EXHIBIT 1
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AGREEMENT AND PLAN OF MERGER
Among
DMA HOLDINGS, INC.,
DIVERSE MEDIA ACQUISITIONS, INC.
and
AUDIO COMMUNICATION NETWORK, INC.
Dated as of June 5, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER
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SECTION 1.01. The Merger............................................... 1
SECTION 1.02. Effective Time; Closing.................................. 2
SECTION 1.03. Effect of the Merger..................................... 2
SECTION 1.04. Articles of Incorporation; By-laws....................... 2
SECTION 1.05. Directors and Officers................................... 2
SECTION 1.06. Effect on Capital Stock.................................. 3
SECTION 1.07. Payment for Company Common Stock......................... 3
SECTION 1.08. Employee Stock Options................................... 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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SECTION 2.01. Organization and Qualification; Subsidiaries............. 5
SECTION 2.02. Articles of Incorporation and By-laws.................... 6
SECTION 2.03. Capitalization........................................... 6
SECTION 2.04. Authority Relative to this Agreement..................... 7
SECTION 2.05. No Conflict; Required Filings and Consents............... 8
SECTION 2.06. Compliance............................................... 8
SECTION 2.07. SEC Filings; Financial Statements........................ 8
SECTION 2.08. Absence of Certain Changes or Events..................... 9
SECTION 2.09. Absence of Litigation.................................... 10
SECTION 2.10. Employee Benefit Plans................................... 10
SECTION 2.11. Labor Matters............................................ 13
SECTION 2.12. Recommendation of Board of Directors; Vote Required...... 14
SECTION 2.13. Opinion of Financial Advisor............................. 14
SECTION 2.14. Accuracy of Information Supplied......................... 14
SECTION 2.15. Proxy Statement.......................................... 14
SECTION 2.16. Title to, Condition and Sufficiency of Assets............ 15
SECTION 2.17. Trademarks, Patents and Copyrights....................... 16
SECTION 2.18. Taxes.................................................... 16
SECTION 2.19. Environmental Matters.................................... 17
SECTION 2.20. Contracts and Commitments................................ 18
SECTION 2.21. Governmental Licenses and Permits........................ 19
SECTION 2.22. Affiliate Transactions................................... 19
SECTION 2.23. Brokers.................................................. 19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
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SECTION 3.01. Corporate Organization................................... 20
SECTION 3.02. Authority Relative to This Agreement..................... 20
SECTION 3.03. No Conflict; Required Filings and Consents............... 20
SECTION 3.04. Proxy Statement.......................................... 21
SECTION 3.05. Brokers.................................................. 21
SECTION 3.06. Accuracy of Information Supplied......................... 21
SECTION 3.07. Trust Organization....................................... 21
ARTICLE IV
CONDUCT OF BUSINESS PENDING
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THE MERGER
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SECTION 4.01. Conduct of Business by the Company Pending the Merger.... 22
ARTICLE V
ADDITIONAL AGREEMENTS
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SECTION 5.01. Stockholders' Meeting.................................... 24
SECTION 5.02. Proxy Statement.......................................... 24
SECTION 5.03. Access to Information.................................... 25
SECTION 5.04. No Solicitation of Transactions.......................... 26
SECTION 5.05. Directors' and Officers' Indemnification and Insurance... 26
SECTION 5.06. Notification of Certain Matters.......................... 28
SECTION 5.07. Further Action; Reasonable Best Efforts.................. 28
SECTION 5.08. Public Announcements..................................... 28
SECTION 5.09. Consents Generally....................................... 28
SECTION 5.10. Prepayment of Certain Debt............................... 28
SECTION 5.11. Release of Company Stock................................. 29
SECTION 5.12 Cancellation of Suncom Option............................ 29
ARTICLE VI
CONDITIONS TO THE MERGER
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SECTION 6.01. Conditions to the Merger................................. 29
SECTION 6.02. Conditions to the Obligations of Parent and Purchaser.... 30
SECTION 6.03. Conditions to the Obligations of The Company............. 32
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
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SECTION 7.01. Termination.............................................. 33
SECTION 7.02. Effect of Termination.................................... 34
SECTION 7.03. Fees and Expenses........................................ 34
SECTION 7.04. Amendment................................................ 36
SECTION 7.05. Waiver................................................... 36
ARTICLE VIII
GENERAL PROVISIONS
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SECTION 8.01. Non-Survival of Representations, Warranties
and Agreements......................................... 36
SECTION 8.02. Notices.................................................. 36
SECTION 8.03. Certain Definitions...................................... 38
SECTION 8.04. Severability............................................. 39
SECTION 8.05. Entire Agreement; Assignment............................. 39
SECTION 8.06. Parties in Interest...................................... 39
SECTION 8.07. Specific Performance..................................... 39
SECTION 8.08. Governing Law............................................ 40
SECTION 8.09. Headings................................................. 40
SECTION 8.10. Counterparts............................................. 40
AGREEMENT AND PLAN OF MERGER, dated as of June 5, 1998 (this
"Agreement"), among DMA HOLDINGS, INC., a Delaware corporation ("Parent"),
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DIVERSE MEDIA ACQUISITIONS, INC., a Florida corporation and a wholly owned
subsidiary of Parent ("Purchaser"), and Audio Communication Network, Inc., a
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Florida corporation (the "Company").
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WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent to acquire the Company upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall merge with and into the Company (the "Merger") on the terms and
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conditions set forth in this Agreement;
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Purchaser and the Company have each approved the Merger of
Purchaser with and into the Company in accordance with the Florida Business
Corporation Act ("Florida Law");
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WHEREAS, Parent and Suncom Communications, L.L.C., a Delaware limited
liability company ("Suncom"), have entered into a Stock Option Agreement, dated
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as of the date hereof (the "Shareholders' Stock Option Agreement"), providing
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for the granting by Suncom to Parent of an option to purchase from Suncom up to
2,697,986 Shares at $6.40 per Share and further providing for an agreement by
Suncom to vote all such Shares in favor of the Merger at the Stockholders'
Meeting subject to the conditions set forth therein; and
WHEREAS, Parent and the Company have agreed to cause the Escrow
Agreement (as defined below) to be entered into on the date hereof as set forth
in Section 7.03(d);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE MERGER
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SECTION 1.01. The Merger. Upon the terms and subject to the
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conditions set forth in Article VI, and in accordance with Florida Law, at the
Effective Time (as hereinafter defined) Purchaser shall be merged with and into
the Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation").
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2
SECTION 1.02. Effective Time; Closing. On the Closing Date (as
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defined below) (or on such other date as Parent and the Company may agree), the
parties hereto shall cause the Merger to be consummated by filing Articles of
Merger (the "Articles of Merger") with the Secretary of State of the State of
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Florida, in such form as is required by, and executed in accordance with the
relevant provisions of, Florida Law (the date and time of such filing being the
"Effective Time"). The closing of the merger (the "Closing") will take place at
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the offices of Shearman & Sterling located at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx at 10:00 a.m. (local time) on the tenth business day following the date
on which the conditions set forth in Article VI (other than the delivery of
documents to be made at the Closing) have been satisfied or waived by the party
entitled to the benefits of such conditions, or at such other place, time and
date as Parent and the Company may agree (the "Closing Date").
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SECTION 1.03. Effect of the Merger. At the Effective Time, the
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effect of the Merger shall be as provided in the applicable provisions of
Florida Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Purchaser shall vest in the Surviving Corporation,
and all debts, liabilities, obligations, restrictions, disabilities and duties
of the Company and Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 1.04. Articles of Incorporation; By-laws. (a) Unless
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otherwise determined by Parent prior to the Effective Time, at the Effective
Time the Articles of Incorporation of Purchaser, as in effect immediately prior
to the Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended as provided by law and such Articles of
Incorporation.
(b) Unless otherwise determined by Parent prior to the Effective Time,
the By-laws of Purchaser, as in effect immediately prior to the Effective Time,
shall be the By-laws of the Surviving Corporation until thereafter amended as
provided by law, the Articles of Incorporation of the Surviving Corporation and
such By-laws.
SECTION 1.05. Directors and Officers. The directors of Purchaser
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immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and By-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
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SECTION 1.06. Effect on Capital Stock. At the Effective Time, by
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virtue of the Merger and without any action on the part of the holder of any
shares of common stock, par value $0.25 per share, of the Company ("Company
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Common Stock" or the "Shares") or the holder of any shares of common stock, par
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value $0.01 per share, of Purchaser ("Purchaser Common Stock"):
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(a) Conversion of Shares of Common Stock. Each issued and outstanding
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share of Company Common Stock (other than (i) shares of Company Common Stock
held by the Company or any of its Subsidiaries as treasury shares and (ii) any
shares of Company Common Stock held by Parent or any of its subsidiaries
(including Purchaser), shall be converted into the right to receive $6.40 per
share, net, in cash (the "Merger Consideration"), payable to the holder thereof
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upon surrender of the certificate formerly representing such shares in
accordance with Section 1.07, without interest thereon, less any required
withholding taxes. Each such share of Company Common Stock shall cease to be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate formerly representing any such shares of
Company Common Stock shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration to be paid in consideration
therefor upon surrender of such certificate in accordance with Section 1.07,
without interest thereon, less any required withholding taxes.
(b) Cancellation of Common Stock Owned by Company, Parent and
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Purchaser. Each share of the Company Common Stock that is owned by, or by any
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Subsidiary of, Company, or by Purchaser or any Subsidiary of Parent (including
Purchaser) shall automatically be canceled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(c) Conversion of Shares of Purchaser Common Stock. Each share of
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Purchaser Common Stock issued and outstanding immediately prior to the Effective
Time shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
SECTION 1.07. Payment for Company Common Stock. (a) Exchange Agent.
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Prior to the Effective Time, Parent shall designate a bank or trust company
reasonably acceptable to the Company to act as exchange agent in the Merger (the
"Exchange Agent"). At or prior to the Effective Time, Parent or Purchaser shall
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deposit with the Exchange Agent the funds necessary to make the payments
contemplated by Section 1.06(a) hereof (the "Exchange Fund").
