exhibit 1.1(b) Exhibit 3.1(h)(ii)
[Exhibit 1.1(c) is intentionally Exhibit 3.1(i)(i)
omitted.] Exhibit 3.1(i)(ii)
Exhibit 1.1(d)(i) Exhibit 3.1(k)
Exhibit 1.1.(d)(ii) Exhibit 3.1(l)(i)
Exhibit 1.1(e) Exhibit 3.1(l)(ii)
Exhibit 1.1(f) Exhibit 3.1(m)
Exhibit 1.1(g) Exhibit 3.1(n)(ii)
Exhibit 1.1(h) Exhibit 3.1(o)(i)
Exhibit 1.1(i) Exhibit 3.1(o)(ii)
Exhibit 1.1(j) Exhibit 3.1(o)(iii)
Exhibit 2.3(b)(i) Exhibit 3.1(r)
Exhibit 2.3(b)(iii) Exhibit 3.1(s)
Exhibit 3.1(b)(ii) Exhibit 3.1(t)
Exhibit 3.1(c) Exhibit 3.1(u)(ii)
Exhibit 3.1(d)(i)(A) Exhibit 3.2(a)(ii)
Exhibit 3.1(d)(i)(B) Exhibit 3.2(b)(i)
Exhibit 3.1(d)(ii)(A) Exhibit 4.9(a)
Exhibit 3.1(d)(ii)(B) Exhibit 4.9(b)
Exhibit 3.1(e)(i) Exhibit 6.1(h)
Exhibit 3.1(e)(ii)(F) Exhibit 6.2(c)
Exhibit 3.1(e)(iii)
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This Purchase Agreement is entered into as of February 18, 2000 among
PentaStar Communications, Inc., a Delaware corporation ("PentaStar"), OC
Mergerco 4, Inc., a Delaware corporation (the "Acquiror"), VSI Network
Solutions, Inc., a Delaware corporation (the "Company"), and the Person
identified as the Shareholder on the signature page hereto (the "Shareholder").
Recitals
A. The Shareholder presently owns approximately 67%, and upon the Closing
will own all, of the issued and outstanding capital stock of the Company.
B. The Acquiror is a newly-formed, wholly-owned subsidiary of PentaStar.
The Acquiror desires to acquire from the Company, and the Company desires to
sell to the Acquiror, substantially all of the Company's assets as provided in
this Agreement.
C. PentaStar, the Acquiror, the Company and the Shareholder desire to make
certain representations, warranties and agreements in connection with such
transaction and also desire to set forth various conditions precedent thereto.
Agreement
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties and covenants set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
the parties agree as follows:
1. Definitions. The terms defined in Exhibit 1.1(a) shall have the meanings
designated therein.
2. Purchase and Sale.
2.1. Basic Transaction.
(a) Subject to the terms and conditions set forth in this Agreement,
the Acquiror agrees to purchase from the Company, and the Company agrees to sell
to the Acquiror, all the Acquired Assets free and clear of any Tax or
Encumbrance (other than the Permitted Encumbrances in the event that, subject to
Section 4.10, the Acquiror has not paid off the debt to RFC Capital Corporation
as of the Closing), for the consideration specified in Section 2.3. The Acquiror
will have no obligation under this Agreement to purchase less than all of the
Acquired Assets.
(b) The following documents have been executed and delivered by the
parties thereto concurrently with the execution of this Agreement: (i) the
Assignment and Assumption Agreement; (ii) the ▇▇▇▇ of Sale; (iii) the Employment
Agreement; (iv) the Escrow Agreement; (v) the Noncompetition Agreement; (vi) the
▇▇▇▇▇▇ Payment Agreement; (vii) the Voting Agreement; and (viii) the documents
specified in Sections 6.1(f)(ii) (other than with respect to the Required Vote)
and 6.1(o).
2.2. Assumption of Certain Liabilities. Subject to the terms and conditions
set forth in this Agreement, the Acquiror agrees to assume and become
responsible at the Closing for all of the Assumed Liabilities. The Acquiror will
not assume or have any responsibility with respect to any other Liability not
expressly included within the definition of Assumed Liabilities.
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2.3. Purchase Price; Payment.
(a) The consideration payable by the Acquiror to the Company for the
Acquired Assets will consist of (i) cash in an amount of $2,100,000; (ii) such
number of PentaStar Shares (rounded to the nearest whole share) as have an
aggregate Fair Market Value as of the date of this Agreement of $950,000 (such
number of shares being referred to as the "Closing Shares"); (iii) the
assumption of the Assumed Liabilities; and (iv) the Earn-Out Amount payable
pursuant to Section 2.3(b) (collectively the "Purchase Price"). At the Closing,
the Acquiror will (i) pay to the Company by wire transfer to an account
designated by the Company $1,600,000 of the cash portion of the Purchase Price,
(ii) deposit the remaining $500,000 of the cash portion of the Purchase Price
(such $500,000 is referred to as the "Accounts Receivable Escrow Fund") and the
stock certificates representing the Closing Shares into the Escrow Account with
the Escrow Agent (which Closing Shares shall be issued by PentaStar in the name
of the Company and contributed by PentaStar to the Acquiror immediately prior to
the Closing) and (iii) assume the Assumed Liabilities. The Accounts Receivable
Escrow Fund, the Closing Shares and the other property held in the Escrow
Account shall be held and disbursed according to this Agreement and the Escrow
Agreement.
(b) In addition to the cash portion of the Purchase Price and the
Closing Shares payable and issuable at the Closing pursuant to Section 2.3(a),
the Company shall be entitled to receive the Earn-Out Amount determined and
payable as provided in this Section 2.3(b).
(i) PentaStar agrees that, during the Earn-Out Period, the Acquiror
will conduct the operations represented by the Acquired Assets in the ETI Region
as a separate subsidiary of PentaStar with no other operations. PentaStar agrees
that, during the Earn-Out Period, it will not allocate any corporate expense or
otherwise cause the ETI Region to incur any corporate or other expense not
specifically related to the business of the ETI Region.
(ii) As soon as reasonably practicable after the end of the
Earn-Out Period, and in any event by March 31, 2001, PentaStar will cause the
independent auditors who audit its financial statements for the year 2000 to
prepare an audited income statement of the Acquiror for the Earn-Out Period and
a written calculation of the Earn-Out Amount (collectively, the "Earn-Out
Financial Statements"). PentaStar will promptly provide a copy of the Earn-Out
Financial Statements to the Company. Within 20 days after receipt of the
Earn-Out Financial Statements, each of PentaStar and the Company will, in a
written notice to the other, either accept the Earn-Out Financial Statements or
object to them by describing in reasonably specific detail any proposed
adjustments to the Earn-Out Financial Statements and the estimated amounts of
and reasons for such proposed adjustments. The failure by PentaStar or the
Company to object to the Earn-Out Financial Statements within such 20-day period
will be deemed to be an acceptance by such Person of the Earn-Out Financial
Statements. If any adjustments to the Earn-Out Financial Statements are proposed
by PentaStar or the Company within such 20-day period, the dispute shall be
resolved as provided in Section 2.3(b)(v). The reasonable fees and expenses of
the independent auditors for the preparation of the Earn-Out Financial
Statements, other than those associated with the normal year-end audit of
PentaStar or the Acquiror, shall be paid 50% by PentaStar and 50% by the
Company.
(iii) Within 10 Business Days after the later of the acceptance of
the Earn-Out Financial Statements by PentaStar and the Company or the resolution
of any disputes under Section 2.3(b)(v), as the case may be, the Acquiror shall
pay the Earn-Out Amount, if any, to the Company. The Earn-Out Amount shall be
paid, in PentaStar's sole discretion, in cash or PentaStar Common Stock, or any
combination thereof. If any portion of the Earn-Out Amount is paid in PentaStar
Common Stock, the number of shares
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of PentaStar Common Stock to be issued (which shall be rounded to the nearest
whole share) will be determined by dividing (A) the Earn-Out Amount that is
being paid in PentaStar Common Stock by (B) a per share value of PentaStar
Common Stock that is equal to 90% of the Fair Market Value as of the date such
Earn-Out Amount is paid, and such shares shall be issued by PentaStar in the
name of the Company or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as the case may be, in the amounts
determined as set forth below, and contributed by PentaStar to the Acquiror
immediately prior to the delivery of such shares by the Acquiror. If any shares
of PentaStar Common Stock are issued in the name of the Company pursuant to this
Section 2.3(b)(iii), the Acquiror shall deposit the stock certificates
representing such shares into the Escrow Account with the Escrow Agent. If the
Earn-Out Amount becomes payable by the Acquiror, the Company shall pay to ▇▇.
▇▇▇▇▇▇ (however delivery may be delayed if such shares are in escrow) the amount
determined pursuant to Exhibit 2.3(b)(iii) (and if the Earn-Out Amount is
comprised of a combination of cash and PentaStar Common Stock, then ▇▇. ▇▇▇▇▇▇
shall receive cash and PentaStar Common Stock from the Company in the same
proportions as the cash and PentaStar Common Stock comprising the Earn-Out
Amount (the shares of PentaStar Common Stock, if any, issued in the name of ▇▇.
▇▇▇▇▇▇ are referred to as the "▇▇▇▇▇▇ Shares")). The cash portion of the
Earn-Out Amount shall be paid by wire transfer to an account designated by the
Company.
(iv) In the event that PentaStar sells the operations conducted by
the Acquiror prior to the end of the Earn-Out Period, PentaStar shall require
the purchaser to continue to account for such operations separately and agree to
assume the obligation of the Acquiror to pay the Earn-Out Amount as provided in
this Section 2.3(b), including the obligation to comply with the provisions of
Section 2.3(b)(i).
(v) If any adjustments to the Earn-Out Financial Statements are
proposed by PentaStar or the Company pursuant to Section 2.3(b)(ii), PentaStar
and the Company will negotiate in good faith to resolve any dispute, provided
that if the dispute is not resolved within 10 days following the receipt of the
proposed adjustments then PentaStar and the Company will retain the Boston,
Massachusetts office of (or office most geographically proximate to Boston,
Massachusetts) BDO ▇▇▇▇▇▇▇ LLC to resolve such dispute, which resolution will be
final and binding. The fees and expenses of BDO ▇▇▇▇▇▇▇ LLC will be paid 50% by
PentaStar and 50% by the Company, and BDO ▇▇▇▇▇▇▇ LLC will be retained under a
retention letter executed by the parties that specifies that the determination
by said firm of any such disputes will be resolved in accordance with this
Agreement (including the definitions of "Earn-Out Amount," "Earn-Out Period,"
"Earn-Out Period EBITA" and "EBITA" set forth in this Agreement), by choosing
the position of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ L.L.P. or the objecting party under Section
2.3(b)(ii), without change, within 30 days of the expiration of the 20-day
period described in Section 2.3(b)(ii).
(c) The allocation of the total consideration for the Acquired Assets
for Tax reporting purposes shall be as follows: (i) to cash and cash
equivalents, the amount thereof; (ii) to Closing Accounts Receivable, the amount
determined by the Acquiror from the Company's, records, adjusted by the Acquiror
to conform to GAAP; (iii) to inventory, the amount determined by the Acquiror
from the Company's records, adjusted by the Acquiror to conform to GAAP; (iv) to
leasehold improvements, the greater of fair market value (determined by the
Acquiror from its historical experience, or in the Acquiror's sole discretion,
by independent appraisal) or the current book value thereof as reflected in the
Company's records, adjusted by the Acquiror to conform to GAAP; and (v) the
entire remaining balance of the consideration shall be allocated to the goodwill
of the Company's business or, at the Acquiror's sole discretion, to the other
intangible assets which are included in the Acquired Assets. The parties
acknowledge that such allocations for Tax reporting purposes were determined
pursuant to arm's length bargaining regarding the fair market values of the
Acquired Assets in accordance with the provisions of Code Section 1060. The
parties agree to be bound by these allocations for all federal, state and local
Tax reporting purposes, including for purposes
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of determining any income, gain, loss, depreciation or other deductions in
respect of such assets. The parties further agree to prepare and file all Tax
Returns (including Form 8594 under the Code) in a manner consistent with such
allocations.
2.4. Sales Taxes, Etc. The Company will pay all sales, use, transfer,
licensing and other Taxes, fees and charges payable in respect of or as a result
of the sale and transfer of the Acquired Assets to the Acquiror pursuant to this
Agreement.
2.5. The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
L.L.C. at 10:00 a.m. Denver, Colorado time on the date on which the Required
Vote is obtained. The date upon which the Closing occurs is the "Closing Date."
All transactions contemplated by this Agreement will be effective at 12:01 a.m.
Eastern Standard Time on such date between January 1, 2000 and May 1, 2000 as
the Acquiror shall determine (such effective time being the "Effective Date").
2.6. Deliveries at the Closing. At the Closing, (a) the Company will
deliver to PentaStar the various certificates, instruments and documents, and
take the actions, referred to in Section 6.1 and (b) PentaStar will deliver to
the Company the various certificates, instruments and documents, and take the
actions, referred to in Section 6.2.
3. Representations and Warranties.
3.1. Representations and Warranties of the Company and the Shareholder. The
Company and the Shareholder jointly and severally represent and warrant to
PentaStar and the Acquiror that the statements contained in this Section 3.1 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Effective Date and as of the date of the Closing (as though
made then and as though the Effective Date and the date of the Closing were then
substituted for the date of this Agreement throughout this Section 3.1). For
purposes of this Section 3.1, (a) with respect to the representations given as
of the date of this Agreement, the VSN/UST Acquisition shall be deemed not to
have occurred as of the date of this Agreement and (b) the Company and the
Shareholder are not making any representations or warranties with respect to
UST, VNS or the UST/VNS Assets or business as of any date after the date of this
Agreement, as the UST/VNS Assets will be owned by the Acquiror after the date of
this Agreement.
