SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 19, 1996
AUDIO COMMUNICATIONS NETWORK, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 0-7762 59-0690530
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
1000 Legion Place 32801
Suite 1515 (Zip Code)
Orlando Florida
(Address of principal executive offices)
Registrant's telephone number, including area code (407) 649-8877
Item 5. Other Events.
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On November 19, 1996, Audio Communications Network, Inc. , a Florida
corporation (the "Company"), and Suncom Communications L.L.C., a Delaware
limited liability company ("Suncom"), entered into an Asset Purchase Agreement,
dated as of November 19, 1996, providing for the acquisition of Suncom's
business by the Company.
Under the terms of the Asset Purchase Agreement, the Company will acquire
the business and assume the liabilities of Suncom. To the extent that Suncom's
liabilities (as defined in the Asset Purchase Agreement) exceed its Current
Assets (also as defined in the Asset Purchase Agreement) by more than
$18,750,000 at the closing date (an "Overage"), Suncom will pay the Company an
amount in cash equal to such Overage. In addition to the assumption of the
liabilities of Suncom, the Company will also issue 2.1 million shares of its
common stock as consideration for the acquisition, representing approximately
48% of the Company's common stock. Consummation of the transaction requires the
consent of the Company's and Suncom's lenders or the replacement of the existing
banking facilities with a substitute facility or combined facilities.
Mr. Schell will remain as Chairman of the Company's Board of Directors
after closing of the transaction. In addition, as of the closing, Suncom will
designate four persons who will serve on the Company's eight-person Board of
Directors, with four of the current directors remaining on the Company's Board
and four of the current directors resigning their positions. The Company's
shareholders are expected to vote on a proposal to be submitted at the 1997
annual meeting to increase the size of the Board to nine, with the ninth member
being nominated by Suncom.
Additionally, Suncom has entered into an agreement with A.J. Schell, the
Company's Chairman and Chief Executive Officer, to acquire Mr. Schell's position
in the Company. Upon consummation of both transactions, which is expected to
take place in January 1997, Suncom is expected to own approximately 2.7 million
shares, or approximately 62% of the Company's outstanding common stock.
The Asset Purchase Agreement also provides for the execution of an Option
Agreement between the Company and Suncom. At closing, the Company will grant
Suncom an option to acquire up to 1,000,000 shares of Company common stock at an
exercise price of $6.00 per share. The options become exercisable upon the
consummation of a public or private offering of Company common stock, or
securities convertible into such stock, but only with respect to the number of
shares issued in such offering. In the event that the offering is of securities
convertible into Company common stock, the exercise price of the option
increases to $9.00 per share. The option expires three years from grant or from
the completion of an offering of convertible securities.
Mr. Schell will enter into an employment agreement with the Company at the
closing of the transaction. Mr. Schell will serve as Chairman and will perform
a variety of management duties as more fully described in the Employment
Agreement. The employment agreement has a three-year term and provides for
payment of $600,000 per annum.
Suncom is the MUZAK affiliate for the Charlotte and Raleigh/Durham areas of
North Carolina as well as Phoenix, Arizona. The Company operates MUZAK
franchises in Baltimore, Maryland, Fresno, California, Jacksonville, Florida and
Kansas City and St. Louis Missouri.
A copy of the Asset Purchase Agreement dated November 19, 1996, certain
of the exhibits and schedules thereto and the press release issued by the
Company on November 19, 1996 are filed as exhibits hereto and are incorporated
by reference herein. The description of such agreements does not purport to be
complete and is qualified by reference to such agreements in their entirety.
List of Exhibits
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Exhibit No. Description
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99.1 Asset Purchase Agreement dated as of November 19, 1996 between
Audio Communications Network, Inc. and Suncom Communications
L.L.C.
99.2 Press release of Audio Communications Network, Inc. dated
November 19, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AUDIO COMMUNICATIONS NETWORK, INC.
Date: November 26, 1996 By /s/ Doris K. Krummenacker
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Name: Doris K. Krummenacker
Title: Secretary