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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997.
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to _____________.
Commission file number 0-7762.
AUDIO COMMUNICATIONS NETWORK, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
FLORIDA 59-0690530
- ------------------------------------------- --------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation of organization) Identification Number)
1000 Legion Place, Suite 1515
Orlando, Florida 32801
- ------------------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (407) 649-8877.
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
As of August 15, 1997, 4,453,191 Common Shares were outstanding.
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
AUDIO COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES
UNAUDITED STATEMENT OF CONSOLIDTED OPERATIONS
<TABLE>
<CAPTION>
SECOND QUARTER
------------------------------
FOR THE 3 MONTHS ENDED
------------------------------
PART I - FINANCIAL INFORMATION 6/30/97 6/30/96
----------- ------------
<S> <C> <C>
Music Sales .................... $ 2,483,173 $ 1,653,741
Installations .................. 534,420 371,270
Equipment Sales ................ 453,835 502,858
Miscellaneous................... 44,769 77,157
----------- -----------
TOTAL REVENUE................... 3,516,197 2,605,026
COST AND EXPENSES
Cost of Sales .................. 1,070,510 760,430
Selling, General and
Administrative Expenses ........ 1,257,591 969,495
Depreciation and Amortization .. 797,421 596,567
----------- -----------
TOTAL .......................... 3,125,522 2,326,492
----------- -----------
Income before Other Income
(Expense) and Income Taxes...... 390,675 278,534
OTHER INCOME (EXPENSE):
Interest Income ................ 1,672 -0-
Interest Expense................ (574,317) (470,925)
Other .......................... 2,410 -0-
----------- -----------
OTHER NET ...................... (570,235) (470,925)
----------- -----------
Loss before Income Taxes........ (179,560) (192,391)
Provision for Income Taxes ..... 4,600 -0-
----------- -----------
Net Loss........................ $ (184,160) $ (192,391)
=========== ===========
Net Loss Per Common Share
(Proforma)..................... $ (.04) $ (.04)
=========== ===========
Weighted Average Number of
Common Shares................... 4,516,080 4,516,080
=========== ===========
Dividends Per Share............. -0- -0-
=========== ===========
</TABLE>
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AUDIO COMMUNICATIONS NETWORK, INC. AND SUBSIDIARIES
UNAUDITED STATEMENT OF CONSOLIDATED OPERATIONS
<TABLE>
<CAPTION>
FIRST SIX MONTHS
------------------------------
FOR THE 6 MONTHS ENDED
------------------------------
6/30/97 6/30/96
------------ -----------
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Music Sales .................... $ 4,389,025 $ 3,270,024
Installations .................. 846,153 745,121
Equipment Sales ................ 843,232 1,061,613
Miscellaneous................... 100,213 141,167
------------ -----------
TOTAL REVENUE................... 6,178,623 5,217,925
COST AND EXPENSES
Cost of Sales .................. 1,783,996 1,506,668
Selling, General and
Administrative Expenses ........ 2,158,405 1,962,833
Depreciation and Amortization .. 1,428,770 1,193,134
------------ -----------
TOTAL .......................... 5,371,171 4,662,635
------------ -----------
Income before Other Income
(Expense) and Income Taxes...... 807,452 555,290
OTHER INCOME (EXPENSE):
Interest Income ................ 1,672 -0-
Interest Expense................ (1,054,890) (945,712)
Other .......................... 2,410 -0-
------------ -----------
OTHER NET ...................... (1,050,808) (945,712)
------------ -----------
Loss before Income Taxes........ (243,356) (390,422)
Provision for Income Taxes ..... 4,600 -0-
------------ -----------
Net Loss........................ $ (247,956) $ (390,422)
============ ===========
Net Loss Per Common Share
(Proforma) $ (.06) $ (.09)
============ ===========
Weighted Average Number of
Common Shares................... 4,516,080 4,516,080
============ ===========
Dividends Per Share -0- -0-
============ ===========
</TABLE>
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AUDIO COMMUNICATIONS NETWORK, INC, & SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
6/30/97 12/31/96
--------------- ------------------
(Unaudited) (Condensed from
Audited Financial
Stmts of Suncom
Communications,LLC)
<S> <C> <C>
PART I - FINANCIAL INFORMATION
ASSETS
Current Assets:
Cash & Cash Equivalents........... $ 1,635,732 $ 132,565
Accounts Receivable .............. 1,230,165 839,442
Inventories....................... 950,930 443,969
Prepaid Expenses & Other.......... 261,410 124,372
------------- ------------
Total - Current Assets............ 4,078,237 1,540,348
------------- ------------
Property - Net.................... 11,896,458 5,908,432
------------- ------------
Subscriber Contracts & Other
Intangibles....................... 16,372,920 14,921,299
Goodwill.......................... 12,469,230 653,666
Deposits & Other.................. 17,761 80,349
------------- ------------
Total Other Assets................ 28,859,911 15,655,314
------------- ------------
TOTAL............................. $ 44,834,606 $ 23,104,094
============= ============
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Current - Long Term Debt......... $ 50,363 $ 1,400,000
Current Portion of Obligation
Under Capital Leases ............ 13,278 68,420
Accounts Payable................. 3,039,710 1,482,758
Due A. J. Schell................. 414,475 -0-
Accrued Liabilities.............. 893,615 406,871
Deferred Revenue................. 224,784 -0-
------------- ------------
Total Current Liabilities........ 4,636,225 3,358,049
------------- ------------
Long - Term Debt................. 25,332,810 12,600,000
------------- ------------
Subordinate Debt................. 4,750,000 4,584,146
------------- ------------
Obligations Under Capital Leases. 32,168 13,719
------------- ------------
Due A. J. Schell................. 828,951 -0-
------------- ------------
Stockholders' Equity:
Common Stock, $.25 par value
8,000,000 shares, authorized,
4,453,191 outstanding as of
June 30, 1997..................... 1,113,298 -0-
Capital Contributed in Excess
of Par Value..................... 9,784,576 -0-
Members Invest. & Contrib. Capital -0- 3,943,646
Accumulated Deficit.............. (1,643,422) (1,395,466)
------------- ------------
Stockholders' Equity............. 9,254,452 2,548,180
------------- ------------
TOTAL............................ $ 44,834,606 $ 23,104,094
============= ============
</TABLE>
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AUDIO COMMUNICATIONS NETWORK, INC. & SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE 6 MONTHS ENDED JUNE 30TH
--------------------------------
1997 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss............................... $ (247,956) $ (390,422)
Adjustments to Reconcile Net Cash
Provided by Operating Activities
Depreciation and Amortization.......... 1,428,770 1,193,134
Amortization of Debt Discount.......... -0- 1,793
Change in Operating Assets and Liabilities
Increase in Accounts Receivable....... 222,580 (90,302)
Increase in Inventories............... (531,142) (550,873)
Increase in Prepaid Expenses.......... (105,556) 27,350
Decrease in Deferred Commission Expense -0- -0-
Decrease in Deposits.................. 62,588 (7,486)
Increase in Deferred Revenue.......... -0- -0-
Increase in Accounts Payable.......... 573,466 (144,847)
Increase in Accrued Expenses.......... 278,128 (164,873)
Other,Net............................. (28,422) (1,778)
------------- -------------
Net Cash Provided By Operating Activities 1,652,456 (128,304)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquistion of Certain Assets and
Liabilities of ACN.................... (2,130,889) -0-
Capital Expenditures................... (738,328) (560,804)
Change in Accumulated Depreciation..... -0- -0-
Acquisition of Intangible Assets -0-
and Goodwill.......................... -0- -0-
------------- -------------
Net Cash Used in Investing Activities.. (2,869,217) (560,804)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds From Issuance of Debt......... 26,493,426 -0-
Repayment of Long Term Debt............ (23,755,000) -0-
Principal Payments Under Capital
Lease Obligations..................... (18,498) (21,420)
Addition to Capital.................... -0- -0-
------------- -------------
Net Cash Provided by Financing Activities 2,719,928 (21,420)
------------- -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,503,167 (710,528)
------------- -------------
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD 132,565 800,256
------------- -------------
CASH & CASH EQUIVALENTS, END OF PERIOD $ 1,635,732 $ 89,728
============= =============
Cash Paid During the Period For Interest $ 1,137,826 $ 1,016,690
Supplemental Schedule of Noncash Investing
& Financing Activities:
Inventory leased to customers and
reclassified to property.............. $ 527,548 $ 433,623
</TABLE>
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AUDIO COMMUNICATIONS NETWORK, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations.
The accompanying unaudited interim consolidated financial statements and related
notes should be read in conjunction with the financial statements and related
notes included in the Company's 1996 Annual Report on Form 10-K. In the opinion
of management, all material adjustments, consisting of normal recurring
adjustments, considered necessary for a fair presentation have been included in
the accompanying unaudited interim consolidated financial statements. Operating
results for the six months ended June 30, 1997, are not necessarily indicative
of the results that may be expected for the year ending September 30, 1997.
NOTE 2 - ACQUISITION
On May 30, 1997, the Company completed a business combination with Suncom
Communications L.L.C. a Delaware limited liability company. Under the terms of
the agreement, the Company, through its wholly owned subsidiary, Suncom, Inc.,
acquired the assets and business of Suncom, in exchange for which the Company
issued 2.1 million Common Shares to Suncom, which represented approximately
47.5% of the Company's outstanding Common Shares.
Also on May 30, 1997, Suncom consummated an agreement with A. J. Schell
acquiring substantially all of his equity position in the Company. As a result,
Suncom is the owner of 2,697,986 Common Shares, representing approximately 60.7%
of the outstanding Common Shares of the Company resulting in a reverse
acquisition.
The transaction has been accounted for as a reverse acquisition therefore the
financial statements presented herein represent the historical results of Suncom
and the results of operation of Audio Communications Network, Inc. from the date
of acquisition.
Assuming the reverse acquisition had occurred on January 1, 1996 the Company's
(unaudited) net revenues, net income (loss) per share, and earnings (loss) per
share would have been approximately as follows:
<TABLE>
<CAPTION>
2nd. Quarter First 6 Months
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Revenue $5,269,441 $5,554,783 $10,351,201 $10,766,784
Net Income (Loss) $ (872,941) $ 103,039 $ (932,095) $ 56,455
Earnings (Loss)
Per Share $ (.19) $ .02 $ (.21) $ .01
</TABLE>
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AUDIO COMMUNICATIONS NETWORK & SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENT OF SHAREHOLDERS' EQUITY
Six Months Ending June 30, 1997
<TABLE>
<CAPTION>
Additional Contributed
Paid-in Capital Retained
Common Stock Amount Investments Capital Pf. Warrants Earnings
_____________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Balance 1/1/96 -0- -0- 3,750,000 -0- 193,646 (850,123)
Net Loss for the 12 mos.
ending 12/31/96 -0- -0- -0- -0- -0- (545,343)
--------- ------- ---------- --------- -------- ----------
Balance 12/31/96 -0- -0- 3,750,000 -0- 193,646 (1,395,466)
========= ======= ========== ========= ======== ==========
Balance 1/1/97 -0- -0- 3,750,000 193,646 (1,395,466)
Increase of Common
Stock on Reverse
Acquisition on 5/30/97
with ACNI & Suncom 2,100,000 525,000 (3,750,000) 4,565,662 (193,646) -0-
Common Shares Acquired
on Reverse Acquisition
from ACNI 2,353,191 588,298 -0- 5,218,914 -0- -0-
Net Loss for the Period
Ending 6/30/97 -0- -0- -0- -0- -0- (247,956)
--------- ------- ---------- --------- -------- ----------
Balance 6/30/97 4,453,191 1,113,298 -0- 9,784,576 -0- (1,643,422)
========= ======= ========== ========= ======== ==========
</TABLE>
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Item 2. Management's Discussion and Analysis or Plan of Operation.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS & RESULTS OF OPERATIONS
SUMMARY
The following table sets forth for the periods indicated, certain items
from the Company's Consolidated Statement of Operations expressed as a
percentage of operating revenues.
<TABLE>
<CAPTION>
RELATIONSHIP TO TOTAL REVENUES
-------------------------------------
FOR THE PERIOD ENDING JUNE 30TH
-------------------------------------
SECOND QUARTER FIRST SIX MONTHS
---------------- ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues from Operations 100.0% 100.0% 100.0% 100.0%
Operating Costs and Expenses (66.2) (66.4) (63.8) (66.5)
------ ------ ------ ------
Income from Operations before
Depreciation and Amortization 33.8 33.6 36.2 33.5
Depreciation and Amortization 22.7 (22.9) (23.1) (22.9)
------ ------ ------ ------
Income before Other Income (Expense),
and Income Taxes 11.1 10.7 13.1 10.6
Other Income (Expense) Net (16.2) (18.1) (17.0) (18.1)
------ ------ ------ ------
Income before Income Taxes (5.1) (7.4) (3.9) (7.5)
Provision for Income Taxes (0.1) 0.0 (0.1) 0.0
------ ------ ------ ------
Net Income (5.2) (7.4) (4.0) (7.5)
====== ====== ====== ======
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
On May 30, 1997, Audio Communications Network, Inc. acquired the assets of
Suncom Communications, L.L.C. ("Suncom acquisition") subject to the assumption
of $18.75 million of liabilities. In addition, the members of Suncom received
2,100,000 shares of Audio stock representing approximately 48% of the shares on
a fully diluted basis. In a separate transaction, the members of Suncom
purchased 597,698 shares of Audio Stock from Al Schell, President, CEO, and
Chairman of the Board. Suncom's franchise areas of operation include specified
areas in the states of North and South Carolina as well as Arizona. Suncom will
operate as a wholly owned subsidiary of Audio Communications Network, Inc.
