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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 20, 1996.
Symetrics Industries, Inc.
(Exact Name of Registrant as specified in its charter)
Florida 0-4025 59-0954868
(State of Incorporation) (Commission File No) (IRS Employer
ID Number)
557 N. Harbor City Boulevard, Melbourne, Florida 32935
(Address of Principal Executive Offices)
Registrants telephone number: (407) 254-1500
Item 2. Acquisition or Disposition of Assets
On April 20, 1996, Symetrics Industries, Inc. ("Symetrics") acquired
approximately 95% of the outstanding capital stock of American Digital
Switching, Inc. ("ADS") of Melbourne, Florida. ADS is a provider of central
office digital switching systems and support services to telephone companies
serving the communications requirements of rural communities.
The acquisition was accomplished by the exchange of one share of
Symetrics' voting common stock for every 4.5 shares of ADS common stock
tendered (the "Exchange"). Pursuant to the Exchange, Symetrics exchanged
207,399 shares of Symetrics common stock, or approximately 13% of the
outstanding capital stock of Symetrics after the Exchange, for 933,334 shares
of ADS. There are 1,595,297 shares of Symetrics common stock outstanding
after the Exchange. The Symetrics shares acquired in the Exchange are subject
to certain registration rights. Symetrics intends to shortly complete the
acquisition of the remaining outstanding shares of ADS.
A copy of the Stock Purchase Agreement is filed as an exhibit to this
report.
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Item 7. Financial Statements and Exhibits
(a) and (b) Financial statements and pro forma financial information
required to be filed as part of this Form 8-K are not being filed herewith
because it is impractical to file them at this time. Symetrics intends to file
the required financial statements and pro forma financial information as soon
as practical, but not later than sixty (60) days after this report on Form 8-K
must be filed.
(c) Exhibits required to be filed by Item 601 of Regulation S-K:
2. Stock Purchase Agreement signed April 20, 1996 and
effective as of April 1, 1996 by and among Symetrics Industries, Inc., American
Digital Switching, Inc., and the Selling Shareholders named in Schedule 1
thereto.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Symetrics Industries, Inc.
Date: May 3, 1996 By: /s/ Dudlev E. Gamer, Jr.
-------------------------------
Dudley E. Gamer, Jr., President
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EXHIBIT INDEX
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Exhibit Description Page No.
2 Stock Purchase Agreement 3
signed April 20, 1996 and
effective as of April 1,
1996 by and among Symetrics
Industries, Inc., American
Digital Switching, Inc.,
and the Selling Shareholders
named in Schedule 1 thereto.
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STOCK PURCHASE AGREEMENT
Among
SYMETRICS INDUSTRIES, INC.
AMERICAN DIGITAL SWITCHING, INC.
and
SELLING SHAREHOLDERS
NAMED IN SCHEDULE 1
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Effective as of April 1, 1996
-----------------------------
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
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<S> <C>
1. Terms of the Exchange 1
2. Closing 1
3. Covenants and Agreements at Closing 2
4. Representations and Warranties of the Selling Shareholders 3
5. Covenants of Selling Shareholders 15
6. Representations and Warranties of Buyer 15
7. Covenants of Buyer 17
8. Mutual Covenants 20
9. Termination of Shareholders' Agreements 21
10. Appointment of Representative 21
11. Certain Understandings; Further Assurances 21
12. Indemnification 21
13. Assignment 23
14. No Third-Party Beneficiaries 24
15. Corporate Reorganization 24
16. Survival of Representations 24
17. Expenses 24
18. Amendments 24
19. Notices 24
20. Interpretation 25
21. Counterparts 25
22. Entire Agreement 25
23. Fees 25
24. Severability 25
25. Consent to Jurisdiction 25
26. Governing Law 25
Exhibit A Form of Opinion of Counsel to Selling Shareholders
Exhibit B Form of Opinion of Counsel to Buyer
Exhibit C Form of Employment Agreement
Exhibit D Form of Release
Exhibit E Form of Certificate of Management
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SCHEDULES
1 Selling Shareholders
2 Option Holders
4(l)(b) Liens on Company Equity Securities
4(II)(b) Foreign Qualification Jurisdictions
4(II)(c) Outstanding Indebtedness
4(II)(d) Equity Interests
4(II)(e) Financial Statements
4(II)(f) Liabilities
4(II)(g) Tax Liens and Claims
4(II)(h) Permitted Liens
4(II)(i)-(i) Owned Real Property and Related Reciprocal Easement Agreements
4(II)(i)-(ii) Leased Real Property and Related Reciprocal Easement Agreements
4(II)(j) Patents, Trade Rights, etc.
4(II)(k) Contracts
4(II)(l) Litigation
4(II)(m) Defaults
4(II)(o) Insurance
4(II)(p) Shareholders, Directors and Officers; Indebtedness
4(II)(q) Directors, Officers, Employees, etc.
4(II)(r) Material Events
4(II)(s) Employee Benefits
4(II)(t) Absence of Events
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT is executed this 20th day of April, 1996 and
effective as of April 1, 1996, among SYMETRICS INDUSTRIES, INC., a Florida
corporation (the "Buyer"), AMERICAN DIGITAL SWITCHING, INC., a Florida
corporation (the "Company"), and the SELLING SHAREHOLDERS named in Schedule 1
hereto (individually each a "Selling Shareholder", collectively, the "Selling
Shareholders").
BACKGROUND
The Buyer desires to acquire all of the outstanding equity securities of
the Company from the Selling Shareholders in exchange for a certain number of
shares of Buyer's voting common stock, par value $.25 per share ("Buyer Common
Stock") as hereinafter provided (the "Exchange").
Pursuant to the Exchange, each Selling Shareholder desires to transfer to
Buyer, the issued and outstanding common stock of the Company, par value $.01
per share ("Company Common Stock") listed opposite the name of the relevant
Selling Shareholder in Schedule I (the securities listed opposite the names of
the Selling Shareholders collectively, the "Company Equity Securities") upon
the terms and subject to the conditions hereinafter set forth.
TERMS OF AGREEMENT
Accordingly, the parties hereto hereby agree as follows:
1. TERMS OF THE EXCHANGE. On the terms and subject to the conditions of
this Agreement, and based upon the representations, warranties, covenants and
agreements contained herein:
(a) Each Selling Shareholder shall sell, assign, transfer and deliver
to Buyer at the Closing a certificate or certificates, as the case may be,
representing the Company Equity Securities listed opposite the name of such
Selling Shareholder in Schedule 1, duly endorsed in blank or accompanied by a
stock power duly endorsed in blank.
(b) In consideration for the Company Equity Securities referred to in
Section 1(a) above, Buyer shall deliver at the Closing to Edwin H. Eichler, as
agent for the Selling Shareholders (the "Representative"), certificates
registered in such names and for the number of shares of Buyer Common Stock as
set forth on Schedule 1. The Representative shall deliver to each Selling
Shareholder a certificate or certificates, as the case may be, representing
the number of shares of Buyer Common Stock set forth opposite the name of such
Selling Shareholder in Schedule 1. Buyer shall pay any stock transfer taxes
due as a result of the issuance of the Buyer Common Stock to the Selling
Shareholders.
(c) An aggregate of up to 218,509 shares of Buyer Common Stock shall
be delivered by Buyer in exchange for up to 983,334 shares of Company Equity
Securities as set forth on Schedule 1, on the basis of one share of Buyer
Common Stock for every 4.5 shares of Company Equity Securities owned by the
Selling Shareholders. No fractional shares of Buyer Common Stock shall be
issued in the Exchange. In lieu of receiving fractional shares, Selling
Shareholders entitled to receive fractional shares will receive payment in
cash delivered to the Representative at Closing based on the closing price of
Buyer Common Stock on the NASDAQ National Market System on the business day
before execution of this Agreement.
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2. CLOSING. The closing (the "Closing") of the Exchange shall be held at
such time and place as shall be mutually agreed upon between the parties
hereto The date on which the Closing shall occur is hereinafter referred to
as the "Closing Date."
3. COVENANTS AND AGREEMENTS AT CLOSING. Contemporaneously with
execution of this Agreement:
(a) Buyer shall have received an opinion dated the Closing Date of
Gray, Harris & Robinson, P.A., counsel to the Company, substantially in
the form of EXHIBIT A.
(b) Buyer shall have received such closing documents as the Buyer or
its counsel may reasonably request.
(c) The Company shall have entered into an employment agreement with
Richard F. Ostrow substantially in the form of EXHIBIT C hereto.
(d) All directors of the Company shall have resigned as directors and
members of all committees of the board of directors of the Company in
writing effective immediately after the Closing. All corporate officers
of the Company shall have resigned at or prior to the Closing in writing
effective immediately after the Closing subject to acceptance by the
Buyer.
(e) The Buyer shall have received from each person who is an officer
or a director of the Company a release, dated the date of the Closing,
substantially in the form of EXHIBIT D.
(f) The Company shall have entered into invention and confidential
information agreements in form acceptable to Buyer with each person who
is an employee of the Company.
(g) The Selling Shareholders shall have received an opinion dated the
Closing Date of Grocock, Loftis & Abramson, counsel to Buyer,
substantially in the form of EXHIBIT B.
(h) The Selling Shareholders shall have received such closing
documents as such Selling Shareholders or counsel for the Selling
Shareholders may reasonably request.
