Exhibit 3.5 Agreement of Merger
AGREEMENT OF MERGER
Agreement of Merger, (the "Agreement"), dated as of March 28, 2002,
between American Industries, Inc., a Utah corporation ("AI") Pegasus Tel, Inc.
Merger Subsidiary Corporation, a Delaware corporation ("SUB") and Pegasus
Communications, Inc., a New York corporation ("PCI").
WHEREAS, the authorized Capital Stock of AI consists of 250,000,000
shares, $0.001 par value per share of common stock (the "AI common Stock"), of
which 8,048,174 shares (the "Shares") will be issued and outstanding immediately
prior to the Effective Time; and
WHEREAS, the authorized capital stock of PCI consists of 1,000 shares,
$1.00 par value per share, of common stock (the "PCI Common Stock"), of which
1,000 shares are presently outstanding; and
WHEREAS, the authorized capital stock of SUB consists of 1,000 shares,
$.0 par value per share of common stock (the "SUB Common Stock") of which 1,000
shares are outstanding; and
WHEREAS, the Board of Directors of AI, SUB, and PCI respectively have
approved a merger (the "Merger") of PCI into SUB in accordance with the laws of
the State of Delaware, upon the terms and subject to the conditions set forth in
this Merger Agreement, and pursuant to which each Share of PCI shall be
converted into the right receive shares of AI Common Stock; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements made herein and of the mutual benefits to
be derived hereby, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.01 The Merger.
(a) Upon the terms and subject to the conditions of this Agreement, PCI
shall merge with and into SUB, (the "Merger") as a wholly owned subsidiary of
AI; such merger to be conducted in accordance with the laws of the States of New
York and Delaware, with SUB continuing as the surviving corporation (the
"Surviving Corporation"), and the separate existence of PCI terminating. As a
result of the Merger, the name of AI shall be changed to Dolce Ventures, Inc.
The Merger shall be effective (the "Effective Time") upon the filing of
Certificate of Merger, in such form as required by, and executed in accordance
with the relevant provisions of the General Corporate law of Delaware ("DCA").
(b) The Merger shall have the effect set forth in Section 259 of the
Delaware General Corporation Law (the "DGCL") and Section 16-10a-11-6 of the
Utah revised Business Corporation Act.
(c) The Certificate of Incorporation of SUB in effect immediately prior
to the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation.
(d) The Bylaws of SUB and AI in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation and AI,
respectively. Provided, however, that after the Effective Time and prior to June
30, 2002, the Board of Directors of AI and the Surviving Corporation may amend
the Bylaws of AI and the Surviving Corporation as the deem necessary and
appropriate, subject to the requirements and the restrictions of the "DCA".
(e) The Board of Directors of SUB and AI immediately prior to the
Effective Time shall be the initial Board of Directors of the Surviving
Corporation and AI respectively, provided that, as of the Effective Time all
exiting Officers and Directors of AI and The Surviving Corporation shall resign
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and the Board of Directors of PCI immediately prior to the Effective Time shall
become the Directors of AI and the Surviving Corporation.
1.02. Conversion or Cancellation of PCI Common Stock
(a) As soon as practicable after the Effective Time, by virtue of the
Merger and without any further action on the part of the holders thereof, each
Share issued and outstanding immediately prior to the Effective Time, except for
Shares entitled to dissenters rights payout, if any, shall be converted into the
right to receive the shares of AI capital stock, (the "Exchange Shares"),
deliverable to the holder thereof, upon the surrender of the certificate
representing such Share as follows: (i) one (1) Share shall be converted into
approximately 65,000 shares of AI common stock. Any fraction of a share of AI
common stock shall be rounded up to a whole share. The exchange of Shares shall
occur in a manner and at the time the "Exchange Date") described in Section
1.03.
(b) As of the effective Time of the Merger, the holders of certificates
representing Shares shall cease to have any rights as stockholders of PCI and
their sole right shall be the right to receive the consideration provided in
this Section 1.02, without interest thereon.
(c) Each other share of capital stock of AI issued and outstanding
immediately prior to the Effective Time shall continue as issued and outstanding
capital stock of AI.
(d) After the Exchange Date, the stockholders of PCI will hold
approximately 65,000,000 of the outstanding shares of the Company, and after the
Exchange Date the Broker will hold approximately 7,163,357 of the outstanding
shares of the company, and the current stockholders of the Company holding
shares after the Exchange Date, will hold approximately 8,048,174 of the
outstanding shares of the Company.
