EXHIBIT 10.34
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), is dated as of December
31, 1999, and is among OC Mergerco 4, Inc. ("Purchaser"), USTeleCenters, Inc.,
and Vermont Network Services Corporation (collectively, "Sellers") and View
Tech, Inc., owner, whether directly or indirectly, of all of the outstanding
capital stock of each Seller ("Parent").
W I T N E S S E T H :
WHEREAS, Sellers desire to sell, and Purchaser desires to purchase,
substantially all of the assets of Sellers;
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and on the terms and
subject to the conditions herein set forth, the parties hereto hereby agree as
follows:
ARTICLE I
Definitions
Section 1.1. Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
(a) "Assets" shall mean, with respect to Sellers as of the
Effective Date, all of the business, properties and assets (real and personal,
tangible and intangible) of Sellers of every kind and wherever situated that are
owned by Sellers or in which either of them has any right or interest, including
without limitation and to the extent owned, its business as a going concern, its
goodwill and franchises; its trade-names (including "USTeleCenters", "Vermont
Network Services" and all derivatives thereof), trade-marks, trade-xxxx
registrations and trade-xxxx applications, service marks, service xxxx
registrations and service xxxx applications, copyrights, copyright registrations
and copyright applications, patents, patent registrations and patent
applications, processes, formulae, proprietary and technical information,
computer software, web sites, URLs, know-how, permits, licenses, trade secrets,
inventions and royalties (including all rights to xxx for past infringement of
any of the foregoing); mailing permits; its leaseholds and other interests in
land; its inventory of finished goods, work-in-process and raw materials,
equipment and supplies; its subscription and other mailing lists; its cash,
money on deposit with banks and others, certificates of deposit, commercial
paper, stocks, bonds and other investments; its accounts receivable; rights
under its insurance policies and warranties; its causes of action, judgments,
claims and demands of whatever nature; its deferred charges, advance payments,
prepaid items, claims for refunds, rights of offset and credits of all kinds;
all credit balances of or inuring to Sellers under any state unemployment
compensation plan or fund; its rights under restrictive covenants and
obligations of present and former officers and employees and of
individuals and corporations; its rights under partnership or joint venture
agreements or arrangements; its rights under all agreements assumed by
Purchaser; and its files, papers and records relating to the aforesaid business,
properties and assets; other than the Excluded Assets. To the extent that any
stockholder of either Seller owns any assets used in the business of such
Seller, such Seller shall arrange to have such assets transferred to such
Sellers, at no cost, immediately prior to the Closing, and the same shall be
included in the Assets.
(b) "Assigned Commitments" shall mean those Commitments listed
in the Disclosure Schedule pursuant to Section 3.9 that are denoted as
Commitments the rights and obligations under which are to be assigned to, and
assumed by, Purchaser. The parties agree that "Assigned Commitments" shall
include (but is not limited to) Sellers' settlement agreement with Xxxxxx Xxxx
dated December 23, 1999 and the payment of $180,000.00 due to Xx. Xxxx in
connection therewith.
(c) "Assumed Liabilities" shall mean those fixed and
determinable liabilities of Sellers listed on Exhibit A hereto, plus all
obligations assumed by Purchaser as Assigned Commitments.
(d) Intentionally omitted.
(e) "Cash Consideration" shall have the meaning set forth in
Section 2.4.
(f) "Closing" shall mean the closing of the transactions
contemplated by this Agreement, which shall occur at 5:00 p.m., Eastern time, on
the Closing Date at such place as the parties shall agree, or at such other time
and place as shall be mutually agreed in writing by the parties hereto.
(g) "Closing Date" shall mean February 18, 2000, or such other
date as the parties shall mutually agree to in writing.
(h) "Commitments" shall have the meaning set forth in Section
3.9.
(i) "Damages" shall have the meaning set forth in Section 8.1.
(j) "Disclosure Schedule" means the disclosure schedule attached
to this Agreement.
(j) "Effective Date" shall mean 12:01 a.m., January 1, 2000.
(k) "Environmental Laws" shall have the meaning set forth in
Section 3.19(a).
(l) "Excluded Assets" shall mean the following assets and
properties:
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(i) The consideration delivered to Sellers pursuant to
this Agreement for the Assets sold, transferred, assigned, conveyed and
delivered pursuant hereto;
(ii) Sellers' right to enforce Purchaser's
representations, warranties and covenants hereunder and the obligations of
Purchaser to pay, perform or discharge the liabilities of Sellers assumed by
Purchaser pursuant to this Agreement and all other rights, including rights of
indemnification, of Sellers under this Agreement or any instrument executed
pursuant hereto;
(iii) Sellers' charter documents and all amendments
thereto, Bylaws, corporate seal, minute books, stock books and other corporate
records having exclusively to do with the corporate organization and
capitalization of Sellers;
(iv) any assets acquired or business conducted by Sellers
after the Closing Date;
(v) Sellers' books of account, but Sellers agree that
Purchaser shall have the right at Purchaser's request to inspect such books and
make copies thereof, subject to Seller's reasonable scheduling requirements.
(m) "Financial Statements" shall have the meaning set forth in
Section 3.5.
(n) "Material Adverse Effect" shall mean an event or series of
events the occurrence or non-occurrence of which results in damages, losses,
liabilities, or obligations, either singularly or in the aggregate within one
year, of $20,000 with respect to either the Sellers' financial condition or
results of operations or with respect to the Assets.
(o) "ordinary course of business" means the usual and customary
way in which Sellers has conducted its business in the past.
(p) "Proprietary Rights" shall have the meaning set forth in
Section 3.10(a).
