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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) -- SEPTEMBER 30, 1998
UNISTAR FINANCIAL SERVICE CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 2-93426-D 87-0419568
(State or other jurisdiction (Commission File (IRS Employer
of Incorporation Number) Identification No.)
4635 MCEWEN ROAD, DALLAS, TEXAS 75244
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (972) 702-0800
NOT APPLICABLE
(Former Name or Former Address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 30, 1998, Unistar Financial Service Corp. ("Unistar"),
completed the acquisition (the "Acquisition") of the assets and operations of
U.S. Fidelity Holding Corp. and its subsidiaries (collectively, "USFH"). The
Acquisition was structured as a stock-for-stock exchange, with Unistar issuing
3,975,000 shares of its common stock, par value $.01 per share ("Common Stock"),
in exchange for all of the issued and outstanding shares of USFH (the "Acquired
Shares"). Immediately prior to the Acquisition, Unistar had 20,000,000 shares of
Common Stock outstanding, resulting in 23,975,000 shares of Common Stock
outstanding after giving effect to the Acquisition. The consideration paid for
USFH by Unistar was determined by Unistar based upon its assessment of the value
of USFH operating as a wholly-owned subsidiary of Unistar, including in
particular the synergies created by the accretion of USFH to Unistar's
pre-Acquisition operations through International Surety & Casualty Company
("ISCC").
ISCC is a Texas-licensed and admitted property and casualty insurance
company, whose primary business is underwriting and reinsuring a portfolio of
non-standard auto insurance generated primarily through USFH. USFH participates
in the auto insurance industry by providing multiple non-standard auto insurance
products, premium financing and claims administration and auto collision
appraisal and repair services.
Immediately prior to the Acquisition, (i) USFH held 53,333 shares of
Unistar Common Stock and was wholly-owned by F. Jeffrey Nelson, President, Chief
Financial Officer and a director of Unistar, and Marc A. Sparks, Chairman of the
Board and Chief Executive Officer of Unistar, (ii) Messrs. Nelson and Sparks
served (and continue to serve) in those same capacities with USFH, and (iii)
Messrs. Nelson and Sparks transferred their shares of USFH to Rockford Partners,
Ltd., a British Virgin Islands corporation ("Rockford Partners"), in
satisfaction of pre-existing obligations to Rockford Partners resulting from
historic working capital provided to USFH and its affiliates and in exchange for
certain additional consideration to be finalized, which additional consideration
may include distribution of a portion of the Unistar Common Stock received by
Rockford Partners pursuant to the Acquisition. Rockford Partners then sold the
shares of USFH to Unistar pursuant to the Stock Purchase Agreement, and now
holds the 3,975,000 shares of Common Stock that it received as consideration for
the shares of USFH.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) It is impractical to furnish the required financial statements at this
time. The financial statements will be filed under cover of Form 8-K/A
on or before December 14, 1998.
(b) It is impractical to furnish the required pro forma financial
information at this time. The requisite pro forma financial information
will be filed under cover of Form 8-K/A on or before December 14, 1998.
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(c) EXHIBITS
EXHIBIT NO. DESCRIPTION
2.1 Stock Purchase Agreement dated as of September 14, 1998, by
and between Unistar Financial Service Corp., U.S. Fidelity
Holding Corp. and Rockford Partners, Ltd.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, as amended, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
UNISTAR FINANCIAL SERVICE CORP.
Date: October 15, 1998 By: /s/ MARC A. SPARKS
-----------------------------
Marc A. Sparks, Chairman and
Chief Executive Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
2.1 Stock Purchase Agreement dated as of September 14, 1998, by
and between Unistar Financial Service Corp., U.S. Fidelity
Holding Corp. and Rockford Partners, Ltd.
</TABLE>
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
UNISTAR FINANCIAL SERVICE CORP.
AND
U. S. FIDELITY HOLDING CORP.
AND
ROCKFORD PARTNERS, LTD.
DATED AS OF SEPTEMBER 14, 1998
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I.
<S> <C>
DEFINITIONS
1.01 Definitions...................................................................................... 1
ARTICLE II.
BASIC TRANSACTION
2.01 Purchase and Sale of USF Shares............................................................... 4
ARTICLE III.
CLOSING AND CLOSING DATE
3.01 Closing....................................................................................... 4
3.02 Closing Date.................................................................................. 4
3.03 Deliveries at the Closing..................................................................... 4
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
4.01 Due Organization; Foreign Qualification....................................................... 5
4.02 Due Authorization; Enforceability............................................................. 5
4.03 Non-Contravention; Consents and Approvals..................................................... 5
4.04 Capitalization; Rights, Warrants, Options..................................................... 6
4.05 Financial Statements; Undisclosed Liabilities; Other Documents................................ 6
4.06 No Material Adverse Effects or Changes........................................................ 7
4.07 Title......................................................................................... 8
4.08 Intellectual Property......................................................................... 8
4.09 Employment Matters............................................................................. 8
4.10 Tax Returns and Audits......................................................................... 8
4.11 Litigation..................................................................................... 9
4.12 Compliance with Applicable Laws................................................................ 9
4.13 Contracts; No Defaults......................................................................... 9
4.14 Fees of Brokers, Finders and Financial Advisors............................................... 10
4.15 Books and Records............................................................................. 10
4.16 Related Party Transactions.................................................................... 10
4.17 Due Diligence................................................................................. 10
4.18 Investment.................................................................................... 10
4.19 General Representation and Warranty........................................................... 10
</TABLE>
i
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<TABLE>
<CAPTION>
ARTICLE V.
<S> <C>
REPRESENTATIONS AND WARRANTIES OF UNISTAR
5.01 Due Organization; Foreign Qualification....................................................... 11
5.02 Due Authorization; Enforceability............................................................. 11
5.03 Non-Contravention; Consents and Approvals..................................................... 11
5.04 Capitalization................................................................................ 12
5.05 Financial Statements.......................................................................... 12
5.06 Commission Filings............................................................................ 12
5.07 No Material Adverse Effects or Changes........................................................ 13
5.08 Tax Returns and Audits........................................................................ 13
5.09 Litigation.................................................................................... 13
5.10 Compliance with Applicable Laws............................................................... 13
5.11 Fees of Brokers, Finders and Investment Bankers............................................... 13
5.12 General Representation of Warranty............................................................ 14
ARTICLE VI.
COVENANTS
6.01 Implementing Agreement........................................................................ 14
6.02 Access to Information and Facilities...........................................................14
6.03 Confidentiality............................................................................... 14
6.04 Preservation of Business...................................................................... 14
6.05 Consents and Approvals........................................................................ 16
6.06 Unistar Stockholder Approval.................................................................. 16
6.07 Publicity..................................................................................... 16
6.08 Fees and Expenses............................................................................. 16
6.09 Periodic Reports.............................................................................. 16
ARTICLE VII.
CONDITIONS PRECEDENT TO THE CONSUMMATION OF THE MERGER
7.01 Actions or Proceedings........................................................................ 16
7.02 Approval of Merger............................................................................ 16
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE VIII.