1.03 Surrender of Share Certificates; Payment. As of the Exchange Date, AI shall
accept from each holder of record of Shares a certificate or certificates which,
immediately prior to the Effective Time, represented outstanding Shares.
Delivery shall be affected, and risk of loss and title to the Shares shall pass,
only upon receipt of the Shares by AI or its designated agent for such purposes,
and instructions for use in effecting the surrender of the Shares for exchange
for Exchange Shares therefore. Upon surrender of a duly endorsed share
certificate for exchange to AI or to such other agent or agents as may be
appointed by AI, together with any other required documents, the holder of such
Share certificate shall be entitled to receive the consideration provided in
Section 1.02(a), and the Share certificate so surrendered shall forthwith be
cancelled.
1.04 Restriction on Sales of Common Shares. Upon issuance of the Exchange Shares
to the holders of the Shares in exchange therefore, in accordance with the terms
and conditions hereof, the Exchange Shares shall be fully paid, validly issued,
and nonassessable, and not subject to any preemptive rights or any liens,
claims, equities, encumbrances, or security interests or any restrictions on the
transfer thereof other than those set forth in this Agreement or imposed by law.
At the Exchange Date, the Exchange Shares shall not be subject to an effective
Registration Statement under the Securities Act of 1933 (the "Act"), and may be
sold or transferred only pursuant to an effective Registration Statement or and
exemption from registration, including without limitation Rule 144 as
promulgated pursuant to the Securities Act of 1933, and in compliance with all
applicable state securities laws. A sale or transfer shall include any offer or
the sale, gift, disposition, attempted disposition, liquidating distribution,
transfer, assignment, delivery, pledge, hypothecation, allocation or creation or
attempted creation of any present or future interest, right, claim, or privilege
in or to any of the Exchange Shares. Prior to the issuance of the Exchange
Shares, as a condition to the issuance by AI of the Exchange Shares, AI shall
receive from each holder of PCI Shares, a representation and warranty that the
Exchange Shares to be received by such holder have been acquired solely for such
holder's own account for investment and may not be sold by such holder except in
accordance with all applicable securities laws. It is acknowledged that the
certificates representing the Exchange Shares will bear a restrictive legend
similar to the following:
The Shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold or otherwise
transferred unless a compliance with the registration provisions of such Act has
been made or unless availability of an exemption from such registration
provisions has been established or unless sold pursuant to Rule 144 under the
securities Act of 1933.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PCI
PCI represents and warrants to AI that:
2.01 Due Organization. PCI is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, operate and lease its
properties and to carry on its businesses as they are being conducted on the
date of this Agreement. Except as set forth on a Disclosure Schedule delivered
to AI on the date hereof (the Disclosure Schedule"), PCI is duly qualified as a
foreign corporation, and is in good standing in each jurisdiction in which the
character of its properties or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
have a materially adverse effect on PCI. Except as set forth on the Disclosure
Schedule, all of the outstanding Shares of PCI Common Stock are validly issued,
fully paid and nonassessable. PCI neither directly no indirectly owns any
material interest in any corporation, partnership, joint venture or other
business association or entity, except as set forth on the Disclosure Schedule.
2.02 Execution and Delivery of Agreement.
(a) PCI has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by PCI and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, except for the approval of the Merger by the stockholders of
PCI. This agreement has been duly executed and delivered by PCI and shall, upon
receipt of approval by the holder of the Shares, constitute the legal, valid and
binding obligation of PCI, enforceable against PCI in accordance with its terms,
except that; (a) the enforceability hereof may be subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally; and (b)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceedings therefore may be brought.
(b) The Board of Directors of PCI has and prior to the Effective Time
the requisite number of stockholders shall have, by resolution duly adopted,
approved the Merger and this Agreement by the vote of or written consent as
required by New York law.
(c) Except as set forth in the Disclosure Schedule, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby do not violate (i) the Certificate of Incorporation or Bylaws of PCI;
(ii) any material contractual restriction binding on PCI; or (iii) any judgment,
order, decree, law, rule or regulation applicable to PCI or its respective
properties, which contravention would have a materially adverse effect on the
business or financial condition of PCI. No approval or authorization of, or
filing with, any governmental or regulatory authority is required for the
execution and delivery of this Agreement by PCI or the consummation by PCI of
the transactions contemplated hereby, except the filing of the appropriate
Certificate of Merger, and if necessary, the amendments to PCI's Certificate of
Incorporation with the appropriate official of the State of New York.