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(b) Payment Procedures. As soon as reasonably practicable after the
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Effective Time, the Surviving Corporation shall instruct the Exchange Agent to
mail to each holder of record of a certificate or certificates that immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock (collectively, the "Certificates") whose shares were converted into the
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right to receive the Merger Consideration pursuant to Section 1.06(a), (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as the Surviving Corporation may reasonably specify) ("Transmittal
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Letter") and (ii) instructions for use in effecting the surrender of the
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Certificates in exchange for payment of the Merger Consideration
("Instructions"). Alternatively, the Company shall instruct the Exchange Agent
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to provide to any holder of shares of Company Common Stock, who so requests, in
advance of the Closing a Transmittal Letter and Instructions. Upon surrender of
a Certificate for cancellation to the Exchange Agent, together with Transmittal
Letter, duly executed, and such other documents as reasonably may be required by
the Exchange Agent, and acceptance thereof by the Exchange Agent, which
surrender and acceptance may occur at the Closing or after the Effective Time,
each holder of a Certificate shall receive in exchange therefor the Merger
Consideration specified in Section 1.06(a) hereof, without interest thereon,
less any required withholding taxes, and the Certificate so surrendered shall
forthwith be canceled. The Exchange Agent shall accept such Certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent may
impose to effect an orderly exchange thereof in accordance with normal exchange
practices. After the Effective Time, there shall be no further transfer on the
books and records of the Company or its transfer agent of Certificates, and if
Certificates are presented to the Company for transfer, they shall be canceled
against payment of the Merger Consideration as herein provided. If any payment
of Merger Consideration is to be made to a Person other than the Person in whose
name the Certificate surrendered for exchange is registered, it shall be a
condition of such payment that the Certificate so surrendered shall be properly
endorsed, with the signature guaranteed, or otherwise in proper form for
transfer and that the Person requesting such payment shall pay any transfer or
other taxes required by reason of the payment to a Person other than the
registered holder of the Certificate surrendered, or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 1.07, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration, without
interest thereon, less any required withholding taxes.
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(c) Further Ownership Rights in Company Common Stock. The Merger
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Consideration paid upon the surrender for exchange of Certificates in accordance
with the terms of this Article I shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Common Stock theretofore
represented by such Certificates. If, after the Effective Time, Certificates
are presented to the Surviving Company or the Exchange Agent for any reason,
they shall be canceled and exchanged as provided in this Article I.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
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that remains undistributed to the former stockholders of the Company for six
months after the Effective Time shall be delivered to the Surviving Company upon
demand, and any former stockholders of the Company who have not theretofore
complied with this Article I shall thereafter look only to the Surviving Company
for payment of their claim for any Merger Consideration, without interest
thereon, less any required withholding taxes.
(e) No Liability. None of Parent, Purchaser, the Company or the
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Exchange Agent shall be liable to any Person in respect of any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
SECTION 1.08. Employee Stock Options.
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Immediately prior to the Effective Time, each outstanding option to
purchase Shares (in each case, an "Option"), whether or not then exercisable,
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shall be canceled and each holder of a canceled Option shall be entitled to
receive a payment (the "Exercise Amount") in cash from the Company, in
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consideration for the cancellation of each such Option, at the same time that
the Merger Consideration is received by the holders of Shares, in an amount
equal to the product of (i) the number of Shares to be issued upon the exercise
of such Option and (ii) the excess, if any, of the Merger Consideration over the
exercise price per Share previously subject to such Option. Prior to the
Effective Time, the Company shall use its reasonable best efforts to cause each
holder of an outstanding Option to consent to the cancellation of such Option in
consideration for the payment provided herein, and shall take such other action
as may be necessary to carry out the terms of this Section 1.08.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company hereby represents and warrants to Parent and Purchaser
that:
SECTION 2.01. Organization and Qualification; Subsidiaries. (a)
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Each of the Company and each subsidiary of the Company (a "Subsidiary") is a
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corporation duly
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organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Material Adverse Effect (as defined below). The Company
and each Subsidiary is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect. When used in connection with the
Company or any Subsidiary, the term "Material Adverse Effect" means any change
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or effect that, individually or in the aggregate when taken together with any
other adverse changes and effects is or is reasonably likely to be materially
adverse to the business, operations, condition (financial or otherwise), assets
or liabilities (including, without limitation, contingent liabilities) of the
Company and the Subsidiaries taken as a whole), other than any effect relating
to (i) the United States economy in general or, (ii) changes in economic
conditions that affect, in general, the business in which the Company is
engaged. A true and complete list of all the Subsidiaries, together with the
jurisdiction of incorporation of each Subsidiary and the percentage of the
outstanding capital stock of each Subsidiary owned by the Company and each other
Subsidiary, is set forth in Section 2.01 of the Disclosure Schedule previously
delivered by the Company to Parent (the "Disclosure Schedule"). Except as
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disclosed in such Section 2.01, the Company does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
(b) Each Subsidiary that is material to the business, operations,
condition (financial or otherwise), assets or liabilities (including, without
limitation, contingent liabilities) of the Company and the Subsidiaries taken as
a whole is so identified in Section 2.01 of the Disclosure Schedule and is
referred to herein as a "Material Subsidiary".
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SECTION 2.02. Articles of Incorporation and By-laws. The Company has
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heretofore furnished to Parent a complete and correct copy of the Articles of
Incorporation and the By-laws or equivalent organizational documents, each as
amended to date, of the Company and each Material Subsidiary. Such Articles of
Incorporation and By-laws are true and correct as of the date hereof.
SECTION 2.03. Capitalization. The authorized capital stock of the
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Company consists of 12,000,000 Shares and 1,000,000 shares of preferred stock,
$0.001 par value per share. As of the date hereof, (i) 4,502,602 Shares are
issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) no Shares are held in the treasury of the
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Company, (iii) no Shares are held by the Subsidiaries, and (iv) 108,500 Shares
are reserved for future issuance pursuant to employee stock options, options or
stock incentive rights granted pursuant to, among other agreements, the
Company's Stock Option Plan. As of the date hereof, no shares of capital stock
of the Company besides the Shares are issued and outstanding. Except as set
forth in this Section 2.03, and except for the Options, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Company or any
Subsidiary or obligating the Company or any Subsidiary to issue or sell any
shares of capital stock of, or other equity interests in, the Company or any
Subsidiary. All Shares subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.
There are no outstanding contractual obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any Shares or any capital
stock of any Subsidiary or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any Subsidiary or any
other person. Other than the Shares pledged pursuant to the Pledge Agreement (as
defined below), each outstanding share of capital stock of each Subsidiary is
duly authorized, validly issued, fully paid and nonassessable and each such
share owned by the Company or another Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, and limitations on the Company's or such other Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever.
SECTION 2.04. Authority Relative to this Agreement. The Company has
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all necessary power and authority to execute and deliver this Agreement and the
Escrow Agreement, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby (the "Transactions") and
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thereby. The execution and delivery of this Agreement and the Escrow Agreement
by the Company and the consummation by the Company of the Transactions have been
duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or the Escrow Agreement or to consummate the Transactions (other than,
with respect to the Merger, the approval and adoption of this Agreement by the
holders of a majority of the then outstanding Shares if and to the extent
required by applicable law, and the filing and recordation of appropriate merger
documents as required by Florida Law). This Agreement and the Escrow Agreement
have been duly and validly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by Parent and Purchaser,
constitute legal, valid and binding obligations of the Company. As a result of
actions by the Company's Board of Directors, the voting requirements contained
in Section 607.0901 of the Florida Law do not apply to the Transactions, the
Escrow Agreement and the Shareholder's Option Agreement.
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SECTION 2.05. No Conflict; Required Filings and Consents. (a)
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Except as set forth in Section 2.05 of the Disclosure Schedule, the execution
and delivery of this Agreement and the Escrow Agreement by the Company do not,
and the performance of this Agreement and the Escrow Agreement by the Company
will not, (i) conflict with or violate the Articles of Incorporation or By-laws
or equivalent organizational documents of the Company or any Subsidiary, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or any Subsidiary or by which any property or asset of
the Company or any Subsidiary is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the Company
or any Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation.
(b) The execution and delivery of this Agreement and the Escrow
Agreement by the Company do not, and the performance of this Agreement and the
Escrow Agreement by the Company will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, except (i) for applicable
requirements, if any, of the Exchange Act, state securities or "blue sky" laws
("Blue Sky Laws") and state takeover laws, the pre-merger notification
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requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"), and filing
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and recordation of appropriate merger documents as required by Florida Law and
(ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent the Company from performing its
obligations under this Agreement.
SECTION 2.06. Compliance. Neither the Company nor any Subsidiary is
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in conflict with, or in default or violation of, (i) any material law, rule,
regulation, order, judgment or decree applicable to the Company or any
Subsidiary or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (ii) any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary or any property or asset of the Company or any
Subsidiary is bound or affected.
SECTION 2.07. SEC Filings; Financial Statements. (a) The Company
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has filed all forms, reports, documents and amendments thereto required to be
filed by it with the SEC since January 1, 1995 (the "SEC Reports"). The SEC
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Reports (i) were prepared, in all material respects, in accordance with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
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and the Exchange Act, as the case may be, and the rules and
9
regulations thereunder and (ii) did not at the time they were filed contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading. No
Subsidiary is required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the SEC Reports was prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each fairly presented the consolidated financial position, results
of operations and changes in financial position of the Company and the
consolidated Subsidiaries as at the respective dates thereof and for the
respective periods indicated therein (subject, in the case of unaudited
statements), to normal and recurring year-end adjustments.
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Subsidiaries as at March 31, 1998,
including the notes thereto (the "1998 Balance Sheet"), neither the Company nor
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any Subsidiary has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) which would be required to be reflected on a
balance sheet, or in the notes thereto, prepared in accordance with generally
accepted accounting principles, except for liabilities and obligations incurred
in the ordinary course of business consistent with past practice since April 1,
1998.
(d) The Company has heretofore furnished to Parent complete and
correct copies of all amendments and modifications that have not been filed by
the Company with the SEC to all agreements, documents and other instruments that
previously had been filed by the Company with the SEC and are currently in
effect.
SECTION 2.08. Absence of Certain Changes or Events. Since April 1,
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1998, except as contemplated by this Agreement or disclosed in any SEC Report
filed since April 1, 1998 and prior to the date of this Agreement, the Company
and the Subsidiaries have conducted their businesses only in the ordinary course
and in a manner consistent with past practice and, since April 1, 1998, there
has not been (i) any change in the business, operations, condition (financial or
otherwise), assets or liabilities (including, without limitation, contingent
liabilities) of the Company or any Subsidiary having, individually or in the
aggregate, a Material Adverse Effect, (ii) any damage, destruction or loss
(whether or not covered by insurance) with respect to any property or asset of
the Company or any Subsidiary and having, individually or in the aggregate, a
Material Adverse Effect, (iii) any change by the Company in its accounting
methods, principles or practices, (iv) any revaluation by the Company of any
asset (including, without limitation, any writing down of the value of inventory
or writing off of notes or accounts receivable), other than in the ordinary
course of
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business consistent with past practice, (v) any entry by the Company or any
Subsidiary into any commitment or transaction material to the Company and the
Subsidiaries taken as a whole, (vi) any capital expenditure other than in
accordance with the budget therefor most-recently provided to Parent prior to
the date of this Agreement, or any acquisition of any Person or all or a
significant portion of the assets of any Person or any division or business unit
or segment thereof, (vii) any waiver of any right of material value relating to
the Business, (viii) any declaration, setting aside or payment of any dividend
or distribution in respect of any capital stock of the Company or any
redemption, purchase or other acquisition of any of its securities, or (ix) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation payable or to
become payable to any officers or key employees of the Company or any
Subsidiary, except in the ordinary course of business consistent with past
practice.