<S> <C>
CONDITIONS PRECEDENT TO OBLIGATIONS OF UNISTAR
8.01 Warranties True as of Closing Date............................................................ 17
8.02 Compliance With Agreements and Covenants...................................................... 17
8.03 Sellers' Certificate.......................................................................... 17
8.04 Consents and Approvals........................................................................ 17
8.05 Good Standing Certificates.................................................................... 17
8.06 Other Closing Documents....................................................................... 17
ARTICLE IX.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
9.01 Warranties True as of Closing Date.............................................................18
9.02 Compliance with Agreements and Covenants......................................................18
9.03 Unistar Certificate........................................................................... 18
9.04 Secretary's Certificate....................................................................... 18
9.05 Good Standing Certificate..................................................................... 18
9.06 Consents and Approvals........................................................................ 18
9.07 Other Closing Documents....................................................................... 18
ARTICLE X.
TERMINATION
10.01 Termination................................................................................... 19
10.02 Effect of Termination and Abandonment......................................................... 19
ARTICLE XI.
MISCELLANEOUS
11.01 Amendment....................................................................................... 19
11.02 No Survival of Representations, Warranties, Covenants and Agreements.............................19
11.03 Notices......................................................................................... 20
11.04 Waivers......................................................................................... 20
11.05 Interpretation.................................................................................. 21
11.06 Applicable Law.................................................................................. 21
11.07 Assignment...................................................................................... 21
11.08 No Third Party Beneficiaries.................................................................... 21
</TABLE>
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<TABLE>
<S> <C>
11.09 Enforcement of the Agreement.................................................................... 21
11.10 Further Assurances.............................................................................. 21
11.11 Severability.................................................................................... 21
11.12 Remedies Cumulative............................................................................. 21
11.13 Entire Understanding............................................................................ 21
11.14 Waiver of Jury Trial............................................................................ 21
11.15 Counterparts.................................................................................... 22
</TABLE>
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LIST OF SCHEDULES
-----------------
Number Description
- ------ -----------
4.01 Due Organization; Foreign Qualification
4.03 Non-Contravention; Consents and Approvals
4.04 USF Options, Warrants, Rights, Convertible Securities
4.06 No Material Adverse Effects or Changes
4.07 Real Property Leases
4.08 Intellectual Property
4.11 Employment Matters
4.13 Litigation
4.14 Compliance with Applicable Laws
4.15 Contracts; No Defaults
4.17 Books and Records
4.18 Related Party Transactions
5.07 Unistar Contracts
v
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STOCK PURCHASE AGREEMENT
AGREEMENT, dated as of September 14, 1998, by and among
UNISTAR FINANCIAL SERVICE CORP., a Delaware corporation ("UNISTAR"), U. S.
FIDELITY HOLDING CORP., a Texas corporation, ("USF") and ROCKFORD PARTNERS,
LTD., incorporated in Tortola, British Virgin Islands, ("ROCKFORD"), the Seller.
W I T N E S E T H :
WHEREAS, the Seller owns all of the issued and outstanding
capital stock of U. S. Fidelity Holding Corp., a Texas corporation ("USF");
WHEREAS, the Seller desires to sell its shares of USF capital
stock (the "USF Shares") to Unistar, and Unistar desires to purchase their USF
Shares, in exchange for shares of Unistar Common Stock, subject to a
recapitalization of Unistar as provided for herein, all pursuant to approval by
the stockholders of Unistar;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto, intending to be legally
bound hereby, agree as follows:
ARTICLE I.
DEFINITIONS
1.01 Definitions. For purposes of this Agreement, the
following terms shall have the meanings set forth in this Section 1.01:
"Affiliates" shall mean the those subsidiaries of U.S.
Fidelity Holding Corp. (U.S. Fidelity Insurance Services, Eagle Premium Finance
Corp., Eagle Claims Corporation and 4635 Partners, Ltd.)
"Agreement" means this Stock Purchase Agreement, as the same
may be amended from time to time in accordance with the terms hereof.
"Unistar" has the meaning set forth in the caption to this
Agreement.
"Unistar Common Stock" has the meaning set forth in Section
2.01 hereof.
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"Unistar Material Adverse Effect" means an effect on or
circumstance involving the business, operations, assets, liabilities, results of
operations, cash flows or condition (financial or otherwise) of Unistar which is
materially adverse to Unistar.
"Unistar Shares" has the meaning set forth in Section 2.01
hereof.
"Unistar Stockholders Meeting" has the meaning set forth in
Section 6.06 hereof.
"Closing" has the meaning set forth in Section 3.01 hereof.
"Closing Date" has the meaning set forth in Section 3.02
hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the U.S. Securities and Exchange
Commission.
"Companies Permits" has the meaning set forth in Section 4.12
hereof.
"Companies" means USF and its subsidiaries.
"Contract" means any written or oral agreement, deed,
contract, license, guaranty or other understanding of any nature to which an
Entity is a party or by which its properties or assets are bound.
"Entity" means any corporation, general partnership, limited
partnership, limited liability company, trust company, joint venture or other
enterprise or association.
"ERISA" means the Employee Retirement Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means United States generally accepted accounting
principles as in effect on the date of this Agreement.
"Governmental Authority" means any government or any agency,
bureau, board, commission, court, department, political subdivision, tribunal or
other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"USF" has the meaning set forth in the first preamble to this
Agreement.
"USF Financial Statements" has the meaning set forth in
Section 4.05(a) hereof.
"USF Interim Financials" has the meaning set forth in Section
4.05(b) hereof.
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"USF Material Adverse Effect" means an effect on or
circumstance involving the business, operations, assets, liabilities, results of
operations, cash flows or condition (financial or otherwise) of USF or its
subsidiaries which is materially adverse to USF taken as a whole.
"USF Shares" has the meaning set forth in the second preamble
to this Agreement.
"Intellectual Property" has the meaning set forth in Section
4.08 hereof.
"USF Affiliates" has the meaning set forth in Section 4.01
hereof.
"USF Affiliates Shares" has the meaning set forth in Section
4.04 hereof.
"Law" means any constitutional provision, statute, law, rule,
regulation, decree, injunction, judgment, order or ruling of any Governmental
Authority.
"Loss" means liabilities, losses, costs, claims, damages
(including consequential damages), penalties and expenses (including attorneys'
fees and expenses and costs of investigation and litigation).
"ROCKFORD" has the meaning set forth in the caption to this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"SEC Documents" means the Caldera Form 10-KSB for the fiscal
year ended December 31, 1997 and Form 10-QSB for the fiscal quarter ended June
30, 1998.
"Seller" has the meaning set forth in the caption to this
Agreement.
"Taxes" means all taxes, assessments and governmental charges
imposed by any federal, state, local or foreign government, taxing authority,
subdivision or agency thereof, including, but not limited to, any withholding,
payroll, employment, custom, duty, sales, any other governmental fee or
assessment, and penalties, in addition to any liability to a third party for
such amounts.
