MERGER AND RECAPITALIZATION AGREEMENT
AND
PLAN OF REORGANIZATION
AmeriCom USA, Inc.
A Delaware Corporation
and
DigiCities, Inc.
A California Corporation
September 27, 1999
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TABLE OF CONTENTS
PREAMBLE.....................................................................................1
DEFINITIONS..................................................................................1
PRELIMINARY STATEMENT........................................................................3
ARTICLE I. THE MERGER........................................................................4
Section 1.1. The Merger.............................................................4
Section 1.2. Closing................................................................4
Section 1.3. Certificate............................................................4
Section 1.4. Bylaws.................................................................5
Section 1.5. Directors..............................................................5
Section 1.6. Officers...............................................................5
ARTICLE II RECAPITALIZATION..................................................................5
Section 2.1. The Recapitalization...................................................5
Section 2.2. Closing................................................................6
ARTICLE III. CONVERSION......................................................................6
Section 3.1. Effect of the Merger and Recapitalization on Capital Stock.............6
Section 3.2. Delivery and Exchange..................................................6
Section 3.3. Stock Options..........................................................7
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF AMERICOM.......................................8
Section 4.1. Organization, Authority and Qualification..............................8
Section 4.2. Ownership of Shares; Subsidiaries......................................8
Section 4.3. Financial Statement, Financial Condition. .............................8
Section 4.4. Accounts Receivable....................................................9
Section 4.5. Interest in AmeriCom's Property........................................9
Section 4.6. Real Property..........................................................9
Section 4.7. Intellectual Property..................................................9
Section 4.8. Absence of Specific Changes...........................................10
Section 4.9. Permit, Licenses, and Franchises......................................11
Section 4.10. Judgments, Decrees, or Orders Restraining Business....................11
Section 4.11. Insurance.............................................................12
Section 4.12. Environmental Compliance; Hazardous Materials.........................12
Section 4.14. No Violation of Other Instruments.....................................12
Section 4.14. Contracts.............................................................12
Section 4.15. Litigation............................................................13
Section 4.16. Taxes.................................................................13
Section 4.17. Employee Benefit Matters.............................................13
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Section 4.18. AmeriCom Reporting Requirements.......................................14
Section 4.19. Disclosure............................................................14
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF DIGICITIES.....................................14
Section 5.1. Organization, Authority and Qualification.............................14
Section 5.2. Ownership of Shares; Subsidiaries.....................................14
Section 5.3. Financial Statement, Financial Condition. ............................15
Section 5.4. Title of Properties...................................................15
Section 5.5. Inventory.............................................................15
Section 5.6. Accounts Receivable...................................................15
Section 5.7. Interest in DigiCities's Property.....................................16
Section 5.8. Real Property.........................................................16
Section 5.9. Intellectual Property.................................................16
Section 5.10. Absence of Undisclosed Liabilities....................................17
Section 5.11. Absence of Specific Changes...........................................17
Section 5.12. Permit, Licenses, and Franchises......................................18
Section 5.13. Judgments, Decrees, or Orders Restraining Business....................18
Section 5.14. Environmental Compliance; Hazardous Materials.........................18
Section 5.15. No Violation of Other Instruments.....................................18
Section 5.16. Contracts.............................................................19
Section 5.17. Litigation............................................................19
Section 5.18. Taxes.................................................................19
Section 5.19. Employee Benefit Matters..............................................20
Section 5.20. Reporting Requirements................................................20
Section 5.21. Records...............................................................20
Section 5.22. Labor Disputes........................................................20
Section 5.23. Insurance.............................................................20
Section 5.24. Shareholder Relations.................................................21
Section 5.25. Disclosure............................................................21
ARTICLE VI. COVENANTS.......................................................................21
Section 6.1 Covenants of DigiCities...............................................21
Section 6.2. Covenants of AmeriCom.................................................23
Section 6.3. Post-Closing Covenants................................................24
ARTICLE VII. CONDITIONS TO THE MERGER.......................................................25
Section 7.1. Conditions Precedent to AmeriCom's Obligation to Close................25
Section 7.2. Conditions Precedent to DigiCities' Obligation to Close...............26
Section 7.3. Additional Conditions to the Obligations of DigiCities................27
ARTICLE VIII. SURVIVAL OF WARRANTIES........................................................27
ARTICLE IX. TERMINATION OF AGREEMENT........................................................27
Section 9.1. Termination by AmeriCom...............................................27
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Section 9.2. Termination...........................................................28
Section 9.3. Right to Proceed......................................................29
Section 9.4. Return of Documents...................................................29
ARTICLE X. ADDITIONAL AGREEMENTS............................................................29
Section 10.1. Expenses..............................................................29
Section 10.2. Publicity.............................................................29
Section 10.3. Approval of DigiCities Shareholders...................................30
Section 10.4. Approval of AmeriCom Shareholders.....................................30
ARTICLE XI. MISCELLANEOUS...................................................................30
Section 11.1. Governing Law; Counterparts...........................................30
Section 11.2. Notices...............................................................30
Section 11.3. Waiver................................................................31
Section 11.4. Binding Effect........................................................31
Section 11.5. No Third Party Beneficiaries..........................................31
Section 11.6. Amendments............................................................31
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MERGER AND RECAPITALIZATION AGREEMENT
AND
PLAN OF REORGANIZATION
PREAMBLE
This merger agreement and plan of reorganization (the "Agreement") are
made as of September 27, 1999, between AmeriCom USA, Inc., a Delaware
corporation ("AmeriCom"), and DigiCities, Inc., a California corporation
("DigiCities").
DEFINITIONS
In this Agreement, unless the context otherwise requires:
(a) "Action" shall mean any action, suit, litigation, complaint,
counterclaim, claim, petition, mediation contest, or administrative proceeding,
whether at law, in equity, in arbitration or otherwise, and whether conducted by
or before any Government or other Person.
(b) "AmeriCom Subsidiary" shall mean all such Persons required to be
disclosed in Schedule 3.2(b) pursuant to Section 3.2(b).
(c) "CACC" means the California Corporation Code.
(d) "Closing Date" means November 15, 1999, or such later date on or
before the Termination Date as the parties may agree to in writing.
(e) "Contract" shall mean all existing written and oral material
agreements and commitments, including, without limitation, all employment and
consulting contracts, union contracts, distributorship agreements, agreements
with suppliers and customers (except purchase or sale orders entered into in the
ordinary course of business involving the purchase or sale of goods or services
for not more than Ten Thousand Dollars ($10,000.00) and for a term of not more
than twelve (12) months), leases, licenses, employee benefit plans, deferred
compensation agreements, indentures, notes, bonds, mortgages, security
agreements, loan agreements, guarantees, franchise agreements, agreements in
respect of the issuance, sale, repurchase or transfer of capital stock, bonds or
other securities, power of attorney, and any contract which involves a payment
by DigiCities of more than Ten Thousand Dollars ($10,000.00) or has a term or
requires performance over a period of more than ninety (90) days.
(f) "Dissenting Shares" shall have the meaning set forth in Section 1300
of the California Corporation Code.
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(g) "Effective Time" shall mean the date on which a certificate of
merger and the Amended and Restated Certificate of Incorporation of AmeriCom are
filed in the office of the Secretary of State of the State of Delaware and/or
the Secretary of State of the State of California.
(h) "Exchange Act" means the Securities Exchange Act of 1934.
(i) "Forum" shall mean any federal, national, state, local, municipal or
foreign court, governmental agency, administrative body or agency, tribunal,
private alternative dispute resolution systems, or arbitration panel.
(j) "GDCL" shall mean the General Delaware Corporation Law.
(k) "Government" shall mean any federal, national, state, provincial,
local, municipal, or foreign government or any department, commission, board,
bureau, agency, instrumentality, unit, or taxing authority thereof.
(l) "Laws" shall mean all federal, national, state, provincial, local,
municipal or foreign constitutions, statutes, rules, regulations, norms,
ordinance, acts, codes, legislation, treaties, conventions, common law
principles, judicial decisions and similar laws and legal requirements, whether
of the United States of America or any other jurisdiction as in effect form time
to time.
(m) "Liability" shall mean any liability or obligation whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due.
(n) "Order" shall mean all applicable orders, writs, judgments,
injunctions, decrees, rulings, consent agreements, and awards of or by any Forum
or entered by consent of the party to be bound.
(o) "Person" shall include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an unincorporated
organization and a Government.
(p) "Proprietary Rights" means (i) patents, applications for patents and
patent rights; (ii) in each case, whether registered, unregistered or under
pending registration, trademark rights, trade names, trade name rights,
corporate names, business names, trade styles or dress, service marks and logos
and other trade designations and copyrights; and (iii) all agreements relating
to the technology, know-how or processes,
(q) "SEC" means the Securities and Exchange Commission.
(r) "Surviving Corporation" shall mean Americom USA, Inc.
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(s) "Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of whatever
nature, including, without limitation, income, gross receipts, excise, property,
sales, use, customs, value added, consumption, transfer, license, payroll,
employee income, withholding, social security, and franchise taxes, now or
hereafter imposed or levied by the United States of America or any Government or
by any department, agency or other political subdivision or taxing authority
thereof or therein, all deposits required in connection therewith, and all
interests, penalties, additions to tax, and other similar Liabilities with
respect thereto.
(t) "Termination Date" has the meaning Section 9.2(i) specifies.
PRELIMINARY STATEMENT
The parties to this Agreement have determined it is in their best
long-term interests to effect a Plan of Reorganization pursuant to which:
(a) DigiCities will merge into AmeriCom on the terms and subject to the
conditions set forth herein;
(b) Upon the Effective Time, (i) all issued and outstanding Common
Shares of DigiCities shall be converted and exchanged for 3,500,014 shares of
Class A Common Stock of AmeriCom pursuant to this Agreement and (ii) the
continuing employees of DigiCities immediately after the Effective Time shall be
allocated 1,500,000 shares of Class A Common Stock of AmeriCom under AmeriCom
Stock Option Plan.