(a) Organization, Good Standing, Etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is qualified and authorized to do business as a foreign
corporation and is in good standing in Rhode Island, Massachusetts, New York and
New Jersey, which are the only jurisdictions in which the nature of the business
conducted by it or the properties owned, leased or operated by it make such
qualification necessary. The Company has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.
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(b) Ownership and Capitalization.
(i) The authorized capital stock of the Company consists of
1,000,000 shares of common stock, $.01 par value. The Shareholder owns,
beneficially and of record, free and clear of any Encumbrance or Tax, 1,000,000
shares of the common stock, $.01 par value, of the Company (the "Company
Shares"), and the Company Shares constitute all of the issued and outstanding
capital stock of the Company.
(ii) Except as set forth on Exhibit 3.1(b)(ii), the Company has no
Subsidiaries and no capital stock, securities convertible into capital stock, or
any other equity interest in any other corporation, partnership, limited
partnership, limited liability company, association, joint venture or other
Person. Each of the entities listed on Exhibit 3.1(b)(ii) is wholly-owned,
directly or indirectly, by the Company, is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation, as
set forth on Exhibit 3.1(b)(ii), and is qualified to do business as a foreign
corporation and is in good standing in the states set forth on Exhibit
3.1(b)(ii), which are the only jurisdictions in which the nature of the business
conducted by it or the properties owned, leased or operated by it make such
qualification necessary. No Person has any right to acquire any interest in any
Subsidiary and there are no authorized or outstanding stock appreciation,
phantom stock, profit participation or similar rights with respect to any
Subsidiary. Each such Subsidiary has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted.
(c) Authority; No Violation. This Agreement and the Other Seller
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly and unanimously approved by the board of directors and
shareholders of the Company, and this Agreement and the Other Seller Agreements
to which the Company is a party have been duly executed and delivered by the
Company. The Company has full corporate power and authority to execute, deliver
and perform this Agreement and the Other Seller Agreements to which the Company
is a party, each Person (other than PentaStar or the Acquiror) who is a party to
any Other Seller Agreement has full and absolute right, power, authority and
legal capacity to execute, deliver and perform this Agreement and all Other
Seller Agreements to which such Person is a party, and this Agreement
constitutes, and the Other Seller Agreements will when executed and delivered
constitute, the legal, valid and binding obligations of, and shall be
enforceable in accordance with their respective terms against, the Company and
each such Person who is a party thereto. The execution, delivery and performance
of this Agreement and the Other Seller Agreements and the consummation of the
transactions contemplated hereby and thereby will not (i) violate any Legal
Requirement to which the Company or any Person (other than PentaStar or the
Acquiror) who is a party to any Other Seller Agreement is subject or any
provision of the articles of incorporation or bylaws of the Company or of any
such Person, or (ii) violate, with or without the giving of notice or the lapse
of time or both, or conflict with or result in the breach or termination of any
provision of, or constitute a default under, or give any Person the right to
accelerate any obligation under, or result in the creation of any Encumbrance
upon any properties, assets or business of the Company or of any such Person
pursuant to, any indenture, mortgage, deed of trust, lien, lease, license,
Permit, agreement, instrument or other arrangement to which the Company or any
such Person is a party or by which the Company or any such Person or any of
their respective assets and properties is bound or subject. Except for the
Required Vote, the consents listed on Exhibit 4.9(a) and the Specified Consents,
neither the Company, nor any Person (excluding PentaStar or the Acquiror) need
give any notice to, make any filing with or obtain any authorization, consent or
approval of any Governmental Authority or other Person in order for the parties
to consummate the transactions contemplated by this Agreement and the Other
Seller Agreements. Except for the Required Vote, no approval of the shareholders
of VSI Enterprises, Inc. is required for the execution, delivery or performance
by the Company or VSI Enterprises, Inc.
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of this Agreement or any Other Seller Agreement.
(d) Financial Statements
(i) The unaudited balance sheets of each of the Company, UST and
VNS as of December 31, 1998, the related statements of income for each of the
Company, UST and VNS for the fiscal year then ended, the unaudited balance
sheets of each of the Company, UST and VNS as of December 31, 1999 (the latter
being referred to as the "Latest Balance Sheets"), and the related statements of
income for each of the Company, UST and VNS for the twelve-month periods then
ended (which December 31, 1999 financial statements are final and not subject to
adjustment) have been prepared in accordance with GAAP on a consistent basis,
are in accordance with the books and records of the Company, UST and VNS (which
books and records are complete and correct in all material respects), and fairly
present the respective financial position and results of operations of each of
the Company, UST and VNS in all material respects as of such dates and for each
of the periods indicated. As of the date of each such balance sheet, each of the
Company, UST and VNS had no Liability other than those set forth on each such
balance sheet. Copies of the financial statements described in the first
sentence in this Section 3.1(d) are attached as Exhibit 3.1(d)(i)(A). Attached
as Exhibit 3.1 (d)(i)(B) is a list of all employees of the Company, UST or VNS
(broken down with respect to each of the three companies) whose employment with
the Company, UST or VNS (A) has terminated since December 31, 1999 or (B) will
be terminated in connection with the Closing. To the best knowledge of the
Company and the Shareholder, the Financial Projections for the Year Ending 2000
have been prepared by the Company in good faith and in a manner consistent with
the Company's normal budgeting process, with no intent to misrepresent the
future financial performance of the business represented by the Acquired Assets,
and reflects the Company's best estimate of the financial performance of such
business in the year ending December 31, 2000.
(ii) Attached as Exhibit 3.1(d)(ii)(A) are the combining balance
sheets, and corresponding combining income statements, of each of the Company,
UST and VNS as of December 31, 1999, restated to reflect the accounting
methodology set forth on Exhibit 3.1(d)(ii)(B) in all material respects. The
balance sheets and income statements attached as Exhibit 3.1(d)(ii)(A)
accurately and completely restate the Latest Balance Sheets, and corresponding
income statements, of each of the Company, UST and VNS to reflect the accounting
methodology set forth on Exhibit 3.1(d)(ii)(B).
(e) Absence of Certain Agreements, Changes or Events.
(i) The Company is not, except as set forth on Exhibit 3.1(e)(i), a
party to or otherwise bound by any material contract or agreement (A) pursuant
to which the Company is obligated to furnish any services, product or equipment
and (B) that has been prepaid with respect to any period after December 31,
1999.
(ii) Since December 31, 1999, neither the Company, UST nor VNS has
(A) incurred any debt, indebtedness or other Liability, except current
Liabilities incurred in the ordinary course of business consistent with past
practice; (B) delayed or postponed the payment of accounts payable or other
Liabilities or accelerated the collection of any receivable beyond stated,
normal terms; (C) sold or otherwise transferred any of its assets or properties,
except for the sale of the UST/VNS Assets pursuant to the UST/VNS Acquisition
Agreement; (D) canceled, compromised, settled, released, waived, written-off or
expensed any account or note receivable, right, debt or claim involving more
than $10,000 in the aggregate or accelerated the collection of any account or
note receivable; (E) changed in any significant manner the way
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in which it conducts its business; (F) made or granted any individual or general
wage or salary increase, or any additional benefits of any kind or nature, or
entered into any employment agreements with salaried employees, officers or
directors (except for the employment agreements identified on Exhibit
3.1(e)(ii)(F) entered into with UST or VNS employees as part of the operational
integration of UST, VNS and the Company after and only after obtaining
PentaStar's consent thereto); (G) except as otherwise expressly permitted by
this Section 3.1(e)(ii), (1) entered into any contracts or agreements, or made
any commitments, involving more than $10,000 individually or in the aggregate,
except for contracts or agreements for capital expenditures not involving more
than $25,000 individually or in the aggregate, or (2) accelerated, terminated,
delayed, modified or canceled any agreement, contract, lease or license (or
series of related agreements, contracts, leases and licenses) involving more
than $10,000 individually or in the aggregate; (H) suffered any material adverse
fact or change, including, without limitation, to or in its business, assets or
financial condition or customer or service provider relationships; (I) made any
payment or transfer to or for the benefit of any shareholder, officer or
director or any relative or affiliate thereof or permitted any Person,
including, without limitation, any shareholder, officer, director or employee or
any relative or affiliate thereof, to withdraw assets from the Company, UST or
VNS; or (J) agreed to incur, take, enter into, make or permit any of the matters
described in clauses (A) through (I).
(iii) Exhibit 3.1(e)(iii) lists, for each of the Company, UST and
VNS, all orders booked, by month, during the seven-month period from July 1,
1999 through January 31, 2000, and the current status of each such order, as
reported through databases of each company which do not reconcile to any of such
companies' general ledgers.
(f) Tax Matters.
(i) Each of the Company, UST and VNS has filed, or has had filed on
its behalf, all Tax Returns that it was required to file. All such Tax Returns
were correct and complete in all respects. All Taxes owed by the Company, UST or
VNS (whether or not shown on any Tax Return) have been paid. Neither the
Company, UST nor VNS is currently the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made by an authority
in a jurisdiction where the Company, UST or VNS does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction. There are no
Encumbrances (other than Encumbrances for Taxes not yet due and payable, which
shall be paid by the Company) on any of the assets of the Company, UST or VNS
that arose in connection with any failure (or alleged failure) to pay any Tax.
(ii) Each of the Company, UST and VNS has withheld, or has had
withheld on its behalf, and paid, or has had paid on its behalf, all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, shareholder or other third
party.
(iii) To the best knowledge of the Company and the Shareholder,
there is no basis for any authority to assess any additional Taxes with respect
to the Company, UST or VNS for any period for which Tax Returns have been filed.
There is no pending or threatened dispute or claim concerning any Tax Liability
of the Company, UST or VNS. None of the Company, UST or VNS have any Liability
for any unpaid Taxes.
(iv) Neither the Company, UST nor VNS has waived, or had waived on
its behalf, any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
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(v) Neither the Company, UST nor VNS has made any payments, is not
obligated to make any payments and is not a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. None of the Company, UST or VNS is a party
to any Tax allocation or sharing agreement. None of the Company, UST or VNS has
Liability for the Taxes of any Person under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local, or foreign law), as a transferee or
successor, by contract or otherwise.
(g) Assets and Properties.
(i) Each of the Company, UST and VNS has good and marketable title
to, or a valid leasehold interest or interest as a licensee in, the properties
and assets used or held for use by it, located on its Premises, or shown on its
Latest Balance Sheet or acquired after the date thereof. As of the Closing, all
of the Acquired Assets will be owned by the Company, free and clear of all
Encumbrances (other than the Permitted Encumbrances in the event that, subject
to Section 4.10, the Acquiror has not paid off the debt to RFC Capital
Corporation as of the Closing). Neither the Company, UST nor VNS has entered
into any contract or made any commitment to sell all or any part of its assets,
except to the extent that the Permitted Encumbrances could be deemed a contract
or commitment to sell assets. The Company Acquired Assets constitute all of the
real, personal and mixed assets and property, both tangible and intangible,
including Intellectual Property, which are being used or held for use by the
Company in the conduct of the business and operations of the Company, consistent
with historical and current practices. The UST/VNS Assets constitute all of the
real, personal and mixed assets and property, both tangible and intangible,
including Intellectual Property, which are being used or held for use by UST or
VNS in the conduct of their respective business and operations, consistent with
historical and current practices. Each of the Company, UST and VNS owns or
leases all equipment and other tangible assets necessary for the conduct of its
business as presently conducted and as presently proposed to be conducted. Each
such tangible asset material to the Company's, UST's or VNS's operations is in
good operating condition and repair. There are no leases of real property
between the Company, UST or VNS and any shareholder, officer or director or any
relative or affiliate thereof. None of the current or former shareholders, nor
any relative or affiliate thereof, of the Company, UST or VNS, owns any asset,
tangible or intangible, which is used in the business of the Company, UST or
VNS, as the case may be, other than assets which will be included in the
Acquired Assets.
(ii) The Premises constitute all of the real property, buildings
and improvements used by the Company, UST or VNS, as the case may be, in its
business. To the best knowledge of the Shareholder, the Premises have been
occupied, operated and maintained in accordance with applicable Legal
Requirements. None of the Company, UST or VNS has received notice of violation
of any Legal Requirement or Permit relating to its operations or its owned or
leased properties.
(iii) No party to any lease with respect to any Premises has
repudiated any provision thereof, and there are no disputes, oral agreements or
forbearance programs in effect as to any such lease.
(h) Lists of Contracts and Other Matters. Attached as Exhibit 3.1(h)(i)
is a correct and complete list setting forth the following items, to the extent
such items relate to the Acquired Assets, the Assumed Liabilities or the
business represented by the Acquired Assets:
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(i) the following contracts and other agreements in effect as of
January 1, 2000 or the Closing to which the Company, UST or VNS is, or following
the closing under the UST/VNS Acquisition Agreement to which the Acquiror will
be, a party:
(A) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in excess
of $5,000 per year;
(B) any agreement involving a deposit in an amount greater than
$5,000;
(C) any agreement (or group of related agreements) for the purchase
or sale of supplies, products or other personal property, or for the furnishing
or receipt of services, the performance of which will extend over a period of
more than one year, result in a material loss to the Company, UST or VNS or
their respective businesses or involve consideration in excess of $10,000;
(D) any agreement concerning a partnership or joint venture;
(E) any agreement (or group of related agreements) under which the
Company, UST or VNS has created, incurred, assumed or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation, in excess
of $10,000 or under which any of them has granted any Encumbrances on any of its
respective assets, tangible or intangible;
(F) any agreement concerning confidentiality or noncompetition;
(G) any agreement with any of its current or former shareholders or
any relative or affiliate thereof;
(H) any profit sharing, stock option, stock purchase, phantom
stock, stock appreciation, profit participation, deferred compensation,
severance or other plan or arrangement;
(I) any collective bargaining agreement;
(J) any agreement for the employment of any individual on a
full-time, part-time, consulting or other basis or any agreement providing
severance benefits;
(K) any agreement under which the Company, UST or VNS has advanced
or loaned any amount to any of its directors, officers and employees outside the
ordinary course of business;
(L) any agreement obligating the Company, UST or VNS to meet
another party's unspecified requirements for goods or services or obligating any
of them to purchase an unspecified amount of goods or services based on another
party's ability to supply them;
(M) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business, financial
condition, operations, results of operations or future prospects of the Company,
UST or VNS; or
(N) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $10,000.