(q) "Purchase Price" shall have the meaning set forth in Section
2.2(a).
(r) Intentionally omitted.
(s) "System" shall have the meaning set forth in Section 3.20.
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ARTICLE II
Purchase and Sale
Section 2.1. Purchase and Sale of Assets. Subject to and upon the terms
and conditions contained herein, at the Closing, Sellers shall sell, transfer,
assign, convey and deliver to Purchaser, free and clear of all security
interests, liens, claims and encumbrances (other than the Assumed Liabilities)
and Purchaser shall purchase, accept and acquire from Sellers, the Assets.
Section 2.2. Purchase Price.
(a) Total Purchase Price. The total purchase price for the
Assets (the "Purchase Price") shall be One Hundred Eighty-Two Thousand One
Hundred Forty-Seven and 09/100 Dollars ($182,147.09) ("Cash Consideration"),
shares of Common Stock of Purchaser's parent company, Pentastar Communications,
Inc., having a value of One Hundred Thousand Dollars ($100,000.00) (based upon
the trading price for the five day period ending on the Closing Date) ("Stock
Consideration"), and the assumption of Assumed Liabilities.
(b) Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets as set forth in a schedule to be prepared by
Purchaser, after consultation with Sellers, as soon as practicable following
Closing, such allocation to be made as provided in Section 1060 of the Internal
Revenue Code of 1986 (the "Code"). Purchaser and Sellers shall each file Form
8594 (Asset Acquisition Statement Under Section 1060) on a timely basis
reporting the allocation of the Purchase Price consistent with the allocation in
such schedule. Purchaser and Sellers shall file on a timely basis any amendments
required to such Form 8594 as a result of a subsequent increase or decrease of
the Purchase Price. Purchaser and Sellers shall not take any position on their
respective income tax returns that is inconsistent with the allocation of the
Purchase Price set forth in such schedule. Purchaser and Sellers shall each
indemnify, defend and hold harmless the other party from and against any and all
claims, losses, liabilities, damages, costs and expenses that may be incurred as
a result of the failure to file Form 8594, the failure to file such Form 8594 on
a timely basis or the failure to file its income tax return on a basis as
required by this Section 7.4. This Section shall survive termination of this
Agreement.
(c) Division of Purchase Price. The Purchase Price shall be
divided between Sellers based upon the allocation set forth in Section 2.2(b).
Section 2.3. Excluded Liabilities. Except for the Assumed Liabilities,
Purchaser shall not assume or agree to pay, perform or discharge any liabilities
or obligations of Sellers, whether accrued, absolute, contingent or otherwise,
including without limitation liabilities based on or arising out of or in
connection with (a) any defects in products manufactured, rented or sold by
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Sellers prior to the Effective Date, (b) any implied or express warranties
relating to such products, (c) any pension or other benefit liability relating
to Sellers' employees, (d) any federal, state, local or foreign income, sales,
real or personal property or other taxes, assessments, fees, levies, imposts,
duties, deductions or other charges of any nature whatsoever (including without
limitation interest and penalties) imposed by any law, rule or regulation that
are attributable or relating to the assets of the business of Sellers for any
periods ending on or before the Effective Date, or that may be applicable
because of Sellers' sale of their business or any of the Assets to Purchaser,
(e) any claims by any of Sellers' directors, officers, employees or stockholders
relating to this Agreement or its performance or consummation, or any claims by
any of them relating to or arising out of (i) their employment (including
without limitation any modification or termination thereof) by Sellers, (ii) any
employment contract with either Seller or (iii) any pension or other benefit
liabilities of Sellers, (f) any claims or conditions arising under or relating
to Environmental Laws or similar legal requirements attributable or relating to
the Assets (including, without limitation, the operation thereof) or the
business of Sellers prior to the Effective Date, (g) any unlicensed or other
unauthorized use by Sellers of any patented or unpatented invention, trade
secret, copyright, trademark or other intellectual property right, (h) any
dividend or other distribution declared or otherwise payable by Sellers, (i) any
note, account payable or other obligation of Sellers to any affiliate, or (j)
any fees payable to Concord Partners Ltd.
Section 2.4. Intentionally omitted.
Section 2.5. Intentionally omitted.
ARTICLE III
Representations and Warranties of Sellers and Parent
Sellers and Parent, jointly and severally, hereby represent and warrant
that the following are true and correct as of the date hereof and will be true
and correct as of the Closing Date.
Section 3.1. Organization and Good Standing; Qualification. Each Seller
is a corporation duly incorporated, validly existing and in good standing under
the laws of its state of incorporation, with all requisite corporate power and
authority to carry on the business in which it is engaged, to own the properties
it owns, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Each Seller is duly qualified and licensed to
do business and is in good standing in each state where the conduct of its
business requires it to be so qualified, except to the extent that the failure
to so qualify would not have a Material Adverse Effect. Sellers do not own,
directly or indirectly, any of the capital stock of any other corporation or any
equity, profit sharing, participation or other interest in any corporation,
partnership, joint venture or other entity.
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Section 3.2. Authorization and Validity. The execution, delivery and
performance by Sellers and Parent of this Agreement and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by Sellers and Parent. This
Agreement and each other agreement contemplated hereby have been duly executed
and delivered by Sellers and Parent and constitute legal, valid and binding
obligations of Sellers and Parent, enforceable against Sellers and Parent in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies.