The transaction has been accounted for as a reverse acquisition therefore the
financial statements presented herein represent the historical results of Suncom
and the results of operation of Audio Communications Network, Inc. from the date
of acquisition.
NET REVENUES:
Consolidated Net Revenues for the 2nd. Quarter of 1997 were $3,516,197
increasing over the comparable period of 1996 and the 1st. Quarter of 1997 by
$911,171 or 35% and $853,771 or 32% respectively. Ninety three percent of the
increase over '96 is attributable to the reverse acquisition of ACN and the
balance to the growth in the Suncom franchises. One hundred percent of the
increase over the 1st Quarter of 1997 is attributable to the reverse acquisition
of ACN.
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<PAGE>
Overall, the Company's first 6 months of 1997 revenues of $6,178,623 as compared
to the first 6 months of 1996 revenues of $5,217,925 increased $960,698. Eighty
eight percent of that increase is directly related to the reverse acquisition of
ACN with the remaining representing growth from the Suncom franchises.
COST AND EXPENSES:
Cost and Expenses for the 2nd. Quarter of 1997 were $2,328,101 increasing over
the comparable period of 1996 and the 1st. Quarter of 1997 by $598,176 or 35 %
and $713,801 or 44% respectively. Ninety four percent of the increase over '96
is attributable to the reverse acquisition of ACN and the balance to the
increase operating expenses of the Suncom franchises. Eighty five percent of the
increase over the 1st. Quarter of 1997 is attributable to the reverse
acquisition of ACN and the balance to the growth in the Suncom franchises.
Overall, the Company's first 6 months of 1997 Costs and Expenses of $3,942,401
as compared to the first 6 months of 1996 $3,469,501 increased $482,900. The
entire increase is directly related to the reverse acquisition of ACN.
DEPRECIATION AND AMORTIZATION:
The increase in Depreciation and Amortization in the 2nd. Quarter of 1997 and
the first 6 months of 1997 over like periods is due primarily to the assets
acquired in the reverse acquisition.
OTHER INCOME AND EXPENSE (NET):
The increase in Other Income and Expense (Net) in the 2nd Quarter of 1997 and
the first 6 months of 1997 over their like periods is due primarily to the
additional senior and subordinated debt resulting from the reverse acquisition.
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INCOME TAXES:
At June 30, 1997 the Company had operating loss carryforwards for federal tax
purchases of approximately $2,000,000. Such loss carryforwards expire in 2004
through 2006.
NET INCOME/LOSS:
Net Loss for the Company's 2nd. Quarter of 1997 was $184,160 decreased from a
loss for the comparable period of 1996 of $192,391 by $8,231 or 4%. The net loss
for the 6 month period of 1997 was $247,956 compared to a loss for the
comparable period in 1996 of $390,422, an improvement of $142,466 or 36%. These
improvements in operating results are primarily attributable to the reverse
acquisition of ACN.
LIQUIDITY AND CAPITAL RESOURCES:
Operating cash flows (computed as net income plus interest, taxes, depreciation
and amortization) for the first 6 months of 1997 have increased from $1,748,424
in 1996 to $2,236,222 in 1997 an increase of $487,798 or 28%.
On May 30, 1997, in conjunction with the Suncom transaction, the Company repaid
all its bank debt obligations to SunTrust Bank, Central Florida, N.A. as well as
$18.75 million of debt obligations of Suncom and entered into a $32 million
credit facility with PNC Bank with SunTrust and Lehman Brothers as participating
lenders in the facility. As of June 30, 1997 the Company had an outstanding loan
balance of $25.25 million and an unused credit facility of $6.75 million. The
credit facility is subject to various covenants including: (1) Debt Service
Coverage Ratio; (2) Debt to Cash Flow Ratio; and (3) Debt to Minimum Monthly
Recurring Billing Required.
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In addition at that time, the Company and Midwest Mezzanine Fund entered into a
$4,750,000 subordinated debt agreement. The agreement requires the Company to
pay quarterly interest at a rate of 12.27%. Audio Communications Network, Inc.
was in compliance with all covenants at June 30, 1997. All payments of interest
and principal on loans outstanding and payments on lease obligations have been
made on a timely basis.
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PART II
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.2 Amended and Restated Bylaws.
10.15 Employment Agreement dated May 30, 1997, with A.J. Schell.
10.16 Employment Agreement dated May 30, 1997, with Mitchell
Kleinhandler.
10.17 Employment Agreement dated May 30, 1997, with David Unger.
27.1 Financial Data Schedule.
(b) Reports of Form 8-K.
A report on Form 8-K dated May 30, 1997 was filed on June 16,
1997, reporting the Company's completion of the business combination (the
"Combination") with Suncom Communications L.L.C., and the ancillary agreements
thereto. In addition, the Company reported that contemporaneously with the
consummation of the Combination, it entered into a new $32,000,000 credit
facility. The required financial statements of the business acquired and the
pro-forma information were subsequently filed by amendment within sixty days
therefrom.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AUDIO COMMUNICATIONS NETWORK, INC.
Date: August 15, 1997 By: /s/ David Unger
-------------------------------
David Unger
Chief Financial Officer and
Executive Vice President
Date: August 15, 1997 By: /s/ Mitchell Kleinhandler
-------------------------------
Mitchell Kleinhandler
President and
Chief Operating Officer
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AMENDED AND RESTATED
BYLAWS
OF
AUDIO COMMUNICATIONS NETWORK, INC.
ADOPTED MAY 30, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE I MEETINGS OF SHAREHOLDERS...............................................1
1.1 Place of Meeting.......................................................1
1.2 Annual Meetings........................................................1
1.3 Special Meetings.......................................................1
1.4 Notice.................................................................1
1.5 Quorum.................................................................2
1.6 Fixing Record Date.....................................................2
1.7 Voting.................................................................3
1.8 Action by Shareholders Without a Meeting...............................4
1.9 Order of Business......................................................4
1.10 Inspectors of Elections................................................4
ARTICLE II DIRECTORS..............................................................5
2.1 Powers.................................................................5
2.2 Nominations for Directors..............................................5
2.3 Numbers................................................................5
2.4 Term of Offices........................................................5
2.5 Resignations...........................................................5
2.6 RESERVED...............................................................5
2.7 Compensation...........................................................5
2.8 Annual Meetings........................................................6
2.9 Regular Meetings.......................................................6
2.10 Special Meetings.......................................................6
2.11 Place of Meeting.......................................................6
2.12 Adjourned Meetings.....................................................6
2.13 Waiver of Notice.......................................................7
2.14 Organization...........................................................7
2.15 Action by the Board....................................................7
ARTICLE III COMMITTEES OF THE BOARD................................................8
ARTICLE IV OFFICERS...............................................................8
4.1 Election...............................................................8
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C> <C>
4.2 Term of Office.........................................................8
4.3 Resignations...........................................................8
4.4 Removal................................................................9
4.5 Duties of Officers may be Delegated....................................9
4.6 Salaries...............................................................9
4.7 Voting Shares in Other Corporations....................................9
4.8 Chairman of the Board; Vice Chairman...................................9
4.9 Chief Executive Officer...............................................10
4.10 Chief Financial Officer...............................................10
4.11 President.............................................................10
4.12 Vice President........................................................10
4.13 Treasurer.............................................................11
4.14 Secretary.............................................................11
ARTICLE V CERTIFICATE AND TRANSFER OF STOCK.....................................12
5.1 Shares................................................................12
5.2 Certificates..........................................................12
5.3 Recording of Shares...................................................12
5.4 Registered Shareholders...............................................12
5.5 Transfer of Stock.....................................................12
5.6 Transfer Agents.......................................................13
5.7 Restriction on Transfer of Stock......................................13
5.8 Closing of Transfer Books.............................................13
5.9 Lost Certificate......................................................13
ARTICLE VI DIVIDENDS.............................................................14
ARTICLE VII OFFICES, BOOKS AND RECORDS............................................14
7.1 Offices...............................................................14
7.2 Books and Records.....................................................14
7.3 Form of Records.......................................................14
7.4 Inspection of Books and Records.......................................15
ARTICLE VIII NOTICES...............................................................15
ARTICLE IX AMENDMENTS............................................................15
ARTICLE X NONAPPLICABILITY OF CERTAIN FLORIDA STATUTES..........................15
ARTICLE XI INDEMNIFICATION.......................................................16
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE XII MISCELLANEOUS.........................................................16
12.1 Indebtedness of Shareholders..........................................16
12.2 Checks, Etc...........................................................16
12.3 Fiscal Year...........................................................17
12.4 Seal..................................................................17
</TABLE>
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<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
AUDIO COMMUNICATIONS NETWORK, INC.
ADOPTED MAY 30, 1997
AND AS SUBSEQUENTLY AMENDED
ARTICLE I
MEETINGS OF SHAREHOLDERS
1.1 PLACE OF MEETING. All meetings of the Shareholders shall be held at
the principal office of the Corporation in the State of Florida, or at such
other place as may be determined by the Board of Directors and designated in the
notice of such meeting.
1.2 ANNUAL MEETINGS. The annual meeting of Shareholders shall be held on
such date as may be established by the Board of Directors. The annual meeting
shall be called by the Board of Directors for the purpose of electing Directors
for the ensuing year and for the transaction of such other general business of
the Corporation as may come before the meeting.
1.3 SPECIAL MEETINGS. Special meetings of Shareholders, for any purpose
other than those regulated by statute, may be called by the Board of Directors,
the Chief Executive Officer or by the President of the Corporation, or by the
holders of at least one-third of all the outstanding shares entitled to vote at
the meeting.
1.4 NOTICE.
a. NOTICE OF ANNUAL MEETINGS. Notice of the annual meeting of
Shareholders shall be mailed or otherwise given to each holder of record of the
stock entitled to vote at such meeting, at his address, as the same appears on
the books of the Corporation, at least 10 days but no more than 60 days prior to
such meeting. Such notice need not specify the business to be transacted but
shall state the place, day and hour of such meeting.
b. NOTICE OF SPECIAL MEETINGS. Written or printed notice of each
special meeting of Shareholders, stating the place, day and hour of such meeting
and business proposed to be transacted, shall be mailed, postage prepaid, or
otherwise given to each holder of record of the stock entitled to vote at such
meeting, at his address as the same appears on the books of the Corporation, at
least 10 days but no more than 60 days prior to such meeting. Notice of and all
expenses relating to a special meeting of Shareholders, called by a Shareholder
on his own initiative, shall be the sole responsibility and expense of said
Shareholder. No business other than that specified in the notice of special
meeting of Shareholders shall be transacted at any special meeting.
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c. WAIVER OF NOTICE OF MEETINGS. Whenever any notice is required
to be given under the provisions of any law of this State or under the
provisions of the Articles of Incorporation of this Corporation or by these
Bylaws, waiver in writing, signed by the person or persons entitled to such
notice, or by his or their proxy or proxies, whether before or after the time
fixed for the giving of such notice, shall be deemed equivalent to such notice.
If a person or persons entitled to notice of a meeting shall attend such
meeting, either in person or by proxy, such attendance shall constitute a waiver
of notice of the meeting, except in case the attendance is for the express
purpose of objecting to the transaction of any business because the meeting
shall not have been lawfully called or convened.
1.5 QUORUM. Except as otherwise required by law, by the Certificate of
Incorporation of this Corporation, or by these Bylaws, the presence, in person
or by proxy, of Shareholders entitled to cast a majority in number of the
aggregate number of shares of Common Stock to be voted, shall constitute a
quorum of all meetings of the Shareholders. After a quorum has been established
at a Shareholders meeting, a withdrawal of shareholders that reduces the number
of shareholders entitled to vote at the meeting below the number required for a
quorum does not affect the validity of any action taken prior thereto. In any
case where the presence of the aforesaid number of the holders of Common Stock
shall be necessary to constitute a quorum, and if such number shall not be
represented at any meeting, the Shareholders entitled to vote, present in person
or by proxy, shall have the power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until the requisite
amount of voting stock shall be present.
1.6 FIXING RECORD DATE. For the purpose of determining the Shareholders
entitled to notice of or to vote at any meeting of Shareholders or any
adjournment thereof, or to express consent to any corporate action in writing
without a meeting, or for the purpose of determining Shareholders entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock, or for the purpose of any other lawful action, the Board
may fix, in advance, a date as the record date for any such determination of
Shareholders. Such date shall not be more than 60 nor less than 10 days before
the date of such meeting, nor more than 60 days prior to any other action. If no
such record date is fixed:
a. The record date for determining Shareholders entitled to
notice of or to vote at a meeting of Shareholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
b. The record date for determining Shareholders entitled to
express consent to any corporate action in writing without a meeting, when no
prior action by the Board is necessary, shall be the day on which the first
written consent is expressed.