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(ii) All material claims, deposits, causes of action, choses in
action, rights of recovery, rights of set off and rights of recoupment of the
Company, UST or VNS.
(iii) All material franchises, approvals, Permits, licenses,
Orders, registrations, certificates, variances and similar rights of the
Company, UST or VNS (all of which are in full force and effect).
(iv) Each item of Intellectual Property owned by the Company, UST
or VNS or which is used by the Company, UST or VNS in its business and, in each
case where the Company, UST or VNS is not the owner, the owner of the
Intellectual Property.
(v) The name of each bank or other financial institution or entity
in which the Company, UST or VNS has an account or safe deposit box (with the
identifying account number or symbol) and the names of all persons authorized to
draw thereon or to have access thereto.
The Shareholder has delivered to PentaStar a correct and complete copy of
each written agreement and a written summary setting forth the terms and
conditions of each oral agreement referred to in Section 3.1(h)(i). With respect
to each such agreement, (A) the agreement is legal, valid, binding, enforceable
and in full force and effect; (B) the agreement will continue to be legal,
valid, binding, enforceable and in full force and effect on identical terms
immediately following the consummation of the transactions contemplated hereby
(except for those franchises, approvals, Permits, Licenses, Orders,
registrations, certificates or variances of the Company, UST or VNS set forth on
Exhibit 3.1(h)(ii) which have been granted, issued or given by Governmental
Authorities and which are not, by their terms, transferable to the Acquiror);
(C) neither the Company, UST or VNS nor, to the best knowledge of the
Shareholder, any other party is in breach or default, and, to the best knowledge
of the Shareholder, no event has occurred which, with notice or lapse of time,
would constitute a breach or default, or permit termination, modification or
acceleration, under the agreement; and (D) no party has repudiated any provision
of the agreement.
(i) Litigation; Compliance with Applicable Laws and Rights.
(i) There is no outstanding Order against, nor, except as set forth
on Exhibit 3.1(i)(i), is there any litigation, proceeding, arbitration or
investigation by any Governmental Authority or other Person pending or, to the
best knowledge of the Company and the Shareholder, threatened against, the
Company, UST or VNS or their respective assets or business or relating to the
transactions contemplated by this Agreement, nor is there any basis for any such
action.
(ii) To the best knowledge of the Company and the Shareholder,
except as set forth on Exhibit 3.1(i)(ii), neither the Company, UST or VNS nor
the Company's, UST's or VNS's assets are in violation of any applicable Legal
Requirement or Right. None of the Company, UST or VNS has received notice from
any Governmental Authority or other Person of any violation or alleged violation
of any Legal Requirement or Right, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand or notice has been filed or
commenced or is pending or, to the best knowledge of the Company and the
Shareholder, threatened against the Company, UST or VNS alleging any such
violation.
(j) Notes and Accounts Receivable. The notes and accounts receivable of
the Company, UST and VNS reflected on its Latest Balance Sheet, and all notes
and accounts receivable arising on or prior to the Closing, arose from bona fide
transactions by the Company, UST and VNS in the ordinary course of
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business, are valid receivables with trade customers and have been recorded
using the Company's historic revenue recognition policies.
(k) Product Quality, Warranty and Liability. All services and products
sold, leased, provided or delivered by the Company, UST or VNS to customers on
or prior to January 1, 2000 or the Closing conform to applicable contractual
commitments, express and implied warranties, product and service specifications
and quality standards, and there is no basis for any Liability for replacement
or repair thereof except as provided for in services contracts entered into by
the Company, UST or VNS with customers or other damages in connection therewith.
No service or product sold, leased, provided or delivered by the Company, UST or
VNS to customers on or prior to January 1, 2000 or the Closing is subject to any
guaranty, warranty or other indemnity beyond the applicable standard terms and
conditions of sale or lease. None of the Company, UST or VNS has any Liability
and there is no basis for any Liability arising out of any injury to a Person or
property as a result of the ownership, possession, provision or use of any
service or product sold, leased, provided or delivered by the Company, UST or
VNS on or prior to the Closing Date or the Closing. All product or service
liability claims that have been asserted against the Company, UST or VNS since
January 1, 1996, whether covered by insurance or not and whether litigation has
resulted or not, other than those listed and summarized on Exhibit 3.1(i)(i),
are listed and summarized on Exhibit 3.1(k).
(l) Insurance. Each of the Company, UST and VNS has policies of
insurance (i) covering risk of loss on the Acquired Assets and the Company
Acquired Assets (in the case of the Company) and the UST/VNS Assets (in the case
of UST and VNS), (ii) covering products and services liability and liability for
fire, property damage, personal injury and workers' compensation coverage and
(iii) for business interruption, all, to the best knowledge of the Company and
the Shareholder, with responsible and financially sound insurance carriers in
adequate amounts and in compliance with governmental requirements and in
accordance with good industry practice. All such insurance policies are valid,
in full force and effect and enforceable in accordance with their respective
terms and no party has repudiated any provision thereof. All such policies will
remain in full force and effect until the Closing. Neither the Company nor any
other party to any such policy is in breach or default (including with respect
to the payment of premiums or the giving of notices) in the performance of any
of their respective obligations thereunder, and no event exists which, with the
giving of notice or the lapse of time or both, would constitute a breach,
default or event of default, or permit termination, modification or acceleration
under any such policy. There are no claims, actions, proceedings or suits
arising out of or based upon any of such policies nor, to the best knowledge of
the Company and the Shareholder, does any basis for any such claim, action, suit
or proceeding exist. All premiums have been paid on such policies as of the date
of this Agreement and will be paid on such policies through the Closing. Each of
the Company, UST and VNS has been covered during the three years prior to the
date of this Agreement by the insurance policies set forth on Exhibit 3.1(l)(i).
All claims made during such five-year period with respect to any insurance
coverage of the Company, UST or VNS, other than those described on Exhibit
3.1(k), are set forth on Exhibit 3.1(l)(ii).
(m) Pension and Employee Benefit Matters. Neither the Acquiror nor
PentaStar will suffer any Liability or Adverse Consequence from the Company's,
UST's or VNS's administration or termination of any of its Employee Benefit
Plans or from any failure of any pre-Closing or post-Closing distribution of
benefits to employees of the Company, UST or VNS to be made by the Company, UST
or VNS in compliance with all applicable Legal Requirements. Neither the
Acquiror nor PentaStar will have any obligation to employ any employee of the
Company, UST or VNS or to continue any Employee Benefit Plan, and will have no
Liability under any plan or arrangement maintained by the Company, UST or VNS
for the benefit of any employee. The Company, UST or VNS, as the case may be,
will remain liable for all costs
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of employee compensation, including benefits and Taxes relating to employment
and employees attributable to periods up to January 1, 2000, whether reported by
the Closing or thereafter, and all group health plan continuation coverage to
which any employee, former employee or dependent is entitled because of a
qualifying event (as defined in Section 4980B(f)(3) of the Code) occurring
through the Closing or as a result of termination of employment with the
Company, UST or VNS because of the transactions contemplated by this Agreement
and any benefit or excise tax liability or penalty or other costs arising from
any failure by the Company, UST or VNS to provide group health plan continuation
coverage. Except as set forth on Exhibit 3.1(m), neither the Company, UST or VNS
nor any Affiliated Group which includes the Company, UST or VNS (if any)
maintains, administers or contributes to, has maintained, administered or
contributed to, or has any Liability to contribute to, any Employee Benefit
Plan. Exhibit 3.1(m) lists each Employee Benefit Plan that is, or at any time
during the past three years was, maintained, administered, contributed to or
required to be contributed to by the Company, UST or VNS or any Affiliated Group
(if any) which includes or has included the Company, UST or VNS, and the date of
termination of each such Employee Benefit Plan (if any) which has been
terminated. None of the Company, UST or VNS has any Liability (and there is no
basis for the assertion of any Liability) as a result of the Company's, UST's or
VNS's or any such Affiliated Group's maintenance, administration or termination
of, or contribution to, any Employee Benefit Plan. Neither the Company nor any
member of any Affiliated Group (if any) which includes or has included the
Company, UST or VNS has ever been required to contribute to any Multiemployer
Plan (as defined in ERISA Section 3(37)) nor has incurred any Liability under
Title IV of ERISA.
(n) Employees and Labor.
(i) None of the Company, UST or VNS has received any notice, nor,
to the best knowledge of the Company and the Shareholder, is there any reason to
believe that any Key Employee of the Company, UST or VNS or any group of
employees of the Company, UST or VNS has made plans to terminate his, her or its
employment with the Company, UST or VNS, as the case may be. To the best
knowledge of the Company and the Shareholder, no Key Employee is subject to any
agreement, obligation, Order or other legal hindrance that impedes or might
impede such Key Employee from devoting his or her full business time to the
affairs of the Company, UST or VNS, as the case may be, prior to the Closing
and, if such person becomes an employee of the Acquiror or PentaStar, to the
affairs of the Acquiror or PentaStar after the Closing. None of the Company, UST
or VNS will be required to give any notice under the Worker Adjustment and
Retraining Notification Act, as amended, or any similar Legal Requirement as a
result of this Agreement, the Other Seller Agreements or the transactions
contemplated hereby or thereby. None of the Company, UST or VNS has any labor
relations problems or disputes, nor has any of the Company, UST or VNS
experienced any strikes, grievances, claims of unfair labor practices or other
collective bargaining disputes. None of the Company, UST or VNS is a party to or
bound by any collective bargaining agreement, there is no union or collective
bargaining unit at the Company's, UST's or VNS's facilities, and no union
organization effort has been threatened, initiated or is in progress with
respect to any employees of the Company, UST or VNS.
(ii) Exhibit 3.1(n)(ii) lists (A) the name of each salesperson
(whether such salesperson was an employee or independent contractor) of the
Company, UST or VNS, other than UST Telemarketers, who has left the employment
of the Company, UST or VNS in the twelve-month period ending January 31, 2000,
(B) the date such salesperson left the employment of the Company, UST or VNS and
(C) the dollar amount of orders booked by the Company, UST or VNS during the
twelve-month period prior to the date such salesperson left the employment of
the Company, UST or VNS which were attributable to such salesperson or for which
such salesperson was responsible, as reported through databases of each company
which do not reconcile to any of such companies' general ledgers.
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(o) Customer and Service Provider Relationships. The customers listed
on Exhibit 3.1(o)(i) (the "Large Customers"), individually or with their
respective affiliates, accounted for the respective revenues of the Company, UST
and VNS during the fiscal year ended December 31, 1998 or the fiscal year ended
December 31, 1999, the revenues of the Company, UST or VNS set forth opposite
such Large Customer's name on Exhibit 3.1(o)(i), as reported through databases
of each company which did not reconcile to any of such companies' general
ledgers. Exhibit 3.1(o)(ii) lists each Person who was a service provider to the
customers of the Company, UST or VNS as of December 31, 1999 or as of the date
of this Agreement (the "Principal Providers"). Each of the Company, UST and VNS
has good commercial working relationships with its Large Customers (except as
set forth on Exhibit 3.1(o)(iii)) and Principal Providers and since December 31,
1999 no Large Customer (except as set forth on Exhibit 3.1(o)(iii)) or Principal
Provider has canceled or otherwise terminated its relationship with the Company,
UST or VNS, as the case may be, materially decreased its services supplied to
the Company, UST or VNS, as the case may be, or threatened to take any such
action. The Company and the Shareholder have no basis to anticipate any problems
with the Company's, UST's or VNS's customer or service provider relationships.
To the best knowledge of the Company and the Shareholder (and the Company and
the Shareholder have no obligation in making this representation to make inquiry
of any Large Customer or Principal Provider as to such Large Customer's or
Principal Provider's plans), no Large Customer (except as set forth on Exhibit
3.1(o)(iii)) or Principal Provider has any plans to terminate its relationship
with the Company, UST or VNS and the execution and delivery of this Agreement
and of the UST/VNS Acquisition Agreement and the consummation of the
transactions contemplated hereby and thereby will not adversely affect the
relationship of the Company, UST or VNS with any Large Customer or Principal
Provider prior to the Closing (or in the case of the UST/VNS Acquisition
Agreement, the closing thereunder)or of the Acquiror or PentaStar with any Large
Customer or Principal Provider after the Closing (or in the case of the UST/VNS
Acquisition Agreement, the closing thereunder).
(p) Environmental Matters. Each of the Company, UST or VNS is
conducting and at all times has conducted its business and operations, and has
occupied, used and operated its Premises and all other real property and
facilities presently or previously owned, occupied, used or operated by it, in
compliance with all Environmental Obligations and so as not to give rise to
Liability under any Environmental Obligations or to any impact on the Company's,
UST's or VNS's business or activities. None of the Company, UST or VNS has any
Liability under any Environmental Obligation, nor is there any basis for any
such Liability.
(q) Intellectual Property. The Company owns or has, or will upon the
closing under the UST/VNS Acquisition Agreement own or have, the legal right to
use each item of Intellectual Property required to be identified on Exhibit
3.1(h)(i), except for the software deficiency set forth on Exhibit 3.1(i)(ii).
