Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
AMERICAN INDEPENDENT NETWORK, INC.
AND
HISPANO TELEVISION VENTURES, INC.
DATED AS OF OCTOBER 15, 1999
TABLE OF CONTENTS
ARTICLE I - THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. The Closing.. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.03. Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.04. Effect of the Merger. . . . . . . . . . . . . . . . . . . . . . 2
Section 1.05. Directors and Officers. . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II - CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES . . . . . . . . 2
Section 2.01. Merger Consideration: Conversion and Cancellation of Securities 2
Section 2.02. Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.03. Stock Transfer Books. . . . . . . . . . . . . . . . . . . . . . 4
Section 2.04. Dissenters' Rights. . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF HTV . . . . . . . . . . . . . . 5
Section 3.01. Organization and Qualification: Subsidiaries. . . . . . . . . . 5
Section 3.02. Articles of Incorporation and Bylaws. . . . . . . . . . . . . . 5
Section 3.03. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.04. Authority.. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.05. No Conflict: Required Filings and Consents. . . . . . . . . . . 7
Section 3.06. Permits; Compliance.. . . . . . . . . . . . . . . . . . . . . . 8
Section 3.07. Reports; Financial Statements; Undisclosed Liabilities. . . . . 8
Section 3.08. Absence of Certain Changes or Events. . . . . . . . . . . . . . 8
Section 3.09. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.10. Employee Benefit Plans; Labor Matters.. . . . . . . . . . . . . 9
Section 3.11. Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.12. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.13. Insider Interests; Transactions with Management.. . . . . . . . 10
Section 3.14. Contracts and Agreements. . . . . . . . . . . . . . . . . . . . 11
Section 3.15. Brokers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.16. Board Recommendations.. . . . . . . . . . . . . . . . . . . . . 11
Section 3.17. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.18. Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF AIN. . . . . . . . . . . . . . . 12
Section 4.01. Organization and Qualification; Subsidiaries. . . . . . . . . . 12
Section 4.02. Certificate of Incorporation and Bylaws; Formation Documents. . 12
Section 4.03. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.04. Authority.. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.05. No Conflict; Required Filings and Consents. . . . . . . . . . . 14
Section 4.06. Permits; Compliance.. . . . . . . . . . . . . . . . . . . . . . 14
Section 4.07. Reports; Financial Statements.. . . . . . . . . . . . . . . . . 14
Section 4.08. Absence of Certain Changes or Events. . . . . . . . . . . . . . 15
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Section 4.09. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.10. Employee Benefit Plans; Labor Matters . . . . . . . . . . . . . 16
Section 4.11. Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.12. Environmental Matters . . . . . . . . . . . . . . . . . . . . . 17
Section 4.13. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.14. Insider Interests; Transactions with Management . . . . . . . . 18
Section 4.15. Contracts and Agreements. . . . . . . . . . . . . . . . . . . . 18
Section 4.16. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.17. Board Recommendations . . . . . . . . . . . . . . . . . . . . . 18
Section 4.18. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V - COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.01. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . 19
Section 5.02. Negative Covenants. . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.03. Access and Information. . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI - ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.01. Transfer Restrictions . . . . . . . . . . . . . . . . . . . . . 22
Section 6.02. Name Change . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII - CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.01. Additional Conditions to Obligations of AIN.. . . . . . . . . . 23
Section 7.02. Additional Conditions to Obligations of HTV . . . . . . . . . . 24
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . . . . . . . 26
Section 8.01.Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.02. Effect of Termination; Remedies.. . . . . . . . . . . . . . . . 26
Section 8.03. Amendment.. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 8.04. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 8.05. Fees and Expenses.. . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE IX - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 9.01. Effectiveness of Representations, Warranties and Agreements.. . 27
Section 9.02. Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 9.03. Certain Definitions.. . . . . . . . . . . . . . . . . . . . . . 29
Section 9.04. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.05. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 9.06. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 30
Section 9.07. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 9.08. Parties in Interest.. . . . . . . . . . . . . . . . . . . . . . 30
Section 9.09. Failure or Indulgence Not Waiver; Remedies Cumulative.. . . . . 30
Section 9.10. Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 9.11. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 9.12. Specific Performance. . . . . . . . . . . . . . . . . . . . . . 30
Section 9.13. Confidentiality Agreement . . . . . . . . . . . . . . . . . . . 31
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of October 15, 1999 (this
"Agreement"), is by and between American Independent Network, Inc., a Delaware
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corporation ("AIN"), and Hispano Television Ventures, Inc., a Texas corporation
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("HTV").
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WHEREAS, HTV, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware ("DGCL") and the Texas Business Corporation Code ("TBCA"), will merge
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with and into AIN (the "Merger");
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WHEREAS, the Board of Directors of HTV has determined that the Merger is
advisable and is fair to, and in the best interests of, HTV and its
stockholders, has approved and adopted this Agreement and the transactions
contemplated hereby, and has recommended approval and adoption of this Agreement
by the stockholders of HTV; and
WHEREAS, the Board of Directors of AIN has determined that the Merger is
advisable and is fair to, and in the best interests of, AIN and its
stockholders, has approved and adopted this Agreement and the transactions
contemplated hereby, and has recommended approval and adoption of this Agreement
by the stockholders of AIN;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.01. The Merger. Upon the terms and subject to the conditions
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set forth in this Agreement, and in accordance with the DGCL and the TBCA, at
the Effective Time (as defined in Section 1.03 of this Agreement), HTV shall be
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merged with and into AIN. As a result of the Merger, the separate corporate
existence of HTV shall cease and AIN shall continue as the surviving corporation
of the Merger (the "Surviving Corporation").
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Section 1.02. The Closing. Subject to the terms and conditions of this
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Agreement, the closing of the Merger (the "Closing") shall take place (a) at the
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offices of Xxxxxx & Hanger, L.L.P., 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxxx,
Xxxxx 00000, at 9:00 a.m., local time, on the day immediately following the day
on which the last to be fulfilled or waived of the conditions set forth in
Article VII shall be fulfilled or waived in accordance herewith (other than
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conditions with respect to actions the respective parties hereto will take at
the Closing), or (b) at such other time, date or place as AIN and HTV may agree.
The date on which the Closing occurs is hereinafter referred to as the "Closing
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Date."
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Section 1.03. Effective Time. On the Closing Date, the parties hereto
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shall cause the Merger to be consummated by filing a Certificate of Merger with
the Delaware Secretary of State and Articles of Merger with the Texas Secretary
of State in such forms as are required by, and executed in accordance with the
relevant provisions of the DGCL and the TBCA, respectively (the date and time of
the completion of such filing or such later date and time as may be specified in
the Certificate of Merger and Articles of Merger as the effective time of the
Merger being the "Effective Time").
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Section 1.04. Effect of the Merger. At the Effective Time, the effect
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of the Merger shall be as provided in Section 259 of the DGCL and Article 5.06
of the TBCA. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of AIN and HTV shall vest in the Surviving Corporation, and all
debts, obligations, liabilities and duties of each of AIN and HTV shall become
the debts, obligations, liabilities and duties of the Surviving Corporation.
Section 1.05. Directors and Officers. Xxxxx X. Xxxxxx, P. Xxxx Xxxxxxx,
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Xxxxxxx X. Xxxxxx and Xxx X. Xxxxxx shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation. P. Xxxx Xxxxxxx shall be
the President and Chief Operating Officer, Xxxxxxx X. Xxxxxx shall be the Chief
Financial Officer and the Treasurer, and Xxxxxxxx X. Xxxxxxx shall be the
Secretary of the Surviving Corporation in each case until their respective
successors are duly elected or appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.01. Merger Consideration: Conversion and Cancellation of
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Securities. At the Effective Time, by virtue of the Merger and without any
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action on the part of AIN, HTV or the holders of any of HTV's securities:
(a) Subject to the other provisions of this Article II, each share of
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common stock, par value $.001 per share, of HTV ("HTV Common Stock") issued and
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outstanding immediately prior to the Effective Time (excluding any Dissenting
Shares and any HTV Common Stock described in Section 2.01(d) of this Agreement)
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shall be converted into the right to receive 1.640624949 fully paid and
nonassessable share of common stock, par value $.01 per share, of AIN ("AIN
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Common Stock") (the "Conversion Ratio").
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(b) Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding shares of AIN Common Stock or
HTV Common Stock shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Conversion Ratio
shall be correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
(c) As a result of their conversion pursuant to Section 2.01(a), all
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shares of HTV Common Stock shall cease to be outstanding and shall automatically
be canceled and retired. Each certificate previously evidencing HTV Common
Stock outstanding immediately prior to the Effective Time (other than HTV Common
Stock described in Section 2.01(d) of this Agreement and any Dissenting Shares)
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("Converted Common Stock") shall thereafter represent, subject to Section
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2.02(b) of this Agreement, the right to receive that number of shares of AIN
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Common Stock determined pursuant to the Conversion Ratio and, if applicable, the
right to receive cash pursuant to Section 2.02(b) of this Agreement ("Merger
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Consideration"). The holders of certificates previously evidencing Converted
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Common Stock shall cease to have any rights with respect to such Converted
Common Stock except the right to receive the applicable Merger Consideration and
as otherwise provided in this Agreement or by law. Such certificates previously
evidencing Converted Common Stock shall be exchanged for certificates evidencing
whole shares of AIN Common Stock issued in consideration therefor upon the
surrender of such certificates in accordance with the provisions of Section 2.02
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of this Agreement. No fractional shares of AIN Common Stock shall be issued
and, in lieu thereof, a cash payment shall be made pursuant to Section 2.02(b)
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of this Agreement.
(d) Notwithstanding any provision of this Agreement to the contrary,
each share of HTV Common Stock held in the treasury of HTV immediately prior to
the Effective Time shall be canceled and extinguished without any conversion
thereof and no payment shall be made with respect thereto.
(e) Each share of AIN Common Stock issued and outstanding immediately
prior to the Effective Time shall remain issued and outstanding and shall
thereafter represent one validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation, and shall not be converted or
affected by virtue of the Merger.
(f) Notwithstanding Section 2.01(e) of this Agreement, each share of
AIN Common Stock held by HTV immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof and no payment shall be
made with respect thereto.
Section 2.02. Certificates.
