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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DMAC HOLDINGS, INC.,
DMAC MERGER CORP.
AND
AMERICOMM HOLDINGS, INC.
Dated as of May 18, 1998
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER AND RELATED MATTERS...........................................................................2
1.01 The Merger...........................................................................................2
1.02 Conversion of Stock..................................................................................3
1.03 Dissenting Stock.....................................................................................3
1.04 Surrender of Certificates............................................................................4
1.05 No Further Rights of Transfers.......................................................................5
1.06 Warrants.............................................................................................5
1.07 Stock Option and Other Plans.........................................................................5
1.08 Certificate of Incorporation of the Surviving Corporation............................................6
1.09 By-Laws of the Surviving Corporation.................................................................6
1.10 Directors and Officers of the Surviving Corporation..................................................6
1.11 Closing..............................................................................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES.........................................................................10
2.01 Representations and Warranties of the Company.......................................................10
(a) Due Organization, Good Standing and Corporate Power.........................................10
(b) Authorization and Validity of Agreement.....................................................10
(c) Capitalization..............................................................................10
(d) Consents and Approvals; No Violations.......................................................12
(e) Financial Statements; Commission Filings....................................................12
(f) Absence of Certain Changes..................................................................13
(g) Title to Properties; Encumbrances...........................................................13
(h) Leases......................................................................................14
(i) Material Contracts..........................................................................14
(j) Compliance with Laws........................................................................14
(k) Litigation..................................................................................15
(l) Employee Benefit Plans......................................................................15
(m) Employment Relations and Agreements.........................................................15
(n) Taxes 16
(o) Liabilities.................................................................................17
(p) Intellectual Properties.....................................................................17
(q) Environmental Laws and Regulations..........................................................17
(r) Conduct of Business.........................................................................18
(s) Broker's or Finder's Fee....................................................................18
2.02 Representations and Warranties of Parent and Sub....................................................18
(a) Due Organization; Good Standing and Corporate Power.........................................18
(b) Authorization and Validity of Agreement.....................................................18
(c) Consents and Approvals; No Violations.......................................................19
(d) Litigation..................................................................................19
(e) Broker's or Finder's Fee....................................................................19
(f) Financing...................................................................................19
ARTICLE III TRANSACTIONS PRIOR TO CLOSING DATE....................................................................20
3.01 Access to Information Concerning Properties and Records.............................................20
3.02 Confidentiality.....................................................................................20
3.03 Conduct of the Business of the Company Pending the Closing Date.....................................20
3.04 Reasonable Best Efforts.............................................................................21
3.05 Exclusive Dealing...................................................................................21
ARTICLE IV CONDITIONS PRECEDENT TO MERGER.........................................................................22
4.01 Conditions to Each Party's Obligations..............................................................22
(a) No Injunction...............................................................................22
(b) Statutes....................................................................................22
(c) HSR Act.....................................................................................22
4.02 Conditions to Obligations of the Company............................................................22
(a) Parent Representations and Warranties.......................................................22
(b) Performance by Parent.......................................................................22
(c) Certificate.................................................................................22
4.03 Conditions to Obligations of Parent and Sub.........................................................23
(a) Company Representations and Warranties......................................................23
(b) Performance by the Company..................................................................23
(c) No Material Adverse Change..................................................................23
(d) Certificate.................................................................................23
ARTICLE V TERMINATION AND ABANDONMENT.............................................................................23
5.01 Termination.........................................................................................23
5.02 Effect of Termination...............................................................................24
ARTICLE VI MISCELLANEOUS..........................................................................................24
6.01 Fees and Expenses...................................................................................24
6.02 Representations and Warranties......................................................................25
6.03 Transfer Taxes......................................................................................25
6.04 Extension; Waiver...................................................................................25
6.05 Public Announcements................................................................................25
6.06 Employee Benefits...................................................................................25
6.07 Indemnification.....................................................................................26
6.08 Notices.............................................................................................26
6.09 Entire Agreement....................................................................................27
6.10 Binding Effect; Benefit; Assignment.................................................................27
6.11 Amendment and Modification..........................................................................27
6.12 Further Actions.....................................................................................27
6.13 Headings............................................................................................27
6.14 Counterparts........................................................................................27
6.15 Applicable Law......................................................................................28
6.16 Severability........................................................................................28
6.17 Certain Definitions.................................................................................28
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 18, 1998 (this
"AGREEMENT"), by and among DMAC Holdings, Inc., a Delaware corporation
("PARENT"), DIMAC Merger Corp., a Delaware corporation and an indirect
wholly-owned subsidiary of Parent ("SUB"), and AmeriComm Holdings, Inc., a
Delaware corporation (the "COMPANY").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent; and
WHEREAS, to complete such acquisition, the respective Boards of
Directors of Parent, Sub and the Company, have approved the merger of Sub with
and into the Company (the "MERGER"), pursuant to and subject to the terms and
conditions of this Agreement; and
WHEREAS, the Directors of the Company have unanimously determined that
the Merger is fair to, and in the best interests of, the holders of the capital
stock of the Company, approved the Merger and this Agreement and the
transactions contemplated hereby and recommended the approval of the Merger and
approval and adoption of this Agreement by the stockholders of the Company; and
WHEREAS, the stockholders of the Company have by written consent
approved the Merger and this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
THE MERGER AND RELATED MATTERS
1.01 The Merger. (a) Subject to the terms and conditions of this
Agreement, at the time of the Closing (as defined in Section 1.11 hereof), a
certificate of merger (the "CERTIFICATE OF MERGER") shall be duly prepared,
executed and acknowledged by Sub and the Company in accordance with the General
Corporation Law of the State of Delaware (the "DGCL") and shall be filed on the
Closing Date (as defined in Section 1.11 hereof). The Merger shall become
effective upon the filing of a Certificate of Merger with the Secretary of State
of the State of Delaware in accordance with the provisions and requirements of
the DGCL. The date and time when the Merger shall become effective is
hereinafter referred to as the "EFFECTIVE TIME."
(b) At the Effective Time, Sub shall be merged with and into the
Company and the separate corporate existence of Sub shall cease, and the Company
shall continue as the surviving corporation under the laws of the State of
Delaware under the name of "AmeriComm Holdings, Inc." (the "SURVIVING
CORPORATION").
(c) From and after the Effective Time, the Merger shall have the
effects set forth in Section 259 of the DGCL.
1.02 Conversion of Stock. At the Effective Time:
(a) Each share of (i) Class A Common Stock, par value $0.0001 per
share, of the Company (the "VOTING COMMON STOCK") and (ii) Class B
Non-Voting Common Stock, par value $0.0001 per share, of the Company (the
"NON-VOTING COMMON STOCK" and, collectively with the Voting Common Stock,
the "COMMON STOCK") then issued and outstanding (other than (x) any shares
of Common Stock which are held by any Subsidiary of the Company or in the
treasury of the Company, or which are held, directly or indirectly, by
Parent or any direct or indirect subsidiary of Parent (including, but not
limited to, Sub), all of which shall be cancelled and none of which shall
receive any payment with respect thereto and (y) shares of Common Stock
held by Dissenting Stockholders (as defined in Section 1.03 hereof)) shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and represent the right to receive the "MERGER
CONSIDERATION" (as hereinafter defined);
The "AGGREGATE MERGER CONSIDERATION" shall be equal to (i)
$200,000,000; less (ii) the amount of Debt (as hereinafter defined) at
Closing; less (iii) the fees specified in Section 2.01(s) of this Agreement
along with the other expenses of the Company in connection with this
Agreement; plus or minus (iv) any adjustments under Section 1.12.