SECTION 2.09. Absence of Litigation. Except as disclosed in the SEC
---------------------
Reports filed prior to the date of this Agreement, there is no claim, action,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary, or any property or asset of
the Company or any Subsidiary, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign, which (i)
individually or in the aggregate, is reasonably likely to require payment by the
Company in excess of $100,000 or (ii) seeks to delay or prevent the consummation
of any Transaction. As of the date hereof, neither the Company nor any
Subsidiary nor any property or asset of the Company or any Subsidiary is subject
to any order, writ, judgment, injunction, decree, determination or award.
SECTION 2.10. Employee Benefit Plans. (a) Section 2.10 of the
----------------------
Disclosure Schedule contains a true and complete list of (i) all employee
benefit plans (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
-----
stock purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance or other employee
benefit plans, programs or arrangements, and all employment, termination,
severance or other employment contracts or agreements to which the Company or
any Subsidiary is a party, with respect to which the Company or any Subsidiary
has any obligation or which are maintained, contributed to or sponsored by the
Company or any Subsidiary for the benefit of any current or former employee,
officer or director of the Company or any Subsidiary and (ii) each employee
benefit plan for which the Company or any Subsidiary could reasonably be
expected to incur liability under Section 4069 of ERISA, in the event such plan
were terminated, or under Section 4212(c) of ERISA, or in respect of which the
Company or any Subsidiary remains secondarily liable under Section 4204 of ERISA
(collectively, the "Plans"). Each Plan is in writing and the Company has
-----
previously made available to Parent a
11
true and complete copy of each Plan and a true and complete copy of each
material document prepared in connection with each such Plan, including, without
limitation, (i) a copy of each trust or other funding arrangement, (ii) each
summary plan description and summary of material modifications, (iii) the most
recently filed Internal Revenue Service ("IRS") Form 5500, (iv) the most
---
recently received IRS determination letter, if any, for each such Plan, and (v)
the most recently prepared actuarial report and financial statement, if any, in
connection with each such Plan. Except as disclosed in Section 2.10 of the
Disclosure Schedule, neither the Company nor any Subsidiary has any express or
implied commitment (i) to create, incur liability with respect to or cause to
exist any other employee benefit plan, program or arrangement other than a Plan,
(ii) to enter into any contract or agreement to provide compensation or benefits
to any individual or (iii) to modify, change or terminate any Plan, other than
with respect to a modification, change or termination required by ERISA or the
Internal Revenue Code of 1986, as amended (the "Code").
----
(b) Other than as specifically disclosed in Section 2.10 of the
Disclosure Schedule, none of the Plans is a multiemployer plan, within the
meaning of Section 3(37) or 4001(a)(3) of ERISA (a "Multiemployer Plan"), or a
------------------
single employer pension plan, within the meaning of Section 4001(a)(15) of
ERISA, for which the Company or any Subsidiary would incur liability if the
Company or a Subsidiary withdraws from such Plan or any such Plan was terminated
under Section 4063 or 4064 of ERISA (a "Multiple Employer Plan"). Except as
----------------------
disclosed in Section 2.10 of the Disclosure Schedule, none of the Plans (i)
provides for the payment of separation, severance, termination or similar-type
benefits to any person, (ii) obligates the Company or any Subsidiary to pay
separation, severance, termination or other benefit as a result of any
Transaction, or (iii) obligates the Company or any Subsidiary to make any
payment or provide any benefit that could be subject to a tax under Section 4999
of the Code. Except as disclosed in Section 2.10 of the Disclosure Schedule,
none of the Plans provides for or promises retiree medical, disability or life
insurance benefits to any current or former employee, officer or director of the
Company or any Subsidiary. With respect to each Multiemployer Plan and Multiple
Employer Plan, Section 2.10(b) of the Disclosure Schedule sets forth an accurate
statement or the Company's or Subsidiary's best information or most recent
information of the total amount of withdrawal liability that the Company or any
Subsidiary would incur in the event of a complete withdrawal, within the meaning
of Title IV of ERISA, from each such plan.
(c) Each Plan other than each Multiemployer Plan which is intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS that such Plan is so qualified, and each trust
established in connection with any Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that such trust is so exempt. Except as
disclosed in Schedule 2.10, no fact or event has occurred since the date of any
such determination letter from the IRS that has adversely affected the qualified
status of any such
12
Plan or the exempt status of any such trust. Each trust, if any, maintained or
contributed to by the Company or any Subsidiary which is intended to be
qualified as a voluntary employees' beneficiary association exempt from federal
income taxation under Sections 501(a) and 501(c)(9) of the Code has received a
favorable ruling letter from the IRS that it is so qualified and so exempt, and
no fact or event has occurred since the date of such determination by the IRS
that has adversely affected such qualified or exempt status.
(d) There has been no material prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Plan (other than any Multiemployer Plan). Neither the Company nor any
Subsidiary is currently liable or has previously incurred any liability for any
tax or penalty arising under Section 4971, 4972, 4979, 4980 or 4980B of the Code
or Section 502(c) of ERISA, and no fact or event exists which could reasonably
be expected to give rise to any such liability. Neither the Company nor any
Subsidiary has incurred any liability under, arising out of or by operation of
Title IV of ERISA (other than liability for premiums to the Pension Benefit
Guaranty Corporation ("PBGC") arising in the ordinary course), including,
----
without limitation, any liability in connection with (i) the termination or
reorganization of any employee pension benefit plan subject to Title IV of ERISA
or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer Plan,
and no fact or event exists which could reasonably be expected to give rise to
any such liability. Except as disclosed on Schedule 2.10, no complete or partial
termination has occurred within the five years preceding the date hereof with
respect to any Plan. No reportable event (within the meaning of Section 4043 of
ERISA) has occurred or is expected to occur with respect to any Plan (other than
any Multiemployer Plan) subject to Title IV of ERISA other than those events
with respect to which the PBGC notice requirement has been waived. No asset of
the Company or any Subsidiary is the subject of any lien arising under Section
302(f) of ERISA or Section 412(n) of the Code; neither the Company nor any
Subsidiary has been required to post any security under Section 307 of ERISA or
Section 401(a)(29) of the Code; and no fact or event exists which could
reasonably be expected to give rise to any such lien or requirement to post any
such security.
(e) Each Plan is now and has been operated in all material respects in
accordance with the requirements of all applicable laws, including, without
limitation, ERISA and the Code, and the Company and each Subsidiary have
performed all obligations required to be performed by them under, are not in any
material respect in default under or in violation of, and have no knowledge of
any material default or material violation by any party to, any Plan. No Plan
has incurred an "accumulated funding deficiency" (within the meaning of Section
302 of ERISA or Section 412 of the Code), whether or not waived. All
contributions, premiums or payments required to be made with respect to any Plan
other than any Plan involving the grant of incentive stock options to the extent
that options granted thereunder qualify for incentive stock option treatment
under Section 432 of the Code are or will be fully deductible for income tax
purposes and no such deduction previously claimed has been
13
challenged by any government entity. The 1998 Balance Sheet reflects an accrual
of all amounts of employer contributions and premiums accrued but unpaid with
respect to the Plans which are required to be accrued on such balance sheet in
accordance with United States Generally Accepted Accounting Principles. With
respect to each Plan, if any, other than a Multiemployer Plan, subject to Title
IV of ERISA, the accumulated benefit obligations of such Plan (determined as of
the date of the most recent actuarial valuation prepared for such Plan) does not
exceed the fair market value of the assets of such Plan (determined as of the
date of such valuation) attributable to such obligations.
(f) The Company and the Subsidiaries have not incurred any liability
under, and have complied in all respects with, the Worker Adjustment Retraining
Notification Act and the regulations promulgated thereunder ("WARN") and do not
----
reasonably expect to incur any such liability solely as a result of actions
taken or not taken prior to the Effective Time. Section 2.10(f) of the
Disclosure Schedule lists (i) all the employees terminated or laid off by the
Company or any Subsidiary during the 90 days prior to the date hereof and (ii)
all the employees of the Company or any Subsidiary who have experienced a
reduction in hours of work of more than 50% during any month during the 90 days
prior to the date hereof and describes all notices, if any, given by the Company
and the Subsidiaries in connection with WARN with respect to any termination,
layoff or reduction in hours described in clause (i) or (ii) of this Section
2.10(f). The Company will, by written notice to Parent and Purchaser, update
Section 2.10(f) of the Disclosure Schedule to include any such terminations,
layoffs and 50% reductions in hours from the date hereof through the Effective
Time and will provide Parent and Purchaser with any related information which
they may reasonably request in connection with the Company's compliance.
SECTION 2.11. Labor Matters. (a) Except as set forth in Section 2.11
-------------
of the Disclosure Schedule, (i) there are no controversies pending or, to the
knowledge of the Company, threatened between the Company or any Subsidiary and
any of their respective employees; (ii) neither the Company nor any Subsidiary
is a party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or any Subsidiary, nor, to the
knowledge of the Company, are there any activities or proceedings of any labor
union to organize any such employees; (iii) neither the Company nor any
Subsidiary has breached or otherwise failed to comply with any material
provision of any such agreement or contract and there are no grievances
outstanding against the Company or any Subsidiary under any such agreement or
contract; (iv) there are no unfair labor practice complaints pending against the
Company or any Subsidiary before the National Labor Relations Board or any
current union representation questions involving employees of the Company or any
Subsidiary; and (v) there is no strike, slowdown, work stoppage or lockout, or,
to the knowledge of the Company, threat thereof, by or with respect to any
employees of the Company or any Subsidiary. The consent of any labor unions
which are parties to any
14
collective bargaining agreements listed in Section 2.11 of the Disclosure
Schedule is not required to consummate the Transactions.