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c. The record date for determining Shareholders for any purpose
other than those specified in Sections 1.6a and b above shall be at the close of
business on the day on which the Board adopts the resolution relating thereto.
When a determination of Shareholders entitled to notice of or to
vote at any meeting of Shareholders has been made as provided in this Section
1.6, such determination shall apply to any adjournment thereof, unless the Board
fixes a new record date for the adjourned meeting.
1.7 VOTING.
a. VOTING. If a quorum is present, the affirmative vote of a
majority of the shares present in person or by proxy at such meeting is the act
of the Shareholders unless otherwise provided in the Certificate of
Incorporation, these By-laws or by law. Each Shareholder shall be entitled to
one vote for each share of Common Stock standing in his name on the books of the
Corporation.
b. PROXIES. Any Shareholders entitled to vote at any meeting of
Shareholders may be represented and vote by proxy appointed by an instrument in
writing subscribed by such Shareholder and bearing a date not more than three
months prior to such meeting, unless such proxy shall, on its face, provide a
longer period in which it is to remain in force. The validity and enforceability
of any proxy shall be determined in accordance with the provisions of the
Florida Business Corporation Act ("FBCA").
c. VOTE BY BALLOT. All elections of directors shall be by written
ballot unless otherwise provided in the Certificate of Incorporation. In voting
on any other question on which a vote by ballot is required by law or is
demanded at the commencement of the meeting by any Shareholder entitled to vote,
the voting shall be by ballot. Each ballot shall be signed by the Shareholder
voting or by his proxy, and shall state the number of shares voted. On all other
questions, the voting shall be by voice vote. Every Shareholder entitled to vote
at a meeting of Shareholders may authorize another person or persons to act for
him by proxy.
d. LIST OF SHAREHOLDERS. The Secretary of the Corporation shall
prepare at least 10 days prior to each election of directors, a complete list of
the Shareholders entitled to vote, arranged in alphabetical order, with the
residence of and the number of voting shares held by each Shareholder, which
shall be open for the examination of any Shareholder, at the place where said
election is to be held, for 10 days prior to such election, and shall be kept
available for the inspection by any Shareholder during such meeting.
e. OTHER PROVISIONS. Authorized but unissued shares including
those redeemed or otherwise reacquired by the Corporation, and shares of stock
of the Corporation owned by another corporation the majority of the voting stock
of which is owned or controlled by the Corporation, directly or indirectly, at
any meeting shall not be counted in determining the total number of outstanding
shares at any time. The president, any vice president, the
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secretary and the treasurer of a corporate shareholder are presumed to possess,
in that order, authority to vote shares standing in the name of a corporate
shareholder, absent a bylaw or other instrument of the corporate shareholder
designating some other officer, agent or proxy to vote the shares. Shares held
by an administrator, executor, guardian or conservator may be voted by him
without a transfer of the shares into his name. A trustee may vote shares
standing in his name, but no trustee may vote shares that are not transferred
into his name. If he is authorized to do so by an appropriate order of the court
by which he was appointed, a receiver may vote shares standing in his name or
held by or under his control, without transferring the shares into his name. A
Shareholder whose shares are pledged may vote the shares until the shares have
been transferred into the name of the pledgee, and thereafter the pledgee or his
nominee shall be entitled to vote the shares unless the instrument creating the
pledge provides otherwise.
1.8 ACTION BY SHAREHOLDERS WITHOUT A MEETING. Any action required or
permitted by law, these Bylaws, or the Certificate of Incorporation of the
Corporation to be taken at any annual or special meeting of Shareholders, may be
taken without a meeting, without prior notice and without a vote, if one or more
consents in writing, setting forth the action so taken, are dated and signed by
the holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote on such action were present and voted and
delivered to the principal place of business of the Corporation or the Secretary
within 60 days of the date of the earliest dated consent. Within 10 days after
obtaining such authorization by written consent, notice of the action so taken
shall be given in accordance with applicable law to those Shareholders who have
not so consented or who are not entitled to vote on the action.
1.9 ORDER OF BUSINESS. a. GENERALLY. The Board may adopt such rules and
regulations, not inconsistent with the Corporation's Certificate of
Incorporation or the Bylaws or applicable laws, as it may deem proper for the
conduct of any meetings of the shareholders of the Corporation.
b. NOMINATIONS AND OTHER BUSINESS PROPOSED BY SHAREHOLDERS. For
nominations or other business to be properly brought before an annual meeting by
a Shareholder, the Shareholder must comply with the Securities Act of 1934 and
the rules and regulations promulgated thereunder.
1.10 INSPECTORS OF ELECTIONS. The Board by resolution shall appoint one
or more inspectors, which inspector or inspectors may include individuals who
serve the Corporation in other capacities, including, without limitation, as
officers, employees, agents or representatives of the Corporation, to act at a
meeting of Shareholders and make a written report thereof. One or more persons
may be designated as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate has been appointed to act, or if all
inspectors or alternates who have been appointed are unable to act at a meeting
of shareholders, the chairman of the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before discharging his duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict
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impartiality and according to the best of his ability. The inspectors shall have
the duties prescribed by the laws of the State of Florida.
ARTICLE II
DIRECTORS
2.1 POWERS. Except as otherwise provided in the Certificate of
Incorporation, the business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors (the "Board"). The Board may
adopt such rules and regulations, not inconsistent with the Certificate of
Incorporation or the Bylaws or applicable laws, as it may deem proper for the
conduct of its meetings and the management of the Corporation. In addition to
the powers expressly conferred by the Bylaws, the Board may exercise all powers
and perform all acts which are not required by the Bylaws or the Certificate of
Incorporation or by law to be exercised and performed by the Shareholders.
2.2 NOMINATIONS FOR DIRECTORS. Nominations for election to the Board may
be made by the Board or in accordance with section 1.9b above. A director need
not be a Shareholder.
2.3 NUMBERS. The Board shall consist of a number not less than three (3)
members elected by the Shareholders. The number of Directors shall be fixed,
from time to time, by the Bylaws. Until the number of Directors shall be changed
or altered, as herein provided for, the Board shall consist of eight (8)
members. The provisions of this section relating to the number of Directors
constituting the Board may be amended, changed or altered only by vote of the
holders of a majority of the common stock present and entitled to vote at any
duly convened meeting of such Shareholders at which a quorum is present.
2.4 TERM OF OFFICES. Except as otherwise provided in the Certificate of
Incorporation of the Corporation, each Director shall be elected to serve until
the next annual meeting of Shareholders and until his successor is chosen and
qualified or until his earlier death, resignation or removal. In case one or
more vacancies shall occur in the Board, the remaining Directors, although less
than a quorum, may, by a majority vote, elect a successor or successors to fill
the vacancy for the unexpired term or terms.
2.5 RESIGNATIONS. Any Director may resign at any time by written notice
to the Corporation. Such resignation shall take effect at the time specified in
such notification, and, unless otherwise specified, the acceptance of such
resignation shall not be necessary to make it effective.
2.6 RESERVED
2.7 COMPENSATION. Each Director, in consideration of his service as
such, shall be entitled to receive from the Corporation such amount per annum or
such fees for attendance at
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Directors' meetings, or both, as the Board may from time to time determine,
together with reimbursement for the reasonable expenses incurred by him in
connection with the performance of his duties. Each Director who shall serve as
a member of any committee of Directors shall be entitled to such additional
amount per annum or such fees for attendance at committee meetings, or both, as
the Board may from time to time determine, together with reimbursement for the
reasonable expenses incurred by him in the performance of his duties. Nothing
contained in this section shall preclude any Director from serving the
Corporation or its subsidiaries in any other capacity and receiving proper
compensation for such service.
2.8 ANNUAL MEETINGS. On the day when and at the place where the annual
meeting of Shareholders for the election of Directors is held, and as soon as
practicable thereafter, the Board may hold its annual meeting, without notice of
such meeting, for the purposes of organization, the election of officers and the
transaction of other business. The annual meeting of the Board may be held at
any other time and place specified in a notice given as provided in these Bylaws
for special meetings of the Board or in a waiver of notice of meeting.
2.9 REGULAR MEETINGS. Regular meetings of the Board may be held at such
times and places as may be fixed from time to time by the Board. Unless
otherwise required by the Board, regular meetings of the Board may be held
without notice. If any day fixed for a regular meeting of the Board shall be a
Saturday or Sunday or a legal holiday at the place where such meeting is to be
held, then such meeting shall be held at the same hour at the same place on the
first business day thereafter which is not a Saturday, Sunday or legal holiday.
2.10 SPECIAL MEETINGS. Special meetings of the Board shall be held
whenever called by the Chief Executive Officer, the President or by any three
(3) Directors. Notice of each special meeting of the Board shall, if mailed, be
addressed to each Director at the address designated by him for that purpose or,
if none is designated, at his last known address at least two days before the
date on which the meeting is to be held; or such notice shall be sent to each
Director at such address by facsimile, telegraph, cable or wireless, or be
delivered to him personally, not later than the day before the date on which
such meeting is to be held. Every such notice shall state the time and place of
the meeting but need not state the purposes of the meeting, except to the extent
required by law.
2.11 PLACE OF MEETING. The Board may hold its meetings either within or
outside of the State of Florida, at such place or places as it may from time to
time determine.
2.12 ADJOURNED MEETINGS. A majority of the Directors present at any
meeting of the Board, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. Notice of any
adjourned meeting of the Board need not be given to any Director whether or not
present at the time of the adjournment. Any business may be transacted at any
adjourned meeting that might have been transacted at the meeting originally
called.
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2.13 WAIVER OF NOTICE. Whenever notice is required to be given to any
Director or member of a committee of Directors under any provision of the FBCA
or under the Certificate of Incorporation or Bylaws, a written waiver, signed by
the person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Directors, or members of a committee of
Directors, need be specified in any written waiver of notice.
2.14 ORGANIZATION. At each meeting of the Board, the Chairman of the
Corporation, or in the absence of the Chairman, the Vice Chairman, if any, the
Chief Executive Officer or the President shall preside. The Secretary shall act
as secretary at each meeting of the Board. In case the Secretary shall be absent
from any meeting of the Board, an Assistant Secretary shall perform the duties
of secretary at such meeting; and in the absence from any such meeting of the
Secretary and all Assistant Secretaries, the person presiding at the meeting may
appoint any person to act as secretary of the meeting.
2.15 ACTION BY THE BOARD.
a. WRITTEN CONSENTS. All corporate action taken by the Board or
any committee of the Board shall be taken at a meeting of the Board, or of such
committee, as the case may be, except that any action required or permitted to
be taken at any meeting of the Board, or of any committee of the Board, may be
taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or such committee.
b. CONFERENCE CALL. Members of the Board, or any committee
designated by the Board, may participate in a meeting of the Board, or of such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to
conference telephone or similar communications equipment shall constitute
presence in person at such meeting.
c. VOTING. Except as otherwise provided by the Certificate of
Incorporation or by law, the vote of a majority of the Directors present
(including those who participate by means of conference telephone or similar
communications equipment) at the time of the vote, if a quorum is present at
such time, shall be the act of the Board or of such committee, as the case may
be.
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ARTICLE III
COMMITTEES OF THE BOARD
The Board may, by resolution passed by a majority of the full Board,
designate one or more committees, each committee to consist of one or more of
the Directors of the Corporation. The Board may designate one or more Directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members present at
any meeting and not absent or disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified member.
Except as otherwise provided by applicable law, any such committee, to the
extent provided in the resolution of the Board, shall have and may exercise all
the powers and authority of the Board in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it.
ARTICLE IV
OFFICERS
4.1 ELECTION. The officers of the Corporation shall be a President, one
or more Vice-Presidents, a Treasurer, a Secretary, and, if desired, a Chairman
of the Board, a Vice Chairman, a Chief Executive Officer and/or a Chief
Financial Officer and one or more Assistant Secretaries and Assistant
Treasurers, all of whom shall be elected by the Board. None of the officers,
except the Chairman and Vice Chairman of the Board and, if required by the
Certificate of Incorporation, the President, need be a Director. The officers
shall be elected at the first meeting of the Board after each annual meeting of
Shareholders.
a. HOLD TWO OFFICES. Any two or more of the offices of the
Corporation, except those of Chairman and Vice Chairman, President and
Vice-President, and Secretary and President, may be held by the same person, but
no officer shall execute, acknowledge or verify any instrument in more than one
capacity, if such instrument is required by law or by these Bylaws to be
executed, acknowledged or verified by any two or more officers.
4.2 TERM OF OFFICE. The officers of the Corporation shall hold office
for one year or until their successors are chosen and qualified. Any vacancy
occurring among the officers shall be filled by the Board, but the person so
elected to fill the vacancy shall hold office only until the first meeting of
the Board after the next annual meeting of Shareholders and until his successor
is chosen and qualified.
4.3 RESIGNATIONS. Any officer may resign at any time by so
notifying the Board or the President in writing. Such resignation shall take
effect at the date of receipt of such notice
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or at such later time as is therein specified, and, unless otherwise specified,
the acceptance of such resignation shall not be necessary to make it effective.