Section 3.3. No Violation. Neither the execution, delivery or performance
of this Agreement or the other agreements contemplated hereby nor the
consummation of the transactions contemplated hereby or thereby will (i)
conflict with, or result in a violation or breach of the terms, conditions or
provisions of, or constitute a default under, the Articles of Incorporation or
Bylaws of Sellers or Parent or any agreement, indenture or other instrument
under which Sellers or Parent is bound or to which any of the Assets are
subject, or result in the creation or imposition of any security interest, lien,
charge or encumbrance upon any of the Assets or (ii) violate or conflict with
any judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over
Sellers, Parent or the Assets.
Section 3.4. Consents. Except as set forth in the Disclosure Schedule, as
of the Closing Date no consent, authorization, approval, permit or license of,
or filing with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or is required in
connection with, the execution, delivery and performance of this Agreement or
the agreements contemplated hereby on the part of Sellers or Parent.
Section 3.5. Financial Statements. Each Seller has furnished or will
furnish to Purchaser the financial statements listed on Schedule 3.5 hereto
(collectively, the "Financial Statements") and the Pro Forma Balance Sheet. The
Financial Statements and the Pro Forma Balance Sheet are materially true,
correct and complete in all respects, have been prepared from the books and
records of the appropriate Seller maintained in the ordinary course of business
in accordance with sound accounting practice, fairly present the financial
condition and results of operations of such Seller as of the dates and for the
periods indicated and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis with prior periods, subject,
in the case of the Financial Statements dated December 31, 1999, to normal
recurring year end adjustments, the effect of which will not, individually or in
the aggregate, be materially adverse. The Financial Statements can be reconciled
with the financial statements and financial records maintained, and the
accounting methods applied, by the Company for federal income tax purposes.
Neither Sellers nor Parent makes any representation or warrants regarding the
future profitability of the business represented by the Assets.
Section 3.6. Liabilities and Obligations. Sellers have no liabilities
other than:
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(i) those set forth or reserved against in the Financial
Statements,
(ii) those incurred since December 31, 1999 in the
ordinary course of business; and
(iii) those set forth in the Disclosure Schedule.
Except as set forth in the Financial Statements and the Disclosure Schedule, no
Seller is liable upon or with respect to, or obligated in any other way to
provide funds in respect of or to guarantee or assume in any manner, any debt,
obligation or dividend of any person, corporation, association, partnership,
joint venture, trust or other entity, and Sellers know of no basis for the
assertion of any other claims or liabilities of any nature or in any amount.
Section 3.7. Absence of Certain Changes. Except as set forth in the
Disclosure Schedule and as set forth in the Financial Statements, since November
30, 1999, Sellers have not
(a) suffered any Material Adverse Effect;
(b) contracted for the purchase of any capital assets having a
cost in excess of $10,000 or paid any capital expenditures in excess of $10,000;
(c) incurred any indebtedness for borrowed money or issued or
sold any debt securities other than in the ordinary course of business;
(d) incurred or discharged any liabilities or obligations except
in the ordinary course of business;
(e) paid any amount on any indebtedness prior to the due date,
forgiven or canceled any debts or claims or released or waived any rights or
claims other than in the ordinary course of business;
(f) mortgaged, pledged or subjected to any security interest,
lien, lease or other charge or encumbrance any of its properties or assets other
than in the ordinary course of business;
(g) acquired or disposed of any assets except in the ordinary
course of business;
(h) entered into any other commitment or transaction or
experienced any other event that is material to this Agreement or to any of the
other agreements and documents
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executed or to be executed pursuant to this Agreement or to the transactions
contemplated hereby or thereby, or that could have a Material Adverse Effect; or
(i) incurred or discharged any liabilities or obligation on
behalf of Parent, including, but not limited to, any expense allocated by Parent
to either Seller and any interest expense associated with any credit facility of
Parent or Sellers.
Section 3.8. Title; Leased Assets.
(a) Real Property. Sellers do not own any real property.
(b) Personal Property. Sellers have good, valid and marketable
title to all tangible and intangible personal property owned by Sellers, the
location and general description of which is listed on the Disclosure Schedule,
and which as of the Closing Date will be free and clear of all security
interests, liens, claims and encumbrances other than the Assumed Liabilities.
(c) Leases. Set forth in the Disclosure Schedule is a list of
copies of all leases of real and personal property to which Sellers are a party,
either as lessor or lessee. All leased personal property is listed on the
Disclosure Schedule, as a leased asset. All such leases are valid and
enforceable in accordance with their respective terms except as may be limited
by applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies.
(d) Right to Use Assets. All tangible assets used in the conduct
of Sellers' business are reflected in the Financial Statements in a manner that
is in conformity with generally accepted accounting principles applied on a
consistent basis with prior periods. Sellers own, lease or otherwise possess a
transferable right to use all material assets used in the conduct of their
business, and except for the Excluded Assets, will transfer all of such rights
to Purchaser at Closing.
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Section 3.9. Commitments. Except as set forth in the Disclosure Schedule,
Sellers have not entered into, nor are the Assets or the business of Sellers
bound by, whether or not in writing, any contract or arrangement that involves
either an unperformed commitment in excess of $10,000 or that terminates more
than 30 days after the date hereof; or any other agreement or commitment not
made in the ordinary course of business or that is material to the business or
financial condition of the Company. All of the agreements listed in the
Disclosure Schedule are hereinafter collectively referred to as the
"Commitments." Except as set forth in the Disclosure Schedule, there are no
existing defaults, events of default or events, occurrences, acts or omissions
that, with the giving of notice or lapse of time or both, would constitute
defaults by Sellers, and no penalties have been incurred nor are amendments
pending, with respect to the Commitments. Except as set forth in the Disclosure
Schedule, the Commitments are in full force and effect and are valid and
enforceable obligations of the parties thereto in accordance with their
respective terms, and no defenses, off-sets or counterclaims have been asserted
or, may be made by any party thereto, nor have Sellers waived any rights
thereunder. Except as set forth in the Disclosure Schedule, Sellers have not
received notice of any default with respect to any Commitment.