(i) The Company shall have entered into agreements with certain
holders of options to purchase Company Common Stock providing for the
termination of such options, and pursuant to Section 7(e) hereof Buyer
shall have granted options to purchase common stock of the Buyer to such
persons as set forth on SCHEDULE 2 hereof.
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(j) Pursuant to Section 9 hereof, the parties to the Shareholder and
Stock Redemption Agreement dated March 15, 1989 and the Shareholder and
Stock Redemption Agreement dated as of April 12, 1989 (the
"Shareholders' Agreements") shall have terminated the Shareholders'
Agreements.
(k) The Buyer shall have received a certificate substantially in the
Form of Exhibit E, signed by Richard F. Ostrow, president of the
Company, dated the Closing Date, confirming that to the best of his
knowledge, after reasonable investigation, the representations and
warranties of the Selling Shareholders made in this Agreement are true
and correct in all material respects.
(l) The Buyer shall have received a certificate of the secretary of
each of the corporate Selling Shareholders, dated as of the Closing
Date, with respect to the incumbency of the officer executing this
Agreement on behalf of such Selling Shareholder and certified copies of
all resolutions pertaining to the authorization of the transactions
described herein.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
(I) Each Selling Shareholder with respect to itself, severally, hereby
represents and warrants to Buyer as follows:
(a) AUTHORITY OF SELLING SHAREHOLDER. The Selling Shareholder, if it
is a corporation, is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation. The
Selling Shareholder, if it is a partnership, is a partnership duly organized,
validly existing and in good standing under the laws of its jurisdiction of
formation. The Selling Shareholder has all requisite power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. All acts and other proceedings required to be taken by the Selling
Shareholder to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and properly taken. This Agreement has been duly executed and
delivered by the Selling Shareholder and constitutes a valid and binding
obligation of the Selling Shareholder, enforceable against the Selling
Shareholder in accordance with its terms. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not conflict with, result in
any violation, involuntary termination of or constitute a default under, (i)
any provision of the Certificate of Incorporation, By-laws, partnership
agreement, trust agreement or other charter document, as the case may be, of
the Selling Shareholder (ii) any outstanding indenture, indebtedness, contract
or agreement to which the Selling Shareholder is a party or by which it or any
of their property is subject, or (iii) any judgment, order or decree, or
material statute, law, ordinance, rule or regulation applicable to the Selling
Shareholder or the property or assets of the Selling Shareholder. No material
consent, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, is required to
be obtained or made by or with respect to the Selling Shareholder or its
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affiliates in connection with the execution and delivery of this Agreement or
the consummation by the Selling Shareholder of the transactions contemplated
hereby, other than (i) compliance with and filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), if applicable, and (ii)
compliance with and filings under applicable Federal and state securities
laws.
(b) THE COMPANY EQUITY SECURITIES. The Selling Shareholder has good
and marketable title to the Company Equity Securities listed opposite the name
of such Selling Shareholder in Schedule 1, free and clear of any claims,
liens, pledges, encumbrances or security interests whatsoever except as set
forth on SCHEDULE 4(I)(B). At the Closing, good and marketable title to the
Company Equity Securities listed opposite the name of such Selling Shareholder
in Schedule 1 will pass to Buyer, free and clear of any claims, liens,
pledges, encumbrances or security interests whatsoever. The Company Equity
Securities listed opposite the name of each Selling Shareholder in Schedule 1
are not subject to any voting trust agreement or other contract, agreement,
arrangement, commitment or understanding, including any such agreement,
arrangement, commitment or understanding restricting or otherwise relating to
the voting, dividend rights or disposition of such Company Equity Securities.
(c) COMPLIANCE WITH APPLICABLE LAWS. The offer and sale by the
Selling Shareholder of the Company Equity Securities listed opposite the name
of such Selling Shareholder in Schedule 1 pursuant to this Agreement are
exempt from the registration requirements of applicable Federal and state
securities laws and neither the Selling Shareholder nor anyone acting on its
behalf will knowingly take any action hereafter that would cause the loss of
such exemption. The Selling Shareholder has complied and will comply with all
applicable "blue sky" or Federal securities laws in connection with the offer
and sale by the Selling Shareholder of the Company Equity Securities pursuant
to this Agreement.
(d) GOVERNMENTAL CONSENTS. All material consents, approvals, or
authorizations of, or registrations, qualifications, designations,
declarations, or filings with any Federal or state governmental authority on
the part of the Selling Shareholder required in connection with the
consummation of the transactions contemplated by this Agreement shall have
been obtained prior to or on the date of and be effective as of, the Closing.
(e) NO VIOLATION OF OTHER SELLING SHAREHOLDER REPRESENTATIONS AND
WARRANTIES. If such Selling Shareholder is not an Inside Selling Shareholder
(as defined in Section 4(II) below), to the best knowledge of such Selling
Shareholder the representations and warranties in Section 4(II) are true,
complete and correct (with the references in Section 4(II)(a)-(v) to Inside
Selling Shareholder(s) for the purposes of this Section 4(I)(e) being replaced
by references to Selling Shareholder(s)).
(f) DISCLOSURE. To the best knowledge of the Selling Shareholder, no
representation or warranty in this Agreement or any writing furnished pursuant
hereto or in connection with any transaction or agreement contemplated hereby,
contains any untrue statement of a material fact or omits to state any
material fact required to make the statements herein or therein not misleading
in light of the circumstances under which they are made and the Selling
Shareholder has disclosed to Buyer in writing all material adverse facts known
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to such Selling Shareholder relating to the Company.
(g) INVESTMENT REPRESENTATION. Each Selling Shareholder represents
that such Selling Shareholder understands that (i) the Buyer Common Stock has
not been registered under the Securities Act of 1933, as amended, and the
Buyer Common Stock is being issued in reliance upon the exemptions afforded by
Section 4(2) thereof, and Regulation D thereunder, for transactions by an
issuer not involving any public offering, (ii) the Buyer Common Stock must be
held indefinitely unless a subsequent disposition thereof is registered under
the Securities Act of 1933, as amended, or is exempt from registration, (iii)
the Buyer Common Stock will bear a legend to such effect, and (iv) Buyer will
make a notation on its transfer books to such effect. Each Selling
Shareholder further represents that (i) the Buyer Common Stock is being
acquired for investment and without any present view toward distribution
thereof to any other person, (ii) such Selling Shareholder will not sell or
otherwise dispose of the Buyer Common Stock except in compliance with the
registration requirements or exemption provisions under the Securities Act of
1933, as amended, applicable state securities laws and the rules and
regulations thereunder, and as otherwise set forth by the Securities and
Exchange Commission, (iii) such Selling Shareholder, individually or together
with his or its purchaser representative, has such knowledge and experience in
financial and business matters so that such Selling Shareholder is capable of
evaluating the risks and merits of an investment in the Buyer Common Stock,
(iv) in connection with the Exchange, the Selling Shareholder has been
furnished by Buyer with all information regarding Buyer which such Selling
Shareholder has requested or desires to know, all documents which could have
reasonably been provided have been made available for such Selling
Shareholder's inspection and review, and such Selling Shareholder has been
afforded the opportunity to ask questions of and receive answers from duly
authorized officers or other representatives of Buyer concerning the Buyer,
the terms and conditions of the Exchange and any additional information which
such Selling Shareholder has requested (v) such Selling Shareholder has had
access to the kind of financial and other information about the Buyer as would
be contained in a registration statement filed under the Securities Act of
1933, as amended, (vi) such Selling Shareholder has consulted with counsel, to
the extent deemed necessary, as to all matters covered by this Agreement and
has not relied upon Buyer for any explanation of the application of the
various federal or state securities laws with regard to the acquisition of the
Buyer Common Stock, (vii) such Selling Shareholder has investigated and is
familiar with the business, financial condition and prospects of Buyer, and
has been given sufficient access to and has acquired sufficient information
about Buyer to reach an informed and knowledgeable decision to acquire the
Buyer Common Stock, (viii) such Selling Shareholder recognizes that the
information furnished by Buyer, its officers, directors and advisors, does not
constitute investment, tax, accounting or legal advice and that he has
obtained and relied on appropriate professional advice regarding this
investment and the tax, accounting and legal consequences of this transaction,
and (ix) such Selling Shareholder is able to bear the economic risks of such
an investment.
(II) Union Telephone Company, Amtelecom Group, Inc., James W.
McConnell, Pigeon Telephone Company, Michael D. Jensen Amery Telecom, Inc. and
Agri-Valley Communications, Inc. (each an "Inside Selling Shareholder,"
collectively, the "Inside Selling Shareholders") hereby severally represent
and warrant to Buyer as follows:
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(a) AUTHORITY OF THE COMPANY. Each of the Company and Innovative
Engineering Services, Inc. (the "Subsidiary")is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida.
The Company has all requisite power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. All acts and other
proceedings required to be taken by the Company to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and properly taken. This
Agreement has been duly executed and delivered by the Company and constitutes
a valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms. To the best knowledge of the Inside Selling
Shareholders, after due and diligent inquiry of the Company's management, the
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will not
conflict with, result in any violation, involuntary termination of or
constitute a default under, (i) any provision of the Articles of Incorporation
or By-laws of the Company, (ii) except as set forth on SCHEDULE 4(II)(M), any
outstanding indenture, indebtedness, contract or agreement to which the
Company is a party or by which it or any of its property is subject, or (iii)
any judgment, order or decree, or material statute, law, ordinance, rule or
regulation applicable to the Company or the property or assets of the Company.