The resignation of an officer shall be without prejudice to the contract rights
of the Corporation, if any.
4.4 REMOVAL. Any officer chosen by the Board may be removed at any time,
with or without cause, by the affirmative vote of a majority of the directors
then in office, whether acting at a meeting or by the written consent of such
majority. The removal of an officer without cause shall be without prejudice to
his contract rights, if any. The election or appointment of an officer shall not
of itself create contract rights.
4.5 DUTIES OF OFFICERS MAY BE DELEGATED. In case of the absence or
disability of any officer of the Corporation, or for any other reason that the
Board may deem sufficient, the Board, by majority vote, may delegate the powers
or duties or any officer to any other officer or to any Director or to any other
person. The Board may appoint such agents as it may deem necessary, who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the Board.
4.6 SALARIES. The salaries of all officers and agents of the Corporation
shall be fixed by the Board. No officer shall be prevented from receiving a
salary or other compensation by reason of the fact that he is also a Director.
4.7 VOTING SHARES IN OTHER CORPORATIONS. Unless otherwise provided by
resolution of the Board, the Chief Executive Officer or the President may, from
time to time, appoint one or more attorneys or agents of the Corporation, in the
name and on behalf of the Corporation, to cast the votes which the Corporation
may be entitled to cast as a stockholder or otherwise in any other corporation,
any of whose shares or securities may be held by the Corporation, at meetings of
the holders of stock or other securities of such other corporation, or to
consent in writing to any action by any such other corporation, and may instruct
the person or persons so appointed as to the manner of casting such votes or
giving such consent, and may execute or cause to be executed on behalf of the
Corporation and under its corporate seal, or otherwise, such written proxies,
consents, waivers or other instruments as he may deem necessary or proper in the
premises; or the President may himself attend any meeting of the holders of the
stock or other securities of any such other corporation and thereat vote or
exercise any or all other powers of the Corporation as the holder of such stock
or other securities of such other corporation.
4.8 CHAIRMAN OF THE BOARD; VICE CHAIRMAN.
a. The Chairman of the Board shall preside at all meetings of the
Shareholders and of the Board. The Chairman shall make reports to the Board and
the Shareholders, and shall perform all such other duties as are properly
required of him by the Board.
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b. The Vice Chairman shall have such powers and perform such
duties as from time to time may be assigned to him by the Board. In the absence
of the Chairman, the Vice Chairman, if any, shall preside at all meetings of the
Shareholders and of the Board.
4.9 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be
responsible for the general management of the affairs of the Corporation and
shall perform all duties incidental to the Chief Executive Officer's office
which may be required by law and all such other duties as are properly required
of him by the Board. The Chief Executive Officer shall see that all orders and
resolutions of the Board and of any committee thereof are carried into effect.
4.10 CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall have
general supervision, direction and control of the financial affairs of the
Corporation and shall have such other powers and duties as may be prescribed by
the Board, the Chief Executive Officer, or these Bylaws. In the absence of a
named Treasurer, the Chief Financial Officer shall also have the powers and
duties of the Treasurer as hereinafter set forth and shall be authorized and
empowered to sign as Treasurer in any case where such officer's signature is
required.
4.11 PRESIDENT. The President shall act in a general executive capacity
and shall assist the Chairman of the Board or the Chief Executive Officer in the
administration and operation of the Corporation's business, and the general
supervision of its policies and affairs, subject, however, to the control of the
Chief Executive Officer, the Board and of any duly authorized committee of
Directors. He may sign and execute in the name of the Corporation deeds,
mortgages, bonds, contracts and other instruments authorized by the Board,
except in cases where the signing and execution thereof shall be expressly
delegated by the Board or by the Bylaws to some other officer or agent of the
Corporation, or shall otherwise be required by law to be signed or executed. The
President shall perform all duties incident to the office of President and such
other duties as from time to time may be assigned to him by the Board or the
Chief Executive Officer.
4.12 VICE PRESIDENT. The Vice Presidents, in the order of their
seniority, shall have and exercise all the powers and duties of the President in
case of his absence or inability to act when requested to do so by the Board,
and shall possess such other powers as shall be assigned to them by the Board or
by the President with the approval of the Board. The Board shall also determine
the order in which the Vice Presidents shall assume the authority of the
President in his absence. Any Vice President may sign and execute in the name of
the Corporation deeds, mortgages, bonds, contracts or other instruments
authorized by the Board, except in cases where the signing and execution thereof
shall be expressly delegated by the Board or by the Bylaws to some other officer
or agent of the Corporation, or shall be required by law to be signed or
executed otherwise. Each Vice President shall perform such other duties as from
time to time may be assigned to him by the Board, the Chief Executive Officer or
by the President.
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4.13 TREASURER.
a. GENERAL. The Treasurer shall perform all duties and exercise
all powers as shall be assigned to him by the Board, the Chief Executive
Officer, the Chief Financial Officer or the President.
b. CUSTODY OF FUNDS. The Treasurer shall have the custody of the
corporate funds and securities, and shall keep full and accurate account of
receipts and disbursements in books belonging to the Corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
Corporation in such depositories as may be designated by the Board.
c. DISBURSEMENTS. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board, taking proper vouchers for such
disbursements. He shall render to the President and Directors at the regular
meetings an account of all his transactions as Treasurer and of the financial
condition of the Corporation.
d. BOND. He shall give the Corporation a bond, if required by the
Board, in a sum and with one or more securities satisfactory to the Board, for
the faithful performance of the duties of his office and for the restoration to
the Corporation in case of his death, resignation, retirement or removal from
office of all books, papers, vouchers, moneys and other property of whatever
kind in his possession or under his control belonging to the Corporation.
e. ASSISTANT TREASURER. The Assistant Treasurer shall perform all
the duties and responsibilities of the Treasurer on such occasions on which the
Treasurer shall be unable to perform all the duties of the office and shall
perform all other duties and exercise all other powers as shall be assigned to
him by the Board or by the Chief Executive Officer, the Chief Financial Officer,
the President or the Treasurer.
4.14 SECRETARY.
a. RESPONSIBILITIES. The Secretary shall attend all meetings of
the Board and all meetings of the Shareholders and shall record all votes and
the minutes of all proceedings in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. He shall give or
cause to be given notice of all meetings of the Shareholders and of the Board,
and he shall keep the seal of the Corporation in safe custody. The Secretary
shall have charge of the stock ledger and also of the other books, records and
papers of the Corporation relating to its organization and management as a
Corporation, and shall see that the reports, statements and other documents
required by law are properly kept and filed; and shall, in general, perform all
the duties incident to the office of Secretary and such other duties as from
time to time may be assigned to him by the Board, the Chief Executive Officer,
the Chief Financial Officer, or by the President.
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b. ASSISTANT SECRETARY. The Assistant Secretary shall perform all
the duties and responsibilities of the Secretary on such occasions on which the
Secretary shall be unavailable to perform the duties of the office and shall
perform all other duties and exercise all other powers as shall be assigned him
by the Board, the Chief Executive Officer, the Chief Financial Officer, the
President or the Secretary.
ARTICLE V
CERTIFICATE AND TRANSFER OF STOCK
5.1 SHARES. The interest of each Shareholder of the Corporation shall be
evidenced by certificates of shares of stock, certifying the number of shares
represented thereby and in such form as is consistent with the Certificate of
Incorporation and as the Board may from time to time prescribe.
5.2 CERTIFICATES. The certificates of stock shall be signed by the
Chairman of the Board, Chief Executive Officer, President or a Vice President
and by the Secretary or an Assistant Secretary or Treasurer or Assistant
Treasurer, and sealed with the corporate seal of the Corporation. Such seal may
be a facsimile, engraved or printed. Where any certificate is manually signed by
a transfer agent or a transfer clerk and registrar, the signature of the
Chairman of the Board, the Chief Executive Officer, the President or a Vice
President and the Secretary or an Assistant Secretary or Treasurer or Assistant
Treasurer, upon such certificate may be facsimiles, engraved or printed. In case
any officer who has signed or whose facsimile signature has been placed upon any
certificate, shall have ceased to be such officer before the certificate is
issued, it may be issued by the Corporation with the same effect as if such
officer had not ceased to be such at the time of its issue.
5.3 RECORDING OF SHARES. The certificates of stock of the Corporation
shall be numbered and shall be entered in the books of the Corporation as they
are issued. They shall exhibit the holder's name and certify the number of
shares owned by him.
5.4 REGISTERED SHAREHOLDERS. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof and shall not be bound to recognize any equitable or other claims to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as expressly provided by
the laws of the State of Florida.
5.5 TRANSFER OF STOCK. Transfers of shares of stock of the Corporation
shall be made only on the books of the Corporation by the registered owner
thereof, or by his duly authorized attorney, or with a transfer agent appointed
as provided in these Bylaws, and on surrender of the certificate, or
certificates for such shares, properly endorsed and accompanied by the payment
for all taxes.
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5.6 TRANSFER AGENTS. The Board may appoint one or more transfer agents
and one or more registrars, and may require all certificates for shares to bear
the signature or signatures of any of them.
5.7 RESTRICTION ON TRANSFER OF STOCK. A written restriction on the
transfer or registration of transfer of capital stock of the Corporation and
noted conspicuously on the certificate representing such capital stock, may be
enforced against the holder of the restricted capital stock or any successor or
transferee of the holder including an executor, administrator, trustee, guardian
or other fiduciary entrusted with like responsibility for the person or estate
of the holder. Unless noted conspicuously on the certificate representing such
capital stock, a restriction shall be ineffective except against a person with
actual knowledge of the restriction. A restriction on the transfer or
registration of transfer of capital stock of the Corporation may be imposed
either by the Certificate of Incorporation or by an agreement among any number
of Shareholders or among such Shareholders and the Corporation. No restriction
so imposed shall be binding with respect to capital stock issued prior to the
adoption of the restriction unless the holders of such capital stock are parties
to an agreement or voted in favor of the restriction.
5.8 CLOSING OF TRANSFER BOOKS. The Board shall have power to close the
stock transfer books of the Corporation for a period not exceeding 60 days
preceding the date of any meeting of Shareholders, or the date for payment of
any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect;
provided, however, that in lieu of closing the stock transfer books as
aforesaid, the Board are authorized to fix in advance a date, not exceeding the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, as a record date for the determination of the Shareholders entitled
to notice, and to vote at any such meeting, or entitled to receive payment of
any such dividend, or to any such allotment of rights, or to exercise the rights
in respect of any change, conversion or exchange of capital stock, and in such
case only such Shareholders as shall be Shareholders of record on the date so
fixed shall be entitled to notice of, and to vote at, such meeting, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, as the case may be notwithstanding any transfer of any
stock on the books of the Corporation after such record date has been fixed.
5.9 LOST CERTIFICATE. No certificate for shares of stock in the
Corporation shall be issued in place of any certificate alleged to have been
lost, destroyed or stolen, except on production of evidence satisfactory to the
Board of such loss, destruction or theft and, if the Board so requires, upon the
furnishing of bond satisfactory to the Corporation and to the transfer agent, if
any, in such sum as the Board may direct as indemnity against any claim that may
be made against the Corporation or the transfer agent, if any, with respect to
the certificate alleged to have been lost, destroyed or stolen before a new
certificate may be issued with the same tenor for the same number of shares as
the one alleged to have been lost, destroyed or stolen.
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ARTICLE VI
DIVIDENDS
6.1 Subject to the provisions of the Certificate of Incorporation and
the FBCA, the Board:
a. May declare and pay dividends or make other distributions on
the outstanding shares of capital stock in such amounts and at such time or
times as, in its discretion, the condition of the affairs of the Corporation
shall render advisable;
b. May use and apply, in its discretion, any of the surplus of
the Corporation in purchasing or acquiring any shares of capital stock of the
Corporation, or purchase warrants therefor, in accordance with law, or any of
its bonds, debentures, notes or other securities or evidences of indebtedness;
and
c. May set aside from time to time out of such surplus or net
profits such sum or sums as, in its discretion, it may think proper, as a
reserve fund to meet contingencies, or for equalizing dividends or for the
purpose of maintaining or increasing the property or business of the
Corporation, or for any purpose it may think conducive to the best interests of
the Corporation.
ARTICLE VII
OFFICES, BOOKS AND RECORDS
7.1 OFFICES. The principal office of the Corporation shall be located in
the City of Orlando, County of Orange in the State of Florida, or at such other
place in the State of Florida as the Board shall determine. The Corporation may
have other offices, either within or outside the State of Florida, at such place
or places as the Board may from time to time determine.
7.2 BOOKS AND RECORDS. The Corporation shall keep correct and complete
books and records of account and shall keep minutes of the proceedings of the
Shareholders, the Board and any committee of the Board. The Corporation shall
keep at the office designated in the Certificate of Incorporation or at the
office of the transfer agent or registrar of the Corporation, a record
containing the names and addresses of all Shareholders, the number and class of
shares held by each and the dates when they respectively became the owners of
record.