2.03. Capital Stock. The authorized capital stock of PCI consists of 1,000
shares of $1.00 par value common stock, of which 1,000 shares will be issued and
outstanding immediately prior to the Effective Time. As of the date hereof, no
other equity securities of PCI are outstanding or reserved for issuance. No
shares of PCI common stock are held in PCI's treasury or reserved for issuance;
and no preferred shares are authorized, issued or outstanding. All outstanding
shares of capital stock of PCI are duly authorized, validly issued, fully paid
and nonassessable. There are not outstanding on the date hereof any
subscriptions, options, conversion rights, warrants or other agreements or
commitments of any nature whatsoever (either firm or conditional, written or
oral) obligating PCI or any current record or beneficial stockholder of PCI to
issue, deliver, sell, or cause to be issued, delivered or sold to any party.
2.04 Financial Statements
(a) Since the Most Recent Fiscal Month End, there has not been any
materially adverse change in the financial condition of PCI taken as a whole.
Without limiting the generality of the foregoing, since that date PCI has not
engaged in any practice, taken any action, or entered into any transaction
outside the ordinary course of business and no change has occurred which has or
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may be reasonably be expected to have a materially adverse affect on the ability
of PCI to consummate the transactions contemplated by this Agreement or on the
business or financial condition of PCI.
2.05 Other Information
(a) None of the written information supplied by or on behalf of PCI to
AI contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not misleading
or to correct any statement previously made.
(b) All written statements, memoranda, certificates, schedules, lists
or other written information (including, without limitation, financial
information) heretofore, or hereafter provided by PCI to AI or any of its
representatives, pursuant to the terms hereof, or otherwise in connection with
the transactions contemplated hereby, have been and will be true and correct in
all material respects, and do not and will not contain any materially misleading
statement or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, and in view
of all the written information which was provided by PCI to AI or any of their
representatives, not misleading.
2.06 Brokers. American Industries, Inc. will pay Xxxxx Xxxxxxxx a finder's
fee of approximately 7,163,357 shares of AI common stock.
2.07 No Violation of Law. (a) To the knowledge of PCI, the business of PCI is
being conducted in conformity with applicable law, ordinance, regulation,
judgment, decree, injunction or order of any court or other governmental entity,
except for violations which individually or in the aggregate, do not and are not
expected to have a materially adverse effect on PCI taken as a whole; and (b) no
investigation or review by any governmental or regulatory entity with respect to
PCI is pending, or to the knowledge of PCI, threatened, nor has any governmental
or regulatory entity indicated an intention to conduct the same, other than
those the outcome of which will not in the aggregate have or be expected to have
a materially adverse effect on PCI taken as a whole.
2.08 Litigation. There are no suits, actions, proceedings or investigations
pending, or to the knowledge of PCI, threatened against or affecting PCI or any
of its subsidiaries at law or in equity, or before any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, the results of which would have a materially adverse effect on
PCI.
2.09 Taxes
(a) Except as set forth in the Disclosure Schedule, (i) all returns and
reports of all Taxes (as defined below) including, without limitation,
consolidated federal income tax returns of PCI, withholding tax returns, and tax
reports, required to be filed with respect to PCI or any of its income,
properties or operation, have been duly filed in a timely manner (taking into
account all extensions of due dates); (ii) all information provided in such
returns, declarations and reports is true, correct and complete in all material
respects; and (iii) all taxes attributable to PCI and its subsidiaries that are
or were due and payable have been paid, provided for, or are being contested in
good faith.
(b) There is no claim or assessment pending, or to the best of PCI's
knowledge, threatened against PCI for any alleged deficiency of any Taxes, and
PCI does not know of any audit or investigation with respect to any liability of
PCI for Taxes.
(c) For purposes of this Agreement, "Taxes" shall be understood to
include any tax or similar governmental charge, impost or levy, together with
any related liabilities penalties, fines, additions to tax or interest, imposed
by the United States or any state, county, local or foreign government or
subdivision or agency thereof.
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2.10 Current Negotiations and Discussions. Except as set out in the Disclosure
Schedule, as of the date of this Agreement, neither PCI nor any of its
affiliates, officers, directors, representatives, or agents is in negotiations
with, or soliciting offers or proposals from any corporation, partnership,
person or other entity or group (other than AI and its respective directors,
offices, employees, representatives or agents) in respect of any merger, sale of
assets, sale of shares of capital stock or similar transactions involving PCI.
2.11 Title to Assets. PCI has good and marketable title to all of its assets
free and clear of all security interests. The ability of PCI to use any
intellectual property is not currently materially and adversely affected by the
bankruptcy of any licensor except that warranty, support and service obligations
may not be enforceable against licensors who are bankrupt.