To the best knowledge of the Inside Selling Shareholders, after due and
diligent inquiry of the Company's management, no material consent, approval,
order or authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, is required to be obtained or made by or
with respect to the Company or its affiliates in connection with the execution
and delivery of this Agreement or the consummation by the Company of the
transactions contemplated hereby, other than (i) compliance with and filings
under the HSR Act, if applicable, and (ii) compliance with and filings under
applicable Federal and state securities laws.
(b) STANDING OF THE COMPANY. To the best knowledge of the Inside
Selling Shareholders, after due and diligent inquiry of the Company's
management, Each of the Company and the Subsidiary has full corporate power
and authority and possesses all material governmental franchises, licenses,
permits, authorizations and approvals necessary to enable it to use its
corporate name and to own, lease or otherwise hold its properties and assets
and to carry on its business as presently conducted. Each of the Company and
the Subsidiary is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership, leasing or
holding of its properties makes such qualification necessary, except such
jurisdictions where the failure so to qualify would not have a material
adverse effect on the business, assets, financial condition or results of
operations of the Company or the Subsidiary. A list of the jurisdictions in
which the Company and the Subsidiary are so qualified is set forth on SCHEDULE
4(II)(B). The Inside Selling Shareholders have delivered to Buyer true and
complete copies of the Certificate of Incorporation, as amended to date, and
the By-laws, as in effect on the date hereof, of the Company and the
Subsidiary. To the best knowledge of the Inside Selling Shareholders, after
due and diligent inquiry of the Company's management, the stock certificate
and transfer books and the minute books of the Company and the Subsidiary
(which have been made available for inspection by Buyer and its
representatives) are true and complete.
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(c) CAPITAL STOCK AND CONTRACTUAL INDEBTEDNESS OF THE COMPANY. The
authorized capital stock of the Company consists of 5,000,000 shares of $.01
par value Company Common Stock of which 983,334 shares of Company Common Stock
have been duly issued, are outstanding and are fully paid and nonassessable.
To the best of the Inside Selling Shareholders knowledge and belief, the
issued and outstanding shares of Company Common Stock are owned of record and
beneficially by the shareholders and in the amounts set forth in SCHEDULE 1,
and have been offered, issued, sold and delivered by the Company in compliance
with applicable Federal and state securities laws. The Company has granted
91,000 options to purchase Company Common Stock at exercise prices ranging
from $.75 to $3.00 per share, as set forth in SCHEDULE 2, and is authorized to
grant options for an additional 59,000 shares under its 1995 Stock Option
Plan.
The authorized capital stock of Innovative Engineering Services, Inc.
consists of 5,000 shares of common stock, par value $1.00 per share, of which
650 shares are issued and outstanding; all of the outstanding shares of
capital stock of Innovative Engineering Services, Inc. are validly issued,
fully paid and nonassessable and are owned of record and beneficially by the
Company free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements and voting rights agreements except as
described on Schedule 4(II)(c).
To the best knowledge of the Inside Selling Shareholders, after due and
diligent inquiry of the Company's management, at the Closing Date, the
outstanding indebtedness of the Company and the Subsidiary shall consist of
the indebtedness described on SCHEDULE 4(II)(C) to this Agreement. To the
best knowledge of the Inside Selling Shareholders, after due and diligent
inquiry of the Company's management, neither the Company nor the Subsidiary is
a guarantor or otherwise contingently liable for any indebtedness not
described on SCHEDULE 4(II)(C).
(d) EQUITY INTERESTS. Except as set forth on SCHEDULE 4(II)(D), the
Company does not directly or indirectly own any capital stock of, or have any
other equity or proprietary interest in, any corporation, association, trust,
partnership, joint venture or other entity.
(e) FINANCIAL STATEMENTS. The Company has furnished to Buyer the
following consolidated financial statements which are set forth in SCHEDULE
4(II)(E): (i) the unaudited consolidated balance sheet of the Company as of
February 29 1996 (the "Balance Sheet"), and related unaudited consolidated
statement of operations for the two month period then ended; and (ii) the
audited consolidated financial statements of the Company for its fiscal year
ended December 31, 1995, including the consolidated balance sheet of the
Company as of December 31, 1995, and the related consolidated statements of
earnings, stockholder's equity and cash flows for the year then ended,
together with footnotes thereto, as reported upon by Bray, Beck & Koetter,
independent certified public accountants (collectively, the "Financial
Statements"). To the best knowledge of the Inside Selling Shareholders, the
Financial Statements have been prepared in conformity with generally accepted
accounting principles consistently applied (except in each case as described
in the notes included therein) and fairly present the financial condition and
the results of operations of the Company as at and for the periods indicated.
To the best knowledge of the Inside Selling Shareholders, after due and
diligent inquiry of the Company's management, the Balance Sheet shows all
material liabilities, absolute or contingent, of the Company or its
subsidiaries required to be recorded thereon in accordance with generally
accepted accounting principles as of the date thereof.
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(f) UNDISCLOSED LIABILITIES. To the best knowledge of the Inside
Selling Shareholders, after due and diligent inquiry of the Company's
management, neither the Company nor the Subsidiary has any liabilities or
obligations (fixed or contingent, including, without limitation, any tax
liabilities due or to become due) of a nature required by generally accepted
accounting principles to be reflected on a balance sheet or in notes thereto,
except (i) as set forth or reflected on the Financial Statements (or described
in the notes included therein) and (ii) as disclosed in SCHEDULE 4(II)(F)
hereto. Except as set forth in SCHEDULE 4(II)(F), the Inside Selling
Shareholders do not know, after due and diligent inquiry of the Company's
management, of any basis for the assertion against the Company or the
Subsidiary, as of the date hereof, of any liability of any nature or in any
amount not fully reflected or reserved against in the Balance Sheet.
(g) TAXES.
(i) For purposes of this Agreement, "Tax" or "Taxes" shall mean
all Federal, state, local and foreign taxes and assessments, including
withholding taxes and all interest, penalties and additions imposed with
respect to such amounts, and "Code" shall mean the Internal Revenue Code
of 1986, as amended.
(ii) To the best knowledge of the Inside Selling
Shareholders, after due and diligent inquiry of the Company's
management, the Company and any affiliated group, within the meaning of
Section 1504 of the Code, of which the Company is or has been a member
(the "Affiliated Group"), has filed or caused to be filed in a timely
manner (within any applicable extension periods) all Tax returns,
reports and forms required to be filed by the Code or by applicable
state, local or foreign tax laws; all such returns, reports and forms
are true, complete and correct; all Taxes shown to be due on such
returns, reports and forms have been or will be timely paid in full; no
tax liens have been filed and no material claims are being asserted in
writing with respect to any Taxes, except as set forth on SCHEDULE
4(II)(G); all Taxes payable by the Company and the Affiliated Group for
all periods ending on or before the Closing Date and, with respect to
any period that begins before and ends after the Closing Date, the
portion of such period up to the Closing Date have been paid or provided
for on the Financial Statements or disclosed in SCHEDULE 4(II)(G); no
deficiencies have been asserted or assessed as a result of any audit or
other investigation by the Internal Revenue Service or any state or
local taxing authority and no such deficiency, audit or other
investigation has been proposed or threatened and to the best knowledge
of the Inside Selling Shareholders no set of facts exist that would
reasonably support such a deficiency.
(h) ASSETS. To the best knowledge of the Inside Selling Shareholders,
after due and diligent inquiry of the Company's management, each of the
Company and the Subsidiary has good and valid title to all assets reflected on
the Financial Statements or thereafter acquired, except those since sold or
otherwise disposed of for fair value in the ordinary course of business
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consistent with past practice, in each case free and clear of all mortgages,
liens, pledges, security interests or encumbrances of any nature whatsoever
except (i) such as are disclosed on the Schedules hereto and (ii) mechanics',
carriers', workmen's, repairmen's or other like liens arising or incurred in
the ordinary course of business, which imperfections of title or other
encumbrances do not materially impair the use of the assets to which they
relate in the business of the Company as presently conducted (the mortgages,
liens, pledges, security interests and encumbrances described in clauses (i)
and (ii) above are hereinafter referred to collectively as "Permitted Liens"
and such Permitted Liens are set forth on SCHEDULE 4(II)(H). This paragraph
(h) does not relate to real property or interests in real property (except
that the defined term "Permitted Liens" shall be applicable to paragraph (i)
of this Section 4 to the extent provided therein), such items being the
subject of paragraph (i) of this Section 4.