"DEBT" shall mean the outstanding principal amount of the Company's
subsidiary's 11 5/8% Senior Notes due 2002 in the aggregate amount of
approximately $100,000,000 and the Company's 12 1/2% Notes due April 24,
2003 in the aggregate amount of approximately $39,264,000 (collectively,
the "BONDS") and accrued interest thereon, and shall include all funded
long term, short term or "line of credit" indebtedness to banks and other
third parties, including the current portion thereof, accrued interest
thereon, capital lease obligations and, in the case of Debt (other than the
Bonds), the amount of any fees, early retirement or prepayment fees and
penalties, and any other amounts due upon the prepayment thereof.
The "MERGER CONSIDERATION" shall be the Aggregate Merger Consideration
plus the aggregate exercise price for all Warrants and Options exercisable
immediately prior to the Effective Time divided by the sum of the total
number of shares of Common Stock outstanding (other than (x) any shares of
Common Stock which are held by any Subsidiary of the Company or in the
treasury of the Company, or which are held, directly or indirectly, by
Parent or any direct or indirect subsidiary of Parent (including, but not
limited to, Sub)), at the Effective Time and the total number of shares of
Common Stock for which Warrants and Options are outstanding at the
Effective Time. In calculating the Merger Consideration, no Warrant or
Option shall be included that would have an exercise price equal to or in
excess of the amount of Merger Consideration if such Warrant or Option were
included in such calculation.
(b) Each share of common stock, par value $0.001 per share, of Sub
then issued and outstanding shall, by virtue of the Merger and without any
action on the part of the holder thereof, become one fully paid and
nonassessable share of common stock, $0.0001 par value, of the Surviving
Corporation.
1.03 Dissenting Stock. Notwithstanding anything in this Agreement to
the contrary but only to the extent required by DGCL, shares of Common Stock
that are issued and outstanding immediately prior to the Effective Time and are
held by holders of Common Stock who comply with all the provisions of Delaware
law concerning the right of holders of Common Stock to dissent from the Merger
and require appraisal of their shares of Common Stock ("DISSENTING
STOCKHOLDERS") shall not be converted into the right to receive the Merger
Consideration but shall become the right to receive such consideration as may be
determined to be due such Dissenting Stockholder pursuant to the law of the
State of Delaware; provided, however, that (i) if any Dissenting Stockholder
shall subsequently deliver a written withdrawal of his or her demand for
appraisal (with the written approval of the Surviving Corporation, if such
withdrawal is not tendered within 60 days after the Effective Time), or (ii) if
any Dissenting Stockholder fails to establish and perfect his or her entitlement
to appraisal rights as provided by applicable law, or (iii) if within 120 days
of the Effective Time neither any Dissenting Stockholder nor the Surviving
Corporation has filed a petition demanding a determination of the value of all
shares of the Common Stock that are issued and outstanding at the Effective Time
and held by Dissenting Stockholders, then such Dissenting Stockholder or
Stockholders, as the case may be, shall forfeit the right to appraisal of such
shares and such shares shall thereupon be deemed to have been converted into the
right to receive, as of the Effective Time, the Merger Consideration, without
interest according to the terms of this Agreement. The Company shall give Parent
and Sub (A) prompt notice of any written demands for appraisal, withdrawals of
demands for appraisal and any other related instruments received by the Company,
and (B) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal. The Company will not voluntarily make any payment with
respect to any demands for appraisal and will not, except with the prior written
consent of Parent, settle or offer to settle any such demand.
1.04 Surrender of Certificates. (a) Concurrently with or following the
Effective Date, upon the surrender for cancellation to Parent of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding Common Stock (the "CERTIFICATES") Parent shall promptly pay by wire
transfer of immediately available funds to the Person (as defined in Section
6.16 hereof) entitled thereto the Merger Consideration times the number of
shares represented by such Certificates surrendered. Until so surrendered, each
Certificate shall be deemed, for all corporate purposes, to evidence only the
right to receive upon such surrender the Merger Consideration deliverable in
respect thereof to which such Person is entitled pursuant to this Article I.
Except as otherwise provided in Section 1.12, no interest shall be paid or
accrued in respect of such cash payments.
(b) If the Merger Consideration (or any portion thereof) is to be
delivered to a Person other than the Person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of the Merger Consideration that the Certificates so surrendered shall
be properly endorsed or accompanied by appropriate stock powers and otherwise in
proper form for transfer, that such transfer otherwise be proper and that the
Person requesting such transfer pay to the Parent any transfer or other taxes
payable by reason of the foregoing or establish to the satisfaction of the
Parent that such taxes have been paid or are not required to be paid.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, Parent will issue in exchange
for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with this Article I,
provided that, the Person to whom the Merger Consideration is paid shall, as a
condition precedent to the payment thereof, agree to indemnify the Surviving
Corporation against any claim that may be made against the Surviving Corporation
with respect to the Certificate claimed to have been lost, stolen or destroyed.
1.05 No Further Rights of Transfers. At and after the Effective Time,
each holder of a Certificate shall cease to have any rights as a stockholder of
the Company, except for, in the case of a holder of a Certificate (other than
shares to be cancelled pursuant to Section 1.02(a) hereof and other than shares
held by Dissenting Stockholders), the right to surrender his or her Certificate
in exchange for payment of the Merger Consideration or, in the case of a
Dissenting Stockholder, to perfect his or her right to receive payment for his
or her shares pursuant to Delaware law if such holder has validly perfected and
not withdrawn his or her right to receive payment for his or her shares, and no
transfer of shares of Common Stock shall be made on the stock transfer books of
the Surviving Corporation. Certificates presented to the Surviving Corporation
after the Effective Time shall be cancelled and exchanged for cash as provided
in this Article I. At the close of business on the day of the Effective Time the
stock ledger of the Company with respect to Common Stock shall be closed.
1.06 Warrants. Immediately prior to the Effective Time, each
outstanding Warrant to purchase Common Stock (the "WARRANTS"), whether or not
immediately exercisable, shall no longer be exercisable for the purchase of
shares of Common Stock but shall entitle each holder thereof, in cancellation
and settlement therefor to payments in cash (subject to any applicable
withholding taxes, if any, the "WARRANT PAYMENT"), equal to the product of (i)
the total number of shares subject to such Warrant as to which such Warrant
could have been exercisable and (y) the excess of the Merger Consideration over
the exercise price per share of Common Stock subject to such Warrant.
1.07 Stock Option and Other Plans. (a) Subject to the provisions of
Section 4.02(d) hereof prior to the Effective Time, the Board of Directors of
the Company (or, if appropriate, any Committee thereof) shall adopt appropriate
resolutions and take all other actions necessary to provide for the
cancellation, effective at the Effective Time of all the outstanding stock
options to purchase Common Stock (the "OPTIONS") heretofore granted under any
stock option plan of the Company (the "STOCK PLANS"). Immediately prior to the
Effective Time, subject to obtaining the consent of any holder of Options, to
the extent necessary, each Option, whether or not then vested or exercisable,
shall no longer be exercisable for the purchase of shares of Common Stock, but
shall entitle each holder thereof, in cancellation and settlement therefor, to
payments in cash (subject to any applicable withholding taxes, the "CASH
PAYMENT"), at the Effective Time, equal to the product of (x) the total number
of shares of Common Stock subject to such Option as to which such Option could
have been exercised as of the Effective Time and (y) the excess of the Merger
Consideration over the exercise price per share of Common Stock subject to such
Option. As provided herein, the Stock Plans and any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any Subsidiary (collectively with the
Stock Plans, referred to as the "STOCK INCENTIVE PLANS") shall terminate as of
the Effective Time. The Company will take all steps to ensure that neither the
Company nor any of its Subsidiaries is or will be bound by any Options, other
options, warrants, rights or agreements which would entitle any Person, other
than Parent or its affiliates, to own any capital stock of the Surviving
Corporation or any of its subsidiaries or to receive any payment in respect
thereof. The Company will use its reasonable best efforts to obtain all
necessary consents to ensure that after the Effective Time, the only rights of
the holders of Options to purchase shares of Common Stock in respect of such
Options will be to receive the Cash Payment in cancellation and settlement
thereof.
