Merger Agreement - Scores Holding Co. Inc. and Aciem Management Inc.
MERGER AGREEMENT
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AGREEMENT AND PLAN OF MERGER
BY AND
AMONG
SCORES HOLDING COMPANY, INC.
A UTAH CORPORATION,
SCRH ACQUISITION CORP.,
A NEW YORK CORPORATION
AND
ACIEM MANAGEMENT, INC.,
A NEW YORK CORPORATION
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AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of August 12,
2004, by and among Scores Holding Company, Inc., a Utah corporation (the
"Company"), SCRH Acquisition Corp., a New York corporation ("Acquisition") and
Aciem Management, Inc., a New York corporation ("ACMI").
RECITALS
WHEREAS, the Company and ACMI desire to merge Acquisition with and
into ACMI whereby ACMI shall be the surviving entity pursuant to the terms and
conditions set forth herein and whereby the transaction is intended to qualify
as a tax free reorganization pursuant to Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "IRC"), to the extent permitted by applicable law;
WHEREAS, in furtherance of such combination, the Boards of Directors
of the Company, Acquisition and ACMI have each approved the merger of
Acquisition with and into ACMI (the "Merger"), upon the terms and subject to the
conditions set forth herein, in accordance with the applicable provisions of the
New York Business Corporation Law (the "NYBCL").
WHEREAS, the stockholder of ACMI desires to exchange all of its
shares of the capital stock of ACMI (the "ACMI Capital Stock") for shares of the
capital stock of the Company (the "Company Capital Stock") as a tax free
reorganization pursuant to Section 368(a) of the IRC, to the extent permitted by
applicable law;
WHERAS, just prior to the Merger, ACMI's 1.5% Convertible Debentures
Due August 11, 2009 in the aggregate principal amount of Four Hundred Eighty
Thousand Dollars ($480,000) (the "ACMI First Debenture") and ACMI's 1.5%
Convertible Debenture Due August 11, 2009 in the principal amount of Twenty
Thousand Dollars ($20,000) (the "ACMI Second Debenture" and, together with the
ACMI First Debenture, the "ACMI Debentures") are convertible into shares of ACMI
common stock, par value $.001 (the "ACMI Common Stock"), pursuant to the terms
of the ACMI Debentures and the Purchase Agreement (as defined below) and upon
the consummation of the Merger will be convertible into an equivalent number of
shares of the Company's common stock, par value $0.001 per share (the "Company
Common Stock") (the "Company Underlying Shares");
WHEREAS, upon the effectiveness of the Merger and pursuant to the
terms of this Agreement and the Purchase Agreement, the Company Underlying
Shares will be substituted for the ACMI Underlying Shares, the Company will
assume the obligations, jointly and severally, with ACMI under the ACMI
Debentures and the Company will assume the obligations of ACMI under that
certain Convertible Debenture Purchase Agreement dated even date herewith
between ACMI, HEM Mutual Assurance LLC ("HEM") and Highgate House, LLC
("Highgate") (the "Purchase Agreement") and ACMI will be released from certain
of such obligations; and
WHEREAS, all defined terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Purchase Agreement.
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NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as hereinafter defined) and
subject to and upon the terms and conditions of this Agreement and the NYBCL,
Acquisition shall be merged with and into ACMI pursuant to the Merger. Following
the Merger, ACMI shall continue as the surviving corporation (the "Surviving
Corporation") and the separate corporate existence of Acquisition shall cease.
As part of the Merger and as more fully described in Section 2.1, (i) the Two
Hundred (200) issued and outstanding shares of the ACMI Common Stock shall be
exchanged for Company Common Stock at the Exchange Ratio (as defined below) and
(ii) each share of Acquisition's issued and outstanding shares of common stock,
no par value per share (the "Acquisition Common Stock"), shall be converted into
one validly issued, fully paid and non-assessable share of common stock, par
value $.001, of the Surviving Corporation (the "Surviving Corporation Common
Stock").
1.2 Effective Time. The Merger shall be consummated as promptly as
practicable after satisfaction of all conditions to the Merger set forth herein,
by filing with the Secretary of State of the State of New York a certificate of
merger or similar document (the "Certificate of Merger"), and all other
appropriate documents, executed in accordance with the relevant provisions of
the NYBCL. The Merger shall become effective upon the filing of the Certificate
of Merger with the Secretary of State of New York. The time of such filing shall
be referred to herein as the "Effective Time."
1.3 Effects of the Merger. At the Effective Time, all the rights,
privileges, immunities, powers and franchises of Acquisition and ACMI and all
property, real, personal and mixed, and every other interest of, or belonging to
or due to each of Acquisition and ACMI shall vest in the Surviving Corporation,
and all debts, liabilities, obligations and duties of Acquisition and ACMI,
including, without limitation, the performance of all obligations and duties of
ACMI pursuant to the Purchase Agreement, the ACMI Debentures and the exhibits,
schedules and all documents executed in connection therewith or any other
Transaction Document (as defined in the Purchase Agreement), shall become the
debts, liabilities, obligations and duties of the Surviving Corporation (except
as assumed by the Company) without further act or deed, all in the manner and to
the full extent provided by the NYBCL. Whenever a conveyance, assignment,
transfer, deed or other instrument or act is necessary to vest any property or
right in the Surviving Corporation, the directors and officers of the respective
constituent corporations shall execute, acknowledge and deliver such instruments
and perform such acts, for which purpose the separate existence of the
constituent corporations and the authority of their respective directors and
officers shall continue, notwithstanding the Merger.
1.4 Certificate of Incorporation. The Certificate of Incorporation
of ACMI, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation and thereafter may be
amended or repealed in accordance with its terms and applicable law.
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1.5 By-Laws. At the Effective Time and without any further action on
the part of Acquisition and ACMI, the By-laws of ACMI shall be the By-laws of
the Surviving Corporation and thereafter may be amended or repealed in
accordance with their terms or the Certificate of Incorporation of the Surviving
Corporation and as provided by law.
1.6 Directors. The directors of Acquisition at the Effective Time
shall be the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
1.7 Officers. The officers of Acquisition at the Effective Time
shall be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly appointed
and qualified, as the case may be.
1.8 Tax-Free Reorganization. The parties intend that the Merger
shall be treated as a tax-free reorganization pursuant to Section 368(a) of the
IRC, to the extent permitted by applicable law.
ARTICLE II
CONVERSION OF ACMI SHARES AND ASSUMPTION OF ACMI DEBENTURES
2.1 Conversion and Cancellation of ACMI Common Stock. As of the
Effective Time, by virtue of the Merger and without any action on the part of
the Company, Acquisition or ACMI or the holders of any shares of the capital
stock of Acquisition or ACMI:
(a) Subject to the provisions of Sections 2.4 and 2.5, each
share of ACMI Common Stock (the "ACMI Common Stock Shares") issued and
outstanding immediately prior to the Effective Time (other than shares canceled
in accordance with Section 2.1(b) and other than with respect to the escrow
shares deposited by ACMI with the Escrow Agent (as defined below) in accordance
with the Purchase Agreement (the "ACMI Escrow Shares") which shall be
automatically cancelled and replaced with an equal number of Company Escrow
Shares in accordance with Section 2.2, shall be converted into 0.01 (the
"Exchange Ratio") of a validly issued, fully paid and nonassessable share of
Company Common Stock (the "Company Common Stock Shares"). As of the Effective
Time, each ACMI Common Stock Share shall no longer be outstanding and shall
automatically be canceled and cease to exist, and each holder of a certificate
representing any ACMI Common Stock Share shall cease to have any rights with
respect thereto other than the right to receive Company Common Stock Shares to
be issued in consideration therefor upon the surrender of such certificate,
properly endorsed to the Company. (B) (C)
(b) Each share of ACMI Capital Stock held in the treasury of the
ACMI and each share of ACMI Capital Stock owned by Acquisition or Company shall
be canceled without any conversion thereof and no payment, distribution or other
consideration shall be made with respect thereto.
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(c) Each issued and outstanding share of Acquisition Common Stock
shall be converted into one validly issued, fully paid and nonassessable share
of Surviving Corporation Common Stock.
2.2 Escrow Materials. (a) At the Post-Closing, the Company shall
deposit into escrow with Gottbetter & Partners, LLP, as escrow agent (the
"Escrow Agent") the following, which are hereinafter collectively referred to as
the "Escrow Materials," (i) the escrow agreement annexed hereto and made a part
hereof as EXHIBIT 2.2(A) (the "Escrow Agreement"), (ii) certificates
representing Sixty Million (60,000,000) shares of duly issued Company Common
Stock, without restriction and freely tradable pursuant to Rule 504 of
Regulation D of the Securities Act (the "Company Escrow Shares"), in share
denominations specified by the Purchaser, registered in the name of the
Purchaser and/or its assigns; and (iii) a power of attorney with respect to the
Company Underlying Shares and the Company Escrow Shares, in the form annexed to
the Escrow Agreement as Appendix I. At the Post-Closing, upon the Company
fulfilling its obligations under this Section 2.2, Escrow Agent shall release to
the Company the ACMI Escrow Shares cancelled in accordance with Section 2.1. The
Escrow Materials shall be held in escrow in accordance with the Escrow
Agreement. The Escrow Materials shall be released from escrow only in accordance
with this Section 2.2, the Purchase Agreement the ACMI Debentures and the Escrow
Agreement.