(i) TITLE TO REAL PROPERTY. To the best knowledge of the Inside
Selling Shareholders, after due and diligent inquiry of the Company's
management, SCHEDULE 4(II)(I)-(I) sets forth a complete list of all real
property and interests in real property owned in fee by the Company or the
Subsidiary and identifies any reciprocal easement agreements relating thereto
and any (A) Permitted Liens, (B) easements, covenants, rights of way and other
encumbrances or restrictions of records and (C) zoning, building and other
similar restrictions relating thereto. To the best knowledge of the Inside
Selling Shareholders, after due and diligent inquiry of the Company's
management, SCHEDULE 4(II)(I)-(II) sets forth a complete list of all real
property and interests in real property leased by the Company and identifies
any base leases and reciprocal easement agreements relating thereto and any
(A) Permitted Liens, (B) easements, covenants, rights of way and other
encumbrances or restrictions of record and (C) zoning, building and other
similar restrictions relating thereto. To the best knowledge of the Inside
Selling Shareholders, after due and diligent inquiry of the Company's
management, the Company has (i) good and marketable fee title to all real
property and interests in real property shown on SCHEDULE 4(II)(I)-(I) to be
owned by it and (ii) good leasehold interest in all real property and
interests in real property shown on SCHEDULE 4(II)(I)-(II) to be leased by it,
in each case free and clear of all mortgages, liens, security interests,
easements, covenants, rights of way and other encumbrances or restrictions of
any nature whatsoever, except (A) Permitted Liens, (B) easements, covenants,
rights-of-way and other encumbrances or restrictions of record and (C) zoning,
building and other similar restrictions, none of which items materially impair
the use of the property to which they relate in the business of the Company as
presently conducted. To the best knowledge of the Inside Selling
Shareholders, after due and diligent inquiry of the Company's management,
except as described in SCHEDULE 4(II)(I)-(II), the Company is the lessee of
all the leasehold interests purported to be granted by each such lease or
agreement, and the Company's possession thereof has not been disturbed nor has
any claim been asserted against the Company adverse to its rights in such
leasehold interests.
(j) PATENTS, TRADEMARKS, ETC. To the best knowledge of the Inside
Selling Shareholders, after due and diligent inquiry of the Company's
management, SCHEDULE 4(II)(J) sets forth a true and complete list of all
patents, registered and common law trademarks, trade names, service marks,
copyrights and licenses, together with applications therefor, owned by or
licensed to or by the Company or the Subsidiary. Except as disclosed on
SCHEDULE 4(II)(J), to the best knowledge of the Inside Selling Shareholders,
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after due and diligent inquiry of the Company's management, (i) each of the
Company and the Subsidiary owns all right, title, and interest in and to all
of its proprietary rights, (ii) there have been no claims made against the
Company or the Subsidiary asserting the invalidity, abuse, misuse, or
unenforceability of any of such rights, and there are no grounds for the same,
(iii) neither the Company or the Subsidiary is infringing upon or otherwise
acting adversely to any copyrights, trademarks, trademark rights, service
marks, service names, trade names, patents, patent rights, licenses, trade
secrets or other proprietary rights owned by any other person or persons, and
there is no claim or action by any such person pending, or to the knowledge of
the Inside Selling Shareholders threatened, with respect thereto (iv) neither
the Company nor the Subsidiary has received a notice of conflict with, or
infringement upon, the asserted rights of others, and (v) the conduct of the
Company's business as presently conducted and as proposed to be conducted does
not and will not infringe any such rights of others.
To the best knowledge of the Inside Selling Shareholders, after due and
diligent inquiry of the Company's management, each of the Company and the
Subsidiary has all patents, trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights or processes
necessary for its business as now conducted and as proposed to be conducted.
To the best knowledge of the Inside Selling Shareholders, after due and
diligent inquiry of the Company's management, except as set forth in SCHEDULE
4(II)(J), each of the Company and the Subsidiary has full and exclusive right
and authority to utilize the processes, systems and techniques currently
required to enable it to conduct its business as now conducted and as proposed
to be conducted, including, without limitation, those processes, systems and
techniques developed by any employee or consultant of the Company. To the
best knowledge of the Inside Selling Shareholders, after due and diligent
inquiry of the Company's management, all such processes, systems and
techniques either have been developed directly by and are owned by the Company
or the Subsidiary or have been duly and validly assigned to the Company or the
Subsidiary by such employee or consultant. To the best knowledge of the
Inside Selling Shareholders, after due and diligent inquiry of the Company's
management, no past or present officer, director, consultant, or employee of
the Company or the Subsidiary owns or holds, directly or indirectly, any
interests in any processes systems and techniques used or usable by the
Company or the Subsidiary.
To the best knowledge of the Inside Selling Shareholders, none of the
Company's employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court of administrative agency, that would
interfere with the use of his best efforts to promote the interests of the
Company or that would conflict with the Company's business as proposed to be
conducted.
(k) CONTRACTS. To the best knowledge of the Inside Selling
Shareholders, after due and diligent inquiry of the Company's management,
neither the Company nor the Subsidiary has any existing contract or commitment
of a material nature or involving the payment by it of more than $10,000 in
the aggregate over the life of such contract other than those listed in
SCHEDULE 4(II)(K) to this Agreement (provided that any contract or commitment
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of type specified in subparagraph (i) below, written or oral, shall be listed
in SCHEDULE 4(II)(K) regardless of whether such contract is of a material
nature or involves the payment by the Company of more than $10,000 in
aggregate over the life of such contract), including, without limitation, the
following:
(i) any contract or commitment with any officer, director,
employee or shareholder of the Company or any affiliate of any such
officer, director, employee or shareholder.
(ii) employment, bonus or consulting agreement, pension, profit
sharing, deferred compensation, stock bonus, retirement, stock option,
stock purchase, phantom stock or similar plans, including agreements
evidencing rights to purchase securities of the Company and agreements
among shareholders and the Company;
(iii) loan or other agreements, notes, indentures, or instruments
relating to or evidencing indebtedness for borrowed money, or
mortgaging, pledging or granting or creating a lien or security interest
or other encumbrances on any of the Company's property or any agreement
or instrument evidencing any guarantee by the Company of payment or
performance of any obligation by any other person;
(iv) agreements with dealers, sales representatives, brokers or
other distributors, jobbers, advertisers or sales agencies;
(v) agreements with any labor union or collective bargaining
organization or other labor agreements;
(vi) any contract or series of contracts with the same person
for the furnishing or purchase of machinery, equipment, goods or services,
including, but without limitation, agreements with processors and
subcontractors;
(vii) any indenture, agreement or other document (including
private placement brochures) relating to the sale or repurchase of
securities;
(viii) any joint venture contract or arrangement or other
agreement involving a sharing of profits or expenses to which the
Company is a party;
(ix) any agreement limiting the freedom of the Company to
compete in any line of business or in any geographic area or with any
person;
(x) any agreement providing for disposition of the business,
assets or shares of the Company, agreements of merger or consolidation
to which the Company is a party or letters of intent with respect to the
foregoing other than this Agreement and the letter or intent executed
with Buyer with respect to the transaction contemplated hereby;
(xii) any agreement involving, or letter of intent with respect
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to, the acquisition of the business, assets or shares of any other
business; and
(xii) any assignment, license, indemnification or agreement with
respect to any intangible property (including, without limitation, any
patent, trademark, trade names, copyright, know-how, trade secret or
confidential information).
True and complete copies of all such contracts or commitments listed in
SCHEDULE 4(II)(K) have been made available to Buyer for its review. To the
best knowledge of the Inside Selling Shareholders, after due and diligent
inquiry of the Company's management, all of such contracts are valid and
subsisting, in full force and effect, and no notice of default or intention to
terminate has been received by the Company or the Subsidiary in connection
with the same, except as described in SCHEDULE 4(II)(K) to this Agreement. To
the best knowledge of the Inside Selling Shareholders, after due and diligent
inquiry of the Company's management, each of the Company and the Subsidiary
has complied with all the material provisions of all said contracts and
commitments and is not in default under any material provisions thereof.
To the best knowledge of the Inside Selling Shareholders, after due and
diligent inquiry of the Company's management, no material software licenses or
contracts of the Company will terminate due to the Exchange and no other
material contracts, agreements or commitments involving payments to the
Company of more than $20,000 in the aggregate over the life of the contract
will terminate due to the Exchange.
(l) LITIGATION; DECREES. SCHEDULE 4(II)(L) sets forth a list, as of
the date of this Agreement, of all lawsuits, claims, proceedings or
investigations pending or, to the best knowledge of the Inside Selling
Shareholders, threatened by or against or affecting the Company, the
Subsidiary, or any of their properties, assets, operations or business which
(i) relate to or involve more than $10,000, (ii) seek any material injunctive
relief or (iii) relate to the transactions contemplated by this Agreement and
to the best knowledge of the Inside Selling Shareholders no set of facts exist
that would reasonably support such a lawsuit or claim. To the best knowledge
of the Inside Selling Shareholders, neither the Company nor the Subsidiary is
in material default under any judgment, order or decree of any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, applicable to the Company or any of its
properties, assets, operations or business.
(m) DEFAULTS. Except as described in SCHEDULE 4(II)(M) to this
Agreement, the Company is not in material default under, and no event has
occurred which, with the lapse of time or action by a third party, could
result in a material default under, any outstanding indenture, indebtedness,
lease, contract or agreement to which it is a party or to which it or any of
its property may be subject, or under any provision of its Articles of
Incorporation or By-Laws.
(n) CUSTOMER ACCOUNTS RECEIVABLE; INVENTORIES.
(i) All customer accounts receivable of the Company have arisen
from bona fide transactions in the ordinary course of business. To the
best knowledge of the Inside Selling Shareholders, all customer accounts
receivable reflected on the Financial Statements are good and
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collectible at the aggregate recorded amounts thereof, net of any
applicable reserves for doubtful accounts reflected on the Financial
Statements and all customer accounts receivable acquired since the date
of the Financial Statements are good and collectible at the aggregate
recorded amounts thereof, net of any applicable reserves for doubtful
accounts.
