EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
AMONG
DMA HOLDINGS, INC.,
DIVERSE MEDIA ACQUISITIONS, INC.
AND
AUDIO COMMUNICATION NETWORK, INC.
DATED AS OF JUNE 5, 1998
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TABLE OF CONTENTS
PAGE
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ARTICLE I
The Merger
Section 1.01. The Merger.............................................. 1
Section 1.02. Effective Time; Closing................................. 1
Section 1.03. Effect of the Merger.................................... 1
Section 1.04. Articles of Incorporation; By-laws...................... 2
Section 1.05. Directors and Officers.................................. 2
Section 1.06. Effect on Capital Stock................................. 2
Section 1.07. Payment for Company Common Stock........................ 2
Section 1.08. Employee Stock Options.................................. 3
ARTICLE II
Representations and Warranties of the Company
Section 2.01. Organization and Qualification; Subsidiaries............ 4
Section 2.02. Articles of Incorporation and By-laws................... 4
Section 2.03. Capitalization.......................................... 4
Section 2.04. Authority Relative to this Agreement.................... 5
Section 2.05. No Conflict; Required Filings and Consents.............. 5
Section 2.06. Compliance.............................................. 6
Section 2.07. SEC Filings; Financial Statements....................... 6
Section 2.08. Absence of Certain Changes or Events.................... 6
Section 2.09. Absence of Litigation................................... 7
Section 2.10. Employee Benefit Plans.................................. 7
Section 2.11. Labor Matters........................................... 9
Section 2.12. Recommendation of Board of Directors; Vote Required..... 9
Section 2.13. Opinion of Financial Advisor............................ 9
Section 2.14. Accuracy of Information Supplied........................ 9
Section 2.15. Proxy Statement......................................... 10
Section 2.16. Title to, Condition and Sufficiency of Assets........... 10
Section 2.17. Trademarks, Patents and Copyrights...................... 11
Section 2.18. Taxes................................................... 11
Section 2.19. Environmental Matters................................... 11
Section 2.20. Contracts and Commitments............................... 12
Section 2.21. Governmental Licenses and Permits....................... 13
Section 2.22. Affiliate Transactions.................................. 13
Section 2.23. Brokers.................................................. 13
ARTICLE III
Representations and Warranties of Parent and Purchaser
Section 3.01. Corporate Organization................................... 13
Section 3.02. Authority Relative to This Agreement..................... 13
Section 3.03. No Conflict; Required Filings and Consents............... 13
Section 3.04. Proxy Statement.......................................... 14
Section 3.05. Brokers.................................................. 14
Section 3.06. Accuracy of Information Supplied......................... 14
Section 3.07. Trust Organization....................................... 14
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ARTICLE IV
Conduct of Business Pending the Merger
Section 4.01. Conduct of Business by the Company Pending the Merger.... 15
ARTICLE V
Additional Agreements
Section 5.01. Stockholders' Meeting.................................... 16
Section 5.02. Proxy Statement.......................................... 16
Section 5.03. Access to Information.................................... 17
Section 5.04. No Solicitation of Transactions.......................... 17
Section 5.05. Directors' and Officers' Indemnification and Insurance... 18
Section 5.06. Notification of Certain Matters.......................... 18
Section 5.07. Further Action; Reasonable Best Efforts.................. 19
Section 5.08. Public Announcements..................................... 19
Section 5.09. Consents Generally....................................... 19
Section 5.10. Prepayment of Certain Debt............................... 19
Section 5.11. Release of Company Stock................................. 19
Section 5.12 Cancellation of Suncom Option............................ 19
ARTICLE VI
Conditions to the Merger
Section 6.01. Conditions to the Merger................................. 20
Section 6.02. Conditions to the Obligations of Parent and Purchaser.... 20
Section 6.03. Conditions to the Obligations of The Company............. 21
ARTICLE VII
Termination, Amendment and Waiver
Section 7.01. Termination.............................................. 22
Section 7.02. Effect of Termination.................................... 23
Section 7.03. Fees and Expenses........................................ 23
Section 7.04. Amendment................................................ 24
Section 7.05. Waiver................................................... 24
ARTICLE VIII
General Provisions
Non-Survival of Representations, Warranties and
Section 8.01. Agreements............................................... 24
Section 8.02. Notices.................................................. 24
Section 8.03. Certain Definitions...................................... 25
Section 8.04. Severability............................................. 26
Section 8.05. Entire Agreement; Assignment............................. 26
Section 8.06. Parties in Interest...................................... 26
Section 8.07. Specific Performance.................................... 26
Section 8.08. Governing Law............................................ 26
Section 8.09. Headings................................................. 26
Section 8.10. Counterparts............................................ 26
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Agreement and Plan of Merger, dated as of June 5, 1998 (this "Agreement"),
among DMA HOLDINGS, INC., a Delaware corporation ("Parent"), DIVERSE MEDIA
ACQUISITIONS, INC., a Florida corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and Audio Communication Network, Inc., a Florida
corporation (the "Company").
Whereas, the Boards of Directors of Parent, Purchaser and the Company have
each determined that it is in the best interests of their respective
stockholders for Parent to acquire the Company upon the terms and subject to
the conditions set forth herein;
Whereas, in furtherance of such acquisition, it is proposed that Purchaser
shall merge with and into the Company (the "Merger") on the terms and
conditions set forth in this Agreement;
Whereas, also in furtherance of such acquisition, the Boards of Directors of
Parent, Purchaser and the Company have each approved the Merger of Purchaser
with and into the Company in accordance with the Florida Business Corporation
Act ("Florida Law");
Whereas, Parent and Suncom Communications, L.L.C., a Delaware limited
liability company ("Suncom"), have entered into a Stock Option Agreement,
dated as of the date hereof (the "Shareholders' Stock Option Agreement"),
providing for the granting by Suncom to Parent of an option to purchase from
Suncom up to 2,697,986 Shares at $6.40 per Share and further providing for an
agreement by Suncom to vote all such Shares in favor of the Merger at the
Stockholders' Meeting subject to the conditions set forth therein; and
Whereas, Parent and the Company have agreed to cause the Escrow Agreement
(as defined below) to be entered into on the date hereof as set forth in
Section 7.03(d);
Now, Therefore, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
The Merger
Section 1.01. The Merger. Upon the terms and subject to the conditions set
forth in Article VI, and in accordance with Florida Law, at the Effective Time
(as hereinafter defined) Purchaser shall be merged with and into the Company.
As a result of the Merger, the separate corporate existence of Purchaser shall
cease and the Company shall continue as the surviving corporation of the
Merger (the "Surviving Corporation").
Section 1.02. Effective Time; Closing. On the Closing Date (as defined
below) (or on such other date as Parent and the Company may agree), the
parties hereto shall cause the Merger to be consummated by filing Articles of
Merger (the "Articles of Merger") with the Secretary of State of the State of
Florida, in such form as is required by, and executed in accordance with the
relevant provisions of, Florida Law (the date and time of such filing being
the "Effective Time"). The closing of the merger (the "Closing") will take
place at the offices of Shearman & Sterling located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m. (local time) on the tenth business day
following the date on which the conditions set forth in Article VI (other than
the delivery of documents to be made at the Closing) have been satisfied or
waived by the party entitled to the benefits of such conditions, or at such
other place, time and date as Parent and the Company may agree (the "Closing
Date").
Section 1.03. Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Florida Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties
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of the Company and Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
Section 1.04. Articles of Incorporation; By-laws. (a) Unless otherwise
determined by Parent prior to the Effective Time, at the Effective Time the
Articles of Incorporation of Purchaser, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended as provided by law and such Articles of
Incorporation.
(b) Unless otherwise determined by Parent prior to the Effective Time, the
By-laws of Purchaser, as in effect immediately prior to the Effective Time,
shall be the By-laws of the Surviving Corporation until thereafter amended as
provided by law, the Articles of Incorporation of the Surviving Corporation
and such By-laws.
Section 1.05. Directors and Officers. The directors of Purchaser immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and By-laws of the Surviving Corporation, and the officers of
the Company immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified.
Section 1.06. Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
common stock, par value $0.25 per share, of the Company ("Company Common
Stock" or the "Shares") or the holder of any shares of common stock, par value
$0.01 per share, of Purchaser ("Purchaser Common Stock"):
(a) Conversion of Shares of Common Stock. Each issued and outstanding
share of Company Common Stock (other than (i) shares of Company Common
Stock held by the Company or any of its Subsidiaries as treasury shares and
(ii) any shares of Company Common Stock held by Parent or any of its
subsidiaries (including Purchaser), shall be converted into the right to
receive $6.40 per share, net, in cash (the "Merger Consideration"), payable
to the holder thereof upon surrender of the certificate formerly
representing such shares in accordance with Section 1.07, without interest
thereon, less any required withholding taxes. Each such share of Company
Common Stock shall cease to be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a
certificate formerly representing any such shares of Company Common Stock
shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration to be paid in consideration therefor upon
surrender of such certificate in accordance with Section 1.07, without
interest thereon, less any required withholding taxes.
(b) Cancellation of Common Stock Owned by Company, Parent and
Purchaser. Each share of the Company Common Stock that is owned by, or by
any Subsidiary of, Company, or by Purchaser or any Subsidiary of Parent
(including Purchaser) shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered in exchange
therefor.
(c) Conversion of Shares of Purchaser Common Stock. Each share of
Purchaser Common Stock issued and outstanding immediately prior to the
Effective Time shall be converted into and become one validly issued, fully
paid and nonassessable share of common stock, par value $0.01 per share, of
the Surviving Corporation.
Section 1.07. Payment for Company Common Stock. (a) Exchange Agent. Prior to
the Effective Time, Parent shall designate a bank or trust company reasonably
acceptable to the Company to act as exchange agent in the Merger (the
"Exchange Agent"). At or prior to the Effective Time, Parent or Purchaser
shall deposit with the Exchange Agent the funds necessary to make the payments
contemplated by Section 1.06(a) hereof (the "Exchange Fund").
(b) Payment Procedures. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall instruct the Exchange Agent to
mail to each holder of record of a certificate or certificates that
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock
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(collectively, the "Certificates") whose shares were converted into the right
to receive the Merger Consideration pursuant to Section 1.06(a), (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as the Surviving Corporation may reasonably specify)
("Transmittal Letter") and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for payment of the Merger
Consideration ("Instructions"). Alternatively, the Company shall instruct the
Exchange Agent to provide to any holder of shares of Company Common Stock, who
so requests, in advance of the Closing a Transmittal Letter and Instructions.
Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with Transmittal Letter, duly executed, and such other documents as
reasonably may be required by the Exchange Agent, and acceptance thereof by
the Exchange Agent, which surrender and acceptance may occur at the Closing or
after the Effective Time, each holder of a Certificate shall receive in
exchange therefor the Merger Consideration specified in Section 1.06(a)
hereof, without interest thereon, less any required withholding taxes, and the
Certificate so surrendered shall forthwith be canceled. The Exchange Agent
shall accept such Certificates upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose to effect an orderly exchange
thereof in accordance with normal exchange practices. After the Effective
Time, there shall be no further transfer on the books and records of the
Company or its transfer agent of Certificates, and if Certificates are
presented to the Company for transfer, they shall be canceled against payment
of the Merger Consideration as herein provided. If any payment of Merger
Consideration is to be made to a Person other than the Person in whose name
the Certificate surrendered for exchange is registered, it shall be a
condition of such payment that the Certificate so surrendered shall be
properly endorsed, with the signature guaranteed, or otherwise in proper form
for transfer and that the Person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a Person other
than the registered holder of the Certificate surrendered, or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is
not applicable. Until surrendered as contemplated by this Section 1.07, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration,
without interest thereon, less any required withholding taxes.
(c) Further Ownership Rights in Company Common Stock. The Merger
Consideration paid upon the surrender for exchange of Certificates in
accordance with the terms of this Article I shall be deemed to have been paid
in full satisfaction of all rights pertaining to the shares of Common Stock
theretofore represented by such Certificates. If, after the Effective Time,
Certificates are presented to the Surviving Company or the Exchange Agent for
any reason, they shall be canceled and exchanged as provided in this Article
I.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the former stockholders of the Company for six months
after the Effective Time shall be delivered to the Surviving Company upon
demand, and any former stockholders of the Company who have not theretofore
complied with this Article I shall thereafter look only to the Surviving
Company for payment of their claim for any Merger Consideration, without
interest thereon, less any required withholding taxes.
(e) No Liability. None of Parent, Purchaser, the Company or the Exchange
Agent shall be liable to any Person in respect of any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
Section 1.08. Employee Stock Options.
Immediately prior to the Effective Time, each outstanding option to purchase
Shares (in each case, an "Option"), whether or not then exercisable, shall be
canceled and each holder of a canceled Option shall be entitled to receive a
payment (the "Exercise Amount") in cash from the Company, in consideration for
the cancellation of each such Option, at the same time that the Merger
Consideration is received by the holders of Shares, in an amount equal to the
product of (i) the number of Shares to be issued upon the exercise of such
Option and (ii) the excess, if any, of the Merger Consideration over the
exercise price per Share previously
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subject to such Option. Prior to the Effective Time, the Company shall use its
reasonable best efforts to cause each holder of an outstanding Option to
consent to the cancellation of such Option in consideration for the payment
provided herein, and shall take such other action as may be necessary to carry
out the terms of this Section 1.08.
ARTICLE II
Representations and Warranties of the Company
The Company hereby represents and warrants to Parent and Purchaser that:
Section 2.01. Organization and Qualification; Subsidiaries. (a) Each of the
Company and each subsidiary of the Company (a "Subsidiary") is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite power and authority
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Material Adverse Effect (as defined below). The Company
and each Subsidiary is duly qualified or licensed as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would not,
individually or in the aggregate, have a Material Adverse Effect. When used in
connection with the Company or any Subsidiary, the term "Material Adverse
Effect" means any change or effect that, individually or in the aggregate when
taken together with any other adverse changes and effects is or is reasonably
likely to be materially adverse to the business, operations, condition
(financial or otherwise), assets or liabilities (including, without
limitation, contingent liabilities) of the Company and the Subsidiaries taken
as a whole), other than any effect relating to (i) the United States economy
in general or, (ii) changes in economic conditions that affect, in general,
the business in which the Company is engaged. A true and complete list of all
the Subsidiaries, together with the jurisdiction of incorporation of each
Subsidiary and the percentage of the outstanding capital stock of each
Subsidiary owned by the Company and each other Subsidiary, is set forth in
Section 2.01 of the Disclosure Schedule previously delivered by the Company to
Parent (the "Disclosure Schedule"). Except as disclosed in such Section 2.01,
the Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for any
equity or similar interest in, any corporation, partnership, joint venture or
other business association or entity.
(b) Each Subsidiary that is material to the business, operations, condition
(financial or otherwise), assets or liabilities (including, without
limitation, contingent liabilities) of the Company and the Subsidiaries taken
as a whole is so identified in Section 2.01 of the Disclosure Schedule and is
referred to herein as a "Material Subsidiary".
Section 2.02. Articles of Incorporation and By-laws. The Company has
heretofore furnished to Parent a complete and correct copy of the Articles of
Incorporation and the By-laws or equivalent organizational documents, each as
amended to date, of the Company and each Material Subsidiary. Such Articles of
Incorporation and By-laws are true and correct as of the date hereof.
Section 2.03. Capitalization. The authorized capital stock of the Company
consists of 12,000,000 Shares and 1,000,000 shares of preferred stock, $0.001
par value per share. As of the date hereof, (i) 4,502,602 Shares are issued
and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) no Shares are held in the treasury of the Company, (iii)
no Shares are held by the Subsidiaries, and (iv) 108,500 Shares are reserved
for future issuance pursuant to employee stock options, options or stock
incentive rights granted pursuant to, among other agreements, the Company's
Stock Option Plan. As of the date hereof, no shares of capital stock of the
Company besides the Shares are issued and outstanding. Except as set forth in
this Section 2.03, and except for the Options, there are no options, warrants
or other rights, agreements, arrangements or
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commitments of any character relating to the issued or unissued capital stock
of the Company or any Subsidiary or obligating the Company or any Subsidiary
to issue or sell any shares of capital stock of, or other equity interests in,
the Company or any Subsidiary. All Shares subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be duly authorized, validly issued,
fully paid and nonassessable. There are no outstanding contractual obligations
of the Company or any Subsidiary to repurchase, redeem or otherwise acquire
any Shares or any capital stock of any Subsidiary or to provide funds to, or
make any investment (in the form of a loan, capital contribution or otherwise)
in, any Subsidiary or any other person. Other than the Shares pledged pursuant
to the Pledge Agreement (as defined below), each outstanding share of capital
stock of each Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by the Company or another Subsidiary
is free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, and limitations on the Company's or such
other Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever.
Section 2.04. Authority Relative to this Agreement. The Company has all
necessary power and authority to execute and deliver this Agreement and the
Escrow Agreement, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby (the "Transactions") and
thereby. The execution and delivery of this Agreement and the Escrow Agreement
by the Company and the consummation by the Company of the Transactions have
been duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or the Escrow Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval and
adoption of this Agreement by the holders of a majority of the then
outstanding Shares if and to the extent required by applicable law, and the
filing and recordation of appropriate merger documents as required by Florida
Law). This Agreement and the Escrow Agreement have been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Purchaser, constitute legal, valid and
binding obligations of the Company. As a result of actions by the Company's
Board of Directors, the voting requirements contained in Section 607.0901 of
the Florida Law do not apply to the Transactions, the Escrow Agreement and the
Shareholder's Option Agreement.
Section 2.05. No Conflict; Required Filings and Consents. (a) Except as set
forth in Section 2.05 of the Disclosure Schedule, the execution and delivery
of this Agreement and the Escrow Agreement by the Company do not, and the
performance of this Agreement and the Escrow Agreement by the Company will
not, (i) conflict with or violate the Articles of Incorporation or By-laws or
equivalent organizational documents of the Company or any Subsidiary, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or any Subsidiary or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the
Company or any Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation.
(b) The execution and delivery of this Agreement and the Escrow Agreement by
the Company do not, and the performance of this Agreement and the Escrow
Agreement by the Company will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Exchange Act, state securities or
"blue sky" laws ("Blue Sky Laws") and state takeover laws, the pre-merger
notification requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder (the "HSR Act"),
and filing and recordation of appropriate merger documents as required by
Florida Law and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Merger, or otherwise prevent the Company
from performing its obligations under this Agreement.
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Section 2.06. Compliance. Neither the Company nor any Subsidiary is in
conflict with, or in default or violation of, (i) any material law, rule,
regulation, order, judgment or decree applicable to the Company or any
Subsidiary or by which any property or asset of the Company or any Subsidiary
is bound or affected, or (ii) any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary or any property or asset of the Company or any
Subsidiary is bound or affected.
Section 2.07. SEC Filings; Financial Statements. (a) The Company has filed
all forms, reports, documents and amendments thereto required to be filed by
it with the SEC since January 1, 1995 (the "SEC Reports"). The SEC Reports (i)
were prepared, in all material respects, in accordance with the requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and the
Exchange Act, as the case may be, and the rules and regulations thereunder and
(ii) did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. No Subsidiary is
required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the SEC Reports was prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each fairly presented the consolidated financial position,
results of operations and changes in financial position of the Company and the
consolidated Subsidiaries as at the respective dates thereof and for the
respective periods indicated therein (subject, in the case of unaudited
statements), to normal and recurring year-end adjustments.
(c) Except as and to the extent set forth on the consolidated balance sheet
of the Company and the consolidated Subsidiaries as at March 31, 1998,
including the notes thereto (the "1998 Balance Sheet"), neither the Company
nor any Subsidiary has any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise) which would be required to be
reflected on a balance sheet, or in the notes thereto, prepared in accordance
with generally accepted accounting principles, except for liabilities and
obligations incurred in the ordinary course of business consistent with past
practice since April 1, 1998.
(d) The Company has heretofore furnished to Parent complete and correct
copies of all amendments and modifications that have not been filed by the
Company with the SEC to all agreements, documents and other instruments that
previously had been filed by the Company with the SEC and are currently in
effect.