(c) Upon the Effective Date, AmeriCom will be recapitalized by (i)
converting its existing common stock into a Class A and Class B common stock and
(ii) each share of outstanding common stock of AmeriCom shall be converted and
exchanged for one share of Class A Common Stock of AmeriCom pursuant to this
Agreement.
(d) The respective Boards of Directors of AmeriCom and DigiCities have
approved the Merger and exchange, and declared advisable and in the best
interests of their respective stockholders; and
(e) The Merger transaction described in this Agreement is intended to be
a tax-free reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code").
(f) The recapitalization transaction described in this agreement is
intended to be a tax-free reorganization within the meaning of Section 368 (a)
(1) (E) of the Code.
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NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I.
THE MERGER
Section 1.1. The Merger.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as hereinafter defined), DigiCities shall
be merged with and into AmeriCom (the "Merger") in accordance with the GDCL and
CACC, whereupon the separate legal existence of DigiCities shall cease, and
AmeriCom shall continue as the surviving corporation (the "Surviving
Corporation").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger set forth herein,
AmeriCom and DigiCities will file a Certificate of Merger with the Secretary of
State of the State of Delaware and the Secretary of State of the State of
California. The Merger shall become effective at such time as set forth in the
Certificate of Merger ("Effective Time") or, if the Certificate of Merger does
not specify another time, 8:00 a..m., Pacific Time, on the Effective Date.
(c) The Merger shall have the effects set forth in GDCL and CACC.
(d) The Merger is intended to be a tax-free reorganization
pursuant to Section 368(a)(1)(A) of the Code and the regulations promulgated
under Section 368 of the Code.
Section 1.2. Closing. On or before the Closing Date, the parties hereto
will take all actions necessary to (i) effect the Merger as required by GDCL and
CACC; (ii) transmit for filing of the Certificate of Merger with the Secretary
of State of Delaware and the Secretary of State of California; (iii) satisfy the
conditions set forth in Article VI; and (iv) accomplish all transactions this
Agreement contemplates, as the case may be (all those actions collectively being
the "Closing"). The Closing will take place at the office of ▇▇▇▇▇▇ Eng ▇▇▇▇ &
▇▇▇▇▇▇▇▇ in Sacramento, California, at 10:00 a.m., Pacific Time, on the Closing
Date, or at such other time and place as the parties may agree to in writing.
Section 1.3. Certificate. The Certificate of Incorporation of AmeriCom,
after giving effect to amendment to AmeriCom's Certificate of Incorporation as
specified in Section 1.1(a) and in effect on the Effective Time of the Merger
will become the Certificate of Incorporation of the Surviving Corporation. From
and after the Effective Time of the Merger, said Certificate of Incorporation,
as it may be amended from time to time as provided by law, will be, and may be
separately certified as, the Certificate of Incorporation of the Surviving
Corporation.
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Section 1.4. Bylaws. The Bylaws of AmeriCom in effect on the Effective
Time of the Merger will be the Bylaws of the Surviving Corporation until they
are thereafter duly altered, amended, or repealed.
Section 1.5. Directors. The directors of AmeriCom immediately prior to
the Effective Time of the Merger will be the directors of the Surviving
Corporation. They will hold office until their successors have been elected and
qualified.
Section 1.6. Officers. The initial officers of the Surviving Corporation
shall be as Schedule 1.6 sets forth, and each of these persons will serve in
each office Schedule 1.6 specifies for that person, subject to the provisions of
the articles of the Surviving Corporation, until that person's successor is duly
elected to, and, if necessary, qualified for that office.
ARTICLE II
RECAPITALIZATION
Section 2.1. The Recapitalization.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time, all of the currently outstanding shares
of AmeriCom Common Stock shall be converted and exchanged (the
"Recapitalization") in accordance with the GDCL and CACC, whereupon (i) the
Certificate of Incorporation of AmeriCom will be amended to change AmeriCom's
authorized capital stock to 120,000,000 of which 99,000,000 shares shall be
designated Class A Common Stock, $.0001 par value, 1,000,000 shares shall be
designated as Class B Common Stock, $.0001 par value, and 20,000,000 shares
shall be designated Preferred Stock, $.0001 par value and (ii) the Class A
Common Stock shall have all of the rights, preferences and privileges granted to
common stock under the GDCL while the Class B Common Stock and Preferred Stock
shall have such rights, preferences and privileges and be issued in such numbers
as AmeriCom's Board of Directors may determine from time to time;
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the recapitalizations set forth
herein, AmeriCom will file an Amended and Restated Certificate of Incorporation
with the Secretary of the State of Delaware. The Recapitalization shall become
effective at such time as set forth in the Amended and Restated Certificate of
Incorporation.
(c) The Recapitalization shall have the effects as provided in
the GDCL and Section 2115 of the CACC.
(d) The Recapitalization is intended to be a tax-free
reorganization pursuant to Section 368(a)(1)(E) of the Code and the regulations
promulgated under Section 368 of the Code.
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Section 2.2. Closing. On or before the Closing Date, the parties hereto
shall take all actions to (i) affect the recapitalization as required by the
GDCL and CACC; (ii) transmit for filing the Amended and Restated Certificate of
Incorporation with the Secretary of State of Delaware; (iii) satisfying the
conditions set forth in Article VI; and (iv) accomplish all transactions this
Agreement contemplates, as the case may be (all those actions collectively being
the "Closing"). The Closing will take place at the office of ▇▇▇▇▇▇ Eng Linn &
▇▇▇▇▇▇▇▇ in Sacramento, California, at 10:00 a.m. Pacific Time, on the Closing
Date, or at such other time and place as the parties may agree to in writing.
ARTICLE III.
CONVERSION
Section 3.1. Effect of the Merger and Recapitalization on Capital Stock.
As of the Effective Time, as a result of the Merger and Recapitalization and
without any action on the part of any holder thereof:
(a) All of the shares of DigiCities Common Stock issued and
outstanding immediately before the Effective Time, will by virtue of the Merger
and without action on the part of the shareholder, be converted into and become
the right to receive 3,500,014 shares of Class A Common Stock, $.0001 par value,
of the Surviving Corporation.
(b) All of the shares of AmeriCom Common Stock issued and
outstanding immediately before the Effective Time, will by virtue of the
Recapitalization and without action on the part of the shareholders, be
converted into and become the right to receive a like number of shares of
AmeriCom's Class A Common Stock, $.0001 par value.
Section 3.2. Delivery and Exchange.
(a) After the Effective Time, the shareholders of DigiCities,
upon surrender of their stock certificates to AmeriCom (or any agent that
AmeriCom may appoint for purpose of this Section 3.2) shall be entitled to
receive in exchange therefor a certificate or certificates representing the
number of shares of AmeriCom Class A Common Stock as set forth in the allocation
schedule attached hereto as Schedule 3.2(a). No certificates or scrip for
fractional shares of AmeriCom's Common Stock have been or will be issued. Until
surrendered and exchanged, each DigiCities share certificate shall, after the
Effective Time, be deemed for all corporate purposes to represent only the right
to receive the same number of shares of AmeriCom Class A Common Stock into which
the DigiCities's Common Stock shall have been converted pursuant to the Merger.
(b) After the Effective Time, each holder of AmeriCom's Common
Stock certificates, upon surrender thereof to AmeriCom (or any agent that
AmeriCom may appoint for purpose of this Section 3.2) shall be entitled to
receive in exchange therefor a certificate or certificates representing the same
number of shares of AmeriCom Class A Common Stock. No certificates or scrip for
fractional shares of AmeriCom's Common Stock have been or will be issued. Until
7
surrendered and exchanged, each AmeriCom share certificate shall, after the
Effective Time, be deemed for all corporate purposes to represent only the right
to receive the same number of shares of AmeriCom Class A Common Stock into which
the AmeriCom's Common Stock shall have been converted pursuant to the Merger.
(c) As of the Effective Time, no transfer of the shares of
AmeriCom Common Stock or DigiCities Common Stock outstanding prior to the
Effective Time shall be made on the stock transfer books of the Surviving
Corporation. If, after the Effective Time, AmeriCom or DigiCities stock
certificates are presented to AmeriCom or the Surviving Corporation, they shall
be exchanged pursuant to Section 3.2(a) or 3.2 (b) above.
Section 3.3. Stock Options.
(a) As soon as practicable following the date of this Agreement
but before the Closing Date, the Board of Directors of AmeriCom shall adopt such
resolutions or take such other actions as may be required to effect the
following:
(i) As soon as practicable after the Effective Time,
AmeriCom shall allocate and grant up to 1,500,000 shares AmeriCom Class A Common
Stock under the AmeriCom Stock Option Plan to the prior existing employees of
DigiCities immediate prior to the Effective Time provided that they remained
employees of AmeriCom after the Effective Time, under a 3 year vesting schedule
and in accordance with the direction to be provided by DigiCities prior to the
Effective Time; and
(ii) Make such other changes to the AmeriCom Option Plan
as it deems appropriate to give effect to the Merger.
(b) Prior to the Closing, AmeriCom shall seek consent from each
of its stock option holders agreeing to convert his/her AmeriCom Stock Options
into stock options exercisable into Class A Common Stock of AmeriCom.
(c) As soon as practicable after the Effective Time, the
Surviving Corporation shall deliver to the holders of AmeriCom Stock Options
appropriate notices setting forth such holders' rights pursuant to the AmeriCom
Option Plan and the agreements evidencing the grants of such AmeriCom Stock
Options shall continue in effect on the same terms and conditions.