(b) Except as set forth in Section 2.10 of the Disclosure Schedule, to
the Company's knowledge, no key executive employee and no group of employees or
independent contractors of the Company or any Subsidiary has any plans to
terminate his, her or its employment or relationship as an independent
contractor with the Company or any Subsidiary or to not remain employed at the
Company or any Subsidiary after the Closing. Section 2.11(b) of the Disclosure
Schedule sets forth the name, start date, title or position, and the annual or,
as the case may be, hourly rate of compensation (including salary, bonuses and
commissions), as of the date of this Agreement for each individual engaged by
the Company or any Subsidiary as an employee or independent contractor.
SECTION 2.12. Recommendation of Board of Directors; Vote Required.
---------------------------------------------------
The Board of Directors of the Company has approved this Agreement (there being
no votes against such approval), the Merger and the other transactions
contemplated hereby and, subject to Section 7.01(g) hereof, has determined to
recommend to its stockholders (the "Recommendation") that its stockholders vote
--------------
in favor of the adoption and approval of this Agreement. The affirmative vote
of a majority of the votes that the holders of the outstanding shares of Company
Common Stock are entitled to cast with respect to the adoption and approval of
this Agreement is the only vote of the holders of any class or series of the
capital stock of the Company necessary to approve the Merger and the other
transactions contemplated hereby.
SECTION 2.13. Opinion of Financial Advisor. The Company has received
----------------------------
the opinion of Duff & Xxxxxx, L.L.C., dated the date hereof, to the effect that,
as of such date, the Merger Consideration is fair to the Company stockholders
from a financial point of view, and such opinion has not been withdrawn.
SECTION 2.14. Accuracy of Information Supplied. Neither this
--------------------------------
Agreement nor any schedule, exhibit or certificate furnished or required to be
furnished by or on behalf of the Company to Parent, Purchaser or any of their
agents or affiliates in connection with this Agreement or any of the
transactions contemplated hereby, taken as a whole, contains or will contain (at
the time when such schedule, exhibit or certificate is furnished) any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.
SECTION 2.15. Proxy Statement. On the date the Proxy Statement is
---------------
first mailed to the Company's stockholders, at the time of the Stockholders'
Meeting (as hereinafter defined) and at the Effective Time, the Proxy Statement
will comply in all material respects
15
with the requirements of the Exchange Act and will not contain any statement
that, at such time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Stockholders' Meeting that shall have become false or misleading; provided,
--------
however, that the representations and warranties in this subsection shall not
-------
apply to statements in or omissions from the Proxy Statement made in reliance
upon and in conformity with information furnished to the Company in writing by
or on behalf of Parent or Purchaser expressly for use in the Proxy Statement.
SECTION 2.16. Title to, Condition and Sufficiency of Assets. (a)
---------------------------------------------
Owned Properties. The Company owns no real property.
----------------
(b) The leases and subleases described on Section 2.16(b) of the
Disclosure Schedule (the "Leases") constitute all of the leases of real property
------
used or held for use in the business to which the Company or any Subsidiary is a
party. Each Lease is in full force and effect and the Company or a Subsidiary,
as indicated for such Lease in Section 2.16(b) of the Disclosure Schedule, holds
a valid and existing leasehold or subleasehold interest thereunder in the real
property which is subject thereto (collectively, the "Leased Realty"). The
-------------
Leased Realty constitutes all of the interests in real property used or held for
use by the Company or any Subsidiary in the operation of its business. The
Company has delivered to Parent complete and accurate copies of each of the
Leases, in each case including all modifications and amendments thereto. With
respect to each Lease: (i) such Lease is legal, valid, binding, enforceable and
in full force and effect; (ii) subject to obtaining any Consent described in
Section 2.05 of the Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement will not cause such Lease to cease to be legal,
valid, binding, enforceable and in full force and effect on substantially the
same terms as are presently in effect; (iii) neither the Company nor any
Subsidiary is in material breach or default under, and no event has occurred
which, with notice or lapse of time, would constitute such a breach or default
of the Company or any Subsidiary of, or permit termination, modification or
acceleration of, such Lease; (iv) to the Company's knowledge, no other party to
such Lease is in material breach or default under, and no event has occurred
which, with notice or lapse of time, would constitute such a breach or default
or permit termination, modification or acceleration of, such Lease; (v) neither
the Company nor any Subsidiary has (and, to the Company's knowledge, no other
party to such Lease has) repudiated any provision thereof; (vi) there are no
material disputes, oral agreements, or forbearances in effect as to such Lease;
(vii) such Lease has not been modified in any respect, except to the extent that
such modifications are disclosed by the documents delivered to Parent; and
(viii) neither the Company nor any Subsidiary has assigned, transferred,
conveyed, mortgaged, deeded in trust or caused any mortgages, pledges, liens,
security interests, conditional and installment sale agreements, encumbrances,
charges or
16
other claims of third parties of any kind (collectively, "Liens"), (other than
-----
any (A) Liens for current taxes and assessments not yet past due, (B) inchoate
mechanics' and materialmen's Liens for construction in progress and (C)
workmen's, repairmen's, warehousemen's and carriers' Liens arising in the
ordinary course of business of the Company or such Subsidiary consistent with
past practice (collectively, "Permitted Liens"), to exist with respect to any
---------------
interest of the Company or any Subsidiary in such Lease.
(c) There is no proceeding in eminent domain or any similar proceeding
pending, or (to the Company's knowledge) threatened, affecting any of the
Company's or any Subsidiary's interest in any Leased Realty. There exists no
writ, injunction, decree, order or judgment outstanding, nor any litigation,
pending, or (to the Company's knowledge) threatened, relating to the ownership,
lease, use, occupancy or operation by any of the Company's or any Subsidiary's
of any Leased Realty.
(d) Except as set forth in Section 2.16(d) of the Disclosure Schedule:
(i) the current use by the Company and the Subsidiaries of the Leased Realty
does not violate any Lease, law, instrument of record or agreement affecting any
Leased Realty, and (ii) there is no violation of any applicable covenant,
condition, restriction, easement or agreement.
SECTION 2.17. Trademarks, Patents and Copyrights. The Company and
----------------------------------
the Subsidiaries own or possess adequate licenses or other valid rights to use
all material patents, patent rights, trademarks, trademark rights, trade names,
trade name rights, copyrights, servicemarks, trade secrets, applications for
trademarks and for servicemarks, know-how and other proprietary rights and
information used or held for use in connection with the business of the Company
and the Subsidiaries as currently conducted or as contemplated to be conducted,
and the Company is unaware of any assertion or claim challenging the validity of
any of the foregoing. A true and complete list of all such items is set forth
on Section 2.17 of the Disclosure Schedule. The conduct of the business of the
Company and the Subsidiaries as currently conducted and as contemplated to be
conducted does not and will not conflict in any material respect with any
patent, patent right, license, trademark, trademark right, trade name, trade
name right, servicemark or copyright of any third party. To the knowledge of
the Company, there are no infringements of any material propriety rights owned
by or licensed by or to the Company or any Subsidiary. To the knowledge of the
Company, neither it nor any Subsidiary has licensed or otherwise permitted the
use by any third party of any material proprietary information.
SECTION 2.18. Taxes. (a) The Company and the Subsidiaries have
-----
timely filed all federal, state, local and foreign tax returns and reports
required to be filed by them and have paid and discharged all taxes required to
be shown thereon and have paid all applicable ad valorem taxes as are due. Such
tax returns are true, correct and complete in all material respects. Neither
the IRS nor any other taxing authority or agency, domestic or
17
foreign, is now asserting or, to the knowledge of the Company, threatening to
assert against the Company or any Subsidiary any deficiency or claim for
additional taxes or interest thereon or penalties in connection therewith.
Neither the Company nor any Subsidiary is a party to any tax sharing agreement
and has no current or contingent contractual obligations to indemnify any other
Person with respect to any taxes. Neither the Company nor any Subsidiary has a
permanent establishment in any foreign country, within the meaning of the
relevant tax treaty between the United States and any such foreign country. None
of the Company's or any Subsidiary's assets constitutes "tax exempt use
property" within the meaning of Section 168(h) of the Code (or any corresponding
provision of state, local or foreign tax law). Neither the Company nor any
Subsidiary has granted any waiver of any statute of limitations with respect to,
or any extension of a period for the assessment of, any federal, state, county,
municipal or foreign income tax. The accruals and reserves for taxes reflected
in the 1998 Balance Sheet are adequate to cover all taxes accruable through such
date (including interest and penalties, if any, thereon) in accordance with
generally accepted accounting principles. Neither the Company nor any Subsidiary
has made an election under Section 341(f) of the Code.
(b) The Company has furnished to Parent true, correct and complete
copies of all tax returns filed with respect to itself or any Subsidiary for (i)
each taxable period which remains open to audit, review or examination by the
relevant taxing authority or authorities and (ii) the most recent closed taxable
period.
SECTION 2.19. Environmental Matters. (a) For purposes of this
---------------------
Agreement, the following terms shall have the following meanings: (i)
"Hazardous Substances" means (A) those substances defined in or regulated under
---------------------
the following federal statutes and their state counterparts, as each may be
amended from time to time, and all regulations thereunder: the Hazardous
Materials Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (B) petroleum
and petroleum products including crude oil and any fractions thereof; (C)
natural gas, synthetic gas, and any mixtures thereof; (D) radon; (E) any other
contaminant; and (F) any substance with respect to which a federal, state or
local agency requires environmental investigation, monitoring, reporting or
remediation; and (ii) "Environmental Laws" means any federal, state or local law
------------------
relating to (A) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances; (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; or (C) otherwise relating to
pollution of the environment or the protection of human health.
(b) Except as described in Section 2.19 of the Disclosure Schedule:
(i) the Company is not in violation of any Environmental Law; (ii) none of the
properties owned or leased by the Company (including, without limitation, soils
and surface and ground waters) are
18
contaminated with any Hazardous Substance; (iii) the Company is not actually or
potentially nor, to the knowledge of the Company, allegedly liable for any off-
site contamination; (iv) the Company is not actually or potentially nor, to the
knowledge of the Company, allegedly liable under any Environmental Law
(including, without limitation, pending or threatened liens); (v) the Company
has all material permits, licenses and other authorizations required under any
Environmental Law ("Environmental Permits"); (vi) neither the execution and
---------------------
delivery of any transaction contemplated hereunder nor the consummation of the
transactions contemplated hereby imposes any obligations for site investigation
or cleanup, or notification to or other consent of a governmental entity or any
other Person, pursuant to any "transaction-triggered" Environmental Law; and
(vii) the Company and each Subsidiary is in compliance with its Environmental
Permits in all material respects.