Section 2.08. Absence of Certain Changes or Events. Since April 1, 1998,
except as contemplated by this Agreement or disclosed in any SEC Report filed
since April 1, 1998 and prior to the date of this Agreement, the Company and
the Subsidiaries have conducted their businesses only in the ordinary course
and in a manner consistent with past practice and, since April 1, 1998, there
has not been (i) any change in the business, operations, condition (financial
or otherwise), assets or liabilities (including, without limitation,
contingent liabilities) of the Company or any Subsidiary having, individually
or in the aggregate, a Material Adverse Effect, (ii) any damage, destruction
or loss (whether or not covered by insurance) with respect to any property or
asset of the Company or any Subsidiary and having, individually or in the
aggregate, a Material Adverse Effect, (iii) any change by the Company in its
accounting methods, principles or practices, (iv) any revaluation by the
Company of any asset (including, without limitation, any writing down of the
value of inventory or writing off of notes or accounts receivable), other than
in the ordinary course of business consistent with past practice, (v) any
entry by the Company or any Subsidiary into any commitment or transaction
material to the Company and the Subsidiaries taken as a whole, (vi) any
capital expenditure other than in accordance with the budget therefor most-
recently provided to Parent prior to the date of this Agreement, or any
acquisition of any Person or all or a significant portion of the assets of any
Person or any division or business unit or segment thereof, (vii) any waiver
of any right of material value relating to the Business, (viii) any
declaration, setting aside or payment of any dividend or distribution in
respect of any capital stock of the Company or any redemption, purchase or
other acquisition of any of its securities, or (ix) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the
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granting of stock options, stock appreciation rights, performance awards, or
restricted stock awards), stock purchase or other employee benefit plan, or
any other increase in the compensation payable or to become payable to any
officers or key employees of the Company or any Subsidiary, except in the
ordinary course of business consistent with past practice.
Section 2.09. Absence of Litigation. Except as disclosed in the SEC Reports
filed prior to the date of this Agreement, there is no claim, action,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary, or any property or asset of
the Company or any Subsidiary, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign, which (i)
individually or in the aggregate, is reasonably likely to require payment by
the Company in excess of $100,000 or (ii) seeks to delay or prevent the
consummation of any Transaction. As of the date hereof, neither the Company
nor any Subsidiary nor any property or asset of the Company or any Subsidiary
is subject to any order, writ, judgment, injunction, decree, determination or
award.
Section 2.10. Employee Benefit Plans. (a) Section 2.10 of the Disclosure
Schedule contains a true and complete list of (i) all employee benefit plans
(within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) and all bonus, stock option, stock
purchase, restricted stock, incentive, deferred compensation, retiree medical
or life insurance, supplemental retirement, severance or other employee
benefit plans, programs or arrangements, and all employment, termination,
severance or other employment contracts or agreements to which the Company or
any Subsidiary is a party, with respect to which the Company or any Subsidiary
has any obligation or which are maintained, contributed to or sponsored by the
Company or any Subsidiary for the benefit of any current or former employee,
officer or director of the Company or any Subsidiary and (ii) each employee
benefit plan for which the Company or any Subsidiary could reasonably be
expected to incur liability under Section 4069 of ERISA, in the event such
plan were terminated, or under Section 4212(c) of ERISA, or in respect of
which the Company or any Subsidiary remains secondarily liable under Section
4204 of ERISA (collectively, the "Plans"). Each Plan is in writing and the
Company has previously made available to Parent a true and complete copy of
each Plan and a true and complete copy of each material document prepared in
connection with each such Plan, including, without limitation, (i) a copy of
each trust or other funding arrangement, (ii) each summary plan description
and summary of material modifications, (iii) the most recently filed Internal
Revenue Service ("IRS") Form 5500, (iv) the most recently received IRS
determination letter, if any, for each such Plan, and (v) the most recently
prepared actuarial report and financial statement, if any, in connection with
each such Plan. Except as disclosed in Section 2.10 of the Disclosure
Schedule, neither the Company nor any Subsidiary has any express or implied
commitment (i) to create, incur liability with respect to or cause to exist
any other employee benefit plan, program or arrangement other than a Plan,
(ii) to enter into any contract or agreement to provide compensation or
benefits to any individual or (iii) to modify, change or terminate any Plan,
other than with respect to a modification, change or termination required by
ERISA or the Internal Revenue Code of 1986, as amended (the "Code").
(b) Other than as specifically disclosed in Section 2.10 of the Disclosure
Schedule, none of the Plans is a multiemployer plan, within the meaning of
Section 3(37) or 4001(a)(3) of ERISA (a "Multiemployer Plan"), or a single
employer pension plan, within the meaning of Section 4001(a)(15) of ERISA, for
which the Company or any Subsidiary would incur liability if the Company or a
Subsidiary withdraws from such Plan or any such Plan was terminated under
Section 4063 or 4064 of ERISA (a "Multiple Employer Plan"). Except as
disclosed in Section 2.10 of the Disclosure Schedule, none of the Plans (i)
provides for the payment of separation, severance, termination or similar-type
benefits to any person, (ii) obligates the Company or any Subsidiary to pay
separation, severance, termination or other benefit as a result of any
Transaction, or (iii) obligates the Company or any Subsidiary to make any
payment or provide any benefit that could be subject to a tax under Section
4999 of the Code. Except as disclosed in Section 2.10 of the Disclosure
Schedule, none of the Plans provides for or promises retiree medical,
disability or life insurance benefits to any current or former employee,
officer or director of the Company or any Subsidiary. With respect to each
Multiemployer Plan and Multiple Employer Plan, Section 2.10(b) of the
Disclosure Schedule sets forth an accurate statement or the Company's or
Subsidiary's best information or most recent information of the total amount
of withdrawal liability that the
7
Company or any Subsidiary would incur in the event of a complete withdrawal,
within the meaning of Title IV of ERISA, from each such plan.
(c) Each Plan other than each Multiemployer Plan which is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS that such Plan is so qualified, and each
trust established in connection with any Plan which is intended to be exempt
from federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that such trust is so exempt. Except as
disclosed in Schedule 2.10, no fact or event has occurred since the date of
any such determination letter from the IRS that has adversely affected the
qualified status of any such Plan or the exempt status of any such trust. Each
trust, if any, maintained or contributed to by the Company or any Subsidiary
which is intended to be qualified as a voluntary employees' beneficiary
association exempt from federal income taxation under Sections 501(a) and
501(c)(9) of the Code has received a favorable ruling letter from the IRS that
it is so qualified and so exempt, and no fact or event has occurred since the
date of such determination by the IRS that has adversely affected such
qualified or exempt status.
(d) There has been no material prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan
(other than any Multiemployer Plan). Neither the Company nor any Subsidiary is
currently liable or has previously incurred any liability for any tax or
penalty arising under Section 4971, 4972, 4979, 4980 or 4980B of the Code or
Section 502(c) of ERISA, and no fact or event exists which could reasonably be
expected to give rise to any such liability. Neither the Company nor any
Subsidiary has incurred any liability under, arising out of or by operation of
Title IV of ERISA (other than liability for premiums to the Pension Benefit
Guaranty Corporation ("PBGC") arising in the ordinary course), including,
without limitation, any liability in connection with (i) the termination or
reorganization of any employee pension benefit plan subject to Title IV of
ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer
Plan, and no fact or event exists which could reasonably be expected to give
rise to any such liability. Except as disclosed on Schedule 2.10, no complete
or partial termination has occurred within the five years preceding the date
hereof with respect to any Plan. No reportable event (within the meaning of
Section 4043 of ERISA) has occurred or is expected to occur with respect to
any Plan (other than any Multiemployer Plan) subject to Title IV of ERISA
other than those events with respect to which the PBGC notice requirement has
been waived. No asset of the Company or any Subsidiary is the subject of any
lien arising under Section 302(f) of ERISA or Section 412(n) of the Code;
neither the Company nor any Subsidiary has been required to post any security
under Section 307 of ERISA or Section 401(a)(29) of the Code; and no fact or
event exists which could reasonably be expected to give rise to any such lien
or requirement to post any such security.
(e) Each Plan is now and has been operated in all material respects in
accordance with the requirements of all applicable laws, including, without
limitation, ERISA and the Code, and the Company and each Subsidiary have
performed all obligations required to be performed by them under, are not in
any material respect in default under or in violation of, and have no
knowledge of any material default or material violation by any party to, any
Plan. No Plan has incurred an "accumulated funding deficiency" (within the
meaning of Section 302 of ERISA or Section 412 of the Code), whether or not
waived. All contributions, premiums or payments required to be made with
respect to any Plan other than any Plan involving the grant of incentive stock
options to the extent that options granted thereunder qualify for incentive
stock option treatment under Section 432 of the Code are or will be fully
deductible for income tax purposes and no such deduction previously claimed
has been challenged by any government entity. The 1998 Balance Sheet reflects
an accrual of all amounts of employer contributions and premiums accrued but
unpaid with respect to the Plans which are required to be accrued on such
balance sheet in accordance with United States Generally Accepted Accounting
Principles. With respect to each Plan, if any, other than a Multiemployer
Plan, subject to Title IV of ERISA, the accumulated benefit obligations of
such Plan (determined as of the date of the most recent actuarial valuation
prepared for such Plan) does not exceed the fair market value of the assets of
such Plan (determined as of the date of such valuation) attributable to such
obligations.
(f) The Company and the Subsidiaries have not incurred any liability under,
and have complied in all respects with, the Worker Adjustment Retraining
Notification Act and the regulations promulgated thereunder
8
("WARN") and do not reasonably expect to incur any such liability solely as a
result of actions taken or not taken prior to the Effective Time. Section
2.10(f) of the Disclosure Schedule lists (i) all the employees terminated or
laid off by the Company or any Subsidiary during the 90 days prior to the date
hereof and (ii) all the employees of the Company or any Subsidiary who have
experienced a reduction in hours of work of more than 50% during any month
during the 90 days prior to the date hereof and describes all notices, if any,
given by the Company and the Subsidiaries in connection with WARN with respect
to any termination, layoff or reduction in hours described in clause (i) or
(ii) of this Section 2.10(f). The Company will, by written notice to Parent
and Purchaser, update Section 2.10(f) of the Disclosure Schedule to include
any such terminations, layoffs and 50% reductions in hours from the date
hereof through the Effective Time and will provide Parent and Purchaser with
any related information which they may reasonably request in connection with
the Company's compliance.