7.3 FORM OF RECORDS. Any records maintained by the Corporation in the
regular course of its business, including its stock ledger, books of account,
and minute books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotographs, or any other information storage device,
provided that the records so kept can be converted into
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clearly legible written form within a reasonable time. The Corporation shall so
convert any records so kept upon the request of any person entitled to inspect
the same.
7.4 INSPECTION OF BOOKS AND RECORDS. Except as otherwise provided by
law, the Board shall determine from time to time whether, and, if allowed, when
and under what conditions and regulations, the accounts, books, minutes and
other records of the Corporation, or any of them, shall be open to the
inspection of the Shareholders.
ARTICLE VIII
NOTICES
Whenever notice is required to be given by the Certificate of
Incorporation or by these Bylaws it shall not be construed to mean personal
notice, but such notice, except as otherwise provided by law or by these Bylaws,
may be given by depositing the same in a post office, letter box or mail chute,
in a postpaid sealed wrapper addressed to the Shareholder, officer or director,
as the case may be, at such address as appears on the books of the Corporation.
ARTICLE IX
AMENDMENTS
Except as in these Bylaws hereinbefore otherwise provided with respect
to any amendment changing the number of the members of the Board, these Bylaws
may be repealed, altered, amended, added to, or modified by the Board by a vote
of a majority of the same, or at any special meeting of the Board, when notice
of the proposed amendment has been given.
ARTICLE X
NONAPPLICABILITY OF
CERTAIN FLORIDA STATUTES
The Corporation and its shareholders hereby expressly elect not to be
governed by the provisions of Section 607.0902 of the Florida Statutes if and to
the extent that such provisions are applicable to them. If and to the extent
that a court of competent jurisdiction may hold that Section 607.0902 of the
Florida Statutes applies to the Corporation and its Shareholders, then the
Corporation and its Shareholders hereby expressly provide that such provision
shall not apply to any "control-share acquisition" (as defined therein) of
shares of capital stock of the Corporation.
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ARTICLE XI
INDEMNIFICATION
Any person, his heirs or personal representative made, or threatened to
be made, a party to any threatened, pending or completed action or proceeding,
whether civil, criminal, administrative or investigative, because he is or was a
director, officer, employee or agent of the Corporation or serves or served any
other corporation or other enterprise in any capacity at the request of the
Corporation, shall, in the case of a director or officer, or may, in the case of
an employee or agent, be indemnified by the Corporation, and the Corporation may
advance his related expenses, to the full extent permitted by Florida law,
provided that the advancement of such expenses shall be made only after receipt
of an undertaking by the indemnitee to repay all amounts advanced if it should
be ultimately determined that the indemnitee is not entitled to be indemnified
under this Article or otherwise. In discharging his duty, any director, officer,
employee or agent, when acting in good faith, may rely upon information,
opinions, reports or statements, including financial statements and other
financial data, in each case prepared or presented by (1) one or more officers
or employees of the Corporation whom the director, officer, employee or agent
reasonably believes to be reliable and competent in the matters presented, (2)
counsel, public accountants or other persons as to matters that the director,
officer, employee or agent believes to be within that person's professional or
expert competence, or (3) in the case of a director, a committee of the board of
directors upon which he does not serve, duly designated according to law, as to
matters within its designated authority, if the director reasonably believes
that the committee is competent. The foregoing right of indemnification or
reimbursement shall not be exclusive of other rights to which the person, his
heirs or personal representatives may be entitled. The Corporation shall obtain
and maintain directors' and officers' liability insurance at its expense.
Notwithstanding the preceding sentence, the Corporation shall have no obligation
to obtain and maintain such insurance if the Corporation determines in good
faith that such insurance is not reasonably available, premium cost and coverage
provided to be considered.
ARTICLE XII
MISCELLANEOUS
12.1 INDEBTEDNESS OF SHAREHOLDERS. The Corporation shall have a first
lien on all the shares of its capital stock and upon all dividends declared upon
the same for any sum due to the Corporation, either on account of the
subscription to its stock or for any other indebtedness due from the
Shareholder.
12.2 CHECKS, ETC. All checks, drafts, acceptances, notes and other
orders, demands, or instruments in respect to the payment of money, shall be
signed or endorsed on behalf of the
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Corporation by the Chief Executive Officer, Chief Financial Officer, President
and/or Secretary or by any other officers whom the Board may from time to time
designate.
12.3 FISCAL YEAR. The fiscal year of the Corporation shall begin January
1, and end on December 31 of such calendar year.
12.4 SEAL. The corporate seal shall be circular in form and shall have
inscribed thereon the name of the Corporation, the year of its incorporation and
the words "Corporate Seal, Florida". The Secretary of the Corporation shall have
the custody of the corporate seal. The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Employment Agreement") made and entered
into as of the 30th day of May, 1997, by and between Audio Communications
Network, Inc., a Florida corporation (the "Company"), with its principal place
of business at 1000 Legion Place, Suite 1515, Orlando, Florida 3280 1, and A. J.
Schell ("Schell"), of Winter Park, Florida (together, the "Parties").
WHEREAS, Schell has been a director and officer of the Company prior to
the date of this Employment Agreement and has substantial experience and
knowledge with respect to the business of the Company; and
WHEREAS, the Company desires to employ Schell and Schell desires to
accept employment with the Company on the terms and conditions set forth in this
Employment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth and the mutual benefits derived herefrom, the Parties,
intending to be legally bound, covenant and agree as follows:
1. EMPLOYMENT. The Company hereby employs Schell and Schell hereby
accepts employment under the terms and conditions hereinafter set forth.
2. TERM. The term of this Employment Agreement shall commence as of the
date hereof and except as provided in Sections 4(b), 8 and 9 or in the next
succeeding sentence shall terminate on the third anniversary of the date hereof.
The Company may terminate this Employment Agreement with or without cause, and
Schell may terminate this Employment Agreement for "Good Reason." "Good Reason"
shall mean the breach by the Company of its obligations under the Employment
Agreement after (a) Schell has given written notice of such breach to the
Company and (b) fifteen (15) days has elapsed following such notice and such
breach has not been cured by the Company.
For purposes of this Employment Agreement, any good faith determination
of "Good Reason" made by Schell shall be conclusive.
3. DUTIES. Commencing as of the date of this Employment Agreement and
continuing thereafter during the term thereof, Schell agrees to provide services
to the Company (i) as Chairman of the Board of Directors, (ii) by seeking
potential acquisitions for the Company and assisting with the negotiation of the
same, (iii) counseling as to acquisitions not originated by Schell, (iv)
assisting with the general oversight of franchise managers and corporate staff
relative to the Company's mission, including work in the field and with respect
to personnel matters, (v) assisting with maintaining relations with investors,
financial institutions and the financial community, and (vi) such other general
management duties as may directed from time
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to time by the Board of Directors of the Company. The Company acknowledges and
agrees that it will not require Schell to be based at any office or location
other than the Company's principal offices in the metropolitan area of Orlando,
Florida, except for travel reasonably required in the performance of Schell's
responsibilities.
4. COMPENSATION.
(a) (i) The Company shall make a payment to Schell of one hundred
thousand dollars per annum ($100,000.00), payable in equal amounts at intervals
not less frequently than monthly.
(ii) In the event that Schell's employment or this
Employment Agreement is terminated for any reason (including death or
disability), installments not previously paid under this Section 4 and Section 7
shall continue to be payable to Schell (or his estate, as the case may be), and
the benefits provided by Section 4(b) shall continue to be furnished to Schell,
his spouse and any covered dependents, all in accordance with the terms of this
Employment Agreement.
(b) The Company agrees (i) to furnish Schell during the term of
this Employment Agreement with certain benefits, including but not limited to
health insurance and other insurance benefits, target benefit plan or comparable
benefits, automobile allowance (and the reimbursement of automobile related
expenses) and country club dues, all on terms no less favorable than heretofore
granted to Schell by the Company, and (ii) to provide health insurance benefits
to Schell, his spouse and any covered dependents during the term of this
Employment Agreement and until the sixth anniversary of the date of this
Employment Agreement.
(c) The Company agrees to reimburse all expenses incurred by
Schell in furtherance of the business, including, but not limited to, office
expenses, travel and entertainment expenses, and communication expenses,
consistent with the reimbursement policies of the Company at the date of this
Employment Agreement.
5. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Employment Agreement shall
limit or prevent nor require Schell's participation in any welfare plans,
programs, practices or policies provided by the Company or any subsidiary for
which Schell may qualify.
6. NONDISCLOSURE OF CONFIDENTIAL BUSINESS INFORMATION.
Schell acknowledges that he has held a sensitive management position with the
Company and will continue to perform services for the Company as provided in
this Employment Agreement and that, by virtue of having held this position, he
has had access to and has learned (and will continue to have access to and to
learn) the Company's confidential and proprietary information and trade secrets
pertaining to its business operations (the "Confidential Business Information").
Examples of such Confidential Business Information include, but are not limited
to, information as to the Company's products, services, systems, software,
finances (including prices, costs and revenues), marketing plans, programs,
methods of operation, prospective and existing contracts,
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other business arrangements or business plans, procedures, strategies (including
acquisition strategies), customer lists, referral sources, and other information
concerning the Company's practices and procedures. Schell agrees that he will
not, during the term of this Employment Agreement, or for three years after the
termination of this Employment Agreement, disclose such Confidential Business
Information or any part thereof, to any person, firm or corporation, association
or other entity for any reason or purpose whatsoever, except as may be normal
and required in connection with the operation of the business of the Company. In
the event of a breach or a threat to breach by Schell of the provisions of this
Section, the Company shall be entitled to an injunction restraining Schell from
disclosing in whole or in part such Confidential Business Information, or from
rendering any services to the firm, corporation, association or other entity to
whom such Confidential Business Information in whole or in part has been
disclosed, or is threatened to be disclosed. Nothing herein contained shall be
construed as prohibiting the Company from pursuing any other remedies available
to the Company for such breach, or threatened breach, including the recovery of
damages.
7. EFFECT ON PRIOR EMPLOYMENT AGREEMENT. This Employment Agreement
supersedes and terminates the Employment Agreement dated as of July 18, 1989
between the Company and Schell, as amended by the Amendment and Supplement dated
as of September 1, 1993 (the "Former Employment Agreement"). Each party
acknowledges and agrees that the Former Employment Agreement constituted the
legal, valid and binding obligations of such party, and that such Agreement was
approved by a majority of the disinterested directors. In consideration of the
termination of the Former Employment Agreement and the execution and delivery of
this Employment Agreement by Schell, the Company shall make a payment to Schell
of five hundred thousand dollars ($500,000) on each of January 2, 1998, January
4, 1999 and January 3, 2000. Payments hereunder are secured pursuant to the
provisions of the Pledge Agreement annexed hereto as Exhibit A.
8. RESTRICTIVE COVENANT. In addition to the Confidential Business
Information described in Section 6 above, Schell acknowledges that he has
developed and will continue to develop substantial relationships with the
Company's prospective or existing customers as a result of his past and future
employment with the Company. Schell also acknowledges that, contemporaneously
with the execution of this Employment Agreement, Suncom Communications L.L.C., a
Delaware limited liability company ("Suncom") is consummating the purchase of
597,986 shares of the Company's common stock, par value $0.25 per share (the
"Common Stock") from Schell pursuant to a Stock Purchase Agreement by and
between Suncom and Schell dated as of November 19, 1996 (the "Stock Purchase
Agreement"). Schell agrees that a restrictive covenant is necessary to protect
the Company's interests in its Confidential Business Information and customer
relationships, to induce Suncom to enter into and consummate the Stock Purchase
Agreement, and to enable Suncom to protect and preserve the value of the Company
and its assets, capital stock, and good will over which Suncom will gain control
upon the consummation of the Stock Purchase Agreement. Accordingly, Schell
covenants and agrees that he will not, for a period of three years from the
termination of this Employment Agreement within those jurisdictions that the
Company and Suncom, have franchises as of the date of the termination of this
Employment Agreement, directly or
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indirectly, manage, operate, control or be employed or participate in
management, operation or control of any business of the type and character of
business engaged in by the Company and Suncom as of the date of the termination
of this Employment Agreement, or assist any other party with respect to the
foregoing. Schell hereby acknowledges and agrees that any breach of or default
under this Agreement will cause damage to the Company and Suncom in an amount
difficult to ascertain. Accordingly, in addition to any other relief to which
the Company may be entitled, the Company will be entitled, without proof of
actual damages, to such injunctive relief as may be ordered by any court of
competent jurisdiction.
9. STOCK OPTIONS. The options to purchase 30,000 shares of the common
stock, par value $0.25 per share, of the Company which were granted to Schell in
February of 1995 shall vest as a result of the execution and delivery of this
Employment Agreement, and such options shall not be terminated as a result of
the termination of this Employment Agreement and shall remain exercisable in all
cases through the fifth anniversary of the grant thereof.
10. MISCELLANEOUS.
(a) Any failure of either of the parties hereto to comply with
any of its obligations or agreements herein contained may be waived only in
writing by the other party.