SECTION 2.20. Contracts and Commitments. (a) Except for the
-------------------------
documents contemplated hereunder or any contract described on Section 2.20 of
the Disclosure Schedule (with respect to its business) neither the Company nor
any Subsidiary is a party to nor bound by, and neither the Company nor any
Subsidiary is subject to, any contract, whether written or oral, including any:
(i) collective bargaining agreement or contract with any labor union or any
bonus, pension, profit sharing, retirement or any other form of deferred
compensation plan or any hospitalization insurance or similar plan or practice;
(ii) contract for the employment or engagement of any individual employee or
other Person (including as an independent contractor or on a consulting basis)
other than at the will of the employing Person, or any agreement to provide
severance or similar benefits upon any termination of employment or other
engagement; (iii) agreement, indenture or other contract placing a Lien on any
asset of the Company or any Subsidiary; (iv) agreement with respect to the
lending or investing of funds by the Company or any Subsidiary; (v) license or
royalty agreement; (vi) guaranty of any obligation of any other Person or
arrangement having a similar economic effect, other than endorsements made for
collection made in the ordinary course of business; (vii) sales representation
agreement; (viii) agreement with any intellectual property; (ix) lease or
agreement under which it is lessee of, or holds or operates, any personal
property owned by any other party calling for payments in excess of $10,000
annually or entered into outside of the ordinary course of business; (x) lease
or agreement under which it is lessor of or permits any third party to hold or
operate any property, real or personal, owned or controlled by it; (xi)
agreement, contract or understanding pursuant to which the Company or any
Subsidiary subcontracts work to a third party; or (xii) other agreement material
to the business of the Company and its Subsidiaries.
(b) Each of the items which is described or required to be described
on the Section 2.20 of the Disclosure Schedule is in full force and effect; no
item which is described or required to be described on the Section 2.20 of the
Disclosure Schedule has been breached in any material respect, canceled or
repudiated by the Company or any Subsidiary or (to the Company's knowledge) by
any other party thereto; no such other party has indicated in writing
19
or orally to the Company or any Subsidiary that it will stop or decrease the
rate of business done with the Company or that it desires to renegotiate its
arrangements with the Company or any Subsidiary; the Company and each Subsidiary
has performed all material obligations required to be performed by it in
connection with the items which are described or required to be described on the
Section 2.20 of the Disclosure Schedule and is not in receipt of any claim of
material default under any such item; and neither the Company nor any Subsidiary
has a present expectation or intention of not performing in all material
respects any obligation pursuant to any item which is described or required to
be disclosed on Section 2.20 of the Disclosure Schedule.
(c) The Company has furnished to Parent a true and correct copy of all
written contracts and other items which are described or required to be
described on Section 2.20 of the Disclosure Schedule, in each case together with
all amendments, waivers or other changes thereto. Section 2.20 of the
Disclosure Schedule contains an accurate and complete description of all
material terms of all oral contracts and other oral items which are described or
required to be described on such Schedule.
SECTION 2.21. Governmental Licenses and Permits. Section 2.21 of the
---------------------------------
Disclosure Schedule contains a complete listing and summary description of all
material Governmental Authorizations owned or possessed by the Company or any
Subsidiary. Taken together, the Company and its Subsidiaries own or possess all
right, title and interest in and to all of the Governmental Authorizations which
are necessary or material to conduct the business as currently conducted or
proposed to be conducted by the Company and its Subsidiaries. No loss or
expiration of any Governmental Authorization is pending, reasonably foreseeable
or, to the Company's knowledge, threatened, or would occur as a result of any
transaction contemplated by this Agreement.
SECTION 2.22. Affiliate Transactions. Other than as described on
----------------------
Section 2.22 of the Disclosure Schedule, no person employed by the Company or
any Subsidiary (a) is a party to any contract (other than in such person
employed by the Company or any Subsidiary in its capacity as an employee of the
Company or any Subsidiary) or (b) has any interest in any asset of the Company
or any Subsidiary, other than indirectly, as a stockholder of the Company.
SECTION 2.23. Brokers. No broker, finder or investment banker (other
-------
than Duff & Xxxxxx, L.L.C. for whom the maximum fees paid or payable do not
exceed $200,000) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the Company. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements between the Company and Duff &
Xxxxxx, L.L.C. pursuant to which such firm would be entitled to any payment
relating to the Transactions.
20
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
------------------------------------------------------
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 3.01. Corporate Organization. Each of Parent and Purchaser
----------------------
is a corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have a material adverse effect on the business or operations of
Parent and Purchaser and their respective subsidiaries taken as a whole.
SECTION 3.02. Authority Relative to This Agreement. Each of Parent
------------------------------------
and Purchaser has all necessary power and authority to execute and deliver this
Agreement and the Escrow Agreement (only Parent is making the representation and
warranty with respect to this agreement), to perform its obligations hereunder
and thereunder and to consummate the Transactions. The execution and delivery
of this Agreement and the Escrow Agreement (only Parent is making the
representation and warranty with respect to this Agreement) by Parent and
Purchaser and the consummation by Parent and Purchaser of the Transactions have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or the Escrow Agreement or to consummate the
Transactions (other than, with respect to the Merger, the filing and recordation
of appropriate merger documents as required by Florida Law). This Agreement and
the Escrow Agreement (only Parent is making the representation and warranty with
respect to this Agreement) have been duly and validly executed and delivered by
Parent and Purchaser and, assuming the due authorization, execution and delivery
by the Company, constitutes a legal, valid and binding obligation of each of
Parent and Purchaser enforceable against each of Parent and Purchaser in
accordance with its terms except that the Escrow Agreement shall only be
enforceable against Parent.
SECTION 3.03. No Conflict; Required Filings and Consents. (a) The
------------------------------------------
execution and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will not, (i) conflict
with or violate the Certificate of Incorporation (Articles of Incorporation in
the case of Purchaser) or By-laws of either Parent or Purchaser, (ii) conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Parent or Purchaser or by which any property or asset of either of them is
bound or affected, or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of Parent or Purchaser pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or Purchaser is a party or by which
Parent or Purchaser or any property or asset of either of them is bound or
affected, except for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or
21
in the aggregate, have a material adverse effect on the ability of Parent or
Purchaser to consummate the Transactions.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Exchange Act,
Blue Sky Laws and state takeover laws, the HSR Act, and the filing and
recordation of appropriate merger documents as required by Florida Law and (ii)
where failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not prevent or delay consummation
of the Merger, or otherwise prevent Parent or Purchaser from performing their
respective obligations under this Agreement.
SECTION 3.04. Proxy Statement. The information supplied in writing
---------------
by each of Parent and Purchaser for inclusion in the Proxy Statement will not,
on the date the Proxy Statement is first mailed to stockholders of the Company,
at the time of the Stockholders' Meeting and at the Effective Time, contain any
statement that, at such time and in light of the circumstances under which it is
made, is false or misleading with respect to any material fact, or omits to
state any material fact required to be stated therein or necessary in order to
make the statements therein not false or misleading or necessary to correct any
statement in any information previously supplied by any of Parent, or Purchaser
for inclusion in the Proxy Statement that shall have become false or misleading.
SECTION 3.05. Brokers. No broker, finder or investment banker is
-------
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Parent or
Purchaser.
SECTION 3.06. Accuracy of Information Supplied. Neither this
--------------------------------
Agreement nor any schedule, exhibit or certificate furnished or required to be
furnished by or on behalf of Parent or Purchaser to the Company or any of its
agents or affiliates in connection with this Agreement or any of the
transactions contemplated hereby, taken as a whole, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they are made, not misleading.
SECTION 3.07. Trust Organization. DMA Holdings Statutory Trust (the
------------------
"Trust") is a trust duly organized under the laws of Connecticut, and is duly
-----
organized, validly existing and in good standing under the laws of its creation.
Parent has heretofore delivered or made available to the Company true and
complete copies of the trust agreement pursuant to which the Trust was
organized. DMA, L.P. a Delaware limited partnership is the beneficiary
22
of the Trust. First Union National Bank, a national banking association, is the
trustee of the Trust. The Trustee holds all of the issued and outstanding
capital stock of Parent.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
--------------------------------------
SECTION 4.01. Conduct of Business by the Company Pending the Merger.
-----------------------------------------------------
The Company covenants and agrees that, between the date of this Agreement and
the Effective Time, unless Parent shall otherwise agree in writing, the
businesses of the Company and the Subsidiaries shall be conducted only in, and
the Company and the Subsidiaries shall not take any action except in, the
ordinary course of business and in a manner consistent with past practice; and
the Company shall use its reasonable best efforts to preserve substantially
intact the business organization of the Company and the Subsidiaries, to keep
available the services of the current officers, employees and consultants of the
Company and the Subsidiaries and to preserve the current relationships of the
Company and the Subsidiaries with customers, suppliers and other persons with
which the Company or any Subsidiary has significant business relations. By way
of amplification and not limitation, except as contemplated by this Agreement,
neither the Company nor any Subsidiary shall, between the date of this Agreement
and the Effective Time, directly or indirectly do, or propose to do, any of the
following without the prior written consent (which consent shall not be
unreasonably withheld) of Parent:
(a) amend or otherwise change its Articles of Incorporation or By-laws
or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, (i) any shares of
capital stock of any class of the Company or any Subsidiary, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest (including,
without limitation, any phantom interest), of the Company or any Subsidiary
(except for the issuance in accordance with their respective terms of a maximum
of 108,500 Shares issuable pursuant to employee stock options outstanding on the
date hereof, or the continuation of the Company's policy of reissuing Shares for
directors fees, if elected by any director) or (ii) any assets of the Company or
any Subsidiary, except for sales in the ordinary course of business and in a
manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock;
23
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire, for more than $200,000 in any single transaction, or
$1,000,000 in the aggregate, for any group of transactions, (including, without
limitation, by merger, consolidation, or acquisition of stock or assets) any
corporation, partnership, other business organization or any division thereof or
any material amount of assets; (ii) incur any indebtedness for borrowed money,
or issue any debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or make any
loans or advances, except, in each case, in the ordinary course of business and
consistent with past practice; (iii) enter into any contract or agreement other
than in the ordinary course of business, consistent with past practice; (iv)
authorize any single capital expenditure which is in excess of $200,000 or
capital expenditures which are, in the aggregate, in excess of $2,000,000 for
the Company and the Subsidiaries, taken as a whole; or (v) enter into or amend
any contract, agreement, commitment or arrangement with respect to any matter
set forth in this Section 4.01(e);
(f) except as set forth in Section 4.01(f) of the Disclosure Schedule,
increase the compensation payable or to become payable to its officers or
employees, except for increases in accordance with existing agreements, past
practices in salaries or wages of employees of the Company or any Subsidiary who
are not officers of the Company, or grant any severance or termination pay to or
enter into any employment or severance agreement with, any director, officer or
other employee of the Company or any Subsidiary, or establish, adopt, enter into
or amend any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer or employee;
(g) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect to
accounting policies or procedures (including, without limitation, procedures
with respect to the payment of accounts payable and collection of accounts
receivable);
(h) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability; or
(i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of liabilities reflected or reserved against in
the 1998 Balance Sheet or subsequently incurred in the ordinary course of
business and consistent with past practice.