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(a) Surrender of Certificates. As soon as practicable following the
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Effective Time, a Letter of Transmittal will be forwarded to the holders of HTV
Common Stock soon after the date of this Agreement, and upon a stockholder's
completion and return of the Letter of Transmittal to AIN, along with the
endorsed original HTV certificates, certificates representing the number of
shares of AIN Common Stock based on the Conversion Ratio set forth in Section
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2.01(a) of this Agreement, shall be issued to such stockholder or as otherwise
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requested in the Letter of Transmittal.
(b) No Fractional Shares. No certificates evidencing fractional shares
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of AIN Common Stock shall be issued upon the surrender for exchange of HTV
Common Stock certificates, and such fractional share interests shall not entitle
the owner thereof to any rights of a stockholder of AIN. In lieu of any such
fractional shares, (i) each holder of a certificate previously evidencing HTV
Common Stock, upon surrender of such certificate for exchange pursuant to this
Article II, shall be paid an amount in cash (without interest), rounded to the
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nearest cent, determined by multiplying (A) the Closing Price multiplied by the
Conversion Ratio by (B) the fractional interest to which such holder would
otherwise be entitled (after taking into account all shares of HTV Common Stock
held of record by such holder at the Effective Time). "Closing Price" means the
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closing sales price of the AIN Common Stock on the OTCBB as reported by the Wall
Street Journal on the day preceding the Closing Date as provided in Section 1.02
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hereof.
Section 2.03. Stock Transfer Books. At the Effective Time, the stock
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transfer books of HTV shall be closed and there shall be no further registration
of transfers of shares of HTV Common Stock thereafter on the records of HTV.
If, after the Effective Time, HTV Common Stock certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for the Merger
Consideration, deliverable in respect thereof pursuant to this Agreement in
accordance with the procedures set forth in this Article II.
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Section 2.04. Dissenters' Rights.
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(a) Notwithstanding the provision of Section 2.01 or any other
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provision in this Agreement to the contrary, each share of HTV Common Stock
issued and outstanding immediately prior to the Effective Time and held by
stockholders who have not voted such shares in favor of the Merger or consented
thereto in writing and qualify under and have complied with all of the
provisions of Articles 5.11 and 5.12 of the TBCA (the "Appraisal Provisions")
("Dissenting Shares") shall not, by virtue of the Merger, be converted into the
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right to receive the Merger Consideration but such stockholder shall be entitled
to receive payment of the appraised value of such shares of HTV Common Stock or
held by them in accordance with the Appraisal Provisions; provided, however,
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that if any holder of Dissenting Shares (i) subsequently delivers a written
withdrawal of his demand for appraisal rights (with the written consent of AIN
if such written withdrawal is not made after the Effective Time within the time
periods required by the Appraisal Provisions), or (ii) fails to perfect
dissenter's rights as provided in the Appraisal Provisions, or (iii) if neither
any holder of Dissenting Shares nor the Surviving Corporation has filed a
petition demanding a determination of the value of Dissenting Shares within the
time provided in the Appraisal Provisions, the Dissenting Shares held by such
holder or holders (as the case may be) shall thereupon be deemed to have been
converted into and to have become exchangeable for, as of the Effective Time,
the right to receive the Merger Consideration as provided in this Agreement
without any interest thereon and shall be treated for all purposes as Converted
Common Stock.
(b) HTV shall give AIN (i) prompt notice of any written demands for
appraisal, withdrawal of demands for appraisal and any other instruments served
pursuant to the Appraisal Provisions and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
Appraisal Provisions. HTV agrees that prior to the Effective Time, it will not,
without the prior written consent of AIN, voluntarily make or agree to make any
payment with respect to, or settle or offer to settle, any such demands.
(c) Each holder of Dissenting Shares who becomes entitled, pursuant to
the Appraisal Provisions, to payment for his or its Dissenting Shares shall
receive payment therefor after the Effective Time from the Surviving Corporation
(but only after the amount thereof shall have been agreed upon or finally
determined pursuant to such provisions) and such shares shall be canceled.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HTV
HTV hereby represents and warrants to AIN that:
Section 3.01. Organization and Qualification: Subsidiaries. HTV is a
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corporation, and each of HTV's subsidiaries (as such term in defined in Section
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9.03 herein) is a corporation, duly organized, validly existing and in good
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standing under the laws of the jurisdiction of its incorporation or
organization, and each of HTV and its subsidiaries has all requisite corporate
power and authority to own, lease and operate its properties and to conduct its
business as it is now being conducted and is qualified to do business and is in
good standing in each jurisdiction in which the nature of the business conducted
by it or the ownership or leasing of its properties makes such qualification
necessary, other than where the failure to be so qualified and in good standing
could not reasonably be expected to have a HTV Material Adverse Effect. The
term "HTV Material Adverse Effect" as used in this Agreement shall mean any
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change or effect that would be materially adverse to the financial condition,
results of operations, business, or prospects of HTV and its subsidiaries, taken
as a whole, at the time of such change or effect. Section 3.01 of the
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Disclosure Schedule delivered by HTV to AIN concurrently with the execution of
this Agreement (the "HTV Disclosure Schedule") sets forth, as of the date of
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this Agreement, a true and complete list of all HTV's directly or indirectly
owned subsidiaries, together with the jurisdiction of incorporation or
organization of each such subsidiary and the percentage of each such
subsidiary's outstanding capital stock or other equity interests owned by HTV or
another subsidiary of HTV.
Section 3.02. Articles of Incorporation and Bylaws. HTV has heretofore
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furnished or made available to AIN complete and correct copies of the Articles
of Incorporation and the Bylaws, in each case as amended or restated to the date
hereof, of HTV and each of its subsidiaries. Neither HTV nor any of its
subsidiaries is in violation of any of the provisions of its Articles of
Incorporation or Bylaws.
Section 3.03. Capitalization.
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(a) The authorized capital stock of HTV consists of 50,000,000 shares
of HTV Common Stock, par value $.001 per share, and 25,000,000 shares of
Preferred Stock, par value $0.001 per share. At the date hereof, 21,333,334
shares of HTV Common Stock were issued and outstanding, no shares of HTV Common
Stock were held by HTV in its treasury or by HTV's subsidiaries and no shares of
HTV Common Stock were reserved for issuance. Each of the issued shares of
capital stock of each of HTV and its subsidiaries is duly authorized, validly
issued and fully paid and nonassessable, and has not been issued in violation of
(nor are any of the authorized shares of capital stock of, or other equity
interests in, HTV or any of its subsidiaries subject to) any preemptive or
similar rights created by statute, the Articles of Incorporation or Bylaws (or
the equivalent organizational documents) of HTV or any of its subsidiaries, any
agreement to which HTV or any of its subsidiaries is a party or is bound or
applicable federal or state securities laws. All issued shares or other equity
interests in the subsidiaries of HTV owned by HTV or a subsidiary of HTV are
owned free and clear of all security interests, liens, claims, pledges,
agreements, limitations on HTV's or such subsidiaries' voting rights, charges or
other encumbrances of any nature whatsoever.
(b) Except as set forth in Section 3.03(b) of the HTV Disclosure
Schedules, no bonds, debentures, notes or other indebtedness of HTV or its
subsidiaries having the right to vote (or convertible into or exchangeable or
exercisable for securities having the right to vote) on any matters on which
stockholders may vote ("HTV Voting Debt") are issued or outstanding.
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(c) There are no options, warrants or other rights (including
registration rights), agreements, arrangements or commitments of any character
to which HTV or any of its subsidiaries is a party relating to the issued or
unissued capital stock of HTV or any of its subsidiaries or obligating HTV or
any of its subsidiaries to grant, issue, sell or register under federal or state
securities laws any shares of capital stock, HTV Voting Debt or other equity
interests of HTV or any of its subsidiaries. There are no obligations,
contingent or otherwise, of HTV or any of its subsidiaries (i) to repurchase,
redeem or otherwise acquire any shares of HTV Common Stock or other capital
stock of HTV or the capital stock of any subsidiary of HTV or (ii) other than
advances to wholly owned subsidiaries in the ordinary course of business, to
provide funds to, or to make any investment in (in the form of a loan, capital
contribution or otherwise), or to provide any guarantee with respect to the
obligations of, any subsidiary of HTV or any other person. Except (i) as set
forth in Section 3.03(c) of the HTV Disclosure Schedule or (ii) for the
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subsidiaries of HTV set forth in Section 3.01 of the HTV Disclosure Schedule,
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neither HTV nor any of its subsidiaries (x) directly or indirectly owns, (y) has
agreed to purchase or otherwise acquire or (z) holds any interest convertible
into or exchangeable or exercisable for the capital stock or any other equity
interests of any corporation, partnership, joint venture or other business
association or entity. Except as set forth in Section 3.03(c) of the HTV
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Disclosure Schedule or for any agreements, arrangements or commitments between
HTV and its wholly owned subsidiaries or between such wholly owned subsidiaries,
there are no agreements, arrangements or commitments of any character
(contingent or otherwise) pursuant to which any person is or may be entitled to
receive any payment based on, or calculated in accordance with, the revenues or
earnings of HTV or any of its subsidiaries. Except as set forth in Section
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3.03(c) of the HTV Disclosure Schedule, there are no voting trusts, proxies or
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other agreements or understandings to which HTV or any of its subsidiaries is a
party or by which HTV or any of its subsidiaries is bound with respect to the
voting of any shares of capital stock or other equity interests of HTV or any of
its subsidiaries.
Section 3.04. Authority. HTV has all requisite corporate power and
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authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby (subject to,
with respect to the Merger, the approval and adoption of this Agreement by the
stockholders of HTV as set forth in Section 7.01(a) of this Agreement). The
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execution and delivery of this Agreement by HTV and the consummation by HTV have
been duly authorized by all necessary corporate action and no other corporate
proceedings on the part of HTV are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (subject to, with respect to the
Merger, the approval and adoption of this Agreement by the stockholders of HTV
as described in Section 7.01(a) of this Agreement). This Agreement has been
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duly executed and delivered by HTV and, assuming the due authorization,
execution and delivery hereof by AIN, constitutes the legal, valid and binding
obligation of HTV, enforceable against HTV in accordance with its terms.
Section 3.05. No Conflict: Required Filings and Consents.