ARTICLE II.
BASIC TRANSACTION
2.01 Purchase and Sale of USF Shares. On the terms and
subject to the conditions set forth in this Agreement, at the Closing, Unistar
shall purchase from the Seller, and the Seller shall sell, transfer, assign,
convey and deliver to Unistar, all right, title and interest in the USF Shares
in exchange for 3,975,000 shares of Common Stock, $.01 par value (the "Unistar
Common Stock") of Unistar (the "Unistar Shares").
3
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ARTICLE III.
CLOSING AND CLOSING DATE
3.01 Closing. Subject to the provisions of ARTICLE X hereof,
the consummation of the transactions contemplated by this Agreement (the
"Closing") will take place at the office of Unistar., at 4635 McEwen Drive,
Dallas, Texas at 10:00 a.m. local time on the first business day after the
satisfaction or waiver of all of the closing conditions set forth in Sections 7
and 8 hereof or at such other place or on such other date as Unistar and the
Seller may agree.
3.02 Closing Date. The date on which the Closing actually
takes place is referred to in this Agreement as the "Closing Date."
3.03 Deliveries at the Closing. At the Closing, (a) the
Seller will deliver to Unistar the various certificates, instruments and
document referred to in ARTICLE VIII hereof, (b) Unistar will deliver to the
Seller the various certificates, instruments and documents referred to in
ARTICLE IX hereof, (c) the Seller will deliver to Unistar stock certificates
representing the USF Shares, endorsed in blank or accompanied by duly executed
assignment documents, and (d) Unistar will deliver to the Seller stock
certificates representing the Unistar Shares in the amounts as set forth on
Schedule 4.04 annexed hereto.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to Unistar as
follows (with all representations and warranties being joint and several, except
those in Sections 4.02, 4.03, 4.17 and 4.18 shall just be several):
4.01 Due Organization; Foreign Qualification. USF and its
wholly-owned subsidiaries, U. S. Fidelity Insurance Services ("USFI"), Eagle
Claims Corp. ("ECC"), Eagle Premium Finance Company ("EPF") and 4635 Partners,
Ltd. (4635"), each is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas, with all requisite corporate
power and authority to own, lease and operate its respective properties and to
carry on its respective business as they are now being owned, leased, operated
and conducted. The jurisdictions in which USFI, ECC EPF and 4635 are qualified
to do business are set forth on Schedule 4.01. USF has no direct or indirect
subsidiaries, either wholly or partially owned, other than USFI, ECC, EPF and
4635 and USFI, ECC, EPF and 4635 has no direct or indirect subsidiaries, either
wholly or partially owned other than USFI which owns directly Great Southern
General Agency, Inc., First Choice Underwriters, Inc., Peak Underwriters, Inc.,
and Advanced Underwriters, Inc. USF holds no voting or management interest in
any Entity other than its subsidiaries.
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4.02 Due Authorization; Enforceability. The Seller has full
power and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby, and has duly and validly executed and
delivered this Agreement. This Agreement constitutes the legal, valid and
binding obligation of the Seller, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, moratorium, reorganization or other laws from
time to time in effect which affect creditors' rights generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.03 Non-Contravention; Consents and Approvals. (a) Except to
the extent set forth on Schedule 4.03, the execution and delivery of this
Agreement by the Seller does not, and the performance by the Seller of its
respective obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under,
result in or give to any person any right of payment or reimbursement,
termination, cancellation, modification or acceleration of, or result in the
creation or imposition of any lien upon any of the assets or properties of the
Seller, USF or its subsidiaries, under any of the terms, conditions or
provisions of (i) the Certificate of Incorporation or By-Laws of USF or its
subsidiaries , or (ii) (x) any Law of any Governmental Authority applicable to
the Seller, USF or its subsidiaries, or any of their respective assets or
properties (including the USF shares), or (y) any contract, agreement or
commitment to which the Seller, USF or its subsidiaries or by which the Seller,
USF or its subsidiaries or any of their respective assets or properties are
bound is a party, excluding from the foregoing clauses (x) and (y) conflicts,
violations, breaches, defaults, terminations, modifications, accelerations and
creations and impositions of liens which would not have an USF Material Adverse
Effect or result in the inability of the Seller to consummate the transactions
contemplated by this Agreement.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required by
the Seller, USF or its subsidiaries in connection with the execution and
delivery of this Agreement or the consummation by the Seller of the transactions
contemplated hereby.
4.04 Capitalization; Rights, Warrants, Options. (a) The
authorized capital stock of USF consists of 1,000,000 shares of Common Stock
[and no shares of Preferred Stock]. On the date hereof, there are issued and
outstanding 100,000 shares of USF Common Stock and [no shares of Preferred
Stock]. All of the issued and outstanding USF Shares are validly issued, fully
paid and non-assessable and the issuance thereof was not subject to preemptive
rights. Schedule 4.04 is a true and complete list of each of the subsidiaries
shareholder, which indicates as of the date hereof, the number of shares of USF
Common Stock held by each such USF shareholder.
(b) There are no shares of USF Common Stock or other equity
securities (whether or not such securities have voting rights) of USF issued or
outstanding or any subscriptions, options, warrants, calls, rights, convertible
securities or other agreements or commitments of any character obligating USF to
issue, transfer or sell any shares of capital stock or other securities (whether
or not such securities have voting rights) of USF. There are no outstanding
contractual
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obligations of USF which relate to the purchase, sale, issuance, repurchase,
redemption, acquisition, transfer, disposition, holding or voting of any shares
of capital stock or other securities of any of the subsidiaries.
(c) The authorized capital stock of USFI consists of 100,000
shares of Common Stock, $1.00 par value, of which 5,000 shares (the "USFI
Shares") are issued and outstanding, and owned of record and beneficially by
USF. There are no shares of USFI Common Stock or other equity securities
(whether or not such securities have voting rights) of USFI issued or
outstanding or any subscriptions, options, warrants, calls, rights, convertible
securities or other agreements or commitments of any character obligating USFI
to issue, transfer or sell any shares of capital stock or other securities
(whether or not such securities have voting rights) of USFI. There are no
outstanding contractual obligations of USFI which relate to the purchase, sale,
issuance, repurchase, redemption, acquisition, transfer, disposition, holding or
voting of any shares of capital stock or other securities of USFI.
(d) The authorized capital stock of ECC consists of 100,000
shares of Common Stock, $0.01 par value, of which 1,000 shares (the "ECC
Shares") are issued and outstanding, and owned of record and beneficially by
USF. There are no shares of ECC Common Stock or other equity securities (whether
or not such securities have voting rights) of ECC issued or outstanding or any
subscriptions, options, warrants, calls, rights, convertible securities or other
agreements or commitments of any character obligating ECC to issue, transfer or
sell any shares of capital stock or other securities (whether or not such
securities have voting rights) of ECC. There are no outstanding contractual
obligations of ECC which relate to the purchase, sale, issuance, repurchase,
redemption, acquisition, transfer, disposition, holding or voting of any shares
of capital stock or other securities of ECC.