Section 3.10. Patents, Trade-marks, Service Marks and Copyrights.
(a) Ownership. Sellers own all patents, trade-marks, service
marks and copyrights, if any, necessary to conduct its business, or possesses
adequate licenses or other rights, if any, therefor, without conflict with the
rights of others. Set forth in the Disclosure Schedule is a true and correct
description of the following ("Proprietary Rights"):
(i) all trade-marks, trade-names, service marks and other
trade designations, including common law rights, registrations and applications
therefor, and all patents, copyrights and applications currently owned, in whole
or in part, by Sellers with respect to the Assets and Sellers' business, and all
licenses, royalties, assignments and other similar agreements relating to the
foregoing to which either Seller is a party (including expiration date if
applicable); and
(ii) all agreements relating to technology, know-how or
processes that Sellers are licensed or authorized to use by others, or which
either of them licenses or authorizes others to use.
(b) Conflicting Rights of Third Parties. Sellers have the sole
and exclusive right (except with respect to certain licensed Proprietary Rights)
to use the Proprietary Rights without infringing or violating the rights of any
third parties. No consent of third parties will be required for the transfer
thereof to Purchaser or the use thereof by Purchaser upon consummation of the
transactions contemplated hereby and the Proprietary Rights are freely
transferable. No claim has been asserted by any person to the ownership of or
right to use any Proprietary Right or challenging or questioning the validity or
effectiveness of any license or agreement
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constituting a part of any Proprietary Right, and Sellers know of no valid basis
for any such claim. Each of the Proprietary Rights is valid and subsisting, has
not been canceled, abandoned or otherwise terminated and, if applicable, has
been duly issued or filed.
(c) Claims of Other Persons. Sellers have no knowledge of any
claim that, or inquiry as to whether, any product, activity or operation of
Sellers infringes upon or involves, or has resulted in the infringement of, any
proprietary right of any other person, corporation or other entity; and no
proceedings have been instituted, are pending or are threatened that challenge
the rights of Sellers with respect thereto. Sellers have not given and are not
bound by any agreement of indemnification for any Proprietary Right as to any
property manufactured, used or sold by Sellers.
Section 3.11. Trade Secrets and Customer and Mailing Lists. Sellers have
the right to use, free and clear of any claims or rights of others except claims
or rights specifically set forth in the Disclosure Schedule, all trade secrets,
customer, subscriber and mailing lists and proprietary information required for
the marketing of all merchandise and services formerly or presently sold or
marketed by Sellers. Sellers are not using or in any way making use of any
confidential information or trade secrets of any third party without their
consent, including without limitation any past or present employee of either
Seller.
Section 3.12. Taxes.
(a) Filing of Tax Returns. Sellers have duly and timely filed,
including with extensions, if applicable, with the appropriate governmental
agencies all income, excise, corporate, franchise, property, sales, use,
payroll, withholding and other tax returns (including information returns) and
reports required to be filed by the United States or any state or any political
subdivision thereof or any foreign jurisdiction. All such tax returns or reports
as of the time of their filing were complete and accurate and properly reflected
the taxes of Sellers for the periods covered thereby.
(b) Payment of Taxes. Sellers have paid or accrued all taxes,
penalties and interest that have become due with respect to any returns that it
has filed and any assessments of which it is aware, subject to any extensions
that may have been granted. Sellers are not delinquent in the payment of any
tax, assessment or governmental charge.
(c) No Pending Deficiencies, Delinquencies, Assessments or
Audits. No tax deficiency or delinquency has been asserted against either
Seller. There is no unpaid assessment, proposal for additional taxes, deficiency
or delinquency in the payment of any of the taxes of either Seller that could be
asserted by any taxing authority. There is no taxing authority audit of either
Seller pending or threatened, and the results of any completed audits are
properly reflected in the Financial Statements. Sellers have not violated in any
material respect any federal, state, local or foreign tax law.
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Section 3.13. Compliance with Laws. Sellers have complied with all laws,
regulations and licensing requirements and has filed with the proper authorities
all necessary statements and reports. There are no existing material violations
by Sellers of any federal, state or local law or regulation that could affect
the property or business of Sellers. Sellers possess all material licenses,
franchises, permits and governmental authorizations to conduct its business as
now conducted.
Section 3.14. Finder's Fee. Except as set forth in the Disclosure
Schedule, Sellers have not incurred any obligation for any finder's, broker's or
agent's fee in connection with the transactions contemplated hereby.
Section 3.15. Litigation. Except as disclosed in the Disclosure Schedule,
there are no legal actions or administrative proceedings or investigations
instituted, or to the best knowledge of Sellers threatened, against or
affecting, or that could affect, Sellers, any of the Assets, or the business of
Sellers. Sellers are not (i) subject to any continuing court or administrative
order, writ, injunction or decree applicable specifically to Sellers or to their
business, assets, operations or employees or (ii) in default with respect to any
such order, writ, injunction or decree. Sellers do not know of any basis for any
such action, proceeding or investigation.
Section 3.16. Accuracy of Information Furnished. All information furnished
to Purchaser by Sellers hereby or in connection with the transactions
contemplated hereby is true, correct and complete in all material respects. Such
information states all facts required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which such
statements are made, materially true, correct and complete. Except as disclosed
on the Disclosure Schedule, Sellers are not aware of any fact or circumstance
that could have a Material Adverse Effect on the business of Sellers or the
Assets being acquired by Purchaser.