24
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
SECTION 5.01. Stockholders' Meeting. (a) If required by applicable
---------------------
law in order to consummate the Merger, the Company, acting through the Board,
shall, in accordance with applicable law and the Company's Articles of
Incorporation and By-laws use its reasonable best efforts to, (i) duly call,
give notice of, convene and hold an annual or special meeting of its
stockholders as promptly as practicable following the clearance of the Proxy
Statement by the SEC for the purpose of considering and taking action on this
Agreement and the transactions contemplated hereby (the "Stockholders' Meeting")
---------------------
and (ii) subject to its fiduciary duties under applicable law as advised in
writing by independent counsel, (A) include in the Proxy Statement the
recommendation of the Board that a majority of the stockholders of the Company
entitled to vote on the Merger Agreement approve this Agreement and the
transactions contemplated hereby and (B) use its reasonable best efforts to
obtain such approval and adoption. At the Stockholders' Meeting, Parent and
Purchaser shall cause all Shares then owned by them and their subsidiaries to be
voted in favor of the approval and adoption of this Agreement and the
transactions contemplated hereby.
SECTION 5.02. Proxy Statement. (a) If required by applicable law,
---------------
within 15 business days following the execution of this Agreement, with all
reasonable and necessary assistance from Parent and Purchaser, the Company shall
file the Proxy Statement with the SEC under the Exchange Act, and shall use its
reasonable best efforts to have the Proxy Statement cleared by the SEC. The
Proxy Statement shall comply with all provisions of the Exchange Act, including,
without limitation, Rule 14a-9 thereunder. Parent, Purchaser and the Company
shall cooperate with each other in the preparation of the Proxy Statement, and
the Company shall notify Parent of the receipt of any comments of the SEC with
respect to the Proxy Statement and of any requests by the SEC for any amendment
or supplement thereto or for additional information and shall provide to Parent
promptly copies of all correspondence between the Company or any representative
of the Company and the SEC. The Company shall give Parent and its counsel the
opportunity to review the Proxy Statement prior to its being filed with the SEC,
and shall give Parent and its counsel the opportunity to review all amendments
and supplements to the Proxy Statement and all responses to requests for
additional information and replies to comments prior to their being filed with,
or sent to, the SEC. Each of the Company, Parent and Purchaser agrees to use
its reasonable best efforts, after consultation with the other parties hereto,
to respond promptly to all such comments of and requests by the SEC and to cause
the Proxy Statement and all required amendments and supplements thereto to be
mailed to the holders of Shares entitled to vote at the Stockholders' Meeting at
the earliest practicable time.
25
(b) If any event shall occur as a result of which it is necessary, in
the opinion of legal counsel to Parent or the Company, to amend the Proxy
Statement in order to make the Proxy Statement not misleading in light of the
circumstances existing at the time it is delivered to a holder of Common Stock,
the Company shall forthwith amend the Proxy Statement (in form and substance
reasonably satisfactory to legal counsel to Parent) so that, as so amended, the
Proxy Statement will not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances existing at the time it is delivered to a holder of
Common Stock, not misleading. Parent and Purchaser shall furnish any information
reasonably requested by the Company which is necessary to amend the Proxy
Statement in accordance with this Section 5.02(b).
SECTION 5.03. Access to Information. (a) From the date hereof to
---------------------
the Effective Time, the Company shall, and shall cause the Subsidiaries and the
officers, directors, employees, auditors and agents of the Company and the
Subsidiaries to, afford the officers, employees and agents of Parent and
Purchaser and persons providing or committing to provide Parent or Purchaser
with financing for the Transactions complete access at all reasonable times to
the officers, employees, agents, properties, offices, plants and other
facilities, books and records of the Company and each Subsidiary, and shall
furnish Parent and Purchaser and persons providing or committing to provide
Parent or Purchaser with financing for the Transactions with all financial,
operating and other data and information as Parent or Purchaser, through its
officers, employees or agents, may reasonably request.
(b) No investigation pursuant to this Section 5.03 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
(c) From and after the date hereof, each party hereto shall, and shall
use its best efforts to cause its affiliates and its and their respective agents
to, keep secret and hold in strictest confidence any and all documents and
information identified by any other party as confidential and furnished to such
first party (whether before or after the date hereof) in connection with the
transactions contemplated hereunder, other than the following: (i) information
that has become generally available to the public other than as a result of a
disclosure by such party, its affiliates or its agents; (ii) information that
has become available to such party or an agent of such party on a
nonconfidential basis from a third party having, to the knowledge of such party
(after reasonable inquiry), no obligation of confidentiality or other legal or
fiduciary obligation of secrecy to a party to this Agreement and that has not
itself, to the knowledge of such party (after reasonable inquiry), received such
information directly or indirectly in breach of any such obligation; and (iii)
information that is required to be disclosed by applicable law or pursuant to
any listing agreement with, or the rules or regulations of, any securities
exchange on which securities of such party or any such affiliate
26
are listed or traded. If any party hereto is required to disclose any such
confidential information pursuant to applicable law, such party shall promptly
notify each other party in writing, which notification shall include the nature
of the legal requirement and the extent of the required disclosure, and shall
cooperate with each other party to preserve the confidentiality of such
information consistent with applicable law. In the event the transactions
contemplated by this Agreement are not consummated, each party hereto shall
return all materials in its possession containing confidential information
belonging to another party and shall not use any such information for any
purpose whatsoever.
SECTION 5.04. No Solicitation of Transactions. Neither the Company
-------------------------------
nor any Subsidiary shall, directly or indirectly, through any officer, director,
agent or otherwise, solicit, initiate or encourage the submission of any
proposal or offer from any person relating to any acquisition or purchase of all
or any portion of the assets of, or any equity interest in, the Company or any
Subsidiary or any business combination with the Company or any Subsidiary,
participate in any negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing; provided, however, that the Company
-------- -------
may, in accordance with its fiduciary duties under applicable law as advised in
writing by independent counsel of the Board, respond to unsolicited offers from
third parties that seek to do any of the foregoing. The Company immediately
shall cease and cause to be terminated all existing discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing. The
Company shall notify Parent promptly if any such proposal or offer, or any
inquiry or contact with any person with respect thereto, is made and shall, in
any such notice to Parent, indicate in reasonable detail the identity of the
person making such proposal, offer, inquiry or contact and the terms and
conditions of such proposal, offer, inquiry or contact. The Company agrees not
to release any third party from, or waive any provision of, any confidentiality
or standstill agreement to which the Company is a party.
SECTION 5.05. Directors' and Officers' Indemnification and Insurance.
------------------------------------------------------
(a) The By-laws of the Surviving Corporation shall contain provisions no less
favorable with respect to indemnification than are set forth in Article XI of
the By-laws of the Company, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would affect adversely the rights thereunder of individuals who at
the Effective Time were directors, officers, employees, fiduciaries or agents of
the Company, unless such modification shall be required by law.
(b) The Company shall, to the fullest extent permitted under
applicable law and regardless of whether the Merger becomes effective, indemnify
and hold harmless, and, after the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director, officer,
27
employee, fiduciary and agent of the Company and each Subsidiary (collectively,
the "Indemnified Parties") against all costs and expenses (including attorneys'
-------------------
fees), judgments, fines, losses, claims, damages, liabilities and settlement
amounts paid in connection with any claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), whether
civil, criminal, administrative or investigative, arising out of or pertaining
to any action or omission in their capacity as an officer, director, employee,
fiduciary or agent, whether occurring before or after the Effective Time, for a
period of six years after the date hereof. In the event of any such claim,
action, suit, proceeding or investigation, (i) the Company or the Surviving
Corporation, as the case may be, shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to the Company or the Surviving Corporation, promptly after
statements therefor are received and (ii) the Company and the Surviving
Corporation shall cooperate in the defense of any such matter; provided,
--------
however, that neither the Company nor the Surviving Corporation shall be liable
-------
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld); and provided further that neither the Company nor the
-------- -------
Surviving Corporation shall be obligated pursuant to this Section 5.05(b) to pay
the fees and expenses of more than one counsel for all Indemnified Parties in
any single action except to the extent that two or more of such Indemnified
Parties shall have conflicting interests in the outcome of such action; and
provided further that, in the event that any claim for indemnification is
-------- -------
asserted or made within such six-year period, all rights to indemnification in
respect of such claim shall continue until the disposition of such claim.
(c) The Surviving Corporation shall use its reasonable best efforts to
maintain in effect for three years from the Effective Time, if available, the
current directors' and officers' liability insurance policies maintained by the
Company (provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which are
not materially less favorable) with respect to matters occurring prior to the
Effective Time; provided, however, that in no event shall the Surviving
-------- -------
Corporation be required to expend pursuant to this Section 5.05(c) more than
150% of the current annual premiums.
(d) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, or at Parent's option, Parent, shall
assume the obligations set forth in this Section 5.05.
28
SECTION 5.06. Notification of Certain Matters. The Company shall
-------------------------------
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence, or nonoccurrence, of any event the occurrence,
or nonoccurrence, of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate and (ii) any
failure of the Company, Parent or Purchaser, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
-------- -------
this Section 5.06 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 5.07. Further Action; Reasonable Best Efforts. Upon the
---------------------------------------
terms and subject to the conditions hereof, each of the parties hereto shall (i)
make, within 30 days following the execution of this Agreement, its respective
filings, and thereafter make any other required submissions, under the HSR Act
with respect to the Transactions and (ii) use its reasonable best efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Transactions, including,
without limitation, using its reasonable best efforts to obtain all licenses,
permits (including, without limitation, Environmental Permits), consents,
approvals, authorizations, qualifications and orders of governmental authorities
and parties to contracts with the Company and the Subsidiaries as are necessary
for the consummation of the Transactions and to fulfill the conditions to the
Merger. In case at any time after the Effective Time any further action is
reasonably necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall use
their reasonable best efforts to take all such action.