(b) Upon the effectiveness of the Merger and in accordance with
Section 2.7 hereof, the Company shall substitute the Company Underlying Shares
and the Company Escrow Shares for the ACMI Underlying Shares and the ACMI Escrow
Shares with regard to all of the rights and obligations, specifically including
the conversion rights, under the ACMI Debentures, and the ACMI Escrow Shares
shall be cancelled.
2.3 [Intentionally left blank].
2.4 Adjustment of the Exchange Ratio. In the event that, prior to
the Effective Time, any stock split, combination, reclassification or stock
dividend with respect to the Company Common Stock or ACMI Common Stock, any
change or conversion of Company Common Stock or ACMI Common Stock or into other
securities or any other dividend or distribution with respect to the Company
Common Stock or ACMI Common Stock (other than regular quarterly dividends)
should occur or, if a record date with respect to any of the foregoing should
occur, appropriate and proportionate adjustments shall be made to the Exchange
Ratio, and thereafter all references to an Exchange Ratio shall be deemed to be
to such Exchange Ratio as so adjusted.
2.5 No Fractional Shares. No certificates or scrip representing
fractional shares of Company Common Stock shall be issued upon the surrender for
exchange of certificates and such fractional share shall not entitle the record
or beneficial owner thereof to vote or to any other rights as a stockholder of
the Company. The number of shares of Company Common Stock to be issued shall be
rounded up to the nearest whole share.
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2.6 Further Assurances. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, its right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either ACMI
or Acquisition or (b) otherwise to carry out the purposes of this Agreement, the
Surviving Corporation and its proper officers and directors or their designees
shall be authorized (to the fullest extent allowed under applicable law) to
execute and deliver, in the name and on behalf of either ACMI or Acquisition ,
all such deeds, bills of sale, assignments and assurances and do, in the name
and on behalf of ACMI or Acquisition, all such other acts and things necessary,
desirable or proper to vest, perfect or confirm its right, title or interest in,
to or under any of the rights, privileges, powers, franchises, properties or
assets of ACMI or Acquisition, as applicable, and otherwise to carry out the
purposes of this Agreement.
2.7 ACMI Debentures. (a) As of the Effective Time, the Company
assumes, jointly and severally with ACMI, all of the obligations and
responsibilities under the ACMI Debentures to the holder or holders of the ACMI
Debentures. With respect to the ACMI Debentures, at the Effective Time, the
Company shall (i) replace the ACMI Underlying Shares, with the Company
Underlying Shares and (ii) replace the Escrow Shares deposited by ACMI with the
Escrow Agent with the Company Escrow Shares.
(b) At the Effective Time, (i) all references in the ACMI Debentures
to Company Common Stock (as defined in the ACMI Debentures) shall be references
to Company Common Stock (as defined herein) and (ii) all references to the
Company (as defined in the ACMI Debentures) in the ACMI Debentures shall be read
as references to the Company (as defined herein) as if the ACMI Debentures were
issued on the date the ACMI Debentures were issued, by the Company (as defined
herein), specifically including all calculations in the ACMI Debentures such as
the determination of the conversion price, the Conversion Price, the Fixed
Conversion Price and the Floating Conversion Price. The Exchange Ratio (as
defined herein) shall have no effect on the ACMI Debentures or the assumption
thereof by the Company (as defined herein).
(c) At the Effective Time, ACMI shall assign and the Company shall
assume all of ACMI's obligations and covenants under the Purchase Agreement as
if the Company executed the Purchase Agreement instead of ACMI on the date
thereof. At the Effective Time, all references to the Company (as defined in the
Purchase Agreement) in the Purchase Agreement shall mean the Company (as defined
herein) and all references to dates or tolling of periods shall be read as if
the Company (as defined herein) executed the Purchase Agreement instead of the
Company (as defined in the Purchase Agreement). At the Effective Time, all of
the remedies available to the current and future holders of the ACMI Debentures
under the Purchase Agreement against the Company (as defined in the Purchase
Agreement) shall be available against the Company (as defined herein).
(d) The provisions described in this Section 2.7 shall not be
amended and shall be in effect until the earlier of (i) the date all of the ACMI
Convertible Debentures have been converted into Company Common Stock Shares and
(ii) six (6) years from the date the ACMI Debentures were issued.
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(e) The current and future holders of the ACMI Debentures shall be
third party beneficiaries of this Agreement. There shall be no other third party
beneficiaries to this Agreement or any part hereof. XX.
ARTICLE III
CLOSING
Subject to satisfaction of the conditions to closing set forth in
this Agreement and unless this Agreement is otherwise terminated in accordance
with the provisions contained herein, the closing of the Merger and the
Contemplated Transactions (the "Post-Closing") shall take place at the offices
of Gottbetter & Partners, LLP, 488 Madison Avenue, New York, New York as
promptly as practicable after satisfaction of the conditions set forth in this
Agreement, which in no event shall be more than ten days after the Closing Date
under the Purchase Agreement (except if such 10th day is not a Business Day,
then the next Business Day) (the "Post-Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company and Acquisition.
Except as disclosed in the Reports (as defined below) or in a document of even
date herewith referring to the representations and warranties in this Agreement
and delivered by Company to ACMI prior to the execution and delivery of this
Agreement (the "Company Disclosure Schedule"), Acquisition and the Company
hereby make the following representations and warranties to ACMI, all of which
shall survive the Post-Closing, subject to the limitations set forth in Section
8.1 hereof:
(a) Organization and Good Standing. Acquisition is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York, with full corporate power and authority to conduct its
business as it is now being conducted, to own or use the properties and assets
that it owns or uses, and to perform all its obligations under this Agreement.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Utah, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it owns or uses, and to perform all its
obligations under this Agreement and, upon the Post-Closing the ACMI Debentures.
Company has no subsidiaries other than Acquisition and other than as set forth
on the Company Disclosure Schedule (individually, a "Subsidiary" and
collectively, the "Subsidiaries"). Acquisition has no subsidiaries. Each of the
Company and Acquisition is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except for such failures to be so
qualified or in good standing would not have a Material Adverse Effect.
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(b) Authority; No Conflict.
i. This Agreement and any agreement executed in connection
herewith by Company or Acquisition constitute the legal, valid and binding
obligations of the Company and Acquisition, as the case may be, enforceable
against the Company and Acquisition, as the case may be, in accordance with
their respective terms, except as such enforceability is limited by bankruptcy,
insolvency and other laws affecting the rights of creditors and by general
equitable principles. The Company has the absolute and unrestricted right,
power, authority and capacity to execute and deliver this Agreement and any
agreement executed by it in connection herewith and to perform its obligations
hereunder and thereunder.
ii. Neither the execution and delivery of this Agreement by
each of the Company and Acquisition, nor the consummation or performance by each
of any of its respective obligations contained in this Agreement or in
connection with the Contemplated Transactions will, directly or indirectly (with
or without notice or lapse of time):
a. contravene, conflict with or result in a violation of
(x) any provision of the Organizational Documents of the Company or Acquisition,
as the case may be, or (y) any resolution adopted by the board of directors or
the stockholders of the Company or Acquisition, as the case may be;
b. contravene, conflict with or result in a violation
of, or give any governmental body or other Person the right to challenge any of
the Contemplated Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which the Company or Acquisition or
any of the assets owned or used by the Company or Acquisition may be subject;
c. contravene, conflict with or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate or modify, this Agreement, the ACMI Debentures (once
assumed by Company) or any Applicable Contract;
d. result in the imposition or creation of any material
encumbrance upon or with respect to any of the material assets owned or used by
the Company or Acquisition;
e. cause the Company or Acquisition to become subject
to, or to become liable for the payment of, any tax; or
f. cause any of the assets owned by the Company or
Acquisition to be reassessed or revalued by any taxing authority or other
governmental body, except in connection with the transfer of real estate
pursuant to this Agreement or the Contemplated Transactions, if any.
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(c) Capitalization. The capitalization of the Company as of June 30,
2004 is as set forth in the Form 10-Q for the period ended June 30, 2004,
increased as set forth in the next sentence. The Company has not issued any
capital stock since that date other than pursuant to (i) employee benefit plans
disclosed in the Reports (as defined in Section 4.1(d)), (ii) outstanding
warrants, options or other securities disclosed in the Reports or (iii) as
disclosed in all of the filings of the Company with the SEC. All of the issued
and outstanding shares of the Company Capital Stock have been duly authorized
and validly issued and are fully paid and non-assessable. Except for this
Agreement and as disclosed in the Reports, there are no outstanding options,
warrants, script, rights to subscribe to, registration rights, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of the Company Common Stock, or
contracts, commitments, understandings, or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of the Company
Common Stock, or securities or rights convertible or exchangeable into shares of
the Company Common Stock. None of the outstanding Company Capital Stock was
issued in violation of the Securities Act or any other legal requirement.