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(a) Except as disclosed in Section 3.05(a) of the HTV Disclosure
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Schedule, the execution and delivery of this Agreement by HTV does not, and the
performance by HTV of its obligations hereunder, including consummation of the
transactions contemplated hereby, will not (i) conflict with or violate the
Articles of Incorporation or Bylaws, or the equivalent organizational documents,
in each case as amended or restated, of HTV or any of its subsidiaries, (ii)
conflict with or violate any federal, state, foreign or local law, statute,
ordinance, rule or regulation (collectively, "Laws") in effect as of the date of
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this Agreement or any judgment, order or decree to which HTV or any of its
subsidiaries is a party or by or to which any of their respective properties are
bound or subject or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or impair any of HTV's or any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or require payment
under, or result in the creation of a lien or encumbrance on any of the
properties or assets of HTV or any of its subsidiaries pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which HTV or any of its
subsidiaries is a party or by or to which HTV or any of its subsidiaries or any
of their respective properties are bound or subject, excluding from the
foregoing clause (iii) any such conflicts, violations, breaches, defaults,
events, rights of termination, amendment, acceleration or cancellation, payment
obligations or liens or encumbrances that individually or in the aggregate could
not reasonably be expected to have an HTV Material Adverse Effect. The Board of
Directors of HTV has approved the Merger, this Agreement and the transactions
contemplated hereby. To the best of HTV's knowledge, no other state takeover
statute or similar statute or regulation applies or purports to apply to the
Merger, this Agreement or any of the transactions contemplated hereby.
(b) The execution and delivery of this Agreement by HTV does not, and
the performance by HTV of its obligations hereunder, including consummation of
the transactions contemplated hereby, will not, require HTV to obtain any
consent, license, permit, waiver, approval, authorization or order of, or to
make any filing with or notification to, any governmental or regulatory
authority, federal, state, local or foreign (collectively, "Governmental
------------
Entities"), except for (i) applicable requirements, if any, of the Securities
--------
Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
state securities or blue sky laws ("Blue Sky Laws") and (ii) the filing and
-------------
recordation of appropriate merger documents as required by the TBCA.
Section 3.06. Permits; Compliance. HTV is in possession of all permits
-------------------
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to possess such permits
could not reasonably be expected to have an HTV Material Adverse Effect.
Section 3.07. Reports; Financial Statements; Undisclosed Liabilities.
-------------------------------------------------------
(a) HTV has delivered to AIN (i) an unaudited consolidated balance
sheet of HTV and its subsidiaries as of June 30, 1999 and (ii) an unaudited
consolidated statement of income, stockholders' equity and cash flows for the
six month period ended June 30, 1999. Such unaudited consolidated financial
statements, (i) are in accordance with the books and records of HTV and its
subsidiaries in all material respects and were prepared in accordance with the
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except (A) to the extent disclosed therein or
required by changes in generally accepted accounting principles), as may be
indicated in the notes thereto, and (ii) fairly present in all material respects
the consolidated financial position of HTV and its subsidiaries as of the
respective dates thereof and the consolidated results of operations and cash
flows for the periods indicated (except, in the case of unaudited consolidated
financial statements for interim periods, for the absence of footnotes and
subject to adjustments, consisting only of normal, recurring accruals, necessary
to present fairly such results of operations and cash flows).
(b) Except as and to the extent set forth on the consolidated balance
sheet of HTV and its subsidiaries as of June 30, 1999, including the notes
thereto, neither HTV or any of its subsidiaries has any liabilities or
obligations material to HTV and its subsidiaries that are not referenced on such
balance sheet. Except as set forth in Section 3.07 of the HTV Disclosure
-------------
Schedule, since June 30, 1999, neither HTV nor any of its subsidiaries has
incurred any liabilities except for (i) liabilities or obligations incurred in
the ordinary course of business and consistent with past practice which do not
have an HTV Material Adverse Effect, and (ii) for professional fees and expenses
incurred in connection with or as a result of the Merger.
Section 3.08. Absence of Certain Changes or Events. Except as set
----------------------------------------
forth in Section 3.08 of the HTV Disclosure Schedule, since June 30, 1999, HTV
-------------
and its subsidiaries have conducted their respective businesses only in the
ordinary course and in a manner consistent with past practice and there has not
been (a) any damage, destruction or loss with respect to any assets of HTV or
any of its subsidiaries that, whether or not covered by insurance, would
constitute an HTV Material Adverse Effect, (b) any change by HTV or its
subsidiaries in their significant accounting policies, (c) except for dividends
by a subsidiary of HTV to HTV or another wholly owned subsidiary of HTV, any
declaration, setting aside or payment of any dividends or distributions in
respect of shares of HTV Common Stock or the shares of stock of, or other equity
interests in, any subsidiary of HTV or any redemption, purchase or other
acquisition of any of HTV's securities or any of the securities of any
subsidiary of HTV, (d) any increase in the benefits under, or the establishment
or amendment of, any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, performance awards (including, without
limitation, the granting of stock appreciation rights or restricted stock
awards), stock purchase or other employee benefit plan, or any increase in the
compensation payable or to become payable to any of the directors or officers of
HTV or the employees of HTV or its subsidiaries as a group, except for (i)
increases in salaries or wages payable or to become payable in the ordinary
course of business and consistent with past practice or (ii) the granting of
stock options in the ordinary course of business to employees of HTV or its
subsidiaries who are not directors or executive officers of HTV, or (e) any
other HTV Material Adverse Effect.
Section 3.09. Litigation. Except as set forth in Section 3.09 of the
---------- ------------
HTV Disclosure Schedule, there is no claim, action, suit, litigation,
proceeding, arbitration or, to the knowledge of HTV, investigation of any kind,
at law or in equity (including actions or proceedings seeking injunctive
relief), pending or, to the knowledge of HTV, threatened against HTV or any of
its subsidiaries or any properties or rights of HTV or any of its subsidiaries,
and neither HTV nor any of its subsidiaries is subject to any continuing order
of, consent decree, settlement agreement or other similar written agreement
with, or, to the knowledge of HTV, continuing investigation by, any Governmental
Entity, or any judgment, order, writ, injunction, decree or award of any
Governmental Entity or arbitrator, including, without limitation,
cease-and-desist or other orders.
Section 3.10. Employee Benefit Plans; Labor Matters.
-----------------------------------------
(a) HTV and its subsidiaries have no "employee benefit plan" within the
meaning of Section 3.3 of the Employee Retirement Income Securities Act of 1974,
-----------
as amended.
(b) There are no collective bargaining or other labor union contracts
to which HTV or its subsidiaries is a party and no collective bargaining
agreement is being negotiated by HTV or any of its subsidiaries. There is no
pending or, to the best knowledge of HTV, threatened labor dispute, strike or
work stoppage against HTV or
Section 3.11. Taxes. Except as set forth in Section 3.11 of the HTV
----- ------------
Disclosure Schedule:
(a) (i) all returns and reports ("Tax Returns") of or with respect to
-----------
any Tax (as defined in Section 9.03 of this Agreement) that are required to be
------------
filed on or before the date hereof by or with respect to HTV or any of its
subsidiaries have been duly and timely filed, (ii) Taxes that have become due
with respect to the period covered by each such Tax Return have been paid, (iii)
all withholding Tax requirements imposed on or with respect to HTV or any of its
subsidiaries have been satisfied in all material respects, and (iv) no penalty,
interest or other charge is due with respect to the late filing of any such Tax
Return or late payment of any such Tax.
(b) There is no claim against HTV or any of its subsidiaries for any
amount of Taxes, no assessment, deficiency or adjustment has been asserted or
proposed with respect to any Tax Return of or with respect to HTV or any of its
subsidiaries, and no Tax Return of or with respect to HTV or any of its
subsidiaries has been, or is being, audited by the Internal Revenue Service or
any state, local or other taxing authority other than those disclosed (and to
which are attached copies of all audit or similar reports) in Section 3.11 of
------------
the HTV Disclosure Schedule.
(c) The total amounts set up as liabilities for current and deferred
Taxes in the financial statements referred to in Section 3.07 of this Agreement
------------
are sufficient to cover the payment of all Taxes, whether or not assessed or
disputed, with respect to HTV and any of its subsidiaries up to and through the
periods covered thereby.
(d) Except for statutory liens for current Taxes not yet due and for
Taxes being contested in good faith that have been disclosed in Section 3.10 of
------------
the HTV Disclosure Schedule and for which adequate provisions have been made in
the financial statements referred to in Section 3.07, no liens for Taxes exist
------------
upon the assets of any of HTV or any of its subsidiaries.
(e) Neither HTV nor any of its subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(f) Neither HTV nor any of its subsidiaries has made an election under
Section 341(f) of the Code. Except as disclosed in Section 3.11 of the HTV
------------
Disclosure Schedule, neither HTV nor any of its subsidiaries has made any
payments, is obligated to make any payments, or is a party to any agreement that
under the circumstances could obligate it to make any payments that will not be
deductible under Sections 162(m) or 280G of the Code.
(g) Neither HTV nor any of its subsidiaries have taken or agreed to
take any action that would create a material risk that the Merger would not
qualify as a tax free reorganization under the provisions of Section
368(a)(1)(A) of the Code.
(h) To the extent HTV's liabilities exceed the adjusted basis of its
assets, AIN will be responsible to pay any related tax liability.
Section 3.12. Properties. Except as set forth in Section 3.12 of the
---------- ------------
HTV Disclosure Schedule, HTV and each of its subsidiaries has good, valid and
marketable title to all properties, rights, licenses, and other assets, tangible
and intangible, owned by it, including, without limitation, those listed on the
Financial Statements, free and clear of all mortgages, pledges, security
interests, liens, charges and other encumbrances, except liens for current taxes
not yet due. Except as set forth in Section 3.12 of the HTV Disclosure
-------------
Schedule, HTV and its subsidiaries' buildings, equipment, and other tangible
assets are in good operating condition in all respects and are fit for use in
the ordinary course of HTV's and its subsidiaries' business. HTV and each
subsidiary owns or has a valid leasehold interest in all assets and properties
(real or personal) necessary for the conduct of its business as possibly
conducted and proposed to be conducted.