The continued operation of the business of the Company, UST or VNS as currently
conducted will not interfere with, infringe upon, misappropriate or conflict
with any Intellectual Property rights of another Person. To the best knowledge
of the Company and the Shareholder, no other Person has interfered with,
infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property rights of the Company, UST or VNS or any Intellectual
Property included in the Acquired Assets. Neither the Company, UST or VNS nor
any owner of any Intellectual Property included in the Acquired Assets has
granted any license, sublicense or permission with respect to any Intellectual
Property owned or used in the Company's, UST's or VNS's business. No claims are
pending or, to the knowledge of the Company and the Shareholder, threatened,
that the Company, UST or VNS is infringing or otherwise adversely affecting the
rights of any
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Person with regard to any Intellectual Property. To the best knowledge of the
Company and the Shareholder, all of the Intellectual Property that is owned by
the Company, UST or VNS is owned free and clear of all Encumbrances and was not
misappropriated from any Person, and all portions of the Intellectual Property
that are licensed by the Company, UST or VNS are licensed pursuant to valid and
existing license agreements. The consummation of the transactions contemplated
by this Agreement will not result in the loss or material diminution of any
Intellectual Property or rights in Intellectual Property.
(r) Year ▇▇▇▇ ▇▇▇▇▇▇▇▇. To the best knowledge of the Company and the
Shareholder, the computer software owned by the Company, UST or VNS and all
other Intellectual Property used or held for use by the Company, UST or VNS in
its business accurately processes date/time data (including calculating,
comparing, and sequencing) from, into, and between the twentieth and
twenty-first centuries, and the years 1999 and 2000 and leap year calculations
and the date September 9, 1999 when either (i) used as a standalone application,
or (ii) integrated into or otherwise used in conjunction with the third party
hardware, software, firmware and data over which the Shareholder, the Company,
UST or VNS have no control ("Third Party Products") with which such Company, UST
or VNS software or other Intellectual Property was designated or intended to
operate at the time such Company, UST or VNS software was (A) developed or (B)
first provided to the Company's, UST's or VNS's customers, or tested by the
Company, UST or VNS for such customers, whichever is later. Notwithstanding the
foregoing, the Company, UST or VNS shall not be considered to be in breach of
the representation and warranty in the immediately preceding sentence if the
failure of such Company, UST or VNS software to comply with such representation
and warranty is attributable solely to (x) a failure by any Third Party Product
to accurately process date/time data (including but not limited to, calculating,
comparing, and sequencing) from, into, and between the twentieth and
twenty-first centuries, and the years 1999 and 2000 and leap year calculations
and the date September 9, 1999; or (y) any modification of the Company, UST or
VNS software by any party other than the Company, UST or VNS (unless such
modification was made at the direction of the Company, UST or VNS). The personal
computers used by UST in its telecenter business do not meet the representation
set forth in clause (i) of the first sentence of this Section 3.1(r); provided,
however, that such computers have been networked together to allow the Company
to operate the telecenter business in a manner consistent with past practice
without loss of material data.
(s) Brokers' Fees. Except as set forth on Exhibit 3.1(s), neither the
Company nor the Shareholder has, and will not have as a result of the
consummation of this Agreement, any Liability to pay any fees or commissions to
any broker, finder or agent with respect to the transactions contemplated by
this Agreement.
(t) Guaranties. The Company is not a guarantor or otherwise liable for
any Liability (including indebtedness for borrowed money) of any other Person.
Except as set forth on Exhibit 3.1(t), no Person is a guarantor or otherwise
liable for any Liability (including indebtedness for borrowed money) of the
Company.
(u) Investment Representations. (i) The Company is acquiring the shares
of PentaStar Common Stock to be issued pursuant to this Agreement (the
"PentaStar Shares") for the Company's own account and not on behalf of any other
Person, except that the ▇▇▇▇▇▇ Shares, if issued, will be issued in the name of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ pursuant to Section 2.3(b)(iii); the Company is aware and
acknowledges that the PentaStar Shares have not been registered under the
Securities Act, or applicable state securities laws, and may not be offered,
sold, assigned, exchanged, transferred, pledged or otherwise disposed of unless
so registered under the Securities Act and applicable state securities laws or
an exemption from the registration
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requirements thereof is available; (ii) the Company has been furnished all
information that the Company deems necessary to enable it to evaluate the merits
and risks of an investment in PentaStar, including, without limitation, the
information described on Exhibit 3.1(u)(ii); the Company has had a reasonable
opportunity to ask questions of and receive answers from PentaStar concerning
PentaStar, the PentaStar Shares and any and all matters relating to the
transactions described herein or in the information described on Exhibit
3.1(u)(ii), and all such questions, if any, have been answered to the full
satisfaction of the Company; (iii) no Person other than the Company and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ pursuant to Section 2.3(b)(iii) has (A) any rights in and to the
PentaStar Shares, which rights were obtained through or from the Company; or (B)
any rights to acquire the PentaStar Shares, which rights were obtained through
or from the Company; (iv) the Company has such knowledge and expertise in
financial and business matters (including knowledge and expertise in the
business and proposed business of PentaStar) that the Company is capable of
evaluating the merits and risks involved in an investment in the PentaStar
Shares; and the Company is financially able to bear the economic risk of the
investment in the PentaStar Shares, including a total loss of such investment;
(v) the Company has adequate means of providing for its current needs and has no
need for liquidity in its investment in the PentaStar Shares; the Company has no
reason to anticipate any material change in its financial condition for the
foreseeable future; (vi) the Company is aware that the acquisition of the
PentaStar Shares is an investment involving a risk of loss and that there is no
guarantee that the Company will realize any gain from this investment, and that
the Company could lose the total amount of its investment; (vii) the Company
understands that no United States federal or state agency has made any finding
of determination regarding the fairness of the offering of the PentaStar Shares
for investment, or any recommendation or endorsement of the offering of the
PentaStar Shares; (viii) the Company is acquiring the PentaStar Shares for
investment, with no present intention of dividing or allowing others to
participate in such investment or of reselling, or otherwise participating,
directly or indirectly, in a distribution of PentaStar Shares, except for the
issuance of the ▇▇▇▇▇▇ Shares in the name of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ pursuant to Section
2.3(b)(iii), and shall not make any sale, transfer or pledge thereof without
registration under the Securities Act and any applicable securities laws of any
state, unless an exemption from registration is available, as established to the
reasonable satisfaction of PentaStar, by opinion of counsel or otherwise; (ix)
except as set forth herein, no representations or warranties have been made to
the Company by PentaStar or any agent, employee or affiliate of PentaStar, and
in entering into this transaction the Company is not relying upon any
information, other than from the results of independent investigation by the
Company; and (x) the Company understands that the PentaStar Shares are being
offered to the Company in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that
PentaStar is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Company set
forth herein in order to determine the applicability of such exemptions and the
suitability of the Company to acquire the PentaStar Shares; and (xi) the Company
is an "accredited investor" as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
All the certificates representing PentaStar Shares shall bear the following
legend, in addition to the legend required by Section 5.8:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") NOR UNDER ANY STATE SECURITIES LAWS AND CAN
NOT BE TRANSFERRED, SOLD, ASSIGNED OR HYPOTHECATED UNTIL EITHER (I) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS OR (II) THE ISSUER RECEIVES AN OPINION OF
COUNSEL TO THE ISSUER OR OTHER COUNSEL TO THE HOLDER OF SUCH SHARES, WHICH
OPINION IS SATISFACTORY TO THE ISSUER AND ITS COUNSEL, THAT SUCH
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SECURITIES MAY BE TRANSFERRED, SOLD, ASSIGNED OR HYPOTHECATED WITHOUT
REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.
(v) UST/VNS Acquisition Agreement. The representations and warranties
of UST, VNS and/or View Tech set forth in the UST/VNS Acquisition Agreement are
true and correct.
(w) Disclosure. None of the documents or information provided to
PentaStar by the Company, the Shareholder or any agent or employee thereof in
the course of PentaStar's due diligence investigation and the negotiation of
this Agreement and Section 3.1 of this Agreement and the disclosure Exhibits
referred to therein, including the financial statements referred to above in
Section 3.1, contains any untrue statement of any material fact or omit to state
a material fact necessary in order to make the statements contained herein or
therein not misleading. Except as set forth in this Agreement and the Exhibits,
including the financial statements, there is no other fact specific to the
Company, UST or VNS which materially adversely affects the business, condition,
affairs or operations of the Company, UST or VNS or any of their respective
properties or assets.
Nothing in the disclosure Exhibits referred to in Section 3.1 shall be
deemed adequate to disclose an exception to a representation or warranty made
herein unless the applicable disclosure Exhibit identifies the exception with
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein (unless the representation
or warranty has to do with the existence of the document or other item itself).
3.2. Representations and Warranties of PentaStar. PentaStar represents and
warrants to the Company and the Shareholder that the statements contained in
this Section 3.2 are correct and complete as of the date of this Agreement and
will be correct and complete as of the date of the Closing (as though made then
and as though the date of the Closing were substituted for the date of this
Agreement throughout this Section 3.2).
(a) Organization, Good Standing, Power, Etc. PentaStar and the Acquiror
are each corporations duly organized, validly existing and in good standing
under the laws of the State of Delaware and are qualified to do business as
foreign corporations and are in good standing in all jurisdictions in which the
nature of the respective businesses conducted by each of them or the respective
properties owned, leased or operated by each of them make such qualification
necessary. This Agreement and the Other PentaStar Agreements and the
transactions contemplated hereby and thereby have been duly approved by all
requisite corporate action. Each of PentaStar and the Acquiror have full
corporate power and authority to execute, deliver and perform this Agreement and
the Other PentaStar Agreements to which it is a party, and this Agreement
constitutes, and the Other PentaStar Agreements will when executed and delivered
constitute, the legal, valid and binding obligations of PentaStar or the
Acquiror, as the case may be, and shall be enforceable in accordance with their
respective terms against PentaStar or the Acquiror, as the case may be.
(b) Capitalization.
(i) The authorized, issued and outstanding shares of the capital
stock of PentaStar are as set forth on Exhibit 3.2(b)(i).
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(ii) At the time of issuance thereof and delivery, the PentaStar
Shares to be delivered pursuant to this Agreement will be duly authorized and
validly issued shares of PentaStar's Common Stock, and will be fully paid and
nonassessable. Such PentaStar Shares shall at the time of such issuance and
delivery be free and clear of any Encumbrances of any kind or character, other
than those arising under applicable federal and state securities laws, under
this Agreement or under any Other Seller Agreement.
(iii) All of the issued and outstanding capital stock of the
Acquiror is owned by PentaStar.
(c) No Violation of Agreements, Etc. The execution, delivery and
performance of this Agreement and the Other PentaStar Agreements, and the
consummation of the transactions contemplated hereby and thereby will not (i)
violate any Legal Requirement to which PentaStar or the Acquiror is subject or
any provision of the certificate of incorporation or bylaws of PentaStar or the
Acquiror or (ii) violate, with or without the giving of notice or the lapse of
time or both, or conflict with or result in the breach or termination of any
provision of, or constitute a default under, or give any Person the right to
accelerate any obligation under, or result in the creation of any Encumbrance
upon any properties, assets or business of PentaStar or of the Acquiror pursuant
to, any indenture, mortgage, deed of trust, lien, lease, license, agreement,
instrument or other arrangement to which PentaStar or the Acquiror is a party or
by which PentaStar or the Acquiror or any of their respective assets and
properties is bound or subject. Except for notices and consents that will be
given or obtained by PentaStar prior to the Closing, neither PentaStar nor the
Acquiror need to give any notice to, make any filing with or obtain any
authorization, consent or approval of any Governmental Authority or other Person
in order for the parties to consummate the transactions contemplated by this
Agreement.
3.3. Survival of Representations. The representations and warranties
contained in Sections 3.1 and 3.2 and the Liabilities of the parties with
respect thereto shall survive any investigation thereof by the parties and shall
survive the Closing for two years, except that the Liabilities of the Company
and the Shareholder with respect to the representations and warranties set forth
in Sections 3.1(f), 3.1(m), 3.1(p) and 3.1(q) shall survive until the expiration
of the applicable statute of limitations and except that the Liabilities of the
Company and the Shareholder with respect to the representations and warranties
set forth in Sections 3.1(a), 3.1(b), 3.1(c) and 3.1(u) and the Liabilities of
PentaStar with respect to the representations and warranties set forth in
Sections 3.2(a) and 3.2(b) shall survive without termination.
3.4. Representations as to Knowledge. The representations and warranties
contained in Article 3 hereof will in each and every case where an exercise of
discretion or a statement to the "best knowledge," "best of knowledge" or
"knowledge" is required on behalf of any party to this Agreement be deemed to
require that such exercise of discretion or statement be in good faith after
reasonable investigation (including, in the case of the Company and the
Shareholder, inquiry of the applicable employees of the Company), with due
diligence, to the best efforts of such party and be exercised always in a
reasonable manner and within reasonable times.
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4. Pre-Closing Covenants. The parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
4.1. General. Each of the parties will use its reasonable best efforts to
take all actions necessary, proper or advisable in order to consummate and make
effective the transactions contemplated by this Agreement (including the
satisfaction, but not the waiver, of the closing conditions set forth in Section
6) and the other agreements contemplated hereby. Without limiting the foregoing,
the Shareholder will, and will cause the Company to, give any notices, make any
filings and obtain any consents, authorizations or approvals needed to
consummate the transactions contemplated by this Agreement.
4.2. Operation and Preservation of Business. The Company will not, and the
Shareholder will not cause or permit the Company to, engage in any practice,
take any action or enter into any transaction outside the ordinary course of its
business; provided, however, that in no event will any action be taken or fail
to be taken by the Company or the Shareholder or any transaction be entered into
by the Company or the Shareholder which would result in a breach of any
representation, warranty or covenant of the Company or the Shareholder contained
herein or in the Agreement dated December 22, 1999 between PentaStar and the
Company. The Company will, and the Shareholder will cause the Company to, keep
its business and properties, including its current operations, physical
facilities, working conditions and relationships with customers, service
providers, lessors, licensors and employees, intact.
4.3. Full Access. The Company will, and the Shareholder will cause the
Company to, permit PentaStar and its agents to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Company, to all premises, properties, personnel,
books, records (including Tax records), contracts and documents of or pertaining
to the Company, UST or VNS.