(e) The authorized capital stock of EPF consists of 100,000
shares of Common Stock, $0.01 par value, of which 1,000 shares (the "EPF
Shares") are issued and outstanding, and owned of record and beneficially by
USF. There are no shares of EPF Common Stock or other equity securities (whether
or not such securities have voting rights) of EPF issued or outstanding or any
subscriptions, options, warrants, calls, rights, convertible securities or other
agreements or commitments of any character obligating EPF to issue, transfer or
sell any shares of capital stock or other securities (whether or not such
securities have voting rights) of EPF. There are no outstanding contractual
obligations of USF which relate to the purchase, sale, issuance, repurchase,
redemption, acquisition, transfer, disposition, holding or voting of any shares
of capital stock or other securities of EPF.
4.05 Financial Statements; Undisclosed Liabilities; Other
Documents. (a) For purposes of this Agreement, "USF Financial Statements" shall
mean the audited consolidated financial statements of USF for the years ended
December 31, 1997 and 1996 (the "Audited USF Financial Statements") and
unaudited consolidated financial statements of USF for the quarters ended June
30, 1998 and 1997 (the "Unaudited USF Financial Statements") (including all
notes thereto), consisting of the balance sheets at such dates and the related
statements of income, shareholders' equity and cash flows for the periods then
ended. The USF Financial Statements have been prepared in accordance
6
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with generally accepted accounting principles consistently applied (except as
may be indicated therein or in the notes thereto) and present fairly the
financial position of the Companies as at the dates thereof and the results of
operations and cash flows of the Companies for the period covered thereby
(subject, in case of the Unaudited USF Financial Statements, to normal,
recurring year-end audit adjustments), and are substantially in accordance with
the financial books and records of USF and its affiliates.
(b) Neither USF nor its affiliates has any liabilities or
obligations of any nature, whether accrued, absolute, contingent, determined,
determinable or otherwise, which individually or in the aggregate, nor any
existing condition, situation or set of circumstances which, could be reasonably
expected to have a USF Material Adverse Effect except (i) as set forth on or
reflected in the USF Financial Statements as of and for the period ended June
30, 1998 (the "USF Interim Financials") or (ii) liabilities and obligations
incurred by the Companies since June 30, 1998 in the ordinary and usual course
of their business.
4.06 No Material Adverse Effects or Changes. Except as
contemplated by this Agreement, since June 30, 1998, neither USF nor its
affiliates has suffered any damage, destruction or Loss to any of its respective
assets or properties (whether or not covered by insurance) which is having or
could reasonably be expected to have a USF Material Adverse Effect. Except as
disclosed in the Interim Financials or on Schedule 4.06 since June 30, 1998, USF
has not nor has permitted or caused its affiliates to have:
(a) declared, set aside or paid any dividend or other
distribution in respect of its capital stock;
(b) made any direct or indirect redemption, purchase or other
acquisition of any shares of its capital stock or made any payment to any of its
shareholders (in their capacity as shareholders);
(c) made any amendment to any material term of any of its
outstanding securities;
(d) issued or sold any shares of its capital stock or any
options, warrants or other rights to purchase any such shares or any securities
convertible into or exchangeable for such shares or taken any action to
reclassify or recapitalize or split up its capital stock;
(e) incurred any debt, guaranteed any indebtedness or forgiven
any material or guaranteed any indebtedness, or mortgaged, pledged or subjected
to any lien, lease, security interest, encumbrance or other restriction, any of
its material properties or assets except in the ordinary and usual course of its
business and consistent with past practice;
(f) had any change in any method of accounting or accounting
practice, except for any such change required by reason of a concurrent change
in GAAP; or
(g) made any arrangement, agreement or undertaking to do any
of the foregoing.
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4.07 Title
(a) Personal Property. Except for properties and assets which
have been sold or otherwise disposed of in the ordinary course of business since
June 30, 1998, USF has good, valid, marketable, legal and beneficial title to
all of the properties and assets reflected in the Interim Financials, free and
clear of all liens, security interests, mortgages, pledges, restrictions, or
other encumbrances of any nature whatsoever, whether absolute, legal, equitable,
accrued, contingent or otherwise. There are no outstanding options, warrants,
commitments, agreements or any other rights of any character, entitling any
person or entity to acquire any interest in all, or any part of such properties
and assets.
(b) Real Property Leases. Schedule 4.07 sets forth a complete
and correct list of all real property leases to which USF or its affiliates is a
party, whether as lessor or lessee. All leases listed on such Schedule are valid
and subsisting and in full force and effect, and all rent and other payments now
due have been paid. USF or its affiliates enjoys and is in peaceful and
undisturbed possession under each lease so listed in which it is a lessee.
Neither of the Companies has received any notice of, and to the knowledge of the
Sellers, there does not exist, any event of default or event, occurrence or act
which, with the giving of notice or the lapse of time or both, would become a
default under any such lease and, neither of the Companies has violated any of
the terms or conditions under any such lease in any material respect.
4.08 Intellectual Property. Schedule 4.08 sets forth a
complete and correct list of all of the trademarks, trade names, service marks,
and patents, material to the Companies (including any registrations of or
pending applications for any of the foregoing) ("Intellectual Property") used by
the Companies in the conduct of their business. All of such Intellectual
Property is owned by the Companies free and clear of all liens, and is not
subject to any license, royalty or other agreement. None of such Intellectual
Property has been or is the subject of any pending or, to the Seller's
knowledge, threatened litigation or claim of infringement. No license or royalty
agreement to which either of the Companies is a party is in breach or default by
any party thereto except where such breach or default would not have a USF
Material Adverse Effect or is the subject of any notice of termination given or,
to the Sellers' knowledge, threatened.
4.09 Employment Matters. Schedule 4.11 sets forth a complete
and correct list of all full-time and part-time employees of the Companies,
including the position, salary, date of hire and any arrangements with such
employees, written or oral. Except to the extent set forth on Schedule 4.11,
neither of the Companies maintains any employee benefit plan of any kind for any
of its directors, officers, consultants, employees or former employees, whether
or not such plan subject to ERISA.
4.10 Tax Returns and Audits. Each of the Companies has duly
filed all federal, state, local and foreign tax returns, reports and forms
required to be filed by it, and has duly paid (except for Taxes being contested
in good faith) or made adequate provisions of its books in
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accordance with GAAP for the payment of all Taxes which have been incurred or
are due and payable, and it will on or before the Closing make adequate
provision on its books in accordance with GAAP for all Taxes payable for any
period through the Closing Date for which no return is required to be filed
prior to the Closing Date. The federal and state income tax returns of the
Companies have never been examined by the Internal Revenue Service or state
taxing authority, respectively, nor has either of the Companies granted or given
any extensions or waivers of the statute of limitations with respect to any such
federal and state income tax returns. The Seller is not aware of any basis for
the assertion of any deficiency against either of the Companies for Taxes,
which, if adversely determined, would have a USF Material Adverse Effect.