Section 3.13. Insider Interests; Transactions with Management. Except
-----------------------------------------------
as set forth in Section 3.13 of the HTV Disclosure Schedule, no officer,
-------------
director, or employee of HTV or holder of more than five percent of HTV Common
Stock currently outstanding has any interest in any property, real or personal,
tangible or intangible, agreement, arrangement, or understanding, written or
oral, providing for the employment of, furnishing of services by, rental or real
or personal property from, or otherwise requiring payments to any such
shareholder, officer, director or employee used in or pertaining to the business
of HTV or any subsidiary, except for the ordinary rights of a stockholder or
employee stock option holder. Except as set forth on Section 3.13 of the HTV
------------
Disclosure Schedule, no executive officer or director of HTV or any of its
subsidiaries (except in his capacity as such) has any direct or indirect
material interest in (a) any competitor, customer, supplier or agent of HTV or
any of its subsidiaries, or (b) any person that is a party to any contract or
agreement with HTV or any of its subsidiaries.
Section 3.14. Contracts and Agreements. The contracts and agreements
-------------------------
listed in Section 3.14 of the HTV Disclosure Schedule constitute all of the
-------------
written and oral contracts, commitments, leases, and other agreements
(including, without limitation, promissory notes, loan agreements, and other
evidences of indebtedness) to which HTV or any of its subsidiaries is a party or
by which any of their properties are bound with respect to which the obligations
of or the benefits to be received by HTV or any of its subsidiaries,
individually or in the aggregate, could reasonably be expected to have a value
in excess of $25,000 (each a "Material Contract"). Except as set forth in
------------------
Section 3.14 of the HTV Disclosure Schedule, neither HTV nor any of its
-------------
subsidiaries are and, to the best knowledge of HTV, no other party thereto is in
default (and no event has occurred which, with the passage of time or the giving
of notice, or both, would constitute a default) under any Material Contract, and
neither HTV nor any of its subsidiaries have waived any right under any Material
Contract. Neither HTV nor any of its subsidiaries have received any notice of
default or termination under any Material Contract and neither HTV nor any of
its subsidiaries has assigned or otherwise transferred any rights under any
Material Contract or any other contract, to the extent default or termination
could have an HTV Material Adverse Effect.
Section 3.15. Brokers. No broker, finder or investment banker is
-------
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of HTV.
Section 3.16. Board Recommendations. By a unanimous vote of the Board
---------------------
of Directors (which meeting was duly called and held and at which a quorum was
present at all times), the Board of Directors (a) approved and adopted this
Agreement, including the Merger and the other transactions contemplated hereby,
and determined that the Merger is fair to the stockholders of HTV, and (b)
subject to Section 6.01 hereof, resolved to recommend approval and adoption of
------------
this Agreement, including the Merger and the other transactions contemplated
herein, by the stockholders of HTV.
Section 3.17. Disclosure. No representation or warranty hereunder
----------
contains any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained therein or herein not
misleading.
Section 3.18. Due Diligence. HTV has had access to AIN's business
--------------
records since September 1, 1999 and has had the opportunity to conduct and will
continue to conduct due diligence investigation as it deems appropriate.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AIN
AIN hereby represents and warrants to HTV that:
Section 4.01. Organization and Qualification; Subsidiaries. AIN is a
----------------------------------------------
corporation, and each of AIN's subsidiaries (as such term is defined in Section
-------
9.03 herein) is a corporation duly organized, validly existing and in good
----
standing under the laws of the jurisdiction of its incorporation and each of AIN
and its subsidiaries has all requisite corporate power and authority to own,
lease and operate its properties and to conduct its business as it is now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary, other
than where the failure to be so duly qualified and in good standing could not
reasonably be expected to have a AIN Material Adverse Effect. The term "AIN
---
Material Adverse Effect" as used in this Agreement shall mean any change or
-------------------------
effect that would be materially adverse to the financial condition, results of
operations, business, or prospects of AIN taken as a whole, at the time of such
change or effect. Section 4.01 of the Disclosure Schedule delivered by AIN to
------------
HTV concurrently with the execution of this Agreement (the "AIN Disclosure
--------------
Schedule") sets forth, as of the date of this Agreement, a true and complete
--------
list of all the AIN's directly or indirectly owned subsidiaries which have not
been previously disclosed, together with the jurisdiction of incorporation or
organization of each such subsidiary and the percentage of each such subsidiary,
outstanding capital stock or other equity interests owned by AIN or another
subsidiary of AIN.
Section 4.02. Certificate of Incorporation and Bylaws; Formation
-------------------------------------------------------
Documents. AIN has furnished or made available to HTV complete and correct
---------
copies of the Certificate of Incorporation and Bylaws, in each case as amended
or restated to the date hereof, of AIN and each of its subsidiaries. Neither
AIN nor any of its subsidiaries is in violation of any of the provisions of its
Certificate of Incorporation or Bylaws.
Section 4.03. Capitalization.
--------------
(a) The authorized capital stock of AIN as of the Effective Time will
consist of 20,000,000 shares of AIN Common Stock, par value $.01 per share
("AIN Common Stock") and 10,000,000 shares of preferred stock par value $1.00
------------------
per share (the "Preferred Stock"). Immediately prior to the Effective Time,
----------------
19,007,466 shares of AIN Common Stock will be issued and outstanding (which
include 11,000,000 shares issued to HTV which will be surrendered to AIN and
canceled upon the Effective Time) and 42,000 shares of Series B Preferred Stock
will be issued and outstanding. Except as described in this Section 4.03 or in
------------
Section 4.03(a) of the AIN Disclosure Schedule, no shares of capital stock of
----------------
AIN are reserved for issuance for any other purpose. Each of the issued shares
of capital stock of AIN and its subsidiaries is duly authorized, validly issued
and, fully paid and nonassessable, and has not been issued in violation of (nor
are any of the authorized shares of capital stock of, or other equity interests
in, AIN or any of its subsidiaries subject to) any preemptive or similar rights
created by statute, the Certificate of Incorporation or Bylaws of AIN or any of
its subsidiaries, any agreement to which AIN is a party or is bound or
applicable federal or state securities laws.
(b) No bonds, debentures, notes or other indebtedness of AIN having the
right to vote (or convertible into or exchangeable or exercisable for securities
having the right to vote) on any matters on which stockholders may vote ("AIN
---
Voting Debt") are issued or outstanding.
------------
(c) There are no options, warrants or other rights (including
registration rights), agreements, arrangements or commitments of any character
to which AIN or any of its subsidiaries is a party relating to the issued or
unissued capital stock of AIN or any of its subsidiaries or obligating AIN to
grant, issue or sell any shares of capital stock, AIN Voting Debt or other
equity interests of AIN or any of its subsidiaries. There are no obligations,
contingent or otherwise, of AIN or any of its subsidiaries (i) to repurchase,
redeem or otherwise acquire any shares of AIN Common Stock or other capital
stock of AIN or the capital stock of any Subsidiary of AIN or any of its
subsidiaries or (ii) other than advances to wholly owned subsidiaries in the
ordinary course of business, to provide funds to, or to make any investment in
(in the form of a loan, capital contribution or otherwise), or to provide any
guarantee with respect to the obligations of any Subsidiary of AIN or any other
person. Neither AIN nor any of its subsidiaries (x) directly or indirectly
owns, (y) has agreed to purchase or otherwise acquire or (z) does not hold any
interest convertible into or exchangeable or exercisable for the capital stock
or any other equity interests of any corporation, partnership, joint venture or
other business association or entity. There are no agreements, arrangements or
commitments of any character (contingent or otherwise) pursuant to which any
person is or may be entitled to receive any payment based on, or calculated in
accordance with, the revenues or earnings of AIN or any of its subsidiaries.
There are no voting trusts, proxies or other agreements or understandings to
which AIN or any of its subsidiaries is a party or by which AIN or any of its
subsidiaries is bound with respect to the voting of any shares of capital stock
or other equity interests of AIN or any of its subsidiaries.
Section 4.04. Authority. AIN has all requisite corporate power and
---------
authority to execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby(subject to,
with respect to the Merger, the approval and adoption of this Agreement by the
stockholders of AIN as set forth in Section 7.01(a) of this Agreement. The
---------------
execution and delivery of this Agreement by AIN and the performance by AIN of
its obligations hereunder, including the consummation of the transactions
contemplated hereby, have been or were duly authorized by all necessary
corporate action and no other corporate proceedings on the part of AIN are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (subject to, with respect to the Merger, the approval and
adoption of this Agreement by the stockholders of AIN as set forth in Section
-------
7.01(a) of this Agreement). This Agreement has been duly executed and delivered
-------
by AIN and, assuming the due authorization, execution and delivery hereof by
HTV, constitutes the legal, valid and binding obligations of AIN, enforceable
against AIN in accordance with its terms.
Section 4.05. No Conflict; Required Filings and Consents.
-----------------------------------------------
(a) The execution and delivery of this Agreement by AIN, does not and
the performance by AIN of its obligations hereunder, including consummation of
the transactions contemplated hereby will not (i) conflict with or violate the
Certificate of Incorporation or Bylaws, or the equivalent organizational
documents, in each case as amended or restated, of AIN or any of its
subsidiaries, (ii) conflict with or violate any Laws in effect as of the date of
this Agreement or any judgment, order or decree to which AIN or any of its
subsidiaries is a party or by or to which any of its properties are bound or
subject or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair any of AIN's or any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or require payment
under, or result in the creation of a lien or encumbrance on any of the
properties or assets of AIN or any of its subsidiaries pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which AIN or any of its
subsidiaries is a party or by or to which AIN or any of its subsidiaries or any
of their respective properties are bound or subject, excluding from the
foregoing clause (iii) any such conflicts, violations, breaches, defaults,
events, rights of termination, amendment, acceleration or cancellation, payment
obligations or liens or encumbrances that individually or in the aggregate could
not reasonably be expected to have a AIN Material Adverse Effect. The Board of
Directors of AIN has approved the merger, this Agreement and the transactions
contemplated hereof.
(b) The execution and delivery of this Agreement by AIN does not and
the performance by AIN of its obligations hereunder, including consummation of
the transactions contemplated hereby, will not, require AIN to obtain any
consent, license, permit, waiver, approval, authorization or order of, or to
make any filing with or notification to, any governmental or regulatory
authority, federal, state, local or foreign (collectively, "Governmental
------------
Entities"), except for (i) applicable requirements, if any, of the Securities
--------
Act, the Exchange Act, and the Blue Sky Laws and (ii) the filing and recordation
of appropriate merger documents as required by the DGCL.