(ii) To the best knowledge of the Inside Selling Shareholders,
the inventories of the Company are of a quality and quantity usable and
salable, at customary gross margins and with customary markdowns
consistent with past practice in the ordinary course of business. To the
best knowledge of the Inside Selling Shareholders, after due and
diligent inquiry of the Company's management, the inventories of the
Company are reflected on the Financial Statements and in the books and
records of the Company in accordance with generally accepted accounting
principles applied on a basis consistent with past practice (except as
described in the notes to the Financial Statements).
(o) INSURANCE. To the best knowledge of the Inside Selling
Shareholders, after due and diligent inquiry of the Company's management,
there is in full force and effect a policy or policies of insurance issued by
insurers of recognized responsibility, insuring the Company and its properties
and business against such losses and risks, and in such amounts, as are
customarily maintained by companies which engage in similar businesses and
which own or operate similar properties in the same general areas in which the
Company operates, and which to the best of the Inside Selling Shareholders
knowledge are adequate to protect the Company and its financial condition
against the usual risks involved in the business conducted by the Company.
SCHEDULE 4(II)(O) sets forth the type and amounts of the insurance described
in this SECTION 4(II)(O).
(p) SHAREHOLDERS, DIRECTORS AND OFFICERS; INDEBTEDNESS. Set forth in
SCHEDULE 4(II)(P) is a correct and complete list or description of all
indebtedness of the Company to the officers, directors or shareholders of the
Company or any of their respective relatives or affiliates, and all of the
indebtedness of such persons to the Company. To the best knowledge of the
Inside Selling Shareholders, none of the officers or directors of the Company,
or their respective spouses, relatives, or affiliates, owns directly or
indirectly, individually or collectively, a material interest in any entity
which is a competitor, customer or supplier of (or has any existing
contractual relationship with) the Company.
(q) DIRECTORS, OFFICERS, EMPLOYEES, ETC. SCHEDULE 4(II)(Q) sets forth:
(i) the names of all of the Company's directors and
officers as of the date hereof;
(ii) the names of all employees, officers and other persons who
as of the date hereof earn total compensation from the Company at an
annual rate of $20,000 or more; and
(iii) the compensation paid during the 12-month period ending
December 31, 1995, by the Company to shareholders of the Company.
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To the best knowledge of the Inside Selling Shareholders, no employee of
the Company is, or is now expected to be, in violation of any term of any
employment contract, patent disclosure agreement or any restrictive covenant
relating to the right of any such employee to be employed by the Company
because of the nature of the business conducted or to be conducted by the
Company or to use trade secrets or proprietary information of others, and the
employment of the Company's employees does not subject the Company or Buyer to
any liability. The Company has no collective bargaining agreement covering
any of its employees.
(r) BUSINESS OF THE COMPANY. Except as described in SCHEDULE
4(II)(R), the Inside Selling Shareholders have no knowledge or notice that
there is pending or threatened any material claim or litigation against or
affecting the Company contesting its right to produce, manufacture, sell or
use any product, process, method, substance, part or other material presently
produced, manufactured, sold or used or planned to be produced, manufactured,
sold or used by the Company in connection with the operation of the Company.
(s) EMPLOYEE BENEFITS AND PENSION PLANS. Except as set on SCHEDULE
4(II)(S), the Company has not established and does not maintain, contribute
to, or otherwise participate in any pension or other employee benefit plans (a
"Plan") subject to the Employee Retirement Income Security Act of 1974 and the
rules and regulations thereunder (collectively and as from time to time in
effect, the "Pension Reform Act"), other than welfare plans (as defined in
SECTION 3(L) of the Pension Reform Act). Except as set forth in SCHEDULE
4(II)(S), the Company has no deferred compensation arrangements, or bonus,
incentive, profit sharing, health, stock purchase, stock option, insurance,
hospitalization, severance or any other employee benefit or welfare plan
currently in force and effect.
(t) ABSENCE OF CHANGES OR EVENTS. To the best knowledge of the Inside
Selling Shareholders, after due and diligent inquiry of the Company's
management, since December 31, 1995, there has not been any event or condition
of any type that has materially affected the Company's business, prospects,
condition, affairs, operations, properties, or assets, except as described in
SCHEDULE 4(II)(T) to this Agreement. Without limiting the generality of the
foregoing, to the best knowledge of the Inside Selling Shareholders, after due
and diligent inquiry of the Company's management, the following specific
changes have not occurred since December 31, 1995, except as described in
SCHEDULE 4(II)(T).
(i) any change in the condition (financial or otherwise),
assets, debts, obligations, liabilities (whether absolute, accrued,
contingent or otherwise) or business of the Company or its subsidiaries
as reflected in the Financial Statements, other than changes in the
ordinary course of business, which, individually or in the aggregate,
have not been materially adverse to the Company, or might reasonably be
expected to be materially adverse in the future;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the business or prospects or
any of the properties or assets of the Company, or any item carried on
the accounts of the Company at more than $10,000;
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(iii) any declaration, setting aside or payment of any dividend
or other distributions in respect of any of the Company's capital stock,
or any direct or indirect redemption, purchase or other acquisition of any
of such stock;
(iv) any general increase in the compensation payable or to
become payable by the Company to any of its employees, any increase in
the compensation payable or to become payable by the Company to any of
its officers or agents, or any bonus payment or arrangement made to or
with any thereof;
(v) any sale, lease or other disposition of any assets of the
Company, except in the ordinary course of business; or
(vi) any labor trouble, or any event or condition of any
character, materially adversely affecting the business or plans of the
Company.
(u) COMPLIANCE WITH APPLICABLE LAWS. To the best knowledge of the
Inside Selling Shareholders, after due and diligent inquiry of the Company's
management, the Company is in compliance with all applicable statutes, laws,
ordinances, rules and regulations of any governmental authority or
instrumentality, domestic or foreign (including those relating to asbestos,
petroleum and hazardous substances) and has all necessary permits required
thereby, except where noncompliance would not have a material adverse effect
on the business, assets, financial condition or results of operations of the
Company.
(v) GOVERNMENTAL CONSENTS. To the best knowledge of the Inside Selling
Shareholders, after due and diligent inquiry of the Company's management, all
material consents, approvals, or authorizations of, or registrations,
qualifications, designations, declarations, or filings with any Federal or
state governmental authority on the part of the Company required in connection
with the consummation of the transactions contemplated by this Agreement shall
have been obtained prior to or on the date of and be effective as of, the
Closing.
5. COVENANTS OF SELLING SHAREHOLDERS. Each Selling Shareholder covenants
and agrees as follows:
(a) CONFIDENTIALITY. Each Selling Shareholder will keep confidential
and cause its affiliates and instruct its and their officers, directors,
employees and advisors to keep confidential all nonpublic information relating
to the Company and its business, except as required by law or administrative
process and except for information which becomes public other than as a result
of a breach of this Section 5(a).
6. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and
warrants to each Selling Shareholder as follows:
(a) AUTHORITY. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida. Buyer
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has all requisite corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. All corporate acts
and other proceedings required to be taken by Buyer to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly and properly taken. This
Agreement has been duly executed and delivered by Buyer and constitutes a
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with the
terms hereof will not conflict with, or result in any violation, involuntary
termination of or constitute a default under (i) any provision of the Articles
of Incorporation or By-laws of Buyer, (ii) any outstanding indenture,
indebtedness, contract or agreement to which Buyer is a party or by which it
or any of its property is subject, or (iii) judgment, order or decree, or
material statute, law, ordinance, rule or regulation applicable to Buyer or
its property or assets. No material consent, approval, order or authorization
of, or registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, is required to be obtained or made by or with respect to
Buyer in connection with the execution and delivery of this Agreement or the
consummation by Buyer of the transactions contemplated hereby, other than
compliance with and filings under applicable Federal and state securities
laws.
(b) CAPITAL STOCK OF BUYER. The authorized capital stock of Buyer
consists of 2,000,000 shares of $.25 par value common stock of which 1,387,898
shares of common stock have been duly issued, are outstanding and are fully
paid and nonassessable. The outstanding shares of capital stock of Buyer have
been offered, issued, sold and delivered by Buyer in compliance with
applicable Federal and state securities laws. Buyer has options to purchase
64,750 shares of common stock outstanding at exercise prices ranging from
$1.25 to $10.92 per share, and does not currently have shareholder approval to
grant options for additional shares under its Stock Option Plan. The Board of
Directors of the Company has approved an amendment to the Company's Stock
Option Plan to increase the number of shares reserved for issuance thereunder
and has authorized the submission of such amendment to the Company's
shareholders for approval. The shares of Buyer Common Stock, when issued and
delivered in accordance with the terms of this Agreement for the consideration
provided herein, will be duly issued, fully paid and nonassessable.
(c) SECURITIES ACT. The Company Equity Securities purchased by Buyer
pursuant to this Agreement are being acquired for investment only and not with
a view to any public distribution thereof, and Buyer will not offer to sell or
otherwise dispose of the Company Equity Securities so acquired by it in
violation of any of the registration requirements of the Securities Act of
1933.