(b) All Stock Plans shall terminate as of the Effective Time and the
Company shall use its reasonable best efforts to ensure that following the
Effective Time no holder of an Option or any participant in any Stock Plan shall
have any right thereunder to acquire any capital stock of the Company, Parent or
the Surviving Corporation, except as provided in Section 1.07(a).
1.08 Certificate of Incorporation of the Surviving Corporation. The
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation.
1.09 By-Laws of the Surviving Corporation. The By-Laws of the Company,
as in effect immediately prior to the Effective Time, shall be the By-Laws of
the Surviving Corporation.
1.10 Directors and Officers of the Surviving Corporation. At the
Effective Time, the directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, each of such directors to
hold office, subject to the applicable provisions of the Certificate of
Incorporation and By-Laws of the Surviving Corporation, until the next annual
stockholders' meeting of the Surviving Corporation and until their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of the Company immediately prior to the Effective Time shall,
subject to the applicable provisions of the Certificate of Incorporation and
By-Laws of the Surviving Corporation, be the officers of the Surviving
Corporation until their respective successors shall be duly elected or appointed
and qualified.
1.11 Closing. The closing of the Merger (the "CLOSING") shall take
place at the offices of White & Case, 1155 Avenue of the Americas, New York, New
York, as soon as practicable after the last of the conditions set forth in
Article IV hereof is fulfilled or waived (subject to applicable law) but in no
event later than the fifth business day thereafter, or at such other time and
place and on such other date as Parent and the Company shall mutually agree (the
"CLOSING DATE").
1.12 Working Capital Settlement.
(a) Prior to the Closing Date, the Company shall estimate its working
capital position (the "Working Capital") as of the close of business on the
Closing Date. Working Capital shall be equal to the sum of (i) cash and cash
equivalents, plus (ii) the book value of accounts receivable after the allowance
for doubtful accounts, plus (iii) the book value of inventory, including all
work-in-process and finished goods, after allowance for all obsolete or
unsaleable inventory, plus (iv) the book value of all accounts classified as
current assets other than cash, cash equivalents, accounts receivable,
inventory, income tax receivable and deferred income tax, including all utility
deposits, rental deposits and equipment deposits (even though such deposits are
characterized as long-term assets); less the sum of (a) bank overdraft, plus (b)
the book value of all accounts payable, plus (c) the book value of accrued
payroll, payroll taxes and deductions, as classified as a current liability,
plus (d) the book value of advance ▇▇▇▇▇▇▇▇, plus (e) taxes (other than income
taxes) payable, plus (f) the book value of accrued expenses as classified as a
current liability, excluding all accruals of interest, fees and penalties on
Debt. The book value of all amounts shall be as shown on the Company's financial
statements prepared in accordance with generally accepted accounting principles,
consistently applied with the Financial Statements ("GAAP"). The Company shall
provide Parent with a copy of the calculation of the Working Capital three
business days prior to the Closing Date. Parent and the Company shall mutually
agree to the Working Capital Statement (the "Working Capital Statement") on or
before the Closing Date and the Working Capital Statement as amended on the
Closing Date (the "Final Working Capital Statement") shall become final and
binding on Parent and the Shareholders.
(b)(i) If the Working Capital as set forth in the Final Working
Capital Statement is less than $25,298,000, then the Aggregate Merger
Consideration shall be decreased by such difference. If the Working Capital as
set forth in the Final Working Capital Statement is greater than $25,298,000,
then the Aggregate Merger Consideration shall be increased by such difference.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.01 Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent and Sub as follows:
(a) Due Organization, Good Standing and Corporate Power. Each of the
Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and each such corporation has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of the Company and its Subsidiaries
is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification
necessary, except in such jurisdictions where the failure to be so
qualified or licensed and in good standing would not have a material
adverse effect on the business, operations, results of operations, or
financial condition (the "CONDITION") of the Company and its Subsidiaries
taken as a whole. The Company has made available to Parent and Sub complete
and correct copies of the Certificate of Incorporation and By-Laws of the
Company and the comparable governing documents of each of its Subsidiaries,
in each case as amended to the date of this Agreement.
(b) Authorization and Validity of Agreement. The Company has full
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by the
Company, and the consummation by it of the transactions contemplated
hereby, have been duly authorized and approved by its Board of Directors
and its stockholders and no other corporate action on the part of the
Company is necessary to authorize the execution, delivery and performance
of this Agreement by the Company and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
the Company and, assuming the due execution of this Agreement by Parent and
Sub, is a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and to general equitable principles.
(c) Capitalization. (i) The authorized capital stock of the Company
consists of 4,000,000 shares of Voting Common Stock, 300,000 shares of
Non-Voting Common Stock and 250,000 shares of preferred stock, par value
$0.0001 per share, (the "PREFERRED STOCK"). As of December 31, 1997, (A)
2,690,464 shares of Voting Common Stock were issued and outstanding; (B) no
shares of Non-Voting Common Stock were issued and outstanding; (C) no
shares of Preferred Stock were issued and outstanding; (D) 143,589 shares
of Voting Common Stock were reserved for issuance upon the exercise of
outstanding Warrants; (E) 265,636 shares of Voting Common Stock were
reserved for issuance upon the exercise of certain Options and (F) 61,820
shares of Voting Common Stock were held in the treasury of the Company. All
issued and outstanding shares of capital stock of the Company have been
validly issued and are fully paid and nonassessable. Except as set forth in
this Section 2.01(c) or in Section 2.01(c) of the Company's disclosure
letter (the "COMPANY DISCLOSURE LETTER"), delivered concurrently with the
delivery of this Agreement, (i) there are no shares of capital stock of the
Company authorized, issued or outstanding and (ii) there are not as of the
date hereof, and at the Effective Time there will not be, any outstanding
or authorized options, warrants, rights, subscriptions, claims of any
character, agreements, obligations, convertible or exchangeable securities,
or other commitments, contingent or otherwise, relating to Common Stock or
any other shares of capital stock of the Company, pursuant to which the
Company is or may become obligated to issue shares of Common Stock, any
other shares of its capital stock or any securities convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of
the capital stock of the Company. The Company has no authorized or
outstanding bonds, debentures, notes or other indebtedness the holders of
which have the right to vote (or convertible or exchangeable into or
exercisable for securities having the right to vote) with the stockholders
of the Company or any of its Subsidiaries on any matter ("VOTING DEBT").
After the Effective Time, the Surviving Corporation will have no obligation
to issue, transfer or sell any shares of or common stock of the Surviving
Corporation pursuant to any Plan (as defined in Section 2.01(l)).
(ii) Section 2.01(c)(ii) of the Company Disclosure Letter lists all of
the Company's Subsidiaries. All of the outstanding shares of capital stock
of each of the Company's Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable and are owned, of record and
beneficially, by the Company, free and clear of all liens, encumbrances,
options or claims whatsoever. Except as set forth on Section 2.01(c)(ii) of
the Company Disclosure Letter, no shares of capital stock of any of the
Company's Subsidiaries are reserved for issuance and there are no
outstanding or authorized options, warrants, rights, subscriptions, claims
of any character, agreements, obligations, convertible or exchangeable
securities, or other commitments, contingent or otherwise, relating to the
capital stock of any Subsidiary, pursuant to which such Subsidiary is or
may become obligated to issue any shares of capital stock of such
Subsidiary or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of such Subsidiary. Other
than as set forth on Section 2.01(c)(ii) of the Company Disclosure Letter,
there are no restrictions of any kind which prevent the payment of
dividends by any of the Company's Subsidiaries. Except as set forth on
Section 2.01(c)(ii) of the Company Disclosure Letter, the Company does not
own, directly or indirectly, any capital stock or other equity interest in
any Person or have any direct or indirect equity or ownership interest in
any Person and neither the Company nor any of its Subsidiaries is subject
to any obligation or requirement to provide funds for or to make any
investment (in the form of a loan, capital contribution or otherwise) to or
in any Person. The Company's Subsidiaries have no Voting Debt.