Section 4.06. Permits; Compliance. AIN is in possession of all permits
-------------------
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted except where the failure to possess such permits
could not reasonably be expected to have a AIN Material Adverse Effect.
Section 4.07. Reports; Financial Statements.
-------------------------------
(a) AIN has delivered to HTV audited financial statements for the
periods ending December 31, 1997 and December 31, 1998. AIN has also delivered
to HTV (i) an unaudited balance sheet of AIN as of June 30, 1999, and (ii) pro
forma unaudited balance sheets and statements of income, stockholders' equity
and cash flows as of June 30, 1999. Such audited and unaudited historical
financial statements, including any such financial statements and schedules to
be contained in AIN SEC reports (or incorporated by referenced therein) (i) are
in accordance with the books and records of AIN in all material respects and
have been prepared in accordance with the published rules and regulations of the
SEC and generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except (A) to the extent disclosed therein or
required by changes in generally accepted accounting principles, and (B) in the
case of the unaudited financial statements, as permitted by the rules and
regulations of the SEC) and (ii) fairly present in all material respects the
consolidated financial position of AIN as of the respective dates thereof and
the results of operations and cash flows for the periods indicated (except, in
the case of unaudited financial statements for interim periods, for the absence
of footnotes and subject to adjustments, consisting only of normal, recurring
accruals, necessary to present fairly such results of operations and cash
flows).
(b) Except as and to the extent set forth on the unaudited balance
sheet of AIN and its subsidiaries as of June 30, 1999, including the notes
thereto, neither AIN or any of its subsidiaries has any liabilities or
obligations material to AIN and its subsidiaries that are not referenced on such
balance sheet. Except as set forth in Section 4.07 of the AIN Disclosure
-------------
Schedule, since June 30, 1999, neither AIN nor any of its subsidiaries has
incurred any liabilities except for (i) liabilities or obligations incurred in
the ordinary course of business and consistent with past practice which do not
have an AIN Material Adverse Effect, and (ii) for professional fees and expenses
incurred in connection with or as a result of the Merger.
Section 4.08. Absence of Certain Changes or Events. Except as set
----------------------------------------
forth in Section 4.08 of the AIN Disclosure Schedule, since January 1, 1999
-------------
until August 31, 1999, AIN and its subsidiaries have conducted their respective
businesses only in the ordinary course and in a manner consistent with past
practice and there has not been (a) any damage, destruction or loss with respect
to any assets of AIN, that, whether or not covered by insurance, would
constitute a AIN Material Adverse Effect, (b) any change by AIN in its
significant accounting policies, (c) except for dividends by a subsidiary of AIN
to AIN or another wholly owned subsidiary of AIN, any declaration, setting aside
or payment of any dividends or distributions in respect of shares of AIN Common
Stock or the shares of stock of, or other equity interests in, any subsidiary of
AIN or any redemption, purchase or other acquisition of any of AIN's securities
or any of the securities of any subsidiary of AIN, (d) any increase in the
benefits under, or the establishment or amendment of, any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing,
performance awards (including, without limitation, the granting of stock
appreciation rights or restricted stock awards), stock purchase or other
employee benefit plan, or any increase in the compensation payable or to become
payable to any of the directors or officers of AIN or the employees of AIN or
its subsidiaries as a group, except for (i) increases in salaries or wages
payable or to become payable in the ordinary course of business and consistent
with past practice or (ii) the granting of stock options in the ordinary course
of business to employees of AIN or its subsidiaries who are not directors or
executive officers of AIN, or (e) any other AIN Material Adverse Effect.
Section 4.09. Litigation. Except as set forth in AIN's audited
----------
financial statements for the period ending December 31, 1998 and on Form 10Q
filed with the Securities and Exchange Commission as of June 30, 1999, there is
no claim, action, suit, litigation, proceeding, arbitration or, to the knowledge
of AIN, investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), pending or, to the knowledge of AIN,
threatened against AIN or any of its subsidiaries or any properties or rights of
AIN or any of its subsidiaries, and neither AIN nor any of its subsidiaries is
subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement with, or, to the knowledge of AIN, continuing
investigation by, any Governmental Entity, or any judgment, order, writ,
injunction, decree or award of any Governmental Entity or arbitrator, including,
without limitation, cease-and-desist or other orders.
Section 4.10. Employee Benefit Plans; Labor Matters.
-----------------------------------------
(a) AIN and its subsidiaries have no "employee benefit plan" within the
meaning of Section 3.3 of the Employee Retirement Income Securities Act of 1974,
-----------
as amended.
(b) There are no collective bargaining or other labor union contracts
to which AIN is a party and no collective bargaining agreement is being
negotiated by AIN. There is no pending or, to the best knowledge of AIN,
threatened labor dispute, strike or work stoppage against the AIN.
Section 4.11. Taxes. Except as set forth in Section 4.11 of the AIN
----- ------------
Disclosure Schedule:
(a) (i) all Tax Returns that are required to be filed on or before the
date hereof by or with respect to AIN or any of its subsidiaries have been duly
and timely filed, (ii) Taxes that have become due with respect to the period
covered by each such Tax Return have been paid, (iii) all withholding Tax
requirements imposed on or with respect to AIN or any of its subsidiaries have
been satisfied in all material respects, and (iv) no penalty, interest or other
charge is due with respect to the late filing of any such Tax Return or late
payment of any such Tax .
(b) There is no claim against AIN or any of its subsidiaries for any
amount of Taxes, no assessment, deficiency or adjustment has been asserted or
proposed with respect to any Tax Return of or with respect to AIN or any of its
subsidiaries, and no Tax Return of or with respect to AIN has been, or is being,
audited by the Internal Revenue Service or any state, local or other taxing
authority other than those disclosed (and to which are attached copies of all
audit or similar reports) in Section 4.11 of the AIN Disclosure Schedule.
-------------
(c) The total amounts set up as liabilities for current and deferred
Taxes in the financial statements referred to in Section 4.07 of this Agreement
------------
are sufficient to cover the payment of all Taxes, whether or not assessed or
disputed, with respect to AIN or any of its subsidiaries up to and through the
periods covered thereby.
(d) Except for statutory liens for current Taxes not yet due and for
Taxes being contested in good faith that have been disclosed in Section 4.11 of
------------
the AIN Disclosure Schedule and for which adequate provisions have been made in
the financial statements referred to in Section 4.07, no liens for Taxes exist
------------
upon the assets of AIN or any of its subsidiaries.
(e) Neither AIN nor any of its subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(f) Neither AIN nor any of its subsidiaries has made an election under
Section 341(f) of the Code. Except as disclosed in Section 4.11 of the AIN
------------
Disclosure Schedule, neither AIN nor any of its subsidiaries has made any
payments, is obligated to make any payments, or is a party to any agreement that
under the circumstances could obligate it to make any payments that will not be
deductible under Sections 162(m) or 280G of the Code.
(g) Neither AIN nor any of its subsidiaries has taken or agreed to take
any action that would create a material risk that the Merger would not qualify
as a tax free reorganization under the provisions of Section 368(a)(1)(A) of the
Code.
(h) Neither AIN nor any of its subsidiaries (i) has been a member of an
Affiliated Group (as defined in Section 1504 of the Code) other than a group the
common parent of which was AIN or (ii) has any liability for the Taxes of any
person (other than AIN or any of its subsidiaries) under Treas. Reg. 1.1502-6
(or any similar provision under state, local, or foreign law), as a transferee
or successor, by contract, or otherwise.
Section 4.12. Environmental Matters.
----------------------
(a) To the best knowledge of AIN all of the properties, operations and
activities of AIN comply with all applicable Environmental Laws (as defined in
Section 9.03).
-------------
(b) To the best knowledge of AIN, none of AIN, its subsidiaries or
their properties and operations are subject to any existing, pending or, to the
knowledge of AIN, threatened action, suit, investigation, inquiry or proceeding
by or before any Governmental Authority or third party under any Environmental
Law.
(c) To the best knowledge of AIN, all notices, permits, licenses or
similar authorizations, if any, required to be obtained or filed by AIN or any
of its subsidiaries under any Environmental Law in connection with any aspect of
the business of AIN or its subsidiaries or the AIN Properties, including without
limitation those relating to the treatment, storage, disposal or release of a
hazardous substance or solid waste, have been duly obtained or filed and will
remain valid and in effect after the Merger, and AIN and its subsidiaries are in
compliance with the terms and conditions of all such notices, permits, licenses
and similar authorizations.
Section 4.13. Properties. Except as set forth in Section 4.13 of the
---------- ------------
AIN Disclosure Schedule, AIN and each of its subsidiaries has good, valid and
marketable title to all properties, rights, licenses, and other assets, tangible
and intangible, owned by it, including, without limitation, those listed on the
Financial Statements, free and clear of all mortgages, pledges, security
interests, liens, charges and other encumbrances, except liens for current taxes
not yet due. Except as set forth in Section 4.13 of the AIN Disclosure
-------------
Schedule, AIN and its subsidiaries' buildings, equipment, and other tangible
assets are in good operating condition in all respects and are fit for use in
the ordinary course of AIN's and its subsidiaries' business. AIN and each
subsidiary owns or has a valid leasehold interest in all assets and properties
(real or personal) necessary for the conduct of its business as possibly
conducted and proposed to be conducted.
Section 4.14. Insider Interests; Transactions with Management. Except
-----------------------------------------------
as set forth in Section 4.14 of the AIN Disclosure Schedule, no officer,
-------------
director, or employee of AIN or holder of more than five percent of AIN Common
Stock currently outstanding has any interest in any property, real or personal,
tangible or intangible, agreement, arrangement, or understanding, written or
oral, providing for the employment of, furnishing of services by, rental or
real or personal property from, or otherwise requiring payments to any such
shareholder, officer, director or employee used in or pertaining to the business
of AIN or any of its subsidiaries, except for the ordinary rights of a
stockholder or employee stock option holder. Except as set forth on Schedule
--------
4.14, no executive officer or director of AIN (except in his capacity as such)
----
has any direct or indirect material interest in (a) any competitor, customer,
supplier or agent of AIN or any of its subsidiaries, or (b) any person that is
a party to any contract or agreement with AIN or any of its subsidiaries.