Section 2.11. Labor Matters. (a) Except as set forth in Section 2.11 of the
Disclosure Schedule, (i) there are no controversies pending or, to the
knowledge of the Company, threatened between the Company or any Subsidiary and
any of their respective employees; (ii) neither the Company nor any Subsidiary
is a party to any collective bargaining agreement or other labor union
contract applicable to persons employed by the Company or any Subsidiary, nor,
to the knowledge of the Company, are there any activities or proceedings of
any labor union to organize any such employees; (iii) neither the Company nor
any Subsidiary has breached or otherwise failed to comply with any material
provision of any such agreement or contract and there are no grievances
outstanding against the Company or any Subsidiary under any such agreement or
contract; (iv) there are no unfair labor practice complaints pending against
the Company or any Subsidiary before the National Labor Relations Board or any
current union representation questions involving employees of the Company or
any Subsidiary; and (v) there is no strike, slowdown, work stoppage or
lockout, or, to the knowledge of the Company, threat thereof, by or with
respect to any employees of the Company or any Subsidiary. The consent of any
labor unions which are parties to any collective bargaining agreements listed
in Section 2.11 of the Disclosure Schedule is not required to consummate the
Transactions.
(b) Except as set forth in Section 2.10 of the Disclosure Schedule, to the
Company's knowledge, no key executive employee and no group of employees or
independent contractors of the Company or any Subsidiary has any plans to
terminate his, her or its employment or relationship as an independent
contractor with the Company or any Subsidiary or to not remain employed at the
Company or any Subsidiary after the Closing. Section 2.11(b) of the Disclosure
Schedule sets forth the name, start date, title or position, and the annual
or, as the case may be, hourly rate of compensation (including salary, bonuses
and commissions), as of the date of this Agreement for each individual engaged
by the Company or any Subsidiary as an employee or independent contractor.
Section 2.12. Recommendation of Board of Directors; Vote Required. The Board
of Directors of the Company has approved this Agreement (there being no votes
against such approval), the Merger and the other transactions contemplated
hereby and, subject to Section 7.01(g) hereof, has determined to recommend to
its stockholders (the "Recommendation") that its stockholders vote in favor of
the adoption and approval of this Agreement. The affirmative vote of a
majority of the votes that the holders of the outstanding shares of Company
Common Stock are entitled to cast with respect to the adoption and approval of
this Agreement is the only vote of the holders of any class or series of the
capital stock of the Company necessary to approve the Merger and the other
transactions contemplated hereby.
Section 2.13. Opinion of Financial Advisor. The Company has received the
opinion of Duff & ▇▇▇▇▇▇, L.L.C., dated the date hereof, to the effect that,
as of such date, the Merger Consideration is fair to the Company stockholders
from a financial point of view, and such opinion has not been withdrawn.
Section 2.14. Accuracy of Information Supplied. Neither this Agreement nor
any schedule, exhibit or certificate furnished or required to be furnished by
or on behalf of the Company to Parent, Purchaser or any of their agents or
affiliates in connection with this Agreement or any of the transactions
contemplated hereby, taken as a whole, contains or will contain (at the time
when such schedule, exhibit or certificate is furnished) any untrue
9
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.
Section 2.15. Proxy Statement. On the date the Proxy Statement is first
mailed to the Company's stockholders, at the time of the Stockholders' Meeting
(as hereinafter defined) and at the Effective Time, the Proxy Statement will
comply in all material respects with the requirements of the Exchange Act and
will not contain any statement that, at such time and in light of the
circumstances under which it is made, is false or misleading with respect to
any material fact, or omits to state any material fact required to be stated
therein or necessary to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for the Stockholders' Meeting that shall have
become false or misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or omissions
from the Proxy Statement made in reliance upon and in conformity with
information furnished to the Company in writing by or on behalf of Parent or
Purchaser expressly for use in the Proxy Statement.
Section 2.16. Title to, Condition and Sufficiency of Assets. (a) Owned
Properties. The Company owns no real property.
(b) The leases and subleases described on Section 2.16(b) of the Disclosure
Schedule (the "Leases") constitute all of the leases of real property used or
held for use in the business to which the Company or any Subsidiary is a
party. Each Lease is in full force and effect and the Company or a Subsidiary,
as indicated for such Lease in Section 2.16(b) of the Disclosure Schedule,
holds a valid and existing leasehold or subleasehold interest thereunder in
the real property which is subject thereto (collectively, the "Leased
Realty"). The Leased Realty constitutes all of the interests in real property
used or held for use by the Company or any Subsidiary in the operation of its
business. The Company has delivered to Parent complete and accurate copies of
each of the Leases, in each case including all modifications and amendments
thereto. With respect to each Lease: (i) such Lease is legal, valid, binding,
enforceable and in full force and effect; (ii) subject to obtaining any
Consent described in Section 2.05 of the Disclosure Schedule, the consummation
of the transactions contemplated by this Agreement will not cause such Lease
to cease to be legal, valid, binding, enforceable and in full force and effect
on substantially the same terms as are presently in effect; (iii) neither the
Company nor any Subsidiary is in material breach or default under, and no
event has occurred which, with notice or lapse of time, would constitute such
a breach or default of the Company or any Subsidiary of, or permit
termination, modification or acceleration of, such Lease; (iv) to the
Company's knowledge, no other party to such Lease is in material breach or
default under, and no event has occurred which, with notice or lapse of time,
would constitute such a breach or default or permit termination, modification
or acceleration of, such Lease; (v) neither the Company nor any Subsidiary has
(and, to the Company's knowledge, no other party to such Lease has) repudiated
any provision thereof; (vi) there are no material disputes, oral agreements,
or forbearances in effect as to such Lease; (vii) such Lease has not been
modified in any respect, except to the extent that such modifications are
disclosed by the documents delivered to Parent; and (viii) neither the Company
nor any Subsidiary has assigned, transferred, conveyed, mortgaged, deeded in
trust or caused any mortgages, pledges, liens, security interests, conditional
and installment sale agreements, encumbrances, charges or other claims of
third parties of any kind (collectively, "Liens"), (other than any (A) Liens
for current taxes and assessments not yet past due, (B) inchoate mechanics'
and materialmen's Liens for construction in progress and (C) workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of business of the Company or such Subsidiary consistent with past practice
(collectively, "Permitted Liens"), to exist with respect to any interest of
the Company or any Subsidiary in such Lease.
(c) There is no proceeding in eminent domain or any similar proceeding
pending, or (to the Company's knowledge) threatened, affecting any of the
Company's or any Subsidiary's interest in any Leased Realty. There exists no
writ, injunction, decree, order or judgment outstanding, nor any litigation,
pending, or (to the Company's knowledge) threatened, relating to the
ownership, lease, use, occupancy or operation by any of the Company's or any
Subsidiary's of any Leased Realty.
10
(d) Except as set forth in Section 2.16(d) of the Disclosure Schedule: (i)
the current use by the Company and the Subsidiaries of the Leased Realty does
not violate any Lease, law, instrument of record or agreement affecting any
Leased Realty, and (ii) there is no violation of any applicable covenant,
condition, restriction, easement or agreement.
Section 2.17. Trademarks, Patents and Copyrights. The Company and the
Subsidiaries own or possess adequate licenses or other valid rights to use all
material patents, patent rights, trademarks, trademark rights, trade names,
trade name rights, copyrights, servicemarks, trade secrets, applications for
trademarks and for servicemarks, know-how and other proprietary rights and
information used or held for use in connection with the business of the
Company and the Subsidiaries as currently conducted or as contemplated to be
conducted, and the Company is unaware of any assertion or claim challenging
the validity of any of the foregoing. A true and complete list of all such
items is set forth on Section 2.17 of the Disclosure Schedule. The conduct of
the business of the Company and the Subsidiaries as currently conducted and as
contemplated to be conducted does not and will not conflict in any material
respect with any patent, patent right, license, trademark, trademark right,
trade name, trade name right, servicemark or copyright of any third party. To
the knowledge of the Company, there are no infringements of any material
propriety rights owned by or licensed by or to the Company or any Subsidiary.
To the knowledge of the Company, neither it nor any Subsidiary has licensed or
otherwise permitted the use by any third party of any material proprietary
information.
Section 2.18. Taxes. (a) The Company and the Subsidiaries have timely filed
all federal, state, local and foreign tax returns and reports required to be
filed by them and have paid and discharged all taxes required to be shown
thereon and have paid all applicable ad valorem taxes as are due. Such tax
returns are true, correct and complete in all material respects. Neither the
IRS nor any other taxing authority or agency, domestic or foreign, is now
asserting or, to the knowledge of the Company, threatening to assert against
the Company or any Subsidiary any deficiency or claim for additional taxes or
interest thereon or penalties in connection therewith. Neither the Company nor
any Subsidiary is a party to any tax sharing agreement and has no current or
contingent contractual obligations to indemnify any other Person with respect
to any taxes. Neither the Company nor any Subsidiary has a permanent
establishment in any foreign country, within the meaning of the relevant tax
treaty between the United States and any such foreign country. None of the
Company's or any Subsidiary's assets constitutes "tax exempt use property"
within the meaning of Section 168(h) of the Code (or any corresponding
provision of state, local or foreign tax law). Neither the Company nor any
Subsidiary has granted any waiver of any statute of limitations with respect
to, or any extension of a period for the assessment of, any federal, state,
county, municipal or foreign income tax. The accruals and reserves for taxes
reflected in the 1998 Balance Sheet are adequate to cover all taxes accruable
through such date (including interest and penalties, if any, thereon) in
accordance with generally accepted accounting principles. Neither the Company
nor any Subsidiary has made an election under Section 341(f) of the Code.
(b) The Company has furnished to Parent true, correct and complete copies of
all tax returns filed with respect to itself or any Subsidiary for (i) each
taxable period which remains open to audit, review or examination by the
relevant taxing authority or authorities and (ii) the most recent closed
taxable period.
Section 2.19. Environmental Matters. (a) For purposes of this Agreement, the
following terms shall have the following meanings: (i) "Hazardous Substances"
means (A) those substances defined in or regulated under the following federal
statutes and their state counterparts, as each may be amended from time to
time, and all regulations thereunder: the Hazardous Materials Transportation
Act, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Clean Water Act,
the Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide,
Fungicide, and Rodenticide Act and the Clean Air Act; (B) petroleum and
petroleum products including crude oil and any fractions thereof; (C) natural
gas, synthetic gas, and any mixtures thereof; (D) radon; (E) any other
contaminant; and (F) any substance with respect to which a federal, state or
local agency requires environmental investigation, monitoring, reporting or
remediation; and (ii) "Environmental Laws" means any federal, state or local
law relating to (A) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances; (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing
11
Hazardous Substances; or (C) otherwise relating to pollution of the
environment or the protection of human health.