(d) Consents and Approvals; No Violations. Assuming (i) the filings
required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), are made and the waiting period thereunder has
been terminated or has expired, (ii) the filing of the Certificate of
Merger and other appropriate merger documents, if any, as required by DGCL,
are made and (iii) approval of the Merger by holders of capital stock of
the Company representing a majority of the votes entitled to be cast at a
meeting of the stockholders of the Company, as required by the DGCL, is
received, the execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby
will not: (1) violate any provision of the Certificate of Incorporation or
By-Laws of the Company or the comparable governing documents of any of its
Subsidiaries; (2) violate any statute, ordinance, rule, regulation, order
or decree of any court or of any governmental or regulatory body, agency or
authority applicable to the Company or any of its Subsidiaries or by which
any of their respective properties or assets may be bound; (3) except as
set forth in Section 2.01(d) of the Company Disclosure Letter, require any
filing with, or permit, consent or approval of, or the giving of any notice
to, any governmental or regulatory body, agency or authority; or (4) except
as set forth in Section 2.01(d) of the Company Disclosure Letter, result in
a violation or breach of, conflict with, constitute (with or without due
notice or lapse of time or both) a material default (or give rise to any
right of termination, cancellation, payment or acceleration) under, or
result in the creation of any material Encumbrance (as defined herein) upon
any of the properties or assets of the Company or any of its Subsidiaries
under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement, lease,
franchise agreement or other instrument or obligation to which the Company
or any of its Subsidiaries is a party, or by which it or any of their
respective properties or assets are bound or subject except for in the case
of clauses (3) and (4) above for such filing, permit, consent, approval or
violation, which would not have a material adverse effect on the Condition
of the Company and its Subsidiaries taken as a whole, or would not prevent
or materially delay consummation of the transactions contemplated by this
Agreement.
(e) Financial Statements; Commission Filings. (i) The Company has
heretofore furnished Parent with the consolidated balance sheets of the
Company and its Subsidiaries as at December 31, 1997 and 1996 and the
related consolidated statements of operations, changes in stockholder's
equity and cash flows for the periods then ended, audited by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP (the "AUDITED FINANCIAL STATEMENTS") and the unaudited
consolidated balance sheet of the Company as at March 31, 1997, and the
related unaudited consolidated statements of operations, changes in
stockholders' equity and cash flows for the three month period then ended
(the "UNAUDITED FINANCIAL STATEMENTS" and together with the Audited
Financial Statements, the "FINANCIAL STATEMENTS"). The consolidated
unaudited balance sheet as at March 31, 1998, is sometimes referred to
herein as the "BALANCE SHEET" and March 31, 1998, is sometimes herein
referred to as the "BALANCE SHEET DATE". Such Financial Statements
including the footnotes thereto, except as indicated therein, have been
prepared in accordance with generally accepted accounting principles and
fairly present in all material respects the financial position of the
Company and its Subsidiaries and the results of their operations and cash
flows at such dates and for such periods except that the Unaudited
Financial Statements do not contain footnotes and are subject to year-end
adjustments.
(ii) The Company has filed all forms, reports and documents with the
Securities and Exchange Commission (the "COMMISSION") required to be filed
by it pursuant to the Federal securities laws and the Commission rules and
regulations thereunder, and all forms, reports and documents filed with the
Commission by the Company (collectively, the "COMMISSION FILINGS") have
complied in all material respects with the applicable requirements of the
Federal securities laws and the Commission rules and regulations
promulgated thereunder. As of their respective dates, the Commission
Filings did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(f) Absence of Certain Changes. Other than (i) as set forth in Section
2.01(f) of the Company Disclosure Letter, (ii) any change resulting from
general economic, financial or market conditions, or (iii) any change
resulting from conditions or circumstances generally affecting the business
in which the Company and/or its Subsidiaries operate, since the Balance
Sheet Date, there has been no material adverse change in the Condition of
the Company and its Subsidiaries taken as a whole.
(g) Title to Properties; Encumbrances. Except as set forth in Section
2.01(g) of the Company Disclosure Letter, the Company and each of its
Subsidiaries has good and valid title to (i) all of its material tangible
properties and assets (real and personal), including, without limitation,
all the material properties and assets reflected in the Balance Sheet
except as indicated in the notes thereto and except for properties and
assets reflected in the Balance Sheet which have been sold or otherwise
disposed of in the ordinary course of business after the Balance Sheet
Date, and (ii) all the material tangible properties and assets purchased by
the Company and any of its Subsidiaries since the Balance Sheet Date except
for such properties and assets which have been sold or otherwise disposed
of in the ordinary course of business; in each case subject to no
encumbrance, lien, security interest, charge or other restriction (each an
"ENCUMBRANCE") of any kind or character, except as reflected in Section
2.01(g) of the Company Disclosure Letter and except for (1) Encumbrances
reflected on the Balance Sheet, (2) Encumbrances consisting of zoning or
planning restrictions, easements, permits and other restrictions or
limitations on the use of real property or irregularities in title thereto
which do not materially detract from the value of, or impair the use of,
such property by the Company or any of its Subsidiaries in the operation of
its respective business, (3) Encumbrances arising by operation of law, (4)
Encumbrances for current taxes, assessments or governmental charges or
levies on property not yet due and delinquent or the validity of which are
being contested in good faith by appropriate proceedings, and (5)
Encumbrances which do not have a material adverse effect on the Condition
of the Company and its Subsidiaries, taken as a whole.
(h) Leases. Section 2.01(h) of the Company Disclosure Letter contains
a list of all material leases to which the Company or any Subsidiary is a
party requiring an annual aggregate payment of at least $100,000. Except as
otherwise set forth in Section 2.01(h) of the Company Disclosure Letter,
each lease set forth therein is in full force and effect; all rents and
additional rents due to date from the Company or such Subsidiary on each
such lease have been paid; in each case, neither the Company nor any
Subsidiary has received notice that it is in material default thereunder;
and, to the knowledge of the Company there exists no material event,
occurrence, condition or act (including the consummation of the Merger or
the other transactions contemplated hereby) which, with the giving of
notice, the lapse of time or the happening of any further event or
condition, would become a material default by the Company or any Subsidiary
under such lease.
(i) Material Contracts. Except as set forth in Section 2.01(h),
2.01(i) or 2.01(m) of the Company Disclosure Letter, neither the Company
nor any Subsidiary has or is bound by (a) any agreement, contract or
commitment relating to the employment of any Person by the Company or any
Subsidiary which cannot be terminated by the Company or the Subsidiary upon
notice of 60 days or less without penalty or premium and involve annual
compensation in excess of $100,000 annually, (b) any agreement, contract or
commitment materially limiting the freedom of the Company or any Subsidiary
to engage in any line of business or to compete with any other Person or
(c) any agreement, contract or commitment not entered into in the ordinary
course of business which materially affects the business of the Company and
the Subsidiaries taken as a whole and is not cancelable without penalty
within 90 days.
(j) Compliance with Laws. (i) The Company and its Subsidiaries are in
compliance with all applicable laws and regulations and all orders,
judgments and decrees relating to its business and operations except where
the failure to so comply would not have a material adverse effect on the
Condition of the Company and its Subsidiaries taken as a whole or would
prevent or materially delay consummation of the transactions contemplated
by this Agreement.