Section 4.15. Contracts and Agreements. Except as set forth in Section
------------------------
4.15 of the AIN Disclosure Schedule, the contracts and agreements listed in
AIN's audited financial statements for the period ending December 31, 1998 and
on Form 10Q filed with the Securities and Exchange Commission as of June 30,
1999, constitute all of the written and oral contracts, commitments, leases, and
other agreements (including, without limitation, promissory notes, loan
agreements, and other evidences of indebtedness) to which AIN or any of its
subsidiaries is a party or by which any of their properties are bound with
respect to which the obligations of or the benefits to be received by AIN or any
of its subsidiaries, individually or in the aggregate, could reasonably be
expected to have a value in excess of $25,000 (each a "Material Contract").
-----------------
Except as set forth in Section 4.15 of the AIN Disclosure Schedule, neither AIN
------------
nor any of its subsidiaries are and, to the best knowledge of AIN, no other
party thereto is in default (and no event has occurred which, with the passage
of time or the giving of notice, or both, would constitute a default) under any
Material Contract, and neither AIN nor any of its subsidiaries have waived any
right under any Material Contract. Neither AIN nor any of its subsidiaries have
received any notice of default or termination under any Material Contract and
neither AIN nor any of its subsidiaries has assigned or otherwise transferred
any rights under any Material Contract or any other contract, to the extent
default or termination could have an AIN Material Adverse Effect.
Section 4.16. Brokers. No broker, finder or investment banker is
-------
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of AIN.
Section 4.17. Board Recommendations. By a unanimous vote of the
----------------------
directors present at a meeting of AIN's Board of Directors (which meeting was
duly called and held and at which a quorum was present at all times), the Board
of Directors of AIN (a) approved and adopted this Agreement and the other
transactions contemplated herein, and determined that the Merger is fair to the
stockholders of AIN, and (b) resolved to recommend approval and adoption of this
Agreement, including the Merger and the other transactions contemplated herein,
by the stockholders of AIN.
Section 4.18. Disclosure. No representation or warranty hereunder
----------
contains any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained therein or herein not
misleading.
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants. Each of HTV and AIN hereby
----------------------
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by the other
party, it will and will cause each of its subsidiaries to:
(a) operate its business in the usual and ordinary course consistent
with past practices;
(b) use its best efforts to preserve intact its business organization,
maintain its rights and franchises, retain the services of its respective
officers and key employees and maintain its relationships with its respective
customers and suppliers;
(c) maintain and keep its properties and assets in as good a repair and
condition as at present, ordinary wear and tear excepted, and use its best
efforts to maintain supplies and inventories in quantities consistent with its
customary business practices;
(d) use its best efforts to keep in full force and effect insurance and
bonds comparable in amount and scope of coverage to that currently maintained;
(e) promptly notify the other party of (i) any material adverse change
in the condition (financial or otherwise), of its business, properties, assets,
liabilities or prospects of HTV and its subsidiaries or in the operation of its
business or the properties and its subsidiaries, (ii) any litigation or
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated) involving the party or any of its
subsidiaries, (iii) the occurrence, or failure to occur, of any event, which
occurrence or failure to occur would likely cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any respect when made
or at any time from the date of this Agreement to the Effective Time; (iv) any
failure such party to comply in any respect with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; or (v) any other event that could reasonably be expected to result in
a party Material Adverse Effect; provided, however, that no such notification
-------- -------
shall affect the representations and warranties of the other party or the
conditions to the obligations of the parties hereunder;
(f) (i) file all Tax Returns required to be filed on or before the
Closing Date by or with respect to it or any of its subsidiaries, (ii) include
in each such Tax Return all items of income, gain, loss, deduction and credit or
other items required to be included in each such Tax Return, (iii) timely pay in
full all Taxes that become due pursuant to such Tax Returns, and (iv) satisfy
all withholding requirements imposed on or with respect to it;
(g) to the extent legally and contractually authorized to do so, give
the other party and its attorneys and other representatives access at all
reasonable times to each other's properties and to it and any the subsidiaries'
records pertaining to the ownership and/or operation of each other's properties;
and
(h) cause all expenses and liabilities relating to the ownership or
operation of each other's property to be paid and discharged in the ordinary
course of business.
Section 5.02. Negative Covenants. Except as expressly contemplated by
------------------
this Agreement or otherwise consented to in writing by the other party from the
date of this Agreement until the Effective Time, neither AIN, nor HTV, nor shall
AIN, nor HTV permit any of its subsidiaries to do, any of the following:
(a) (i) increase the compensation payable to or to become payable to
any director; (ii) increase the compensation payable or pay bonuses to its
officers or employees or any of their subsidiaries other than in the ordinary
course of business and consistent with past practices; (iii) grant any severance
or termination pay (other than pursuant to agreements or arrangements in effect
on the date hereof) or enter into any employment or severance agreement with,
any director, officer or employee; (iv) establish, adopt or enter into any
employee benefit plan or arrangement; or (v) make any loans to any stockholders,
officers, directors or employees or make any change in its borrowing
arrangements;
(b) declare or pay any dividend on, or make any other distribution in
respect of, outstanding shares of capital stock or other equity interests;
(c) (i) redeem, purchase or otherwise acquire any shares of its or any
of its subsidiaries' capital stock or any securities or obligations convertible
into or exchangeable for any shares of its or its subsidiaries' capital stock,
or any options, warrants or conversion or other rights to acquire any shares of
its or its subsidiaries' capital stock or any such securities or obligations,
(ii) effect any reorganization or recapitalization, or (iii) split, combine or
reclassify any of its or its subsidiaries' capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its or its subsidiaries' capital stock; provided,
--------
however, that nothing in this Section 5.02 shall prohibit the merger of a
------- -------------
wholly-owned, direct or indirect subsidiary with and into its parent
corporation;
(d) issue (whether upon original issue or out of treasury), sell,
grant, award, deliver or limit the voting rights of any shares of any class of
its or its subsidiaries' capital stock, any securities convertible into or
exercisable or exchangeable for any such shares, or any rights, warrants or
options to acquire any such shares (except for the issuance of shares upon the
exercise of outstanding stock options or warrants in accordance with their
terms);
(e) acquire or agree to acquire (whether pursuant to a definitive
agreement, a non-binding letter of intent or otherwise), by merging or
consolidating with, by purchasing an equity interest in or a portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets of any other Person (other than the
purchase of assets from suppliers or vendors in the ordinary course of business
and consistent with past practice);
(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of ("Transfer"), or agree to sell, lease, exchange, mortgage, pledge,
--------
transfer or otherwise dispose of, any of its assets or any assets of any of its
subsidiaries, except for Transfers of assets in the ordinary course of business
and consistent with past practice;
(g) take or permit any action that could adversely affect or delay the
ability of either party to obtain any necessary approvals of any Governmental
Entities required for the transactions contemplated hereby or to perform its
covenants and agreements under this Agreement;
(h) sell, transfer or abandon any portion of its properties;
(i) take any action that would, or that reasonably could be expected
to, result in any of the representations and warranties set forth in this
Agreement becoming untrue or any of the conditions to the Merger set forth in
Article VI not being satisfied; and
(j) agree in writing or otherwise to do any of the foregoing.
Section 5.03. Access and Information.
------------------------
(a) HTV shall, and shall cause its subsidiaries to, (i) afford to AIN
and AIN's officers, directors, stockholders, employees, accountants,
consultants, legal counsel, agents and other representatives (collectively, the
"AIN Representatives") access during ordinary business hours and at other
--------------------
reasonable times, upon reasonable prior notice, to the officers, employees,
accountants, agents, properties, offices and other facilities of HTV and its
subsidiaries and to the books and records thereof and (ii) furnish promptly to
AIN and the AIN Representatives such information concerning the business,
properties, contracts, records and personnel of HTV and its subsidiaries
(including, without limitation, financial, operating and other data and
information) as may be reasonably requested, from time to time, by AIN.
(b) AIN shall, and shall cause its subsidiaries to, (i) afford to HTV
and HTV's officers, directors, employees, accountants, consultants, legal
counsel, agents and other representatives (collectively, the "HTV
---
Representatives") access during ordinary business hours and at other reasonable
---------------
times, upon reasonable prior notice, to the officers, employees, accountants,
agents, properties, offices and other facilities of AIN and its subsidiaries and
to the books and records thereof and (ii) furnish promptly to HTV and HTV
Representatives such information concerning the business, properties,
intellectual property assets, contracts, records and personnel of AIN and its
subsidiaries (including, without limitation, financial, operating and other data
and information) as may be reasonably requested, from time to time, by HTV.
(c) No investigation by the parties hereto made heretofore or hereafter
shall affect the representations and warranties of the parties that are
contained herein and each such representation and warranty shall survive such
investigation.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01. Transfer Restrictions. Each of the HTV Securities
----------------------
Holders agrees he or it will not, directly or indirectly, during a period of 24
months, issue, sell offer or agree to sell, grant any option for the sale of,
pledge, or enter into any other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of the Shares or
otherwise dispose of any of the Shares; provided, however, subject to
restrictions of applicable securities laws, the Shares in the percentages
indicated below shall be free of the 24 month restriction of this Section 6.01
if and to the extent the conditions set forth below are met or in the event the
Shares are publicly registered by AIN.
COMPANY COMMON STOCK
TIME PERIOD TRADING PRICE FOR A % OF SHARES
CONSECUTIVE 30-DAY PERIOD FREE OF RESTRICTIONS
0-6 months. . . $ 1.00 10%
7-12 months . . $ 2.00 20%
After 12 months N/A 20%
13-18 $ 3.00 30%
After 18 months N/A 30%
19-24 $ 4.00 40%
Section 6.02. Name Change. Promptly following the Effective Time, AIN
-----------
will change its name to the name of Hispanic Television Network, Inc.
