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EXHIBIT 2.5
October 20, 1999
DMA Ventures, Inc.
0000 X. Xxxxx Xxx, Xxxxxxxx X
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
0000 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxx 00000
Re: Agreement and Plan of Merger dated August 13, 1999
Dear Xxxx:
This letter agreement serves as an amendment to the Agreement
and Plan of Merger dated as of August 13, 1999 (the "Agreement") by and among
PentaStar Communications, Inc., OC Mergerco 1, Inc., DMA Ventures, Inc., and
Xxxxxxx Xxxxx. All capitalized terms used in this letter agreement without
definition have the respective meanings given to them in the Agreement.
The parties hereby amend the Agreement as follows:
1. The Closing shall occur at 8:00 a.m. Denver, Colorado time
on Monday, October 25, 1999, the proposed date on which PentaStar's Registration
Statement will be declared effective by the SEC. At the Closing, PentaStar will
deliver a promissory note in the form attached as Exhibit A (the "Temporary
Note") in an amount determined pursuant to clause (a) of Section 2(k) of the
Agreement (the "Cash Purchase Price Amount"), rather than delivering cash in
such amount at the Closing. Immediately upon the closing of the IPO, cash in an
amount equal to the Cash Purchase Price Amount will be delivered as specified in
Section 2(k) of the Agreement in exchange for the return of the Temporary Note
to PentaStar and its cancellation. All other Closing conditions set forth in
Sections 6.1 and 6.2 of the Agreement shall be completed at the Closing as set
forth in such Sections. If the closing of the IPO does not occur by the close of
business on October 29, 1999, the Closing shall be unwound and rescinded
effective as of 8:00 a.m. Denver, Colorado time on Monday, October 25, 1999 as
if it had never occurred, and the Agreement will remain in full force and effect
until terminated in accordance with its terms. In order to facilitate such
unwinding and rescission if necessary, the Company will not be merged into the
Acquiror until cash in an amount equal to the Cash Purchase Price Amount is
delivered as specified in Section 2(k) of the Agreement.
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2. (a) A definition of "cash" is added to Exhibit
1.1(a) to read in its entirety as follows:
Cash means the sum of (a) the amount of cash and
cash equivalents held by the Company at 11:59 p.m.
Mountain Standard Time ("MST") on October 19, 1999
which continues to be held by the Company on the
Closing Date plus (b) the amount of cash received
by the Company in respect of the August/September
Receivables between 12:00 a.m. MST on October 20,
1999 and the Closing Date which continues to be
held by the Company on the Closing Date. "Cash"
for purposes of this Agreement, including, without
limitation, for purposes of calculating cash held
by the Company to determine the amount of cash to
be set forth on the Estimated Closing Date Balance
Sheet or on the Closing Date Balance Sheet
pursuant to Section 2 or for making any other
calculation or determination pursuant to Section 2
or any other section of the Agreement, shall not
include any other cash or cash equivalents ("Other
Cash") which are acquired by the Company between
12:00 a.m. MST on October 20, 1999 and the Closing
Date. Such Other Cash shall be separately set
aside by the Company until the Closing Date and
shall be the property of PentaStar upon the
Closing Date.
(b) A definition of "August/September Receivables"
is added to Exhibit 1.1(a) to read in its entirety as follows:
August/September Receivables means commissions
received by the Company prior to the Closing Date
or by the Acquiror on or after the Closing Date
pursuant to the US West Contract in respect of,
and only in respect of, (a) customer's orders that
were submitted to and accepted by US West in
August or September 1999 or (b) customer
installations completed by US West in August or
September 1999, but in either case net of the
amount of any related Cash Covered Accrued
Commission Liability.
(c) If, after the Closing Date, the Acquiror
receives payment from US West in respect of an August/September Receivable, the
Acquiror will immediately deliver the amount of such August/September
Receivable, netted as set forth in the definition thereof, to the Shareholder.
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(d) During the 180 day period following the
Closing Date, Shareholder will not, and the Shareholder will not permit the
Shareholder's agents or attorneys to, contact US West concerning the Closing
Accounts Receivable, except as normal collection efforts are undertaken by the
Shareholder in his capacity as an employee of the Acquiror after approval by
PentaStar.