2.12 Events Subsequent to Most Recent Fiscal Month. Since the Most Recent Fiscal
Month End, there has not been any materially adverse change in the business,
financial condition, operations or results of operations or to the best
knowledge of PCI, the future prospects of PCI.
2.13 Real Property.
(a) PCI owns no real property.
(b) PCI leases no real property.
2.14 Intellectual Property. PCI owns all intellectual property used in the
operation of the business as presently conducted.
2.15 Contracts. PCI is a party to certain agreements, including third party
contracts and various certificates of convenience with and tariffs issued by
various governmental authorities (collectively the "Contracts") necessary for
the conduct of the business of PCI; and with respect to each such Contract,
subject to the terms and provisions thereof, and the performance of the
covenants and agreements by PCI and all other persons thereto, including persons
that are not parties to the Contracts, and in all material respects; (i) the
Contract is legal, valid, binding, enforceable, and in full force and effect;
(ii) to PCI's best knowledge, the Contract will continue to be legal, valid,
binding, enforceable, and consummation of the transactions contemplated hereby
and no breach or default, and no event has occurred which with notice or lapse
of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (iii) no party has
repudiated any provision of the Contract that would have a materially adverse
effect on PCI; subject however, to the qualifications that enforcement of the
rights and remedies created thereby is subject to; (A) bankruptcy, insolvency,
reorganization, moratorium and the laws of general application affecting the
rights and remedies of creditors; and (B) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
2.16 Litigation. PCI is not; (i) subject to any outstanding injunction,
judgment, order, decree, ruling, charge, or; (ii) a party, or to the knowledge
of PCI, its directors or officers, is not threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
of quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator, other than claims arising in the
ordinary course of PCI's business which in the aggregate as of the date of
Closing would not have a materially adverse effect on the financial condition of
PCI. Neither PCI nor any of its directors or officers has any reason to believe
that any such action, suit, proceeding, hearing, or investigation may be brought
or threatened against PCI.
2.17 Employees. PCI is not bound by any collective bargaining agreement, nor has
it experienced any strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes. PCI and its directors and officers have no
knowledge of any organizational effort presently being made or threatened by or
on behalf of any labor union with respect to its employees of any unfair labor
practice committed by PCI.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AI AND SUB
AI and SUB jointly and severally represent and warrant to PCI that:
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3.01 Due Organization. AI is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, operate and lease its
properties and to carry on its businesses as they are being conducted on the
date of this Agreement. Except as set forth on a Disclosure Schedule delivered
to PCI on the date hereof (the "Disclosure Schedule"), AI is duly qualified as a
foreign corporation, and is in good standing in each jurisdiction in which the
character of its properties or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
have a materially adverse affect on AI. Except as set forth on the Disclosure
Schedule, all of the outstanding Shares of AI Common Stock are validly issued,
fully paid and nonassessable. AI neither directly nor indirectly owns any
material interest in any corporation, partnership, joint venture or other
business association or entity, except as set forth on the Disclosure Schedule.
3.02 Execution and Delivery of Agreement.
(a) AI has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by AI and SUB and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action, except for the approval of the Merger by the
Stockholders of SUB and AI. This Agreement has been duly executed and delivered
by AI and SUB and shall, upon receipt of approval by the holders of AI and SUB
shares, constitute the legal, valid and binding obligations of AI and SUB,
enforceable against AI and SUB in accordance with its terms, except that; (i)
the enforceability hereof by be subject to bankruptcy insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may by subject to
equitable defenses and to the discretion of the court before which any
proceedings therefore may be brought.
(b) The Boards of Directors of AI and SUB have, and prior to the
Effective Time the requisite number of stockholders shall have, by resolution
duly adopted, approved the Merger and this Agreement by the vote of or by
written consent as required by Utah and Delaware law.
(c) Except as set forth on the Disclosure Schedule, the execution and
delivery of this Agreement and the Consummation of the transactions contemplated
hereby so not violate (i) the Certificate of Incorporation or Bylaws of AI or
SUB; or (ii) any material contractual restriction binding on AI or SUB; or (iii)
any judgment order, decree, law, rule or regulation applicable to AI or SUB or
their respective properties, which contravention would have a materially adverse
effect on the ability of AI or SUB to consummate the transactions contemplated
by this Agreement or on the business or financial condition of AI or SUB. No
approval or authorization of, or filing with any governmental or regulatory
authority is required for the execution and delivery of this Agreement by AI or
SUB or the consummation by AI or SUB of the transactions contemplated hereby,
except the filing of the appropriate Certificate of Merger, and the amendments
to AI's Certificate of Incorporation with the appropriate official of the State
of Utah.