ARTICLE VII
CLOSING CONDITIONS
Section 7.01. Additional Conditions to Obligations of AIN. The
-------------------------------------------------
obligations of AIN to effect the Merger and the other transactions contemplated
by this Agreement are subject to the satisfaction of the following conditions at
or prior to the Effective Time (any or all of which may be waived by AIN in
writing, in whole or in part, to the extent permitted by applicable law):
(a) Stockholder Approval. The Merger and this Agreement shall have
---------------------
been approved by the requisite vote of the stockholders of AIN in accordance
with the DGCL and AIN's Certificate of Incorporation.
(b) Representations and Warranties. Each of the representations and
--------------------------------
warranties of HTV contained in this Agreement shall have been true and correct
in all material respects at and as of the date made and, except as contemplated
or permitted by this Agreement, at and as of the Effective Time as if made at
and as of such time. AIN shall have received a certificate of the Chief
Executive Officer of HTV, in his capacity as such, dated the Closing Date, to
the effect that each of the representations and warranties of HTV contained in
this Agreement were true and correct in all material respects as of the date
made and, except as contemplated or permitted by this Agreement, at and as of
the Effective Time as if made at and as of such time.
(c) Agreements and Covenants. HTV shall have performed or complied in
-------------------------
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Effective
Time. AIN shall have received a certificate of the Chief Executive Officer of
HTV, in his capacity as such, dated the Closing Date, to such effect.
(d) Release of Indebtedness. Xxxx X. Xxxxxxx and Xxx X. Xxxxxx shall
-------------------------
have executed a release of the $250,000 indebtedness for the benefit of AIN.
(e) Consents. All consents, authorizations, orders and approvals
--------
of, or filings or registrations with, any Governmental Entity required in
connection with the execution, delivery and performance of this Agreement shall
have been obtained or made, except for filings required under the TBCA in
connection with the Merger and HTV shall have obtained all consents,
authorizations, waivers and approvals required from third parties required under
all material agreements and instruments by reason of the Merger and the
consummation of the transactions contemplated hereby.
(f) No Governmental Proceedings or Litigation. There shall not be
---------------------------------------------
pending or threatened any action, proceeding, claim or counterclaim by any
Governmental Entity or by any third party which seeks to or would (i) prohibit
or restrict the consummation of the Merger, (ii) require the disposition of or
the holding separate of any of the stock or assets of HTV or its subsidiaries or
impose material limitations on the ability of AIN to control in any material
respect the business, assets or operations of either AIN or HTV, or (iii) have a
material adverse effect on AIN's business or materially impair the ability of
HTV to perform their obligations hereunder. There shall not be in effect any
order, decree or injunction (whether preliminary, final or appealable) of a
United States Federal or state court of competent jurisdiction, and no statute,
rule or regulation shall have been enacted or promulgated by any Governmental
Entity, which (i) prohibits or restricts consummation of the Merger or the
transactions contemplated hereby, (ii) requires AIN to hold separate or dispose
of any of the stock or assets of HTV or its subsidiaries or imposes material
limitations on the ability of AIN to control in any material respect the
business, assets or operations of either AIN or HTV or (iii) has a material
adverse effect on the business of AIN or on HTV and its subsidiaries or
materially impairs the ability of AIN to perform its obligations hereunder.
(g) Analysis from Valuation Consultant. HTV shall have received a
-------------------------------------
written valuation analysis of fair market value of the common equity of AIN from
a valuation consultant.
(h) Cancellation of AIN Common Stock Held by HTV. HTV shall have
--------------------------------------------------
returned to AIN the 11,000,00 shares of AIN Common Stock for cancellation.
Section 7.02. Additional Conditions to Obligations of HTV. The
------------------------------------------------
obligations of HTV to effect the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions at or prior
to the Effective Time (any or all of which may be waived by HTV in writing, in
whole or in part, to the extent permitted by applicable law):
(a) Approval of HTV Stockholders and Other HTV Securities Holders. The
-------------------------------------------------------------
Merger and this Agreement shall have been approved by the requisite vote of the
stockholders of HTV in accordance with the TBCA and HTV's Articles of
Incorporation and by all other HTV Securities Holders.
(b) Representations and Warranties. Each of the representations and
--------------------------------
warranties of AIN contained in this Agreement shall have been true and correct
in all material respects at and as of the date made and, except as contemplated
or permitted by this Agreement, at and as of the Effective Time as if made at
and as of such time. HTV shall have received a certificate of the Chief
Executive Officer of AIN, in their capacities as such, dated as of the Effective
Time, to the effect that each of the representations and warranties of AIN
contained in this Agreement were true and correct in all material respects as of
the date made and, except as contemplated by this Agreement, at and as of the
Effective Time as if made at and as of such time.
(c) Agreements and Covenants. AIN shall have performed or complied in
-------------------------
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by them at or prior to the Effective
Time. HTV shall have received a certificate of the Chief Executive Officer of
AIN, in such capacities, dated the Closing Date, to that effect.
(d) Amendment to Certificate of Incorporation. The AIN Certificate of
------------------------------------------
Incorporation shall have been amended to increase the number of authorized
shares of AIN Common Stock from 20,000,000 to 200,000,000.
(e) Conversion of HTV Notes. All holders of the HTV Notes shall have
-------------------------
converted their Notes into HTV Preferred Stock, and such Preferred Stock into
HTV Common Stock.
(f) Consents. All consents, authorizations, orders and approvals of,
--------
or filings or registrations with, any Governmental Entity required in connection
with the execution, delivery and performance of this Agreement shall have been
obtained or made, except for filings required under the DGCL in connection with
the Merger, and AIN shall have obtained all consents, authorizations, waivers
and approvals required from third parties required under all material agreements
and instruments by reason of the Merger and the consummation of the transactions
contemplated hereby, except for such consents, authorizations, waivers and
approvals where the failure to obtain such could not reasonably be expected to
result in a AIN Material Adverse Effect.
(g) No Governmental Proceedings or Litigation. There shall not be
---------------------------------------------
pending or threatened any action, proceeding, claim or counterclaim by any
Governmental Entity or by any third party that seeks to or would (i) prohibit or
restrict the consummation of the Merger, (ii) require the disposition of or the
holding separate of any of the stock or assets of HTV or its subsidiaries or
impose material limitations on the ability of the Surviving Corporation to
control in any material respect the business, assets or operations of either the
Surviving Corporation or HTV, or (iii) have a material adverse effect on the
Surviving Corporation's business or materially impair the ability of HTV to
perform their obligations hereunder. There shall not be in effect any order,
decree or injunction (whether preliminary, final or appealable) of a United
States Federal or state court of competent jurisdiction, and no statute, rule or
regulation shall have been enacted or promulgated by any Governmental Entity,
which (i) prohibits or restricts consummation of the Merger or the transactions
contemplated hereby, (ii) requires AIN to hold separate or dispose of any of the
stock or assets of HTV or its subsidiaries or the Surviving Corporation or
imposes material limitations on the ability of AIN to control in any material
respect the business, assets or operations of either AIN or the Surviving
Corporation, or (iii) has a material adverse effect on the business of AIN or on
the Surviving Corporation or materially impairs the ability of AIN to perform
its obligations hereunder.
(h) No Adverse Change. There shall not have occurred any material
-------------------
adverse change in the business, results of operations or financial conditions of
AIN.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.01. Termination. This Agreement may be terminated and the
-----------
Merger hereby contemplated may be abandoned at any time notwithstanding approval
of this Agreement by the stockholders of HTV and/or AIN, but prior to the
Effective Time:
(a) by mutual written consent duly authorized by the Board of Directors
of AIN and the Board of Directors of HTV;
(b) by AIN, if there has been a material breach of the representations
and warranties of HTV contained in this Agreement or if HTV has failed to comply
in any material respect with any of its covenants or agreements set forth in
this Agreement, and HTV shall not have cured such breach or failure within ten
days of receipt of written notice thereof from AIN;
(c) by HTV, if there has been a material breach of the representations
and warranties of AIN contained in this Agreement or if AIN has failed to comply
in any material respect with any covenant or agreement on the part of AIN set
forth in this Agreement, and AIN shall not have cured such breach or failure
within ten days of receipt of written notice thereof from HTV;
(d) by either AIN or HTV, if any court of competent jurisdiction in the
United States or other United States governmental body shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting any of the transactions contemplated hereby and such
order, decree, ruling or other action shall have become final and non-appealable
preventing the consummation of the Merger;
(e) by either AIN or HTV, if the Effective Time shall not have occurred
on or before November 30, 1999; provided that neither HTV nor AIN shall be
--------
entitled to terminate this Agreement pursuant to this paragraph if such party's
material breach of this Agreement has been the cause of or resulted in the
failure of the Effective Time to occur at or prior to such time; or
(f) by either AIN or HTV, if this Agreement and the Merger shall fail
to be approved and adopted by the affirmative vote of the stockholders of AIN
and HTV required under the DGCL, TBCA and their respective Certificate and
Articles of Incorporation.
Section 8.02. Effect of Termination; Remedies. In the event of the
----------------------------------
termination of this Agreement pursuant to Section 8.01, this Agreement shall
------------
forthwith become void, there shall be no liability on the part of AIN or HTV or
any of their respective officers or directors to the other and all rights and
obligations of any party hereto shall cease, except that nothing herein shall
relieve any party from its obligations with respect to any breach of this
Agreement.
Section 8.03. Amendment. This Agreement may be amended by HTV and AIN
---------
by action taken by or on behalf of the Board of Directors of AIN, the Board of
Directors of HTV at any time prior to the Effective Time; provided, however,
-------- -------
that after approval of the Merger by the stockholders of HTV or the stockholders
of AIN, any such amendment shall be subject to the provisions of Section 252 of
the DGCL and Section 5.03 of the TBCA. This Agreement may not be amended except
by an instrument in writing signed by HTV and AIN.
Section 8.04. Waiver. At any time prior to the Effective Time, any
------
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party or parties hereto, (b) waive any
inaccuracies in the representations and warranties of the other party or parties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance by the other party or parties with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party or parties to be
bound thereby.
Section 8.05. Fees and Expenses.
-------------------
(a) All fees and expenses incurred by the parties hereto shall be borne
solely and entirely by the party that has incurred such fees and expenses.
ARTICLE IX
GENERAL PROVISIONS
Section 9.01. Effectiveness of Representations, Warranties and
----------------------------------------------------
Agreements.