Section 3.17. Books of Account. The books of account of Sellers have been
kept accurately in all material respects in the ordinary course of business, the
transactions entered therein represent bona fide transactions and the revenues,
expenses, assets and liabilities of Sellers have been properly recorded in all
material respects in such books.
Section 3.18. Name. There are no actions, suits or proceedings pending or
threatened against or affecting Sellers that could result in any impairment of
the right to use the names "USTeleCenters" or "Vermont Network Services." The
use of the names "USTeleCenters" and "Vermont Network Services" does not
infringe the rights of any third party nor is it confusingly similar with the
corporate name of any third party. After the Closing Date, no person or business
entity other than Purchaser will be authorized, directly or indirectly, by
Sellers or Parent to use the names "USTeleCenters" or "Vermont Network Services"
or any name confusingly similar to either.
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Section 3.19. Environmental Matters.
(a) Environmental Laws. Neither Sellers nor any of the Assets
are currently in material violation of, or subject to any existing, pending or
threatened investigation or inquiry by any governmental authority or to any
remedial obligations under, any laws or regulations pertaining to health or the
environment (hereinafter sometimes collectively called "Environmental Laws").
This representation and warranty would continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant facts,
conditions and circumstances, if any, pertaining to the Assets.
(b) Use of Assets. The Assets have never been used in a manner
that would be in violation of the Environmental Laws.
Section 3.20. Year 2000; Computer Systems. Each item of hardware,
software, information technology, embedded, electromechanical or processor based
system and/or any combination thereof, used, developed, manufactured,
distributed, licensed, transferred or delivered by Sellers on or before the
Closing Date (each a "System"), shall be able to correctly function, operate,
process data or perform date related calculations, including, but not limited
to, (i) calculate, compare and sequence, from, into and between the years 1999
and 2000, (ii) accurately process, provide and/or receive date data, including
leap year calculations, into and between the years 1999, 2000 and beyond, (iii)
shall otherwise function according to the specifications thereof both before,
during and following January 1, 2000, and (iv) that neither performance nor
functionality thereof shall be affected by dates prior to, during and after
January 1, 2000. The Disclosure Schedule contains a list of all Systems of
Sellers, together with a description of the Year 2000 compliance status of such
System; provided, in all of the foregoing, that all non-Seller systems and
products (e.g., hardware, software and firmware) material to the conduct of
Sellers' Systems and used in or in combination with Sellers' Systems exchange
data with Sellers' Systems in the same manner on dates in both the Twentieth and
Twenty-First centuries.
Section 3.21. Parent Merger. Parent has entered into an Agreement and Plan
of Merger dated as of December 27, 1999, pursuant to which Parent will merge
with All Communications Corporation in a stock for stock transaction.
ARTICLE IV
Representations and Warranties of Purchaser
Purchaser represents and warrants that the following are true and correct
as of the date hereof and will be true and correct through the Closing Date as
if made on that date:
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Section 4.1. Organization and Good Standing. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation, with all requisite power and authority to carry on
the business in which it is engaged, to own the properties it owns, to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. Purchaser is duly qualified and licensed to do business and is in good
standing in each state where the conduct of its business requires it to be so
qualified, except to the extent that the failure to so qualify would not have a
Material Adverse Effect. Purchaser conducts business under the name "OC Mergerco
4" and has made all assumed name and similar filings that it is required to make
except to the extent that the failure to so file would not have a Material
Adverse Effect.
Section 4.2. Authorization and Validity. The execution, delivery and
performance by Purchaser of this Agreement, and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by Purchaser. This Agreement and
each other agreement contemplated hereby have been or will be as of the Closing
Date duly executed and delivered by Purchaser and constitute or will constitute
legal, valid and binding obligations of Purchaser, enforceable against Purchaser
in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies.
Section 4.3. No Violation. Neither the execution, delivery or performance
of this Agreement or the other agreements contemplated hereby nor the
consummation of the transactions contemplated hereby or thereby will (i)
conflict with, or result in a violation or breach of the terms, conditions and
provisions of, or constitute a default under, the charter documents of Purchaser
or any agreement, indenture or other instrument under which Purchaser is bound
or (ii) violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
having jurisdiction over Purchaser or the properties or assets of Purchaser.
Section 4.4. Finder's Fee. Purchaser has not incurred any obligation for
any finder's, broker's or agent's fee in connection with the transactions
contemplated hereby.
ARTICLE V
Preclosing Matters
Section 5.1. Conduct Prior to Closing. Prior to the Closing, each Seller
shall conduct its business only in the ordinary course, consistent with past
practice and Sellers shall not take any actions that would cause the
representations and warranties set forth in Article III hereof to be incorrect.
Without limitation of the foregoing, prior to the Closing each Seller
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agrees that it shall not, (a) declare, pay or make any dividends or
distributions on its capital stock; (b) enter into any agreement (oral or
written) with its directors, officers or salaried employees; (c) increase the
compensation of its directors, officers or employees; (d) make capital
expenditures (or enter into commitments to make capital expenditures); (e) issue
any capital stock or grant options to purchase its capital stock; or (f) incur
indebtedness or other liabilities other than in the ordinary course of business
and consistent with past practices. Purchaser expressly acknowledges that the
provisions of this Section apply to Sellers and the Assets only and do not apply
to Parent. Purchaser further expressly acknowledges that from the date of the
Effective Date to the Closing Date, Purchaser and Sellers are cooperating fully
in the operation of the business of Sellers and, therefore, any action taken or
not taken at the direction of or with the consent of Purchaser will not
constitute a breach of this Section 5.1.