4.4. Notice of Developments. The Company and the Shareholder will give
prompt written notice to PentaStar of any material development which occurs
after the date of this Agreement and before the Closing and affects the
business, assets, Liabilities, financial condition, operations, results of
operations, future prospects, representations, warranties, covenants or
disclosure Exhibits of the Company, UST or VNS. No such written notice, however,
will be deemed to amend or supplement any disclosure Exhibit or to prevent or
cure any misrepresentation, breach of warranty or breach of covenant.
4.5. Exclusivity. Neither the Company nor the Shareholder will, and the
Shareholder will not cause or permit the Company to, (a) solicit, initiate or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any portion
of the assets of, the Company (including any acquisition structured as a merger,
consolidation or share exchange) or (b) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. The Shareholder will not vote shares
of the Company's stock in favor of any such transaction. The Company and the
Shareholder will notify PentaStar immediately if any Person makes any proposal,
offer, inquiry or contact with respect to any of the foregoing.
4.6. Announcements; Securities Law Restrictions. Prior to the Closing,
neither the Shareholder nor the Company shall disclose to any Person, nor issue
any press release or make any public announcement concerning, the existence,
terms or subject matter of this Agreement without the prior written approval of
PentaStar, except (and only to the extent) previously publicly announced by
PentaStar and the Shareholder shall coordinate its initial release with respect
to this Agreement with PentaStar. Further, neither the
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Shareholder nor the Company shall violate the United States securities laws
which restrict the Shareholder and the Company, as Persons with material
non-public information concerning PentaStar obtained directly or indirectly from
PentaStar, from purchasing or selling securities of PentaStar or from
communicating such information to any other Person under any circumstances in
which it is reasonably foreseeable that such Person is likely to purchase or
sell such securities.
4.7. Bulk Sales Laws. In reliance upon its indemnification rights set forth
in Section 7, the Acquiror waives compliance by the Company with the bulk
transfer law and any other similar law of any applicable jurisdiction in respect
to the transactions contemplated by this Agreement.
4.8 Shareholders' Meeting.
(a) The Shareholder, acting through its board of directors, shall, in
accordance with applicable Legal Requirements and the Shareholder's articles or
certificate of incorporation and bylaws, duly call, give notice of, convene and
hold a meeting (including any adjournment or postponement thereof, the
"Meeting") of its shareholders as soon as practicable following the date of this
Agreement, but in any event no later than 20 days after the mailing of the Proxy
Statement for the purpose of considering and taking action upon the approval of
the sale of the Acquired Assets to the Acquiror pursuant to this Agreement (the
"Transaction"). The Shareholder shall cause the Meeting to be held, and such
vote shall be taken not, later than May 31, 2000. The board of directors shall
recommend such approval by the shareholders and shall take all reasonable,
lawful action to solicit such approval by the shareholders of the Shareholder.
(b) The Shareholder shall (i) as promptly as practicable following the
date of this Agreement, prepare and file with the SEC and use its best efforts
to have cleared by the SEC and thereafter mail to its shareholders as promptly
as practicable, a proxy statement and a form of proxy in connection with the
vote at the Meeting of its shareholders with respect to the Transaction (such
proxy statement, together with any amendments thereof or supplements thereto, in
each case in the form or forms mailed to the shareholders, is the "Proxy
Statement") and (ii) otherwise comply with all Legal Requirements applicable to
the Meeting. PentaStar shall be permitted to review drafts of such Proxy
Statement. The Shareholder will include in the Proxy Statement the
recommendation of its board of directors that shareholders of the Shareholder
vote in favor of the approval of the Transaction. The Shareholder shall notify
PentaStar promptly of the receipt of any comments of the SEC or its staff and of
any request by the SEC or its staff or any other governmental officials for
amendments or supplements to the Proxy Statement or for additional information,
and will supply PentaStar with copies of all correspondence between the
Shareholder and any of its representatives, on the one hand, and the SEC or its
staff or any other governmental officials, on the other hand, with respect to
the Proxy Statement. The Proxy Statement shall comply with all applicable Legal
Requirements.
(c) The Shareholder shall cause each of its affiliates to vote at the
Meeting all shares of the capital stock of the Shareholder that each owns in
favor of the Transaction.
4.9 Specified Consents. As of the date of this Agreement, the Company have
delivered to the Acquiror the third-party consents set forth on Exhibit 4.9(a)
which are satisfactory to the Acquiror. As of the date of this Agreement, all
other third-party consents delivered to the Acquiror are not satisfactory to the
Acquiror. Prior to the date the Required Vote is obtained, the Company and the
Shareholder shall obtain and deliver to the Acquiror the material third-party
consents set forth on Exhibit 4.9(b), any additional material third-party
consents required under agreements entered into by the Company after the date
hereof (the
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"Specified Consents"). The documents described in Section 6.1(l) shall be for
the benefit of the Acquiror on forms previously provided to the Company by the
Acquiror, and the other Specified Consents shall be in the name of the Acquiror
as assignee, be effective upon the Closing and comply in wording with the
concept set forth in clause (a) of the definition of Assumed Liabilities on a
form to be provided by the Acquiror.
4.10 Termination Expenses. The Company shall pay any "early termination
fee" required to terminate the Receivables Sales Agreement dated as of October
8, 1998 between the Company and RFC Capital Corporation, and all other fees,
expenses, costs and amounts necessary to deliver the Acquired Assets at the
Closing as set forth in Section 2.1 and this Agreement.
5. Post-Closing Covenants. The parties agree as follows with respect to the
period following the Closing.
5.1. Further Assurances. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other party
reasonably may request, all at the sole cost and expense of the requesting party
(unless the requesting party is entitled to indemnification therefor under
Section 7).
5.2. Transition. Neither the Company nor the Shareholder will take any
action at any time that is designed or intended to have the effect of
discouraging any customer, supplier, lessor, licensor or other business
associate of the Company, UST or VNS from establishing or continuing a business
relationship with the Acquiror or PentaStar after the Closing.
5.3. Cooperation. In the event and for so long as any party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand in connection with (a) any
transaction contemplated by this Agreement or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction on or prior to the Closing
involving any of the Acquired Assets or the Company's business, each of the
other parties will cooperate with such party and its counsel in the contest or
defense, make available their personnel, and provide such testimony and access
to their books and records as shall be reasonably necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending party (unless the contesting or defending party is entitled to
indemnification therefor under Section 7).
5.4. Confidentiality. The Company and the Shareholder will treat and hold
as confidential all Confidential Information concerning PentaStar, the Company's
business, the business represented by the UST Assets and the VNS Assets or the
Acquired Assets, refrain from using any such Confidential Information and
deliver promptly to PentaStar or destroy, at the request and option of
PentaStar, all of such Confidential Information in its or their possession.
5.5. Financial Statements. Upon request of PentaStar, the Company and the
Shareholder will, and will use commercially reasonable efforts to cause UST and
VNS to, cooperate with PentaStar and render such assistance to PentaStar and its
accountants as may be required to produce such historical and on-going financial
statements and audits as PentaStar may request, including, without limitation,
signing (or in the case of UST and VNS using commercially reasonable efforts to
cause to be signed) management representation letters reasonably requested by
PentaStar's auditors, all at the sole cost and expense of PentaStar, but without
additional consideration to the Company, UST, VNS or the Shareholder. The
Company and the Shareholder
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acknowledge that PentaStar may be required by applicable law to include audited
financial statements with respect to the business of the Company, UST and VNS in
reports filed with governmental agencies and that the inability to audit the
financial statements as of the Effective Date promptly after the Closing could
have a material adverse effect on PentaStar.
5.6. Satisfaction of Liabilities. The Company and the Shareholder will pay
and perform, as and when due, all Liabilities (other than the Assumed
Liabilities) relating to the Company, the business of the Company and the
Acquired Assets, including without limitation, all Taxes attributable to the
transactions contemplated by this Agreement and all accrued vacation and other
accrued employee benefits. Further, the Company and the Shareholder, at their
expense, promptly will take or cause to be taken any action necessary to remedy
any failure of the Premises or the acquired business to comply at the Closing
with any Legal Requirement, upon receipt of notice from PentaStar at any time.
The Acquiror will pay and perform, as and when due (except to the extent the
validity thereof or the liability therefor is being contested by the Acquiror),
the Assumed Liabilities.
5.7. Repurchase of Unpaid Receivables. The Company and the Shareholder
jointly and severally guarantee that Closing Accounts Receivable in at least the
aggregate net amount set forth on Exhibit 1.1(e) (the "Aggregate Net Amount")
will be paid to the Acquiror not later than 180 days from the Closing Date. Upon
demand (the "Payment Demand") by PentaStar at any time after 180 days from the
Closing Date, the Company and the Shareholder shall jointly and severally pay to
the Acquiror the amount of any shortfall (a "Shortfall Payment") between the
Aggregate Net Amount and the aggregate payments received by the Acquiror from
account obligors in respect of the Closing Accounts Receivable. Payments
received by the Acquiror from such account obligors will be applied to the
Closing Accounts Receivable specified by the account obligors in connection with
such payment. If the Acquiror receives a Shortfall Payment from the Company or
the Shareholder and the Acquiror thereafter receives payment from an account
obligor in respect of a Closing Account Receivable (a "Post-Indemnification
Payment") in respect of which such Shortfall Payment was made, the Acquiror will
promptly deliver the amount of such Post-Indemnification Payment to the Company;
provided, however, that the aggregate amount of all Post-Indemnification
Payments made by the Acquiror to the Company will not exceed the amount of the
Shortfall Payment. Upon delivery of the Shortfall Payment to the Acquiror, the
Closing Accounts Receivable identified by PentaStar in the Payment Demand (and
PentaStar shall so identify the oldest Closing Accounts Receivable first) shall,
without further action of any party, become the property of the Company and the
Shareholder, who may pursue collection thereof; provided, however, that the
Shareholder and the Company shall notify the account obligor that such
collection efforts are not being undertaken on behalf of the Acquiror. From the
Closing until 180 days after the Closing Date, PentaStar (through the Acquiror)
will apply the Company's standard accounts receivable collection procedures to
the Closing Accounts Receivable; provided, however, neither the Acquiror nor
PentaStar will not be required to institute suit, utilize third-party collection
agencies or other agents or take other extraordinary collection actions with
respect to the Closing Accounts Receivable; and, provided further, that any
failure of any collection activities of the Acquiror, PentaStar or any such
collection agency or other agent will not relieve the Company or the Shareholder
from their guarantee of the Closing Accounts Receivable as described in this
Section 5.7. The Acquiror will make available to the Company and the
Shareholder, during normal business hours as reasonably requested by the
Company, such of the Acquiror's books and records as are necessary to allow the
Company and the Shareholder, at their expense, to confirm the amount of the
Shortfall Payment demanded by PentaStar and the existence of any
Post-Indemnification Payment received by the Acquiror from an account obligor in
respect of such account obligor's Closing Account Receivable.
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5.8. Transfer Restrictions. Unless otherwise agreed by PentaStar, except
for the transfer of the ▇▇▇▇▇▇ Shares to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ pursuant to Section
2.3(b)(iii), the Company will not sell, assign, exchange, transfer, pledge or
otherwise dispose of at any time prior to the date which is 18 months after the
Closing any of the PentaStar Shares received by the Company as part of the
Purchase Price, whether such shares are Closing Shares or are issued pursuant to
Section 2.3(b)(iii). Thereafter, up to 33.33% of the Total VSIN Shares may be
resold at any time, and an additional 33.33% of the Total VSIN Shares may be
resold beginning 24 months after the Closing. Any remaining Total VSIN Shares
may not be sold until the earlier to occur of (x) sale of all or substantially
all of the assets or outstanding shares of PentaStar or (y) 30 months after the
Closing. Certificates for the PentaStar Shares issued to the Company pursuant to
the Agreement will bear a legend substantially in the form set forth below as
long as applicable:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THAT CERTAIN PURCHASE
AGREEMENT DATED AS OF FEBRUARY __, 2000 (THE "AGREEMENT"), BY AND AMONG THE
ISSUER, OC MERGERCO 4, INC., VSI NETWORK SOLUTIONS, INC. AND SHAREHOLDER OF VSI
NETWORK SOLUTIONS, INC. PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD SET FORTH
IN THE AGREEMENT, SUCH SHARES MAY NOT BE SOLD, ASSIGNED, EXCHANGED, TRANSFERRED,
PLEDGED OR OTHERWISE DISPOSED OF WITHOUT THE WRITTEN CONSENT OF THE ISSUER, AND
THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE,
ASSIGNMENT, EXCHANGE, TRANSFER, PLEDGE OR OTHER DISPOSITION WHICH VIOLATES THE
AGREEMENT. UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE
ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER RELATING TO
THIS RESTRICTIVE LEGEND PLACED WITH THE TRANSFER AGENT) WHEN THE APPLICABLE
HOLDING PERIOD HAS EXPIRED.
PentaStar shall issue separate certificates to the Company representing the
shares of PentaStar Shares subject to each of the three periods of restriction
contemplated by this Section 5.8.
The restrictions set forth along in this Section 5.8 shall be in addition
to any restrictions on transfer imposed by the Securities Act and applicable
state securities laws. The Company also agrees to comply with such restrictions.
5.9 Certain Provider Matters. Notwithstanding any other provision of this
Agreement, if during the period ending on June 30, 2000, any Person who is a
service provider to the Acquiror at any time during the period ending June 30,
2000 (who was also a service provider to the Company, UST or VNS prior to the
Closing) changes or terminates its relationship with the Acquiror, and such
change or termination results in Adverse Consequences to the Acquiror or
PentaStar, then the Company and the Shareholder agree to jointly and severally
indemnify the Acquiror and PentaStar from such Adverse Consequences. The
Shareholder's Agent shall be entitled to participate in PentaStar's strategy
sessions and PentaStar's negotiating sessions with such service provider in an
effort to minimize or eliminate the Adverse Consequence, subject to PentaStar's
ultimate control with respect to such strategy sessions and negotiating
sessions.