4.11 Litigation. Except as set forth on Schedule 4.13, there
are no actions, suits, arbitrations, regulatory proceedings or other litigation,
proceedings or governmental investigations pending or, to the Sellers'
knowledge, threatened against or affecting either of the Companies any of its
respective officers or directors in their capacity as such, or any of its
respective property or business. Neither of the Companies is subject to any
order, judgment, decree, injunction, stipulation or consent order of or with any
court or other Governmental Authority, other than orders of general
applicability.
4.12 Compliance with Applicable Laws
(a) Schedule 4.14 sets forth a complete and correct list of
all permits, licenses, variances, exemptions, orders and approvals of all
Governmental Authorities which either of the Companies holds which are required
in the operation of its business (the "Companies Permits"). The Companies are in
compliance with the terms of the Companies Permits, except where the failure so
to comply would not have an USF Material Adverse Effect. To the knowledge of the
Sellers, neither of the Companies is in violation of any law, ordinance or
regulation of any Governmental Authority, including insurance and labor laws and
regulations, except for possible violations (excluding violations under the
relevant insurance laws) which individually and in the aggregate do not, and,
insofar as reasonably can be foreseen the Seller, will not in the future have an
USF Material Adverse Effect. Each of the Companies has conducted and now is
conducting its business and operation in compliance with all applicable domestic
and foreign laws, rules, regulations, judgments and court or administrative
orders, permits and approvals (including, without limitation, state insurance
departments).
4.13 Contracts; No Defaults. Schedule 4.15 sets forth a
complete and correct list of all Contracts to which either of the Companies is a
party or by which it or any of its assets or properties is bound and which
provide for payment(s) or services of not less than $25,000. Neither of the
Companies nor, to the knowledge of the Seller, any other party thereto is in
breach or violation of, or in default in the performance or observance of any
term or provision of, and no event has occurred or by reason of the transactions
contemplated herein, would occur which, with notice or lapse of time or both,
could be reasonably expected to result in a default under, any Contract to which
either of the Companies is a party or by which it or any of its assets or
properties is bound. Neither of the Companies is required to give any notice to
any party subject to any of the Contracts regarding this Agreement or the
transactions contemplated hereby.
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4.14 Fees of Brokers, Finders and Financial Advisors. Neither
the Seller nor either of the Companies has employed any broker, finder or
investment banker or incurred any liability for any brokerage or investment
banking fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
4.15 Books and Records. Each of the Companies has maintained
and preserved complete and accurate books and records for its material
transactions. The minute books of the Companies include complete and correct
minutes of all meetings of its directors, committees and shareholders. USF and
its affiliates Certificates of Incorporation and By-laws previously delivered to
Unistar are current and complete. At the Closing Date, all of those books and
records will be in the possession of USF. Schedule 4.17 sets forth a complete
and correct list of (i) all officers and directors of USFI, ECC, EPF and 4635
and (ii) the name and address of each bank, trust company or other financial
institution in which USF or its affiliates has an account and the names of all
persons authorized to draw thereon as well as all powers of attorney granted by
USF or its affiliate.
4.16 Related Party Transactions. Schedule 4.18 sets forth a
complete and correct list of all transactions, loans, claims, or agreements
between or involving either of the Companies and an officer, director, employee,
consultant or stockholder of either of the Companies (or an affiliate of any
such Person) since June 30, 1998 (excluding employment agreements included on
another Schedule to this Agreement and benefits given to all employees of the
Companies). All transactions and agreements listed on Schedule 4.18 were on
terms to the Companies no less favorable than what they would have had with
unrelated third parties.
4.17 Due Diligence. The Seller has undertaken all due
diligence of Unistar regarding the business and corporate affairs of Unistar
which he or she believes is appropriate for this transaction, including review
of the Unistar SEC Filings. In evaluating the suitability of the transaction
contemplated by this Agreement, the Seller has not relied upon any
representations or other information (whether verbal or written), other than as
contained in this Agreement or in any documents or written responses to
questions furnished to the Seller by Unistar.
4.18 Investment. The Seller is acquiring its portion of the
Unistar Shares for its own account, and not with a view to distribution thereof.
Seller is aware that the Unistar Shares will not be registered under the
Securities Act, is an "accredited investor," as such term is defined in
Regulation D of the Securities Act and aware of the restrictions under the
Securities Act of the sale or other transfer of the Unistar Shares.
4.19 General Representation and Warranty. Neither this
Agreement nor any schedule attached hereto or other documents and written
information furnished by or on behalf of the Seller regarding the Seller or the
Companies to Unistar in connection with this Agreement contains any untrue
statement of material fact or omits to state any material fact necessary to make
the statements contained herein or therein not misleading.
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ARTICLE I.
REPRESENTATIONS AND WARRANTIES OF UNISTAR
Unistar hereby represents and warrants to the Seller as
follows:
5.01 Due Organization; Foreign Qualification. Unistar is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted. Unistar is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the nature of the properties
owned, leased or operated by it and the business transacted by it require such
qualification.
5.02 Due Authorization; Enforceability. Unistar has full
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Unistar of this Agreement has been duly and validly authorized and approved by
the Board of Directors of Unistar, and no other actions or proceedings on the
part of Unistar are necessary to authorize this Agreement other than approval of
the Unistar Stockholders as set forth in Section 6.06 hereof. Subject to
obtaining the necessary approval of the Unistar Stockholders, this Agreement
constitutes legal, valid and binding obligations of Unistar, enforceable in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization or other laws from time to time in effect which affect creditors'
rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.03 Non-Contravention; Consents and Approvals. (a) The
execution and delivery of this Agreement by Unistar does not, and the
performance by Unistar of its obligations hereunder and the consummation of the
transactions contemplated hereby will not, conflict with, result in a violation
or breach of, constitute (with or without notice or lapse of time or both) a
default under, result in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any lien upon any of the assets or
properties of Unistar under, any of the terms, conditions or provisions of (i)
the Certificate of Incorporation or Bylaws Unistar, or (ii) subject to the
taking of the actions described in paragraph (b) of this Section, (x) any Laws
of any Governmental Authority, or (y) any contract, agreement or commitment to
which Unistar is a party or by which Unistar or any of its assets or properties
is bound, excluding from the foregoing clauses (x) and (y) conflicts,
violations, breaches, defaults, terminations, modifications, accelerations and
creations and impositions of liens which would not have a Unistar Material
Adverse Effect or result in the inability of Unistar to consummate the
transactions contemplated by this Agreement.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Authority is required
by Unistar in connection with the execution and delivery of this Agreement or
the consummation by Unistar of the transactions contemplated hereby, the failure
to obtain which would have a Unistar Material Adverse Effect or result in the
inability of
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Unistar to consummate the transactions contemplated hereby, except for the
filing of a Certificate of Amendment to its Certificate of Incorporation with
the Secretary of State of Delaware.