(d) The Surviving Corporation shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Surviving
Corporation's Class A Common Stock for delivery on exercise of AmeriCom Stock
Options outstanding in accordance with this Section 3.2.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF AMERICOM
AmeriCom represents and warrants to, and agrees with, DigiCities that
all the following representations and warranties in this Article IV are as of
the date of this Agreement, and will be, as amended or supplemented pursuant to
Section 6.3 on the Closing Date, true and correct:
Section 4.1. Organization, Authority and Qualification.
(a) AmeriCom is duly organized, validly existing, and in good
standing under the laws of Delaware, and has the corporate power to own all of
its properties and assets and to carry on its business as it is now being
conducted. AmeriCom is duly qualified to do business as a foreign corporation
and is in good standing in the jurisdictions listed in Schedule 4.1, and, except
as set forth in Schedule 4.1, neither the ownership of its property nor the
conduct of its business requires it to be qualified to do business in any other
jurisdiction.
(b) AmeriCom's Board of Directors has authorized the execution of
this Agreement, and AmeriCom has the corporate power and is duly authorized to
have DigiCities merge into AmeriCom pursuant to this Agreement.
Section 4.2. Ownership of Shares; Subsidiaries.
(a) Prior to the Effective Time, AmeriCom's authorized capital
stock consists of 100,000,000 shares of Common Stock, $0.0001 par value, of
which 36,759,609 shares are issued and outstanding and 20,000,000 shares of
Preferred Stock, $0.0001 par value, of which no shares are issued and
outstanding. Except as set forth in Schedule 4.2(a), all issued and outstanding
shares have been validly issued in full compliance with all federal and state
securities laws, are fully paid and nonassessable, and have voting rights.
Except as set forth in Schedule 4.2(a), there are no outstanding subscriptions,
options, rights, warrants, convertible securities, or other agreements or
commitments obligating AmeriCom to issue or to transfer from treasury any
additional shares of its capital stock of any class.
(b) AmeriCom does not own or have an interest, direct or
indirect, or any commitment to purchase or otherwise acquire, any capital stock
or other equity interest, direct or indirect, in any other Person, except as set
forth in Schedule 4.2(b). All such interests so set forth are owned of record
and beneficially by AmeriCom as set forth in Schedule 4.2(b) and are duly
authorized, validly issued, fully paid and nonassessable, and were authorized,
offered, issued and sold in accordance with all applicable securities and other
Laws.
Section 4.3. Financial Statement, Financial Condition. The balance
sheet of AmeriCom as of June 30, 1999 ("AmeriCom Current Balance Sheet ") and
the related statement of profits and losses through June 30, 1999 and for the
last two (2) fiscal years then ended, prepared by AmeriCom,
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copies of which have been delivered by AmeriCom to DigiCities, fairly present
the financial position of AmeriCom as of that date and the results of operations
for June 30, 1999, and have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with that of preceding
years.
Section 4.4. Accounts Receivable. Except as set forth in Schedule 4.4,
all notes and accounts receivable shown on the AmeriCom Current Balance Sheet
and all such receivables now held by AmeriCom are valid and collectible
obligations and were not and are not subject to any offset or counterclaim,
except for amounts reserved against such receivables which are reflected on the
AmeriCom Current Balance Sheet or otherwise set forth in Schedule 4.4. With
respect to notes and accounts receivable arising after the AmeriCom Balance
Sheet Date and now outstanding, (except for a percentage thereof equal to the
percentage which has been historically reserved against receivable amounts on
the AmeriCom Current Balance Sheet or in Schedule 4.4 for bad debts) constitutes
valid and collectible obligations on such AmeriCom Current Balance Sheet.
Section 4.5. Interest in AmeriCom's Property. Except as set forth in
Schedule 4.5, no officer, director, or shareholder of AmeriCom or any AmeriCom
Subsidiary has any interest in any property, real or personal, tangible or
intangible, including copyrights, trademarks, or trade names, used in or
pertaining to the business of AmeriCom or any AmeriCom Subsidiary.
Section 4.6. Real Property. AmeriCom has good title to all of the real
property reflected in the AmeriCom Current Balance Sheet as owned by AmeriCom,
free and clear from all defects and liens, except as may be set forth in the
notes to the AmeriCom Current Balance Sheet or in Schedule 4.6. Schedule 4.6
lists all real property, whether owned or not owned by AmeriCom, listing with
respect to each parcel the street address and the owner or lessor.
Section 4.7. Intellectual Property.
(a) Schedule 4.7 attached hereto lists and contains a description
of:
(i) All patents, patent applications and registrations,
trade marks, trade ▇▇▇▇ applications and registrations, copyrights, copyright
applications and registrations, trade names and industrial designs, domestic or
foreign, owned or used by AmeriCom or relating to the operation of the Business;
(ii) All trade secrets, know-how, inventions and other
intellectual property owned or used by AmeriCom or relating to the Business; and
(iii) All proprietary computer systems, software and
application software, owned or used by AmeriCom or relating to the Business,
(all of the foregoing being collectively called the "Intellectual Property").
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(b) AmeriCom has good and valid title to all of the Intellectual
Property, free and clear of any and all Encumbrances, except in the case of any
Intellectual Property licensed to AmeriCom as disclosed in Schedule 4.7.
Complete and correct copies of all agreements whereby any rights in any of the
Intellectual Property have been granted or licensed to AmeriCom have been
provided to the Purchaser. No royalty or other fee is required to be paid by
AmeriCom to any other person in respect of the use of any of the Intellectual
Property except as provided in such agreements delivered to the Purchaser.
Except as indicated in Schedule 4.7, AmeriCom has the exclusive right to use all
of the Intellectual Property and has not granted any license or other rights to
any other person in respect of the Intellectual Property. Complete and correct
copies of all agreements whereby any rights in any of the Intellectual Property
have been granted or licensed by AmeriCom to any other person have been provided
to the Purchaser.
(c) Except as disclosed in Schedule 4.7, there are no
restrictions on the ability of AmeriCom or any successor to or assignee from
AmeriCom to use and exploit all rights in the Intellectual Property. All
statements contained in all applications for registration of the Intellectual
Property were true and correct as of the date of such applications. Each of the
trade marks and trade names included in the Intellectual Property is in use.
None of the rights of AmeriCom in the Intellectual Property will be impaired or
affected in any way by the transactions contemplated by this agreement.
(d) The conduct of the Business and the use of the Intellectual
Property does not infringe, and AmeriCom has not received any notice, complaint,
threat or claim alleging infringement of, any patent, trade ▇▇▇▇, trade name,
copyright, industrial design, trade secret or other Intellectual Property or
proprietary right of any other person.
Section 4.8. Absence of Specific Changes. Except as set forth in
Schedule 4.8, since the AmeriCom Balance Sheet Date there has not been:
(a) Any change in the business, personnel, results of operations,
assets, financial condition, or manner of conducting the business of AmeriCom or
any AmeriCom Subsidiary other than changes in the ordinary course of business,
none of which has had an adverse effect on the business, results of operations,
assets, financial condition, or prospects of AmeriCom or any AmeriCom
Subsidiary;
(b) Any damage, destruction, or loss (whether or not covered by
insurance) adversely affecting any aspect of the business or operations of
AmeriCom or any AmeriCom Subsidiary;
(c) Any direct or indirect redemption or other acquisition by
AmeriCom of any of AmeriCom's shares of capital stock of any class, or any
declaration, setting aside, or payment of any dividend or other distribution of
AmeriCom's capital stock of any class;
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(d) Any increase in the compensation payable or to become payable
by AmeriCom or any AmeriCom Subsidiary to any of its officers, employees, or
agents, other than the normal increases granted in the ordinary course of
business;
(e) Any option to purchase or other right to acquire stock of any
class of AmeriCom or any AmeriCom Subsidiary granted by AmeriCom or any AmeriCom
Subsidiary to any Person (other than as specified in Schedule 4.2(a) above);
(f) Any employment, bonus, or deferred compensation agreement
entered into between AmeriCom or any AmeriCom Subsidiary and any of its
directors, officers, or other employees or consultants;
(g) Any issuance of capital stock of any class by AmeriCom or any
AmeriCom Subsidiary;
(h) Any indebtedness incurred by AmeriCom or any AmeriCom
Subsidiary for borrowed money or any commitment to borrow money entered into by
AmeriCom or any guaranty given by AmeriCom;
(i) Any amendment to AmeriCom's Certificate of Incorporation or
Bylaws;
(j) Any delayed or postponed payment of any accounts payable or
other Liabilities outside the ordinary course of business; or
(k) Any discontinued or determined to be discontinued selling of
any products or services offered by AmeriCom, the sales of which have been
material to AmeriCom.
Section 4.9. Permit, Licenses, and Franchises. AmeriCom and each
AmeriCom Subsidiary have obtained all necessary permits, licenses, franchises,
and other authorizations and have complied with all laws applicable to the
conduct of their business in the manner and in the areas in which business is
presently being conducted; and all such permits, licenses, franchises, and
authorizations are valid and in full force and effect. Neither AmeriCom nor any
AmeriCom Subsidiary has engaged in any activity that would cause revocation or
suspension of any such permits, licenses, franchises, or authorizations; no
action or proceeding contemplating the revocation or suspension of any of them
is pending or threatened; and no approvals or authorizations will be required
after the consummation of the Merger to permit AmeriCom to continue its business
as presently conducted.
Section 4.10. Judgments, Decrees, or Orders Restraining Business.
Neither AmeriCom nor any AmeriCom Subsidiary is a party to or subject to any
judgment, decree, or Order entered in any suit or proceeding brought by any
governmental agency or by any other Person, enjoining AmeriCom or any AmeriCom
Subsidiary with respect to any business practice, the acquisition of any
property, or the conduct of business in any area.