3.03 Capital Stock.
(a) The authorized capital stock of AI consists of 250,000,000 Shares
of $.001 par value common stock, of which 8,048,174 shares are issued and
outstanding. As of the date hereof, no other equity securities of AI are
outstanding or reserved for issuance. No shares of AI common stock are held in
AI's treasury or reserved for issuance. All outstanding shares of capital stock
of AI are duly authorized, validly issued, fully paid and nonasseesable. There
are not outstanding on the date hereof any subscriptions, options, conversion
rights, warrants or other agreements or commitments of any nature whatsoever
(either firm or conditional) obligating AI to issue, deliver or sale, or cause
to be issued, delivered or sold, any additional shares of the capital stock of
any class or series, or any securities convertible into or exchangeable for
shares of capital stock of any class or series, of AI or obligating AI to grant,
extend or enter into any such agreement or commitment.
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(b) The authorized capital stock of SUB consists of 1,000 shares of $.0
par value common stock, of which 1,000 shares are issued and outstanding. As of
the date hereof, no other equity securities of SUB are outstanding or reserved
for issuance. No shares of SUB common stock are held in SUB's treasury or
reserved for issuance; and no preferred shares are authorized, issued or
outstanding. All outstanding shares of capital stock of SUB are duly authorized,
validly issued, fully paid and nonassessable. There are not outstanding on the
date hereof, any subscriptions, options, conversion rights, warrants or other
agreements or commitments of any nature whatsoever (either firm or conditional)
obligating SUB to issue, deliver or sell, or cause to be issued, delivered or
sold, any additional shares of the capital stock of any class or series, or any
securities convertible into or exchangeable for shares of capital stock of any
class or series, of SUB or obligating SUB to grant, extend or enter into any
such agreement or commitment.
3.04 Financial Statements.
Since the Most Recent Fiscal Month End, there has not been any
materially adverse change in the financial condition of AI, taken as a whole,
Without limiting the generality of the foregoing, since that date, AI has not
engaged in any practice, taken any action, or entered into any transaction
outside the ordinary course of business, and no change has occurred which has or
may reasonably be expected to have a materially adverse affect on the ability of
AI to consummate the transactions contemplated by this Agreement or on the
business of financial condition of AI.
3.05 Other Information.
(a) None of the written information supplied by or on behalf of AI or
SUB to PCI, contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading or to correct any statement previously made.
(b) All written statements, memoranda, certificates, schedules, lists
or other written information (including without limitation, financial
information) heretofore or hereafter provided by AI or SUB to PCI or any of its
representatives, pursuant to the terms hereof or otherwise in connection with
the transactions contemplated hereby, have been and will be true and correct in
all material respects, and do not, and will not, contain any materially
misleading statement or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made and
in view of all the written information which was provided by AI or SUB or any of
their representatives, not misleading.
3.06 No Violation of Law. (a) To the knowledge of AI, The Business of AI is
being conducted in conformity with applicable law, ordinance, regulation,
judgment, decree, injunction or order of any court or other governmental entity,
except for violations which, individually or in the aggregate, do not and are
not expected to have a materially adverse effect on AI taken as a whole, and;
(b) no investigation or review by any governmental or regulatory entity with
respect to AI is pending, or to the knowledge of AI, threatened, nor has any
governmental or regulatory entity indicated an intention to conduct the same,
other than those the outcome of which will not in the aggregate have or be
expected to have a materially adverse effect in AI taken as a whole.
3.07 Litigation. There are no suits, actions, proceedings or investigations
pending, or to the knowledge of AI, threatened against or affecting AI or any of
its subsidiaries at law or in equity, or before any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, the results of which would have a materially adverse effect on
AI.
3.08 Taxes.
(a) Except as set forth in the Disclosure Schedule, (i) all returns and
reports of all Taxes (as defined below) including, without limitation,
consolidated federal income tax returns of AI, withholding tax returns, and tax
reports, required to be filed with respect to AI or any of its income,
properties or operations (taking into account all extensions of due dates); (ii)
all information provided in such returns, declarations and reports is true,
correct and complete in all material respects; and (iii) all taxes attributable
to AI and its subsidiaries that are or were due and payable have been paid,
provided for , or are being contested, in good faith.
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(b) There is no claim or assessment pending or, to the best of AI's
knowledge, threatened against AI for any alleged deficiency of any Taxes, and AI
does not know of any audit or investigation with respect to any liability of AI
for Taxes.