5.04 Capitalization. (a) The authorized capital stock of
Unistar consists of 5,000,000 shares of Preferred Stock, $.01 par value per
share, none of which is issued or outstanding, and 50,000,000 shares of Common
Stock, $.01 par value per share, of which 20,000,000 shares are issued and
outstanding. All of the issued and outstanding shares of Unistar Common Stock
are, and the Unistar Shares to be issued to the Sellers will be, validly issued,
fully paid and non-assessable and the issuances of the Unistar Shares will not
be subject to preemptive rights.
(b) Except for the outstanding shares of Unistar Common Stock
and the Unistar Shares to be issued pursuant to this Agreement, there are no
other equity securities (whether or not such securities have voting rights) of
Unistar issued or outstanding or any subscriptions, options, warrants, calls,
rights, convertible securities or other agreements or commitments of any
character obligating Unistar to issue, transfer or sell any shares of capital
stock or other securities (whether or not such securities have voting rights) of
Unistar. There are no outstanding contractual obligations of Unistar which
relate to the purchase, sale, issuance, repurchase, redemption, acquisition,
transfer, disposition, holding or voting of any shares of capital stock or other
securities of Unistar other than the Unistar Shares.
5.05 Financial Statements. (a) For purposes of this Agreement,
"Unistar Financial Statements" shall mean the audited financial statements of
Unistar for the years ended December 31, 1996 and 1997 and the unaudited
financial statements of Unistar for the quarter ended June 30, 1998 (including
all notes thereto) which are included in the SEC Documents consisting of the
balance sheets at such dates and the related statements of operations,
stockholders' equity and cash flows for the periods then ended. The Unistar
Financial Statements have been prepared in accordance with GAAP consistently
applied (except as may be indicated therein or the notes thereto) and present
fairly the financial position of Unistar as at the dates thereof and the results
of operations and cash flows of Unistar for the periods covered thereby
(subject, in case of the unaudited financial statements to, normal, recurring
year-end audit adjustments), and are substantially in accordance with the
financial books and records of Unistar.
(b) There are no liabilities of Unistar of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
which could reasonably be expected to result in such a liability other than (i)
liabilities reflected or reserved against in the Unistar Financial Statements,
(ii) liabilities incurred after June 30, 1998 in the ordinary course of business
consistent with past practice, which individually or in the aggregate, would not
have a Unistar Material Adverse Effect, and (iii) liabilities under this
Agreement or disclosed pursuant to this Agreement.
5.06 Commission Filings. Unistar is subject to filing periodic
reports with the Commission pursuant to Section 15(d) of the Exchange Act. Since
January 1, 1996 Unistar has filed all forms, reports and other documents that it
was required to file with the Commission pursuant to Section 15(d) of the
Exchange Act, all of which complied when filed, in all material respects, with
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all applicable requirements of the Exchange Act. Unistar has heretofore
delivered to the Seller complete and correct copies of the SEC Documents.
5.07 No Material Adverse Effects or Changes. Except as set
forth in the SEC Documents, since June 30, 1998, Unistar has had no significant
operations or business activities. Except as disclosed in the SEC Documents, or
as contemplated by this Agreement, since June 30, 1998 Unistar has not suffered
any material adverse change involving its business, operations, assets,
liabilities, results of operations, cash flows or condition (financial or
otherwise) which would have a Unistar Material Adverse Effect. Unistar is not a
party to any Contract, except to the extent set forth on Schedule 5.07.
5.08 Tax Returns and Audits. Unistar has duly filed all
federal, state, local and foreign tax returns, reports and forms required to be
filed by it, except where the failure to so file would not have a Unistar
Material Adverse Effect. Unistar has duly paid (except for Taxes being contested
in good faith) or made adequate provisions on their books in accordance with
GAAP for the payment of all Taxes which have accrued or are due and payable, and
Unistar will on or before the Closing Date make adequate provision on its books
in accordance with GAAP for all Taxes payable for any period through the Closing
Date for which no return is required to be filed prior to such date. Since
January 1, 1996, the federal and state income tax returns of Unistar have not
been examined by the Internal Revenue Service or state taxing authority,
respectively, nor has Unistar granted or given any extensions or waivers of the
statute of limitations with respect to any such federal and state income tax
returns. Unistar is not aware of any basis for the assertion of any deficiency
against Unistar for Taxes, which, if adversely determined, would have a Unistar
Material Adverse Effect.
5.09 Litigation. There are no actions, suits, arbitrations,
regulatory proceedings or other litigation, proceedings or governmental
investigations pending or, to Unistar's knowledge, threatened against or
affecting Unistar or any of its officers or directors in their capacity as such,
or any of its respective properties or businesses. Unistar is not subject to any
Law with any Governmental Authority, other than orders of general applicability.
There are no pending or, to Unistar's knowledge, threatened claims against any
director, officer, employee or agent of Unistar or any other Person which could
give rise to any claim for indemnification against Unistar.
5.10 Compliance with Applicable Laws. To Unistar's knowledge,
Unistar is not in violation of any Law of any Governmental Authority, except for
possible violations which individually and in the aggregate do not, and, insofar
as reasonably can be foreseen by Unistar, will not in the future have a Unistar
Material Adverse Effect.
5.11 Fees of Brokers, Finders and Investment Bankers. Neither
Unistar nor any officer, director, or employee of Unistar has employed any
broker, finder or investment banker or incurred any liability for any brokerage
or investment banking fees, commissions or finders' fees in connection with the
transactions contemplated by this Agreement.
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5.12 General Representation of Warranty. Neither this
Agreement nor any schedule attached hereto or other documents and written
information furnished by Unistar to the Seller in connection with this Agreement
contains any untrue statement of material fact or omits to state any material
fact necessary to make the statements contained herein or therein not
misleading.
ARTICLE VI.
COVENANTS
6.01 Implementing Agreement. Subject to the terms and
conditions hereof, each party hereto shall use its best efforts to take all
action required of it to fulfill its obligations under the terms of this
Agreement and to facilitate the consummation of the transactions contemplated
hereby.
6.02 Access to Information and Facilities. From and after the
date of this Agreement, the Seller shall cause Unistar and its representatives
to obtain access during normal business hours and upon reasonable notice to all
of the facilities, properties, books, Contracts and records of the Companies,
shall cause officers and employees of the Companies to be available to Unistar
or its representatives, and shall furnish with any and all information
concerning the Companies, which Unistar or its representatives reasonably
request. Unistar shall provide to the Sellers access to information regarding
Unistar similar to that which is to be afforded to Unistar in this Section.
6.03 Confidentiality. Except as otherwise required by Law or
in the performance of obligations under this Agreement, any nonpublic
information received by a party or its advisors, agents or representatives from
the other party shall be kept confidential and shall not be used or disclosed
for any purpose other than in furtherance of the transactions contemplated by
this Agreement. The obligation of confidentiality shall not extend to
information which: (a) is or becomes generally available to the public other
than as a result of a disclosure by a party in violation of this Agreement; (b)
was in the lawful possession of a party prior to its receipt from the other
party; or (c) becomes available to a party on a non-confidential basis from a
source other than a party to this Agreement, provided such source is not known
to be in violation of a confidentiality agreement. Upon termination of this
Agreement without consummation of the transactions contemplated herein, each
party shall, upon request, promptly return or destroy any confidential
information received from the other party. The covenants of the parties
contained in this Section 6.03 shall survive any termination of this Agreement
but shall terminate at the Closing, if it occurs.