SECTION 5.08. Public Announcements. Parent and the Company shall
--------------------
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or any Transaction and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with a
national securities exchange to which Parent or the Company is a party.
SECTION 5.09. Consents Generally. Each of the Company and Parent
------------------
will (and will cause its Subsidiaries to) use their reasonable best efforts
(without being required to make any payment not specifically required by the
terms of any related contract law or agree to any material modification or
waiver of any term of any contract or any other right) to (a) obtain or cause to
be obtained prior to the Closing all Consents, and (b) cause each Consent to be
effective as of the time of the Closing (whether it is granted or entered into
prior to or after the Closing).
SECTION 5.10. Prepayment of Certain Debt. As of the Effective Time,
--------------------------
Parent shall repay any and all amounts borrowed by the Company pursuant to the
terms of
29
both the Company's bank credit agreement, dated as of May 30, 1997, by and
among the Company, PNC Bank, N.A., SunTrust Bank, Central Florida, N.A. and
Xxxxxx Commercial Paper Inc. (the "Credit Agreement") and the note assumption
----------------
agreement, dated May 30, 1997, by and among the Company, Suncom and Midwest
Mezzanine Fund L.P. (the "Note Agreement"), and, after the Effective Time, take
--------------
all steps reasonably necessary to terminate the Credit Agreement and the Note
Agreement.
SECTION 5.11. Release of Company Stock. Prior to the Effective
------------------------
Time, the Company shall use its reasonable best efforts to cause all Shares
being held by Xx. X.X. Xxxxxx, as security, for certain amounts due Xx. Xxxxxx
pursuant to that certain agreement between Suncom and Xx. Xxxxxx, dated as of
May 30, 1997 (the "Pledge Agreement") to be released. Such Shares should
----------------
thereafter be held free and clear of any claim, lien or other encumbrance and
available for transfer hereunder. The Company shall thereafter take all steps
reasonably necessary to terminate the Pledge Agreement.
SECTION 5.12 Cancellation of Suncom Option. Prior to the Effective
-----------------------------
Time, the Company shall use its reasonable best efforts to cause the option held
by Suncom which permits Suncom to purchase up to 1,000,000 Shares to be
cancelled.
ARTICLE VI
CONDITIONS TO THE MERGER
------------------------
SECTION 6.01. Conditions to the Merger. The respective obligations
------------------------
of each party to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the transactions
--------------------
contemplated hereby shall have been approved by the affirmative vote of the
stockholders of the Company to the extent required by Florida Law and the
Articles of Incorporation of the Company;
(b) HSR Act. Any waiting period (and any extension thereof)
-------
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated; and
(c) No Order. No foreign, United States or state governmental
--------
authority or other agency or commission or foreign, United States or state court
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or
30
permanent) which is then in effect and has the effect of making the acquisition
of Shares by Parent or Purchaser or any affiliate of either of them illegal or
otherwise restricting, preventing or prohibiting consummation of the
Transactions.
SECTION 6.02. Conditions to the Obligations of Parent and Purchaser.
-----------------------------------------------------
The obligations of Parent and Purchaser under this Agreement to consummate the
Transactions contemplated hereby are subject to the satisfaction of the
following conditions, the imposition of which is solely for the benefit of
Parent and Purchaser and any one or more of which may be expressly waived by
Parent, in its sole discretion, except as otherwise required by law:
(a) Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Company contained herein shall have been true and correct
in all material respects when made, and shall be true and correct in all
material respects at and as of the Closing Date as though made on and as of the
Closing Date (except to the extent that any such representation and warranty
shall by its terms have been made as of a specific date in which case such
representation and warranty shall have been true and correct in all material
respects as of such specific date). For purposes of this Section 6.02(a), the
requirement that the representations and warranties of the Company shall be true
and correct in "all material respects" is not intended to establish a different
or higher materiality standard with respect to any representation or warranty
that is already qualified by a materiality or a Material Adverse Effect standard
by the terms thereof. Parent shall have received a certificate of the Company
dated the Closing Date and signed by an officer of the Company certifying to the
fulfillment of this condition;
(b) Performance of Agreements. The Company shall have performed in
-------------------------
all material respects all obligations and agreements and complied in all
material respects with all covenants and conditions contained in this Agreement
or otherwise contemplated hereby to be performed and complied with by it at or
prior to the Closing Date, and Parent shall have received a certificate of the
Company dated the Closing Date and signed by an officer of the Company
certifying to the fulfillment of this condition;
(c) No Material Adverse Change. Since April 1, 1998, there shall not
--------------------------
have occurred any change, condition, event, or development that has a Material
Adverse Effect;
(d) Adverse Actions. There shall not have been instituted or be
---------------
pending any action or proceeding before any court or governmental,
administrative or regulatory authority or agency, domestic or foreign, (i)
challenging or seeking to make illegal, materially delay or otherwise directly
or indirectly restrain or prohibit or make materially more costly the
consummation of the Merger, or the consummation of any other Transaction, or
seeking to obtain material damages in connection with any Transaction; (ii)
seeking to prohibit or limit materially the ownership or operation by the
Company, Parent or any of their subsidiaries of
31
all or any material portion of the business or assets of the Company, Parent or
any of their subsidiaries, or to compel the Company, Parent or any of their
subsidiaries to dispose of or hold separate all or any material portion of the
business or assets of the Company, Parent or any of their subsidiaries, as a
result of the Transactions; (iii) seeking to impose or confirm limitations on
the ability of Parent, Purchaser or any other affiliate of Parent to exercise
effectively full rights of ownership of any Shares; (iv) seeking to require
divestiture by Parent, Purchaser or any other affiliate of Parent of any Shares;
or (v) which otherwise has a Material Adverse Effect or which is reasonably
likely materially adversely to affect the business, operations, condition
(financial or otherwise), assets or liabilities (including, without limitation,
contingent liabilities) of Parent;
(e) Governmental Orders. There shall not have been any action taken,
-------------------
or any statute, rule, regulation, legislation, interpretation, judgment, order
or injunction enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to (i) Parent, the Company or any subsidiary or affiliate of Parent
or the Company or (ii) any Transaction, by any legislative body, court,
government or governmental, administrative or regulatory authority or agency,
domestic or foreign, other than the routine application of the waiting period
provisions of the HSR Act to the Merger, which is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses (i)
through (v) of paragraph (a) above;
(f) Employee Stock Options. The Company shall have taken all
----------------------
necessary measures to cancel each Option as specified in Section 1.08 hereof and
such option shall, in fact, be cancelled;
(g) Suncom Option. The Company shall have cancelled the option held
-------------
by Suncom which permits Suncom to purchase up to 1,000,000 Shares;
(h) Maximum Liabilities. The Closing Net Liability Amount shall not
-------------------
be greater than $33,950,000. "Closing Net Liability Amount" means the sum of:
----------------------------
(i) the aggregate amount of the liabilities, other than the current liabilities
of the Company and its Subsidiaries, (ii) the aggregate amount of the current
portions of all non-current liabilities of the Company and its Subsidiaries
(e.g., the portion, if any, of the principal amount of any long-term
indebtedness of the Company which is classified under generally accepted
accounting principles as a current liability by virtue of the fact that such
portion is due and payable within one year of the time in question), (iii)
without duplication of any amount described in clause (ii) above, the aggregate
amount of all unpaid accrued interest which is part of the current liabilities
of the Company and its Subsidiaries, and (iv) the excess, if any, of the
aggregate amount of the current liabilities of the Company and its Subsidiaries
not described in clause (ii) or clause (iii) over the aggregate amount of the
current assets of the Company and its Subsidiaries; in each of the foregoing
cases determined on a consolidated basis as of the time of the Closing in
accordance with generally accepted accounting principles;
32
(i) Release of Company Stock. The Company shall have secured the
------------------------
release of the Shares under the Pledge Agreement; and
(j) Consents. All Consents, listed on Section 2.05 of the Disclosure
--------
Schedule, shall have been obtained and be in full force and effect. The Company
shall have delivered to Parent copies of all such Consents.
SECTION 6.03. Conditions to the Obligations of The Company. The
--------------------------------------------
obligations of the Company to consummate the transactions contemplated hereby
are subject to the satisfaction of the following conditions, the imposition of
which is solely for the benefit of the Company and any one or more of which may
be expressly waived by the Company, in its sole discretion, except as otherwise
required by law:
(a) Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of Parent and Purchaser contained herein shall have been true and
correct in all material respects when made, and shall be true and correct in all
material respects at and as of the Closing Date as though made on and as of the
Closing Date (except to the extent that any such representation and warranty had
by its terms been made as of a specific date, in which case such representation
and warranty shall have been true and correct in all material respects as of
such specific date). For purposes of this Section 6.03(a), the requirement that
the representations and warranties of Parent and Purchaser shall be true and
correct in "all material respects" is not intended to establish a different or
higher materiality standard with respect to any representation or warranty that
is already qualified by a materiality or a Material Adverse Effect standard by
the terms thereof. The Company shall have received a certificate of Parent
dated the Closing Date and signed by an officer of Parent certifying to the
fulfillment of this condition;
(b) Performance of Agreements. Each of Parent and Purchaser shall
-------------------------
have performed in all material respects all obligations and agreements and
complied in all material respects with all covenants and conditions contained in
this Agreement to be performed and complied with by it at or prior to the
Closing Date, and the Company shall have received a certificate of Parent dated
the Closing Date and signed by an officer of Parent certifying the fulfillment
of this condition; and
(c) Prepayment of Certain Debt. As of the Effective Time, Parent
--------------------------
shall have repaid all amounts outstanding under the Credit Agreement and the
Note Agreement.