5.10 Claims Against UST/VNS/View Tech. If PentaStar or the Acquiror asserts
a claim for indemnification against the Company or the Shareholder with respect
to a matter concerning UST, VNS or the UST/VNS Assets, then the Company and the
Shareholder (through the Shareholder's Representative) shall be entitled,
subject to PentaStar's control, to participate in any efforts PentaStar or the
Acquiror may undertake to pursue indemnification from UST, VNS or View Tech;
provided, however, that nothing in this Section 5.10 shall be deemed to
supersede or modify in any way the obligations of the Company and the
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Shareholder under Section 7 or to condition their obligations under Section 7 on
PentaStar or the Acquiror pursuing indemnification from UST, VNS or View Tech.
6. Conditions to Closing.
6.1. Conditions to Obligation of PentaStar. The obligation of PentaStar to
consummate the transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
(a) the Company's and the Shareholder's representations and warranties
shall be correct and complete at and as of the Effective Date and the Closing
and any written notices delivered to PentaStar pursuant to Section 4.4 and the
subject matter thereof shall be satisfactory to PentaStar;
(b) the Company and the Shareholder shall have performed and complied
with all of their covenants hereunder through the Closing;
(c) the Required Vote shall have been obtained and the Company and the
Shareholder shall have delivered the Specified Consents;
(d) no action, suit or proceeding shall be pending or threatened before
any Governmental Authority or any other Person wherein an unfavorable Order
would (i) prevent consummation of any of the transactions contemplated by this
Agreement, (ii) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation or (iii) affect adversely the right of the
Acquiror to own the Acquired Assets and conduct the acquired business, and no
such Order shall be in effect;
(e) there shall have been no adverse change in the Company, the
Acquired Assets (excluding the UST/VNS Assets) or the Company's business between
the date of execution of this Agreement and the Closing;
(f) the Company and the Shareholder shall have delivered to PentaStar
(i) a certificate to the effect that each of the conditions specified above in
Sections 6.1(a) through (e) is satisfied in all respects, (ii) a certificate as
to the adoption of resolutions by the board of directors and shareholders of the
Company, and the board of directors and, to the extent required by applicable
Legal Requirement and the Shareholder's articles or certificate of incorporation
and bylaws, the shareholders of VSI Enterprises, Inc., authorizing the
execution, delivery and performance of this Agreement and the Other Seller
Agreements and the consummation of the transactions contemplated hereby and
thereby and (iii) a good standing certificate, dated within 10 days of the
Closing, from the Secretary of State of the State of the Company's and VSI
Enterprises, Inc.'s jurisdictions of incorporation and each other state in which
the Company is qualified or authorized to do business as a foreign corporation.
(g) the Company and the Shareholder shall have caused the Other Seller
Agreements to have been executed and delivered by the parties thereto other than
PentaStar and the Acquiror;
(h) PentaStar shall have received from counsel to the Company and the
Shareholder an opinion in form and substance as set forth in Exhibit 6.1(h)
addressed to PentaStar and the Acquiror dated as of the Closing;
(i) [INTENTIONALLY OMITTED.];
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(j) [INTENTIONALLY OMITTED.];
(k) [INTENTIONALLY OMITTED.];
(l) [INTENTIONALLY OMITTED.]
(m) PentaStar shall have received from the Company UCC, lien, judgment
and litigation searches with respect to the Company and the Company Acquired
Assets and evidence of the termination of all Encumbrances, other than Permitted
Encumbrances, against the Company Acquired Assets;
(n) the Company shall have delivered to PentaStar possession and
control of the Company Acquired Assets;
(o) the Company and the Shareholder shall have executed and delivered
to PentaStar appropriate documentation to transfer to the Acquiror, to the
extent not transferred to the Acquiror in connection with the UST/VNS
Acquisition, record ownership of the trade names "Eastern Telecom,"
"USTeleCenters," "▇▇▇▇▇▇.▇▇▇," "USTeleNet" and "Vermont Network Services"
(PentaStar acknowledges that the trade names "Eastern Telecom" and "Vermont
Network Services" is not registered with any Governmental Authority) and all
other registered Intellectual Property and applications therefor, in form
appropriate for filing with the U.S. Patent and Trademark Office or other
applicable Governmental Authority; and
(p) the Company and the Shareholder shall have delivered to PentaStar
such other instruments, certificates and documents as are reasonably requested
by PentaStar in order to consummate the transactions contemplated by this
Agreement, all in form and substance reasonably satisfactory to PentaStar.
Once the Required Vote has been obtained, if the Company fails to deliver any
item, or take any action, specified in Sections 6.1(a) through (c), 6.1(f)
through (h) or 6.1(l) through (p), then PentaStar and the Acquiror may cause the
Closing to occur by delivering to the Company the items, and taking the actions,
specified in Sections 6.2(a) through (d), and upon such delivery and the taking
of such actions the Closing shall be deemed to have been completed. Such Closing
shall not relieve the Company or the Shareholder from any Liability to PentaStar
and the Acquiror for the Company's or the Shareholder's breach of any
representation, warranty or covenant or for the failure to make any such
delivery or take any such action.
6.2. Conditions to Obligation of the Company and the Shareholder. The
obligation of the Company and the Shareholder to consummate the transactions
contemplated by this Agreement is subject to satisfaction of the following
conditions:
(a) the Required Vote shall have been obtained;
(b) PentaStar shall have delivered to the Company a certificate to the
effect that PentaStar's representations and warranties are correct and complete
at and as of the Effective Date and the Closing and that PentaStar has performed
and complied with all of its covenants hereunder through the Closing Date;
(c) the Company shall have received from counsel to PentaStar an
opinion in form and substance as set forth in Exhibit 6.2(c), addressed to the
Company and dated as of the Closing; and
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(d) PentaStar shall have paid the Purchase Price pursuant to Section
2.3 that is to be paid at the Closing.
The Shareholder's Agent may waive any condition specified in this Section 6.2 at
or prior to the Closing.
7. Remedies for Breaches of This Agreement.
7.1. Indemnification Provisions for Benefit of PentaStar.
(a) If the Company or the Shareholder breaches (or if any Person other
than PentaStar or the Acquiror alleges facts that, if true, would mean the
Company or the Shareholder has breached) any of the representations or
warranties of the Company or the Shareholder contained herein and PentaStar
gives notice thereof to the Shareholder's Agent within the Survival Period, or
if the Company or the Shareholder breaches (or if any Person other than
PentaStar or the Acquiror alleges facts that, if true, would mean the Company or
the Shareholder has breached) any covenants of the Company or the Shareholder
contained herein or any representations, warranties or covenants of the Company
or the Shareholder contained in any Other Seller Agreement and PentaStar gives
notice thereof to the Shareholder's Agent, or if UST, VNS or View Tech breaches
any of their covenants (including, without limitation, covenants regarding
indemnification) set forth in the UST/VNS Acquisition Agreement and PentaStar
gives notice thereof to the Shareholder's Agent, then the Company and the
Shareholder agree to jointly and severally indemnify and hold harmless PentaStar
and the Acquiror from and against any Adverse Consequences PentaStar or the
Acquiror may suffer resulting from, arising out of, relating to or caused by any
of the foregoing regardless of whether the Adverse Consequences are suffered
during or after the Survival Period. In determining whether there has been a
breach of any representation or warranty contained in Section 3.1 and in
determining for purposes of the preceding sentence the amount of Adverse
Consequences suffered by PentaStar or the Acquiror, such representations and
warranties shall not be qualified (other than by the reference to "knowledge"
set forth in the last sentence of Section 3.1(o)) by "material," "materiality,"
"in all material respects," "best knowledge," "best of knowledge" or "knowledge"
or words of similar import, or by any phrase using any such terms or words. The
Company and the Shareholder also agree to jointly and severally indemnify and
hold harmless PentaStar and the Acquiror from and against any Adverse
Consequences PentaStar or the Acquiror may suffer which result from, arise out
of, relate to or are caused by (i) any Liability of the Company, UST, VNS or the
Shareholder not included in the Assumed Liabilities, or (ii) any condition,
circumstance or activity existing prior to the Closing which relates to any
Legal Requirement or any act or omission of the Company, UST, VNS, or any
current or former shareholder of the Company or any predecessor with respect to,
or any event or circumstance related to, the Company's, UST's, VNS's, any
current or former shareholder's or any predecessor's ownership, use or operation
of any of the Acquired Assets, the Premises or any other assets or properties or
the conduct of its or their business, regardless, in the case of (i) or (ii), of
(A) whether or not such Liability, act, omission, event, circumstance or matter
was known or disclosed to PentaStar, was disclosed on any Exhibit hereto or is a
matter with respect to which the Company or the Shareholder did or did not have
knowledge, (B) when such Liability, act, omission, event, circumstance or matter
occurred, existed, occurs or exists and (C) whether a claim with respect thereto
was asserted before or is asserted after the Closing and (iii) any Liability
resulting from any failure of the parties to comply with any applicable bulk
sales or transfer Legal Requirement in connection with the transactions
contemplated by this Agreement. The Company and the Shareholder acknowledge and
agree that the fact that they have made disclosures pursuant to Section 3.1 or
otherwise of matters, or did not have knowledge of matters, which result in
Adverse Consequences to PentaStar or the Acquiror shall not relieve the Company
and the Shareholder of their obligation pursuant to this Section 7 to indemnify
and hold PentaStar and the Acquiror harmless from
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all Adverse Consequences. Matters disclosed on an Exhibit referenced in Section
3.1 are deemed to be part of the corresponding representation for purposes of
determining the breach or non-breach of such representation, but such disclosure
shall not relieve the Company and the Shareholder from their obligation to
indemnify PentaStar and the Acquiror pursuant to the preceding provisions of
Section 7.1(a) from the matter disclosed except to the extent such matter
constitutes an Assumed Liability. If any dispute arises concerning whether any
indemnification is owing which cannot be resolved by negotiation among the
parties within 30 days of notice of claim for indemnification from the party
claiming indemnification to the party against whom such claim is asserted, the
dispute will be resolved by arbitration pursuant to this Agreement.
(b) (i) Amounts needed to satisfy the obligations of the Company and
the Shareholder under Section 5.7 during the Escrow Period shall be paid to the
Acquiror first out of the Accounts Receivable Escrow Fund, then by the Company
and the Shareholder. The Company and the Shareholder shall have joint and
several Liability for any additional amounts needed to cover such obligations,
which amounts shall be paid directly to the Acquiror. At the end of the Escrow
Period, amounts of the Accounts Receivable Escrow Fund which may be needed to
cover pending indemnification claims with respect to Section 5.7 made by
PentaStar (such amounts to be determined by PentaStar in accordance with Section
5.7) shall be retained in the Accounts Receivable Escrow Fund until such claims
are resolved, and any excess of the Accounts Receivable Escrow Fund shall be
paid to the Company.
(ii) Except as provided in Section 7.1(b)(i), amounts needed to
cover any indemnification claims resolved in favor of PentaStar or the Acquiror
against the Company or the Shareholder during the Escrow Period shall be paid to
PentaStar first out of the cash portion of the Purchase Price from the Company
and the Shareholder and then out of the Escrow Deposit, along with interest from
the date the party seeking indemnification gives notice thereof to the
indemnifying party at the rate equal to two percentage points above the prime
rate quoted by PentaStar's principal lender from time to time if such interest
rate amount is not already included in the indemnification claim pursuant to the
definition of Adverse Consequences. The Company and the Shareholder shall have
joint and several Liability for any amounts of cash needed to cover such claims,
which amounts shall be paid directly to PentaStar. At the end of the Escrow
Period, amounts of the Escrow Deposit which may be needed to cover pending
indemnification claims made by PentaStar (such amounts to be determined by
PentaStar based upon the reasonable exercise of its business judgment) shall be
retained in the Escrow Account until such claims are resolved, and any excess of
the Escrow Deposit shall be paid to the Company. For purposes of indemnification
claims, each of the Total VSIN Shares shall be valued at the per share price at
which it was issued pursuant to Section 2.3(a) or 2.3(b)(iii), as applicable,
and the Closing Shares shall be deemed to be the first shares subject to such
claims for purposes of such calculation. Subject to Section 7.1(b)(i), the
Escrow Deposit shall also be available to satisfy the obligations of the Company
and the Shareholder under Section 5.7.
(iii) Nothing in this Section 7.1(b) shall be construed to limit
PentaStar's or the Acquiror's right to indemnification to amounts on deposit in
the Accounts Receivable Escrow Fund or the Escrow Account. PentaStar and the
Shareholder's Agent shall jointly give instructions to the Escrow Agent to carry
out the intent of this Section 7.1(b). Any disputes concerning the escrowed
property shall be settled by arbitration as provided in this Agreement.
PentaStar, on the one hand, and the Company and the Shareholder jointly and
severally, on the other hand, shall each be responsible for one-half of the
fees, charges and expenses payable to the Escrow Agent pursuant to paragraph a.
of Article 2 of the Escrow Agreement and, except as otherwise determined
pursuant to Section 9.11 of this Agreement, one-half of any amounts payable
pursuant to paragraph b. of such Article 2.
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(c) PentaStar and the Acquiror shall not assert a claim for
indemnification against the Company or the Shareholder until the aggregate
amount of all Adverse Consequences previously suffered by PentaStar or the
Acquiror in respect of all matters indemnifiable under Section 7.1(a) exceeds
$25,000, at which point PentaStar and the Acquiror shall be entitled to be
indemnified in full, including for all matters comprising the initial $25,000 of
Adverse Consequences not previously asserted. The aggregate indemnification
obligation of the Company and the Shareholder pursuant to Section 7.1(a) shall
be limited to the Purchase Price.
7.2. Indemnification Provisions for Benefit of the Company and the
Shareholder.