(d) FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
(i) As of its filing date, each report or statement filed by
Buyer pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), since March 31, 1993, including, without limitation, Buyer's
Annual Report on Form 10-K for the fiscal year ended March 31, 1995 (the Form
"10-K") and Quarterly Reports on Form 10-Q for the quarters ended June 30,
1995, September 30, 1995, and December 31, 1995 (the "Form 10-Q's") did not
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contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. Since their
respective filing dates, no event has occurred which would result in Buyer's
being required to amend any such reports.
(ii) The financial statements (including any related notes) of
Buyer included in the Form-10-K and the Form 10-Q's were prepared in
conformity with generally accepted accounting principles applied on a
consistent basis (except as otherwise stated in the financial statements), and
present fairly the financial position, result of operations and changes in
financial position of Buyer as of the dates and for the periods indicated,
subject, in the case of unaudited interim financial statements, to (i) the
absence of certain notes thereto and (ii) normal year-end audit adjustments
which are not in the aggregate material.
(e) ABSENCE OF CHANGES. Since December 31, 1995, Buyer has conducted
its business in the ordinary course and there has not been any event that has
had or could reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), business, assets, liabilities,
capitalization, financial position, operations, results of operations or
prospects of Buyer.
(f) COMPLIANCE WITH APPLICABLE LAWS. The offer and sale by the Buyer
of the Buyer Common Stock pursuant to this Agreement are exempt from the
registration requirements of applicable Federal and state securities laws and
neither the Buyer nor anyone acting on its behalf will knowingly take any
action hereafter that would cause the loss of such exemption. The Buyer has
complied and will comply with all applicable "blue sky" or Federal securities
laws in connection with the offer and sale by the Buyer of the Buyer Common
Stock pursuant to this Agreement.
(g) GOVERNMENTAL CONSENTS. All material consents, approvals, or
authorizations of, or registrations, qualifications, designations,
declarations, or filings with any Federal or state governmental authority on
the part of the Buyer required in connection with the consummation of the
transactions contemplated by this Agreement shall have been obtained prior to
or on the date of and be effective as of, the Closing.
7. COVENANTS OF BUYER. The Buyer covenants and agrees as follows:
(a) OPERATIONS OF THE COMPANY. Following the Closing, it is Buyer's
intention, to the best of its abilities, to:
(i) operate the Company as a wholly-owned subsidiary of Buyer
under the name American Digital Switching, Inc.;
(ii) continue to support, in the same general manner and
terms, the existing Company equipment and customers;
(iii) fund a concentrated effort to complete the basic
development of the Centura - registered trademark - Switch within 12
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months of the Closing, and thereafter to endorse an ongoing effort to
advance the Centura - registered trademark - Switch as market forces
evolve in the rural marketplace. Buyer understands that the completion
of the development of the Centura - registered trademark - Switch could
cost up to $1.5 million and is prepared to make this financial
commitment;
(iv) accelerate the development of the SS7 portion of the
Centura - registered trademark - Switch by purchasing existing, field-
proven software at a cost of up to $200,000 and contracting with the
software developer, if practical, to assist in the software/hardware
integration of the Company; and
(v) continue product development, after completion of the
Centura - registered trademark - Switch as an essential part of the
Company's business.
(b) DIRECTORS. Following the Closing, Buyer shall cause two existing
members of the board of directors of the Company to be elected to the board of
directors of Buyer and nominate such directors for re-election at the next
annual meeting of its shareholders.
(c) EMPLOYEES. Following the Closing, it is the intention of the
Buyer, to the best of its abilities, to retain all key employees of the
Company and provide incentives for their continued positive motivation.
Following the Closing, Buyer will cause the Company to provide generally to
officers and employees of the Company employee benefits and compensation which
in the aggregate are no less favorable than those currently provided by the
Company. However, Buyer and the Company shall have the right to amend, modify
or terminate any employee benefit plan, program or arrangement after the
Closing and, except as otherwise contractually obligated in writing, nothing
contained in this Agreement or otherwise shall obligate Buyer, the Company or
any other subsidiary of Buyer to employ any person who is now or in the future
may be employed by the Company.
(d) REGISTRATION RIGHTS. The Buyer Common Stock shall be subject to
the following registration provisions:
(i) Buyer will proceed immediately after the Closing Date to
promptly and expeditiously file a registration statement on Form S-3 (the
"Registration Rights Registration Statement") with the Securities and Exchange
Commission covering the Buyer Common Stock and use its best efforts to have
the Registration Rights Registration Statement declared effective by the
Securities and Exchange Commission within 180 days of the Closing Date. Buyer
shall maintain the Registration Rights Registration Statement effective and
current for so long as the Selling Shareholders reasonably believe that the
proposed sale by the Selling Shareholders or transferees, direct or indirect,
from the Selling Shareholders of the Buyer Common Stock will require
registration under the Securities Act of 1933, as amended, prior to their
public sale, provided, however, that in no event shall Buyer maintain the
Registration Rights Registration Statement effective and current for more than
two years after the Closing Date. Buyer shall amend the Registration Rights
Registration Statement whenever the Selling Shareholders reasonably deem
necessary or advisable, including, without limitation, amendments to include
any information necessary or advisable with respect to any sellers of Buyer
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Common Stock. Until the Registration Rights Registration Statement is
declared effective by the Securities and Exchange Commission, Buyer Common
Stock will be transferable only if, in the opinion of counsel acceptable to
Buyer, such transfer may be made under applicable securities laws.
(ii) The obligation of Buyer to include Buyer Common Stock of a
Selling Shareholder in a Registration Rights Registration Statement is subject
to satisfaction of the condition that such Selling Shareholder shall furnish
to Buyer such information regarding such Selling Shareholder, the Buyer Common
Stock and the intended method of disposition of the Buyer Common Stock as
shall be reasonably required to effect the registration of such Buyer Common
Stock, and such Selling Shareholder shall execute such documents in connection
with such registration as Buyer may reasonably request.
(iii) In connection with the proposed registration, Buyer will
(1) notify the Selling Shareholders, promptly after it shall receive notice
thereof, of the time when the Registration Rights Registration Statement has
been filed; (2) notify the Selling Shareholders promptly of any request by the
Securities and Exchange Commission (the "Commission") for the amending or
supplementing of such registration statement or prospectus or for additional
information; (3) prepare and file with the Commission, promptly on the Selling
Shareholder's request any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for the Selling
Shareholders, may be reasonably necessary in connection with the distribution
of the shares of Buyer Common Stock by the Selling Shareholders; (4) prepare
and promptly file with the Commission and promptly notify the Selling
Shareholders of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statement or omission, if at any time when a prospectus relating to shares of
Buyer Common Stock is required to be delivered under the Securities Act of
1933, as amended (the "Act"), any event shall have occurred as a result of
which any such prospectus as then in effect would include an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading; (5) in case the Selling Shareholders or any
underwriter for the Selling Shareholders are required to deliver a prospectus,
at a time when the prospectus then in effect may no longer be used under the
Act, prepare promptly upon request such amendment or amendments to such
registration statement and such prospectus or prospectuses as may be necessary
to permit compliance with the requirements of Section 10 of the Act; (6) not
file any amendment or supplement to the registration statement or prospectus
to which the Selling Shareholders shall reasonably object based upon
information contained therein after having been furnished a copy within a
reasonable time prior to the filing thereof; (7) advise the Selling
Shareholders promptly after the Buyer shall receive notice or obtain knowledge
thereof of the issuance of any stop order by the Commission suspending the
effectiveness of any such registration statement or of the initiation or
threatening of any proceeding for that purpose and promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal
if such stop order should be issued; (8) use its best efforts to qualify the
shares of Buyer Common Stock for transfer under the securities laws in such
states as the Selling Shareholders may reasonably designate, except that the
Buyer shall not be required in connection therewith or as a condition thereof
to qualify to do business in any such states; (9) furnish to the Selling
Shareholders as soon as available copies of any such registration statement
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<PAGE>
and each preliminary or final prospectus or supplement required to be prepared
pursuant to this subparagraph (iii), all in such quantities as the Selling
Shareholders may from time to time reasonably request; (10) enter into an
underwriting agreement, if applicable, in customary form reasonably
satisfactory to all parties and provide such legal opinions and accountant's
"cold comfort" letters as may be customary in offerings of a similar nature.
(iv) Expenses incurred in connection with the Registration Rights
Registration Statement, including, without limitation, registration and filing
fees, printing expenses, fees and disbursements of counsel for Buyer, expenses
of any special audits incident to or required by any such registration and
expenses of complying with the securities or blue sky laws of any
jurisdictions, but excluding sales commissions and underwriters' discounts
relating to the Buyer Common Stock and fees and expenses of counsel to the
Selling Shareholders, shall be paid or caused to be paid by Buyer.
(v) Buyer agrees to indemnify and hold harmless each holder of
Buyer Common Stock, its officers and directors, and each person, if any, who
controls such holder within the meaning of the Securities Act of 1933, as
amended, from and against any losses, claims, damages, liabilities and
expenses (under such Act, at common law or otherwise) caused by any untrue
statement or alleged untrue statement of a material fact or omission to state
a material fact required to be stated or necessary to make the statements
therein not misleading in any Registration Rights Registration Statement or
prospectus included therein or filing for state qualification. No indemnity
shall apply as to untrue information supplied by the holder of the Buyer
Common Stock.