(ii) The Company and each of its Subsidiaries possess all licenses,
certificates of authority, certificates of need, permits or other
authorizations and regulatory approvals required by law (a "LICENSE")
necessary for the ownership of its properties and the conduct of its
business as presently conducted in each jurisdiction in which the Company
and such Subsidiary is required to possess a License, except where the
failure to possess such a License would not have a material adverse effect
on the Condition of the Company and its Subsidiaries taken as a whole. All
such Licenses are in full force and effect and neither the Company nor any
Subsidiary has received any written notice of any event, inquiry,
investigation or proceeding threatening the validity of such Licenses,
except where the failure of such Licenses to be in full force and effect or
such event, inquiry, investigation or proceeding would not have a material
adverse effect on the Condition of the Company and its Subsidiaries, taken
as a whole.
(k) Litigation. Except as set forth in Section 2.01(k) of the Company
Disclosure Letter, there is no action, suit, proceeding at law or in
equity, or any arbitration or any administrative or other proceeding by or
before (or to the knowledge of the Company any investigation by) any
governmental or other instrumentality or agency, pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or
any of its Subsidiaries, or any of their properties or rights which, is
reasonably likely to have a material adverse effect on the Condition of the
Company and its Subsidiaries taken as a whole or would prevent or
materially delay consummation of the transactions contemplated by this
Agreement.
(l) Employee Benefit Plans. Each "employee benefit plan" (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), maintained or contributed to by the Company or any of
its Subsidiaries (each, a "PLAN" and collectively, the "PLANS") is listed
in Section 2.01(l) of the Company Disclosure Letter, attached hereto.
Except as set forth in Section 2.01(l) of the Company Disclosure Letter, or
to the extent that any breach of the representations set forth in this
sentence would not have a material adverse effect on the Condition of the
Company and its Subsidiaries taken as a whole: (a) each Plan is in
compliance with applicable law and has been administered and operated in
accordance with its terms; (b) each Plan which is intended to be
"qualified" (within the meaning of Section 401(a) of the Internal Revenue
Code of 1986, as amended (the "CODE")), has received a favorable
determination letter from the Internal Revenue Service and, to the
knowledge of the Company, no event has occurred and no condition exists
which could reasonably be expected to result in the revocation of any such
determination letter; (c) no Plan is a "multiemployer plan," within the
meaning of Section 4001(a)(3) of ERISA; (d) the actuarial present value of
the accumulated plan benefits (whether or not vested) under any Employee
Benefit Plan covered by Title IV of ERISA as of the close of its most
recent plan year did not exceed the fair value of the assets allocable
thereto; (e) no Employee Benefit Plan subject to Section 412 of the Code or
Section 302 of ERISA has incurred any accumulated funding deficiency within
the meaning of Section 412 of the Code or Section 302 of ERISA, or obtained
a waiver of any minimum funding standard or an extension of any
amortization period under Section 412 of the Code or Section 303 or 304 of
ERISA; (f) to the knowledge of the Company, no "disqualified person" or
"party in interest" (as defined in Section 4975(e)(2) of the Code and
Section 3(14) of ERISA, respectively) has engaged in any transaction in
connection with a Plan that could reasonably be expected to result in the
imposition of a penalty pursuant to Section 502(i) of ERISA or a tax
pursuant to Section 4975(a) of the Code; and (g) no liability, claim,
action or litigation, has been made, commenced or, to the knowledge of the
Company, threatened with respect to any Plan (other than routine claims for
benefits payable in the ordinary course and appeals of such claims).
(m) Employment Relations and Agreements. Except as set forth in
Section 2.01(m) of the Company Disclosure Letter or as would not have a
material adverse effect on the Condition of the Company and its
Subsidiaries taken as a whole, (i) each of the Company and its Subsidiaries
is in substantial compliance with all federal, state or other applicable
laws respecting employment and employment practices, terms and conditions
of employment and wages and hours, and has not and is not engaged in any
unfair labor practice; (ii) no representation question exists respecting
the employees of the Company or any of its Subsidiaries; (iii) no
collective bargaining agreement is currently being negotiated by the
Company or any of its Subsidiaries and neither the Company nor any of its
Subsidiaries is a party to a collective bargaining agreement; and (v)
neither the Company nor any of its Subsidiaries has experienced any labor
difficulty during the last year. Except as disclosed in Section 2.01(m) of
the Company Disclosure Letter, there exist no employment, consulting,
severance, indemnification agreements or deferred compensation agreements
between the Company and any director, officer or employee of the Company or
any agreement that would give any Person the right to receive any payment
from the Company as a result of the Merger.
(n) Taxes. (A) (i) Tax Returns. The Company and each of its
Subsidiaries has filed or caused to be filed or will file or cause to be
filed with the appropriate taxing authorities all material returns,
statements, forms and reports ("RETURNS") for Taxes that are required to be
filed by, or with respect to, the Company and its Subsidiaries on or prior
to the Effective Time. As used herein, "TAX" or "TAXES" shall mean all
taxes including, without limitation, all U.S. federal, state, local and
foreign income, franchise, profits, capital gains, capital stock, transfer,
sales, use, value added, occupation, property, excise, severance, windfall
profits, stamp, license, payroll, social security, withholding and other
taxes, all estimated taxes, deficiency assessments, additions to tax,
penalties and interest.
(ii) Payment of Taxes. All material Tax liabilities of the Company and
its Subsidiaries or for which the Company and its Subsidiaries may be
liable for all taxable years or other taxable periods (including portions
thereof) prior to the Effective Time have been paid or adequately disclosed
as a liability on the books and records of the Company and its Subsidiaries
in accordance with GAAP.
(iii) Other Tax Matters. Section 2.01(n) of the Company Disclosure
Letter sets forth (I) each taxable year or other taxable period of the
Company and its Subsidiaries for which an audit or other examination of
Taxes by any taxing authority is currently in progress that, if determined
adversely to the Company or its Subsidiaries, would result in a material
Tax liability of the Company or its Subsidiaries after the Closing Date,
and (II) the taxable years or other taxable periods of the Company and its
Subsidiaries which, for income tax purposes, will not be subject to the
normally applicable statute of limitations because of waivers or agreements
given by the Company or its Subsidiaries.
(iv) Acquisition Indebtedness. No indebtedness of the Company consists
of "corporate acquisition indebtedness" within the meaning of Section 279
of the Code.
(B) Except as provided in Section 2.01(n) of the Company Disclosure
Letter, neither the Company, nor any of its Subsidiaries has been included
in any "consolidated," "unitary" or "combined" Return provided for under
the laws of any jurisdiction with respect to Taxes for any taxable period
for which the statute of limitations has not expired.
(C) Except as disclosed in Section 2.01(n) of the Company Disclosure
Letter, there are no tax sharing or tax allocation agreements in effect
between the Company or any of its Subsidiaries and any other party under
which Parent, the Company or any Subsidiary could be liable for any
material Taxes or other claims of any party.
(o) Liabilities. Except as set forth in Section 2.01(o) of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries has any
material claims, liabilities or indebtedness, contingent or otherwise,
required to be set forth on the Balance Sheet in accordance with generally
accepted accounting principles except as set forth in the Balance Sheet or
referred to in the footnotes thereto, and except for liabilities incurred
subsequent to the Balance Sheet Date in the ordinary course of business.
(p) Intellectual Properties. The Company and its 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, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other proprietary rights and
information used or held for use in connection with the business of the
Company and its Subsidiaries as currently conducted, and the Company is
unaware of any assertion or claim challenging the validity of any of the
foregoing which, individually or in the aggregate, would have a material
adverse effect on the Condition of the Company and its Subsidiaries taken
as a whole. To the knowledge of the Company, the conduct of the business of
the Company and its Subsidiaries as currently conducted does not conflict
in any way with any patent, patent right, license, trademark, trademark
right, trade name, trade name right, service ▇▇▇▇ or copyright of any third
party that, individually or in the aggregate, would have a material adverse
effect on the Condition of the Company and its Subsidiaries taken as a
whole.