(b) All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given upon receipt of. hand
delivery; overnight mail, certified or registered mail, return receipt
requested; or telecopy transmission with confirmation of receipt:
(i) If to Schell, to:
A.J. Schell
1719 Barcelona Way
Winter Park, Florida 32789
Telecopier: (407) 644-7434
(ii) If to the Company, to
1000 Legion Place
Suite 1515
Orlando, Florida 32801
Telecopier: (407) 649-8873
Attention: Mitchell Kleinhandler
David Unger
Such names and addresses may be changed by written notice to each person listed
above.
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(c) This Employment Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without giving effect to
its principles or rules regarding conflicts of laws.
(d) This Employment Agreement may be executed in two
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(e) This Employment Agreement may be amended or modified only by
written agreement of the parties hereto.
(f) This Employment Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and assigns;
nothing in this Employment Agreement, express or implied, is intended to confer
on any person other than the parties hereto and their respective successors and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Employment Agreement.
(g) This Employment Agreement shall not be assignable by any
party hereto other than by operation of law without the prior written consent of
the other party hereto. Any purported assignment in violation of this Section 10
(g) shall be void.
(h) The invalidity or unenforceability of any provision of this
Employment Agreement shall not affect the validity or enforceability of any
other provision of this Employment Agreement.
(i) The Company may withhold from any amounts payable under this
Employment Agreement such Federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(j) The Company will require any successor (whether direct or
indirect, by purchase of assets, merger, consolidation, share exchange or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Employment Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this Employment
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Employment Agreement by operation of law or otherwise.
11. WAIVER. Except for the obligations arising out of this Employment
Agreement and except for accrued salary and expense reimbursement obligations
arising under the Former Employment Agreement, Schell hereby waives any and all
claims he has or may have, whether as an officer, director, employee,
shareholder or otherwise, against the Company, arising out of or relating to
events, transactions or occurrences prior to the date hereof.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Employment Agreement as of the date first above written.
AUDIO COMMUNICATIONS NETWORK, INC.
By:
----------------------------------
Name: Mitchell Kleinhandler
Title: President
-----------------------------------------
A.J. Schell
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EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of May 30, 1997, between
AUDIO COMMUNICATIONS NETWORK, INC., a Florida corporation (the "Company"), and
MITCHELL KLEINHANDLER (the "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ the Executive, and the
Executive desires to accept such employment, on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises,
representations and warranties set forth herein, and for other good and valuable
consideration, it is hereby agreed as follows:
1. POSITION AND DUTIES. (A) EMPLOYMENT AND POSITION - The Company
hereby agrees to employ the Executive, and the Executive hereby accepts such
employment, upon the terms and conditions set forth herein. The Executive shall
serve as President and Chief Operating Officer of the Company. The Executive
shall also serve as an executive officer of any or all of the Company's
subsidiaries without any compensation other than as set forth herein.
(B) DUTIES - During the Term, the Executive shall perform
and discharge the duties generally consistent with the position of President and
Chief Operating Officer and such other executive duties consistent with such
offices as may be assigned to him by the Board of Directors of the Company (the
"Board") from time to time in accordance with this Agreement. During the "Term",
as defined in Section 5 below, and any extension thereof, the Executive shall
perform such duties on a full-time basis provided, however, that the Executive
shall not be precluded from devoting such time to such other business and
personal affairs as shall not materially interfere with the performance of his
duties hereunder.
2. COMPENSATION. (A) BASE SALARY - For the Executive's services
hereunder, the Company shall pay the Executive an annual salary (as the same may
be increased from time to time, the "Base Salary") of $200,000 payable in
accordance with the customary payroll practices of the Company.
(B) BONUS - The Executive shall be entitled to a bonus of
$50,000 for each calendar year during the Term of this Agreement if the Company
achieves or exceeds "Plan" for such calendar year. If the Company achieves less
than 95% of Plan for any calendar year, Executive shall not be entitled to any
bonus for such calendar year. If the Company achieves 95% or more of Plan for
any calendar year but less than 100% of Plan for such calendar year, Executive
shall be entitled to a proportionate share of the $50,000 bonus for such
calendar year.
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Such bonus shall be payable within twenty (20) days after the Company's
Compensation Committee receives the Company's audited financials for such year.
If the Executive was not employed by the Company for the entire calendar year,
the bonus otherwise payable, if any, for such calendar year will be pro-rated
for the number of complete months of such year during which the Executive was
employed. "Plan" for purposes hereof shall mean the Company's (and its
subsidiaries on a consolidated basis) earnings before interest, taxes,
depreciation and amortization less capital expenditures for the applicable
period as set forth in the projections provided to its lenders in connection
with the Company's Credit Agreement of even date, as now or hereafter amended.
In addition, the Executive shall be entitled to such other bonus or bonuses as
the Board in its discretion may determine to award to him from time to time.
(C) ADJUSTMENTS. The Base Salary shall be increased by
$25,000 per annum and the bonus shall be increased by $25,000 per annum (or a
pro-rata portion thereof for any period less than a year) should David Unger
("Unger") in his sole discretion elect to reduce his time commitment to the
Company as set forth in paragraph 3 of Unger's Employment Agreement with the
Company of even date (the "Unger Employment Agreement").
(D) WITHHOLDING. All payments required to be made by the
Company to the Executive under this Agreement (whether under this Section 2 or
otherwise) shall be subject to withholding taxes, social security and other
payroll deductions as required by law in accordance with the Company's policies
applicable to employees of the Company at the Executive's level and the
provisions of the "Benefit Plans," as defined in Section 3 below.
3. BENEFITS. (A) BENEFITS PLANS - During the Term, the Company
shall provide to the Executive all fringe benefits which the Company may
generally make available to its senior executive employees from time to time,
including, without limitation, benefits provided under the Company's pension and
profit-sharing plans (if any), health benefit plans (such as medical and
hospitalization coverage), and insurance plans (such as life, supplemental life,
disability, business travel, accident and accidental death and dismemberment) on
the same basis as offered to such other executives (collectively, the "Benefit
Plans").
(B) AUTOMOBILE - During the Term, the Company shall
provide the Executive with either of the following, at the Executive's option,
(a) a car allowance or (b) a luxury class car with lease or finance payments to
be paid by the Company provided that the Company shall not be obligated to spend
more than $500 per month with respect to the foregoing and all related expenses,
which amount may be increased by the amount by which the maximum $500 per month
similar benefit available to Unger under the Unger Employment Agreement is not
used.
(C) VACATIONS, SICK LEAVE AND HOLIDAYS. The Executive
shall be entitled to four (4) weeks of paid vacation during each year of the
Term (and a pro rata portion thereof for any portion of the Term and any
extension thereof that is less than a full year). In addition, Executive shall
be entitled to paid sick leave and holidays in accordance with the Company's
usual policies for its executives.
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4. REIMBURSEMENT OF EXPENSES. During the Term, the Company shall
pay or reimburse the Executive for all reasonable travel, entertainment and
other business expenses actually incurred or paid by the Executive in the
performance of his duties hereunder upon presentation of expense statements or
vouchers or such other supporting information as the Company may reasonably
require of the Executive, but only to the extent that such expenses are incurred
in accordance with the Company's general policies as in effect from time to
time.
5. TERM; TERMINATION. Subject to the provisions of this Section
5, the initial term of the Executive's employment under this Agreement shall
commence on the date hereof and shall end on the first anniversary hereof
(except for those obligations, if any, which by their terms survive or
continue). This Agreement shall automatically be renewed upon the expiration of
said one-year period for successive additional periods of one year each unless
either party notifies the other in writing at least ninety (90) days prior to
the expiration of the then current Term of its/his election to terminate this
Agreement as of the end of such term. The initial one-year term and all renewals
thereof are referred to herein as the "Term". The employment of the Executive
may be terminated prior to the expiration of the Term in the manner described in
this Section 5.
(A) TERMINATION BY THE COMPANY FOR GOOD CAUSE - The
Company shall have the right to terminate the employment of the Executive for
"Good Cause" (as such term is defined herein) by written notice to the Executive
specifying the particulars of the conduct of the Executive forming the basis for
such termination.
(B) TERMINATION BY THE EXECUTIVE FOR GOOD REASON - The
Executive shall have the right to terminate his employment hereunder for Good
Reason (as such term is defined herein) by written notice to the Company
specifying the grounds constituting such Good Reason.
(C) TERMINATION UPON DEATH - The employment of the
Executive hereunder shall terminate immediately upon his death.
(D) TERMINATION BY THE COMPANY WITHOUT GOOD CAUSE. The
Company shall have the right to terminate the employment of the Executive
without "Good Cause" upon at least ninety (90) days prior written notice to the
Executive.
(E) THE COMPANY'S OPTIONS UPON DISABILITY. If the
Executive becomes physically or mentally disabled during the Term and any
extension thereof so that he is unable to perform the services required of him
pursuant to this Agreement for an aggregate of 90 days in any six-month period
(the "Disability Period"), the Board shall have the option, in its discretion,
by giving written notice thereof, either to (A) terminate the Executive's
employment hereunder; or (B) continue the employment of the Executive hereunder
upon all the terms and conditions set forth herein except that for the balance
of the Term and any extension thereof the Executive, while disabled, shall
receive as compensation on amount equal to 50% of the Base Salary then in
effect, (retaining full benefits) which compensation shall revert to full pay in
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accordance with the terms and provisions hereof when the Executive is able to
resume his duties on substantially the same basis as prior to the occurrence of
such disability. Regardless of which option the Company exercises or shall be
deemed to have exercised, during the Disability Period, the Executive shall
continue to receive his Base Salary and other benefits (other than a bonus which
bonus, if any, shall be pro-rated for the number of complete months during which
the Executive was employed hereunder and not disabled) provided herein net of
any payments received under any disability policy or program of which the
Executive is a beneficiary or recipient.
(F) TERMINATION DATE - Any notice of termination given
pursuant to the provisions of this Agreement shall specify therein the effective
date of such termination (the "Termination Date").
(G) CERTAIN DEFINITIONS - For purposes of this Agreement,
the following terms shall have the following meanings:
(i) The "affiliate" of any Person means any other
Person directly or indirectly through one or more intermediary Persons,
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" shall mean the power to direct the
management and policies of such Person, directly or indirectly, by or through
stock or equity ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other Persons by or through stock or equity ownership, agency or otherwise;
and the terms "controlling" and "controlled" shall have meanings correlative to
the foregoing.
(ii) "Change of Control" with respect to the Company,
means the occurrence of any of the following:
(A) the merger or consolidation of the Company
with one or more other corporations as a result of which the
holders of the outstanding capital stock of the Company entitled
to vote for the election of directors immediately before the
merger hold less than 51% of such voting shares of the surviving
or resulting corporation;
(B) the sale of all or substantially all of the
assets of the Company or its subsidiaries taken as a whole;
(C) individuals who are representatives of
SunCom Communications L.L.C. cease for any reason to constitute
at least four members of the Board of Directors of the Company,
unless the election, or the nomination for election by the
Company's stockholders, of each new director was approved by a
vote of a majority of the directors then still in office who were
directors at the date hereof; or
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(D) Suncom Communications L.L.C. ceases to own
at least 51% of the issued and outstanding voting shares.
Provided, however, that a Change of Control shall not be deemed to have occurred
hereunder if either (A) the Executive has consented thereto or (B) such change
occurs in accordance with the Second Amended and Restated Limited Liability
Company Agreement of even date, as amended, of SunCom Communications L.L.C. as a
result of the Company's failure to achieve certain required percentages of Plan.
(iii) "Good Cause" shall exist if, and only if:
(A) the Executive fails in any material respect
to perform his obligations hereunder as provided herein, provided
that such Good Cause shall not exist hereunder unless the Company
shall first have provided the Executive with written notice
specifying in reasonable detail the factors constituting such
material failure and such material failure shall not have been
cured in all material respects by the Executive within ten (10)
business days after such notice;
(B) the Executive has been convicted of a crime
which constitutes a felony under applicable law or has entered a
plea of guilty or nolo contendere with respect thereto;
(C) the Executive is dependent upon alcohol or
illegal drugs; or
(D) the Company (and its subsidiaries on a
consolidated basis) achieves less than 70% of Plan with respect
to any applicable fiscal quarter during the Term.
(iv) "Good Reason" means the occurrence of any of the
following events:
(A) (i) the assignment to the Executive of any
duties inconsistent in any material respect with the Executive's
then position (including status, offices, titles and reporting
relationships), authority, duties or responsibilities, or any
other action by the Company which when taken as a whole results
in a significant diminution in the Executive's position,
authority, duties or responsibilities, or (ii) any other material
breach by the Company of the terms and provisions of this
Agreement not otherwise covered by subsections (B) and (C) below,
provided that Good Reason shall not exist hereunder unless the
Executive shall first have provided the Company with written
notice specifying in reasonable detail the Company's breach and
the Company shall not have cured
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such breach in all material respects within ten (10) business
days after such notice;
(B) a Change of Control of the Company; or
(C) the Company requiring the Executive to be
based at any location other than New York City, New York except
for requirements of temporary travel on the Company's business.
(v) "Person" means any individual, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture, court or government (or political subdivision or
agency thereof).