(e) BUYER STOCK OPTIONS. Subject to approval by the shareholders of
Buyer to increase the number of shares which may be issued under Buyer's Stock
Option Plan, Buyer shall grant stock options to purchase shares of the Buyer's
common stock to the employees of the Company listed on Schedule 2 hereof in
the amounts indicated. The number of options to purchase Buyer common stock
granted to such employees shall equal the number of options to purchase
Company common stock previously held by such persons as set forth on Schedule
2 (the "Terminated Options") divided by 4.5, subject to upward adjustment ,
not to exceed 20%, by multiplying the quotient by a percentage equal to the
average of the last reported sale price of the Buyer's common stock during the
period commencing 22 trading days prior to the date of execution of this
Agreement and ending 2 days prior to such date, divided by 6.75. Options to
purchase fractional shares will not be issued. The date of grant shall be the
date of execution of this Agreement and the exercise price of such options
shall be the last reported sale price of Buyer's common stock as reported on
the Nasdaq National Market System on the grant date, or if not a business day,
on the immediately preceding business day. Vesting for such options shall be
on the same basis as the Terminated Options. In the event that the
shareholders of Buyer do not approve an increase in the number of shares which
may be issued under Buyer's Stock Option Plan, the employees listed on
Schedule 2 hereof will be granted nonqualified stock options, identical in
amount and vesting as the Terminated Options, at an exercise price of $6.75
per share.
(f) COMPLIANCE WITH LISTING REQUIREMENTS. Buyer will use its best
efforts to comply with all applicable procedures, regulations or listing
20
<PAGE>
requirements of the Nasdaq National Market System with respect to the issuance
of the shares of Buyer Common Stock.
8. MUTUAL COVENANTS. Each of the Selling Shareholders and Buyer covenants
and agrees as follows:
(a) CONSENTS. Buyer recognizes that certain consents to the
transactions contemplated by this Agreement may have been or may be required
from parties to the contracts listed on SCHEDULE 4(II)(I)-(I), 4(II)(I)-(II),
4(II)(K) or any other Schedule hereto. Each of Selling Shareholders and Buyer
agrees to use its reasonable best efforts and cooperate with each other to
obtain all consents that may be required; PROVIDED, HOWEVER, that neither
party shall be required to pay or commit to pay any amount to (or incur any
obligation inuring to the benefit of) a person from whom a consent may be
required or otherwise enter into or modify any agreement with such person that
involves any cost or obligation.
(b) PUBLICITY. The Selling Shareholders and Buyer agree that no
public release or announcement concerning the transactions contemplated hereby
shall be issued by either party without the prior consent (which consent shall
not be unreasonably withheld) of the other parties, except as such release or
announcement may be required by law or the rules or regulations of any United
States or foreign securities exchange, in which case the party required to
make the release or announcement shall allow the other parties reasonable time
to comment on such release or announcement in advance of such issuance.
(c) TERMINATION OF CERTAIN OPTIONS. Each of the Selling Shareholders
and the Company shall use its reasonable best efforts to cause the Company to
enter into agreements with all of the holders of options to purchase Company
Common Stock providing for the termination of such options.
9. TERMINATION OF SHAREHOLDERS' AGREEMENTS. By signing this Agreement,
the Company and the Selling Shareholders who are parties to the Shareholder and
Stock Redemption Agreement dated March 15, 1989 and the Shareholder and Stock
Redemption Agreement dated as of April 12, 1989 hereby terminate such
agreements.
10. APPOINTMENT OF REPRESENTATIVE. Edwin H. Eichler will be the
representative (the "Representative") of the interests of the Selling
Shareholders for the following purposes of this Agreement. Without giving
notice to the Selling Shareholders, Representative shall have full and
irrevocable authority on behalf of the Selling Shareholders (a) to deal with
the other parties to this Agreement, (b) to accept the shares of Buyer Common
Stock or any other amounts payable pursuant to this Agreement, (c) to accept
and give notices and other communications relating to this Agreement, (d) to
execute any instrument or document that the Representative may determine is
necessary or desirable in the exercise of his or its authority under this
Section 10, and (e) to act in connection with all administrative and
logistical matters arising out of, based upon, or in connection with this
Agreement and the transactions contemplated hereby. In the event of the
refusal or inability to serve, death, incapacity, or resignation for any
reason of the Representative, Don W. Ingram will become his successor, with
all the powers and irrevocable authority of the Representative, and with full
power of substitution.
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11. CERTAIN UNDERSTANDINGS; FURTHER ASSURANCES. From time to time, as
and when requested by any party hereto, the other party shall execute and
deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions (subject to the limitation set forth in Section 8(a)), as such other
party may reasonably deem necessary or desirable to consummate the
transactions contemplated by this Agreement.
12. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE SELLING SHAREHOLDERS. The Selling
Shareholders severally hereby agree to indemnify Buyer and its affiliates
(including the Company) and their respective officers and directors against
and hold them harmless from any loss, liability, claim, damage or expense
(including reasonable legal fees and expenses) suffered or incurred by any
such indemnified party to the extent arising from (i) any breach of any
representation or warranty of any Selling Shareholder contained in this
Agreement which by the terms of Section 16 survives the Closing, and (ii) any
breach of any covenant of any Selling Shareholder contained in this Agreement
requiring performance after the Closing Date; PROVIDED, HOWEVER, that the
Selling Shareholders shall not have any liability under this Section 12(a) to
the extent the liability or obligation arises as a result of any action taken
or omitted to be taken by Buyer or any of its affiliates; and provided,
further, that in no event shall the liability of any Selling Shareholder
hereunder exceed the value of the shares of Buyer Common Stock acquired by the
Selling Shareholder in the Exchange. For purposes of this Section 12(a) the
value of each share of Buyer's Common Stock shall equal the closing price of
Buyer's common stock as reported on the Nasdaq National Market System on the
Closing Date.
(b) INDEMNIFICATION BY BUYER. Each of Buyer and the Company hereby
agrees to indemnify the Selling Shareholders and each of their respective
affiliates and their respective officers and directors against and hold them
harmless from any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses) suffered or incurred by any such
indemnified party to the extent arising from (i) any breach of any
representation or warranty of Buyer contained in this Agreement which by the
terms of Section 16 survives the Closing, (ii) any action or inaction relating
to the Company occurring after the Closing Date, and, (iii) any breach of any
covenant of Buyer contained in this Agreement requiring performance after the
Closing Date; PROVIDED, HOWEVER that Buyer shall not have any liability under
this Section 12(b) to the extent the liability or obligation arises as a
result of any action taken or omitted to be taken by any Selling Shareholder
or by any affiliate of any Selling Shareholder ;and provided, further, that in
no event shall the liability of Buyer hereunder exceed the value of the shares
of Buyer Common Stock issued by Buyer to the Selling Shareholders in the
Exchange. For purposes of this Section 12(b) the value of each share of
Buyer's Common Stock shall equal the closing price of Buyer's common stock as
reported on the Nasdaq National Market System on the Closing Date.
(c) LOSSES NET OF INSURANCE, ETC. The amount of any loss, liability,
claim, damage or expense for which indemnification is provided under this
Section 12 shall be net of any amounts recovered or recoverable by the
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<PAGE>
indemnified party under insurance policies with respect to such loss
liability, claim, damage or expense and shall be (i) increased to take account
of any Tax cost incurred (grossed up for such increase) by the indemnified
party arising from the receipt of indemnity payments hereunder and (ii)
reduced to take account of any Tax benefit realized by the indemnified party
arising from the incurrence or payment of any such loss, liability, claim,
damage or expense. In computing the amount of any such Tax cost or Tax
benefit, the indemnified party shall be deemed to use all other items of
income, gain, loss, deduction or credit before using any item arising from the
incurrence or payment of any indemnified loss, liability, claim, damage or
expense or of any indemnity payment pursuant to this Section 12. Any
indemnity payment made pursuant to this section will be treated as an
adjustment to the purchase price for Tax purposes, unless a determination (as
defined in Section 1313 of the Code) with respect to the indemnified party
causes any such payment to not constitute an adjustment to the purchase price
for United States Federal income tax purposes.
(d) TERMINATION OF INDEMNIFICATION. The obligations to indemnify and
hold harmless a party hereto, (i) pursuant to Sections 12(a)(i) and 12(b)(i),
shall terminate when the applicable representation or warranty terminates
pursuant to Section 16 and (ii) pursuant to the other clauses of Sections
12(a) and 12(b), shall terminate on April 1, 1998, and PROVIDED, HOWEVER, that
as to clauses (i) and (ii) above such obligations to indemnify and hold
harmless shall not terminate with respect to any item as to which the person
to be indemnified (or the related party hereto) shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice (stating in reasonable detail the basis of such claim) to the party to
be providing the indemnification.
(e) PROCEDURES RELATING TO INDEMNIFICATION UNDER SECTIONS 12(A), (B)
AND 7(D). In order for a party (the "indemnified party") to be entitled to
any indemnification provided for under Sections 12(a) and (b) and 7(d) of this
Agreement in respect of, arising out of or involving a claim or demand made by
any person, firm, governmental authority or corporation against the
indemnified party (a "Third Party Claim"), such indemnified party must notify
the indemnifying party in writing of the Third Party Claim within 10 business
days after receipt by such indemnified party of written notice of the Third
Party Claim; PROVIDED, HOWEVER, that failure to give such notification shall
not affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure (except that the indemnifying party shall not be liable for any
expenses incurred during the period in which the indemnified party failed to
give such notice). Thereafter, the indemnified party shall deliver to the
indemnifying party, within five business days after the indemnified party's
receipt thereof, copies of all notices and documents (including court papers)
received by-the indemnified party relating to the Third Party Claim.