33
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
SECTION 7.01. Termination. This Agreement may be terminated and the
-----------
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent, Purchaser and the Company; or
(b) By Parent if there has been a material breach of any
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement that, if not a willful breach and if curable, has not
been cured within 15 days following receipt by the Company of notice of such
breach from Parent;
(c) By the Company if there has been a material breach of any
representation, warranty, covenant or agreement on the part of Parent or
Purchaser set forth in this Agreement that, if not a willful breach and if
curable, has not been cured within 15 days following receipt by Parent or
Purchaser of notice of such breach from the Company;
(d) By either Parent or the Company, if the Merger shall not have been
consummated within 150 days of the signing of this Agreement (or such later date
as may be agreed to by Parent and the Company), provided that neither party may
terminate this Agreement under this Section 7.01(d) if the failure has been
caused by such party's material breach of this Agreement;
(e) By either Parent or the Company, if this Agreement shall fail to
receive the requisite vote for approval and adoption by the stockholders of the
Company at the Stockholders Meeting;
(f) By Parent, if (i) the Board of Directors of the Company shall
withdraw, modify or change the Recommendation in a manner adverse to Parent or
shall have resolved to do any of the foregoing; (ii) the Board of Directors of
the Company shall have recommended to the stockholders of the Company, or agreed
to enter into, an Alternate Transaction (which shall include, without
limitation, any merger, consolidation or sale of all or substantially all of the
Company's assets); (iii) a tender offer or exchange offer, except for such an
offer by Parent, an affiliate or any "group" of which any of them is a member,
for shares of capital stock of the Company that would result in the beneficial
ownership by any Person or any "group" (as defined in Section 13(d) of the
Exchange Act and the rules and regulations
34
promulgated thereunder) of more than 50% of the outstanding shares of any class
of capital stock of the Company is commenced; or (iv) any Person, other than
Suncom, or, other than Parent, an affiliate or any "group" of which any of them
is a member shall have acquired beneficial ownership or the right to acquire
beneficial ownership of, or any "group" shall have been formed that beneficially
owns, or has the right to acquire "beneficial ownership" of, more than 50% of
the then-outstanding shares of any class of capital stock of the Company;
(g) By either the Company or Parent, prior to the occurrence of the
vote of the stockholders of the Company with respect to this Agreement, if (i)
the Company has received an Alternate Transaction Proposal that the Company's
Board of Directors determines in good faith could be financially superior to the
Merger, (ii) based on the written advice of outside independent legal counsel,
the Company's Board of Directors believes that it is required to respond to and
pursue such Alternate Transaction Proposal in order to comply with its fiduciary
obligations to holders of Common Stock under applicable Florida Law, and (iii)
the Company has entered into a definitive agreement to consummate such Alternate
Transaction Proposal;
(h) By Parent or the Company, if a court of competent jurisdiction or
other governmental Entity shall have issued an order, decree or ruling or taken
any other action restraining, enjoining or otherwise prohibiting the
consummation of the Merger, and such order, decree, ruling or other action shall
have become final and nonappealable.
SECTION 7.02. Effect of Termination. In the event of the termination
---------------------
of this Agreement pursuant to Section 7.01, this Agreement shall forthwith
become void, and there shall be no liability or further obligation on the part
of any party hereto, except (i) as set forth in Sections 5.03(c), 5.08, 7.02,
7.03 and 8.01 and (ii) nothing herein shall relieve any party from liability for
any breach hereof; provided, however, that no termination of this Agreement
-------- -------
shall be of any effect unless and until the Company has paid to Parent the Fee
and any Expenses due the Parent from the Company pursuant to Section 7.03
hereof.
SECTION 7.03. Fees and Expenses. (a) The Company agrees that if
-----------------
this Agreement shall be terminated pursuant to:
(i) Section 7.01(f)(i), Section 7.01(f)(ii) or Section 7.01(g);
or
(ii) Section 7.01(e) and (A) at the time this Agreement is
terminated there shall exist an Alternate Transaction Proposal or any Person
shall have publicly announced its intention to make an Alternate Transaction
Proposal and (B) within 12 months after the date on which this Agreement is
terminated the Company shall sign a definitive agreement for the purpose of
consummating an Alternate Transaction.
35
If this Agreement is terminated pursuant to any of the foregoing
provisions, then the Company shall pay to Parent an amount equal to 3% of the
aggregate Merger Consideration (the "Fee") which amount shall be payable in
---
immediately available funds, plus all Expenses (as hereinafter defined).
(b) If this Agreement is terminated pursuant to Section 7.01(e),
Section 7.01(f)(i), Section 7.01(f)(ii), or Section 7.01(g) and neither Parent
nor Purchaser is in material breach of their respective material covenants and
agreements contained in this Agreement or their respective representations and
warranties contained in this Agreement, the Company shall, whether or not any
payment is made pursuant to Section 7.03(a), reimburse each of Parent and
Purchaser (not later than five business days after submission of statements
therefor) for all out-of-pocket expenses and fees up to $500,000 in the
aggregate (including, without limitation, fees and expenses payable to all
banks, investment banking firms, other financial institutions and other persons
and their respective agents and counsel for arranging, committing to provide or
providing any financing for the Transactions or structuring the Transactions,
and all fees of counsel, accountants, experts and consultants to Parent,
Purchaser and all printing and advertising expenses) actually incurred or
accrued by either of them or on their behalf in connection with the
Transactions, including, without limitation, the financing thereof, and actually
incurred or accrued by banks, investment banking firms, other financial
institutions and other persons and assumed by Parent and Purchaser in connection
with the negotiation, preparation, execution and performance of this Agreement,
the structuring and financing of the Transactions and any financing commitments
or agreements relating thereto (all the foregoing being referred to herein
collectively as the "Expenses").
--------
(c) The Company agrees that if this Agreement is terminated pursuant
to Section 7.01(b), the Company shall pay Parent an amount equal to 3% of the
aggregate Merger Consideration as liquidated damages, which payment shall be the
exclusive remedy available to Parent at law or in equity in respect of
termination pursuant to Section 7.01(b) hereof, and shall constitute payment for
all claims, damages, out-of-pocket expenses and fees arising out of or incurred
by Parent or Purchaser in connection with this transaction.
(d) Parent and Purchaser agree that if this Agreement is terminated
pursuant to Section 7.01(c), Parent shall cause Purchaser to pay the Company
$1,750,000 as liquidated damages, which payment shall be the exclusive remedy
available to the Company at law or in equity in respect of any breach of this
Agreement by Parent or Purchaser, and shall constitute payment for all claims,
damages, out-of-pocket expenses and fees arising out of or incurred by the
Company in connection with this transaction. Parent and the Company shall cause
an escrow agreement (the "Escrow Agreement") to be entered into on the date
----------------
hereof. The Escrow Agreement shall be funded by Parent in the amount of
$1,750,000, and shall serve to fund the obligations of Parent and Purchaser
under this Section 7.03(d).
36
(e ) Except as set forth in this Section 7.03, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, whether or not any Transaction is
consummated.
SECTION 7.04. Amendment. This Agreement may be amended by the
---------
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
-------- -------
after the approval and adoption of this Agreement and the transactions
contemplated hereby by the stockholders of the Company, no amendment may be made
which would reduce the amount or change the type of consideration into which
each Share shall be converted upon consummation of the Merger. This Agreement
may not be amended except by an instrument in writing signed by the parties
hereto.
SECTION 7.05. Waiver. At any time prior to the Effective Time, any
------
party hereto may (i) extend the time for the performance of any obligation or
other act of any other party hereto, (ii) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if set forth in
an instrument in writing signed by the party or parties to be bound thereby.
ARTICLE VIII
GENERAL PROVISIONS
------------------
SECTION 8.01. Non-Survival of Representations, Warranties and
-----------------------------------------------
Agreements. The representations, warranties and agreements in this Agreement
----------
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.01, as the case may be, except that the agreements set
forth in Article I and Section 5.05 shall survive the Effective Time
indefinitely and those set forth in Section 5.03(c) and Section 5.08 shall
survive termination indefinitely.
SECTION 8.02. Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 8.02):
37
if to Parent or Purchaser:
DMA Holdings, Inc.
c/o Integrated Capital Associates, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telecopier No: 000-000-0000
Attention: President
with a copy to:
Shearman & Sterling
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopier No: 000-000-0000
Attention: Xxxxxxxxxxx X. Xxxxxx, Esq.
if to the Company:
Audio Communications Network, Inc.
0000 Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Telecopier No: 000-000-0000
Attention: President
with a copy to:
Xxxxxx Xxxxx & Bockius
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopier No: 000-000-0000
Attention: Xxx Xxxxxxxxx
with a copy to:
Bear, Marks & Xxxxx
000 0xx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier No: 000-000-0000
Attention: Xxxx Xxxxxx
38
SECTION 8.03. Certain Definitions. For purposes of this Agreement,
-------------------
the term:
(a) "affiliate" of a specified person means a person who directly or
---------
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such specified person;
(b) "beneficial owner" with respect to any Shares means a person who
----------------
shall be deemed to be the beneficial owner of such Shares (i) which such person
or any of its affiliates or associates (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) beneficially owns, directly or indirectly,
(ii) which such person or any of its affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration rights,
exchange rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding or (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates or person with whom such person or
any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
Shares;
(c) "business day" means any day on which the principal offices of the
------------
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York;
(d) "consent" means any consent, order, approval, authorization or
-------
other action of, or any filing with or notice to or other action with respect
to, any governmental entity or any other Person which is required for any of the
execution, delivery or performance of this Agreement or any other document
contemplated hereby, the consummation of the Merger or any other transaction
contemplated hereby, or the conduct or operation of the business by the Company
and its Subsidiaries after the Merger or the holding or utilization of any asset
of the business of the Company and its Subsidiaries after the Merger, whether
such requirement arises pursuant to any law or contract, including any of the
foregoing which is required in order to prevent a breach of or a default under
or a termination or modification of any contract.
(e) "control" (including the terms "controlled by" and "under common
------- ------------- ------------
control with") means the possession, directly or indirectly or as trustee or
------------
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
39
(f) "governmental authorizations" means any approval, consent or order
---------------------------
of any United States federal or state body; and
(g) "person" means an individual, corporation, partnership, limited
------
partnership, syndicate, person (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a government.
SECTION 8.04. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 8.05. Entire Agreement; Assignment. This Agreement
----------------------------
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the subject matter
hereof. This Agreement shall not be assigned by operation of law or otherwise,
except that Parent and Purchaser may assign all or any of their rights and
obligations hereunder to any affiliate of Parent, provided that no such
--------
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations.
SECTION 8.06. Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 5.05 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
SECTION 8.07. Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
40
SECTION 8.08. Governing Law. Except to the extent the Merger is
-------------
mandatorily governed by Florida law, this Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that state. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any federal district court sitting in the City of New York.
SECTION 8.09. Headings. The descriptive headings contained in this
--------
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 8.10. Counterparts. This Agreement may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
41
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
DMA HOLDINGS, INC.
By /s/ Xxxxxxx Xxxx
-----------------------------------
Title: President
DIVERSE MEDIA ACQUISITIONS, INC.
By /s/ Xxxxxxx Xxxx
-----------------------------------
Title: President
AUDIO COMMUNICATION NETWORK, INC.
By /s/ Xxxxxxxx Xxxxxxxxxxxx
-----------------------------------
Title: President
Name: Xxxxxxxx Xxxxxxxxxxxx