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Section 4.11. Insurance. During each of the past two (2) fiscal years,
AmeriCom and each AmeriCom Subsidiary have been adequately insured by
financially sound and reputable insurers with respect to risks normally insured
against and in amounts normally carried by companies similarly situated; all
such policies are in full force and effect; all premiums due on such policies
have been fully paid; and no notice of cancellation or termination has been
received with respect to any policy.
Section 4.12. Environmental Compliance; Hazardous Materials. AmeriCom
and each AmeriCom Subsidiary have complied in all material respects with, and
have not been cited for any violation of, federal, state, and local
environmental protection laws and regulations; and no material capital
expenditures will be required for compliance with any federal, state, or local
laws or regulations now in force relating to the protection of the environment.
As used in this paragraph, "Hazardous Material" means any hazardous or toxic
substance, material, or waste that is regulated by any federal authority or by
any state or local authority where the substance, material, or waste is located.
There are no underground storage tanks located on the real property described in
Schedule 4.6 in which any Hazardous Material has been or is being stored, nor
has there been any spill, disposal, discharge, or release of any Hazardous
Material into, upon, or over that real property or into or upon ground or
surface water on that real property. There are no asbestos containing materials
incorporated into the buildings or interior improvements that are part of that
real property or into other assets of AmeriCom or any AmeriCom Subsidiary, nor
is there any electrical transformer, fluorescent light fixture with ballasts, or
other equipment containing PCBs on that real property.
Section 4.14. No Violation of Other Instruments. The execution and
delivery of this Agreement do not, and the consummation of the Merger will not,
(i) violate any provision of AmeriCom's Certificate of Incorporation or Bylaws;
(ii) violate any provision of, result in the acceleration of any obligation
under, or result in the imposition of any lien or encumbrance on any asset of
AmeriCom pursuant to the terms of any mortgage, note, lien, lease, franchise,
license, permit, agreement, instrument, order, arbitration award, judgment, or
decree; (iii) result in the termination of any license, franchise, lease, or
permit to which AmeriCom is a party or by which AmeriCom is bound; or (iv)
violate or conflict with any other restriction of any kind or character to which
AmeriCom is subject. AmeriCom's Board of Directors will take all actions
required by law or by AmeriCom's Certificate of Incorporation or Bylaws, or
otherwise required or necessary to authorize the execution and delivery of this
Agreement and to authorize the merger of AmeriCom with and into DigiCities
pursuant to this Agreement.
Section 4.14. Contracts.
(a) Except as set forth in Schedule 4.14, all AmeriCom Contracts
have been entered into in the ordinary course of AmeriCom's business on
commercially reasonable terms, are valid and enforceable in all material
respects in accordance with their terms, are in full force and effect, and will
continue to be valid and enforceable and in full force and effect on identical
terms following the Effective Time. Except as set forth in Schedule 4.14, no
AmeriCom Contract is likely to result in a loss to AmeriCom upon completion of
the performance, and all AmeriCom Contracts can be fulfilled or performed by the
AmeriCom in accordance with their respective terms without
13
undue or unusual expenditures of money or effort. All AmeriCom Contracts are
listed on Schedule 4.14, and true, correct and complete copies of all AmeriCom
Contracts have been delivered to DigiCities.
(b) There are no existing material defaults, events of default or
events which, with the giving of notice or lapse of time, or both, would
constitute a material default by AmeriCom under any AmeriCom Contract. No event
has occurred which may hereafter give rise to any right of termination,
acceleration, damages or any other remedy under any AmeriCom Contract.
(c) To AmeriCom's knowledge, neither this Agreement, the Closing
nor the relationship between AmeriCom and DigiCities has caused or is likely to
cause the termination, redetermination, or renegotiation of any AmeriCom
Contract.
Section 4.15. Litigation. Except as set forth in Schedule 4.15, no
Action is pending or, to the knowledge of AmeriCom, threatened against, by or
affecting AmeriCom or any AmeriCom Subsidiary.
Section 4.16. Taxes. Except as set forth in Schedule 4.16, AmeriCom has
duly and timely filed all federal, state, municipal, local and foreign, if any,
tax returns and reports (including returns for estimated tax), and all reports
and returns of all other Governments having jurisdiction (collectively,
"Returns") with respect to all Taxes (including, without limitation,
consolidated or combined Returns of some or all of AmeriCom and any AmeriCom
Subsidiary); all such Returns and reports show the correct and proper amount
due; and the Taxes shown on all Returns and reports and all tax assessments
received by AmeriCom or any AmeriCom Subsidiary have been paid to the extent
that such Taxes or estimates are due. AmeriCom has previously provided to
DigiCities true, correct and complete copies of all Returns filed with respect
to the two (2) tax years preceding the date hereof. Except as set forth in
Schedule 4.15, all Taxes imposed on AmeriCom and any AmeriCom Subsidiary by any
Government (including all deposits in connection therewith required by
applicable Law, and all interest and penalties thereon) which have become due
and payable by AmeriCom for all periods through the date hereof have been paid
in full, and adequate reserves for all other Taxes, whether or not due and
payable, and whether or not disputed, have been set up on the books of AmeriCom,
and such reserves will be adequate to pay all Taxes of AmeriCom for all periods
through the Closing. There is not now any proposed assessment against AmeriCom
or any AmeriCom Subsidiary of additional Taxes of any kind. AmeriCom is not a
party to any tax sharing or tax allocation agreement, understanding, arrangement
or commitment. There is no dispute or Action concerning any Tax Liability of the
AmeriCom raised by a Government in writing.
Section 4.17. Employee Benefit Matters. Except as set forth in Schedule
4.17, neither AmeriCom nor any AmeriCom Subsidiary (i) has established or
contributed to any pension, profit-sharing, option, other incentive plan, or any
other type of employee benefit plan, (ii) maintains or has maintained, is or was
a party to, and otherwise participates and has participated in, on its own
behalf or on behalf of any former employees, any pension, profit-sharing,
option, other incentive plan, or any other type of employee benefit plan, or
(iii) has any obligation to, or customary arrangement with,
14
former employees, if any, for bonuses, incentive compensation, vacations,
severance pay, sick pay, sick leave, insurance, service award, relocation,
disability, tuition refund, or other benefits, whether oral or written.
Section 4.18. AmeriCom Reporting Requirements. The AmeriCom Common Stock
is registered under Section 12 of the Exchange Act and AmeriCom is subject to
the periodic reporting requirements of Section 13 of the Exchange Act. AmeriCom,
is and has been for the last 12 months, current in all filings required to be
made with the SEC. AmeriCom has heretofore provided DigiCities copies of all
forms, reports and other documents filed by it under the Exchange Act since
January 1, 1999.
Section 4.19. Disclosure. No representation or warranty by AmeriCom in
this Agreement and no statement by AmeriCom or any AmeriCom Subsidiary, by any
executive officer or other person or contained in any document, certificate, or
other writing furnished by or on behalf of AmeriCom to DigiCities in connection
with this transaction, contains or will contain any untrue statement of material
fact, or omits or will omit to state any material fact necessary to make it not
misleading or to fully provide the information required to be provided in the
document, certificate, or other writing.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF DIGICITIES
DigiCities represents and warrants to, and agrees with, AmeriCom that
all the following representations and warranties in this Article IV are as of
the date of this Agreement, and will be, as amended or supplemented pursuant to
Section 7.1 on the Closing Date, true and correct:
Section 5.1. Organization, Authority and Qualification.
(a) DigiCities is duly organized, validly existing, and in good
standing under the laws of California, and has the corporate power to own all of
its properties and assets and to carry on its business as it is now being
conducted. DigiCities is duly qualified to do business as a foreign corporation
and is in good standing in the jurisdictions listed in Schedule 5.1, and, except
as set forth in Schedule 5.1, neither the ownership of its property nor the
conduct of its business requires it to be qualified to do business in any other
jurisdiction.
(b) DigiCities's Board of Directors has authorized the execution
of this Agreement, and DigiCities has the corporate power and is duly
authorized, subject to the approval of this Agreement by its shareholders, to
merge DigiCities into AmeriCom pursuant to this Agreement.
Section 5.2. Ownership of Shares; Subsidiaries.
(a) DigiCities's authorized capital stock consists of 100,000
shares of Common Stock, no par value, of which 94,305 shares are issued and
outstanding. Except as set forth in
15
Schedule 5.2, all issued and outstanding shares have been validly issued in full
compliance with all federal and state securities laws, are fully paid and
nonassessable, and have voting rights. Except as set forth in Schedule 5.2,
there are no outstanding subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments obligating DigiCities to issue
any additional shares of its Common Stock.
(b) DigiCities does not have any subsidiary.
Section 5.3. Financial Statement, Financial Condition. The compilation
balance sheet of DigiCities as of June 30, 1999 ("DigiCities Current Balance
Sheet ") and the related statement of profits and losses through June 30, 1999
and the audited financial statements of DigiCities for the last two (2) fiscal
years ended December 31, 1998 and 1997, copies of which have been delivered by
DigiCities to AmeriCom, fairly present the financial position of DigiCities as
of June 30, 1999 and the results of operations for those years, and have been
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with that of preceding years.
Section 5.4. Title of Properties. Except as set forth in Schedule 5.4,
and except for the lien for any current taxes or assessments not yet delinquent,
DigiCities owns free and clear of any liens, claims, charges, options, or
encumbrances all the property reflected on its books at the DigiCities Current
Balance Sheet dated June 30, 1999 ("DigiCities Balance Sheet Date") and all
property acquired since that date, except such property as has been disposed of
in the ordinary course of business consistent with prior practices of DigiCities
or with AmeriCom's written consent. For purposes of this Section 5.4, a
disposition of any single asset (other than inventories) carried on the books of
DigiCities at more than $10,000 will be considered to be a disposition not in
the ordinary course of business.