6. OBLIGATIONS ON TERMINATION. (A) PAYMENT OBLIGATIONS OF THE
COMPANY IN CASE OF TERMINATION FOR GOOD REASON OR WITHOUT CAUSE OR REASON. (i)
Upon termination of the Executive's employment pursuant to Sections 5(b), the
Company shall pay the Executive a lump sum cash payment equal to the greater of
(A) three months Base Salary or (B) the Base Salary for the then remaining Term,
plus, in either event, unreimbursed expenses, payable on the Termination Date,
plus any accrued and unpaid bonuses.
(ii) Notwithstanding anything to the contrary
contained herein or in any other agreement between the Company and the
Executive, in the event that Executive's employment is terminated pursuant to
Section 5(b) hereof, any and all costs and expenses, including but not limited
to, reasonable legal fees incurred by Executive in enforcing or establishing any
of his rights hereunder shall be immediately paid to Executive upon presentation
to the Company of such itemized documentation therefor as the Company may
reasonably require.
(iii) Upon termination of the Executive's employment
pursuant to Section 5(d), the Company shall pay the Executive a lump sum cash
payment equal to the Base Salary for the then remaining Term and unreimbursed
expenses payable on the Termination Date, plus any accrued and unpaid bonus.
(B) PAYMENT OBLIGATIONS OF THE COMPANY IN CASE OF
TERMINATION FOR DEATH, VOLUNTARY RESIGNATION OR GOOD CAUSE. Upon termination of
the Executive's employment upon death or disability, by the Executive for any
reason other than Good Reason or by the Company for Good Cause, the Company
shall have no payment obligations to the Executive, except for the payment of
any accrued and unpaid compensation as of the Termination Date (including unpaid
bonuses and other unpaid benefits) and reimbursement of any unreimbursed
expenses except as provided pursuant to Section 5(e) above, except that, in the
event of death, the Company shall also pay the Executive's estate a lump sum
equal to three (3) months of the Executive's Base Salary in effect on the date
of death, within ten (10) days after the date of death.
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(C) THE EXECUTIVE'S RIGHT TO ACQUIRE AUTOMOBILES. Upon
termination of the Executive's employment with the Company for whatever reason,
at his option to be exercised by the Executive giving written notice thereof
within 30 days of the Termination Date, the Executive may assume all obligations
of the Company under the applicable sale or lease agreement relating to the
automobile then being provided by the Company to the Executive pursuant to
Section 3 hereof provided that the Executive agrees to indemnify the Company
with respect thereto. If such automobile has been fully-paid for by the Company,
the Executive shall have the right to purchase it from the Company at its then
book value.
(D) CONTINUED MEDICAL COVERAGE. Upon the termination of
the Executive's employment with the Company for whatever reason, to the extent
permitted by applicable law, the Company shall continue to provide the Executive
with medical and hospitalization insurance coverage for a period of the longer
of: (i) 12 months from the Termination Date; (ii) the period required by
applicable law or (iii) the period set forth in the applicable Benefit Plans at
the Executive's cost in the case of termination under Section 5(a) or 5(c) or in
the case of non-renewal of the Term by the Executive pursuant to Section 5 or at
the Company's cost in the case of non-renewal of the Term by the Company
pursuant to Section 5 or in the case of termination under Section 5(b), (d) or
(e).
7. SEVERABILITY. Should any provision of this Agreement be held,
by a court of competent jurisdiction, to be invalid or unenforceable, such
invalidity or unenforceability shall not render the entire Agreement invalid or
unenforceable, and this Agreement and each individual provision hereof shall be
enforceable and valid to the fullest extent permitted by law.
8. SUCCESSORS AND ASSIGNS. (a) This Agreement and all rights
under this Agreement are personal to the Executive and shall not be assignable
other than by will or the laws of descent. All of the Executive's rights under
the Agreement shall inure to the benefit of his heirs, personal representatives,
designees or other legal representatives, as the case may be.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. Any Person succeeding
to the business of the Company by merger, purchase, consolidation or otherwise
shall assume by contract or operation of law the obligations of the Company
under this Agreement.
9. GOVERNING LAW; JURISDICTION. This Agreement shall be construed
in accordance with and governed by the laws of the State of New York, without
regard to the conflicts of laws rules thereof. The parties hereby irrevocably
submit to the exclusive jurisdiction of any state or federal court in New York
County, New York with respect to any dispute arising out of or in connection
with this Agreement.
10. NOTICES. All notices, requests and demands given to or made
upon the respective parties hereto shall be deemed to have been given when
received or refused if mailed by registered or certified mail, postage prepaid,
if delivered by hand, or if delivered by Federal Express or similar overnight
delivery service, addressed to the parties at their addresses set forth
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below or to such other addresses furnished by notice given in accordance with
this Section 10: (a) if to the Company, to Gateway Center, 1000 Legion Place,
Suite 1515, Orlando, Florida 32801, and (b) if to the Executive, to 920 Park
Avenue, New York, New York 10028.
11. COMPLETE UNDERSTANDING. This Agreement supersedes any prior
contracts, understandings, discussions and agreements relating to employment
between the Executive and the Company and constitutes the complete understanding
between the parties with respect to the subject matter hereof. No statement,
representation, warranty or covenant has been made by either party with respect
to the subject matter hereof except as expressly set forth herein or therein.
12. MODIFICATION; WAIVER. (a) This Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by the Company and the Executive or in the case of a
waiver, by the party against whom the waiver is to be effective. Any such waiver
shall be effective only to the extent specifically set forth in such writing.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
13. MUTUAL REPRESENTATIONS. (a) The Executive represents and
warrants to the Company that the execution and delivery of this Agreement and
the fulfillment of the terms hereof (i) will not constitute a default under or
conflict with any agreement or other instrument to which he is a party or by
which he is bound (taking into account the contemporaneous termination of the
Management Agreement between SunCom Communications L.L.C. and SunCom Management
L.L.C. dated September 14, 1995) and (ii) do not require the consent of any
Person.
(b) The Company represents and warrants to the Executive
that this Agreement has been duly authorized, executed and delivered by the
Company and that the fulfillment of the terms hereof (i) will not constitute a
default under or conflict with any agreement or other instrument to which it is
a party or by which it is bound and (ii) do not require the consent of any
Person.
(c) Each party hereto warrants and represents to the other
that this Agreement constitutes the valid and binding obligation of such party
enforceable against such party in accordance with its terms.
14. HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not control or affect the meaning or construction of
this Agreement.
15. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received counterparts
hereof signed by the other party hereto.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
duly executed in its corporate name by one of its officers duly authorized to
enter into and execute this Agreement, and the Executive has manually signed his
name hereto, all as of the day and year first above written.
AUDIO COMMUNICATIONS NETWORK, INC.
_____________________ By:_______________________________
Witness Name/Title:_______________________
_____________________ __________________________________
Witness MITCHELL KLEINHANDLER
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EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of May 30, 1997, between
AUDIO COMMUNICATIONS NETWORK, INC., a Florida corporation (the "Company"), and
DAVID UNGER (the "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ the Executive, and the
Executive desires to accept such employment, on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises,
representations and warranties set forth herein, and for other good and valuable
consideration, it is hereby agreed as follows:
1. POSITION AND DUTIES. (A) EMPLOYMENT AND POSITION - The Company
hereby agrees to employ the Executive, and the Executive hereby accepts such
employment, upon the terms and conditions set forth herein. The Executive shall
serve as Executive Vice President of the Company. The Executive shall also serve
as an executive officer of any or all of the Company's subsidiaries without any
compensation other than as set forth herein.
(B) DUTIES - During the Term, (a) until such time as
Executive elects the option described in Section 3 below, Executive shall
perform the duties described in Exhibit A annexed hereto and (b) the Executive
shall perform and discharge the duties generally consistent with the position of
Executive Vice President and such other executive duties consistent with such
offices as may be assigned to him by the Board of Directors of the Company (the
"Board") from time to time in accordance with this Agreement. During the "Term",
as defined in Section 6 below, and any extension thereof, the Executive shall
perform such duties on a full-time basis provided, however, that the Executive
shall not be precluded from devoting such time to such other business and
personal affairs as shall not materially interfere with the performance of his
duties hereunder.
2. COMPENSATION. (A) BASE SALARY - For the Executive's services
hereunder, the Company shall pay the Executive an annual salary (as the same may
be increased from time to time, the "Base Salary") of $200,000, payable in
accordance with the customary payroll practices of the Company.
(B) BONUS - The Executive shall be entitled to a bonus of
$50,000 for each calendar year during the Term of this Agreement if the Company
achieves or exceeds "Plan" for such calendar year. If the Company achieves less
than 95% of Plan for any calendar year, Executive shall not be entitled to any
bonus for such calendar year. If the Company achieves
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more than 95% or more of Plan for any calendar year but less than 100% of Plan
for such calendar year, Executive shall be entitled to a proportionate share of
the $50,000 bonus for such calendar year. Such bonus shall be payable within
twenty (20) days after the Company's Compensation Committee receives the
Company's audited financials for such year. If the Executive was not employed by
the Company for the entire calendar year, the bonus otherwise payable, if any,
for such calendar year will be pro-rated for the number of complete months of
such year during which the Executive was employed. "Plan" for purposes hereof
shall mean the Company's (and its subsidiaries on a consolidated basis) earnings
before interest, taxes, depreciation and amortization less capital expenditures
for the applicable period as set forth in the projections provided to its
lenders in connection with the Company's Credit Agreement of even date, as now
or hereafter amended. In addition, the Executive shall be entitled to such other
bonus or bonuses as the Board in its discretion may determine to award to him
from time to time.
(C) WITHHOLDING. All payments required to be made by the
Company to the Executive under this Agreement (whether under this Section 2 or
otherwise) shall be subject to withholding taxes, social security and other
payroll deductions as required by law in accordance with the Company's policies
applicable to employees of the Company at the Executive's level and the
provisions of the "Benefit Plans," as defined in Section 3 below.
3. ADJUSTMENTS. Notwithstanding the provisions of Sections 1 and
2 above, at the election of the Executive, in his sole and absolute discretion
(which election shall be made by written notice to the Company specifying the
effective date of such election), the Executive may reduce his duties so that he
only needs to devote a maximum of 40% of his business time to the business and
affairs of the Company. Should Executive make such election, and effective as of
the effective date of such election, Executive's Base Salary shall be reduced to
$100,000 per annum and Executive shall no longer be entitled to a bonus
(although Executive shall be entitled to a pro rata share of the bonus he would
otherwise have been entitled to for the year in which such election is made,
based on the number of complete months elapsed in such year prior to the
effective date of such election). In all other respects, however, Executive's
benefits, rights and duties under this Agreement shall be unchanged.
4. BENEFITS. (A) BENEFITS PLANS - During the Term, the Company
shall provide to the Executive all fringe benefits which the Company may
generally make available to its senior executive employees from time to time,
including, without limitation, benefits provided under the Company's pension and
profit-sharing plans (if any), health benefit plans (such as medical and
hospitalization coverage), and insurance plans (such as life, supplemental life,
disability, business travel, accident and accidental death and dismemberment) on
the same basis as offered to such other executives (collectively, the "Benefit
Plans").
(B) AUTOMOBILE - During the Term, the Company shall
provide the Executive with either of the following, at the Executive's option,
(a) a car allowance or (b) a luxury class car with lease or finance payments to
be paid by the Company; provided that the Company shall not be obligated to
spend more than $500 per month with respect to the foregoing
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and all related expenses, which amount may be increased by the amount by which
the maximum $500 per month similar benefit available to Mitchell Kleinhandler
under his Employment Agreement with the Company of even date is not used.
(C) VACATIONS, SICK LEAVE AND HOLIDAYS. The Executive
shall be entitled to no less than four (4) weeks of paid vacation during each
year of the Term (and a pro rata portion thereof for any portion of the Term and
any extension thereof that is less than a full year). In addition, Executive
shall be entitled to paid sick leave and holidays in accordance with the
Company's usual policies for its executives.
5. REIMBURSEMENT OF EXPENSES. During the Term, the Company shall
pay or reimburse the Executive for all reasonable travel, entertainment and
other business expenses actually incurred or paid by the Executive in the
performance of his duties hereunder upon presentation of expense statements or
vouchers or such other supporting information as the Company may reasonably
require of the Executive, but only to the extent that such expenses are incurred
in accordance with the Company's general policies as in effect from time to
time.
6. TERM; TERMINATION. Subject to the provisions of this Section
6, the initial term of the Executive's employment under this Agreement shall
commence on the date hereof and shall end on the first anniversary hereof
(except for those obligations, if any, which by their terms survive or
continue); provided, however, that if Executive has elected the option set forth
in Section 3 above prior to said first anniversary, said initial term shall be
extended automatically, without the necessity of any further action, to the
second anniversary hereof. This Agreement shall automatically be renewed upon
the expiration of said period for successive additional periods of one year each
unless either party notifies the other in writing at least ninety (90) days
prior to the expiration of the then current Term of its/his election to
terminate this Agreement as of the end of such term. The initial term and all
extensions and renewals thereof are referred to herein as the "Term". The
employment of the Executive may be terminated prior to the expiration of the
Term in the manner described in this Section 5.