Section 5.2. Conditions to Purchaser's Obligation to Close. The following
shall be conditions to Purchaser's obligation to close the transactions set
forth herein:
(a) all of the representations and warranties of Sellers and
Parent shall be true and correct as of the Closing Date;
(b) intentionally omitted;
(c) No investigation, action, suit or proceeding shall be
pending or, to Sellers' knowledge, threatened before any court or governmental
body which seeks to restrain, prohibit or otherwise challenge or interfere with
the consummation of the transactions contemplated herein;
(d) Xxxxxxxx Xxxxx shall have entered into a non-competition
agreement and a consulting agreement, both on terms satisfactory to Purchaser;
and
(e) an opinion of Sellers' counsel that no shareholder approval
is required to effect the transaction set forth in this Agreement.
ARTICLE VI
Closing Deliveries
Section 6.1. Deliveries of Sellers. At the Closing, Sellers shall deliver
or cause to be delivered to Purchaser the following, all of which are in a form
satisfactory to counsel to Purchaser:
(a) a Xxxx of Sale conveying all personal property to Purchaser;
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(b) assignments for all Proprietary Rights in form appropriate
for filing in the U.S. Patents and Trademarks Office;
(c) an Assignment and Assumption Agreement with respect to the
Assigned Commitments and the Assumed Liabilities;
(d) intentionally omitted;
(e) evidence (including Form UCC-3 releases) of release of all
liens and other encumbrances on the Assets;
(f) such other instrument or instruments of transfer as shall be
necessary or appropriate, as Purchaser or its counsel shall reasonably request,
to vest in Purchaser good and marketable title to the Assets that are personal
property and good and indefeasible title to the Assets that are real property;
(g) a non-competition agreement and a consulting agreement with
Xxxxxxxx Xxxxx; and
(h) an officer's certificate that, for the period from December
31, 1999 through the Closing Date, the net cash flow from Sellers to the Parent
has been negative and that payroll on February 17, 2000 was $182,147.09.
Section 6.2. Deliveries of Purchaser. At the Closing, Purchaser shall
deliver to Sellers:
(a) Cash Consideration in immediately available funds;
(b) Stock Consideration, subject to a Lock-Up Agreement in the
form attached hereto;
(c) a statement that Parent and the Sellers have complied with
the requirements of Section 5.1; and
(d) an executed Assignment and Assumption Agreement in the form
attached hereto with respect to the Assumed Liabilities and the Assigned
Commitments.
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ARTICLE VII
Post Closing Matters
Section 7.1. Further Instruments of Transfer. Following the Closing, at
the request of either party such other party shall deliver any further
instruments of transfer and take all reasonable action as may be necessary or
appropriate to (i) vest in Purchaser good and marketable title to Assets that
are personal property and good and indefeasible title to Assets that are real
property and (ii) transfer to Purchaser all licenses and permits necessary for
the operation of the Assets.
Section 7.2. Employee Benefit Plan Claims Incurred. After the Closing
Date, each Seller shall remain liable under its medical and dental plans and
commitments for any claims incurred by its employees or their spouses and
dependents prior to the Closing Date. A claim shall be deemed to have been
incurred upon the date of the initial occurrence of an injury or the initial
diagnosis of an illness. An incurred claim shall include any claim or series of
claims related to a claim incurred prior to the Closing Date. Sellers shall
retain all liability for continuation coverage under Section 162(k) of the Code.
Section 7.3. Sales Taxes Applicable to Sales Prior to or On the Closing
Date. Sellers shall timely file all sales tax returns with respect to sales
occurring in connection with Sellers' business prior to or on the Closing Date.
Section 7.4. Sales and Transfer Taxes. Sellers shall timely pay all sales
taxes applicable to the sales reported on the tax returns referred to in Section
7.3. Sellers and Parent shall be liable for and shall indemnify Purchaser
against all sales, transfer, use, excise, registration or other taxes assessed
or payable in connection with the transfer of the Assets from Sellers to
Purchaser. Sellers and Purchaser shall sign, and otherwise shall cooperate in
the preparation and filing with the appropriate governmental agencies of, any
affidavits or other transfer documents that are required in connection with the
transfer of vehicles or trailers that constitute part of the Assets.
Section 7.5. Non-Solicitation. For a period of two years following the
Closing Date, neither Sellers nor Parent shall, directly or indirectly, whether
through its employees, affiliates, successors and assigns or otherwise, hire or
solicit to hire any former, current or future employee of Purchaser, including,
without limitation any persons who were employees of Sellers as of the Closing
Date and any person who was an employee of Sellers at any time during the two
year period prior to the Closing Date.
Section 7.7. Change of Name. USTeleCenters, Inc. and Vermont Network
Services Corporation each shall take all steps as shall be necessary to change
its corporate name from
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USTeleCenters, Inc. and Vermont Network Services Corporation, as applicable, to
a name that is significantly dissimilar to such name.
ARTICLE VIII
Remedies
Section 8.1. Indemnification by Sellers and Parent. Subject to the terms
and conditions of this Article, Sellers and Parent, jointly and severally, agree
to indemnify, defend and hold Purchaser and its directors, officers, agents,
attorneys and affiliates harmless from and against all losses, claims,
obligations, demands, assessments, penalties, liabilities (other than Assumed
Liabilities), costs, damages, attorneys' fees and expenses (collectively,
"Damages"), asserted against or incurred by such indemnitees by reason of or
resulting from:
(a) a breach of any of the representations or warranties contained in
Sections 3.1, 3.2, 3.3, 3.7 (b-i), 3.12 or 3.21; or
(b) any liability related to Sellers that has not been expressly
assumed by Purchaser.