3. The 1998 Stock Option Plan set forth in section (i)(H) of
Exhibit 3.1(h) to the Agreement shall be terminated by the Company prior to the
Closing Date with no Liability to PentaStar or the Acquiror. Therefore, that
plan is hereby excluded from clause (a) of the definition of Retained
Liabilities and is included in Exhibit 1.1(b) to the Agreement as a contract so
excluded.
4. With respect to Section 3.1(b)(i) of the Agreement, the
Shareholder agrees that he shall cause to be terminated prior to the Closing
Date, with no Liability to PentaStar or the Acquiror, all existing rights of
first refusal, buy-sell arrangements, options, warrants, rights, calls or other
commitments or restrictions of any character relating to any of the Company's
authorized capital stock, including the stock options set forth in Exhibit
3.1(b)(i) to the Agreement, except those restrictions on transfer imposed by the
Securities Act of 1933, as amended, and applicable state securities laws.
Notwithstanding the foregoing, the Company entered into an Incentive Stock
Option Agreement with Xxxx Xxx X'Xxxxxx dated as of December 11, 1998 (the
"Option Agreement"). Pursuant to the Option Agreement, the Company granted Xx.
X'Xxxxxx the right and option to purchase 2,500 shares of the common stock of
the Company at no cost to her. Despite diligent efforts, neither the Company nor
the Shareholder has been able, as of the Closing, to locate Xx. X'Xxxxxx in
order to terminate, with no Liability to PentaStar or the Acquiror, any rights
of Xx. X'Xxxxxx under the Option Agreement. The Shareholder shall hold PentaStar
and the Acquiror harmless from and against all Adverse Consequences which result
from, arise out of, relate to or are caused by (a) any failure of the
Shareholder to obtain a termination, with no Liability to PentaStar or the
Acquiror, of any rights of Xx. X'Xxxxxx under the Option Agreement or (b) any
claims by Xx. X'Xxxxxx of any ownership interest in, or option or other right
with respect to, the Company, PentaStar or the Acquiror. Any consideration that
the Shareholder chooses to pay Xx. X'Xxxxxx in connection with termination of
the Option Agreement shall not involve the transfer by the Shareholder of any
shares of PentaStar stock.
5. Under the terms of the Agreement, Retained Liabilities does
not include the Liability represented by the loan from Colorado Business Bank to
Xxxx and Xxxxx Xxxxx on August 5, 1998 in the original principal amount of
$138,775.76 (Loan No. 7758201000) on which the Company is the co-borrower and/or
guarantor (the "Bank Loan") and the U.S. Small Business Administration ("SBA")
Note 504 by and between Denver Urban Economic Development Corporation and Xxxx
and Xxxxx Xxxxx on May 13, 1996 in the original principal amount of $120,00.00
(Loan No. CDC 906, 596-30-07-DEN) on which the Company is the co-borrower and/or
guarantor (the "SBA Loan") (the SBA Loan, together with all amounts outstanding
thereunder and all related Encumbrances are referred to collectively as the "SBA
Liability"). Prior to the Closing, the Company will deliver to PentaStar a
letter from Colorado
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Business Bank, reasonably satisfactory to PentaStar, releasing the Company as a
both a co-borrower and a guarantor from the Bank Loan and stating that Colorado
Business Bank has no security interest in any properties or assets of the
Company with respect to the Bank Loan. However, because of certain SBA loan
processing procedures, the SBA Liability will not be terminated until January of
2000 and the release of the deed of trust with respect thereto will not be
recorded in the appropriate county until sometime thereafter. Notwithstanding
those procedures, the Shareholder agrees that on or before November 18, 1999, he
will obtain a letter from the SBA stating the entire pay off amount of the SBA
Liability (the "Pay Off Amount"), and that on or before November 18, 1999, he
will cause such Pay Off Amount to be paid to the SBA. In order to secure the
payment of the Pay Off Amount to the SBA, the parties agree that $120,000.00 of
the cash portion of the Purchase Price otherwise payable at Closing (the "SBA
Liability Escrow") will be deposited into an Escrow Account (as defined in the
Escrow Agreement the form of which is attached as Exhibit A) with Colorado