If a Third Party Claim is made against an indemnified party, the
indemnifying party will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
indemnifying party. Should the indemnifying party so elect to assume the
defense of a Third Party Claim, the indemnifying party will not be liable to
the indemnified party for legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof. If the indemnifying
party assumes such defense, the indemnified party shall have the right to
participate in the defense thereof and to employ counsel, at its own expense,
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separate from the counsel employed by the indemnifying party. The
indemnifying party shall be liable for the fees and expenses of counsel
employed by the indemnified party for any period during which the indemnifying
party has not assumed the defense thereof. If the indemnifying party chooses
to defend or prosecute any Third Party Claim, all of the parties hereto shall
cooperate in the defense or prosecution thereof. Such cooperation shall
include the retention and (upon the indemnifying party's request) the
provision to the indemnifying party copies of records and information
(provided that if originals of such records or information are necessary for
such records or information to be admissible evidence in a court of law, such
originals shall be provided) which are reasonably relevant to such Third Party
Claim, and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Whether or not the indemnifying party shall have assumed the
defense of a Third Party Claim, the indemnified party shall not admit any
liability with respect to, or settle, compromise or discharge, such Third
Party Claim without the indemnifying party's prior written consent, such
consent not to be unreasonably withheld.
13. ASSIGNMENT. This Agreement and the rights hereunder shall not be
assignable or transferable by Buyer or any Selling Shareholder (including by
operation of law in connection with a merger, or sale of substantially all the
assets, of Buyer or any Selling Shareholder) without the prior written consent
of the other party hereto.
14. NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole
benefit of the parties hereto and their permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any person or
entity, other than the parties hereto and such assigns, any legal or equitable
rights hereunder.
15. CORPORATE REORGANIZATION. The parties hereto acknowledge and
agree that it is intended that the transaction contemplated herein shall be
treated by the parties as a reorganization described in Section 368(a)(1)(B)
of the United States Internal Revenue Code of 1986, as amended, and the
parties shall, if permissible, report such transactions consistent therewith
in all tax filings.
16. SURVIVAL OF REPRESENTATIONS. The representations and warranties
in this Agreement and in any other document delivered in connection herewith
(other than those with respect to Taxes) shall survive the Closing solely for
purposes of Sections 12(a), 12(b) and 23 of this Agreement and shall terminate
at the close of business eighteen months following the Closing Date. The
representations and warranties set forth in Section 4(II)(g) shall survive the
Closing and shall not terminate until the expiration of the applicable statute
of limitations on the collection of the Taxes in question.
17. EXPENSES. Whether or not the transactions contemplated hereby are
consummated, all costs and expenses in connection with this Agreement and the
transactions contemplated hereby incurred by Buyer shall be paid by Buyer and
incurred by the Company and the Selling Shareholders shall be paid by the
Company; provided, however, that the Company shall only pay the costs and
expenses incurred by the Selling Shareholders for a single counsel acting as
special counsel to the Company and the Selling Shareholders in connection with
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this Agreement and the transactions contemplated hereby.
18. AMENDMENTS. No amendment to this Agreement shall be effective
unless it shall be in writing and signed by each of the parties hereto.
19. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered personally or three days
after being mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to Buyer,
Symetrics Industries, Inc.
557 North Harbour City Blvd.
Melbourne, Florida 32935
Attention: Dudley E. Garner, Jr.
(ii) if to Company,
American Digital Switching, Inc.
4255 Dow Road
Melbourne, Florida 32934
(iii) if to a Selling Shareholder, to the address specified under
the name of such Selling Shareholder in Schedule 1.
With a copy of any notice sent to the Company or any Selling
Shareholder (which shall not constitute notice) to:
Gray, Harris & Robinson, P.A.
Post Office Box 3068
Orlando, Florida 32802-3068
Attention: Jack K. McMullen
20. INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
22. ENTIRE AGREEMENT. This Agreement contains the entire agreement
and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating
to such subject matter.
23. FEES. Each party hereto hereby represents and warrants that no
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brokers or finders have acted for such party in connection with this Agreement
or the transactions contemplated hereby and no such broker or finder is
entitled to any brokerage fee, finder's fee or commission in respect thereof.
Each party indemnifies the other parties and their respective affiliates and
their respective officers and directors against and holds them harmless from
any loss, liability, claim, damage or expense (including reasonable legal fees
and expenses) suffered or incurred by any such indemnified party to the extent
arising from any breach of the representation and warranty of such
indemnifying party in the first sentence of this Section 23.
24. SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
25. CONSENT TO JURISDICTION. Each of Buyer and the Selling
Shareholders irrevocably submits to the exclusive jurisdiction of (a) the
Circuit Court of the State of Florida, Brevard County, and (b) the United
States District Court for the Middle District of Florida, for the purposes of
any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby.
26. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
SYMETRICS INDUSTRIES, INC.
By: /S/ DUDLEY E. GARNER
-------------------------------------
Dudley E. Garner
AMERICAN DIGITAL SWITCHING, INC.
By: /S/ RICHARD F. OSTROW
-------------------------------------
Richard F. Ostrow
THE SELLING SHAREHOLDERS:
AGRI-VALLEY COMMUNICATIONS, INC.
-------------------------------------
Name of Selling Shareholder
By: /S/ AGRI-VALLEY COMMUNICATIONS, INC.
-------------------------------------
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AMERY TELEPHONE COMPANY
-------------------------------------
Name of Selling Shareholder
By: /S/ AMERY TELEPHONE COMPANY
-------------------------------------
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AMTELECOM GROUP, INC.
-------------------------------------
Name of Selling Shareholder
By: /S/ AMTELECOM GROUP, INC.
-------------------------------------
CALAVERAS TELEPHONE
-------------------------------------
Name of Selling Shareholder
By: /S/ CALAVERAS TELEPHONE
-------------------------------------
COZAD TELEPHONE
-------------------------------------
Name of Selling Shareholder
By: /S/ COZAD TELEPHONE
-------------------------------------
DILLER TELEPHONE
-------------------------------------
Name of Selling Shareholder
By: /S/ DILLER TELEPHONE
-------------------------------------
THE GLENWOOD TELEPHONE
-------------------------------------
Name of Selling Shareholder
By: /S/ THE GLENWOOD TELEPHONE
-------------------------------------
/S/ ROGER HOFFMAN
-------------------------------------
Roger Hoffman
IRONTON TELEPHONE COMPANY
-------------------------------------
Name of Selling Shareholder
By: /S/ IRONTON TELEPHONE COMPANY
-------------------------------------
/S/ MIKE JENSEN
-------------------------------------
Mike Jensen
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LEMONWEIR VALLEY TELEPHONE CO.
-------------------------------------
Name of Selling Shareholder
By: /S/ LEMONWEIR VALLEY TELEPHONE CO.
-------------------------------------
/S/ JIM MCCONNELL
-------------------------------------
Jim McConnell
/S/ MARK MCFARLAND
-------------------------------------
Mark McFarland
MINERVA VALLEY TELEPHONE CO., INC.
-------------------------------------
Name of Selling Shareholder
By: /S/ MINERVA VALLEY TELEPHONE CO., INC.
-------------------------------------
MT. RURAL TELEPHONE COOPERATIVE
-------------------------------------
Name of Selling Shareholder
By: /S/ MT. RURAL TELEPHONE COOPERATIVE
-------------------------------------
NEBRASKA CENTRAL TELEPHONE CO.
-------------------------------------
Name of Selling Shareholder
By: /S/ NEBRASKA CENTRAL TELEPHONE CO.
-------------------------------------
NELSON/BALL GROUND TELEPHONE
-------------------------------------
Name of Selling Shareholder
By: /S/ NELSON/BALL GROUND TELEPHONE
-------------------------------------
PALMERTON TELEPHONE COMPANY
-------------------------------------
Name of Selling Shareholder
By: /S/ PALMERTON TELEPHONE COMPANY
-------------------------------------
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PIDGEON TELEPHONE COMPANY
-------------------------------------
Name of Selling Shareholder
By: /S/ PIDGEON TELEPHONE COMPANY
-------------------------------------
RICE BELT TELEPHONE COMPANY
-------------------------------------
Name of Selling Shareholder
By: /S/ RICE BELT TELEPHONE COMPANY
-------------------------------------
SCOTT COUNTY TELEPHONE COMPANY
-------------------------------------
Name of Selling Shareholder
By: /S/ SCOTT COUNTY TELEPHONE COMPANY
-------------------------------------
SOGETEL INC.
-------------------------------------
Name of Selling Shareholder
By: /S/ SOGETEL INC.
THACKER-GRIGSBY TELEPHONE CO.
-------------------------------------
Name of Selling Shareholder
By: /S/ THACKER-GRIGSBY TELEPHONE CO.
-------------------------------------
THREE RIVERS TELEPHONE COMPANY
-------------------------------------
Name of Selling Shareholder
By: /S/ THREE RIVERS TELEPHONE COMPANY
-------------------------------------
UNION TELEPHONE COMPANY
-------------------------------------
Name of Selling Shareholder
By: /S/ UNION TELEPHONE COMPANY
-------------------------------------
30