Section 8.2. Indemnification by Purchaser. Subject to the terms and
conditions of this Article, Purchaser hereby agrees to indemnify, defend and
hold Sellers and Parent and their respective directors, officers, agents,
attorneys and affiliates harmless from and against all Damages asserted against
or incurred by any of such indemnitees by reason of or resulting from a breach
by Purchaser of any representation or warranty contained in Section 4.
Section 8.3. Conditions of Indemnification. The respective obligations and
liabilities of Sellers and Purchaser (the "indemnifying party") to the other
(the "party to be indemnified") under Sections 8.1 and 8.2 with respect to
claims resulting from the assertion of liability by third parties shall be
subject to the following terms and conditions:
(a) Within 20 days (or such earlier time as might be required to avoid
prejudicing the indemnifying party's position) after receipt of notice of
commencement of any action evidenced by service of process or other legal
pleading, the party to be indemnified shall give the indemnifying party written
notice thereof together with a copy of such claim, process or other legal
pleading, and the indemnifying party shall have the right to undertake the
defense thereof by representatives of its own choosing and at its own expense;
provided that the party to be indemnified may participate in the defense with
counsel of its own choice, the fees and expenses of which counsel shall be paid
by the party to be indemnified unless (i) the indemnifying party has agreed to
pay such fees and expenses, (ii) the indemnifying party has failed to assume the
defense of such action or (ii) the named parties to any such action
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(including any impleaded parties) include both the indemnifying party and the
party to be indemnified and the party to be indemnified has been advised by
counsel that there may be one or more legal defenses available to it that are
different from or additional to those available to the indemnifying party (in
which case, if the party to be indemnified informs the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action on behalf of the party to be indemnified, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for the party to be indemnified, which
firm shall be designated in writing by the party to be indemnified).
(b) In the event that the indemnifying party, by the 30th day after
receipt of notice of any such claim (or, if earlier, by the 10th day preceding
the day on which an answer or other pleading must be served in order to prevent
judgment by default in favor of the person asserting such claim), does not elect
to defend against such claim, the party to be indemnified will (upon further
notice to the indemnifying party) have the right to undertake the defense,
compromise or settlement of such claim on behalf of and for the account and risk
of the indemnifying party and at the indemnifying party's expense, subject to
the right of the indemnifying party to assume the defense of such claims at any
time prior to settlement, compromise or final determination thereof.
(c) Notwithstanding the foregoing, the indemnifying party shall not
settle any claim without the consent of the party to be indemnified unless such
settlement involves only the payment of money and the claimant provides to the
party to be indemnified a release from all liability in respect of such claim.
If the settlement of the claim involves more than the payment of money, the
indemnifying party shall not settle the claim without the prior consent of the
party to be indemnified.
(d) The party to be indemnified and the indemnifying party will each
cooperate with all reasonable requests of the other.
Section 8.4. Waiver. No waiver by any party of any default or breach by
another party of any representation, warranty, covenant or condition contained
in this Agreement, any exhibit or any document, instrument or certificate
contemplated hereby shall be deemed to be a waiver of any subsequent default or
breach by such party of the same or any other representation, warranty, covenant
or condition. No act, delay, omission or course of dealing on the part of any
party in exercising any right, power or remedy under this Agreement or at law or
in equity shall operate as a waiver thereof or otherwise prejudice any of such
party's rights, powers and remedies. All remedies, whether at law or in equity,
shall be cumulative and the election of any one or more shall not constitute a
waiver of the right to pursue other available remedies.
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Section 8.5. Remedies Not Exclusive. The remedies provided in this
Article shall not be exclusive of any other rights or remedies available to one
party against the other, either at law or in equity.
Section 8.6. Costs, Expenses and Legal Fees. Subject to the provisions
of Sections 8.1 and 8.2, whether or not the transactions contemplated hereby
are consummated, each party hereto shall bear its own costs and expenses
(including attorneys' fees), except that each party hereto agrees to pay the
costs and expenses (including reasonable attorneys' fees and expenses) incurred
by the other parties in successfully (i) enforcing any of the terms of this
Agreement or (ii) proving that another party breached any of the terms of this
Agreement.
ARTICLE IX
Miscellaneous
Section 9.1. Amendment. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by all the parties
hereto.
Section 9.2. Assignment. Neither this Agreement nor any right created
hereby or in any agreement entered into in connection with the transactions
contemplated hereby shall be assignable by any party hereto; provided, however,
that Purchaser may assign the right to take title to all or a portion of the
Assets and the obligation to assume all or a portion of the Assumed Liabilities
and Assigned Commitments hereunder to a subsidiary of Purchaser without the
consent of Sellers or Parent.
Section 9.3. Parties In Interest; No Third Party Beneficiaries. Except
as otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective legal
representatives, successors and assigns of the parties hereto. Neither this
Agreement nor any other agreement contemplated hereby shall be deemed to confer
upon any person not a party hereto or thereto any rights or remedies hereunder
or thereunder.
Section 9.4. Entire Agreement. This Agreement, the Disclosure Schedule
and the agreements contemplated hereby constitute the entire agreement of the
parties regarding the subject matter hereof, and supersede all prior agreements
and understandings, both written and oral, among the parties, or any of them,
with respect to the subject matter hereof.
Section 9.5. Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
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provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
Section 9.6. Survival of Representations, Warranties and Covenants.
The representations, warranties and the covenants contained herein, including
the indemnification obligations contained in Article VIII hereof, shall survive
the Closing and all statements contained in any certificate, exhibit or other
instrument delivered by or on behalf of Sellers or Purchaser pursuant to this
Agreement shall be deemed to have been representations and warranties by Sellers
or Purchaser, as the case may be, and, notwithstanding any provision in this
Agreement to the contrary, shall survive the Closing for a period of two years,
except for representations and warranties with respect to any tax or tax-related
matters, which shall survive the Closing until the running of any applicable
statutes of limitation.