(A) TERMINATION BY THE COMPANY FOR GOOD CAUSE - The
Company shall have the right to terminate the employment of the Executive for
"Good Cause" (as such term is defined herein) by written notice to the Executive
specifying the particulars of the conduct of the Executive forming the basis for
such termination.
(B) TERMINATION BY THE EXECUTIVE FOR GOOD REASON - The
Executive shall have the right to terminate his employment hereunder for Good
Reason (as such term is defined herein) by written notice to the Company
specifying the grounds constituting such Good Reason.
(C) TERMINATION UPON DEATH - The employment of the
Executive hereunder shall terminate immediately upon his death.
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(D) TERMINATION BY THE COMPANY WITHOUT GOOD CAUSE. The
Company shall have the right to terminate the employment of the Executive
without "Good Cause" upon at least ninety (90) days prior written notice to the
Executive.
(E) THE COMPANY'S OPTIONS UPON DISABILITY. If the
Executive becomes physically or mentally disabled during the Term and any
extension thereof so that he is unable to perform the services required of him
pursuant to this Agreement for an aggregate of 90 days in any six-month period
(the "Disability Period"), the Board shall have the option, in its discretion,
by giving written notice thereof, either to (A) terminate the Executive's
employment hereunder; or (B) continue the employment of the Executive hereunder
upon all the terms and conditions set forth herein except that for the balance
of the Term and any extension thereof the Executive, while disabled, shall
receive as compensation on amount equal to 50% of the Base Salary then in
effect, (retaining full benefits) which compensation shall revert to full pay in
accordance with the terms and provisions hereof when the Executive is able to
resume his duties on substantially the same basis as prior to the occurrence of
such disability. Regardless of which option the Company exercises or shall be
deemed to have exercised, during the Disability Period, the Executive shall
continue to receive his Base Salary and other benefits (other than a bonus,
which bonus, if any, shall be pro-rated for the number of complete months during
which the Executive was employed hereunder and not disabled), provided herein
net of any payments received under any disability policy or program of which the
Executive is a beneficiary or recipient.
(F) TERMINATION DATE - Any notice of termination given
pursuant to the provisions of this Agreement shall specify therein the effective
date of such termination (the "Termination Date").
(G) CERTAIN DEFINITIONS - For purposes of this Agreement,
the following terms shall have the following meanings:
(i) The "affiliate" of any Person means any other
Person directly or indirectly through one or more intermediary Persons,
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" shall mean the power to direct the
management and policies of such Person, directly or indirectly, by or through
stock or equity ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other Persons by or through stock or equity ownership, agency or otherwise;
and the terms "controlling" and "controlled" shall have meanings correlative to
the foregoing.
(ii) "Change of Control" with respect to the Company,
means the occurrence of any of the following:
(A) the merger or consolidation of the Company
with one or more other corporations as a result of which the
holders of the outstanding capital stock of the Company entitled
to vote for the election of directors
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immediately before the merger hold less than 51% of such voting
shares of the surviving or resulting corporation;
(B) the sale of all or substantially all of the
assets of the Company or its subsidiaries taken as a whole;
(C) individuals who are representatives of
SunCom Communications L.L.C. cease for any reason to constitute
at least four members of the Board of Directors of the Company,
unless the election, or the nomination for election by the
Company's stockholders, of each new director was approved by a
vote of a majority of the directors then still in office who were
directors at the date hereof; or
(D) Suncom Communications L.L.C. ceases to own
at least 51% of the issued and outstanding voting shares of the
Company.
Provided, however, that a Change of Control shall not be deemed to have occurred
hereunder if either (A) the Executive has consented thereto or (B) such change
occurs in accordance with the Second Amended and Restated Limited Liability
Company Agreement of even date, as amended, of Suncom Communications L.L.C. as a
result of the Company's failure to achieve certain required percentages of Plan.
(iii) "Good Cause" shall exist if, and only if:
(A) the Executive fails in any material respect
to perform his obligations hereunder as provided herein, provided
that such Good Cause shall not exist hereunder unless (1) the
Company shall first have provided the Executive with written
notice specifying in reasonable detail the factors constituting
such material failure and such material failure shall not have
been cured in all material respects by the Executive within ten
(10) business days after such notice;
(B) the Executive has been convicted of a crime
which constitutes a felony under applicable law or has entered a
plea of guilty or nolo contendere with respect thereto;
(C) the Executive is dependent upon alcohol or
illegal drugs; or
(D) the Company (and its subsidiaries on a
consolidated basis) achieves less than 70% of Plan with respect
to any applicable fiscal quarter during the Term.
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(iv) "Good Reason" means the occurrence of any of the
following events:
(A) (i) the assignment to the Executive of any
duties inconsistent in any material respect with the Executive's
then position (including status, offices, titles and reporting
relationships), authority, duties or responsibilities, or any
other action by the Company which when taken as a whole results
in a significant diminution in the Executive's position,
authority, duties or responsibilities, or (ii) any other material
breach by the Company of the terms and provisions of this
Agreement not otherwise covered by subsections (B) and (C) below,
provided that Good Reason shall not exist hereunder unless the
Executive shall first have provided the Company with written
notice specifying in reasonable detail the Company's breach and
the Company shall not have cured such breach in all material
respects within ten (10) business days after such notice;
(B) a Change of Control of the Company; or
(C) the Company requiring the Executive to be
based at any location other than New York City, New York except
for requirements of temporary travel on the Company's business.
(v) "Person" means any individual, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture, court or government (or political subdivision or
agency thereof).
7. OBLIGATIONS ON TERMINATION. (A) PAYMENT OBLIGATIONS OF THE
COMPANY IN CASE OF TERMINATION FOR GOOD REASON OR WITHOUT GOOD CAUSE OR REASON.
(i) Upon termination of the Executive's employment pursuant to Sections 6(b),
the Company shall pay the Executive a lump sum cash payment equal to the greater
of (A) three months Base Salary or (B) the Base Salary for the then remaining
Term, plus, in either event, unreimbursed expenses, payable on the Termination
Date, plus any accrued and unpaid bonuses.
(ii) Notwithstanding anything to the contrary
contained herein or in any other agreement between the Company and the
Executive, in the event that Executive's employment is terminated pursuant to
Section 6(b) hereof, any and all costs and expenses, including but not limited
to, reasonable legal fees incurred by Executive in enforcing or establishing any
of his rights hereunder shall be immediately paid to Executive upon presentation
to the Company of such itemized documentation therefor as the Company may
reasonably require.
(iii) Upon termination of the Executive's employment
pursuant to Section 6(d), the Company shall pay the Executive a lump sum cash
payment equal to his
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Base Salary for the then remaining Term and unreimbursed expenses, payable on
the Termination Date, plus any accrued and unpaid bonus.
(B) PAYMENT OBLIGATIONS OF THE COMPANY IN CASE OF
TERMINATION FOR DEATH, VOLUNTARY RESIGNATION OR GOOD CAUSE. Upon termination of
the Executive's employment upon death or disability, by the Executive for any
reason other than Good Reason or by the Company for Good Cause, the Company
shall have no payment obligations to the Executive, except for the payment of
any accrued and unpaid compensation as of the Termination Date (including unpaid
bonuses and other unpaid benefits) and reimbursement of any unreimbursed
expenses except as provided pursuant to Section 6(e) above, except that, in the
event of death, the Company shall also pay the Executive's estate a lump sum
equal to three (3) months of the Executive's Base Salary in effect on the date
of death, within ten (10) days after the date of death.
(C) THE EXECUTIVE'S RIGHT TO ACQUIRE AUTOMOBILES. Upon
termination of the Executive's employment with the Company for whatever reason,
at his option to be exercised by the Executive giving written notice thereof
within 30 days of the Termination Date, the Executive may assume all obligations
of the Company under the applicable sale or lease agreement relating to the
automobile then being provided by the Company to the Executive pursuant to
Section 3 hereof provided that the Executive agrees to indemnify the Company
with respect thereto. If such automobile has been fully-paid for by the Company,
the Executive shall have the right to purchase it from the Company at the
Company's then book value.
(D) CONTINUED MEDICAL COVERAGE. Upon the termination of
the Executive's employment with the Company for whatever reason, to the extent
permitted by applicable law, the Company shall continue to provide the Executive
with medical and hospitalization insurance coverage for a period of the longer
of: (i) 12 months from the Termination Date; (ii) the period required by
applicable law or (iii) the period set forth in the applicable Benefit Plans at
the Executive's cost in the case of termination under Section 6(a) or 6(c) or in
the case of non-renewal of the Term by the Executive pursuant to Section 6 or at
the Company's cost in the case of non-renewal of the Term by the Company
pursuant to Section 6 or in the case of termination under Section 6(b), (d) or
(e).
8. SEVERABILITY. Should any provision of this Agreement be held,
by a court of competent jurisdiction, to be invalid or unenforceable, such
invalidity or unenforceability shall not render the entire Agreement invalid or
unenforceable, and this Agreement and each individual provision hereof shall be
enforceable and valid to the fullest extent permitted by law.
9. SUCCESSORS AND ASSIGNS. (a) This Agreement and all rights
under this Agreement are personal to the Executive and shall not be assignable
other than by will or the laws of descent. All of the Executive's rights under
the Agreement shall inure to the benefit of his heirs, personal representatives,
designees or other legal representatives, as the case may be.
-7-
<PAGE>
<PAGE>
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. Any Person succeeding
to the business of the Company by merger, purchase, consolidation or otherwise
shall assume by contract or operation of law the obligations of the Company
under this Agreement.
10. GOVERNING LAW; JURISDICTION. This Agreement shall be
construed in accordance with and governed by the laws of the State of New York,
without regard to the conflicts of laws rules thereof. The parties hereby
irrevocably submit to the exclusive jurisdiction of any state or federal court
in New York County, New York with respect to any dispute arising out of or in
connection with this Agreement.
11. NOTICES. All notices, requests and demands given to or made
upon the respective parties hereto shall be deemed to have been given when
received or refused if mailed by registered or certified mail, postage prepaid,
if delivered by hand, or if delivered by Federal Express or similar overnight
delivery service, addressed to the parties at their addresses set forth below or
to such other addresses furnished by notice given in accordance with this
Section 11: (a) if to the Company, to Gateway Center, 1000 Legion Place, Suite
1515, Orlando, Florida 32801, and (b) if to the Executive, to 220 East 54th
Street, New York, New York 10022.
12. COMPLETE UNDERSTANDING. This Agreement supersedes any prior
contracts, understandings, discussions and agreements relating to employment
between the Executive and the Company and constitutes the complete understanding
between the parties with respect to the subject matter hereof. No statement,
representation, warranty or covenant has been made by either party with respect
to the subject matter hereof except as expressly set forth herein or therein.
13. MODIFICATION; WAIVER. (a) This Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by the Company and the Executive or in the case of a
waiver, by the party against whom the waiver is to be effective. Any such waiver
shall be effective only to the extent specifically set forth in such writing.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
14. MUTUAL REPRESENTATIONS. (a) The Executive represents and
warrants to the Company that the execution and delivery of this Agreement and
the fulfillment of the terms hereof (i) will not constitute a default under or
conflict with any agreement or other instrument to which he is a party or by
which he is bound (taking into account the contemporaneous termination of the
Management Agreement between SunCom Communications L.L.C. and SunCom Management
L.L.C. dated September 14, 1995) and (ii) do not require the consent of any
Person.
-8-
<PAGE>
<PAGE>
(b) The Company represents and warrants to the Executive
that this Agreement has been duly authorized, executed and delivered by the
Company and that the fulfillment of the terms hereof (i) will not constitute a
default under or conflict with any agreement or other instrument to which it is
a party or by which it is bound and (ii) do not require the consent of any
Person.
(c) Each party hereto warrants and represents to the other
that this Agreement constitutes the valid and binding obligation of such party
enforceable against such party in accordance with its terms.
15. HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not control or affect the meaning or construction of
this Agreement.
16. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received counterparts
hereof signed by the other party hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
duly executed in its corporate name by one of its officers duly authorized to
enter into and execute this Agreement, and the Executive has manually signed his
name hereto, all as of the day and year first above written.
AUDIO COMMUNICATIONS NETWORK, INC.
_____________________ By:________________________________
Witness Name/Title:________________________
_____________________ ___________________________________
Witness DAVID UNGER
-9-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial
information extracted from 2nd Quarter 10-QSB
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,635,732
<SECURITIES> 0
<RECEIVABLES> 1,230,165
<ALLOWANCES> 0
<INVENTORY> 950,930
<CURRENT-ASSETS> 4,078,237
<PP&E> 11,896,458
<DEPRECIATION> 0
<TOTAL-ASSETS> 44,834,606
<CURRENT-LIABILITIES> 4,636,225
<BONDS> 0
<COMMON> 1,113,298
0
0
<OTHER-SE> 9,784,576
<TOTAL-LIABILITY-AND-EQUITY> 44,834,606
<SALES> 0
<TOTAL-REVENUES> 6,178,623
<CGS> 1,783,996
<TOTAL-COSTS> 5,371,171
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,054,890
<INCOME-PRETAX> (243,356)
<INCOME-TAX> 4,600
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (247,956)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> 0
</TABLE>