(d) Financial Statements. The Company has delivered or made
available to ACMI copies of its Form 10-K Annual Report for the fiscal year
ended December 31, 2003 and copies of its quarterly reports on Form 10-Q for the
quarters ended March 30, 2004 and June 30, 2004, each as filed with the SEC and
including, in each case, any amendments thereto (collectively, the "Reports").
The financial statements contained in the Reports are in all material respects
in accordance with the books and records of the Company and have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
indicated, all as more particularly set forth in the notes to such statements.
The consolidated balance sheets contained in such Reports (the "Company Balance
Sheets") present fairly in all material respects as of their dates the
consolidated financial condition of the Company and its subsidiaries. Except as
and to the extent reflected or reserved against in the Company Balance Sheets
(including the notes thereto), the Company did not have, as of the date of any
such Company Balance Sheet, any material liabilities or obligations (absolute or
contingent) of a nature customarily reflected in a balance sheet or the notes
thereto. The consolidated statements of operations, consolidated statements of
stockholders' equity and changes in consolidated statements of cash flows
present fairly in all material respects the results of operations and changes in
financial position of the Company and its subsidiaries for the periods
indicated.
(e) SEC Filings. The Company has filed all reports required to be
filed with the SEC under the rules and regulations of the SEC and all such
reports have complied in all material respects, as of their respective filing
dates and effective dates, as the case may be, with all the applicable
requirements of the Securities Exchange Act of 1934, as amended. As of the
respective filing and effective dates, none of such reports (including without
limitation, the Reports) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(f) Absence of Material Adverse Change. Since the date of the latest
Company Balance Sheets, there have been no events, changes or occurrences which
have had or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect.
(g) Issuance of Company Securities. The Company Common Stock Shares,
and when issued in accordance with this Agreement, the Purchase Agreement, the
ACMI Debentures and the Escrow Agreement, the Company Underlying Shares and the
Company Escrow Shares, shall be duly authorized, validly issued, fully-paid and
nonassessable. The Company currently has, and at all times while the ACMI
Debentures are outstanding will maintain, an adequate reserve of shares of the
Company Common Stock to enable it to perform its obligations under this
Agreement and ACMI Debentures. Except as set forth in the Reports, there is no
equity line of credit or convertible security or instrument outstanding of the
Company.
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(h) Undisclosed Liabilities. Except as disclosed in any Schedule to
this Agreement, none of the Company, Acquisition or the Subsidiaries has any
material obligations and liabilities (contingent or otherwise) except those
liabilities (i) that are reflected in the Company Balance Sheets or in the notes
thereto, or disclosed in the notes therein in accordance with GAAP or, in
accordance with GAAP, are not required to be so reflected or disclosed, or (ii)
that were incurred after the date of the Company Balance Sheets in the Ordinary
Course of Business, none of which results from, arises out of, relates to, is in
the nature of, or was caused by any breach of contract, breach of warranty,
tort, infringement, or violation of law or could reasonably be expected to have
a Material Adverse Effect.
(i) Taxes.
i. The Company has filed or caused to be filed on a timely
basis all tax returns that are or were required to be filed by it pursuant to
applicable Legal Requirements. The Company has paid, or made provision for the
payment of, all taxes that have or may have become due pursuant to those tax
returns or otherwise, or pursuant to any assessment received by the Company,
except such taxes, if any, as are listed in the Company Disclosure Schedule and
are being contested in good faith as to which adequate reserves have been
provided in the Company Balance Sheets.
ii. All tax returns filed by the Company are true, correct and
complete in all material respects.
(j) Employee Benefits. Except as disclosed in the Reports, the
Company does not sponsor or otherwise maintain a "pension plan" within the
meaning of Section 3(2) of ERISA or any other retirement plan other than the
Company Profit Sharing and 401(k) Plan and Trust that is intended to qualify
under Section 401 of the Code, nor do any unfunded liabilities exist with
respect to any employee benefit plan, past or present. No employee benefit plan,
any trust created thereunder or any trustee or administrator thereof has engaged
in a "prohibited transaction," as defined in Section 4975 of the Code, which may
have a Material Adverse Effect.
(k) Governmental Authorizations. The Company, Acquisition and the
Subsidiaries have all permits that are legally required to enable them to
conduct their business in all material respects as now conducted.
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(l) Legal Proceedings; Orders.
i. Except as set forth in the Reports, there is no material
pending Proceeding:
a. that has been commenced by or against the Company,
Acquisition or the Subsidiaries, or any of the assets owned or used by, the
Company, Acquisition or the Subsidiaries; or
b. that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any
Contemplated Transaction.
ii. Except as set forth in the Reports:
a. there is no material Order to which the Company or
the Subsidiaries, or any of the assets owned or used by the Company, Acquisition
or the Subsidiaries, is subject; and
b. no officer, director, agent, or employee of the
Company or Acquisition is subject to any material Order that prohibits such
offer, director, agent or employee from engaging in or continuing any conduct,
activity or practice relating to the business of the Company or Acquisition, as
the case may be.
(m) Absence of Certain Changes and Events. Except as set forth in
the Reports, since the date of the most recent Company Balance Sheets, the
Company and the Subsidiaries and Acquisition, since the date of its inception,
have conducted their business only in the Ordinary Course of Business, and other
than as contemplated by this Agreement or the Contemplated Transactions there
has not been any:
i. change in the authorized or issued Company Capital Stock or
the authorized or issued capital stock of Acquisition and the Subsidiaries;
grant of any stock option or right to purchase shares of capital stock of the
Company; issuance of any equity lines of credit, security convertible into such
capital stock; grant of any registration rights; purchase, redemption,
retirement, or other acquisition or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
ii. amendment to the Organizational Documents of the Company,
Acquisition or the Subsidiaries;
iii. damage to or destruction or loss of any material asset or
property of the Company, Acquisition or the Subsidiaries, whether or not covered
by insurance, causing a Material Adverse Effect;
iv. receipt of notice that any of their substantial customers
have terminated or intends to terminate their relationship, which termination
would have a Material Adverse Effect;
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v. entry into any transaction other than in the Ordinary
Course of Business;
vi. entry into, termination of, or receipt of written notice
of termination of any material (i) license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) contract or
transaction;
vii. sale (other than sales of inventory in the Ordinary
Course of Business), lease, or other disposition of any asset or property of the
Company, Acquisition or the Subsidiaries or mortgage, pledge, or imposition of
any lien or other encumbrance on any material asset or property of the Company,
Acquisition or the Subsidiaries;
viii. cancellation or waiver of any claims or rights with a
value to the Company in excess of $10,000;
ix. material change in the accounting methods used by the
Company, Acquisition or the Subsidiaries; or
x. agreement, whether oral or written, by the Company,
Acquisition or the Subsidiaries to do any of the foregoing.
(n) No Default or Violation. The Company, Acquisition and the
Subsidiaries (i) are in material compliance with all applicable material terms
and requirements of each material contract under which they have or had any
obligation or liability or by which they or any of the assets owned or used by
them is or was bound and (ii) is not in material violation of any Legal
Requirement.
(o) Certain Payments. Since the most recent date of the Company
Balance Sheets, neither the Company, Acquisition or the Subsidiaries, nor any
director, officer, agent or employee of the Company or the Subsidiaries has
directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback or other payment to any Person, private or public,
regardless of form, whether in money, property or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of the Company, Acquisition or
the Subsidiaries or (iv) in violation of any Legal Requirement, or (b)
established or maintained any fund or asset that has not been recorded in the
books and records of the Company, Acquisition or the Subsidiaries.
(p) Brokers or Finders. The Company and Acquisition have not
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
4.2 Representations and Warranties of ACMI. ACMI hereby makes the
following representations and warranties to the Company, all of which shall
survive the Post-Closing, subject to the limitations set forth in Section 8.2
hereof:
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(a) Organization, Good Standing and Purpose. ACMI is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York with full power and authority to conduct its businesses as it
is now being conducted, to own or use the properties and assets that it owns or
uses, and to perform all of its obligations under this Agreement. ACMI has no
subsidiaries. ACMI is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which either the ownership or use of
the properties owned or used by it, or the nature of the activities conducted by
it, requires such qualification, except for such failures to be so qualified or
in good standing would not have a Material Adverse Effect. ACMI was formed to
assist small communications companies with their growth strategies.