(b) Except as described in Section 2.19 of the Disclosure Schedule: (i) the
Company is not in violation of any Environmental Law; (ii) none of the
properties owned or leased by the Company (including, without limitation,
soils and surface and ground waters) are contaminated with any Hazardous
Substance; (iii) the Company is not actually or potentially nor, to the
knowledge of the Company, allegedly liable for any off-site contamination;
(iv) the Company is not actually or potentially nor, to the knowledge of the
Company, allegedly liable under any Environmental Law (including, without
limitation, pending or threatened liens); (v) the Company has all material
permits, licenses and other authorizations required under any Environmental
Law ("Environmental Permits"); (vi) neither the execution and delivery of any
transaction contemplated hereunder nor the consummation of the transactions
contemplated hereby imposes any obligations for site investigation or cleanup,
or notification to or other consent of a governmental entity or any other
Person, pursuant to any "transaction-triggered" Environmental Law; and (vii)
the Company and each Subsidiary is in compliance with its Environmental
Permits in all material respects.
Section 2.20. Contracts and Commitments. (a) Except for the documents
contemplated hereunder or any contract described on Section 2.20 of the
Disclosure Schedule (with respect to its business) neither the Company nor any
Subsidiary is a party to nor bound by, and neither the Company nor any
Subsidiary is subject to, any contract, whether written or oral, including
any: (i) collective bargaining agreement or contract with any labor union or
any bonus, pension, profit sharing, retirement or any other form of deferred
compensation plan or any hospitalization insurance or similar plan or
practice; (ii) contract for the employment or engagement of any individual
employee or other Person (including as an independent contractor or on a
consulting basis) other than at the will of the employing Person, or any
agreement to provide severance or similar benefits upon any termination of
employment or other engagement; (iii) agreement, indenture or other contract
placing a Lien on any asset of the Company or any Subsidiary; (iv) agreement
with respect to the lending or investing of funds by the Company or any
Subsidiary; (v) license or royalty agreement; (vi) guaranty of any obligation
of any other Person or arrangement having a similar economic effect, other
than endorsements made for collection made in the ordinary course of business;
(vii) sales representation agreement; (viii) agreement with any intellectual
property; (ix) lease or agreement under which it is lessee of, or holds or
operates, any personal property owned by any other party calling for payments
in excess of $10,000 annually or entered into outside of the ordinary course
of business; (x) lease or agreement under which it is lessor of or permits any
third party to hold or operate any property, real or personal, owned or
controlled by it; (xi) agreement, contract or understanding pursuant to which
the Company or any Subsidiary subcontracts work to a third party; or (xii)
other agreement material to the business of the Company and its Subsidiaries.
(b) Each of the items which is described or required to be described on the
Section 2.20 of the Disclosure Schedule is in full force and effect; no item
which is described or required to be described on the Section 2.20 of the
Disclosure Schedule has been breached in any material respect, canceled or
repudiated by the Company or any Subsidiary or (to the Company's knowledge) by
any other party thereto; no such other party has indicated in writing or
orally to the Company or any Subsidiary that it will stop or decrease the rate
of business done with the Company or that it desires to renegotiate its
arrangements with the Company or any Subsidiary; the Company and each
Subsidiary has performed all material obligations required to be performed by
it in connection with the items which are described or required to be
described on the Section 2.20 of the Disclosure Schedule and is not in receipt
of any claim of material default under any such item; and neither the Company
nor any Subsidiary has a present expectation or intention of not performing in
all material respects any obligation pursuant to any item which is described
or required to be disclosed on Section 2.20 of the Disclosure Schedule.
(c) The Company has furnished to Parent a true and correct copy of all
written contracts and other items which are described or required to be
described on Section 2.20 of the Disclosure Schedule, in each case together
with all amendments, waivers or other changes thereto. Section 2.20 of the
Disclosure Schedule contains an accurate and complete description of all
material terms of all oral contracts and other oral items which are described
or required to be described on such Schedule.
12
Section 2.21. Governmental Licenses and Permits. Section 2.21 of the
Disclosure Schedule contains a complete listing and summary description of all
material Governmental Authorizations owned or possessed by the Company or any
Subsidiary. Taken together, the Company and its Subsidiaries own or possess
all right, title and interest in and to all of the Governmental Authorizations
which are necessary or material to conduct the business as currently conducted
or proposed to be conducted by the Company and its Subsidiaries. No loss or
expiration of any Governmental Authorization is pending, reasonably
foreseeable or, to the Company's knowledge, threatened, or would occur as a
result of any transaction contemplated by this Agreement.
Section 2.22. Affiliate Transactions. Other than as described on Section
2.22 of the Disclosure Schedule, no person employed by the Company or any
Subsidiary (a) is a party to any contract (other than in such person employed
by the Company or any Subsidiary in its capacity as an employee of the Company
or any Subsidiary) or (b) has any interest in any asset of the Company or any
Subsidiary, other than indirectly, as a stockholder of the Company.
Section 2.23. Brokers. No broker, finder or investment banker (other than
Duff & ▇▇▇▇▇▇, L.L.C. for whom the maximum fees paid or payable do not exceed
$200,000) is entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on behalf
of the Company. The Company has heretofore furnished to Parent a complete and
correct copy of all agreements between the Company and Duff & ▇▇▇▇▇▇, L.L.C.
pursuant to which such firm would be entitled to any payment relating to the
Transactions.
ARTICLE III
Representations and Warranties of Parent and Purchaser
Parent and Purchaser hereby, jointly and severally, represent and warrant to
the Company that:
Section 3.01. Corporate Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation and has the requisite power and authority
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a material adverse effect on the business or operations of
Parent and Purchaser and their respective subsidiaries taken as a whole.
Section 3.02. Authority Relative to This Agreement. Each of Parent and
Purchaser has all necessary power and authority to execute and deliver this
Agreement and the Escrow Agreement (only Parent is making the representation
and warranty with respect to this agreement), to perform its obligations
hereunder and thereunder and to consummate the Transactions. The execution and
delivery of this Agreement and the Escrow Agreement (only Parent is making the
representation and warranty with respect to this Agreement) by Parent and
Purchaser and the consummation by Parent and Purchaser of the Transactions
have been duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of Parent or Purchaser are necessary
to authorize this Agreement or the Escrow Agreement or to consummate the
Transactions (other than, with respect to the Merger, the filing and
recordation of appropriate merger documents as required by Florida Law). This
Agreement and the Escrow Agreement (only Parent is making the representation
and warranty with respect to this Agreement) have been duly and validly
executed and delivered by Parent and Purchaser and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal,
valid and binding obligation of each of Parent and Purchaser enforceable
against each of Parent and Purchaser in accordance with its terms except that
the Escrow Agreement shall only be enforceable against Parent.
Section 3.03. No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will
13
not, (i) conflict with or violate the Certificate of Incorporation (Articles
of Incorporation in the case of Purchaser) or By-laws of either Parent or
Purchaser, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or Purchaser or by which any property
or asset of either of them is bound or affected, or (iii) result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent or
Purchaser pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or Purchaser is a party or by which Parent or Purchaser or any
property or asset of either of them is bound or affected, except for any such
conflicts, violations, breaches, defaults or other occurrences which would
not, individually or in the aggregate, have a material adverse effect on the
ability of Parent or Purchaser to consummate the Transactions.
(b) The execution and delivery of this Agreement by Parent and Purchaser do
not, and the performance of this Agreement by Parent and Purchaser will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Exchange Act,
Blue Sky Laws and state takeover laws, the HSR Act, and the filing and
recordation of appropriate merger documents as required by Florida Law and
(ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent Parent or Purchaser from
performing their respective obligations under this Agreement.
Section 3.04. Proxy Statement. The information supplied in writing by each
of Parent and Purchaser for inclusion in the Proxy Statement will not, on the
date the Proxy Statement is first mailed to stockholders of the Company, at
the time of the Stockholders' Meeting and at the Effective Time, contain any
statement that, at such time and in light of the circumstances under which it
is made, is false or misleading with respect to any material fact, or omits to
state any material fact required to be stated therein or necessary in order to
make the statements therein not false or misleading or necessary to correct
any statement in any information previously supplied by any of Parent, or
Purchaser for inclusion in the Proxy Statement that shall have become false or
misleading.
Section 3.05. Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of Parent or
Purchaser.
Section 3.06. Accuracy of Information Supplied. Neither this Agreement nor
any schedule, exhibit or certificate furnished or required to be furnished by
or on behalf of Parent or Purchaser to the Company or any of its agents or
affiliates in connection with this Agreement or any of the transactions
contemplated hereby, taken as a whole, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.
Section 3.07. Trust Organization. DMA Holdings Statutory Trust (the "Trust")
is a trust duly organized under the laws of Connecticut, and is duly
organized, validly existing and in good standing under the laws of its
creation. Parent has heretofore delivered or made available to the Company
true and complete copies of the trust agreement pursuant to which the Trust
was organized. DMA, L.P. a Delaware limited partnership is the beneficiary of
the Trust. First Union National Bank, a national banking association, is the
trustee of the Trust. The Trustee holds all of the issued and outstanding
capital stock of Parent.
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ARTICLE IV
Conduct of Business Pending the Merger
Section 4.01. Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, the businesses
of the Company and the Subsidiaries shall be conducted only in, and the
Company and the Subsidiaries shall not take any action except in, the ordinary
course of business and in a manner consistent with past practice; and the
Company shall use its reasonable best efforts to preserve substantially intact
the business organization of the Company and the Subsidiaries, to keep
available the services of the current officers, employees and consultants of
the Company and the Subsidiaries and to preserve the current relationships of
the Company and the Subsidiaries with customers, suppliers and other persons
with which the Company or any Subsidiary has significant business relations.