(a) If PentaStar breaches (or if any Person other than the Company or
the Shareholder alleges facts that, if true, would mean PentaStar has breached)
any of its representations or warranties contained herein and the Shareholder's
Agent gives notice of a claim for indemnification against PentaStar within the
Survival Period, or if PentaStar breaches (or if any Person other than the
Company or the Shareholder alleges facts that, if true, would mean PentaStar has
breached) any of its covenants contained herein or any of its representations,
warranties or covenants contained in any Other PentaStar Agreement and the
Shareholder's Agent gives notice thereof to PentaStar, then PentaStar agrees to
indemnify and hold harmless the Company and the Shareholder from and against any
Adverse Consequences the Company and the Shareholder may suffer which result
from, arise out of, relate to, or are caused by the breach or alleged breach,
regardless of whether the Adverse Consequences are suffered during or after the
Survival Period. In determining whether there has been a breach of any
representation or warranty contained in Section 3.2 and in determining the
amount of Adverse Consequences suffered by the Company and the Shareholder for
purposes of this Section 7.2, such representations and warranties shall not be
qualified by "material," "materiality," "in all material respects," "best
knowledge," "best of knowledge" or "knowledge" or words of similar import, or by
any phrase using any such terms or words. Matters disclosed on an Exhibit
referenced in Section 3.2 are deemed to be part of the corresponding
representation for purposes of determining the breach or non-breach of such
representation. If any dispute arises concerning whether any indemnification is
owing which cannot be resolved by negotiation among the parties within 30 days
of notice of claim for indemnification from the party claiming indemnification
to the party against whom such claim is asserted, the dispute will be resolved
by arbitration pursuant to this Agreement.
(b) The Company and the Shareholder shall not assert a claim for
indemnification against PentaStar until the aggregate amount of all Adverse
Consequences previously suffered by the Company and the Shareholder in respect
of all matters indemnifiable under Section 7.2(a) exceeds $25,000 (exclusive of
amounts which are part of the Purchase Price), at which point the Company and
the Shareholder shall be entitled to be indemnified in full, including for all
matters comprising the initial $25,000 of Adverse Consequences not previously
asserted. The aggregate indemnification obligation of PentaStar pursuant to
Section 7.1(a) shall be limited to the Purchase Price.
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7.3. Matters Involving Third Parties.
(a) If any Person not a party to this Agreement (including, without
limitation, any Governmental Authority) notifies any party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other party (the "Indemnifying
Party"), then the Indemnified Party will notify each Indemnifying Party thereof
in writing within 15 days after receiving such notice. No delay on the part of
the Indemnified Party in notifying any Indemnifying Party will relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right, at its sole cost and
expense, to defend the Indemnified Party against the Third Party Claim with
counsel of its choice satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 10 days
after the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to or caused by the Third Party Claim, (ii) the
Indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder (subject to the limitations set forth in
Section 7.1(c) and 7.2(b)), (iii) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable relief, (iv)
settlement of, or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the continuing business
interests of the Indemnified Party, and (v) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently. If the Indemnifying
Party does not assume control of the defense or settlement of any Third Party
Claim in the manner described above, it will be bound by the results obtained by
the Indemnified Party with respect to the Third Party Claim.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 7.3(b) above, (i) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (ii) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (iii) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 7.3(b) above is or
becomes unsatisfied, however, (i) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses), and (iii) the Indemnifying Parties will remain responsible for
any Adverse Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to or caused by the Third Party Claim to the fullest
extent provided in this Section 7.
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7.4. Right of Offset. PentaStar and the Acquiror will have the right to
offset any Adverse Consequences either of them may suffer against any amounts
payable (including amounts payable in the form of PentaStar Common Stock)
pursuant to this Agreement or any Other Seller Agreement to the Company, the
Shareholder or any relative or affiliate of the Company or the Shareholder at or
after the Closing.
7.5. Other Remedies. The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory, equitable or common law
remedy any party may have.
8. Termination.
8.1. Termination of Agreement. The parties may terminate this Agreement as
provided below:
(a) PentaStar and the Shareholder's Agent may terminate this Agreement
by mutual written consent at any time prior to the Closing; or
(b) PentaStar may terminate this Agreement by giving written notice to
the Shareholder's Agent at any time prior to the Closing (i) in the event the
Company or the Shareholder has breached any representation (given as of the date
of this Agreement), warranty or covenant contained in this Agreement in any
material way, PentaStar has notified the Shareholder's Agent of the breach, and
the breach has not been cured within 10 days after the notice of breach or (ii)
if the Closing has not occurred on or before May 31, 2000 because of the failure
of any condition precedent to PentaStar's obligations to consummate the Closing
(unless the failure results primarily from PentaStar breaching any
representation, warranty or covenant contained in this Agreement in any material
way).
8.2. Effect of Termination. The termination of this Agreement by a party
pursuant to Section 8.1 will in no way limit any obligation or liability of any
other party based on or arising from a breach or default by such other party
with respect to any of its representations, warranties, covenants or agreements
contained in this Agreement, and the terminating party will be entitled to seek
all relief to which it is entitled under applicable law.
8.3. Confidentiality. If this Agreement is terminated, each party will
treat and hold as confidential all Confidential Information concerning the other
parties which it acquired from such other parties in connection with this
Agreement and the transactions contemplated hereby.
9. Miscellaneous.
9.1. No Third-Party Beneficiaries. This Agreement will not confer any
rights or remedies upon any Person other than the parties and their respective
successors and permitted assigns.
9.2. Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements or representations by or among the parties,
written or oral, to the extent they relate in any way to the subject matter
hereof.
9.3. Succession and Assignment. This Agreement will be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Neither the Company nor the Shareholder may assign this
Agreement or any of its, his or her rights, interests or obligations hereunder
without the prior written approval of PentaStar. PentaStar and the Acquiror may
assign their respective rights and obligations hereunder as permitted by law,
including, without limitation, to any debt or equity financing source.
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9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall be deemed to be one and the same instrument. The execution of a
counterpart of the signature page to this Agreement will be deemed the execution
of a counterpart of this Agreement. This Agreement may be delivered by facsimile
and facsimile signatures will be treated as original signatures for all
purposes.
9.5. Headings. The section headings contained in this Agreement are
inserted for convenience only and will not affect in any way the meaning or
interpretation of this Agreement.
9.6. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if it is sent by
registered or certified mail, return receipt requested, postage prepaid, or by
courier, telecopy or facsimile, and addressed to the intended recipient as set
forth below:
If to the Company or the
Shareholder: Copy to:
Addressed to the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P.
Shareholder's Agent at: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to PentaStar: Copy to:
PentaStar Communications, Inc. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer Attn: B. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Notices will be deemed given three days after mailing if sent by certified mail,
when delivered if sent by courier, and upon receipt of confirmation by person or
machine if sent by telecopy or facsimile transmission. Any party may change the
address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other parties notice in the manner
herein set forth.
9.7. Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of Colorado without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Colorado or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Colorado.
9.8. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same is in writing and signed by PentaStar
and the Shareholder's Agent. No waiver by any party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not,
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will be deemed to extend to any prior or subsequent default, misrepresentation
or breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence, and no waiver will
be effective unless set forth in writing and signed by the party against whom
such waiver is asserted.
9.9. Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
9.10. Expenses. Except as otherwise provided in Section 8.2, (a) PentaStar
shall bear its own costs and expenses (including, without limitation, legal fees
and expenses) incurred either before or after the date of this Agreement in
connection with this Agreement or the transactions contemplated hereby and (b)
the Shareholder will bear all costs and expenses (including, without limitation,
all legal, accounting and tax related fees and expenses, all fees, commissions,
expenses and other amounts payable to any broker, finder or agent) incurred by
the Company or by the Shareholder either before or after the date of this
Agreement in connection with this Agreement or the transactions contemplated
hereby.
9.11. Arbitration. Any disputes arising under or in connection with this
Agreement, including, without limitation, those involving claims for specific
performance or other equitable relief, will be submitted to binding arbitration
in Denver, Colorado before the Judicial Arbiter Group, but under the Commercial
Arbitration Rules of the American Arbitration Association under the authority of
federal and state arbitration statutes, and shall not be the subject of
litigation in any forum. If the Judicial Arbiter Group is unavailable to conduct
the arbitration or is unsatisfactory to a party in its good faith judgment, then
it shall be before another arbitral body in Denver, Colorado selected by
PentaStar and the Shareholder's Agent or, if they cannot agree on another
arbitral body, the American Arbitration Association. EACH PARTY, BY SIGNING THIS
AGREEMENT, VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY WAIVES ANY RIGHTS SUCH PARTY
MAY OTHERWISE HAVE TO SEEK REMEDIES IN COURT OR OTHER FORUMS, INCLUDING THE
RIGHT TO JURY TRIAL. The arbitrator shall have full authority to order specific
performance and other equitable relief and award damages and other relief
available under this Agreement or applicable law, but shall have no authority to
add to, detract from, change or amend the terms of this Agreement or existing
law. All arbitration proceedings, including settlements and awards, shall be
confidential, except as may otherwise be required by applicable Legal
Requirement. The decision of the arbitrators will be final and binding, and
judgment on the award by the arbitrators may be entered in any court of
competent jurisdiction. THIS SUBMISSION AND AGREEMENT TO ARBITRATE WILL BE
SPECIFICALLY ENFORCEABLE. The prevailing party or parties in any such
arbitration or in any action to enforce this Agreement will be entitled to
recover, in addition to any other relief awarded by the arbitrator, all
reasonable costs and expenses, including fees and expenses of the arbitrators
and attorneys, incurred in connection therewith. If each party prevails on
specific issues in the arbitration, the arbitrator may allocate the costs
incurred by all parties on a basis the arbitrator deems appropriate.
9.12. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement will be construed as
if drafted jointly by the parties and no presumption or burden of proof will
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. The word "including" will mean including
without limitation. The parties intend that each representation, warranty and
covenant contained herein will have independent significance. If any party
breaches any representation,
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warranty or covenant contained herein in any respect, the fact that there exists
another representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached will not detract from or mitigate the fact that the party is in breach
of the first representation, warranty or covenant.
9.13. Incorporation of Exhibits. The Exhibits identified in this Agreement
are incorporated herein by reference and made a part hereof.
9.14. Shareholder's Agent. The Company and the Shareholder hereby authorize
and appoint the Shareholder's Agent as its exclusive agent and attorney-in-fact
to act on behalf of each of them with respect to all matters which are the
subject of this Agreement or any Other Seller Agreement, including, without
limitation, (a) receiving or giving all notices, instructions, other
communications, consents or agreements that may be necessary, required or given
hereunder and (b) asserting, settling, compromising, or defending, or
determining not to assert, settle, compromise or defend, (i) any claims which
the Company or the Shareholder may assert, or have the right to assert, against
PentaStar or the Acquiror, or (ii) any claims which PentaStar or the Acquiror
may assert, or have the right to assert, against the Company or the Shareholder.
The Shareholder's Agent hereby accepts such authorization and appointment. Upon
the receipt of written evidence satisfactory to PentaStar to the effect that the
Shareholder's Agent has been substituted as agent of the Company and the
Shareholder by reason of his death, disability or resignation, PentaStar shall
be entitled to rely on such substituted agent to the same extent as they were
theretofore entitled to rely upon the Shareholder's Agent with respect to the
matters covered by this Section 9.14. Neither the Company nor the Shareholder
shall act with respect to any of the matters which are the subject of this
Agreement or any Other Seller Agreement except through the Shareholder's Agent.
The Company and the Shareholder acknowledge and agree that PentaStar and the
Acquiror may deal exclusively with the Shareholder's Agent in respect of such
matters, that the enforceability of this Section 9.14 is material to PentaStar
and the Acquiror, and that PentaStar and the Acquiror have relied upon the
enforceability of this Section 9.14 in entering into this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PENTASTAR:
PENTASTAR COMMUNICATIONS, INC.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO
ACQUIROR:
OC MERGERCO 4, INC.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO
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COMPANY:
VSI NETWORK SOLUTIONS, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: CEO
SHAREHOLDER:
VSI ENTERPRISES, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: CEO
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
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EXHIBIT 1.1(a)
DEFINED TERMS
Accounts Receivable Escrow Fund has the meaning given it in Section 2.3(a).
Acquiror has the meaning given it in the preamble to this Agreement.
Acquired Assets means all right, title and interest of the Company in and
to all of the tangible and intangible assets of the Company, including, without
limitation, the Company Acquired Assets; provided, however, that for all
purposes of this Agreement the UST/VNS Assets shall be deemed to be Acquired
Assets.
Adverse Consequences means all actions, suits, proceedings, investigations,
complaints, claims, demands, Orders, Liabilities, liens, losses, damages,
penalties, fines, settlements, costs, remediation costs, expenses and fees
(including court costs and reasonable fees and expenses of counsel and other
experts), plus interest at a rate equal to two percentage points above the prime
rate quoted by PentaStar's principal lender from time to time accrued from the
date the party seeking indemnification for an Adverse Consequence gives notice
thereof to the indemnifying party.
Affiliated Group means any affiliated group within the meaning of Code
Section 1504 or any similar group defined under a similar provision of state,
local or foreign law.
Assignment Agreement (UST/VNS Acquisition Agreement) means the Assignment
Agreement among the Company, the Acquiror, PentaStar, UST, VNS and View Tech in
the form of Exhibit 1.1(b).
Assignment and Assumption Agreement means the Assignment and Assumption
Agreement between the Company and the Acquiror in the form of Exhibit 1.1(c)
pursuant to which the Acquiror will assume the Assumed Liabilities.