(b) Authority; No Conflict.
i. This Agreement and any agreement executed in connection
herewith have been duly authorized by all required action of ACMI and constitute
the legal, valid and binding obligations of ACMI, enforceable against ACMI in
accordance with their respective terms. ACMI has the absolute and unrestricted
right, power and authority to execute and deliver this Agreement and any
agreements executed in connection herewith and to perform its obligations
hereunder and thereunder.
ii Neither the execution and delivery of this Agreement by
ACMI, nor the consummation or performance by it of any of its obligations
contained in this Agreement or in connection with the Contemplated Transactions
by the Company will, directly or indirectly (with or without notice or lapse of
time):
a. contravene, conflict with or result in a violation of
(x) any provision of the Organizational Documents of ACMI or (y) any resolution
adopted by the board of directors or the stockholders of ACMI;
b. contravene, conflict with or result in a violation
of, or give any governmental body or other Person the right to challenge any of
the Contemplated Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which ACMI or any of the assets
owned or used by ACMI may be subject;
c. contravene, conflict with or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate or modify, this Agreement, the Purchase Agreement, the ACMI
Debentures or any Applicable Contract;
d. result in the imposition or creation of any material
encumbrance upon or with respect to any of the material assets owned or used by
ACMI;
e. cause ACMI to become subject to, or to become liable
for the payment of, any tax; or
f. cause any of the assets owned by ACMI to be
reassessed or revalued by any taxing authority or other governmental body,
except in connection with the transfer of real estate pursuant to this Agreement
or the Contemplated Transactions.
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iii. ACMI is not required to obtain any consent from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions, other than
the requisite approval of its stockholder, John Neilson ( the "ACMI
Stockholder"), which approval has been obtained.
(c) Capitalization. The entire authorized ACMI Capital Stock
consists of 50,001,000 shares ACMI Common Stock, of which 1,000 shares are
issued and outstanding and held by the ACMI Stockholder and 50,000,000 of which
are held in escrow pursuant to the ACMI Escrow Agreement (as defined below).
With the exception of the ACMI Common Stock Shares and the ACMI Debentures,
there are no other outstanding equity or debt securities of the Company. No
legend or other reference to any purported encumbrance appears upon any
certificate representing the ACMI Common Stock Shares, other than applicable
Securities Act legends. The ACMI Common Stock Shares have been duly authorized
and validly issued and are fully paid and non-assessable. Except for the ACMI
Debentures and the agreements relating thereto set forth in the Purchase
Agreement, there are no outstanding options, voting agreements or arrangements,
warrants, script, rights to subscribe to, registration rights, calls or
commitments of any character whatsoever relating to, or, securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of ACMI Capital Stock or other
securities, or contracts, commitments, understandings, or arrangements by which
ACMI is or may become bound to issue additional shares of ACMI Capital Stock or
other securities, or securities or rights convertible or exchangeable into
shares of ACMI Capital Stock or other securities. Except as set forth in this
Section 4.2(c), ACMI has no outstanding equity, debt, debt or equity equivalent
security, or debt or equity lines of credit. None of the outstanding ACMI Common
Stock Shares were issued in violation of the Securities Act or any other legal
requirement. ACMI does not own, and has no contract to acquire, any equity
securities or other securities of any Person or any direct or indirect equity or
ownership interest in any other business. The ACMI Escrow Shares have been duly
authorized, validly issued, fully paid and are nonassessable pursuant to the
escrow agreement between ACMI, HEM, Highgate and the Escrow Agent (the "ACMI
Escrow Agreement"). The ACMI Underlying Shares have been duly authorized, and
when and if issued pursuant to the terms of the Purchase Agreement, will be
fully paid and nonassessable.
(d) Financial Statements. ACMI has delivered to the Company a
balance sheet of ACMI as at December 31, 2003 (the "ACMI Balance Sheet"), and a
statement of operations for the period from inception to December 31, 2003. Such
financial statements were prepared in accordance with GAAP, are set forth in
Schedule 4.2(d) hereto and fairly present the financial condition and the
results of operations of ACMI as at December 31, 2003 of and for the period then
ended.
(e) Absence of Material Adverse Change. Since the date of the most
recent ACMI Balance Sheet provided under Section 4.2(d) hereof, there have been
no events, changes or occurrences which have had or are reasonably likely to
have, individually or in the aggregate, a material adverse effect on ACMI.
(f) Books and Records. The books of account, minute books, stock
record books, and other records of ACMI, all of which have been made available
to the Company and original copies of which will be delivered to the Company at
the Post-Closing, are complete and correct and have been maintained in
accordance with sound business practices, including the maintenance of an
adequate system of internal controls. The minute books of ACMI contain accurate
and complete records of all meetings held of, and corporate action taken by, the
stockholders, the Board of Directors, and any committees of the Board of
Directors of ACMI.
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(g) No Undisclosed Liabilities. There are no material liabilities of
ACMI, whether absolute, accrued, contingent, or otherwise, other than the ACMI
Debentures and as set forth in Schedule 4.2(g).
(h) Title to Properties; Encumbrances. ACMI has good and marketable
title to all the properties, interest in such properties and assets, real and
personal, reflected in the ACMI Balance Sheet or acquired after the date of such
balance sheet, free and clear of all mortgages, liens, pledges, charges or
encumbrances except (i) mortgages and other encumbrances referred to in the
notes to the ACMI Balance Sheet. ACMI neither owns nor leases any real property.
(i) Legal Proceedings; Orders.
i. Except as set forth in Schedule 4.2(i) hereto, there is no
pending Proceeding:
a. that has been commenced or threatened by or against
ACMI or any of its officers, directors, agents or employees as such or that
otherwise relates to or may affect the business of, or any of the assets owned
or used by, ACMI; or
b. that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any
Contemplated Transaction.
ii. Except as set forth in Schedule 4.2(i) hereto:
a. there is no Order to which ACMI, or any of the assets
owned or used by ACMI, is subject; and
b. no officer, director, agent, or employee of ACMI is
subject to any Order that prohibits such offer, director, agent or employee from
engaging in or continuing any conduct, activity or practice relating to the
business of ACMI.
(j) Brokers or Finders. ACMI has incurred no liability, contingent
or otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement.
(k) No Default or Violation. Schedule 4.2(k) hereto lists each
contract, agreement and commitment to which ACMI is a party or otherwise bound
(each, an "ACMI Contract") or has any obligation or liability pursuant thereto.
ACMI (i) is in compliance with all terms and requirements of each ACMI Contract
and (ii) is not in violation of any Legal Requirement.
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(l) Taxes.
i. ACMI has filed or caused to be filed on a timely basis all
tax returns that are or were required to be filed by it pursuant to applicable
Legal Requirements. ACMI has paid, or made provision for the payment of, all
taxes that have or may have become due pursuant to those tax returns or
otherwise, or pursuant to any assessment received by ACMI, except such taxes, if
any, as are listed in Schedule 4.2(l) hereto and are being contested in good
faith as to which adequate reserves have been provided in the ACMI Balance
Sheets.
ii. All tax returns filed by ACMI are true, correct and
complete in all material respects and no taxes are currently owed or tax returns
due by or on behalf of ACMI.
(m) Absence of Certain Changes and Events. Except as set forth in
Schedule 4.2(m) hereto, since the date of the ACMI Balance Sheet, ACMI has
conducted its business only in the Ordinary Course of Business, there has not
been any material adverse effect on ACMI's business or operations, and there has
not been any:
i. change in the authorized or issued capital stock of ACMI;
grant of any stock option or right to purchase shares of capital stock of ACMI;
issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition or
payment of any dividend or other distribution or payment in respect of shares of
capital stock;
ii. amendment to the Organizational Documents of ACMI;
iii. damage to or destruction or loss of any asset or property
of ACMI, whether or not covered by insurance or any other event or circumstance,
materially and adversely affecting the properties, assets, business, financial
condition, or prospects of ACMI;
iv. receipt of notice that any of its substantial customers
have terminated or intends to terminate their relationship, which termination
would have a material adverse effect on its financial condition, results or
operations, business assets or properties of ACMI;
v. entry into any transaction other than in the Ordinary
Course of Business;
vi. entry into, termination of, or receipt of written notice
of termination of any (i) license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) contract or
transaction;
vii. sale, lease, or other disposition of any asset or
property of ACMI or mortgage, pledge, or imposition of any lien or other
encumbrance on any asset or property of ACMI;
viii. cancellation or waiver of any claims or rights with a
value to ACMI in excess of $10,000;
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ix. material change in the accounting methods used by ACMI;
x. accrual or payment of any salaries or other compensation,
increase in salaries, compensation or bonuses or retention or hiring of, any
consultant or employee;
xi. debt or other liability incurred, other than the ACMI
Debentures; or
xii. agreement, whether oral or written, by ACMI to do any of
the foregoing, other than the Purchase Agreement.
(n) Compliance with Law. Except as set forth in Schedule 4.2(n)
hereto: (B) (xiii)
i. ACMI has complied in all material respects with, and is not
in violation of, in any material respect, any Law to which it or its business is
subject; and
ii. ACMI has obtained all licenses, permits, certificates or
other governmental authorizations (collectively "Authorizations") necessary for
the ownership or use of its assets and properties or the conduct of its
business; and
(iii) ACMI has not received written notice of violation of, or
knows of any material violation of, any Laws to which it or its business is
subject or any Authorization necessary for the ownership or use of its assets
and properties or the conduct of its business.