By way of amplification and not limitation, except as contemplated by this
Agreement, neither the Company nor any Subsidiary shall, between the date of
this Agreement and the Effective Time, directly or indirectly do, or propose
to do, any of the following without the prior written consent (which consent
shall not be unreasonably withheld) of Parent:
(a) amend or otherwise change its Articles of Incorporation or By-laws or
equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of capital stock of any class of the Company or any Subsidiary, or
any options, warrants, convertible securities or other rights of any kind
to acquire any shares of such capital stock, or any other ownership
interest (including, without limitation, any phantom interest), of the
Company or any Subsidiary (except for the issuance in accordance with their
respective terms of a maximum of 108,500 Shares issuable pursuant to
employee stock options outstanding on the date hereof, or the continuation
of the Company's policy of reissuing Shares for directors fees, if elected
by any director) or (ii) any assets of the Company or any Subsidiary,
except for sales in the ordinary course of business and in a manner
consistent with past practice;
(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire, for more than $200,000 in any single transaction, or
$1,000,000 in the aggregate, for any group of transactions, (including,
without limitation, by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership, other business organization or any
division thereof or any material amount of assets; (ii) incur any
indebtedness for borrowed money, or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for, the obligations of any person, or make any loans or advances, except,
in each case, in the ordinary course of business and consistent with past
practice; (iii) enter into any contract or agreement other than in the
ordinary course of business, consistent with past practice; (iv) authorize
any single capital expenditure which is in excess of $200,000 or capital
expenditures which are, in the aggregate, in excess of $2,000,000 for the
Company and the Subsidiaries, taken as a whole; or (v) enter into or amend
any contract, agreement, commitment or arrangement with respect to any
matter set forth in this Section 4.01(e);
(f) except as set forth in Section 4.01(f) of the Disclosure Schedule,
increase the compensation payable or to become payable to its officers or
employees, except for increases in accordance with existing agreements,
past practices in salaries or wages of employees of the Company or any
Subsidiary who are not officers of the Company, or grant any severance or
termination pay to or enter into any employment or severance agreement
with, any director, officer or other employee of the Company or any
Subsidiary, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination,
15
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer or employee;
(g) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect
to accounting policies or procedures (including, without limitation,
procedures with respect to the payment of accounts payable and collection
of accounts receivable);
(h) make any tax election or settle or compromise any material federal,
state, local or foreign income tax liability; or
(i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities reflected or
reserved against in the 1998 Balance Sheet or subsequently incurred in the
ordinary course of business and consistent with past practice.
ARTICLE V
Additional Agreements
Section 5.01. Stockholders' Meeting. (a) If required by applicable law in
order to consummate the Merger, the Company, acting through the Board, shall,
in accordance with applicable law and the Company's Articles of Incorporation
and By-laws use its reasonable best efforts to, (i) duly call, give notice of,
convene and hold an annual or special meeting of its stockholders as promptly
as practicable following the clearance of the Proxy Statement by the SEC for
the purpose of considering and taking action on this Agreement and the
transactions contemplated hereby (the "Stockholders' Meeting") and (ii)
subject to its fiduciary duties under applicable law as advised in writing by
independent counsel, (A) include in the Proxy Statement the recommendation of
the Board that a majority of the stockholders of the Company entitled to vote
on the Merger Agreement approve this Agreement and the transactions
contemplated hereby and (B) use its reasonable best efforts to obtain such
approval and adoption. At the Stockholders' Meeting, Parent and Purchaser
shall cause all Shares then owned by them and their subsidiaries to be voted
in favor of the approval and adoption of this Agreement and the transactions
contemplated hereby.
Section 5.02. Proxy Statement. (a) If required by applicable law, within 15
business days following the execution of this Agreement, with all reasonable
and necessary assistance from Parent and Purchaser, the Company shall file the
Proxy Statement with the SEC under the Exchange Act, and shall use its
reasonable best efforts to have the Proxy Statement cleared by the SEC. The
Proxy Statement shall comply with all provisions of the Exchange Act,
including, without limitation, Rule 14a-9 thereunder. Parent, Purchaser and
the Company shall cooperate with each other in the preparation of the Proxy
Statement, and the Company shall notify Parent of the receipt of any comments
of the SEC with respect to the Proxy Statement and of any requests by the SEC
for any amendment or supplement thereto or for additional information and
shall provide to Parent promptly copies of all correspondence between the
Company or any representative of the Company and the SEC. The Company shall
give Parent and its counsel the opportunity to review the Proxy Statement
prior to its being filed with the SEC, and shall give Parent and its counsel
the opportunity to review all amendments and supplements to the Proxy
Statement and all responses to requests for additional information and replies
to comments prior to their being filed with, or sent to, the SEC. Each of the
Company, Parent and Purchaser agrees to use its reasonable best efforts, after
consultation with the other parties hereto, to respond promptly to all such
comments of and requests by the SEC and to cause the Proxy Statement and all
required amendments and supplements thereto to be mailed to the holders of
Shares entitled to vote at the Stockholders' Meeting at the earliest
practicable time.
(b) If any event shall occur as a result of which it is necessary, in the
opinion of legal counsel to Parent or the Company, to amend the Proxy
Statement in order to make the Proxy Statement not misleading in light of the
circumstances existing at the time it is delivered to a holder of Common
Stock, the Company shall forthwith
16
amend the Proxy Statement (in form and substance reasonably satisfactory to
legal counsel to Parent) so that, as so amended, the Proxy Statement will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances existing at the time it is delivered to a holder of Common
Stock, not misleading. Parent and Purchaser shall furnish any information
reasonably requested by the Company which is necessary to amend the Proxy
Statement in accordance with this Section 5.02(b).
Section 5.03. Access to Information. (a) From the date hereof to the
Effective Time, the Company shall, and shall cause the Subsidiaries and the
officers, directors, employees, auditors and agents of the Company and the
Subsidiaries to, afford the officers, employees and agents of Parent and
Purchaser and persons providing or committing to provide Parent or Purchaser
with financing for the Transactions complete access at all reasonable times to
the officers, employees, agents, properties, offices, plants and other
facilities, books and records of the Company and each Subsidiary, and shall
furnish Parent and Purchaser and persons providing or committing to provide
Parent or Purchaser with financing for the Transactions with all financial,
operating and other data and information as Parent or Purchaser, through its
officers, employees or agents, may reasonably request.
(b) No investigation pursuant to this Section 5.03 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
(c) From and after the date hereof, each party hereto shall, and shall use
its best efforts to cause its affiliates and its and their respective agents
to, keep secret and hold in strictest confidence any and all documents and
information identified by any other party as confidential and furnished to
such first party (whether before or after the date hereof) in connection with
the transactions contemplated hereunder, other than the following: (i)
information that has become generally available to the public other than as a
result of a disclosure by such party, its affiliates or its agents; (ii)
information that has become available to such party or an agent of such party
on a nonconfidential basis from a third party having, to the knowledge of such
party (after reasonable inquiry), no obligation of confidentiality or other
legal or fiduciary obligation of secrecy to a party to this Agreement and that
has not itself, to the knowledge of such party (after reasonable inquiry),
received such information directly or indirectly in breach of any such
obligation; and (iii) information that is required to be disclosed by
applicable law or pursuant to any listing agreement with, or the rules or
regulations of, any securities exchange on which securities of such party or
any such affiliate are listed or traded. If any party hereto is required to
disclose any such confidential information pursuant to applicable law, such
party shall promptly notify each other party in writing, which notification
shall include the nature of the legal requirement and the extent of the
required disclosure, and shall cooperate with each other party to preserve the
confidentiality of such information consistent with applicable law. In the
event the transactions contemplated by this Agreement are not consummated,
each party hereto shall return all materials in its possession containing
confidential information belonging to another party and shall not use any such
information for any purpose whatsoever.
Section 5.04. No Solicitation of Transactions. Neither the Company nor any
Subsidiary shall, directly or indirectly, through any officer, director, agent
or otherwise, solicit, initiate or encourage the submission of any proposal or
offer from any person relating to any acquisition or purchase of all or any
portion of the assets of, or any equity interest in, the Company or any
Subsidiary or any business combination with the Company or any Subsidiary,
participate in any negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing; provided, however, that the Company
may, in accordance with its fiduciary duties under applicable law as advised
in writing by independent counsel of the Board, respond to unsolicited offers
from third parties that seek to do any of the foregoing. The Company
immediately shall cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. The Company shall notify Parent promptly if any such proposal or
offer, or any inquiry or contact with any person with respect thereto, is made
and shall, in any such notice to Parent, indicate in reasonable detail the
identity of the person making such proposal, offer, inquiry or contact and the
terms and conditions of such proposal, offer, inquiry or contact. The Company
agrees not to
17
release any third party from, or waive any provision of, any confidentiality
or standstill agreement to which the Company is a party.
Section 5.05. Directors' and Officers' Indemnification and
Insurance. (a) The By-laws of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set
forth in Article XI of the By-laws of the Company, which provisions shall not
be amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who at the Effective Time were directors, officers, employees,
fiduciaries or agents of the Company, unless such modification shall be
required by law.
(b) The Company shall, to the fullest extent permitted under applicable law
and regardless of whether the Merger becomes effective, indemnify and hold
harmless, and, after the Effective Time, the Surviving Corporation shall, to
the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director, officer, employee, fiduciary and
agent of the Company and each Subsidiary (collectively, the "Indemnified
Parties") against all costs and expenses (including attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and settlement amounts
paid in connection with any claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), whether civil, criminal,
administrative or investigative, arising out of or pertaining to any action or
omission in their capacity as an officer, director, employee, fiduciary or
agent, whether occurring before or after the Effective Time, for a period of
six years after the date hereof. In the event of any such claim, action, suit,
proceeding or investigation, (i) the Company or the Surviving Corporation, as
the case may be, shall pay the reasonable fees and expenses of counsel
selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to the Company or the Surviving Corporation, promptly after
statements therefor are received and (ii) the Company and the Surviving
Corporation shall cooperate in the defense of any such matter; provided,
however, that neither the Company nor the Surviving Corporation shall be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld); and provided further that neither the
Company nor the Surviving Corporation shall be obligated pursuant to this
Section 5.05(b) to pay the fees and expenses of more than one counsel for all
Indemnified Parties in any single action except to the extent that two or more
of such Indemnified Parties shall have conflicting interests in the outcome of
such action; and provided further that, in the event that any claim for
indemnification is asserted or made within such six-year period, all rights to
indemnification in respect of such claim shall continue until the disposition
of such claim.
(c) The Surviving Corporation shall use its reasonable best efforts to
maintain in effect for three years from the Effective Time, if available, the
current directors' and officers' liability insurance policies maintained by
the Company (provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which
are not materially less favorable) with respect to matters occurring prior to
the Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 5.05(c) more than
150% of the current annual premiums.
(d) In the event the Company or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the
Company or the Surviving Corporation, as the case may be, or at Parent's
option, Parent, shall assume the obligations set forth in this Section 5.05.