Assumed Liabilities means (a) the obligations of the Company arising after
the Closing Date under those contracts which are identified by PentaStar on
Exhibit 1.1(d)(i) with respect to the period after the Closing Date provided,
however, that such assumed obligations shall not include any Liability of the
type described in clause (ii) of the third sentence of Section 7.1(a) which
results from, arises out of or relates to the period on or before January 1,
2000, (b) the Liabilities expressly set forth on Exhibit 1.1(d)(ii) in the
amounts expressly set forth on Exhibit 1.1(d)(ii), and (c) additions to the
Liabilities set forth on Exhibit 1.1(d)(ii) which have been incurred by the
Company in the ordinary course of business, consistent with past practice,
between January 1, 2000 and the Closing and not in breach of any representation,
warranty or covenant contained in this Agreement; provided, however, that
Assumed Liabilities will not include any Liabilities for Taxes, bonuses or
profit sharing, any Liabilities past their due dates or any Liabilities for
commissions associated with receivables that have been collected prior to
January 1, 2000, except for such Liabilities, in such amounts, as are expressly
set forth on Exhibit 1.1(d)(ii) pursuant to (b) above; and, provided further,
that Assumed Liabilities will not include any interest bearing debt, other than
the debt to
Exhibit 1.1(a)--1-
40
RFC Capital Corporation in the amount expressly set forth on Exhibit 1.1(d)(ii)
pursuant to (b) above. Assumed Liabilities will not include any other Liability.
Business Day means any day on which commercial banks are open for business
in Denver, Colorado.
Closing Accounts Receivable means the accounts (including late fees and
interest charges thereon) and notes receivable of the Company in the aggregate
net amount set forth on Exhibit 1.1(e).
Closing and Closing Date have the meanings given in Section 2.5.
Code means the Internal Revenue Code of 1986, as amended.
Company has the meaning given it in Recital A, except that for purposes of
Section 3.1 the term the "Company" shall mean the Company and all of its
Subsidiaries.
Company Acquired Assets means all right, title and interest of the Company
in and to all of the tangible and intangible assets of the Company, including,
without limitation, cash and cash equivalents, and rights to receive cash from
RFC Capital Corporation, but excluding the Company's charter documents, bylaws,
minute books, stock books and other corporate records having exclusively to do
with the corporate organization and capitalization of the Company. To the extent
any current or former shareholder of the Company, or relative or affiliate
thereof, owns any tangible or intangible assets used in the business of the
Company, the Company shall arrange to have such assets transferred to the
Company, at no cost, immediately prior to the Closing and such assets shall be
included in the Company Acquired Assets.
Company Shares has the meaning given it in Section 3.1(b)(i).
Confidential Information means any information concerning the subject
Person or the subject Person's business, products, financial condition,
prospects and affairs that is not already generally available to the public.
Earn-Out Amount means the remainder of (i) four times Earn-Out Period EBITA
minus (ii) $4,381,000; provided, however, that in no event will the Earn-Out
Amount exceed $7,807,000.
Earn-Out Period means the calendar year 2000.
Earn-Out Period EBITA means the EBITA of the Acquiror from the ETI Region
for the Earn-Out Period including, for this purpose, the EBITA of the Company,
UST and VNS from the ETI Region from January 1, 2000 until the acquisition of
their respective assets and business by the Acquiror.
EBITA means earnings before interest, taxes and amortization, determined in
accordance with GAAP, but in a manner consistent with the accounting
measurements used by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ L.L.P. to perform the audit of the income
statement of PentaStar for the calendar year ending December 31, 2000 (the
Exhibit 1.1(a)--2-
41
"PentaStar Method"); provided, however, that revenues and expenses recognized by
the Company, UST or VNS for the calendar year ended December 31, 1999 that are
or would be recognized during the Earn-Out Period utilizing the PentaStar Method
will be included in Earn-Out Period EBITA; and provided further, that payments
made or expenses incurred or accrued by UST, VNS or the Acquiror to or in
respect of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ during the period from January 1 through December
31, 2000 shall be included as expenses in determining Earn-Out Period EBITA.
Effective Date has the meaning given it in Section 2.5.
Employee Benefit Plan means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan, as defined in ERISA Section 3(37)) or (d) Employee Welfare
Benefit Plan.
Employee Pension Benefit Plan has the meaning set forth in ERISA Section
3(2).
Employee Welfare Benefit Plan has the meaning set forth in ERISA Section
3(1).
Employment Agreement means the Employment and Noncompetition Agreement
between the Acquiror and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in the form of Exhibit 1.1(f).
Encumbrance means any mortgage, pledge, conditional sale agreement, charge,
claim, interest of another Person, lien, security interest, title defect or
other encumbrance.
Environmental Obligations means all present and future Legal Requirements
and Permits concerning land use, public health, safety, welfare or the
environment, including, without limitation, the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.), as amended, and the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Section 9601
et seq.), as amended.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and any regulations, rules or orders promulgated thereunder.
Escrow Account means the account established pursuant to the Escrow
Agreement.
Escrow Agreement means the Escrow Agreement among PentaStar, the Acquiror,
the Company, the Shareholder's Agent and Escrow Agent in the form of Exhibit
1.1(g).
Escrow Agent means Norwest Bank Colorado, N.A.
Escrow Deposit means the Closing Shares (other than the View Tech Shares)
and any shares of PentaStar Common Stock issued in the name of the Company
pursuant to Section 2.3(b)(iii), and if any stock, cash or other assets of
PentaStar or any other Person are issued or delivered in respect of the property
in the Escrow Deposit, such stock, cash or other assets shall be immediately
delivered to the Escrow Agent and be part of the Escrow Deposit.
Exhibit 1.1(a)--3-
42
Escrow Period means (a) with respect to the Accounts Receivable Escrow
Fund, the period commencing on the Closing and ending on the date which is the
earlier of (i) the date on which the Acquiror has received payment of Closing
Accounts Receivable in the Aggregate Net Amount (as defined in Section 5.7) or
(ii) 180 days after the Closing Date, and (b) with respect to the Escrow
Deposit, the period commencing on the date of the Closing and ending on the date
which is 18 months after the date of the Closing.
ETI Region means the State of Vermont, the Borough of Manhattan, New York
and the metropolitan areas of each of Albany, New York, Boston, Massachusetts
and Providence, Rhode Island.
Fair Market Value of the PentaStar Common Stock means, as of any date, the
average of the closing prices of the PentaStar Common Stock for the 5 trading
days ending two trading days prior to such date, as quoted by Nasdaq. If closing
prices are not quoted for the PentaStar Common Stock, the closing price for each
such day shall be deemed to be the average of the last bid and last asked prices
for the PentaStar Common Stock for that day, as quoted by Nasdaq. If the
PentaStar Common Stock is not quoted on Nasdaq, the closing price for each such
day shall be deemed to be the average of the high and low sales prices for the
PentaStar Common Stock on that day (or if no sales prices are reported, the
average of the high and low asked prices) as reported by the principal regional
stock exchange, or if not so reported, as reported by Nasdaq or a quotation
system of general circulation to brokers and dealers. If the Fair Market Value
of the PentaStar Common Stock cannot be determined pursuant to the preceding
sentence, Fair Market Value shall be determined by the board of directors of
PentaStar by any reasonable method chosen by it.
GAAP means generally accepted accounting principles as in effect from time
to time in the United States.
Governmental Authority means the United States of America, any state,
commonwealth, territory or possession of the United States of America, any
political subdivision thereof (including counties, municipalities, home-rule
cities and the like), and any agency, authority or instrumentality of any of the
foregoing, including, without limitation, any court, tribunal, department,
bureau, commission or board.
Hazardous Materials means any material, chemical, compound, mixture,
hazardous substance, hazardous waste, pollutant or contaminant defined, listed,
classified or regulated under any Environmental Obligation.
Intellectual Property means all trade, corporate, business and product
names, trademarks, trademark rights, service marks, copyrights, patents, patent
rights, trade secrets, business, customer and technical information, and
computer software, all registrations, licenses and applications pertaining
thereto, and all related documentation and goodwill.
Exhibit 1.1(a)--4-
43
Key Employee means (a) each employee of the Company other than clerical
employees and (b), if any salesperson is an independent contractor rather than
an employee, each such salesperson. Key Employees include, without limitation,
executives and salespersons.
Latest Balance Sheet has the meaning given it in Section 3.1(d).
Legal Requirement means any constitution, statute, ordinance, code, or
other law (including common law), rule, regulation, Order, notice, standard,
procedure or other requirement enacted, adopted, applied or issued by any
Governmental Authority, including, without limitation, judicial decisions
applying or interpreting any such Legal Requirement.
Liability means any liability or obligation (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due).
Meeting has the meaning given it in Section 4.8.
Noncompetition Agreement means the Noncompetition Agreement in the form of
Exhibit 1.1(h) among PentaStar, the Acquiror, the Company, the Shareholder and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
Orders means all judgments, injunctions, orders, rulings, decrees,
directives, notices of violation or other requirements of any Governmental
Authority or arbitrator having jurisdiction in the matter, including a
bankruptcy court or trustee.
Other PentaStar Agreements means the Assignment Agreement (UST/VNS
Acquisition Agreement), the Assignment and Assumption Agreement, the Employment
Agreement, the Escrow Agreement, the Noncompetition Agreement, the ▇▇▇▇▇▇
Payment Agreement, the Voting Agreement and the other documents and instruments
to be executed and delivered by PentaStar or the Acquiror pursuant to this
Agreement.
Other Seller Agreements means the Assignment Agreement (UST/VNS Acquisition
Agreement), the Assignment and Assumption Agreement, the Employment Agreement,
the Escrow Agreement, the Noncompetition Agreement, the Reece Agreements, the
▇▇▇▇▇▇ Payment Agreement, the View Tech Lock- Up Agreement, the Voting Agreement
and other documents and instruments to be executed and delivered by the Company,
the Shareholder or any relative or affiliate of the Company or of the
Shareholder pursuant to this Agreement.
PentaStar Common Stock means the common stock, par value $.0001 per share,
of PentaStar.
PentaStar Shares has the meaning set forth in Section 3.1(u).
Permits means all permits, licenses, consents, franchises, authorizations,
approvals, privileges, waivers, exemptions, variances, exclusionary or
inclusionary Orders and other concessions, whether governmental or private,
including, without limitation, those relating to environmental, public health,
welfare or safety matters.
Exhibit 1.1(a)--5-
44
Permitted Encumbrances means the liens and security interests of RFC
Capital Corporation in the Company assets existing under the Receivables Sale
Agreement dated October 8, 1998 between the Company and RFC Capital Corporation
and evidenced by the UCC-1 financing statements set forth on Exhibit 1.1(i).
Person means an individual, partnership, corporation, association, joint
stock company, trust, joint venture, limited liability company, unincorporated
organization or Governmental Authority.
Premises means the real property, buildings and improvements thereon
constituting the business premises of (a) the Company located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇; ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇; ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; and ▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇, (▇) UST located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇; ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇; ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇;
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇; ▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇; ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇; ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇; and One Richmond
Square, Providence, RI, and (c) VNS located at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇; ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇; Hotel ▇▇▇▇▇▇▇▇, White River, VT; ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇; and ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇.
Proxy Statement has the meaning given it in Section 4.8.
Purchase Price has the meaning given it in Section 2.3(a).
Reece Agreements means the following, each dated as of approximately the
date hereof: (a) Noncompetition Agreement among PentaStar, the Acquiror and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇; and (b) Consulting Agreement between the Company and ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇.
Required Vote meaning the affirmative vote of such of the shareholders of
the Shareholder as is required by applicable Legal Requirement and the
Shareholder's articles or certificate of incorporation and bylaws to approve the
Transaction.
Right means any right, property interest, concession, patent, trademark,
trade name, copyright, know-how or other proprietary right of another Person.
▇▇▇▇▇▇ Payment Agreement means the ▇▇▇▇▇▇ Payment Agreement among the
Acquiror, PentaStar, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the Company and the Shareholder in the
form of Exhibit 1.1(j).
▇▇▇▇▇▇ Shares has the meaning given it in Section 2.3(b)(iii).
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended.
Exhibit 1.1(a)--6-
45
Shareholder has the meaning given it in the preamble to this Agreement.
Shareholder's Agent means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (or the substituted agent
described in Section 9.14) acting as agent for the Company and the Shareholder
pursuant to Section 9.14.
Shares means all of the issued and outstanding capital stock of the
Company.
Specified Consents has the meaning given it in Section 4.9.
Subsidiary means, with respect to a Person, any Person controlled (meaning
possession of the direct or indirect power to direct or cause the direction of
the management and policies, whether through the ownership of voting securities,
by contract or otherwise) by such first Person directly or through one or more
intermediaries.
Survival Period means, with respect to a representation or warranty, the
applicable period after the Closing Date during which such representation or
warranty survives pursuant to Section 3.4.
Tax means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, documentary, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated or other tax of any kind whatsoever, including any interest,
penalty or addition thereto, whether disputed or not.
Tax Return means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
Total VSIN Shares means the Closing Shares and the shares (other than the
▇▇▇▇▇▇ Shares) of PentaStar Common Stock, if any, issued to the Company pursuant
to Section 2.3(b)(iii).
Transaction has the meaning given it in Section 4.8.
UST means USTeleCenters, Inc., a Delaware corporation.
UST/VSN Assets means the "Assets" as defined in the UST/VNS Acquisition
Agreement, including, without limitation, cash and cash equivalents of UST and
VNS.
UST/VNS Acquisition means the acquisition of assets of UST and VNS by the
Acquiror contemplated by the UST/VNS Acquisition Agreement.
Exhibit 1.1(a)--7-
46
UST/VNS Acquisition Agreement means the Asset Purchase Agreement dated as
of December 31, 1999 among the Acquiror, UST, VNS and View Tech pursuant to
which the Acquiror will acquire the UST/VNS Assets, and the ▇▇▇▇ of sale, the
assignment and assumption agreement and the other agreements, instruments and
closing documents to be delivered by UST, VNS or View Tech in connection with
the closing thereunder.
VNS means Vermont Network Services Corporation, a Delaware corporation.
View Tech means View Tech, Inc., a Delaware corporation and the owner,
directly or indirectly, of all of the outstanding capital stock of each of UST
and VNS.
View Tech Lock-Up Agreement means the View Tech Lock-Up Agreement dated
February 18, 2000 between PentaStar and View Tech.
Voting Agreement means the Voting Agreement dated the date of this
Agreement among PentaStar, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇.
Exhibit 3.1(h)(i)--8-