(o) Environmental Laws. ACMI has not received any notice or claim
(and is not aware of any facts that would form a reasonable basis for any
claim), or entered into any negotiations or agreements with any other Person,
and, to the best knowledge of ACMI, ACMI is not the subject of any investigation
by any governmental or regulatory authority, domestic or foreign, relating to
any material or potentially material liability or remedial action under any
Environmental Laws. There are no pending or, to the knowledge of ACMI,
threatened, actions, suits or proceedings against ACMI or any of its properties,
assets or operations asserting any such material liability or seeking any
material remedial action in connection with any Environmental Laws.
(p) Intellectual Property. (i) ACMI owns, or is validly licensed or
otherwise has the right to use, all patents, and patent rights ("Patents") and
all trademarks, trade secrets, trademark rights, trade names, trade name rights,
service marks, service mark rights, copyrights and other proprietary
intellectual property rights and computer programs (the "Intellectual Property
Rights"), in each case, which are material to the conduct of the business of
ACMI.
(ii) To the best knowledge of ACMI, ACMI has not interfered
with, infringed upon (without license to infringe), misappropriated or otherwise
come into conflict with any Patent of any other Person. ACMI has not interfered
with, infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property Rights of any other Person. ACMI has not received any
written charge, complaint, claim, demand or notice alleging any such
interference, infringement, is appropriation or violation (including any claim
that ACMI must license or refrain from using any Patents or Intellectual
Property Rights of any other Person) which has not been settled or otherwise
fully resolved. To the best knowledge of ACMI, no other Person has interfered
with, infringed upon (without license to infringe), misappropriated or otherwise
come into conflict with any Patents or Intellectual Property Rights of ACMI.
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(q) Employees. (a) ACMI has no employees other than John Neilson,
who is the President and Chief Executive Officer of ACMI; (b) John Neilson has
been fully paid for all services rendered by her to ACMI in her capacity as
President of ACMI and is owed no further salary or compensation in connection
therewith; (c) ACMI has complied in all respects with all applicable Laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and ACMI is not liable for any arrears of wages or
any taxes or penalties for failure to comply with any such Laws; (d) ACMI
believes that ACMI's relations with its employees is satisfactory; (e) there are
no controversies pending or, to the best knowledge of ACMI, threatened between
ACMI and any of its employees or former employees; (f) ACMI is not a party to
any collective bargaining agreement or other labor union contract applicable to
persons employed by ACMI, nor, to the best knowledge of ACMI, are there any
activities or proceedings of any labor union to organize any such employees; (g)
there are no unfair labor practice complaints pending against ACMI before the
National Labor Relations Board or any current union representation questions
involving employees of ACMI; (h) there is no strike, slowdown, work stoppage or
lockout existing, or, to the best knowledge of ACMI, threatened, by or with
respect to any employees of ACMI; (i) no charges are pending before the Equal
Employment Opportunity Commission or any state, local or foreign agency
responsible for the prevention of unlawful employment practices with respect to
ACMI; (j) there are no claims pending against ACMI before any workers'
compensation board; (k) ACMI has not received notice that any Federal, state,
local or foreign agency responsible for the enforcement of labor or employment
laws intends to conduct an investigation of or relating to ACMI and, to the best
knowledge of ACMI, no such investigation is in progress; and (l) ACMI has no
consultants or independent contractors.
(r) Employee Benefit Plans. There no "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) or "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA) maintained, or contributed to, by ACMI for the
benefit of any current or any former employees, officers or directors of ACMI.
(s) Rule 504 Securities. The ACMI Debentures (which include the
Escrow Shares for the ACMI Underlying Shares) were sold in accordance with Rule
504 of Regulation D of the Securities Act of 1933, as amended (the "Securities
Act"), and Section 80A.15.2(a)(1) of the Minnesota Statutes, 1986 (the
"Minnesota Act"), to an accredited investor residing in the State of Minnesota.
Accordingly, at the Effective Time and pursuant to Rule 504, the Minnesota Act,
and Section 3(a)(9) of the Securities Act, the ACMI Debentures (which include
the Company Escrow Shares for the Company Underlying Shares) shall continue to
be without restriction and shall be freely tradable in accordance with Rule 504.
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ARTICLE V
COVENANTS
5.1 Covenants of the Company and Acquisition.
(a) Conduct of Business. Between the date hereof and up to and
including the Post-Closing Date, each of the Company and Acquisition shall:
i. conduct its business only in the Ordinary Course of
Business;
ii. use its commercially reasonable efforts to preserve intact
the current business organization of the Company and Acquisition, as the case
may be, keep available the services of the current officers, employees and
agents of the Company and Acquisition, as the case may be, and maintain the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents and others having business relationships with the Company and
Acquisition, as the case may be;
iii. not pay, incur or declare any dividends or distributions
with respect to its stockholders or amend its Certificate of Incorporation or
By-Laws, without the prior written consent of the ACMI Debenture Holder;
iv. not authorize, issue, sell, purchase or redeem any shares
of its capital stock or any options or other rights to acquire ownerships
interests without the prior written consent of the ACMI Debenture Holder except
as may be required by pre-existing commitments disclosed herein or in the
Reports;
v. not incur any indebtedness for money borrowed or issue any
debt securities, or incur or suffer to be incurred any liability or obligation
of any nature whatsoever, except those incurred in the Ordinary Course of
Business, or cause or permit any material lien, encumbrance or security interest
to be created or arise on or in respect of any material portion of its
properties or assets;
vi. not make any investment of a capital nature either by
purchased stock or securities, contribution to capital, property transfer or
otherwise, or by the purchase of any property or assets of any other Person;
vii. not do any other act which would cause any representation
or warranty of the Company in this Agreement to be or become untrue in any
material respect or that is not in the Ordinary Course of Business;
viii. report periodically to the ACMI Debenture Holder
concerning the status of the business and operations of the Company upon the
reasonable request of the ACMI Debenture Holder; and
ix. confer with the ACMI Debenture Holder concerning
operational matters of a material nature upon the reasonable request of the ACMI
Debenture Holder.
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(b) Proposals; Other Offers. Commencing on the date of execution of
this Agreement up to and including the Post-Closing Date, each of the Company
and Acquisition shall not, directly or indirectly (whether through an employee,
a representative, an agent or otherwise), solicit or encourage any inquiries or
proposals, engage in negotiations for or consent to or enter into any agreement
providing for the acquisition of its business. Each of the Company and
Acquisition shall not, directly or indirectly (whether through an employee, a
representative, an agent or otherwise) disclose any nonpublic information
relating to the Company and Acquisition or afford access to any of the books,
records or other properties of the Company and Acquisition to any person or
entity that is considering, has considered or is making any such acquisition
inquiry or proposal relating to the Company's and Acquisition's business.
(c) Further Assurances. Prior to the Post-Closing Date, with the
cooperation of ACMI where appropriate, each of the Company and Acquisition shall
use commercially reasonable efforts to:
i. promptly comply with all filing requirements which federal,
state or local law may impose on the Company or Acquisition, as the case may be,
with respect to the Contemplated Transactions by this Agreement; and
ii. take all actions necessary to be taken, make any filing
and obtain any consent, authorization or approval of or exemption by any
governmental authority, regulatory agency or any other third party (including
without limitation, any landlord or lessor of the Company and any party to whom
notification is required to be delivered or from whom any form of consent is
required) which is required to be filed or obtained by the Company or
Acquisition in connection with the Contemplated Transactions by this Agreement.
(d) Access to Additional Agreements and Information. Prior to the
Post-Closing Date, the Company and Acquisition shall make available to the ACMI
Debenture Holder (as well as its counsel, accountants and other representatives)
any and all agreements, contracts, documents, other instruments and personnel
material to the Company's business, including without limitation, those
contracts to which the Company or Acquisition is a party and those by which each
of its business or any of the Company's or Acquisition's assets are bound.
5.2 Covenants of ACMI.
(a) Conduct of Business. Between the date hereof and up to and
including the Post-Closing Date, ACMI shall:
i. conduct its business only in the Ordinary Course of
Business;
ii. use its commercially reasonable efforts to preserve intact
the current business organization of ACMI, keep available the services of the
current officers, employees and agents of ACMI, and maintain the relations and
good will with suppliers, customers, landlords, creditors, employees, agents and
others having business relationships with ACMI;
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iii. not pay, incur or declare any dividends or distributions
with respect to its stockholders or amend its Certificate of Incorporation or
By-Laws, without the prior written consent of the Company and ACMI Debenture
Holder;
iv. not authorize, issue, sell, purchase or redeem any shares
of its capital stock or any options or other rights to acquire ownerships
interests without the prior written consent of the Company and ACMI Debenture
Holder;
v. not incur any indebtedness for money borrowed or issue and
debt securities, or incur or suffer to be incurred any liability or obligation
of any nature whatsoever, or cause or permit any material lien, encumbrance or
security interest to be created or arise on or in respect of any material
portion of its properties or assets;
vi. not make any investment of a capital nature either by
purchased stock or securities, contribution to capital, property transfer or
otherwise, or by the purchase of any property or assets of any other Person;
vii. not do any other act which would cause representation or
warranty of ACMI in this Agreement to be or become untrue in any material
respect or that is not in the Ordinary Course of Business consistent with past
practice;
viii. report periodically to the Company and the ACMI
Debenture Holder concerning the status of the business and operations of ACMI;
and
ix. confer with the Company and the ACMI Debenture Holder
concerning operational matters of a material nature.