Section 5.06. Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i)
the occurrence, or nonoccurrence, of any event the occurrence, or
nonoccurrence, of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate and (ii) any
failure of the Company, Parent or Purchaser, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.06 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
18
Section 5.07. Further Action; Reasonable Best Efforts. Upon the terms and
subject to the conditions hereof, each of the parties hereto shall (i) make,
within 30 days following the execution of this Agreement, its respective
filings, and thereafter make any other required submissions, under the HSR Act
with respect to the Transactions and (ii) use its reasonable best efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Transactions, including,
without limitation, using its reasonable best efforts to obtain all licenses,
permits (including, without limitation, Environmental Permits), consents,
approvals, authorizations, qualifications and orders of governmental
authorities and parties to contracts with the Company and the Subsidiaries as
are necessary for the consummation of the Transactions and to fulfill the
conditions to the Merger. In case at any time after the Effective Time any
further action is reasonably necessary or desirable to carry out the purposes
of this Agreement, the proper officers and directors of each party to this
Agreement shall use their reasonable best efforts to take all such action.
Section 5.08. Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or any Transaction and shall
not issue any such press release or make any such public statement prior to
such consultation, except as may be required by law or any listing agreement
with a national securities exchange to which Parent or the Company is a party.
Section 5.09. Consents Generally. Each of the Company and Parent will (and
will cause its Subsidiaries to) use their reasonable best efforts (without
being required to make any payment not specifically required by the terms of
any related contract law or agree to any material modification or waiver of
any term of any contract or any other right) to (a) obtain or cause to be
obtained prior to the Closing all Consents, and (b) cause each Consent to be
effective as of the time of the Closing (whether it is granted or entered into
prior to or after the Closing).
Section 5.10. Prepayment of Certain Debt. As of the Effective Time, Parent
shall repay any and all amounts borrowed by the Company pursuant to the terms
of both the Company's bank credit agreement, dated as of May 30, 1997, by and
among the Company, PNC Bank, N.A., SunTrust Bank, Central Florida, N.A. and
▇▇▇▇▇▇ Commercial Paper Inc. (the "Credit Agreement") and the note assumption
agreement, dated May 30, 1997, by and among the Company, Suncom and Midwest
Mezzanine Fund L.P. (the "Note Agreement"), and, after the Effective Time,
take all steps reasonably necessary to terminate the Credit Agreement and the
Note Agreement.
Section 5.11. Release of Company Stock. Prior to the Effective Time, the
Company shall use its reasonable best efforts to cause all Shares being held
by ▇▇. ▇.▇. ▇▇▇▇▇▇, as security, for certain amounts due ▇▇. ▇▇▇▇▇▇ pursuant
to that certain agreement between Suncom and ▇▇. ▇▇▇▇▇▇, dated as of May 30,
1997 (the "Pledge Agreement") to be released. Such Shares should thereafter be
held free and clear of any claim, lien or other encumbrance and available for
transfer hereunder. The Company shall thereafter take all steps reasonably
necessary to terminate the Pledge Agreement.
Section 5.12 Cancellation of Suncom Option. Prior to the Effective Time, the
Company shall use its reasonable best efforts to cause the option held by
Suncom which permits Suncom to purchase up to 1,000,000 Shares to be
cancelled.
19
ARTICLE VI
Conditions to the Merger
Section 6.01. Conditions to the Merger. The respective obligations of each
party to effect the Merger shall be subject to the satisfaction at or prior to
the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the affirmative vote of the
stockholders of the Company to the extent required by Florida Law and the
Articles of Incorporation of the Company;
(b) HSR Act. Any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated; and
(c) No Order. No foreign, United States or state governmental authority
or other agency or commission or foreign, United States or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is then in
effect and has the effect of making the acquisition of Shares by Parent or
Purchaser or any affiliate of either of them illegal or otherwise
restricting, preventing or prohibiting consummation of the Transactions.
Section 6.02. Conditions to the Obligations of Parent and Purchaser. The
obligations of Parent and Purchaser under this Agreement to consummate the
Transactions contemplated hereby are subject to the satisfaction of the
following conditions, the imposition of which is solely for the benefit of
Parent and Purchaser and any one or more of which may be expressly waived by
Parent, in its sole discretion, except as otherwise required by law:
(a) Accuracy of Representations and Warranties. The representations and
warranties of the Company contained herein shall have been true and correct
in all material respects when made, and shall be true and correct in all
material respects at and as of the Closing Date as though made on and as of
the Closing Date (except to the extent that any such representation and
warranty shall by its terms have been made as of a specific date in which
case such representation and warranty shall have been true and correct in
all material respects as of such specific date). For purposes of this
Section 6.02(a), the requirement that the representations and warranties of
the Company shall be true and correct in "all material respects" is not
intended to establish a different or higher materiality standard with
respect to any representation or warranty that is already qualified by a
materiality or a Material Adverse Effect standard by the terms thereof.
Parent shall have received a certificate of the Company dated the Closing
Date and signed by an officer of the Company certifying to the fulfillment
of this condition;
(b) Performance of Agreements. The Company shall have performed in all
material respects all obligations and agreements and complied in all
material respects with all covenants and conditions contained in this
Agreement or otherwise contemplated hereby to be performed and complied
with by it at or prior to the Closing Date, and Parent shall have received
a certificate of the Company dated the Closing Date and signed by an
officer of the Company certifying to the fulfillment of this condition;
(c) No Material Adverse Change. Since April 1, 1998, there shall not have
occurred any change, condition, event, or development that has a Material
Adverse Effect;
(d) Adverse Actions. There shall not have been instituted or be pending
any action or proceeding before any court or governmental, administrative
or regulatory authority or agency, domestic or foreign, (i) challenging or
seeking to make illegal, materially delay or otherwise directly or
indirectly restrain or prohibit or make materially more costly the
consummation of the Merger, or the consummation of any other Transaction,
or seeking to obtain material damages in connection with any Transaction;
(ii) seeking to prohibit or limit materially the ownership or operation by
the Company, Parent or any of their subsidiaries of all or any material
portion of the business or assets of the Company, Parent or any of their
subsidiaries, or to compel the Company, Parent or any of their subsidiaries
to dispose of or hold separate all or any material portion of the business
or assets of the Company, Parent or any of their subsidiaries, as a result
of
20
the Transactions; (iii) seeking to impose or confirm limitations on the
ability of Parent, Purchaser or any other affiliate of Parent to exercise
effectively full rights of ownership of any Shares; (iv) seeking to require
divestiture by Parent, Purchaser or any other affiliate of Parent of any
Shares; or (v) which otherwise has a Material Adverse Effect or which is
reasonably likely materially adversely to affect the business, operations,
condition (financial or otherwise), assets or liabilities (including,
without limitation, contingent liabilities) of Parent;
(e) Governmental Orders. There shall not have been any action taken, or
any statute, rule, regulation, legislation, interpretation, judgment, order
or injunction enacted, entered, enforced, promulgated, amended, issued or
deemed applicable to (i) Parent, the Company or any subsidiary or affiliate
of Parent or the Company or (ii) any Transaction, by any legislative body,
court, government or governmental, administrative or regulatory authority
or agency, domestic or foreign, other than the routine application of the
waiting period provisions of the HSR Act to the Merger, which is reasonably
likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above;
(f) Employee Stock Options. The Company shall have taken all necessary
measures to cancel each Option as specified in Section 1.08 hereof and such
option shall, in fact, be cancelled;
(g) Suncom Option. The Company shall have cancelled the option held by
Suncom which permits Suncom to purchase up to 1,000,000 Shares;
(h) Maximum Liabilities. The Closing Net Liability Amount shall not be
greater than $33,950,000. "Closing Net Liability Amount" means the sum of:
(i) the aggregate amount of the liabilities, other than the current
liabilities of the Company and its Subsidiaries, (ii) the aggregate amount
of the current portions of all non-current liabilities of the Company and
its Subsidiaries (e.g., the portion, if any, of the principal amount of any
long-term indebtedness of the Company which is classified under generally
accepted accounting principles as a current liability by virtue of the fact
that such portion is due and payable within one year of the time in
question), (iii) without duplication of any amount described in clause (ii)
above, the aggregate amount of all unpaid accrued interest which is part of
the current liabilities of the Company and its Subsidiaries, and (iv) the
excess, if any, of the aggregate amount of the current liabilities of the
Company and its Subsidiaries not described in clause (ii) or clause (iii)
over the aggregate amount of the current assets of the Company and its
Subsidiaries; in each of the foregoing cases determined on a consolidated
basis as of the time of the Closing in accordance with generally accepted
accounting principles;
(i) Release of Company Stock. The Company shall have secured the release
of the Shares under the Pledge Agreement; and
(j) Consents. All Consents, listed on Section 2.05 of the Disclosure
Schedule, shall have been obtained and be in full force and effect. The
Company shall have delivered to Parent copies of all such Consents.
Section 6.03. Conditions to the Obligations of The Company. The obligations
of the Company to consummate the transactions contemplated hereby are subject
to the satisfaction of the following conditions, the imposition of which is
solely for the benefit of the Company and any one or more of which may be
expressly waived by the Company, in its sole discretion, except as otherwise
required by law:
(a) Accuracy of Representations and Warranties. The representations and
warranties of Parent and Purchaser contained herein shall have been true
and correct in all material respects when made, and shall be true and
correct in all material respects at and as of the Closing Date as though
made on and as of the Closing Date (except to the extent that any such
representation and warranty had by its terms been made as of a specific
date, in which case such representation and warranty shall have been true
and correct in all material respects as of such specific date). For
purposes of this Section 6.03(a), the requirement that the representations
and warranties of Parent and Purchaser shall be true and correct in "all
material respects" is not intended to establish a different or higher
materiality standard with respect to any representation or warranty that is
already qualified by a materiality or a Material Adverse Effect standard by
the terms thereof. The Company shall have received a certificate of Parent
dated the Closing Date and signed by an officer of Parent certifying to the
fulfillment of this condition;
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(b) Performance of Agreements. Each of Parent and Purchaser shall have
performed in all material respects all obligations and agreements and
complied in all material respects with all covenants and conditions
contained in this Agreement to be performed and complied with by it at or
prior to the Closing Date, and the Company shall have received a
certificate of Parent dated the Closing Date and signed by an officer of
Parent certifying the fulfillment of this condition; and
(c) Prepayment of Certain Debt. As of the Effective Time, Parent shall
have repaid all amounts outstanding under the Credit Agreement and the Note
Agreement.