(q) Environmental Laws and Regulations. Except as set forth on Section
2.01(q) of the Company Disclosure Letter or except as would not have a
material adverse effect on the Condition of the Company and its
Subsidiaries taken as a whole, (a) Hazardous Materials have not been (i)
generated, used, treated or stored on, or transported to or from, any
Company Property by the Company, or (ii) Released or disposed of on any
Company Property by the Company, except in the case of clause (i) or (ii)
in compliance with Environmental Law and so as not to give rise for an
Environmental Claim, (b) the Company and each of its Subsidiaries are in
compliance applicable with Environmental Laws and the requirements of any
permits issued under such Environmental Laws and (c) there are no past,
pending or threatened material Environmental Claims against the Company or
any of its Subsidiaries.
For purposes of this Agreement, the following terms shall have the
following meanings: (A) "COMPANY PROPERTY" means any real property and
improvements owned, leased, or operated by the Company or any of its
Subsidiaries; (B)"HAZARDOUS MATERIALS" means (i) any petroleum or petroleum
products, radioactive materials or friable asbestos; (ii) any chemicals,
materials or substances defined as "hazardous substances," under the
Comprehensive Environmental Response Compensation and Liability Act of
1980, as amended, 42 U.S.C. ss. 9601 et seq. ("CERCLA"); (C) "ENVIRONMENTAL
LAW" means any federal, state or local statute, law, rule, regulation,
ordinance or code in effect and in each case as amended as of the date
hereof and Closing Date, relating to the environment or Hazardous
Materials, including without limitation CERCLA, the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. ss. 6901 et seq.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. ss. 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the Clean Air Act, 42
U.S.C. ss. 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. ss. 3808 et
seq.; and (D) "ENVIRONMENTAL CLAIMS" means regulatory or judicial actions,
suits, claims, notices of noncompliance or violation, or proceedings
arising under Environmental Law (for purposes of this subclause (D),
"CLAIMS") including (i) Claims by governmental or regulatory authorities
for enforcement, cleanup, removal, response, remedial actions or damages
pursuant to applicable Environmental Law and (ii) Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation
or injunctive relief resulting from Hazardous Materials or arising from
injury to the environment; and (E) "RELEASE" means disposing, discharging,
injecting, spilling, leaking, leaching, dumping, emitting, escaping,
emptying, seeping, placing and the like, into or upon any land or water or
air, or otherwise entering into the environment.
(r) Conduct of Business. Since the Balance Sheet Date, except (a) as
set forth in Section 2.01(r) of the Company Disclosure Letter or (b) as
contemplated or expressly required or permitted by this Agreement, the
Company has not taken any action which, if taken subsequent to the
execution of this Agreement and on or prior to the Closing Date, would
constitute a material breach of the Company's agreements set forth in
Section 3.03 of this Agreement.
(s) Broker's or Finder's Fee. Except for ▇▇▇▇▇▇▇ Sachs & Co. and MDC
Management Company II, L.P. (whose fees and expenses will be paid as
contemplated by Section 1.02), no agent, broker, Person or firm acting on
behalf of the Company is, or will be, entitled to any fee, commission or
broker's or finder's fees from any of the parties hereto, or from any
Person controlling, controlled by, or under common control with any of the
parties hereto, in connection with this Agreement or any of the
transactions contemplated hereby.
2.02 Representations and Warranties of Parent and Sub. Each of Parent
and Sub represents and warrants to the Company as follows:
(a) Due Organization; Good Standing and Corporate Power. Parent is a
corporation duly organized and validly existing and in good standing under
the laws of the State of Delaware. Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
(b) Authorization and Validity of Agreement. Each of Parent and Sub
has the requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance
of this Agreement by Parent and Sub, and the consummation by each of them
of the transactions contemplated hereby, have been duly authorized by the
respective Boards of Directors of Parent and Sub. No other corporate action
on the part of either Parent or Sub is necessary to authorize the
execution, delivery and performance of this Agreement by each of Parent and
Sub and the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of Parent and Sub
and is a valid and binding obligation of each of Parent and Sub,
enforceable against each of Parent and Sub in accordance with its terms,
except that such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, and general equitable principles.
(c) Consents and Approvals; No Violations. Assuming (i) the filings
required under the HSR Act are made and the waiting period thereunder has
been terminated or has expired and (ii) the filing of the Certificate of
Merger and other appropriate merger documents, if any, as required by the
laws of the State of Delaware, the execution and delivery of this Agreement
by Parent and Sub and the consummation by Parent and Sub of the
transactions contemplated hereby will not: (1) violate any provision of the
Certificate of Incorporation or By-Laws of Parent or Sub; (2) violate any
statute, ordinance, rule, regulation, order or decree of any court or of
any governmental or regulatory body, agency or authority applicable to
Parent or Sub or by which either of their respective properties or assets
may be bound; (3) require any filing with, or permit, consent or approval
of, or the giving of any notice to any governmental or regulatory body,
agency or authority; or (4) result in a violation or breach of, conflict
with, constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Parent, Sub or any of their respective direct or indirect subsidiaries
under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement, lease or other
instrument or obligation to which Parent or Sub or any of their
subsidiaries is a party, or by which they or their respective properties or
assets may be bound except for in the case of clauses (3) and (4) above for
such filing, permit, consent, approval or violation, which would not
prevent or materially delay consummation of the transactions contemplated
by this Agreement.
(d) Litigation. There is no action, suit, proceeding at law or in
equity, or any arbitration or any administrative or other proceeding by or
before (or, to the knowledge of Parent or Sub, any investigation by) any
governmental or other instrumentality or agency, pending or, to the
knowledge of Parent or Sub, threatened, against or affecting Parent or any
of its direct or indirect subsidiaries (including, but not limited to,
Sub), or any of their properties or rights, which would prevent or
materially delay consummation of the transactions contemplated by this
Agreement.
(e) Broker's or Finder's Fee. No agent, broker, Person or firm acting
on behalf of Parent or Sub is, or will be, entitled to any fee, commission
or broker's or finder's fees from any of the Stockholders in connection
with this Agreement or any of the transactions contemplated hereby.
(f) Financing. Parent has (or will have immediately prior to and at
the Effective Time), and will make available to Sub, sufficient funds to
perform its obligations under this Agreement including, without limitation,
to make the payments specified in Article I hereof.
ARTICLE III
TRANSACTIONS PRIOR TO CLOSING DATE
3.01 Access to Information Concerning Properties and Records. During
the period commencing on the date hereof and ending on the Closing Date, the
Company shall, and shall cause each of its Subsidiaries to, upon reasonable
notice, afford Parent and Sub, and their respective counsel, accountants,
consultants and other authorized representatives, full access during normal
business hours to the employees, properties, books and records of the Company
and its Subsidiaries in order that they may have the opportunity to make such
investigations as they shall desire of the affairs of the Company and its
Subsidiaries; provided, that such investigation shall not unreasonably disrupt
the personnel and operations of the Company and its Subsidiaries.
3.02 Confidentiality. Information obtained by Parent and Sub pursuant
to Section 3.01 hereof shall be subject to the provisions of the Confidentiality
Agreement between the Company and ▇▇▇▇▇▇ De Leeuw & Co., Inc. dated May 12, 1998
(the "CONFIDENTIALITY AGREEMENT").