(b) Proposals; Other Offers. Commencing on the date of execution of
this Agreement through the Post-Closing Date, ACMI shall not, directly or
indirectly (whether through an employee, a representative, an agent or
otherwise), solicit or encourage any inquiries or proposals, engage in
negotiations for or consent to or enter into any agreement providing for the
acquisition of its business. ACMI shall not, directly or indirectly (whether
through an employee, a representative, an agent or otherwise) disclose any
nonpublic information relating to ACMI or afford access to any of the books,
records or other properties of ACMI to any person or entity that is considering,
has considered or is making any such acquisition inquiry or proposal relating to
the ACMI's business.
(c) Further Assurances. Prior to the Post-Closing Date, with the
cooperation of the Company where appropriate, ACMI shall:
i. promptly comply with all filing requirements which federal,
state or local law may impose on ACMI with respect to the Contemplated
Transactions by this Agreement and cooperate with the Company regarding the
same; and
ii. take all actions necessary to be taken, make any filing
and obtain any consent, authorization or approval of or exemption by any
governmental authority, regulatory agency or any other third party (including
without limitation, any landlord or lessor of ACMI and any party to whom
notification is required to be delivered or from whom any form of consent is
required) which is required to be filed or obtained by ACMI in connection with
the Contemplated Transactions by this Agreement.
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(d) Actions by ACMI. ACMI shall take no action or enter into any
agreements or arrangements except as may be required by this Agreement.
(e) No Change in Capital Stock. Prior to the Effective Time, no
change will be made in the authorized, issued or outstanding capital stock of
ACMI, and no subscriptions, options, rights, warrants, calls, commitments or
agreements relating to the authorized, issued or outstanding capital stock of
ACMI will be entered into, issued, granted or created.
(f) Access to Additional Agreements and Information. Prior to the
Post-Closing Date, ACMI shall make available to the Company and ACMI Debenture
Holder (as well as its counsel, accountants and other representatives) any and
all agreements, contracts, documents, other instruments and personnel material
of ACMI's business, including without limitation, those contracts to which ACMI
is a party and those by which its business or any of ACMI's assets are bound.
(g) Further Assurances. Prior to the Post-Closing Date, with the
cooperation of the Company where appropriate, ACMI shall use commercially
reasonable efforts to:
i. promptly comply with all filing requirements which federal,
state or local law may impose on ACMI with respect to the Contemplated
Transactions by this Agreement; and
ii. take all actions necessary to be taken, make any filing
and obtain any consent, authorization or approval of or exemption by any
governmental authority, regulatory agency or any other third party (including
without limitation, any landlord or lessor of ACMI and any party to whom
notification is required to be delivered or from whom any form of consent is
required) which is required to be filed or obtained by ACMI in connection with
the Contemplated Transactions by this Agreement.
5.3 Governmental Filings and Consents. The Company, Acquisition and
ACMI shall cooperate with one another in filing any necessary applications,
reports or other documents with any federal or state agencies, authorities or
bodies having jurisdiction with respect to the business of the Company,
Acquisition or ACMI and in seeking any necessary approval, consultation or
prompt favorable action of, with or by any of such agencies, authorities or
bodies.
5.4 Publicity. Any public announcement or press release relating to
this Agreement or the Contemplated Transactions must be approved by the ACMI
Debenture Holder and the Company in writing before being made or released. The
Company shall have the right to issue a press release or make other disclosure
without the ACMI Debenture Holder's written approval if in the opinion of the
Company's counsel such a release is necessary to comply with SEC Rules and
Regulations or other Law; provided that, the ACMI Debenture Holder receives a
copy of such prepared press release or other disclosures for purposes of review
at least 24 hours before it is issued. This 24 hour period may be shortened if
in the opinion of the Company's counsel it is required by Law; provided that,
the ACMI Debenture Holder and the Company receives a copy of such release as
long as reasonably practical before it is issued.
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5.5 Tax Returns. The current officers of the Company shall have the
right to prepare any tax returns of the Company with respect to any period that
ends on or before the Post-Closing Date. Such tax returns shall be timely filed
by the Company. ACMI shall cooperate with said officers in the preparation of
such tax returns.
ARTICLE VI
CONDITIONS
6.1 Conditions to Obligations of ACMI. The obligation of ACMI to
consummate the Contemplated Transactions is subject to the fulfillment of each
of the following conditions, any of which may be waived by ACMI in its sole
discretion:
(a) Copies of Resolutions. At the Post-Closing (i) the Company shall
have furnished ACMI with a certificate of its CEO or President, as the case may
be, in the form of EXHIBIT 6.1(A) annexed hereto, certifying that attached
thereto are copies of resolutions duly adopted by the board of directors of the
Company authorizing the execution, delivery and performance of this Agreement
and all other necessary or proper corporate action to enable the Company to
comply with the terms of this Agreement and (ii) Acquisition shall have
furnished ACMI with a certificate of its CEO or President, as the case may be,
in the form of EXHIBIT 6.1(E) annexed hereto, certifying that attached thereto
are copies of resolutions duly adopted by the board of directors of Acquisition
authorizing the execution, delivery and performance of this Agreement and all
other necessary or proper corporate action to enable Acquisition to comply with
the terms of this Agreement.
(b) Opinion of Company's Counsel. The Company shall have furnished
to ACMI, at the Post-Closing, an opinion of its legal counsel, dated as of the
Post-Closing Date, substantially in the form of EXHIBIT 6.1(B) annexed hereto.
(c) Opinion of Company's Special Securities Counsel. The Company
shall have furnished to ACMI, at the Post-Closing, with an opinion of the
special securities counsel to the Company, dated as of the Post-Closing Date,
substantially in the form of EXHIBIT 6.1(C) annexed hereto.
(d) Instruction Letter to Transfer Agent. The Company shall have
furnished ACMI, at the Post-Closing, with a letter to its transfer agent, to
accept the legal opinion set forth in Section 6.1(c), dated as of the
Post-Closing Date, substantially in the form of EXHIBIT 6.1(D) annexed hereto.
(e) Accuracy of Representations and Warranties; Performance of
Covenants. Each of the representations and warranties of the Company and
Acquisition set forth in this Agreement was true, correct and complete in all
material respects when made (except for representations and warranties that
speak as of a specific date, which representations and warranties shall be true,
correct and complete in all material respects as of such date) and shall also be
true, correct and complete in all material respects at and as of the
Post-Closing Date (except for representations and warranties that speak as of a
specific date, which representations and warranties shall be true, correct and
complete in all material respects as of such date), with the same force and
effect as if made at and as of the Post-Closing Date. The Company shall have
performed and complied in all material respects with all agreements and
covenants required by this Agreement to be performed by the Company and
Acquisition at or prior to the Post-Closing Date.
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(f) Delivery of Certificate. (A) The Company shall have delivered to
ACMI a certificate, in the form of EXHIBIT 6.1(F) annexed hereto, dated the
Post-Closing Date, and signed by the CEO or President of the Company affirming
that the representations and warranties as set forth in Section 4.1 were and are
true, correct and complete as required by Section 6.1(e) and (B) Acquisition
shall have delivered to ACMI a certificate, in the form of EXHIBIT 6.1(H)
annexed hereto, dated the Post-Closing Date, and signed by the CEO or President
of Acquisition affirming that the representations and warranties as set forth in
Section 4.1 were and are true, correct and complete as required by Section
6.1(e).
(g) Consents and Waivers. At the Post-Closing, any and all necessary
consents, authorizations, orders or approvals shall have been obtained, except
as the same shall have been waived by the ACMI Debenture Holder.
(h) Litigation. On the Post-Closing Date, there shall be no
effective injunction, writ or preliminary restraining order or any order of any
kind whatsoever with respect to the Company issued by a court or governmental
agency (or other governmental or regulatory authority) of competent jurisdiction
restraining or prohibiting the consummation of the Contemplated Transactions or
making consummation thereof unduly burdensome to ACMI. On the Post-Closing Date
and immediately prior to consummation of the Contemplated Transactions, no
proceeding or lawsuit shall have been commenced, be pending or have been
threatened by any governmental or regulatory agency or authority or any other
Person restraining or prohibiting the consummation of the Contemplated
Transactions.