Business Bank (the "Escrow Agent"). The Shareholder agrees that, notwithstanding
any contrary provision of the Escrow Agreement, he will pay all of the Escrow
Agent's fees and expenses associated with both the SBA Liability Escrow and the
Escrow Account and that there will be no Liability to either PentaStar or the
Acquiror with respect to such fees or expenses. The Escrow Deposit will be held,
invested, administered and disbursed according to the Escrow Agreement. Upon the
Escrow Agent's receipt of (a) a letter from the SBA to the Company stating the
Pay Off Amount and (b) a letter from the Denver Economic Urban Development
Corporation ("DEUDC") confirming the receipt by the SBA of the Pay Off Amount,
(collectively, the "Pay Off Letters"), copies of which will also be provided to
PentaStar, the Escrow Agent will, as provided in the Escrow Agreement, pay the
SBA Liability Escrow amount of $120,000.00 to the Shareholder by wire transfer
in immediately available funds to an account or accounts designated by the
Shareholder. If PentaStar and the Escrow Agent do not receive the Pay Off
Letters on or before December 15, 1999, PentaStar may take any lawful action to
terminate the SBA Liability, including, but not limited to, using the SBA
Liability Escrow to pay the SBA Liability. The Shareholder agrees that, in the
event that PentaStar and the Escrow Agent do not receive the Pay Off Letters on
or before December 15, 1999, the Escrow Agent will, as provided in the Escrow
Agreement, pay the SBA Liability Escrow amount of $120,000.00 to PentaStar by
wire transfer in immediately available funds to an account or accounts
designated by PentaStar. If the SBA Liability Escrow exceeds the amount required
to terminate the SBA Liability, after paying the SBA Liability PentaStar will
pay the amount of such excess to the Shareholder by wire transfer in immediately
available funds to an account or accounts designated by the Shareholder. Based
upon its best information and knowledge, the Shareholder believes that as of the
date of this letter agreement the amount of the SBA Liability does not exceed
$120,000.00. By agreeing to the foregoing, PentaStar does not waive any of its
rights under the Agreement, and the Shareholder agrees that, notwithstanding
PentaStar's and the Escrow's Agent's receipt of the Pay Off Letters and the
Escrow Agent's release of the SBA Liability Escrow amount of $120,000.00 to him,
he will hold PentaStar and the Acquiror harmless from any Adverse Consequences
they may suffer as a result of the Bank Loan not having been terminated by the
Shareholder prior to the Closing Date or as a result of the SBA Liability not
having been terminated and the corresponding deed of trust not having been
released.
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6. Exhibit 1.1(b) is amended and restated in its entirety by
Exhibit 1.1(b) attached hereto.
7. Exhibit 3.1(c) is amended and restated in its entirety by
Exhibit 3.1(c) attached hereto.
8. Exhibit 3.1(d)(i)(B) is amended and restated in its
entirety by Exhibit 3.1(d)(i)(B) attached hereto.
9. Exhibit 3.1(e)(i) is amended and restated in its entirety
by Exhibit 3.1(e)(i) attached hereto.
10. Exhibit 3.1(h) is amended and restated in its entirety by
Exhibit 3.1(h) attached hereto.
11. Exhibit 3.1(m)(i) is amended and restated in its entirety
by Exhibit 3.1(m)(i) attached hereto.
12. Exhibit 3.1(o)(i)(B) is amended and restated in its
entirety by Exhibit 3.1(o)(i)(B) attached hereto.
By signing below, you acknowledge and agree that (a) this
letter agreement amends the Agreement as set forth above, (b) in the event of
any conflict between this letter agreement and the Agreement, this letter
agreement shall control, and (c) the Agreement, as amended by this letter
agreement, remains in full force and effect.
Very truly yours,
PENTASTAR COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: President
OC MERGERCO 1, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: President
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Agreed and accepted this 20th day of October, 1999, effective
as of August 13, 1999.
DMA VENTURES, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: President
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
cc: Xxxxxx X. Xxxxxxx, Esq.
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