ARTICLE VII
Termination, Amendment and Waiver
Section 7.01. Termination. This Agreement may be terminated and the Merger
and the other Transactions may be abandoned at any time prior to the Effective
Time, notwithstanding any requisite approval and adoption of this Agreement
and the transactions contemplated hereby by the stockholders of the Company:
(a) By mutual written consent duly authorized by the Boards of Directors
of Parent, Purchaser and the Company; or
(b) By Parent if there has been a material breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in
this Agreement that, if not a willful breach and if curable, has not been
cured within 15 days following receipt by the Company of notice of such
breach from Parent;
(c) By the Company if there has been a material breach of any
representation, warranty, covenant or agreement on the part of Parent or
Purchaser set forth in this Agreement that, if not a willful breach and if
curable, has not been cured within 15 days following receipt by Parent or
Purchaser of notice of such breach from the Company;
(d) By either Parent or the Company, if the Merger shall not have been
consummated within 150 days of the signing of this Agreement (or such later
date as may be agreed to by Parent and the Company), provided that neither
party may terminate this Agreement under this Section 7.01(d) if the
failure has been caused by such party's material breach of this Agreement;
(e) By either Parent or the Company, if this Agreement shall fail to
receive the requisite vote for approval and adoption by the stockholders of
the Company at the Stockholders Meeting;
(f) By Parent, if (i) the Board of Directors of the Company shall
withdraw, modify or change the Recommendation in a manner adverse to Parent
or shall have resolved to do any of the foregoing; (ii) the Board of
Directors of the Company shall have recommended to the stockholders of the
Company, or agreed to enter into, an Alternate Transaction (which shall
include, without limitation, any merger, consolidation or sale of all or
substantially all of the Company's assets); (iii) a tender offer or
exchange offer, except for such an offer by Parent, an affiliate or any
"group" of which any of them is a member, for shares of capital stock of
the Company that would result in the beneficial ownership by any Person or
any "group" (as defined in Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder) of more than 50% of the outstanding
shares of any class of capital stock of the Company is commenced; or (iv)
any Person, other than Suncom, or, other than Parent, an affiliate or any
"group" of which any of them is a member shall have acquired beneficial
ownership or the right to acquire beneficial ownership of, or any "group"
shall have been formed that beneficially owns, or has the right to acquire
"beneficial ownership" of, more than 50% of the then-outstanding shares of
any class of capital stock of the Company;
(g) By either the Company or Parent, prior to the occurrence of the vote
of the stockholders of the Company with respect to this Agreement, if (i)
the Company has received an Alternate Transaction Proposal that the
Company's Board of Directors determines in good faith could be financially
superior to the Merger, (ii) based on the written advice of outside
independent legal counsel, the Company's Board of Directors believes that
it is required to respond to and pursue such Alternate Transaction Proposal
in order to comply
22
with its fiduciary obligations to holders of Common Stock under applicable
Florida Law, and (iii) the Company has entered into a definitive agreement
to consummate such Alternate Transaction Proposal;
(h) By Parent or the Company, if a court of competent jurisdiction or
other governmental Entity shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
consummation of the Merger, and such order, decree, ruling or other action
shall have become final and nonappealable.
Section 7.02. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.01, this Agreement shall forthwith become
void, and there shall be no liability or further obligation on the part of any
party hereto, except (i) as set forth in Sections 5.03(c), 5.08, 7.02, 7.03
and 8.01 and (ii) nothing herein shall relieve any party from liability for
any breach hereof; provided, however, that no termination of this Agreement
shall be of any effect unless and until the Company has paid to Parent the Fee
and any Expenses due the Parent from the Company pursuant to Section 7.03
hereof.
Section 7.03. Fees and Expenses. (a) The Company agrees that if this
Agreement shall be terminated pursuant to:
(i) Section 7.01(f)(i), Section 7.01(f)(ii) or Section 7.01(g); or
(ii) Section 7.01(e) and (A) at the time this Agreement is terminated
there shall exist an Alternate Transaction Proposal or any Person shall
have publicly announced its intention to make an Alternate Transaction
Proposal and (B) within 12 months after the date on which this Agreement is
terminated the Company shall sign a definitive agreement for the purpose of
consummating an Alternate Transaction.
If this Agreement is terminated pursuant to any of the foregoing
provisions, then the Company shall pay to Parent an amount equal to 3% of
the aggregate Merger Consideration (the "Fee") which amount shall be
payable in immediately available funds, plus all Expenses (as hereinafter
defined).
(b) If this Agreement is terminated pursuant to Section 7.01(e), Section
7.01(f)(i), Section 7.01(f)(ii), or Section 7.01(g) and neither Parent nor
Purchaser is in material breach of their respective material covenants and
agreements contained in this Agreement or their respective representations and
warranties contained in this Agreement, the Company shall, whether or not any
payment is made pursuant to Section 7.03(a), reimburse each of Parent and
Purchaser (not later than five business days after submission of statements
therefor) for all out-of-pocket expenses and fees up to $500,000 in the
aggregate (including, without limitation, fees and expenses payable to all
banks, investment banking firms, other financial institutions and other
persons and their respective agents and counsel for arranging, committing to
provide or providing any financing for the Transactions or structuring the
Transactions, and all fees of counsel, accountants, experts and consultants to
Parent, Purchaser and all printing and advertising expenses) actually incurred
or accrued by either of them or on their behalf in connection with the
Transactions, including, without limitation, the financing thereof, and
actually incurred or accrued by banks, investment banking firms, other
financial institutions and other persons and assumed by Parent and Purchaser
in connection with the negotiation, preparation, execution and performance of
this Agreement, the structuring and financing of the Transactions and any
financing commitments or agreements relating thereto (all the foregoing being
referred to herein collectively as the "Expenses").
(c) The Company agrees that if this Agreement is terminated pursuant to
Section 7.01(b), the Company shall pay Parent an amount equal to 3% of the
aggregate Merger Consideration as liquidated damages, which payment shall be
the exclusive remedy available to Parent at law or in equity in respect of
termination pursuant to Section 7.01(b) hereof, and shall constitute payment
for all claims, damages, out-of-pocket expenses and fees arising out of or
incurred by Parent or Purchaser in connection with this transaction.
(d) Parent and Purchaser agree that if this Agreement is terminated pursuant
to Section 7.01(c), Parent shall cause Purchaser to pay the Company $1,750,000
as liquidated damages, which payment shall be the exclusive remedy available
to the Company at law or in equity in respect of any breach of this Agreement
by Parent or Purchaser, and shall constitute payment for all claims, damages,
out-of-pocket expenses and fees arising out of
23
or incurred by the Company in connection with this transaction. Parent and the
Company shall cause an escrow agreement (the " Escrow Agreement") to be
entered into on the date hereof. The Escrow Agreement shall be funded by
Parent in the amount of $1,750,000, and shall serve to fund the obligations of
Parent and Purchaser under this Section 7.03(d).
(e) Except as set forth in this Section 7.03, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid
by the party incurring such expenses, whether or not any Transaction is
consummated.
Section 7.04. Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that, after the approval
and adoption of this Agreement and the transactions contemplated hereby by the
stockholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration into which each Share shall be
converted upon consummation of the Merger. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
Section 7.05. Waiver. At any time prior to the Effective Time, any party
hereto may (i) extend the time for the performance of any obligation or other
act of any other party hereto, (ii) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if set forth in
an instrument in writing signed by the party or parties to be bound thereby.
ARTICLE VIII
General Provisions
Section 8.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this
Agreement pursuant to Section 7.01, as the case may be, except that the
agreements set forth in Article I and Section 5.05 shall survive the Effective
Time indefinitely and those set forth in Section 5.03(c) and Section 5.08
shall survive termination indefinitely.
Section 8.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 8.02):
if to Parent or Purchaser:
DMA Holdings, Inc.
c/o Integrated Capital Associates, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No: ▇▇▇-▇▇▇-▇▇▇▇
Attention: President
with a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
24
if to the Company:
Audio Communications Network, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No: ▇▇▇-▇▇▇-▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇ & Bockius
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇
with a copy to:
Bear, Marks & ▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Section 8.03. Certain Definitions. For purposes of this Agreement, the term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with, such specified person;
(b) "beneficial owner" with respect to any Shares means a person who
shall be deemed to be the beneficial owner of such Shares (i) which such
person or any of its affiliates or associates (as such term is defined in
Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly
or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any Shares;
(c) "business day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York;
(d) "consent" means any consent, order, approval, authorization or other
action of, or any filing with or notice to or other action with respect to,
any governmental entity or any other Person which is required for any of
the execution, delivery or performance of this Agreement or any other
document contemplated hereby, the consummation of the Merger or any other
transaction contemplated hereby, or the conduct or operation of the
business by the Company and its Subsidiaries after the Merger or the
holding or utilization of any asset of the business of the Company and its
Subsidiaries after the Merger, whether such requirement arises pursuant to
any law or contract, including any of the foregoing which is required in
order to prevent a breach of or a default under or a termination or
modification of any contract.
25
(e) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(f) "governmental authorizations" means any approval, consent or order of
any United States federal or state body; and
(g) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person"
as defined in Section 13(d)(3) of the Exchange Act), trust, association or
entity or government, political subdivision, agency or instrumentality of a
government.
Section 8.04. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner
in order that the Transactions be consummated as originally contemplated to
the fullest extent possible.
Section 8.05. Entire Agreement; Assignment. This Agreement constitutes the
entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
This Agreement shall not be assigned by operation of law or otherwise, except
that Parent and Purchaser may assign all or any of their rights and
obligations hereunder to any affiliate of Parent, provided that no such
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations.
Section 8.06. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than Section 5.05 (which is intended to be for
the benefit of the persons covered thereby and may be enforced by such
persons).
Section 8.07. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.
Section 8.08. Governing Law. Except to the extent the Merger is mandatorily
governed by Florida law, this Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts
executed in and to be performed in that state. All actions and proceedings
arising out of or relating to this Agreement shall be heard and determined in
any federal district court sitting in the City of New York.
Section 8.09. Headings. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 8.10. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
26
In Witness Whereof, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
DMA Holdings, Inc.
By___________________________________
Title:
Diverse Media Acquisitions, Inc.
By___________________________________
Title:
Audio Communication Network, Inc.
By___________________________________
Title:
27