----------
(a) Except as set forth in Section 9.01(b) of this Agreement, the
----------------
representations, warranties, covenants and agreements of each party hereto shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any other party hereto, any person controlling any such
party or any of their officers, directors, representatives or agents whether
prior to or after the execution of this Agreement.
(b) The representations and warranties in this Agreement shall
terminate at the Effective Time. This Section 9.01(b) shall not limit any
----------------
covenant or agreement of the parties hereto that by its terms contemplates
performance after the Effective Time.
Section 9.02. Notices. All notices and other communications given or
-------
made pursuant hereto shall be in writing and shall be deemed to have been duly
given upon receipt, if delivered personally, sent by nationally recognized
overnight courier service, mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses (
or at such other address for a party as shall be specified by like changes of
address) or sent by electronic transmission to the telecopier number specified
below:
(a) If to AIN, to:
American Independent Network, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxx 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
with copies to:
Xxxxxxxxx Xxxxxx
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Xx. Xxx X. Xxxxxxxxx
Xxxxxxx, Xxxxx & Xxxxxxxxx
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile No. (000) 000-0000
(b) If to HTV, to:
Hispano Television Ventures, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxx 00000
Attention: Xxxx Xxx Xxxxxxx
Facsimile No.: (000) 000-0000
with copies to:
Xxxxxx & Hanger, L.L.P.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
Woodcrest Capital, L.L.C.
0000 Xxxxx Xxxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxx
Facsimile No.: (000) 000-0000
Section 9.03. Certain Definitions. For purposes of this Agreement, the
-------------------
term:
(a) "Business day" means any day other than a day on which banks in the
------------
State of Texas are authorized or obligated to be closed;
(b) "Control" (including the terms "controlled," "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 or policies of a person, whether through the ownership of stock or as
trustee or executor, by contract or credit arrangement or otherwise;
(c) "Environmental Laws": any all laws, rules, orders, regulations,
-------------------
statues, ordinances, guidelines, codes or decrees of the United States or any
other nation, or any state, local, municipal or other Governmental Authority or
other Laws (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
(d) "Knowledge" or "known" shall mean, with respect to any matter in
--------- -----
question, the actual knowledge of an executive officer of HTV or AIN, as the
case may be, of such matter after having made due and diligent inquiry with
respect to such matter of all appropriate personnel of the party in question who
would reasonably be expected to be familiar with the matter involved;
(e) "Subsidiary" or "subsidiaries" of HTV, AIN, the Surviving
---------- ------------
Corporation or any other person, means any corporation, partnership, joint
venture or other legal entity of which HTV, AIN, the Surviving Corporation or
any such other Person, as the case may be (either alone or through or together
with any other subsidiary), owns, directly or indirectly, 50% or more of the
stock or other equity interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation or other legal entity; and
(f) "Tax" or "Taxes" shall mean any and all taxes, charges, fees,
--- -----
levies, assessments, duties or other amounts payable to any federal, state,
local or foreign taxing authority or agency, including, without limitation, (i)
income, franchise, profits, gross receipts, minimum, alternative minimum,
estimated, ad valorem, value added, sales, use, service, real or personal
property, capital stock, license, payroll, withholding, disability, employment,
social security, workers compensation, unemployment compensation, utility,
severance, excise, stamp, windfall profits, transfer and gains taxes, (ii)
customs, duties, imposts, charges, levies or other similar assessments of any
kind, and (iii) interest, penalties and additions to tax imposed with respect
thereto.
Section 9.04. Headings. The headings contained in this Agreement are
--------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.05. 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 contemplated hereby 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 an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
Section 9.06. Entire Agreement. This Agreement (together with the
-----------------
Exhibits, the HTV Disclosure Schedule and the AIN Disclosure Schedule)
constitutes the entire agreement of the parties, and supersede all prior
agreements and undertakings, both written and oral, among the parties, with
respect to the subject matter of this Agreement.
Section 9.07. Assignment. This Agreement shall not be assigned by
----------
operation of law or otherwise.
Section 9.08. Parties in Interest. This Agreement shall be binding
---------------------
upon and inure solely to the benefit of each party, 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.
Section 9.09. Failure or Indulgence Not Waiver; Remedies Cumulative.
-------------------------------------------------------
No failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right.
Section 9.10. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Texas, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
law.
Section 9.11. Counterparts. This Agreement may be executed in multiple
------------
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.
Section 9.12. Specific Performance. The parties hereby acknowledge and
--------------------
agree that the failure of any party to this Agreement to perform the provisions
in accordance with their specific terms or to otherwise breach such provisions,
including its failure to take all actions as are necessary on its part to the
consummation of the Merger, will cause irreparable injury to the other parties
to this Agreement for which damages, even if available, will not be an adequate
remedy. Accordingly, each of the parties hereto hereby consents to the issuance
of injunctive relief by any court of competent jurisdiction to compel
performance of any party's obligations, including an injunction to prevent
breaches, and to the granting by any such court of the remedy of specific
performance of the terms and conditions hereof.
Section 9.13. Confidentiality Agreement.
--------------------------
(a) Each party hereto agrees that all Confidential Information (as
defined below) received by such party (the "Receiving Party") from the any other
party hereto (the "Disclosing Party") shall be kept confidential by the
receiving party and shall not be disclosed by the receiving party in any manner
whatsoever; provided, however, that (i) any of such Confidential Information may
be disclosed to such directors, (and, in the case of AIN, its stockholders)
officers, employees, and authorized representatives (including without
limitation attorneys, accountants, consultants, bankers, and financial advisors)
of the receiving party (collectively, the "Receiving Party's Representatives")
as need to know such information for the purpose of evaluating the Merger (it
being understood that such receiving party's representatives shall be informed
by the receiving party of the confidential nature of such information and shall
be required to treat such information confidentially), (ii) any disclosure of
Confidential Information may be made to the extent to which the disclosing party
consents in writing, (iii) Confidential Information may be disclosed by the
receiving party or any receiving party's representatives to the extent that, in
the opinion of counsel for the receiving party or such receiving party's
representatives is legally compelled to do so, provided that, prior to making
such disclosure, the party being legally compelled to disclose such information
advises and consults with the disclosing party regarding such disclosure and
provided further that the party being legally compelled to disclose such
information discloses only that portion of the Confidential Information as is
legally required, and (iv) any of such Confidential Information may be disclosed
to any banks or other financial institutions or other prospective investors that
may provide Financing if such banks or other financial institutions or other
prospective investors agree to comply with the provisions of this Section. The
term "Confidential Information", as used herein, means all information
(irrespective of the form of communication) obtained by or on behalf of a
receiving party from a disclosing party or its representatives, other than
information which (i) was or becomes generally available to the public other
than as a result of disclosure by the receiving party or any receiving party's
representative, (ii) was or becomes available to the receiving party on a
nonconfidential basis prior to disclosure to the receiving party or its
representatives, or (iii) was or becomes available to the receiving party from a
source other than the disclosing party or its representatives, provided that
such source is not known by the receiving party to be bound by a confidentiality
agreement with the disclosing party.
(b) If this Agreement is terminated, each receiving party shall
promptly return, and shall use their reasonable best efforts to cause all
receiving party representatives to promptly return, all Confidential Information
to the disclosing party without retaining any copies thereof, provided that such
portion of the Confidential Information as consists of notes, compilations,
analyses, reports, studies, or other documents prepared by the receiving party
or the receiving party's representatives shall be destroyed.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
AMERICAN INDEPENDENT NETWORK, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Financial Officer
HISPANO TELEVISION VENTURES, INC.
By: /s/ Xxxxxxx Xxxx Xxxxxxx
--------------------------------------
Name: Xxxxxxx Xxxx Xxxxxxx
Title: Chief Executive Officer
SCHEDULE 3.01
ORGANIZATION AND QUALIFICATION
Subsidiaries: ATN Network, Inc., a Texas corporation, is a wholly owned
------------
subsidiary of HTV. ATN is not in good standing with the Texas Comptroller's
office for failing to file its franchise tax return due on May 1999.
CAPITALIZATION
(b) Convertible Notes payable by HTV in the amount of $1 million are
currently outstanding (the "Notes"). The Notes are convertible into HTV
Preferred Stock. The Notes will be converted to HTV Preferred Stock and the
Preferred Stock into HTV Common Stock prior to the Closing Date.
SCHEDULE 3.05
NO CONFLICT: REQUIRED FILINGS AND CONSENTS
(a) None.
SCHEDULE 3.06
PERMITS/COMPLIANCE
None.
SCHEDULE 3.07
FINANCIAL STATEMENTS
(b) (1) On September 1, 1999 the Company issued convertible notes
payable by HTV in the amount of $500,000 to the same Investors involved in the
May 28, 1999 transaction.
(2) Note payable to Xxxx Xxxxxx with an unpaid balance of $170,000, for
an 89% ownership interest in an Oklahoma television station.
SCHEDULE 3.08
ABSENCE OF CERTAIN CHANGES OR EVENTS
None.
SCHEDULE 3.09
LITIGATION
None.
SCHEDULE 3.11
TAXES
(a) AIN Network, Inc. has not filed its franchise tax return due on May
1999. Penalties related to such failure to file may be assessed by the Texas
Comptroller's Office.
SCHEDULE 3.13
INSIDER TRANSACTIONS
1. Employment Agreement between HTV and P. Xxxx Xxxxxxx, dated May 28, 1998.
2. Consulting Agreement between Woodcrest Capital LLC and HTV dated May 28,
1999.
SCHEDULE 3.14
CONTRACTS AND AGREEMENTS
1. Loan Agreement, dated May 28, 1999 by and among HTV, certain Investors
named therein.
2. Security Agreement between HTV, the Investors, and Woodcrest.
3. Employment Agreement between X. Xxxxxxx and HTV, dated May 28, 1999.
SCHEDULE 4.01
ORGANIZATION AND QUALIFICATION
None.
SCHEDULE 4.08
ABSENCE OF CERTAIN CHANGES OR EVENTS
None.
SCHEDULE 4.09
None.
SCHEDULE 4.11
TAXES
None.
SCHEDULE 4.14
INSIDER INTERESTS, TRANSACTIONS WITH MANAGEMENT
None.
SCHEDULE 4.15
CONTRACTS AND AGREEMENTS
None.