(c) For purposes of this Agreement, "Taxes" shall be understood to
include any tax or similar governmental charge, impost or levy, together with
any related liabilities, penalties, fines, additions to tax or interest, imposed
by the United States or any state, county, local or foreign government or
subdivision or agency thereof.
3.09 Current Negotiations and Discussions. Except as set out in the Disclosure
Schedule, as of the date of this Agreement, neither AI nor any of its
affiliates, officers, directors, representatives, or agents is in negotiations
with, or soliciting offers or proposals from any corporation, partnership,
person or other entity or group (other than PCI and its respective directors,
officers, employees, representatives or agents) in respect of any merger, sale
of assets, sale of shares of capital stock or similar transactions involving AI.
3.10 Title to Assets. AI has good and marketable title to all of its assets free
and clear of all security interests. The ability of AI to use any intellectual
property is not currently materially and adversely affected by the bankruptcy of
any licensor except that warranty, support and service obligations may not be
enforceable against licensors who are bankrupt.
3.11 Events Subsequent to Most Recent Fiscal Month End. Since the Most Recent
Fiscal Month End, there has not been any materially adverse change in the
business, financial condition, operations or results of operations or to the
best knowledge of AI, the future prospects of AI.
3.12 Real Property.
(a) AI owns no real property.
(b) AI leases no real property.
3.13 Intellectual Property. AI owns all intellectual property used in the
operation of the business as presently conducted.
3.14 Employees. AI is not bound by any collective bargaining agreement, nor has
it experienced any strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes. AI and its directors and officers have no
knowledge of any organizational effort presently being made or threatened by or
on behalf of any labor union with respect to its employees or of any unfair
labor practice committed by AI.
ARTICLE IV
COVENANTS OF PCI
4.01 Ordinary Course of Business. During the period from the date of this
Agreement to the Effective Time, PCI will immediately notify AI of any business
practice or action or omission that is different from its ordinary and usual
course of business and consistent with past practice.
4.02 Access and Information. Prior to the consummation of the Merger, PCI shall
permit reasonable access for AI, and AI's officers, directors, accountants,
investment bankers, counsel and other representatives, at any reasonable time
prior to the termination of this Agreement to examine and, as reasonably
requested by AI, make copies of and abstracts from all of its properties, books,
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contracts, commitments and records (including, but not limited to tax returns),
but, excluding certain limited information that is highly sensitive from a
competitive standpoint and not essential for evaluation of the transaction
contemplated hereby, and shall furnish promptly to AI, prior to such time; (i) a
copy of each report, schedule and other document filed or received by it during
such period pursuant to the requirements of federal or state securities laws,
and; (ii) such other information concerning its business, properties and
personnel AI may reasonably request.
ARTICLE V
ADDITIONAL AGREEMENTS
5.01 Stockholder Approvals. Each party to the extent required by applicable law
shall call a meeting of its stockholders to be held as soon as reasonably
practicable for the purpose of voting upon the Merger and all other matters
contemplated herein, (the "Special Meeting"), or shall obtain the requisite
consents ("Consents") from that number of stockholders necessary to achieve
approval pursuant to the law of each party's state of incorporation for the
transactions contemplated herein without the necessity of the Special Meeting.
5.02 Expenses. Whether or not the Merger is completed, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by each party, including but not limited to the cost of
preparing this Agreement.
5.03 Indemnification of Officers and Directors.
(a) In the event any action, suit, proceeding or investigation relating
hereto or to the transactions contemplated hereby is commenced, whether before
or after the Effective Time, the parties hereto agree to cooperate and use their
best efforts to defend against and respond thereto. It is understood and agreed
that PCI and AI shall, to the fullest extent permitted under applicable law or
contract, and regardless of whether the Merger becomes effective, indemnify and
hold harmless (and shall advance expenses to), and after the Effective Time, the
Surviving Corporation and AI shall, to the fullest extent permitted under
applicable law, indemnify and hold harmless (and shall advance expenses to),
each past and present director, officer, employee, fiduciary and agent of PCI or
AI, including, without limitation, officers and directors serving as such on the
date hereof (collectively, the "Indemnified Parties") against any costs or
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation arising out of or
pertaining to any of the transactions contemplated hereby, including a breach of
a representation or warranty contained herein by any party which causes,
contributes to or results in any such claim, action, suit, proceeding or
investigation, and in the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time); (i) PCI and
AI shall pay the reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably satisfactory to PCI and
IA, promptly as statements therefore are received: and (ii) PCI and AI will
cooperate in the defense of any such matter; provided however, that neither PCI
nor AI shall be liable for any settlement effected without its prior written
consent, which consent shall not be unreasonably withheld: and provided further,
that neither PCI nor AI shall be obligated pursuant to this Section 5.03 to pay
the fees and disbursements of more than one counsel and one local counsel for
all Indemnified Parties in any single action except to the extent that, in the
opinion of counsel for the indemnified Parties, two or more of such Indemnified
Parties have conflicting interest in the outcome of such action.