Section 5.5. Inventory. The inventories of DigiCities reflected on the
DigiCities Current Balance Sheet, as well as all inventory items acquired since
the DigiCities Balance Sheet Date that are now the property of DigiCities,
consist of raw materials, supplies, work in process, and finished goods, of such
quality and in such quantities as are being used and will be usable or are being
sold and will be salable in the ordinary course of the business of DigiCities.
These inventories exclude scrap, slow moving items, and obsolete items, and are
valued at the lower of cost or market value, determined in accordance with
generally accepted accounting principles consistently applied. Since the
DigiCities Balance Sheet Date, DigiCities has continued to replenish these
inventories in a normal and customary manner consistent with prudent practice
prevailing in the business.
Section 5.6. Accounts Receivable. Except as set forth in Schedule 5.6,
all notes and accounts receivable shown on the DigiCities Current Balance Sheet
and all such receivables now held by DigiCities are valid and collectible
obligations and were not and are not subject to any offset or counterclaim,
except for amounts reserved against such receivables which are reflected on the
DigiCities Current Balance Sheet or otherwise set forth in Schedule 5.6. With
respect to notes and accounts receivable arising after the DigiCities Balance
Sheet Date and now outstanding, (except for a percentage thereof equal to the
percentage which has been historically reserved against receivable amounts on
the DigiCities Current Balance Sheet or in Schedule 5.6 for bad debts)
constitutes valid
16
and collectible obligations on such DigiCities Current Balance Sheet. DigiCities
currently factors its accounts receivable in the ordinary course of business.
Section 5.7. Interest in DigiCities's Property. Except as set forth in
Schedule 5.7, no officer, director, or shareholder of DigiCities has any
interest in any property, real or personal, tangible or intangible, including
copyrights, trademarks, or trade names, used in or pertaining to the business of
DigiCities.
Section 5.8. Real Property. DigiCities has good title to all of the real
property reflected in the DigiCities Current Balance Sheet as owned by
DigiCities, free and clear from all defects and liens, except as may be set
forth in the notes to the DigiCities Current Balance Sheet or in Schedule 5.8.
Schedule 5.8 lists all real property, whether owned or not owned by DigiCities,
listing with respect to each parcel the street address and the owner or lessor.
Section 5.9. Intellectual Property.
(a) Schedule 5.9 attached hereto lists and contains a description
of:
(i) All patents, patent applications and registrations,
trade marks, trade ▇▇▇▇ applications and registrations, copyrights, copyright
applications and registrations, trade names and industrial designs, domestic or
foreign, owned or used by DigiCities or relating to the operation of the
Business;
(ii) All trade secrets, know-how, inventions and other
intellectual property owned or used by DigiCities or relating to the Business;
and
(iii) All proprietary computer systems, software and
application software, owned or used by DigiCities or relating to the Business,
(all of the foregoing being collectively called the "Intellectual Property").
(b) DigiCities has good and valid title to all of the
Intellectual Property, free and clear of any and all Encumbrances, except in the
case of any Intellectual Property licensed to DigiCities as disclosed in
Schedule 5.9. Complete and correct copies of all agreements whereby any rights
in any of the Intellectual Property have been granted or licensed to DigiCities
have been provided to the Purchaser. No royalty or other fee is required to be
paid by DigiCities to any other person in respect of the use of any of the
Intellectual Property except as provided in such agreements delivered to the
Purchaser. Except as indicated in Schedule 5.9, DigiCities has the exclusive
right to use all of the Intellectual Property and has not granted any license or
other rights to any other person in respect of the Intellectual Property.
Complete and correct copies of all agreements whereby any
17
rights in any of the Intellectual Property have been granted or licensed by
DigiCities to any other person have been provided to the Purchaser.
(c) Except as disclosed in Schedule 5.9, there are no
restrictions on the ability of DigiCities or any successor to or assignee from
DigiCities to use and exploit all rights in the Intellectual Property. All
statements contained in all applications for registration of the Intellectual
Property were true and correct as of the date of such applications. Each of the
trade marks and trade names included in the Intellectual Property is in use.
None of the rights of DigiCities in the Intellectual Property will be impaired
or affected in any way by the transactions contemplated by this agreement.
(d) The conduct of the Business and the use of the Intellectual
Property does not infringe, and DigiCities has not received any notice,
complaint, threat or claim alleging infringement of, any patent, trade ▇▇▇▇,
trade name, copyright, industrial design, trade secret or other Intellectual
Property or proprietary right of any other person.
Section 5.10. Absence of Undisclosed Liabilities. Except as set forth
in Schedule 5.10, there are no Liabilities of DigiCities other than the
following:
(a) Liabilities disclosed or provided for in the DigiCities
Current Balance Sheet, including the notes to the DigiCities Current Balance
Sheet; or
(b) Liabilities incurred in the ordinary course of business since
June 30, 1999, none of which has been adverse to the business of DigiCities, and
none of which is attributable to any period before the DigiCities Current
Balance Sheet.
Section 5.11. Absence of Specific Changes. Since the DigiCities Current
Balance Sheet there has not been:
(a) Any change in the business, personnel, results of operations,
assets, financial condition, or manner of conducting the business of DigiCities
other than changes in the ordinary course of business, none of which has had an
adverse effect on the business, results of operations, assets, financial
condition, or prospects of DigiCities;
(b) Any damage, destruction, or loss (whether or not covered by
insurance) adversely affecting any aspect of the business or operations of
DigiCities;
(c) Any direct or indirect redemption or other acquisition by
DigiCities of any of DigiCities' shares of capital stock of any class, or any
declaration, setting aside, or payment of any dividend or other distribution of
DigiCities' capital stock of any class;
(d) Any option to purchase, or other right to acquire stock of
any class of DigiCities granted by DigiCities to any Person (other than as
specified in Schedule 5.2 above);
18
(e) Any issuance of capital stock of any class by DigiCities;
(f) Any indebtedness incurred by DigiCities for borrowed money or
any commitment to borrow money entered into by DigiCities or any guaranty given
by DigiCities;
(g) Any amendment to DigiCities' Articles of Incorporation or
Bylaws or
(h) Any delayed or postponed payment of any accounts payable or
other Liabilities outside the ordinary course of business.
Section 5.12. Permit, Licenses, and Franchises. DigiCities has obtained
all necessary permits, licenses, franchises, and other authorizations and has
complied with all laws applicable to the conduct of their business in the manner
and in the areas in which business is presently being conducted; and all such
permits, licenses, franchises, and authorizations are valid and in full force
and effect. DigiCities has not engaged in any activity that would cause
revocation or suspension of any such permits, licenses, franchises, or
authorizations; no action or proceeding contemplating the revocation or
suspension of any of them is pending or threatened; and no approvals or
authorizations will be required after the consummation of the Merger to permit
DigiCities to continue its business as presently conducted.
Section 5.13. Judgments, Decrees, or Orders Restraining Business.
DigiCities is not a party to or subject to any judgment, decree, or Order
entered in any suit or proceeding brought by any governmental agency or by any
other Person, enjoining DigiCities with respect to any business practice, the
acquisition of any property, or the conduct of business in any area.
Section 5.14. Environmental Compliance; Hazardous Materials. DigiCities
has complied in all material respects with, and have not been cited for any
violation of, federal, state, and local environmental protection laws and
regulations; and no material capital expenditures will be required for
compliance with any federal, state, or local laws or regulations now in force
relating to the protection of the environment. As used in this paragraph,
"Hazardous Material" means any hazardous or toxic substance, material, or waste
that is regulated by any federal authority or by any state or local authority
where the substance, material, or waste is located. There are no underground
storage tanks located on the real property described in Schedule 5.8 in which
any Hazardous Material has been or is being stored, nor has there been any
spill, disposal, discharge, or release of any Hazardous Material into, upon, or
over that real property or into or upon ground or surface water on that real
property. There are no asbestos containing materials incorporated into the
buildings or interior improvements that are part of that real property or into
other assets of DigiCities, nor is there any electrical transformer, fluorescent
light fixture with ballasts, or other equipment containing PCBs on that real
property.
Section 5.15. No Violation of Other Instruments. The execution and
delivery of this Agreement do not, and the consummation of the Merger will not,
(i) violate any provision of DigiCities' Articles of Incorporation or Bylaws;
(ii) violate any provision of, result in the acceleration
19
of any obligation under, or result in the imposition of any lien or encumbrance
on any asset of DigiCities pursuant to the terms of any mortgage, note, lien,
lease, franchise, license, permit, agreement, instrument, order, arbitration
award, judgment, or decree; (iii) result in the termination of any license,
franchise, lease, or permit to which DigiCities is a party or by which
DigiCities is bound; or (iv) violate or conflict with any other restriction of
any kind or character to which DigiCities is subject. DigiCities' Board of
Directors will take all actions required by law, or by DigiCities' Articles of
Incorporation or Bylaws, or otherwise required or necessary to authorize the
execution and delivery of this Agreement and to authorize the merger of
DigiCities with and into AmeriCom pursuant to this Agreement.
Section 5.16. Contracts.
(a) Schedule 5.16 sets forth all DigiCities Contracts which have
been entered into in the ordinary course of DigiCities' business on commercially
reasonable terms, are valid and enforceable in all material respects in
accordance with their terms, are in full force and effect, and will continue to
be valid and enforceable and in full force and effect on identical terms
following the Effective Time. Except as set forth in Schedule 5.16, no
DigiCities Contract is likely to result in a loss to DigiCities upon completion
of the performance, and all DigiCities Contracts can be fulfilled or performed
by the DigiCities in accordance with their respective terms without undue or
unusual expenditures of money or effort. All DigiCities Contracts are listed on
Schedule 5.16, and true, correct and complete copies of all DigiCities Contracts
have been delivered to AmeriCom.