6.04 Preservation of Business. (a) From the date of this
Agreement until the Closing Date, the Companies and Unistar shall operate only
in the ordinary and usual course of business consistent with past practice, and
shall use reasonable commercial efforts to (a) preserve intact their respective
business organizations, (b) with respect to the Companies, preserve the good
will and advantageous relationships with customers, suppliers, independent
contractors, agents, employees and other persons material to the operation of
their respective business, and (c) not permit
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any action or omission which would cause any of the representations or
warranties contained herein to become inaccurate or any of the covenants to be
breached in any material respect.
(b) The Seller further covenants that prior to the Closing,
neither of the Companies shall, without the prior written consent of Unistar
(which shall not be unreasonably withheld):
(i) take any action, incur any obligation or enter
into or authorize any contract or transaction other than in the
ordinary course of business;
(ii) make any changes in its accounting systems,
policies, principles or practices except as may be required by
applicable law or GAAP;
(iii) authorize for issuance, issue, sell, deliver or
agree or commit to issue, sell or deliver (whether through the issuance
or granting of options, warrants, convertible or exchangeable
securities, commitments, subscriptions, rights to purchase or
otherwise) any shares of its capital stock or any other securities, or
amend any of the terms of any such securities;
(iv) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock, or redeem or otherwise
acquire any of its securities;
(v) make any borrowings, incur any debt (other than
trade payables in the ordinary course of business), or assume,
guarantee, endorse or otherwise become liable (whether directly,
contingently or otherwise) for the obligations of any other person in
an aggregate principal amount exceeding $25,000, or make any
unscheduled payment or repayment of principal in respect of any long
term debt.
(vi) make any new loans, advances or capital
contributions to, or new investments in, any other person, other than
in connection with travel and expense reimbursement of employees in the
ordinary course of business;
(vii) enter into, adopt, amend in any material
respect or terminate any contract, agreement, lease, commitment or
arrangement;
(viii) acquire, lease or encumber any assets outside
the ordinary course of business; or
(ix) enter into any agreement, understanding or
commitment with respect to any of the foregoing actions.
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6.05 Consents and Approvals. Subject to the terms and
conditions provided herein, each of the parties hereto shall use reasonable
commercial efforts to obtain all consents, approvals, certificates and other
documents required in connection with the performance by it of this Agreement
and the consummation of the transactions contemplated hereby. As soon as
practicable after the date hereof, each of the parties hereto shall make all
filings, applications, statements and reports to all Governmental Authorities
and other Entities which are required to be made prior to the Closing Date
pursuant to any applicable Law or Contract in connection with this Agreement and
the transactions contemplated hereby.
6.06 Unistar Stockholder Approval. As soon as practicable
after the date hereof, Unistar will obtain approval of this agreement by a
majority (51%) or more of its' shareholders.
6.07 Publicity. Prior to issuing any public announcement or
statement with respect to the entry into this Agreement or the transactions
contemplated hereby and prior to making any filing with Governmental Authority,
Unistar and the Seller will, subject to their respective legal obligations,
consult with each other and will allow each other to review the contents of any
such public announcement or statement and any such filing.
6.08 Fees and Expenses. The Seller shall cause the Companies
to pay all fees and expenses of the Companies and of Unistar incurred in
connection with the transactions contemplated herein, including, but not limited
to, filing, printing, due diligence expenses, mailing, transfer agent, attorneys
and accounting fees.
6.09 Periodic Reports. Until the Closing Date, Unistar shall
furnish to the Seller all filings made by Unistar with the Commission and shall
solicit comments with respect thereto, in each case at least two business days
(or as soon prior thereto as is practicable) prior to the time of such filings
and the time of such mailings of reports which refer to the Companies or this
Agreement.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE CONSUMMATION OF THE MERGER
The respective obligations of each party to consummate the
purchase and sale of the USF Shares are subject to the fulfillment at or before
the Closing of each of the following conditions:
7.01 Actions or Proceedings. No preliminary or permanent
injunction or other order by any federal or state court preventing consummation
of the purchase and sale of the USF Shares shall have been issued and shall be
continuing in effect, and the transactions contemplated herein shall not be
prohibited under any applicable federal or state law or regulation.
7.02 Approval of Merger. The Unistar stockholders shall have
approved this Agreement and the other items specified in Section 6.06 hereof at
the Unistar Stockholders Meeting.
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ARTICLE VIII.
CONDITIONS PRECEDENT TO OBLIGATIONS
OF UNISTAR
The obligations of Unistar to consummate the transactions
contemplated herein are subject to the fulfillment at or before the Closing of
each of the following conditions:
8.01 Warranties True as of Closing Date. The
representations and warranties of the Seller contained herein shall be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date.
8.02 Compliance With Agreements and Covenants. The Seller
and the Companies shall have performed and complied with in all material
respects all of their covenants, obligations and agreements contained in this
Agreement to be performed and complied with by them on or prior to the Closing
Date.
8.03 Seller's Certificate. The Seller and the Chief
Executive Officer of the Companies each shall have delivered to Unistar a
certificate, dated the Closing Date, certifying that each of the conditions
specified in Section 8.01 and Section 8.02 hereof are satisfied in all respects.
8.04 Consents and Approvals. Unistar shall have received
written evidence reasonably satisfactory to it that all consents and approvals
required on behalf of the Seller and the Companies for the consummation of the
transactions contemplated hereby have been obtained, and all required filings
have been made.
8.05 Good Standing Certificates. The Seller shall have
delivered to Unistar at the Closing certificates of good standing and tax status
from the State of Texas, as to USF and its affiliates, which certificates shall
be dated a date not more than five (5) business days prior to the Closing Date.
8.06 Other Closing Documents. Unistar shall have received
such other agreements and instruments as Unistar shall reasonably request, in
each case in form and substance reasonably satisfactory to Unistar.
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ARTICLE IX.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER
The obligations of the Seller to consummate the transaction
are subject to the satisfaction or waiver by Unistar of the following conditions
precedent on or before the Closing:
9.01 Warranties True as of Closing Date. The representations
and warranties of Unistar contained herein shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though made by Unistar on and as of the Closing Date.
9.02 Compliance with Agreements and Covenants. Unistar shall
have performed and complied with in all material respects all of its covenants,
obligations and agreements contained in this Agreement, to be performed and
complied with by it on or prior to the Closing Date.
9.03 Unistar Certificate. An executive officer of Unistar
shall have delivered to the Seller a certificate, dated the Closing Date,
certifying that each of the conditions specified in Section 9.01 and Section
9.02 hereof are satisfied in all respects.