(b) In the event AI or the Surviving Corporation or any of their
successors or assigns; (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger, or (ii) transfers all or substantially all of their properties and
assets to any person, proper provisions shall be made so that the successors and
assigns of the Surviving Corporation and AI assume the obligations set forth in
this Section 5.03.
(c) This section 5.03 shall survive any termination of this Agreement
and the consummation of the Merger at the Effective Time and is intended to
benefit each of the Indemnified Parties.
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5.04 Miscellaneous Agreements. PCI and AI will use their best efforts to obtain
consents of all third parties and governmental or regulatory bodies necessary,
or in the opinion of AI and PCI, advisable to consummate and make effective the
transactions contemplated by this Agreement. In case, at any time after the
effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement, AI or PCI shall cause the proper officers or
directors of PCI or AI, as the case may be, to take all such necessary action.
5.05 Filings. Each of PCI and AI will take all such action as may be necessary
under the federal and state securities laws applicable to, or necessary for, and
will file and, if appropriate use their respective best efforts to have declared
effective or approved all documents and notifications with SEC and other
governmental or regulatory bodies which are deemed necessary or appropriate for
the consummation of the Merger, and the transaction contemplated hereby, and
each party shall give the other any information requested by it which is
reasonably necessary to enable it to take such action.
5.06 Certain Notification. At all times prior to the Effective Time, each party
shall promptly notify the other in writing of the occurrence of any event which
will or may result in the failure to satisfy the conditions contained in Article
VI of this Agreement.
5.07 Public Announcements. Except as required by applicable Law, none of the
parties hereto shall, nor shall any person acting on behalf of any of them, make
any public announcement in respect of this Agreement or the Merger, without the
prior written consent of AI and PCI.
ARTICLE VI
CONDITIONS
6.01 Conditions to Obligations. The obligations of AI and PCI to effect the
Merger shall be subject to the fulfillment, at the Effective Time, of the
following conditions, except as PCI and AI otherwise consent in writing:
(a) The Merger shall have been approved by the requisite vote or
consent of stockholders and directors of all parties;
(b) There shall not be in effect; (i) any judgment, decree or order
issued by any federal, state, local, or foreign court of competent jurisdiction
or; (ii) any statute, rule or regulation enacted or promulgated by any federal,
state, local or foreign legislative, administrative or regulatory body of
competent jurisdiction that in either of cases (i) or (ii), prohibits the
consummation of the Merger or makes such consummation illegal;
(c) The directors of each of AI, SUB and PCI in the exercise of their
business judgment believe that this Merger is in the best interest of each of
their respective stockholders;
(d) The name of American Industries, Inc. will be changed to Dolce
Ventures, Inc.
(e) AI will have authorized the creation of Preferred Stock, and the
authorization of 100,000,000 shares of preferred with a par value of $.001.
(f) Each party shall be satisfied with the results of its due diligence
examinations;
(g) All representations and warranties set out herein shall be true and
correct and all covenants set out herein shall have been performed.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.01 Termination. This Agreement may be terminated by either AI or PCI of the
required approval of directors and stockholders shall not have been obtained;
the conditions contained in Article VI of this Agreement have not been complied
with in every material respect; there has been a failure to perform any of the
covenants or agreements contained herein; or this Agreement may also be
terminated at any time prior to the Effective Time by either AI or PCI if the
Merger shall not have been consummated on or before March 30, 2002.
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7.02 Effect of Termination. In the event of the termination of this Agreement by
either AI or PCI as provided in Section 7.01 hereof; (i) the Merger shall be
deemed abandoned and this Agreement shall forthwith become void, and; (ii) there
shall be no liability on the part of AI or PCI or their respective officers of
directors, except, with respect to AI or PCI, as set forth in Sections 5.02 and
5.03 hereof and except for liability arising from a material breach of this
Agreement.
7.03 Amendment. This Agreement may be amended by an agreement of the parties
hereto by action taken by their Boards of Directors, at any time before or after
approval of the Merger by the stockholders of the parties, but after any such
approval, no amendment shall be made which reduces or increases the
consideration into which Shares are to be exchanged as provided in this
Agreement or which in any way materially adversely affects the rights of such
stockholders of AI or PCI without the further approval of such respective
stockholders as required by applicable law. This Agreement may not be modified
or amended except by an instrument in writing signed by or on behalf of each of
the parties hereto referring specifically to the Agreement.