(i) Delivery of Documents and Other Information. Prior to the
Post-Closing Date, the Company and Acquisition shall have made available or
delivered to ACMI all of the agreements, contracts, documents and other
instruments requested by ACMI.
6.2 Conditions to Obligations of the Company and Acquisition. The
obligations of the Company and Acquisition to consummate the Contemplated
Transactions are subject to the fulfillment of each of the following conditions,
any of which may be waived by the Company and Acquisition, in their sole
discretion:
(a) Copies of Resolutions. At the Post-Closing, ACMI shall have
furnished the Company with a certificate of its President, in the form of
EXHIBIT 6.2(A) annexed hereto, certifying that attached thereto are copies of
resolutions duly adopted by the board of directors of ACMI authorizing the
execution, delivery and performance of the terms of this Agreement and all other
necessary or proper corporate action to enable ACMI to comply with the terms of
this Agreement.
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(b) Opinion of ACMI's Counsel. ACMI shall have furnished to the
Company, at the Post-Closing, with an opinion of counsel to ACMI, dated as of
the Post-Closing Date, substantially in the form of EXHIBIT 6.2(B) annexed
hereto.
(c) Opinion of ACMI's Special Securities Counsel. ACMI shall have
furnished to the Company, at the Closing, with an opinion of the special
securities counsel to ACMI dated as of the Post-Closing Date, substantially in
the form of EXHIBIT 6.2(C) annexed hereto.
(d) Accuracy of Representations and Warranties; Performance of
Covenants. Each of the representations and warranties of ACMI was true, correct
and complete in all material respects when made (except for representations and
warranties that speak as of a specific date, which representations and
warranties shall be true, correct and complete in all material respects as of
such date) and shall also be true, correct and complete in all material respects
at and as of the Post-Closing Date (except for representations and warranties
that speak as of a specific date, which representations and warranties shall be
true, correct and complete in all material respects as of such date), with the
same force and effect as if made at and as of the Post-Closing Date. ACMI shall
have performed and complied in all material respects with all agreements and
covenants required by this Agreement to be performed by ACMI at or prior to the
Post-Closing Date.
(e) Delivery of Certificate. ACMI shall have delivered to the
Company a certificate, in the form of EXHIBIT 6.2(E) annexed hereto, dated the
Post-Closing Date and signed by the CEO or President of ACMI, affirming that the
representations and warranties of ACMI as set forth in Section 4.2 were and are
true, correct and complete and ACMI's agreements and covenants have been
performed as required by Section 6.2(d).
(f) Compliance with Rule 504. In connection with the issuance of the
Securities by ACMI under the Purchase Agreement, on or prior to the Post-Closing
Date ACMI shall be in full compliance with Rule 504 of Regulation D of the
Securities Act of 1933, as amended, and ACMI shall have delivered to the Company
at the Post-Closing a filed copy of the Form D required to be filed with the SEC
in connection therewith.
(g) Consents and Waivers. On or prior to the Post-Closing Date, any
and all necessary consents, authorizations, orders or approvals shall have been
obtained, except as the same shall have been waived by the Company. LXXXVI.
(h) Litigation. On the Post-Closing Date, there shall be no
effective injunction, writ or preliminary restraining order or any order of any
kind whatsoever with respect to ACMI issued by a court or governmental agency
(or other governmental or regulatory authority) of competent jurisdiction
restraining or prohibiting the consummation of the Contemplated Transactions or
making the consummation thereof unduly burdensome to the Company or ACMI. On the
Post-Closing Date, no proceeding or lawsuit shall have been commenced,
threatened or be pending or by any governmental or regulatory agency or
authority or any other person with respect to the Contemplated Transactions.
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(i) Delivery of Documents and Other Information. Prior to the
Post-Closing Date, ACMI shall have made available or delivered to the Company
all of the agreements, contracts, documents and other instruments required to be
delivered pursuant to the provisions of this Agreement.
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Agreement. This Agreement may be
terminated at any time by mutual consent of the parties hereto, provided that
such consent to terminate is in writing and is signed by each of the parties
hereto.
7.2 Termination for Failure to Close. This Agreement shall be
automatically terminated if the Closing shall not have occurred within ten (10)
days of the date hereof (except if such 10th day is not a Business Day, then the
next Business Day).
7.3 Termination by Operation of Law. This Agreement may be
terminated by any party hereto if there shall be any statute, rule or regulation
that renders consummation of the Contemplated Transactions illegal or otherwise
prohibited, or a court of competent jurisdiction or any government (or
governmental authority) shall have issued an order, decree or ruling, or has
taken any other action restraining, enjoining or otherwise prohibiting the
consummation of such transactions and such order, decree, ruling or other action
shall have become final and nonappealable.
7.4 Termination for Failure to Perform Covenants or Conditions. This
Agreement may be terminated prior to the Post-Closing Date:
(a) by ACMI if: (i) any of the representations and warranties made
in this Agreement by the Company or Acquisition shall not be materially true and
correct, when made or at any time prior to consummation of the Contemplated
Transactions as if made at and as of such time; (ii) any of the conditions set
forth in Section 6.1 hereof have not been fulfilled in all material respects by
the Post-Closing Date; (iii) the Company or Acquisition shall have failed to
observe or perform any of its material obligations under this Agreement; or (iv)
as otherwise set forth herein; or
(b) by the Company or Acquisition if: (i) any of the representations
and warranties of ACMI or the ACMI Stockholder shall not be materially true and
correct when made or at any time prior to consummation of the Contemplated
Transactions as if made at and as of such time; (ii) any of the conditions set
forth in Section 6.2 hereof have not been fulfilled in all material respects by
the Post-Closing Date; (iii) ACMI or the ACMI Stockholder shall have failed to
observe or perform any of their material respective obligations under this
Agreement; or (iv) as otherwise set forth herein.
7.5 Effect of Termination or Default; Remedies. In the event of
termination of this Agreement as set forth above, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto,
provided that such party is a Non-Defaulting Party (as defined below). The
foregoing shall not relieve any party from liability for damages actually
incurred as a result of such party's breach of any term or provision of this
Agreement.
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7.6 Remedies; Specific Performance. In the event that any party
shall fail or refuse to consummate the Contemplated Transactions or if any
default under or beach of any representation, warranty, covenant or condition of
this Agreement on the part of any party (the "Defaulting Party") shall have
occurred that results in the failure to consummate the Contemplated
Transactions, then in addition to the other remedies provided herein, the
non-defaulting party (the "Non-Defaulting Party") shall be entitled to seek and
obtain money damages from the Defaulting Party, or may seek to obtain an order
of specific performance thereof against the Defaulting Party from a court of
competent jurisdiction, provided that the Non-Defaulting Party seeking such
protection must file its request with such court within forty-five (45) days
after it becomes aware of the Defaulting Party's failure, refusal, default or
breach. In addition, the Non-Defaulting Party shall be entitled to obtain from
the Defaulting Party court costs and reasonable attorneys' fees incurred in
connection with or in pursuit of enforcing the rights and remedies provided
hereunder.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.1 Survival of Representations and Warranties of the Company. All
representations and warranties of the Company shall survive the execution and
delivery of this Agreement and the Post-Closing hereunder and shall thereafter
survive until the earlier of (i) the fourth anniversary of the Post-Closing Date
and (ii) the date of the ACMI Debentures have been fully converted or otherwise
cease to be outstanding (the "Conversion Date") and shall then terminate except
to the extent that notice of the Company's or Acquisition liability in respect
of any inaccuracy in or breach of any representation or warranty shall have been
given on or prior to such second anniversary or Conversion Date.
8.2 Survival of Representations and Warranties of ACMI. All
representations and warranties of ACMI shall terminate upon the Closing except
to the extent that notice of ACMI's liability in respect of any inaccuracy in or
breach of any representation or warranty shall have been given on or prior to
Closing.
8.3 Obligation of the Company to Indemnify. The Company agrees to
indemnify, defend and hold harmless ACMI (and its directors, officers,
employees, affiliates, stockholders, debenture holders, agents, attorneys,
successors and assigns) from and against all losses, liabilities, damages,
deficiencies, costs or expenses (including interest, penalties and reasonable
attorneys' and consultants' fees and disbursements) (collectively, "Losses")
based upon, arising out of or otherwise in respect of any (i) inaccuracy in any
representation or warranty of the Company contained in this Agreement or in the
Schedules and Exhibits hereto or (ii) breach by the Company of any covenant or
agreement contained in this Agreement.
8.4 Obligation of and ACMI to Indemnify. ACMI agrees to indemnify,
defend and hold harmless the Company (and its directors, officers, employees,
affiliates, stockholders, agents, attorneys, successors and assigns) from and
against any Losses based upon, arising out of or otherwise in respect of any (i)
inaccuracy in any representation or warranty of ACMI contained in this Agreement
or (ii) breach by ACMI of any covenant or agreement contained in this Agreement.
