Exhibit 2.2
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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
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ARTICLE I
THE MERGER AND RELATED MATTERS.............................................................................2
1.01 The Merger...........................................................................................2
1.02 Conversion of Stock..................................................................................2
1.03 Dissenting Stock.....................................................................................3
1.04 Surrender of Certificates............................................................................3
1.05 No Further Rights of Transfers.......................................................................4
1.06 Warrants.............................................................................................4
1.07 Stock Option and Other Plans.........................................................................4
1.08 Certificate of Incorporation of the Surviving Corporation............................................5
1.09 By-Laws of the Surviving Corporation.................................................................5
1.10 Directors and Officers of the Surviving Corporation..................................................5
1.11 Closing..............................................................................................5
1.12 Working Capital Settlement...........................................................................6
ARTICLE II
REPRESENTATIONS AND WARRANTIES.............................................................................6
2.01 Representations and Warranties of the Company........................................................6
(a) Due Organization, Good Standing and Corporate Power..........................................6
(b) Authorization and Validity of Agreement......................................................7
(c) Capitalization...............................................................................7
(d) Consents and Approvals; No Violations........................................................8
(e) Financial Statements; Commission Filings.....................................................9
(f) Absence of Certain Changes..................................................................10
(g) Title to Properties; Encumbrances...........................................................10
(h) Leases......................................................................................10
(i) Material Contracts..........................................................................11
(j) Compliance with Laws........................................................................11
(k) Litigation..................................................................................11
(l) Employee Benefit Plans......................................................................11
(m) Employment Relations and Agreements.........................................................12
(n) Taxes.......................................................................................13
(o) Liabilities.................................................................................13
(p) Intellectual Properties.....................................................................14
(q) Environmental Laws and Regulations..........................................................14
(r) Conduct of Business.........................................................................15
(s) Broker's or Finder's Fee....................................................................15
2.02 Representations and Warranties of Parent and Sub....................................................15
(i)
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(a) Due Organization; Good Standing and Corporate Power.........................................15
(b) Authorization and Validity of Agreement.....................................................15
(c) Consents and Approvals; No Violations.......................................................16
(d) Litigation..................................................................................16
(e) Broker's or Finder's Fee....................................................................16
(f) Financing...................................................................................16
ARTICLE III
TRANSACTIONS PRIOR TO CLOSING DATE........................................................................17
3.01 Access to Information Concerning Properties and Records............................................17
3.02 Confidentiality....................................................................................17
3.03 Conduct of the Business of the Company Pending the Closing Date....................................17
3.04 Reasonable Best Efforts............................................................................18
3.05 Exclusive Dealing..................................................................................18
ARTICLE IV
CONDITIONS PRECEDENT TO MERGER............................................................................19
4.01 Conditions to Each Party's Obligations.............................................................19
(a) No Injunction...............................................................................19
(b) Statutes....................................................................................19
(c) HSR Act.....................................................................................19
4.02 Conditions to Obligations of the Company...........................................................19
(a) Parent Representations and Warranties.......................................................19
(b) Performance by Parent.......................................................................19
(c) Certificate.................................................................................20
4.03 Conditions to Obligations of Parent and Sub........................................................20
(a) Company Representations and Warranties......................................................20
(b) Performance by the Company..................................................................20
(c) No Material Adverse Change..................................................................20
(d) Certificate.................................................................................20
(e) Employee Notes..............................................................................20
(f) Xxxxxx Credit Agreement.....................................................................20
ARTICLE V
TERMINATION AND ABANDONMENT...............................................................................20
5.01 Termination........................................................................................21
5.02 Effect of Termination..............................................................................21
ARTICLE VI
MISCELLANEOUS.............................................................................................22
6.01 Fees and Expenses..................................................................................22
6.02 Representations and Warranties.....................................................................22
(ii)
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6.03 Transfer Taxes.....................................................................................22
6.04 Extension; Waiver..................................................................................22
6.05 Public Announcements...............................................................................22
6.06 Indemnification....................................................................................22
6.07 Notices............................................................................................23
6.08 Entire Agreement...................................................................................23
6.09 Binding Effect; Benefit; Assignment................................................................24
6.10 Amendment and Modification.........................................................................24
6.11 Further Actions....................................................................................24
6.12 Headings...........................................................................................24
6.13 Counterparts.......................................................................................24
6.14 Applicable Law.....................................................................................24
6.15 Severability.......................................................................................25
6.16 Certain Definitions................................................................................26
(iii)
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.
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(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
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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
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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
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(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 xxxxxxxx, 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
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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
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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 Xxxx-Xxxxx-Xxxxxx 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
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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 Xxxxxx Xxxxxxxx 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
9
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.
10
(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
11
(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
975(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.
12
(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.
13
(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 xxxx 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. Section 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. Section 6901 et seq.; the Federal Water Pollution Control
Act, as amended, 33 U.S.C. Section 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Clean
Air Act, 42 U.S.C. Section 7401 et seq.; the Safe Drinking Water
Act, 42 U.S.C. Section 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
14
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 Xxxxxxx Xxxxx & 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.
15
(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.
16
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 XxXxxx 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
17
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.
18
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.
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(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) Xxxxxx Credit Agreement. The Company shall have delivered
to Parent the written consent of Xxxxxx Financial, Inc. ("Xxxxxx")
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., Xxxxxx Graphic
Innovations, Inc., Short Run Labels, Inc., Boharb Communications, A/L
Systems, Inc., Xxxxxx and the financial institutions party thereto
("Xxxxxx Credit Agreement") to the transactions contemplated by this
Agreement.
ARTICLE V
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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
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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,
22
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.
000 Xxxxxxxxx Xxxxxxxx Xxxx, Xxxxx X000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx
with a copy to:
XxXxxx De Leeuw & Co.
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx
White & Case
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
(b) if to either Parent or Sub, to it at:
DMAC Merger Corp. or
DMAC Holdings Inc.
c/x XxXxxx De Leeuw & Co.
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx
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
23
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.
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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]
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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 /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief
Executive Officer
DMAC MERGER CORP.
By /s/ Xxxxx Xx Xxxxx
-------------------------------
Name: Xxxxx Xx Xxxxx
Title: President
DMAC HOLDINGS, INC.
By /s/ Xxxxx Xx Xxxxx
-------------------------------
Name: Xxxxx Xx Xxxxx
Title: President
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