7.04 Waiver. No term or provision of this Agreement may be waived except that
any term or provision of this Agreement (other than a requirement imposed by
law) may be waived at any time by the party entitled to the benefits thereof by
an instrument in writing signed by or on behalf of such party and referring
specifically to the term or provision to be waived.
ARTICLE VIII
ADDITIONAL TERMS
8.01 Survival of Representations, Warranties and Agreements. The representations
and warranties of AI, SUB and PCI in this Agreement, or in any instrument
delivered by AI, SUB or PCI pursuant to this Agreement, shall survive the Merger
and be continuing.
8.02 Closing. Unless this Agreement shall have been terminated in accordance
with the provisions of Article VII hereof and the Merger herein contemplated
shall have been abandoned, a closing (the "Closing") will be held promptly
following the Special Meeting or Consent, as the case may be, at the offices of
AI in Saint Xxxxxx, Utah, of by mail at the election of the parties. At such
time (the "Closing Date"), any required documents will be delivered, and
immediately thereafter, the Certificate of Merger will be filed and, provided
however, that if any of the conditions provided for in Article VI shall not have
been met or waived by the date on which the Closing is otherwise scheduled,
then, subject to Section 7.01 hereof, the party to this Agreement which is
unable to meet such condition or conditions shall be entitled to postpone the
Closing by notice to the other parties until such condition or conditions shall
have been met or waived. Such notifying party will seek to meet such condition
or conditions at the earliest practicable date.
8.03 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given when delivered personally or sent by telex, fax or
other telecommunications device capable of creating a written record (and
promptly confirmed in writing ) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) If to AI: Xxxxxxx X. Xxxx, Xx.
0000 Xxxxxxxx Xx.
Xx. Xxxxxx, Xxxx, 00000
With a copy to: Xxxx X. Xxxxxxxx
000 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
(b) If to PCI: Xxxx Field
000 Xxxxxxxx Xx.
Xxxxxxx, XX 00000
With a copy to: Xxxxx X. Xxxxxx, Xx.
X.X. Xxx 000000
Xxxxxxx, Xxxxx 00000
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8.04 Miscellaneous. This Agreement (including the Disclosure Schedule, documents
and instruments referred to or incorporated herein); (a) constitutes the entire
agreement and supersedes all other prior agreements and undertakings, both
written an oral, among the parties, or any of them, with respect to the subject
matter hereof; (b) except for the provisions of Sections 5.02 and 5.03, is not
intended to confer upon any other person any rights or remedies hereunder; (c)
shall not be assigned by operation of law or otherwise; (d) shall be governed in
all respects including validity, interpretation and effect, by the laws of the
State of Delaware without the application of conflicts of law principles; (e)
may be executed in counterparts which together shall constitute a single
instrument. No party has relied upon any representation or warranty, oral or
written, of any other party hereto or any of their officers, directors or
stockholders except for the representations and warranties expressly ser forth
in this Agreement, and no officer, agent, accountant, attorney, director or
stockholder of PCI or AI shall have any personal liability for the accuracy or
completeness of the representations and warranties set forth in the Agreement.
The headings in this Agreement are for convenience of reference only, and shall
not be deemed to alter the meaning or interpretation of any of the terms hereof.
Any reference to sections or articles shall be deemed to refer to the sections
or articles hereof unless otherwise stated.
8.05 Severability. If any part of this Agreement is contrary to, prohibited by,
or deemed invalid under applicable laws or regulations, such provision shall be
inapplicable and deemed omitted to the extent so contrary, prohibited or invalid
but the remainder hereto shall not be invalidated hereby and shall be given
effect so far as possible.
[Signature Page Follows]
[Signature Page for Agreement of Merger]
IN WITNESS WHEREOF, AI and PCI have caused this Agreement of Merger to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.
AMERICAN INDUSTRIES, INC. PEGASUS TEL, INC.
a Utah Corporation a Delaware Corporation
By: /s/ Xxxxxxx X. Xxxx, Xx. By: /s/ Xxxxxxx X. Xxxx, Xx._____
------------------------------------ -----------------------------
Xxxxxxx X. Xxxx, Xx., President Xxxxxxx X. Xxxx, Xx., President
PEGASUS COMMUNICATIONS, INC.
a New York Corporation
By: /s/ Xxxx X. X. Field_________
-----------------------------
Xxxx Field, President
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