(b) There are no existing material defaults, events of default or
events which, with the giving of notice or lapse of time, or both, would
constitute a material default by DigiCities under any DigiCities Contract. No
event has occurred which may hereafter give rise to any right of termination,
acceleration, damages or any other remedy under any DigiCities Contract.
(c) To DigiCities' knowledge, neither this Agreement, the Merger
nor the relationship between DigiCities and AmeriCom has caused or is likely to
cause the termination, redetermination, or renegotiation of any DigiCities
Contract except the Agreement between AmeriCom and DigiCities dated August 3,
1999 which will be terminated and superseded by this Agreement.
Section 5.17. Litigation. Except as set forth in Schedule 5.17, no
Action is pending or, to the knowledge of DigiCities, threatened against, by or
affecting DigiCities.
Section 5.18. Taxes. Except as set forth in Schedule 5.18, DigiCities
has duly and timely filed all federal, state, municipal, local and foreign, if
any, tax returns and reports (including returns for estimated tax), and all
reports and returns of all other Governments having jurisdiction (collectively,
"Returns") with respect to all Taxes; all such Returns and reports show the
correct and proper amount due; and the Taxes shown on all Returns and reports
and all tax assessments received by DigiCities has been paid to the extent that
such Taxes or estimates are due. DigiCities has previously provided to AmeriCom
true, correct and complete copies of all Returns filed with respect
20
to the two (2) tax years preceding the date hereof. Except as set forth in
Schedule 5.18, all Taxes imposed on DigiCities by any Government (including all
deposits in connection therewith required by applicable Law, and all interest
and penalties thereon) which have become due and payable by DigiCities for all
periods through the date hereof have been paid in full, and adequate reserves
for all other Taxes, whether or not due and payable, and whether or not
disputed, have been set up on the books of DigiCities, and such reserves will be
adequate to pay all Taxes of DigiCities for all periods through the Closing.
There is not now any proposed assessment against DigiCities of additional Taxes
of any kind. DigiCities is not a party to any tax sharing or tax allocation
agreement, understanding, arrangement or commitment. There is no dispute or
Action concerning any Tax Liability of the DigiCities raised by a Government in
writing.
Section 5.19. Employee Benefit Matters. DigiCities (i) has not
established or contributed to any pension, profit-sharing, option, other
incentive plan, or any other type of employee benefit plan, (ii) has not
maintain or maintained, is or was a party to, and otherwise participates and has
participated in, on its own behalf or on behalf of any former employees, any
pension, profit-sharing, option, other incentive plan, or any other type of
employee benefit plan, or (iii) has no obligation to, or customary arrangement
with, former employees, if any, for bonuses, incentive compensation, vacations,
severance pay, sick pay, sick leave, insurance, service award, relocation,
disability, tuition refund, or other benefits, whether oral or written.
Section 5.20. Reporting Requirements. The DigiCities Common Stock has
not been registered under Section 12 of the Exchange Act and DigiCities is not
subject to the periodic reporting requirements of Section 15(d) of the Exchange
Act.
Section 5.21. Records The stock ledgers and stock transfer books and the
minutes records of DigiCities relating to all issuances and transfers of stock
by DigiCities, and all proceedings of the stockholders, the Board of Directors,
and the committees hereof of DigiCities since its incorporation made available
to AmeriCom are accurate stock ledgers and stock transfer books (as provided by
the transfer agent) and minute book records of DigiCities or exact copies
thereof. The corporate minute books of DigiCities are complete and each of the
minutes contained therein accurately reflect the actions that were taken at the
duly called and held meeting or by consent without a meeting. All actions by
DigiCities which required director or stockholder approval are reflected in the
corporate minute books of DigiCities. DigiCities is not in violation or breach
of, or in default with respect to, any terms of its respective certificates of
incorporation (or other charter documents) or bylaws.
Section 5.22. Labor Disputes. No work stoppage or other labor dispute
with respect to DigiCities is pending or threatened, and no application for
certification of a collective bargaining agent is pending or threatened.
Section 5.23. Insurance. During each of the past two (2) fiscal years,
DigiCities has been adequately insured by financially sound and reputable
insurers with respect to risks normally insured against and in amounts normally
carried by companies similarly situated; all such policies are in full
21
force and effect; all premiums due on such policies have been fully paid; and no
notice of cancellation or termination has been received with respect to any
policy.
Section 5.24. Shareholder Relations. DigiCities is not aware of any
actions or threatened action by any shareholder(s) against DigiCities or any
officers or directors thereof. DigiCities believes its shareholder relations are
good.
Section 5.25. Disclosure. No representation or warranty by DigiCities in
this Agreement and no statement by DigiCities, by any executive officer or other
person or contained in any document, certificate, or other writing furnished by
or on behalf of DigiCities to AmeriCom to in connection with this transaction,
contains or will contain any untrue statement of material fact, or omits or will
omit to state any material fact necessary to make it not misleading or to fully
provide the information required to be provided in the document, certificate, or
other writing.
ARTICLE VI.
COVENANTS
Section 6.1 Covenants of DigiCities.
DigiCities hereby covenants to AmeriCom as follows:
(a) Until the Effective Time, DigiCities will immediately advise
AmeriCom in a detailed written notice of any fact or occurrence of any pending
or threatened occurrence of which DigiCities obtains knowledge and which (if
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement or
which, if existing and known at any time prior to or at the Effective Time,
would make the performance by any party of a covenant contained in this
Agreement impossible or make such performance materially more difficult than in
the absence of such fact or occurrence.
(b) Before DigiCities releases any information concerning this
Agreement, the Merger, or any of the other transactions contemplated by this
Agreement which is intended for, or may result in, public dissemination thereof,
DigiCities shall notify AmeriCom, shall furnish drafts of all documents or
proposed oral statements to AmeriCom for comment, and shall not release any such
information without the consent of AmeriCom, which consent shall not be
unseasonably withheld. Nothing contained herein shall prevent DigiCities from
releasing any information if required to do so by law.
(c) Until the Effective Time, no amendment will be made in the
Articles of Incorporation or Bylaws of DigiCities.
(d) Until the Effective Time, no share of capital stock of
DigiCities, option or warrant for any such share, right to subscribe for or
purchase any such share, or security convertible
22
into or exchangeable for any such share shall be issued or sold by DigiCities
except with notice to and the consent of AmeriCom.
(e) Until the Effective Time, no dividend or liquidating or other
distribution or stock split shall be authorized, declared paid, or effected by
DigiCities in respect of the outstanding shares of DigiCities Common Stock.
Until the Effective Time, no direct or indirect redemption, purchase, or other
acquisition shall be made by DigiCities of shares of DigiCities Common Stock.
(f) Until the Effective Time, DigiCities shall not borrow money
or otherwise incur any indebtedness, except in the ordinary course of business
or with notice to and consent of AmeriCom.
(g) Until the Closing Date, DigiCities will afford the officers,
directors, employees, counsel, agents, investment bankers, accountants, and
other representatives of AmeriCom free and full access to the properties, books,
and records of DigiCities, will permit them to make extracts from and copies of
such books and records, and will from time to time furnish AmeriCom with such
additional financial and operating data and other information as to the
financial condition, results of operations, businesses, properties, assets,
liabilities, or future prospects of DigiCities as AmeriCom from time to time may
request. Until the Closing Date, DigiCities will cause the independent certified
public accountants of DigiCities to make available to AmeriCom and its
independent certified public accountants the work papers relating to the
DigiCities financial statements prepared by them.
(h) Until the Effective Time, DigiCities will conduct its affairs
so that at the Effective Time, no representation or warranty of DigiCities will
be inaccurate, no covenant or agreement of DigiCities will be breached, and no
condition in this Agreement will remain unfulfilled by reason of the actions or
omissions of DigiCities. Until the Effective Time, DigiCities will conduct its
affairs in all respects only in the ordinary course of business and will use its
best efforts to preserve the business operations of DigiCities intact, to keep
available services of its present personnel, to preserve in full force and
effect the contracts, agreements instruments, leases, licenses, arrangements,
and understandings of DigiCities and to preserve the good will of its suppliers,
customers, and others having business relations with it.
(i) DigiCities shall not make any agreement or reach any
understanding not approved by AmeriCom as a condition for obtaining any consent,
authorization, approval, order, license, certificate, or permit required for the
consummation of the transactions contemplated by this Agreement.
(j) Prior to the Closing Date, DigiCities shall assist AmeriCom
in the timely preparation and filing of all documents necessary to be filed with
the California Secretary of State. DigiCities will comply with any applicable
transfer tax statutes that require any such filing before the Effective Time.
23
(k) DigiCities agrees to indemnify and hold harmless AmeriCom's
officers, directors, employees, agents, and counsel, in each case past, present,
or as they may exist at any time after the date of this Agreement, and each
person, if any, who controls, controlled, or will control AmeriCom within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, and, if the Merger is abandoned or terminated pursuant to Article VIII or
otherwise except solely as a result of a breach of this Agreement by AmeriCom
(the "AmeriCom Indemnitees"), against any and all losses, liabilities, claims,
damages, and expenses whatsoever (which shall include, for all purposes of this
Section 6.1(k), but not be limited to, counsel fees and any and all expenses
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation, in each case whether or
not involving a third party) as and when incurred arising out of, based upon, or
in connection with (i) any untrue statement or alleged untrue statement of a
material fact contained in any application or other document or communication
executed by, or on behalf of, DigiCities filed with any governmental authority
in connection with the Merger; or any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, provided in each case that such untrue statement,
alleged untrue statement, omission, or alleged omission relates to information
furnished by or on behalf of, or pertaining to, DigiCities, or any DigiCities
security holder, and (ii) any breach of any representation, warranty, covenant,
or agreement of DigiCities contained in this Agreement. The foregoing agreement
to indemnify shall be in addition to any liability DigiCities may otherwise
have, including liabilities arising under this Agreement.