3.03 Conduct of the Business of the Company Pending the Closing Date.
The Company agrees that, except as set forth in Section 3.03 of the Company
Disclosure Letter and except as permitted, required or specifically contemplated
by, or otherwise described in, this Agreement or otherwise consented to or
approved by Parent, during the period commencing on the date hereof and ending
on the Closing Date:
(a) The Company and each of its Subsidiaries will conduct their
respective operations in the ordinary and usual course of business and will
use their best efforts to preserve intact their respective business
organization, keep available the services of their officers and employees
and maintain satisfactory relationships with licensors, suppliers,
distributors, clients, joint venture partners, and others having business
relationships with them; and
(b) Neither the Company nor any of its Subsidiaries shall (i) make any
change in or amendment to its Certificate of Incorporation or By-Laws (or
comparable governing documents); (ii) issue or sell any shares of its
capital stock (other than in connection with the exercise of Warrants or
Options outstanding on the date hereof) or any of its other securities, or
issue any securities convertible into, or options, warrants or rights to
purchase or subscribe to, or enter into any arrangement or contract with
respect to the issuance or sale of, any shares of its capital stock or any
of its other securities, or make any other changes in its capital
structure; (iii) sell or pledge or agree to sell or pledge any stock owned
by it in any of its Subsidiaries; (iv) declare, pay, set aside or make any
dividend or other distribution or payment with respect to, or split,
combine, redeem or reclassify, or purchase or otherwise acquire any shares
of its capital stock or its other securities; (v) (A) enter into any
contract or commitment with respect to capital expenditures in excess of
$150,000 individually or $500,000 in the aggregate, (B) acquire (by merger,
consolidation, or acquisition of stock or assets) any corporation,
partnership or other business or division thereof; or (C) other than in the
ordinary course of business enter into, cancel or materially amend, modify
or supplement or cancel any other material contract, (vi) acquire a
material amount of assets or securities or release or relinquish any
material contract rights; (vii) except to the extent required under
existing employee and director benefit plans, agreements or arrangements as
in effect on the date of this Agreement or applicable law, increase the
compensation or fringe benefits of any of its directors, officers or
employees, except for increases in salary or wages of employees of the
Company or its subsidiaries in the ordinary course of business or make
bonus, pension, retirement or insurance payments or arrangements to or with
any such Person, except in the ordinary course of business; (viii)
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of,
encumber or subject to any lien, any material assets or incur or modify any
indebtedness or other liability, other than in the ordinary course of
business, or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for the obligations of any
person or, other than in the ordinary course of business, make any loan or
other extension of credit; (ix) make any material tax election or settle or
compromise any material tax liability; (x) make any material change in its
method of accounting other than such changes as may be necessary or
advisable to comply with applicable law or regulation or with generally
accepted accounting principals; (xi) adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
Subsidiaries not constituting an inactive Subsidiary (other than the
Merger); or (xii) agree, in writing or otherwise, to take any of the
foregoing actions.
3.04 Reasonable Best Efforts. Subject to the terms and conditions
provided herein, each of the Company, Parent and Sub shall, and the Company
shall cause each of its Subsidiaries to, cooperate and use their respective
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to make, or cause to be made, all filings necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
their respective reasonable best efforts to obtain, prior to the Closing Date,
all licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and parties to contracts with the Company and
its Subsidiaries as are necessary for consummation of the transactions
contemplated by this Agreement and to fulfill the conditions to the Merger.
3.05 Exclusive Dealing. During the period from the date of this
Agreement to the earlier of the termination of this Agreement and the Effective
Time, none of the Company or any of the Company's respective affiliates,
officers or directors shall take any action to, directly or indirectly,
encourage, initiate, solicit or engage in discussions or negotiations with, or
provide any information to, any Person, other than Parent, Sub and their
representatives, concerning any purchase of any capital stock of the Company or
any merger, asset sale or similar transaction involving the Company.
ARTICLE IV
CONDITIONS PRECEDENT TO MERGER
4.01 Conditions to Each Party's Obligations. The respective
obligations of each party to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) No Injunction. No preliminary injunction, or decree, or other
order shall have been issued by any court or by any governmental or
regulatory agency, body or authority which prohibits the consummation of
the Merger and the transactions contemplated by this Agreement which is in
effect at the Effective Time; provided, however, that, in the case of any
such injunction, decree or other order, each of the parties hereto shall
have used reasonable best efforts to prevent the entry of any such decree,
injunction or other order and to appeal as promptly as possible any such
decree, injunction or other order that may be entered.
(b) Statutes. No statute, rule, regulation, executive order, decree or
order of any kind shall have been enacted, entered, promulgated or enforced
by any court or governmental authority which prohibits the consummation of
the Merger of the transactions contemplated hereby.
(c) HSR Act. Any waiting period applicable to the Merger under the HSR
Act shall have expired or earlier termination thereof shall have been
granted and no action shall have been instituted by either the United
States Department of Justice or the Federal Trade Commission to prevent the
consummation of the transactions contemplated by this Agreement or to
modify or amend such transactions in any material manner or, if any such
action shall have been instituted, it shall have been withdrawn or a final
judgment shall have been entered against such Department or Commission, as
the case may be.
4.02 Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger shall be subject to the fulfillment at or prior to
the Effective Time of the following additional conditions, any one or more of
which may be waived by the Company:
(a) Parent Representations and Warranties. The representations and
warranties of Parent and Sub contained in this Agreement shall be true and
correct in all material respects the Effective Time with the same effect as
though such representations and warranties had been made on and as of such
date.
(b) Performance by Parent. Parent and Sub shall have performed and
complied with all of the covenants and agreements in all material respects
and satisfied in all material respects all of the conditions required by
this Agreement to be performed or complied with or satisfied by Parent and
Sub at or prior to the Effective Time.
(c) Certificate. Parent shall have delivered to the Company a
certificate executed on its behalf by its President, any Vice President or
another authorized officer in their corporate capacity to the effect that
the conditions set forth in Subsections 4.02(a) and 4.02(b) above, have
been satisfied.
4.03 Conditions to Obligations of Parent and Sub. The obligations of
Parent and Sub to effect the Merger shall be subject to the fulfillment at or
prior to the Effective Time of the following additional conditions, any one or
more of which may be waived by Parent:
(a) Company Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and
correct in all material respects as of the Effective Time with the same
effect as though such representations and warranties had been made on and
as of such date.
(b) Performance by the Company. The Company shall have performed and
complied with all the covenants and agreements in all material respects and
satisfied in all material respects all the conditions required by this
Agreement to be performed or complied with or satisfied by the Company at
or prior to the Effective Time.
(c) No Material Adverse Change. There shall have not occurred after
the date hereof any material adverse effect on the Condition of the Company
and its Subsidiaries taken as a whole (other than any material adverse
effect on the Condition of the Company and its Subsidiaries, taken as
whole, due to (i) general economic, financial or market conditions, or (ii)
conditions or circumstances generally affecting the business in which the
Company and its Subsidiaries operate).
(d) Certificate. The Company shall have delivered, or caused to be
delivered, to Parent a certificate executed on its behalf by its duly
authorized officer in their corporate capacity to the effect that the
conditions set forth in Subsections 4.03(a), 4.03(b) and 4.03(c), above,
have been satisfied.
(e) Employee Notes. The Company shall have made arrangements
reasonably acceptable to Parent with those employees of the Company who
have purchased capital stock of the Company through the issuance of notes
to the Company (the "EMPLOYEE NOTES") to have such Employee Notes paid in
full on or prior to the Closing Date.
(f) ▇▇▇▇▇▇ Credit Agreement. The Company shall have delivered to
Parent the written consent of ▇▇▇▇▇▇ Financial, Inc. ("▇▇▇▇▇▇") under the
terms of the Credit Agreement dated as of June 28, 1996 by and among
National Fiberstok Corporation, Label Art, Inc., Infoseal International
Inc., Government Forms and Systems Inc., ▇▇▇▇▇▇ Graphic Innovations, Inc.,
Short Run Labels, Inc., Boharb Communications, A/L Systems, Inc., ▇▇▇▇▇▇
and the financial institutions party thereto ("▇▇▇▇▇▇ Credit Agreement") to
the transactions contemplated by this Agreement.