Section 9.7. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING
CONFLICTS OF LAWS) OF THE STATE OF DELAWARE.
Section 9.8. Captions. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of the
terms or provisions hereof.
Section 9.9. Gender and Number. When the context requires, the gender of
all words used herein shall include the masculine, feminine and neuter and the
number of all words shall include the singular and plural.
Section 9.10. Reference to Agreement. Use of the words "herein",
"hereof", "hereto" and the like in this Agreement shall be construed as
references to this Agreement as a whole and not to any particular Article,
Section or provision of this Agreement, unless otherwise noted.
Section 9.11. Confidentiality; Publicity and Disclosures. Each party
shall keep this Agreement and its terms confidential, and shall make no press
release or public disclosure, either written or oral, regarding the transactions
contemplated by this Agreement without the prior knowledge and consent of the
other parties hereto; provided that the foregoing shall not prohibit any
disclosure (i) to attorneys, accountants, investment bankers or other agents of
the parties assisting the parties in connection with the transactions
contemplated by this Agreement and (ii) by Purchaser in connection with
obtaining financing for the transactions contemplated by this Agreement and
conducting an examination of the operations and assets of Sellers. In the event
that the transactions contemplated hereby are not consummated for any reason
whatsoever, the
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parties hereto agree not to disclose any confidential information they may have
concerning the affairs of the other parties, except for information that is
required by law to be disclosed. Confidential information includes, but is not
limited to: financial records, surveys, reports, plans, proposals, financial
information, information relating to personnel, contracts, stock ownership,
liabilities and litigation; provided that should the transactions contemplated
hereby not be consummated, nothing contained in this Section shall be construed
to prohibit the parties hereto from operating businesses in competition with
each other. Confidential information does not include information that: (x) at
the time of disclosure or thereafter is generally available to and known by the
public (other than through a breach by a party of its obligations hereunder);
(y) was available to a party on a non-confidential basis from a third party,
provided that such third party is not and was not bound by a confidentiality
agreement; and (z) has been independently acquired or developed by a party
without violating any obligations hereunder or that was known to such party
prior to entering into this Agreement.
Section 9.12. Notice. All notices, claims, or demands required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand, delivered by telefax or mailed to the other party, properly addressed,
certified or registered mail, postage prepaid, return receipt requested,
addressed as follows:
(i) If to Sellers or Parent:
View Tech, Inc.
0000 Xxxxx Xxxxxx, Xxxxx X
Xxxxxxxxx, XX 00000-0000
Attn: President
with a copy to:
Xxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
ATTN: Xxxxxx X. Xxxxx, Esq.
(ii) If to Purchaser:
Pentastar Communications, Inc.
0000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Chief Executive Xxxxxxx
-00-
xxx
Xxxxxxx & Xxxxxx X.X.X.
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: B. Xxxxx Xxxxxxx, Esq.
Hand delivered and telefaxed (if confirmed) notices shall be deemed
delivered on the date the same are delivered by hand or telefaxed, and mailed
notices shall be deemed delivered three days following the date mailed, in
accordance with the foregoing provisions of this Section 9.12. A party may
change the address for notices to be sent to it by written notice delivered
pursuant to the terms of this Section 9.12.
Section 9.13. Service of Process. Service of any and all process that
may be served on any party hereto in any suit, action or proceeding arising out
of this Agreement may be made in the manner and to the address set forth in
Section 9.12 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
Section 9.14. Intentionally omitted.
Section 9.15. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
Section 9.16. Termination. This Agreement shall terminate if the
Closing shall not have occurred by 5:00 p.m., February 18, 2000 unless the
parties mutually agree in writing to extend.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
PURCHASER
OC Mergerco 4, Inc.
By:_______________________________
Its:
SELLERS
USTeleCenters, Inc.
By:______________________________
Its:
Vermont Network Services Corporation
By:______________________________
Its:
PARENT
View Tech, Inc.
By:______________________________
Its:
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SCHEDULE 3.5
1) Financial statements - USTelecenters
a) 1998 balance sheet; annual income statement
b) 1999 balance sheet; quarterly and year-to-date income statements
c) 1999 monthly revenue production per representative
d) 1999 payroll records; compensation plans
e) 11/30/99 balance sheet
f) Accounts receivable (detailed list of A/R's) with aging as of 11/30/99
g) Accounts receivable (detailed list of A/R's) with aging as of the
Closing
h) Inventory (based on physical inventory) (standard representation
language)
i) Pre-paid expenses
j) Fixed assets - owned vs. leased by location/facility
k) Accounts payable (detailed list of assumed A/P's) with aging as of
11/30/99
l) 1999 year end balance sheet; annual income statement
2) Financial statements - Vermont Network Services Corporation
a) 1998 balance sheet; annual income statement
b) 1999 balance sheet; quarterly and year-to-date income statements
c) 1999 monthly revenue production per representative
d) 1999 payroll records; compensation plans
e) 11/30/99 balance sheet
f) Accounts receivable (detailed list of A/R's) with aging as of 11/30/99
g) Accounts receivable (detailed list of A/R's) with aging as of the
Closing
h) Inventory (based on physical inventory) (standard representation
language)
i) Pre-paid expenses
j) Fixed assets - owned vs. leased by location/facility
k) Accounts payable (detailed list of assumed A/P's) with aging as of
11/30/99
l) 1999 year end balance sheet; annual income statement
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