Section 6.2. Covenants of AmeriCom.
(a) Until the Effective Time, AmeriCom will comply with all
disclosure requirements of Sections 13, 14 and 16 of the Exchange Act.
(b) Before AmeriCom or any AmeriCom Subsidiary releases any
information concerning this Agreement, the Merger, or any of the other
transactions contemplated by this Agreement which is intended for, or may result
in, public dissemination thereof, AmeriCom and the AmeriCom Subsidiaries shall
notify DigiCities, shall furnish drafts of all documents or proposed oral
statements to DigiCities for comment, and shall not release any such information
without the consent of DigiCities, which consent shall not be unreasonably
withheld. Nothing contained herein shall prevent AmeriCom from releasing any
information if required to do so by law, or pursuant to Section 6.2(a).
(c) Until the Effective Time, no amendment will be made in the
Certificate of Incorporation or Bylaws of AmeriCom.
(d) Until the Effective Time, no dividend or liquidating or other
distribution or stock split shall be authorized, declared, paid, or effected by
AmeriCom in respect of the outstanding shares of AmeriCom Common Stock. Until
the Effective Time, no direct or indirect redemption,
24
purchase, or other acquisition shall be made by AmeriCom or any Subsidiary of
shares of AmeriCom Common Stock.
(e) Until the Closing Date, AmeriCom will afford the officers,
directors, employees, counsel, agents, investment bankers, accountants, and
other representatives of DigiCities and lenders, investors, and prospective
lenders and investors free and full access to the plants, properties, books, and
records of AmeriCom and the Subsidiaries, and will permit them to make extracts
from and copies of such books and records.
(f) Until the Effective Time, AmeriCom and AmeriCom Subsidiaries
will conduct their affairs so that at the Effective Time no representation or
warranty of AmeriCom will be inaccurate, no covenant or agreement of AmeriCom
will be breached, and no condition in this Agreement will remain unfulfilled by
reason of the actions or omissions of AmeriCom or any AmeriCom Subsidiary.
(g) AmeriCom agrees to indemnify and hold harmless DigiCities'
officers, directors, employees, agents, and counsel, in each case past or
present, and each person, if any, who controls, controlled, or will control
DigiCities within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act and, if the Merger is abandoned or terminated pursuant
to Article IX or otherwise solely as a result of a breach of this Agreement by
AmeriCom (the "DigiCities Indemnitees"), against any and all losses,
liabilities, claims, damages and expenses whatsoever (which shall include, for
all purposes of this Section 6.2(g), but not be limited to, counsel fees and any
and all expenses whatsoever incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation, in each case
whether or not involving a third party) as and when incurred arising out of,
based upon, or in connection with (i) any untrue statement or alleged untrue
statement of a material fact contained in any application or other document or
communication decided by or on behalf of AmeriCom filed with any governmental
authority in connection with the Merger; or any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided in each case that such untrue
statement, alleged untrue statement, omission, or alleged omission relates to
information furnished by or on behalf of, or pertaining to, AmeriCom, any
AmeriCom Subsidiary, or any AmeriCom security holder, or (ii) any breach of any
representation, warranty, covenant, or agreement of AmeriCom contained in this
Agreement. The foregoing agreement to indemnify shall be in addition to any
liability AmeriCom may otherwise have, including liabilities arising under this
Agreement.
(h) Prior to the Effective Time, neither AmeriCom nor any
AmeriCom Subsidiary shall recapitalize or reclassify its respective outstanding
capital stock or effect any stock dividend, stock split, or reverse stock split.
(i) Prior to the Closing Date, AmeriCom shall prepare and file
with the California Department of Corporations ("DOC") applications for a
Fairness Hearing and reorganization permit.
25
AmeriCom shall use its best efforts to obtain a Fairness Order and limited
offering qualification for the Merger.
Section 6.3. Post-Closing Covenants.
(a) After the Effective Time, AmeriCom will use its best,
commercially reasonable efforts to remove ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as a guarantor of
DigiCities debts and, if required, substitute AmeriCom as a substitute Guarantor
to replace ▇▇. ▇▇▇▇▇▇▇▇.
(b) After the Effective Time, AmeriCom will appoint ▇▇▇▇▇ ▇▇▇▇▇
as President of the new DigiCities Division of AmeriCom, to serve in such
capacity for so long as he faithfully and competently carries out the duties of
such position.
(c) After the Effective Time, AmeriCom intends to seek listing of
its common stock on the NASD's OTC Bulletin Board.
ARTICLE VII.
CONDITIONS TO THE MERGER
Section 7.1. Conditions Precedent to AmeriCom's Obligation to Close.
AmeriCom's obligation to consummate the Merger is subject to the satisfaction,
on or before the Closing Date, of the following conditions:
(a) Each of the acts and undertakings of DigiCities to be
performed on or before the Closing Date pursuant to the terms of this Agreement
has been duly performed.
(b) DigiCities has furnished AmeriCom with a copy, certified by
DigiCities' secretary, of (i) a resolution or resolutions duly adopted by
DigiCities' Board of Directors authorizing and approving this Agreement and
directing that it be submitted to a vote of DigiCities' shareholders, and (ii) a
resolution or resolutions adopting this Agreement, duly approved by the holders
of at least a majority of the total number of outstanding shares of Common Stock
of DigiCities.
(c) All the representations and warranties of DigiCities
contained in this Agreement and in the schedules required pursuant to Article IV
are true in every respect on the Closing Date, with the same effect as though
such representations and warranties had been made on that date; and AmeriCom has
received at the Closing a certificate, dated the Closing Date and executed by
the President or a Vice President of DigiCities, containing a verification to
that effect.
(d) DigiCities has furnished AmeriCom with a favorable opinion of
DigiCities' counsel dated the Closing Date, substantially in the form attached
as Appendix A. In addition to matters specified in the form, the opinion must
include such other matters incident to the contemplated transactions as are
reasonably requested by AmeriCom or its counsel.
26
(e) AmeriCom has received, or has satisfied itself that it will
receive, in form satisfactory to it, all necessary approvals of the transactions
contemplated by this Agreement from authorities having any jurisdiction over the
business or transactions of DigiCities so that DigiCities may continue to carry
on their business as presently conducted after consummation of the Merger; and
no such approval and no license or permit granted to DigiCities has been
withdrawn or suspended.
(f) All consents of other parties to the mortgages, notes,
leases, franchises, agreements, licenses, and permits of DigiCities necessary to
permit consummation of the Merger have been obtained.
(g) DigiCities has delivered the schedules as required in Article
V, updated through the Closing Date.
(h) In its sole and absolute discretion, AmeriCom is satisfied
with any matter reflected, listed, or disclosed in the updated schedules that
was not reflected, listed, or disclosed in the original schedules.
(i) DigiCities has delivered to AmeriCom an executed non-compete
agreement from each of the individuals as set forth in Schedule 7.1(i), in
substantially the form of Exhibit A attached to the Agreement.
Section 7.2. Conditions Precedent to DigiCities' Obligation to Close.
DigiCities' obligation to consummate the Merger is subject to the satisfaction,
on or before the Closing Date, of the following conditions:
(a) Each of the acts and undertakings of AmeriCom to be performed
on or before the Closing Date pursuant to the terms of this Agreement has been
duly performed.
(b) AmeriCom has furnished DigiCities with a copy, certified by
AmeriCom's secretary, of a resolution or resolutions duly adopted by AmeriCom's
Board of Directors authorizing and approving this Agreement and directing that
it be submitted to a vote of AmeriCom's shareholders, and (ii) a resolution or
resolutions adopting this Agreement, duly approved by the holders of at least a
majority of the total number of outstanding shares of Common Stock of AmeriCom.
(c) All the representations and warranties of AmeriCom contained
in this Agreement and in the schedules required pursuant to Article IV are true
in every respect on the Closing Date, with the same effect as though such
representations and warranties had been made on that date; and DigiCities has
received at the Closing a certificate, dated the Closing Date and executed by
the President or a Vice President of AmeriCom, containing a verification to that
effect.
27
(d) DigiCities has received, or has satisfied itself that it will
receive, in form satisfactory to it, all necessary approvals of the transactions
contemplated by this Agreement from authorities having jurisdiction over the
business or transactions of AmeriCom or any AmeriCom Subsidiary so that AmeriCom
and AmeriCom Subsidiaries may continue to carry on their business as presently
conducted after consummation of the Merger; and no such approval and no license
or permit granted to AmeriCom or any AmeriCom subsidiary has been withdrawn or
suspended.
(e) All consents of other parties to the mortgages, notes,
leases, franchises, agreements, licenses, and permits of AmeriCom or any
AmeriCom Subsidiary necessary to permit consummation of the Merger have been
obtained.
(f) AmeriCom has delivered the schedules as required in Article
IV, updated through the Closing Date.
Section 7.3. Additional Conditions to the Obligations of DigiCities.
(a) The obligations of DigiCities to consummate the Merger is
subject to the satisfaction of the following additional conditions: (i) AmeriCom
shall receive a limited offering permit from the State of California, Department
of Corporations pursuant to Section 25120 of the California Corporations Code
and a Fairness Order pursuant to Section 25142 of the California Corporations
Code; and (ii) the availability of Section 3(a)(10) exemption under the
Securities Act of 1933, as amended.
(b) Upon the Closing Date, AmeriCom will pay those certain
outstanding payables identified in Schedule 7.3.
(c) AmeriCom will enter into an Indemnification Agreement with
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as of the Closing Date whereby AmeriCom will indemnify ▇▇.