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8.5 Notice and Opportunity to Defend. (a) Promptly after receipt by
any Person entitled to indemnity under this Agreement (an "Indemnitee") of
notice of any demand, claim or circumstances which, with the lapse of time,
would or might give rise to a claim or the commencement (or threatened
commencement) of any action, proceeding or investigation (an "Asserted
Liability") that may result in a Loss, the Indemnitee shall give notice thereof
(the "Claims Notice") to any other party (or parties) who is or may be obligated
to provide indemnification pursuant to Section 8.3 or 8.4 (the "Indemnifying
Party"). The Claims Notice shall describe the Asserted Liability in reasonable
detail and shall indicate the amount (estimated, if necessary and to the extent
feasible) of the Loss that has been or may be suffered by the Indemnitee.
(b) The Indemnifying Party may elect to compromise or defend, at its
own expense and by its own counsel, any Asserted Liability. If the Indemnifying
Party elects to compromise or defend such Asserted Liability, it shall within 30
days after the date the Claims Notice is given (or sooner, if the nature of the
Asserted Liability so requires) notify the Indemnitee of its intent to do so,
and the Indemnitee shall cooperate, at the expense of the Indemnifying Party, in
the compromise of, or defense against, such Asserted Liability. If the
Indemnifying Party elects not to compromise or defend the Asserted Liability,
fails to notify the Indemnitee of its election as herein provided or contests
its obligation to indemnify under this Agreement, the Indemnitee may pay,
compromise or defend such Asserted Liability and all reasonable expenses
incurred by the Indemnitee in defending or compromising such Asserted Liability,
all amounts required to be paid in connection with any such Asserted Liability
pursuant to the determination of any court, governmental or regulatory body or
arbitrator, and amounts required to be paid in connection with any compromise or
settlement consented to by the Indemnitee, shall be borne by the Indemnifying
Party. Except as otherwise provided in the immediately preceding sentence, the
Indemnitee may not settle or compromise any claim over the objection of the
Indemnifying Party. In any event, the Indemnitee and the Indemnifying Party may
participate, at their own expense, in (but the Indemnitee may not control) the
defense of such Asserted Liability. If the Indemnifying Party chooses to defend
any claim, the Indemnitee shall make available to the Indemnifying Party any
books, records or other documents within its control that are necessary or
appropriate for such defense.
ARTICLE IX
DEFINITIONS
The following terms, which are capitalized in this Agreement, shall
have the meanings set forth below for the purpose of this Agreement.
"Applicable Contract" means any Contract (a) to which the Company is
a party and under which the Company has or may acquire any material rights, (b)
under which the Company or ACMI, as the case may be, is a party and has or may
become subject to any material obligation or material liability or (c) by which
the Company or ACMI, as the case may be, or any of the material assets owned or
used by it is or may become bound.
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"Contemplated Transactions" means all of the transactions
contemplated by this Agreement, including, without limitation:
(1) the Merger; and
(2) the performance by the parties of their respective covenants and
obligations under this Agreement.
"Environmental Laws" means all applicable federal, state, local or
foreign laws, rules and regulations, orders, decrees, judgments, permits,
filings and licenses relating (i) to protection and clean-up of the environment
and activities or conditions related thereto, including those relating to the
generation, handling, disposal, transportation or release of hazardous
substances and (ii) the health or safety of employees in the workplace
environment, all as amended from time to time, and shall also include any common
law theory based on nuisance, trespass, negligence or other tortious conduct.
"ERISA" means the Employee Retirement Income Security Act of 1974 or
any successor law, and regulations and rules issued pursuant to such law or any
successor law.
"GAAP" means generally accepted accounting principles in the United
States, applied on a consistent basis.
"Law" means all applicable laws, statutes, ordinances, rules,
regulations, orders, writs, injunctions, judgments or decrees entered, enacted,
promulgated, enforced or issued by any court or other governmental or regulatory
authority, domestic or foreign.
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational or other administrative law, ordinance,
principle of common law, regulation, statute, treaty, court or arbitrator.
"Material Adverse Effect" means a material adverse effect upon the
business or financial condition of the Company (when used in Section 4.1) or
ACMI (when used in Section 4.2), taken as a whole with any subsidiaries.
"Order" means any award, decision, injunction, judgment, order,
ruling, subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other governmental body or by any arbitrator.
"Ordinary Course of Business" means an action taken by a Person
where:
(1) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
(2) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority); and
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(3) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"Organizational Documents" means the articles or certificate of
incorporation and the by-laws of a corporation and any amendment thereto.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or governmental body.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or before,
or otherwise involving, any governmental body or arbitrator.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
ARTICLE X
MISCELLANEOUS
10.1 Fees and Expenses. Except as otherwise provided in this
Agreement, each party hereto will bear its own legal, accounting and other fees
and expenses incident to the Contemplated Transactions herein. Any fees and
expenses required to be paid by any party hereunder shall be limited to
reasonable and necessary fees and expenses
10.2 Modification, Amendments and Waiver. The parties hereto may
amend, modify or otherwise waive any provision of this Agreement by mutual
consent, provided that such consent and any amendment, modification or waiver is
in writing and is signed by each of the parties hereto.
10.3 Assignment. Neither the Company nor ACMI shall have the
authority to assign its respective rights or obligations under this Agreement
without the prior written consent of the ACMI Debenture Holder.
10.4 Successors. This Agreement shall be binding upon and, to the
extent permitted in this Agreement, shall inure to the benefit of the parties
and their respective successors and permitted assigns.
10.5 Entire Agreement. This Agreement and the exhibits, schedules
and other documents referred to herein contain the entire agreement among the
parties hereto with respect to the Contemplated Transactions and supersede all
prior agreements with respect thereto, whether written or oral.
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10.6 Governing Law. This Agreement and the exhibits hereto shall be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to principles of conflicts or choice of laws thereof. Any
action to enforce the terms of this Agreement or any of its exhibits shall be
brought exclusively in the state and/or federal courts situated in the County
and State of New York. Service of process in any action by either party to
enforce the terms of this Agreement may be made by serving a copy of the summons
and complaint, in addition to any other relevant documents, by commercial
overnight courier to the other party at its principal address set forth in this
Agreement.
10.7 Notices. Any notice, request, demand, waiver, consent,
approval, or (B) other communication which is required or permitted to be given
to any party hereunder shall be in writing and shall be deemed given only if
delivered to the party personally or sent to the party by facsimile upon
electronic confirmation of receipt (promptly followed by a hard-copy delivered
in accordance with this Section 10.7) or three days after being mailed by
registered or certified mail (return receipt requested), with postage and
registration or certification fees thereon prepaid, or if sent by nationally
recognized overnight courier, one day after being mailed, addressed to the party
at its address set forth below:
If to ACMI prior to
Post-Closing: Aciem Management, Inc.
200 West 58th Street, Suite 18E
New York, New York 10019
Tel:
Fax:
If to ACMI after Aciem Management, Inc.
Post-Closing: 533-535 West 27th Street
New York, NY 10001
Tel: (212) 868-4900
Fax: (212) 868-4414
If to Acquisition: SCRH Acquisition Corp.
533-535 West 27th Street
New York, NY 10001
Tel: (212) 868-4900
Fax: (212) 868-4414
If to the Company: Scores Holding Company, Inc.
533-535 West 27th Street
New York, NY 10001
Tel: (212) 868-4900
Fax: (212) 868-4414
or to such other persons or addresses as may be designated in writing by the
party to receive such notice. If mailed as aforesaid, the day of mailing or
transmission shall be the date any such notice shall be deemed to have been
delivered.
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10.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which shall
constitute but one agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
10.9 Rights Cumulative. All rights, powers and privileges conferred
hereunder upon the parties, unless otherwise provided, shall be cumulative and
shall not be restricted to those given by law. Failure to exercise any power
given any party hereunder or to insist upon strict compliance by any other party
shall not constitute a waiver of any party's right to demand exact compliance
with any of the terms or provisions hereof.
10.10 Severability of Provisions. The provisions of this Agreement
shall be considered severable in the event that any of such provisions are held
by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable. Such invalid, void or otherwise unenforceable provisions shall be
automatically replaced by other provisions which are valid and enforceable and
which are as similar as possible in term and intent to those provisions deemed
to be invalid, void or otherwise unenforceable and the remaining provisions
hereof shall remain enforceable to the fullest extent permitted by law.
10.11 Headings. The headings set forth in the articles and sections
of this Agreement and in the exhibits and the schedules to this Agreement are
inserted for convenience of reference only and shall not be deemed to constitute
a part hereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
have caused this Agreement to be executed and delivered on the date and year
first above written.
SCORES HOLDING COMPANY, INC.
By: /s/ Richard Goldring
-------------------------------------
Richard Goldring, President
ACIEM MANAGEMENT, INC.
By: /s/ John Neilson
-------------------------------------
John Neilson, President
SCRH ACQUISITION CORP.
By: /s/ Richard Goldring
-------------------------------------
Richard Goldring, President
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