9.04 Secretary's Certificate. Unistar shall have delivered to
the Seller a certificate of the duly authorized Secretary of Unistar, dated the
Closing Date, certifying resolutions of the Unistar Board of Directors and
stockholders authorizing the execution, delivery and performance of this
Agreement, and the other transactions on behalf of Unistar, as contemplated
herein.
9.05 Good Standing Certificate. Unistar shall have delivered
to the Seller at the Closing (a) a certificate of good standing from the State
of Delaware as to Unistar, (b) a certified Certificate of Amendment to its
Certificate of Incorporation setting forth the amendments adopted at the Unistar
Stockholders Meeting, which certificates shall be dated a date not more than
five business days prior to the Closing Date.
9.06 Consents and Approvals. The Seller shall have received
written evidence reasonably satisfactory to them that all consents and approvals
required for the consummation of the transactions contemplated hereby by Unistar
have been obtained, and all required filings have been made.
9.07 Other Closing Documents. The Seller shall have received
such other agreements and instruments as the Sellers shall reasonably request,
in each case in form and substance reasonably satisfactory to the Seller.
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ARTICLE X.
TERMINATION
10.01 Termination. This Agreement may be terminated and the
purchase and sale of the USF Shares may be abandoned at any time prior to the
Closing Date, whether before or after approval at the Unistar Stockholders
Meeting:
(a) by mutual written consent of the Seller and the Board of
Directors of Unistar;
(b) by either Unistar or the Seller, by written notice to the
other, if (i) the Closing Date shall not have occurred on or before November 15,
1998 or (ii) any Governmental Authority shall have issued an order, judgment or
decree (other than a temporary restraining order) restraining, enjoining or
otherwise prohibiting the sale of the USF Shares and such order, judgment or
decree shall have become final and non-appealable; provided, however, that the
right to terminate this Agreement (X) under clause (i) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Closing to occur on or before
such date or (Y) under clause (ii) shall not be available to any party unless
such party shall have used all reasonable efforts to remove such order, judgment
or decree.
10.02 Effect of Termination and Abandonment. In the event of
termination of this Agreement and abandonment of the purchase and sale of the
USF Shares pursuant to this ARTICLE X, no party hereto (or any of its directors,
officers or stockholders) shall have any liability or further obligation to any
other party to this Agreement other than the obligations of Section 6.03 hereof,
except that nothing herein shall relieve any party from liability for any
willful breach of this Agreement.
ARTICLE XI.
MISCELLANEOUS
11.01 Amendment. This Agreement may be amended, modified,
supplemented or terminated (in accordance with Article X), but only by a writing
executed by Unistar and the Seller.
11.02 No Survival of Representations, Warranties, Covenants
and Agreements. None of the representations, warranties, covenants and
agreements contained in this Agreement or in any instrument delivered in
connection herewith shall survive the Closing.
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11.03 Notices. Any notice, request, instruction or other
document to be given hereunder by a party hereto shall be in writing and shall
be deemed to have been given, (i) when received if given in person, (ii) on the
date of transmission if sent by telex, facsimile or other wire transmission or
(iii) three business days after being deposited in the U.S. mail, certified or
registered mail, postage prepaid:
(a) If to the Seller:
Rockford Partners, Ltd.
P.O. Box HM 2257
Hamilton M JX, Bermuda
Attn: Deborah L. Patterson, Authorized Representative
Facsimile No. (441) 292-1373
with a copy to:
(b) If to Unistar:
Unistar Financial Service Corp.
4635 McEwen Road
Dallas, Texas 75244
Attention: Marc A. Sparks, Chairman
Facsimile No: (972) 702-0800
with a copy to:
Vinson & Elkins, L.L.P.
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
Attention: Rodney D. Moore, Jr.
Facsimile No.: (214) 999-7781
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
11.04 Waivers. The failure of a party hereto at any time or
times to require performance of any provision hereof shall in no manner affect
its right at a later time to enforce the same. No waiver by a party of any
condition or of any breach of any term, covenant, representation or warranty
contained in this Agreement shall be effective unless in writing, and no waiver
in any one or more instances shall be deemed to be a further or continuing
waiver of any such condition or breach in other instances or a waiver of any
other condition or breach of any other term, covenant, representation or
warranty.
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11.05 Interpretation. The headings preceding the text of
ARTICLES and Sections included in this Agreement and the headings to Schedules
attached to this Agreement are for convenience only and shall not be deemed part
of this Agreement or be given any effect in interpreting this Agreement. The use
of the masculine, feminine or neuter gender herein shall not limit any provision
of this Agreement.
11.06 Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Texas without giving effect to the principles of conflicts of law thereof.
11.07 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs and administrators; provided, however, that no assignment of any
rights or obligations shall be made by any party without the prior written
consent of the other parties hereto.
11.08 No Third Party Beneficiaries. This Agreement is solely
for the benefit of the parties hereto and, to the extent provided herein, and
their respective directors, officers, employees, agents and representatives, and
no provision of this Agreement shall be deemed to confer upon third parties any
remedy, claim, liability, reimbursement, cause of action or other right.
11.09 Enforcement of the Agreement. The parties hereto agree
that irreparable damage would result in the event that any provision of this
Agreement is not performed in accordance with specific terms or is otherwise
breached. It is accordingly agreed that the parties hereto will be entitled to
equitable relief including an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof.
11.10 Further Assurances. Upon the request of Unistar, the
Seller will on and after the Closing Date execute and deliver to Unistar such
other documents, releases, assignments and other instruments as may be required
to effectuate completely the transactions contemplated by this Agreement.
11.11 Severability. If any provision of this Agreement shall
be held invalid, illegal or unenforceable, the validity, legality or
enforceability of the other provisions hereof shall not be affected thereby, and
there shall be deemed substituted for the provision at issue a valid, legal and
enforceable provision as similar as possible to the provision at issue.
11.12 Remedies Cumulative. The remedies provided in this
Agreement shall be cumulative and shall not preclude the assertion or exercise
of any other rights or remedies available by law, in equity or otherwise.
11.13 Entire Understanding. This Agreement sets forth the
entire agreement and understanding of the parties hereto and supersedes all
prior agreements, arrangements and understandings among the parties hereto,
including the Letter of Intent, dated August 18, 1998.
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11.14 Waiver of Jury Trial. Each party hereto waives the right
to a trial by jury in any dispute in connection with the transactions
contemplated by this Agreement, and agrees to take any and all action necessary
or appropriate to effect such waiver.
11.15 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered on the date first above written.
UNISTAR FINANCIAL SERVICE CORP.
By: /s/ MARC A. SPARKS
------------------------------------
Marc A. Sparks
U.S. FIDELITY HOLDING CORP.
By: /s/ F. JEFFREY NELSON
------------------------------------
F. Jeffrey Nelson
ROCKFORD PARTNERS, LTD.
By: /s/ DEBORAH L. PATTERSON
------------------------------------
Deborah L. Patterson
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