▇▇▇▇▇▇▇▇ for any claims made against him as a Guarantor of DigiCities
liabilities up to an aggregate amount of $85,000.
ARTICLE VIII.
SURVIVAL OF WARRANTIES
The representations and warranties included or provided for in this
Agreement or in any schedule or certificate or other document delivered pursuant
to this Agreement will survive the Closing Date for a period of one (1) year. No
claim may be made under this Article VIII unless written notice of the claim is
given within that one (1) year period.
ARTICLE IX.
TERMINATION OF AGREEMENT
Section 9.1. Termination by AmeriCom. As soon as practicable, and in
any event within fifteen (15) days after the receipt of (i) the last schedule
required to be delivered to AmeriCom by
28
DigiCities pursuant to Article V and (ii) any supporting documentation requested
by AmeriCom, AmeriCom will give DigiCities notice if AmeriCom has decided that
it wishes to terminate this Agreement based on any information contained in any
of the schedules or obtained during the course of its investigation pursuant to
Section 6.1. The notice will specify the information contained in the schedules
or obtained during the investigation on which AmeriCom's decision to terminate
is based. DigiCities will have ten (10) days after the receipt of the notice to
review that information with AmeriCom. If AmeriCom does not withdraw its notice
within this five (5) day period, all further obligations of AmeriCom and
DigiCities under this Agreement will terminate without further liability of
AmeriCom to DigiCities or of DigiCities to AmeriCom, except their respective
obligations as provided in Section 9.3. If AmeriCom does not advise DigiCities
within the fifteen (15) day period specified in the first sentence above that it
wishes to terminate this Agreement, AmeriCom will be considered to be satisfied
with the information relating to DigiCities contained in the schedules or
obtained during the course of its investigation, subject to AmeriCom's rights
concerning the continued accuracy of DigiCities' representations and warranties
as required in Section 6.1.
Section 9.2. Termination. This Agreement and the transactions
contemplated under this Agreement may be terminated at any time before the
Closing Date, either before or after the approval of DigiCities' shareholders is
obtained:
(a) By mutual consent of AmeriCom and DigiCities;
(b) By AmeriCom if there has been a material misrepresentation or
a material breach of warranty in DigiCities' representations and warranties set
forth in this Agreement or in any schedule or certificate delivered pursuant to
this Agreement;
(c) By DigiCities if there has been a material misrepresentation
or a material breach of warranty in AmeriCom's representations and warranties
set forth in this Agreement or in any schedule or certificate delivered pursuant
to this Agreement;
(d) By AmeriCom or DigiCities if either party will have
determined in its sole discretion that the transactions contemplated by this
Agreement have become inadvisable or impracticable by reason of the institution
or threat of institution, by governmental authorities (local, state, or federal)
or by any other Person, of material litigation or proceedings against either or
both of the parties, it being understood and agreed that a written request by
governmental authorities for information with respect to the proposed
transactions, which could be used in connection with such litigation or
proceedings, may be considered by AmeriCom or DigiCities to be a threat of
material litigation or proceedings, whether such request is received before or
after the date of this Agreement;
(e) By AmeriCom if it has determined that the business, assets,
or financial condition of DigiCities taken as a whole, have been materially and
adversely affected, whether by reason of changes, developments, or operations in
the ordinary course of business or otherwise;
29
(f) By AmeriCom if it has determined that the business, assets,
or financial condition of DigiCities taken as a whole, have been materially and
adversely affected, whether by reason of changes, developments, or operations in
the ordinary course of business or otherwise;
(g) By DigiCities if it has determined that the business, assets,
or financial condition of AmeriCom taken as a whole, have been materially and
adversely affected, whether by reason of changes, developments, or operations in
the ordinary course of business or otherwise;
(h) By AmeriCom if any condition set forth in Section 7.1 is
not satisfied prior to the Closing Date;
(i) By DigiCities if any condition set forth in Sections 7.2 or
7.3 is not satisfied prior to the Closing Date; and
(j) By DigiCities or by AmeriCom if the Closing Date referred to
in Section 1.2 has not occurred by October 31, 1999.
Section 9.3. Right to Proceed. In the event that this Agreement is
terminated pursuant to Article IX, or because of the failure to satisfy any of
the conditions specified in Article VII, all further obligations of AmeriCom and
of DigiCities under this Agreement will terminate without further liability of
AmeriCom to DigiCities or DigiCities to AmeriCom, except for the obligations of
both parties under Sections 9.3, 9.4, 10.5, 10.2 and 11.5; provided, however,
despite anything in this Agreement to the contrary, that if DigiCities fails to
satisfy any of the conditions specified in Article VI, AmeriCom will nonetheless
have the right, in its discretion, to proceed with the transactions contemplated
by this Agreement.
Section 9.4. Return of Documents. In the event of the termination of
this Agreement for any reason, each party will return to the other party all
documents, work papers, and other materials (including copies) relating to the
transactions contemplated in this Agreement, whether obtained before or after
execution of this Agreement. Each party will not use any information so obtained
for any purpose, and will take all practicable steps to have such information
kept confidential.
ARTICLE X.
ADDITIONAL AGREEMENTS
Section 10.1. Expenses. Except as otherwise provided herein, all
expenses incurred by AmeriCom in connection with the negotiations among the
parties, and the authorization, preparation, execution and performance of this
Agreement and the transactions contemplated hereby shall be paid by AmeriCom.
Except as otherwise provided herein, all expenses incurred by DigiCities in
connection with the negotiations among the parties, and the authorization,
preparation, execution and performance of this Agreement and the transactions
contemplated hereby shall be paid by DigiCities. AmeriCom will pay up to $10,000
of all legal fees incurred by DigiCities in consummating this Merger
transaction.
30
Section 10.2. Publicity. All press releases and other public
announcements respecting the subject matter hereof shall be made in compliance
with Sections 6.1(b) and 6.2(b).
Section 10.3. Approval of DigiCities Shareholders. DigiCities will take
all necessary steps to obtain approval of the merger transaction by a majority
of the DigiCities shareholders within ten (10) days from the date the Department
of Corporation approves the mailing of the Fairness Hearing Notice, which number
of days includes adequate time for the preparation and mailing of information to
shareholders. In all material sent to or other communications with the
shareholders on this subject, DigiCities's Board of Directors will recommend to
the shareholders that they adopt the Plan of Merger and approve the terms of
this Agreement. DigiCities shareholders will also be advised of their appraisal
rights, should they object to the merger transaction.
Section 10.4. Approval of AmeriCom Shareholders. AmeriCom will take all
necessary steps to obtain approval of the merger transaction by a majority of
the AmeriCom shareholders within ten (10) days from the date the Department of
Corporation approves the mailing of the Fairness Hearing Notice, which number of
days includes adequate time for the preparation and mailing of information to
shareholders. In all material sent to or other communications with the
shareholders on this subject, AmeriCom's Board of Directors will recommend to
the shareholders that they adopt the Plan of Merger and approve the terms of
this Agreement. AmeriCom shareholders will also be advised of their appraisal
rights, should they object to the merger transaction.
ARTICLE XI.
MISCELLANEOUS
Section 11.1. Governing Law; Counterparts. This Agreement (a) will be
construed under and in accordance with the laws of the State of California; (b)
will be binding on and will inure to the benefit of the parties to the Agreement
and their respective successors and assigns; (c) may be executed in one or more
counterparts, all of which will be considered one and the same Agreement, and
will become effective when one (1) or more counterparts will have been signed by
each of the parties and delivered to AmeriCom and DigiCities; and (d) embodies
the entire Agreement and understanding, superseding all prior agreements and
understandings between DigiCities and AmeriCom relating to the subject matter of
this Agreement.
Section 11.2. Notices. All notices or other communications required
hereunder shall be in writing and shall be sufficient in all respects and shall
be deemed delivered after five (5) days if sent via registered or certified
mail, postage prepaid; the next day if sent by overnight courier service; or one
(1) business day after transmission, if sent by facsimile to the following:
If to AmeriCom: ▇▇▇▇▇▇ ▇▇▇▇▇, President
AmeriCom USA, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
31
With A Copy To: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ Eng ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to DigiCities: ▇▇▇▇▇ ▇▇▇▇▇, President
DigiCities, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy To: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Each party shall promptly notify the other party in writing of any
change of address.
Section 11.3. Waiver. Any waiver by any party of a breach of any term of
this Agreement shall not operate as, or be construed to be, a waiver of any
other breach of that term or of any breach of any other term of this Agreement.
The failure of a party to insist upon strict adherence to any term of this
Agreement on one or more occasions will not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to that term
or any other term of this Agreement. Any waiver must be in writing and be
authorized by a resolution of the Board of Directors or by a duly authorized
officer of the waiving party.
Section 11.4. Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of DigiCities and AmeriCom and their
respective successors and assigns; provided, however, that no party hereto shall
have the right to assign its rights and obligations hereunder without the prior
written consent of the other parties hereto.
Section 11.5. No Third Party Beneficiaries. This Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this Agreement, except as provided in Section 11.4.
Section 11.6. Amendments. This Agreement may be amended only by the
written agreement of all parties; provided, however, that if amended after the
meeting of the shareholders of DigiCities,
32
the terms regarding the conversion contained in Section 3.1(a) will not be
amended without the further approval of DigiCities' shareholders as required by
law.
[remainder of page intentionally left blank -- signature page follows]
33
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its duly authorized officers, all as of the day and
year first above written.
AmeriCom USA, Inc.,
A Delaware Corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, President
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Secretary
DigiCities, Inc.
A California Corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇▇▇▇▇, President
By: /s/ ▇▇▇▇ ▇▇▇▇
-------------------------
▇▇▇▇ ▇▇▇▇, Secretary