ARTICLE V
TERMINATION AND ABANDONMENT
5.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after approval of the Merger by the Company's
stockholders:
(a) by mutual consent of the Company, on the one hand, and of Parent
and Sub, on the other hand;
(b) by the Company or Parent if the Merger shall not have been
consummated on or before June 30, 1998 (or such later date as may be agreed
to in writing by the Company and Parent), by reason of the failure of any
condition to the consummation of the Merger which must be fulfilled to its
satisfaction, provided, that, no party may terminate this Agreement under
this Section 5.01(b) if such failure has been caused primarily by such
party's material breach of this Agreement;
(c) by the Company if (a) there are any inaccuracies,
misrepresentations or breaches of any of Parent's or Sub's representations
or warranties in this Agreement, such that the condition set forth in
Section 4.02(a) to the Company's obligation to effect the Merger cannot be
met, or (b) Parent has breached or failed to perform in all material
respects any of its material covenants or agreements contained herein as to
which notice has been given to Parent and Parent has failed to cure or
otherwise resolve the same to the reasonable satisfaction of the Company
within fifteen (15) days after receipt of such notice;
(d) by Parent if (a) there are any inaccuracies, misrepresentations or
breaches of any of the Company's representations or warranties in this
Agreement, such that the condition set forth in Section 4.03(a) to Parent's
and Sub's obligation to effect the Merger cannot be met, or (b) the Company
has breached or failed to perform in all material respects any of its
material covenants or agreements contained herein as to which notice has
been given to the Company and the Company has failed to cure or otherwise
resolve the same to the reasonable satisfaction of Parent within fifteen
(15) days after receipt of such notice;
(e) by the Company or Parent if a court of competent jurisdiction or
other governmental body shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become
final and nonappealable;
5.02 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 5.01 hereof by Parent or Sub, on the one hand, or
the Company, on the other hand, written notice thereof shall forthwith be given
to the other party or parties specifying the provision hereof pursuant to which
such termination is made, and this Agreement shall become void and have no
effect, and there shall be no liability hereunder on the part of Parent, Sub or
the Company, except that Sections 3.02, 6.01 and this Section 5.02 hereof shall
survive any termination of this Agreement. Nothing in this Section 5.02 shall
relieve any party to this Agreement of liability for breach of this Agreement.
ARTICLE VI
MISCELLANEOUS
6.01 Fees and Expenses. All costs and expenses incurred in connection
with this Agreement and the consummation of the transactions contemplated hereby
shall be paid by the party incurring such costs and expenses.
6.02 Representations and Warranties. Each and every representation and
warranty of the Company, on the one hand, and Parent and Sub, on the other hand,
contained herein or in any certificates or other documents delivered prior to or
at the Closing shall expire with, and be terminated and extinguished by, the
Closing and thereafter none of the Company, Parent or Sub shall be under any
liability whatsoever with respect to any such representation or warranty. This
Section 6.02 shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after the Effective Time.
6.03 Transfer Taxes. All transfer, sales and use, registration, stamp
and similar Taxes imposed in connection with the sale of Stock or any other
transaction that occurs pursuant to this Agreement shall be borne solely by the
[Sub].
6.04 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken by or on behalf of the respective Boards of
Directors of the Company, Parent or Sub, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein.
6.05 Public Announcements. The Company, on the one hand, and Parent
and Sub, on the other hand, agree to consult promptly with each other prior to
issuing any press release or otherwise making any public statement with respect
to the transactions contemplated hereby, and shall not issue any such press
release or make any such public statement prior to such consultation and review
by the other party of a copy of such release or statement, unless required by
applicable law.
6.06 Indemnification. From and after the Effective Time, Parent shall
cause the Company to (i) maintain in effect in the Certificate of Incorporation
of the Company the provisions with respect to indemnification set forth in
Article Seventh of the Certificate of Incorporation of the Company as in effect
at the Effective Time, which provisions shall not be amended, repealed or
otherwise modified for a period of six (6) years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals (or
their estates) who at the date of this Agreement and/or as of the Effective Time
are or were directors, officers, employees or agents of the Company or its
Subsidiaries, unless such modification is required by law.
6.07 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person or
mailed, certified or registered mail with postage prepaid, or sent by telex,
telegram or telecopier, as follows:
(a) if to the Company, to it at:
AmeriComm Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
with a copy to:
▇▇▇▇▇▇ De Leeuw & Co.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
White & Case
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) if to either Parent or Sub, to it at:
DMAC Merger Corp. or
DMAC Holdings Inc.
c/▇ ▇▇▇▇▇▇ De Leeuw & Co.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third business day after the
mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
6.08 Entire Agreement. This Agreement and the annex, disclosure letter
and other documents referred to herein or delivered pursuant hereto and the
Confidentiality Agreement collectively contain the entire understanding of the
parties hereto with respect to the subject matter contained herein and supersede
all prior agreements and understandings, oral and written, with respect thereto.
6.09 Binding Effect; Benefit; Assignment. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties. Nothing
in this Agreement, expressed or implied, is intended to confer on any Person
other than the parties hereto or their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement except for Sections 6.06 which shall inure to, and be enforceable
by, the intended beneficiaries thereof.
6.10 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in writing by the parties
hereto in any and all respects before the Effective Time (notwithstanding any
stockholder approval), by action taken by the respective Boards of Directors of
Parent, Sub and the Company or by the respective officers authorized by such
Boards of Directors; provided, however, that after any such stockholder
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval.
6.11 Further Actions. Each of the parties hereto agrees that, subject
to its legal obligations, it will use its reasonable best efforts to fulfill all
conditions precedent specified herein, to the extent that such conditions are
within its control, and to do all things reasonably necessary to consummate the
transactions contemplated hereby.
6.12 Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only, do not constitute
a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement.
6.13 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
6.14 Applicable Law. This Agreement and the legal relations between
the parties hereto shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the conflict of laws rules
thereof. Each of the parties hereto hereby irrevocably acknowledges and consents
that any legal action or proceeding brought with respect to any of the
obligations arising under or relating to this Agreement may be brought in the
courts of the State of New York or in the United States District Court for the
Southern District of New York, as the party bringing such action or proceeding
may elect, and each of the parties hereto hereby irrevocably submits to and
accepts with regard to any such action or proceeding, for itself and in respect
of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The foregoing shall not limit the rights of any party to serve
process in any other manner permitted by law. The foregoing consents to
jurisdiction shall not constitute general consents to service of process in the
State of New York for any purpose except as provided above and shall not be
deemed to confer rights on any Person other than the respective parties to this
Agreement. To the fullest extent permitted by applicable law, each of the
parties hereto hereby irrevocably waives the objection which it may now or
hereafter have to the laying of the venue of any suit, action or proceeding
arising out of or relating to this Agreement in any of the courts referred to
above and hereby further irrevocably waives any claim that any such court is not
a convenient forum for any such suit, action or proceeding.
6.15 Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
6.16 Certain Definitions. (a) "PERSON" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, a group and a government or other department or
agency thereof.
(b) "SUBSIDIARY", with respect to the Company, shall mean and include
(x) any partnership of which the Company or any Subsidiary is a general partner
or (y) any other entity in which the Company or any of its Subsidiaries owns or
has the power to vote 50% or more of the equity interests in such entity having
general voting power to participate in the election of the governing body of
such entity.
(C) "KNOWLEDGE" shall mean, with regard to any natural person, the
actual knowledge of such person, and with regard to any party hereto, the actual
knowledge of the executive officers of such party.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each of Parent, Sub and the Company have caused
this Agreement to be executed by their respective officers thereunto duly
authorized, all as of the date first above written.
AMERICOMM HOLDINGS, INC.
By_____________________________
Name:
Title:
DMAC MERGER CORP.
By_____________________________
Name:
Title:
DMAC HOLDINGS, INC.
By_____________________________
Name:
Title: