EXHIBIT 10.6
MERGER AGREEMENT
THIS MERGER AGREEMENT is made this 29th day of January, 1998, at
Evansville, Indiana, by and among Division - Tel Communications Group, Inc., an
Indiana corporation, (hereinafter referred to as "Division - Tel"), ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, an individual and controlling shareholder of Division-Tel (hereinafter
referred to as "▇▇▇▇▇"), and Telecomm Industries Corp., a Delaware corporation
(hereinafter referred to as "Telecomm").
Recitals
1. Division-Tel is an Indiana corporation, and presently owns and
operates a voice and data telecommunication business, operated
from the locations, identified on Schedule 8.1
2. Both Telecomm, through it's Board of Directors, and Division-Tel,
through it's Sole Shareholder, ▇▇▇▇▇▇▇ R, ▇▇▇▇▇, believe this
Merger to be in the best interests of their respective business
entities.
3. The entities shall merge together, with the new entity,
(hereinafter "Merged Companies") becoming known as Telecomm
Industries Corp. Division-Tel shall cease to exist.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and other good and valuable consideration, the receipt, adequacy and
sufficiency of which are acknowledged, the parties agree as follows:
Section 1. Definitions
As used in this Agreement, the terms identified below in this Section
will have the meanings indicated, unless a different and common meaning of the
term is clearly indicated by the context.
1.1 Balance Sheet - means the December 31, 1997 Balance Sheet of
Division-Tel, a copy of which is attached hereto and marked
Schedule 1.1.
1.2 Statement of Income and Expenses - means the December 31, 1997
Statement of Income and Expenses of Division-Tel, a copy of which
is attached hereto and marked Schedule 1.2.
1.3 Financial Statements - means the Balance Sheet, as defined in
Section 1.1, the Statement of Income and Expenses, as defined in
Section 1.2, and Cash Flow Statements, when referred to
collectively.
1.4 Agreement - means this Merger Agreement together with the
Attachments.
1.5 Attachments - means the Schedules and Exhibits referred to herein
and attached hereto.
1.6 Authorization - means any Government consent, license, permit,
grant or other governmental authorization.
1.7 Closing - means the Closing of the Transaction as described in
Section 8 of this Agreement.
1.8 Closing Date - means the date and time as set forth in Section 8,
or such other date and time as subsequently may be agreed upon by
the parties, in writing. Any reference herein to the Closing Date
for the purpose of establishing a point in time, or calculating a
period of time, means 11:59 p.m., local time on the Closing Date.
1.9 Contract - means any voluntarily entered written or oral agreement
or commitment that is legally binding on any person or entity
under applicable law.
1.10 Court Order - means any judgment, decree, injunction or order of
any federal, state, local or foreign court that is binding on any
person or entity or its property under applicable law.
1.11 Effective Date - means the date first above written.
1.12 Entity - means a corporation, partnership, sole proprietorship,
limited liability company, joint venture or other form of
organization whether formed for the conduct of a business or
profit seeking activity, active or passive, or not for profit.
1.13 Intellectual Property - means any trade names, trademarks, service
marks, copyrights and work of authorship, and all registrations
and applications for the foregoing, and all licenses or license
rights related to or based upon the foregoing, software licenses
and know-how licenses, trade secrets, fictitious names, assumed
names, all industrial models and all United States and foreign
patent rights covered by, disclosed in or otherwise related
thereto and all registrations and applications therefor and all
reissues, divisions, continuations-in-part, re-examinations and
extensions thereof, together with the right to ▇▇▇ for past
infringement and improper, unlawful or unfair use of any of the
foregoing.
1.14 Division-Tel - means Division - Tel Communications Group, Inc., an
Indiana corporation.
1.15 Division-Tel's Business - means the existing business operations
(including without limitation, the goodwill and going concern
value), labor relations, customer and supplier relations, and
products, if any, or services, if any, of Division-Tel.
1.16 Telecomm - means Telecomm Industries Corp., a Delaware
Corporation.
1.17 Transaction - means the transaction contemplated by the Agreement,
and the related Exhibits.
1.18 Merged Assets - means the assets to be merged and transferred by
Division-Tel to Telecomm in accordance with this Agreement as more
specifically described in Section 3.3
1.19 Year-End Balance Sheets - means the Balance Sheet for the year
ended December 31, 1997.
1.20 Year-End Statements of Income and Expenses - means the Statements
of Income and Expenses of Division-Tel for the year ended December
31, 1997.
1.21 Year-End Financial Statements - means the Year-End Balance Sheets,
and the Year-End Statement of Income and Expenses.
1.22 Diminutive Error - Means any mistake, misrepresentation, failure
to disclose, or other error which has a net dollar value of less
than Five Hundred Dollars. ($500.00)
1.23 Cumulative Diminutive Errors - Means the combined total of all
diminutive errors made within this agreement.
Section 2 - The Merger
2.1 Adoption of Plan of Merger. Both parties have taken all requisite
corporate action prior to the date hereof for the purposes of
adopting and approving this Agreement pursuant to Indiana Law.
Upon execution of this Agreement, Telecomm and Division-Tel shall
cause Articles of Merger pursuant to this Agreement to be filed
with the Secretary of State of Delaware and Indiana, and shall
cause to be filed such certificates, documents or instruments as
are required to be filed in Indiana or any other State required in
order to effectuate the transactions contemplated by this
Agreement.
2
2.2 Terms of Merger in General; Conversion of Division-Tel Shares.
2.2.1 General. Division-Tel shall be merged with and into Telecomm
effective as of the date of Closing as set forth below, and the
separate corporate existence of Division-Tel shall thereupon
cease. The Articles of Incorporation and Code of Regulations of
Telecomm as in effect on the Closing Date shall remain in full
force and effect. The Merger Consideration shall be payable on
the date of Closing as set forth below.
2.2.2 Conversion of Division -Tel Shares. The Division- Tel Shares
shall be exchanged with Telecomm Shares as a result of the Merger
of the two entities. Telecomm shall deliver to each Shareholder
at the Closing and/or within a reasonable time thereafter, a
share certificate evidencing ownership of Telecomm Shares, as set
forth in the table below, upon surrender to Telecomm of the share
certificate or certificates representing such Shareholder's
ownership of Division - Tel Shares duly endorsed for transfer or
accompanied by properly executed stock powers.
Section 3 - Specific Terms of Merger
3.1 Merger Consideration by Telecomm. To effectuate this Merger,
Telecomm will transfer to the Shareholders of Division-Tel, the
following:
3.1.1 Three Hundred Fifty Thousand (350,000) shares of common stock of
Telecomm, par value $.01 shares ("Shares").
3.1.2 Ten Thousand Dollars ($10,000) United States currency.("Cash")
3.1.3 The payment of Division-Tel's obligation with regard to a
Promissory Note payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, with an outstanding
balance in the amount of Ninety One Thousand Eighty Six Dollars,
zero cents, ($91,086.00) or at such lesser amount as may be owed
on said Note at the date of Closing.
3.1.4 Twenty Thousand Dollars ($20,000) United States currency payable
over six months, interest free, as reflected by, and subject to
the specific terms as set forth in the Note attached as Exhibit
A.
3.1.5 The assumption of Division-Tel's liabilities per Schedule 4.1.3
as approved by Telecomm, including, but not limited to, the
Division-Tel debt as set forth in Section 3.1.3. The liabilities
as set forth in Schedule 4.1.3, shall be assumed by Telecomm and
paid in the normal course of business, excepting the debts as set
forth in Section 3.1.5(a) and 3.1.5(b), as set forth below.
(a) The debt incurred by Division-Tel in the amount of
Twenty Five Thousand Dollars, ($25,000) to ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, shall be due and payable at the closing of
this agreement. Said debt shall include no interest,
nor expenses, above and beyond Twenty Five Thousand
Dollars.
(b) A bonus due and payable to two Employee's of
Division-Tel, specifically, ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇, in the amount of Four Thousand Five Hundred
Dollars per Employee, shall be due and payable at the
closing of this agreement.
3.1.6 The assumption of Division-Tel's liabilities incurred in the
normal course of business, as approved by Telecomm, as set forth
in Schedule 4.1.4, which Schedule will be updated at Closing to
include those additional liabilities of Division-Tel incurred in
the normal course of business through the Closing Date; provided
however, Division-Tel shall be solely responsible for all
professional fees including accounting and legal incurred by
Division-Tel in connection with the execution and consummation of
this Agreement.
3
3.2. Transfer of Stock by Division-Tel. To effectuate this Merger, the
Shareholders of Division-Tel shall cause the transfer of all
Division-Tel shares to Telecomm. The Share certificate or
certificates representing such Shareholder's ownership of
Division-Tel Shares shall be duly endorsed for transfer or
accompanied by properly executed stock powers.
3.3. Transfer of Assets by Division-Tel. Included in the transfer of
all Shares of Stock to Telecomm, Division-Tel shall turn over,
surrender, and transfer, any and all assets currently held by
Division-Tel. This specification of assets in no way affects the
validity of the Merger Agreement, and specifically does not
convert this Agreement to an Asset Purchase Agreement. The items
set forth below are for the mutual protection of the parties, and
are intended only as a guide to the assets to be transferred. This
agreement contemplates the transfer of all assets of Division-Tel,
whether specifically set forth below or not. This agreement does
not contemplate the transfer of any personal assets of
Shareholder, as set forth on Schedule 3.3. Any assets used in the
business, not specified on Schedule 3.3 shall be transferred to
Telecomm herewith.
3.3.1 All of the Receivables of Division-Tel, as of the Closing Date;
3.3.2 All inventory of Division-Tel;
3.3.3 All rights to prepaid expenses, as of the Closing Date;
3.3.4 The motor vehicles described in Schedule 3.3.4
3.3.5 The real property owned by Division-Tel;
3.3.6 All other fixed assets owned by Division-Tel and used in
connection with the conduct of Division-Tel's business,
3.3.7 All right, title and interest in and to all of Division-Tel's
Contracts;
3.3.8 Any and all of the Customers of Division-Tel, as reflected by
Schedule 3.3.8 Said Schedule is not intended to be an exhaustive
list, rather a guide for the benefit of the parties. Nothing in
this Section, this contract, nor any attachment, restricts the
transfer of all customers of Division-Tel.
3.3.9 All manuals, charts, instruction of application, files and
records, signs, customer and marketing-data, engineering data,
plans and blueprints as are used in connection with
Division-Tel's Business, and all documents, papers and records
pertaining to employees, customers and vendors in connection with
Division-Tel's Business, including accounts receivable and trade
payable records; provided, however, that Division-Tel may retain
all corporate records and minute books, all original books of
account and accounting data maintained by Division-Tel for
financial reporting and tax reporting purpose;
3.3.10 All Intellectual Property of Division-Tel used in connection
with Division-Tel's business, and including all rights
Division-Tel has to its know-how, trade secrets, processes,
technology, discoveries, unpatented inventions and designs,
formulae and procedures and other intellectual property,
including, but not limited to, documentation relating to any of
the foregoing, all shop rights and the right to ▇▇▇ for past
infringement or improper, unlawful or unfair use or disclosure
thereof and the right to apply for patent, design or similar
protection therefor any where in the world;
4
3.3.11 All assignable authorizations relating to or utilized in
connection with Division-Tel's Business, including without
limitation, stationery and other office supplies;
3.3.12 All Division-Tel's rights to any leasehold improvements;
3.3.13 All Division-Tel's interest in and to all telephone, fax and
telex numbers, post office box numbers and all listings
pertaining to Division-Tel's Business in all telephone books and
directories, stationery, forms, labels, shipping material,
catalogs, brochures, art work, photographs and advertising and
promotional materials. The telephone, fax, telex numbers and post
office box numbers being identified in attached Schedule 3.3.13;
3.3.14 Rights in, to and under third-party manufacturers' warranties;
3.3.15 Claims as to which Division-Tel is a judgment creditor,
excluding any action currently pending involving Comvest
Communications and Division-Tel.
3.3.16 The goodwill and going concern of value of Division-Tel's
Business;
3.3.17 All cash, bank deposits, and marketable securities.
Section 4. Representations and Warranties of the Shareholders and Division - Tel
4.1 Representations of Each Shareholder. Each Shareholder represents and
warrants to Telecomm as follows:
4.1.1 Title. Each Shareholder owns beneficially and of record,
and has full power and authority to vote and transfer, free
and clear of any claims, liens or encumbrances, the
Division-Tel Shares shown below. The Division-Tel Shares are
owned in the following numbers and percentages by the below
listed Shareholders, and collectively constitute all of the
Division-Tel Shares owned by such Shareholder.
Shareholder Number of Shares Owned Percent of Ownership
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 400 100
4.1.2 Authority Such Shareholder has the full legal right,
power and authority to enter into, execute and deliver this
Agreement and to perform such Shareholder's obligations
hereunder.
(a) This Agreement has been duly executed and delivered by
such Shareholder and is the valid and binding obligation
of such Shareholder enforceable in accordance with its
terms.
(b) The execution and delivery of this Agreement and the
consummation by such Shareholder of the transactions
contemplated by this Agreement will not:
5
(i) require the further approval or consent of any
federal, state, county or local court or other
governmental or regulatory body of the approval
or consent of any other person; or
(ii) conflict with or result in a breach or violation
of any of the terms and conditions of, or
constitute (with notice, lapse of time or both) a
default under or a violation of, any statute,
regulation, order, judgment or decree applicable
to any such Shareholder or any instrument,
contract or other agreement, including, but not
limited to, Covenant not to Compete, Stock Lien,
mortgage lien, assignment contract, or any other
contract to which such Shareholder is a party.
4.1.3 Division-Tel Liabilities. Schedule 4.1.3 sets forth those certain
liabilities which Telecomm has agreed to assume. These
liabilities are categorized as liabilities not incurred in the
normal course of business and include, but are not limited by,
all obligations due from Division-Tel to its past and present
shareholders, any debt incurred to raise capital financing,
current and past litigation claims, and any other debt not
incurred in the Ordinary Course of Business. There are no
additional debts of Division-Tel not incurred in the Normal
Course of Business. The payment of the Schedule 4.1.3 liabilities
will become the obligation of Telecomm from and after the Merger
Date and shall be paid in the ordinary course of business.
4.1.4 Division-Tel Liabilities incurred in the normal course of
business. Schedule 4.1.4 will set forth as of the Merger Date
those other obligations of Division-Tel incurred in the ordinary
course of business and which remain due and owing as of the
Merger Date. Where exact amounts of these liabilities cannot be
determined on the Merger Date, Division-Tel shall indicate the
estimated amount due and owing. The payment of the Schedule 4.1.4
liabilities will become the obligation of Telecomm from and after
the Merger Date and shall be paid in the ordinary course of
business.
4.1.5 Telecomm Review and Acceptance. The closing of this transaction
is contingent upon Telecomm's review and acceptance of the
liabilities set forth in Schedules 4.1.3 and 4.1.4, (collectively
"the Liability Schedules")provided however, that Telecomm's
acceptance of said Schedules shall not in any manner modify,
limit, or invalidate the representations and warranties of
Division-Tel and the Shareholder as contained in the Agreement,
including but not limited to the representations, warranties and
indemnification specifically pertaining to the accuracy of the
liabilities listed in the Liability Schedules. No action, or
inaction by Telecomm Industries, or any other party, including,
but not limited to, Division -Tel or Shareholder, nor any
provision in this contract, or any other contract, writing,
agreement, oral or otherwise, shall in any manner modify, limit,
or invalidate the representations, warranties and indemnification
by Division-Tel and the Shareholder with respect to the Liability
Schedules.
4.1.6 Tax Payments and Returns. Such Shareholder and Division-Tel has
filed all tax reports and returns required to be filed through
the date of this Agreement and has paid all taxes and other
related charges (including interest and penalties) due or claimed
to be due from such Shareholder or Division-Tel, by federal,
state, local or foreign taxing authorities, except as where
indicated on Schedule 4.1.6. Said Shareholder has no actual
knowledge, nor any reason to know, that any taxing authority has
audited any portion of such Shareholder or Division-Tel's tax
return, and has no actual knowledge, nor any reason to know, that
there are any notices of audit, pending questions relating to, or
claims asserted for, taxes or assessment received by or made
against such Shareholder.
6
4.1.7 Restricted Shares. Such Shareholder acknowledges, understands and
agrees
(a) The Telecomm Shares have not been registered with
the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as
amended (the "Securities Act") and have not been
registered under any state securities law. The
Telecomm Shares may not be resold or
redistributed without registration under the
Securities Act and any applicable state
securities laws, unless an applicable exemption
from such registration is available.
(b) The Telecomm Shares being acquired by such
Shareholder under this Agreement, are being
acquired for such Shareholder's own account, for
investment purposes, not for the interest of any
other person, firm or entity, and not with a view
to or present intention or reselling or
distributing all or any portion of, or interest
in, the Telecomm Shares. In order to assure the
forgoing and the status of the Merger as a tax
free reorganization, Telecomm Shares cannot be
sold, assigned, transferred, conveyed, pledged,
hypothecated or other otherwise disposed of by
any Shareholder without the prior written consent
of the Company for two years after the date the
Merger becomes effective.
(c) Such Shareholder does not have any right to
compel Telecomm to register the Telecomm Shares
under the Securities Act or any state securities
law and such Shareholder acknowledges that
Telecomm has no present intention of registering
the Telecomm shares.
(d) Such Shareholder has such knowledge and
experience in financial and business matters that
he is capable by himself of evaluating the merits
and risks of his investment in the Telecomm
Shares and of making an informed investment
decision.
(e) Such Shareholder is aware of the tax consequences
of owning Telecomm Shares and the termination of
S corporation status of Division-Tel.
(f) The certificates evidencing the Telecomm Shares
shall bear the following legend: The shares
represented by this stock certified have not been
registered under any state securities act (the
"State Acts") or the Securities Act of 1933, as
amended (the "Securities Act"). The shares cannot
be sold or otherwise disposed of without either
registration or an exemption from registration.
The corporation is under no obligation to
register the shares under the State Acts or the
Securities Act.
4.1.8 Option to Buy Stock upon Termination
(a) Termination within Probationary Period. Upon
Termination of employment for any reason,
including but not limited to; termination for
cause, (as defined in the Employment agreement
incorporated herein) resignation, death or
disability, or any other termination of the
Employment relationship, within one year
following the effective date of the Employment
Agreement, (hereinafter the "Probationary
Period"), Shareholder agrees to offer for sale to
the Company any and all Telecomm Industries Corp.
stock received as consideration for the Merger,
7
to wit: Three Hundred Fifty Thousand (350,000)
shares, (hereinafter "Possessed Stock") at the
amount computed to the stock, based upon the
closing per share bid price, on the date of the
execution of this agreement.
(b) Termination following Probationary Period. Upon
Termination of employment for any reason,
following said Probationary period as set forth
above in Section 4.1.8 (a), Shareholder agrees to
offer for sale to the Company any and all
Possessed Stock as set forth above in Section
4.1.8 (b), at the fair market value of said stock
on the date of termination. The calculation of
stock value on the date of termination shall be
equal to the most recent bid value, not the most
recent ask value.
(c) Death of Shareholder at any time prior to
Termination, In the event of the death of the
Shareholder, either during the probationary
period or following said period, notwithstanding
section 4.1.8 (a), the value shall be equal to
the fair market value of the stock at the date of
death. The Option to buy the Stock on the part of
Telecomm survives the death of the Shareholder,
and is binding upon the estate, heirs, assigns,
legatees, devisees, or any other third party.
(d) Voluntary Purchase by Company. The purchase of
the stock by Telecomm is absolutely voluntary,
and is to be conducted at the sole discretion of
the Chairman and the Board of Directors of
Telecomm Industries. Should Telecomm fail to
exercise its option, then purchase the stock
pursuant to this agreement within Thirty (30)
days of Company's actual knowledge, or written
notice, of the event that causes the option, the
Shareholder, Shareholders estate, heirs, assigns,
legatees, devisees, or any other third parties,
are no longer bound by this agreement with regard
to the transfer of said stock.
4.1.9 Action Pending with regard to Comvest Communication.
The actions currently pending in the Vanderburgh
County Superior Court, reflecting a dispute between
the Shareholder, Shareholder's spouse, and Comvest
Communications, 82D03-9704-CP- 1039 and
82D03-9704-CP-1666, are potential individual and
Division-Tel debts. Shareholder individually agrees
to indemnify, and hold harmless, Telecomm or
Division-Tel from any and all liability that may
result from said action.
4.2 Joint and Several Representations of the Shareholder and
Division-Tel Each Shareholder and Division-Tel, jointly
and severally, represents and warrants to Telecomm as
follows:
4.2.1 Organization and Qualification; Capitalization.
(a) Division-Tel is an Indiana corporation
duly organized, validly existing and in
good standing under the laws of the
State of Indiana. Division-Tel has the
full corporate power to carry on its
business as is now being conducted.
(b) The authorized capital stock and the
number of shares of capital stock issued
and outstanding for Division-Tel is as
follows:
(i) Authorized Capital Stock 1000.
(ii) Issued Shares 400.
8
4.2.2 Authority.
(a) Division-Tel has the full legal right,
power, and authority to enter into,
execute and deliver this Agreement and
to perform fully its obligations
hereunder.
(b) This Agreement has been duly executed
and delivered by Division-Tel and is the
valid and binding obligation of
Division-Tel enforceable against
Division-Tel in accordance with its
terms.
(c) The Board of Directors of Division-Tel
and the Shareholders have approved, and
no other corporate proceedings are
necessary to authorize, this Agreement
and the consummation of the transactions
contemplated by this Agreement.
(d) The execution and delivery of this
Agreement and the consummation by
Division-Tel of the transactions
contemplated hereby will not:
(i) conflict with, result in a
breach of, or constitute or
result in a default under any
of the terms, conditions or
provisions of the Articles of
Incorporation (or Certificate
of Incorporation), Code of
Regulations (or by-laws) or
other governing instruments of
Division-Tel;
(ii) require the further approval or
consent of any federal, state,
county or local court or other
governmental or regulatory
body, or the approval or
consent of any other person; or
(iii) conflict with or result in any
breach or violation of any of
the terms and conditions of, or
constitute a default (with
notice, lapse of time or both)
under, or a violation or, any
statute, regulation, order,
judgment or decree applicable
to Division-Tel or any
instrument, contract or other
agreement to which Division-Tel
is a party or to which
Division-Tel is bound or
subject, including without
limitation the contracts
identified in Sections 4.2.4 or
4.2.5 below.
4.2.3 Financial Statements/Dividends/Distributions.
(a) The balance sheets of Division-Tel as
defined in Section 1.1, and evidenced by
Schedule 1.1, and the related statements
of income and expenses as defined by
Section 1.2, and evidenced by Schedule
1.2, previously delivered to Telecomm
(Collectively the "Financial
Statements") fairly, accurately and
completely represent the financial
position of Division-Tel on the date of
execution of this document, and the
results of operations and cash flows for
Division-Tel for the years then ended.
(b) No dividends or other distributions have
been made by Division-Tel to their
respective Shareholders since November
26, 1997, except for salaries and
commissions in the ordinary course of
business, or as set forth in Schedule
4.2.3(b).
9
4.2.4 Ownership of Operating Assets. Division-Tel has
good and marketable title to, or holds a valid
lease to, (the "Operating Leases"), all of its
office equipment, furniture, motor vehicles and
other tangible personal property (collectively,
the "Operating Assets") owned or used by it in
its business, free and clear of all restrictions,
liens, claims and other encumbrances except as
set forth in Schedule 4.2.4
4.2.5 Contracts and Leases. Schedule 4.2.5 sets forth
the contracts and leases (including office lease)
material to the operation of Division-Tel and
which have been previously delivered to Telecomm,
are valid, binding upon the parties thereto, in
full force and effect and, except as indicated
below, have not been amended or modified.
Division-Tel and Shareholders will cooperate in
having Schedule 4.2.5 Contracts and Leases
assigned to Telecomm if requested by Telecomm.
Division-Tel and Telecomm acknowledge that a
separate Agreement reflecting the assignment of
the Contracts and Leases is not required as a
result of the merger of Division-Tel into
Telecomm.
4.2.6 Intellectual Property Rights. To the best of the
Shareholder's knowledge Division-Tel owns, or
holds adequate licenses to, the intellectual
property used in its business, including, without
limitation, trademarks, service marks,
copyrights, patents, and computer software and
data bases, free and clear of all restrictions,
liens, claims and other encumbrances, and such
use does not and will conflict with, infringe on,
or otherwise violate any rights of others.
4.2.7 Shareholders: Shareholder Benefits. The
Shareholder benefits programs set forth in
Schedule 4.2.7 constitute the only Shareholder
benefit programs in effect for Division-Tel prior
to the date of this Agreement.
4.2.8 Employee Benefit Programs. The Employee Benefit
programs set forth in Schedule 4.2.8 constitute
the only Employee benefit programs in effect for
Division-Tel prior to the date of the Agreement
4.2.9 Insurance. Division-Tel has in place and in full
force and effect, hazard and liability insurance
policies with coverage amounts and deductibles as
set forth in Schedule 4.2.9
4.2.10 Insurance Coverage. The Shareholder and
Division-Tel shall take all action necessary to
maintain, in the name and for the benefit of
Telecomm, all insurance policies of Division-Tel
4.2.11 Bank Accounts. The Shareholders and Division-Tel
shall take all action Necessary to maintain the
bank accounts, lock boxes and other depositories
of Division-Tel, and shall cause them to be
identified under Telecomm's Federal Employer
Identification Number.
4.2.12 Permits, Licenses and Compliance with Laws. For
this Section, Shareholder and Division-Tel
represent and warrant that they have no actual
knowledge, nor any reason to know of any
violations, and to the best of their knowledge:
10
(a) Division Tel maintains in full force and
effect, all permits, licenses and
approvals from federal, state, local and
foreign governmental and regulatory
bodies required to carry on its
business.
(b) Division-Tel is in compliance in all
material respects with all federal,
state and local laws, ordinances, codes,
regulations, orders, requirements,
standards and procedures which are
applicable to its business.
(c) Neither Division-Tel nor any officer,
director or agent of Division-Tel has
been convicted of, charged with, or to
the knowledge of Division-Tel or the
Shareholders, investigated for a
violation of federal or state law
related to fraud, theft, embezzlement,
breach of fiduciary responsibility, or
financial misconduct, including but not
limited any violation of the Securities
Act, or State Securities Law; or has
been subject to any order or consent
decree of, or criminal or civil fine or
penalty imposed by, any court of
governmental agency.
4.2.13 Litigation. Except as set forth in Schedules
4.1.3, 4.1.4 and 4.13, (Collectively "the
Liability Schedules" and the "Litigation
Schedule") there are no claims, complaints,
suits, actions and judicial, regulatory,
arbitration or governmental actions, proceedings
or investigations pending, or to the knowledge of
the Shareholders or Division-Tel threatened, or
anticipated, including actions known, or actions
that Shareholder or Division-Tel have reason to
know, against Division-Tel, or any of their
respective officers, directors or agents.
4.2.14 Tax Payments and Returns.
(a) Division-Tel has delivered to Telecomm
true and complete copies of its federal,
state and local income tax returns for
its tax year ended December 31, 1997.
Division-Tel has filed all tax reports
and returns required to be filed by it
through the date of this Agreement and
has paid all taxes and other related
charges (including interest and
penalties) due or claimed to be due from
it by foreign, federal, state or local
taxing authorities. To the best of
Shareholder knowledge, no taxing
authority has audited any portion or a
tax return relating to any Shareholder
or Division-Tel, and there are no
notices of audit, pending questions
relating to, or claims asserted for,
taxes or assessments received by or made
against any Division-Tel.
(b) Since its inception, Division-Tel has
been duly qualified as a Sub Chapter S
corporation for federal and state income
tax purposes and, in connection
therewith,
(i) has not had more than 35
shareholders,
(ii) has not had as a shareholder a
person (other than an estate
and other than a trust
described in Section 1361 ( c)
(2) of the Internal Revenue
Code of 1986, as amended) who
is not an individual,
(iii) has not had a nonresident alien
as a shareholder,
11
(iv) has not had more than "one
class of stock" (as such term
is used in Section 1361 of the
Internal Revenue Code of 1986,
as amended), and
(v) has properly filed S
corporation elections with and
is approved as a sub Chapter S
Corporation by the Internal
Revenue Services and all
applicable State Departments
of Revenue or Taxation.
4.2.14 Corporate Documents and Minute Books; Officers
and Directors. The minutes of corporate
proceedings, stock transfer records, Articles of
Incorporation (or Certificate of Incorporation)
and Code of Regulations (or by-laws) of
Division-Tel have been delivered to Telecomm and
are correct and complete, accurately reflect all
actions and proceedings of the shareholders and
Board of Directors of Division-Tel to date.
4.2.15 Brokers/Fees. Negotiations related to this
Agreement and the transactions contemplated
hereby have been carried on by the Shareholders
and Division-Tel, and no brokerage or finders'
fees are payable by any Shareholder or
Division-Tel to any other party in connection
with this Agreement or the transactions
contemplated hereby.
4.2.16 Adverse Changes. Since September 30, 1997,
Division-Tel has not suffered any adverse changes
in its financial condition, assets, liabilities
or business or any damage, destruction or loss to
its assets, whether or not covered by insurance.
4.2.17 Operations in the Ordinary Course. Since
September 30, 1997 Division-Tel has been operated
only in the normal and ordinary course, and has
not:
(a) issued or committed to issue any capital
stock or other ownership interest
therein, other than shown in Section
4.1.1.
(b) granted or committed to grant any
options, warrants, convertible
securities or other rights to subscribe
for, purchase or otherwise acquire any
shares of its capital stock or other
ownership interest therein;
(c) entered into any material agreement to
make capital expenditures, except as
noted on Schedule 4.2.17 (c);
(d) entered into any agreement relating to
the borrowing of money or other contract
for indebtedness, or the guarantee of
any obligation for the borrowing of
money;
(e) entered into any material real or
personal property lease except as noted
on Schedule 4.2.17 (e); or
(f) entered into, modified, or canceled any
other agreement, contract or commitment
which is not terminable at will.
4.2.18 Third Party Consents. The Shareholders and
Division-Tel have obtained and delivered to
Telecomm the consent or approval of each third
party whose consent or approval is required or
deemed necessary by Telecomm for the consummation
of the transactions contemplated by this
Agreement, including but not limited to, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇.
12
4.2.19 Transactions with Related Parties. Except for the
employment of the Shareholders, and the proposed
real estate lease with Eclipse Realty, LLC, the
summary terms of which is set forth in Exhibit D,
there are no contracts, leases, loans,
commitments, transactions, arrangements or other
understandings, oral or written, between
Division-Tel and any Related Party. For purposes
of this Section 4.2.19, the term "Related Party"
means (a) any Shareholder, (b) the spouse, lineal
descendant or other family member of a
Shareholder, ( c) any corporation, partnership,
trust, limited liability company, or other entity
controlled by, or under common control with a
Shareholder, (d) any officer, directory or
Shareholder of Division-Tel, and (e) any person
who is a member, partner or shareholder in any
relationship or similar form of business
association with any person or entity referred to
above.
4.2.20 Disclosure. To the best knowledge of the
Shareholders and to the best knowledge of
Division-Tel, no representation or warranty by
the Shareholders or Division-Tel, or any
document, written statement or certificate
furnished to Telecomm pursuant to this Agreement,
contains any untrue statement of material fact or
omits to state a fact necessary in order to make
the statements contained herein or therein not
misleading.
4.2.21 Accuracy of Schedule 4.1.3 Said Schedule
accurately reflects all obligations of
Division-Tel which were not incurred in the
"ordinary course of business."
(a) For purpose of this representation
obligations owed by Division-Tel whether
contingent, fixed, liquidated or
unliquidated, including but not limited
to obligations owed to
(i) Shareholder or Shareholder loans;
(ii) pending or threatened litigation
claims;
(iii) obligation to repurchase shares
of stock form former shareholders
shall be considered obligations of
Division-Tel not incurred in the
"Ordinary course of business". The
obligations and amounts set forth
on Schedule 4.1.3 are true and
correct.
4.2.22 Accuracy of Schedule 4.1.4 Said Schedule
accurately reflects all obligations of
Division-Tel which were incurred in the "ordinary
course of business."
4.2.23 Diminutive Errors. Notwithstanding the above
Representations and Warranties, Division-Tel and
the Shareholder shall bear no liability for
Diminutive errors, as defined in section 1.22, so
long as the Cumulative Diminutive Errors shall
not exceed Five Thousand Dollars ($5,000).
4.2.24 Articles of Merger. The preparation and
acceptance of Articles of Merger is a Condition
Precedent to the Closing of this Agreement. Both
parties represent and warrant that they will
cooperate with the other party in full and that
they will not take any action to hinder, delay,
or prevent, the filing of the Articles of Merger
with the Secretary of State in both the States of
Delaware and Indiana.
13
Section 5 - Representations and Warranties of Telecomm
5.1 Organization and Good Standing. Telecomm is a corporation
duly organized, validly existing and in good standing
under the laws of the State of Delaware, registered to
conduct business in, among other States, the State of
Indiana. Telecomm has full corporate power to carry on its
business as it is now being conducted.
5.2 Authority. Telecomm has the full legal right, power and
authority to enter into, execute and deliver this
agreement, and to perform its obligations under this
agreement. This agreement has been duly executed and
delivered by authorized officers of Telecomm and is the
valid and binding obligation of Telecomm, enforceable in
accordance with its terms. The execution and delivery of
this agreement and the consummation by Telecomm of the
transactions contemplated will not:
5.2.1 Conflict with, result in a breach of, or
constitute or result in a default under any
of the terms, conditions or provisions of
the Certificate of Incorporation, Articles
of Incorporation, By-laws or Code of
Regulations, or other governing documents of
Telecomm.
5.2.2 Require the further approval or consent of
any federal, state, county or local court,
or other Government or regulatory body or
the approval or consent of any other person.
5.2.3 Conflict with or result in a breach or
violation of any of the terms and conditions
of, or constitute (with notice, lapse of
time, or both) a default under or a
violation of, any statute, regulation,
order, judgment or decree applicable to
Telecomm, or any instrument, contract or
other agreement to which Telecomm is a
party.
5.3 Brokers / Fees. Negotiations related to this
agreement and the transactions contemplated hereby
have been carried on by Telecomm and no brokerage
or finders' fees are payable by Telecomm to any
other party in connection with this agreement or
the Transactions contemplated hereby
5.4 Payment of Schedule 4.1.3 and Schedule 4.1.4
Indebtedness. Telecomm agrees to assume any and all
liabilities as listed on Schedules 4.1.3 and 4.1.4.
Any liabilities not listed on said schedules shall
remain the sole and absolute responsibility of the
Shareholder, and shall be paid by the Shareholder
within thirty (30) days after Telecomm is notified,
or otherwise becomes aware, of any such liability
or claim. With regard to any liability listed on
said liability schedules, where Shareholder has
personally guaranteed the same, Telecomm agrees to
indemnify and hold harmless the Shareholder to the
extent of the Corporate debt.
5.5 Adverse Changes. Telecomm has not suffered any
adverse changes in its financial condition, assets,
liabilities or business or any damage, destruction
or loss to its assets, whether or not covered by
insurance, since the most recent filings with the
Securities and Exchange commission, more
specifically, the Form 10KSB/A, filed on or about
September 17, 1997, and the Form 10QSB, filed on or
about November 12, 1997, except as where indicated
on Schedule 5.5.
14
5.6 Articles of Merger. The preparation and acceptance
of Articles of Merger is a Condition Precedent to
the Closing of this Agreement. Both parties
represent and warrant that they will cooperate with
the other party in full and that they will not take
any action to hinder, delay, or prevent, the filing
of the Articles of Merger with the Secretary of
State in both the States of Delaware and Indiana.
Section 6- Miscellaneous
6.1 Further Acts. The parties agree to perform any
further acts and to execute and deliver any other
documents which may be reasonably necessary to
carry out the intent and provisions of this
Agreement.
6.2 Assignment. Without the consent of Division-Tel,
Telecomm may assign all or any part of this
Agreement and all or any part of its rights and
obligations hereunder to an affiliate of Telecomm.
6.3 Headings. The clause headings appearing in this
Agreement have been inserted for the purpose of
convenience and reference. They do not purport to,
and will not be deemed to, define, limit or extend
the scope or intent of the clauses to which they
apply, and they will not be considered in
construing the terms of this Agreement.
6.4 Investigation Will Not Constitute A Waiver. No
investigation, or lack thereof, by Telecomm, or any
of its agents, will be deemed to constitute or
imply a waiver of any rights of Telecomm may have,
including any right to indemnification as the
result of any material misrepresentation, or breach
of warranty, or covenant in favor of Telecomm as
otherwise provided in this Agreement.
6.5 Counterparts. This Agreement may be executed in
several counterparts, each of which when so
executed will be deemed to be an original for all
purposes.
6.6 Partial Invalidity. If any provision of this
Agreement is invalid or is held illegal or
unenforceable, then notwithstanding any such
invalidity, illegality, or unenforceablility of
such provision, the remainder of this Agreement
will subsist and will be in full force and effect
as though such invalid, illegal or unenforceable
provision had been omitted form this Agreement.
6.7 Entire Agreement. This Agreement embodies the
entire agreement of the parties as to the subject
matter herein contained. There are no promises,
terms, conditions or obligations other than those
contained herein; and this Agreement will supersede
all previous communications, representations, or
agreements, either verbal or written, between the
parties hereto. Without limiting the foregoing, no
letter, telegram, or other communication passing
between the parties hereto, concerning any matter
during the negotiation of this Agreement, will be
deemed a part of this Agreement, nor will it have
the effect of modifying or adding to this
Agreement.
15
6.8 Additional Documents. Each party will execute and
deliver, to either party, subsequent to the
Closing, such other documents or instruments as may
be reasonably necessary to effectuate the
provisions and purpose of this Agreement. Without
limitation of the generality of the foregoing,
Division-Tel will perform all reasonable acts to
cause any licenses or permits issued to
Division-Tel to be assigned or transferred to
Telecomm in order that Telecomm may conduct
Division-Tel's Business subsequent to the Closing
as herein contemplated.
6.9 No Amendment. No amendment, modification, change or
discharge of any term or provision of this
Agreement will be valid or binding unless the same
is in writing and signed by all the parties hereto.
No waiver of any of the terms of this Agreement
will be valid unless signed by the parties against
whom such waiver is asserted.
6.10 Gender. All terms and words used in this Agreement,
regardless of the number and gender in which they
are used, will be deemed and construed to include
any other number, singular or plural, and any other
gender, masculine, feminine, or neuter, as the
context or sense of this Agreement, or any other
section or clause herein, may require, the same as
if such words had been fully and properly written
in the required number and gender.
6.11 Time Periods. Any action required hereunder to be
taken within a certain number of days will be taken
within that number of calendar days; provided,
however, that if the last day for taking such
action falls on a weekend or a holiday, the period
during which such action may be taken will be
automatically extended to the next business day.
6.12 Construction. This Agreement has been prepared by
the joint efforts of the respective attorneys for
each of the parties. This Agreement should be
interpreted fairly, and not strictly construed
against either party.
6.13 No Third Party Beneficiaries. The parties
affirmatively state that they do not intend to
confer any legal or contractual rights or benefits
upon any third persons or Entities, either directly
or incidentally, and all legal rights, duties and
obligation set forth in this Agreement will bind
and benefit only the parties hereto.
6.14 Notices. Any notice or demand required or permitted
to be given hereunder, will be in writing, signed
by the party giving or making the same, and will be
delivered by certified mail, return receipt
requested, or by personal hand delivery, to all
parties hereto at their respective addresses
hereinafter set forth. In the event that delivery
of any such notice or demand cannot be effected as
aforesaid, the same may be served by any method
authorized for the service of legal process as set
forth in the Indiana Rules of Civil Procedure. Any
party hereto will have the right to change the
place to which any such notice or demand, or other
written instrument will be sent to him by similar
notice sent in a like manner to all parties hereto.
The date of mailing of any such offer or demand, if
applicable, will be deemed to be the date of such
offer or demand and will be effective form that
date. The addresses of the parties to this
Agreement are as shown herein below.
To Employee: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
16
CC: ▇▇▇▇ ▇. Fine, Esq.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, FINE & ▇▇▇▇▇▇, LLP
221 NW Fifth Street, Second Floor
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
To the Company: Telecomm Industries Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
Attn.: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, Vice President
And
CC: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
6.15 Binding. This Agreement will bind an inure to the
benefit of the parties hereto, their respective
assigns, and personal representatives and
successors.
6.16 Incorporation by Reference. All exhibits schedules
and documents attached hereto will be deemed to be
incorporated herein by reference as though fully
set forth.
6.17 Competent Professional Advice. All parties to this
agreement have reviewed this agreement with
competent legal counsel. Both parties have sought
and obtained legal counsel and certified public
accountants with respect to this agreement and the
transactions contemplated therein. Both parties,
therefore, enter this agreement, knowingly,
intentionally, and intelligently.
6.18 Professional Fees. Each Party shall bear the
expense of any Professional Fees, including, but
not limited to, Attorney fees, Accountant fees, or
Investigative fees. However, notwithstanding this
paragraph, in the event of a Breach of this
Agreement, the Non-breaching party shall be
responsible for Attorney fees and costs of
collection.
6.19 Employment Agreement and Non Competition Agreement.
Attached hereto as Exhibits C and D, are the
Employment Agreement and
Non-Competition/Confidentiality Agreements entered
into by the Parties contemporaneously with this
Merger Agreement. Said agreements are incorporated
by reference into this document and made a part
hereof. The consideration for this Merger Agreement
is sufficient and adequate consideration for the
Merger Agreement, the Employment Agreement and the
Non-Compete/Confidentiality Agreement.
6.20 Letter of Intent Restriction. This Agreement does
not modify, nor does it supersede, the restrictions
upon the parties as set forth in the Letter of
Intent of Telecomm, as issued on the 26th day on
November, 1997. Following the closing of the
transaction, as set forth in section 8, this
Agreement shall become legally binding, and shall
supersede said letter of intent.
17
6.21 Revocation of Previous Definitive Agreement. The
Parties have previously entered into a valid and
enforceable form of this Agreement, including an
addendum, both executed via facsimile transmission.
It is the intent of the Parties to execute an
original Merger Agreement at the Closing of this
transaction, as set forth in Section 8. Upon it's
execution, said original shall supersede, revoke,
and make null and void any and all Merger
Agreements, including any addendum, executed
previously by and among the parties.
Section 7 - Conditions Precedent
7.1 Non-Binding until Satisfaction of Conditions This
transaction is Non-Binding upon either Party until
and upon the Satisfaction of the Conditions
Precedent and Closing as set forth Below, except
where specifically indicated. It is the Parties
intention that this document will become a binding,
valid, and enforceable Agreement following the
Closing of this Transaction.
7.2 Conditions Precedent - The intention of the Parties
is to become legally bound to this agreement
following the closing of this transaction. Said
Closing shall not take place until the following
Conditions Precedent are satisfied:
7.2.1 Exchange of Tangible Consideration as
set forth in this Agreement, including,
but not limited to, exchange of cash,
promissory notes, certificates of stock,
or other consideration as set forth in
Section 3.1
7.2.2 Transfer of Stock as set forth in
Section 3.2
7.2.3 Transfer of Assets as set forth in
Section 3.3 et seq.
7.2.4 Completion and delivery of all schedules
and exhibits as referenced in this
agreement by both parties, and
acceptance of the same by both parties.
7.2.5 Successful completion of due diligence
as performed by auditors, attorneys or
agents of Telecomm.
7.2.6 Execution of the mutually acceptable
Employment Agreement by both Parties.
7.2.7 Execution of the mutually acceptable
Non-Competition Agreement by both
Parties.
7.2.8 Execution of the mutually acceptable
Lease for the property located at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇.
7.2.9 Satisfaction, and subsequent release, of
the obligation of Division-Tel with
regard to the Debt owed to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇.
18
7.2.10 Successful assignment of any and all
material contracts to which Division-Tel
is a party, including but limited to,
any Contract to which Ameritech, ▇▇▇▇
South, or any other Regional ▇▇▇▇
Operating Company, is a party.
7.2.11 Closing shall be scheduled for a date
prior, and completed no later than,
January 29, 1998, unless mutually agreed
to, or waived, by both parties.
7.2.12 Should the Conditions Precedent not be
satisfied as set forth above, and should
the Closing not occur as set forth
below, neither party shall be bound, nor
bear any liability from this agreement,
unless any of said provisions are
mutually modified or waived by the
parties in writing.
7.2.13 Preparation of appropriate Articles of
Merger to be filed with the Secretary of
State in the States of Delaware and
Indiana, and acceptance thereof by and
among all parties.
7.2.14 Execution of the Document titled
Checklist of Merger, attached as Exhibit
E. Said document has no binding effect
other than to reflect the parties
understanding regarding the necessary
documentation to effectuate this Merger.
7.2.15 Execution and Delivery of Certified
Corporate Resolutions authorizing this
Merger transaction by both parties.
Section 8 - Closing
8.1 Upon Completion of the Conditions Precedent set
forth above, and the completion of Closing as set
forth below, this Agreement shall become a
legally binding, valid and enforceable Agreement.
8.2 The Closing of this transaction shall be deemed
an express representation that there have been no
material changes by, between or among, any of the
parties hereto, since the execution of this
Merger Agreement.
8.3 Closing Date and Time. The Closing shall take
place on the 29th day of January, 1998, at 10:30
AM., or such other date and time as subsequently
may be agreed upon by the parties, in writing.
Any reference herein to the Closing Date for the
purpose of establishing a point in time, or
calculating a period of time, means 11:59 p.m.,
local time on the Closing Date.
8.4 Transfer of Business. Upon the successful Closing
of this transaction, Telecomm and Division-Tel
shall become one entity, and Division-Tel shall
cease to exist as a valid and legally existing
entity. Any and all business transactions, or
activities, as contemplated by this agreement,
shall be transferred to Telecomm. In no event
shall this clause, or any other clause in this
contract, be construed to effect the
Representations, Warranties or Indemnification as
set forth by both parties in this agreement.
19
IN WITNESS WHEREOF, the parties have signed this Agreement, consisting
of 20 pages. The intent of the Parties is to be legally bound thereby.
Signed in the Presence of the following, and on the date first indicated on this
agreement:
DIVISION - TEL COMMUNICATIONS GROUP, INC. (Division-Tel)
By:_________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually
TELECOMM INDUSTRIES CORP. (Telecomm)
By: _____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CEO and
Chairman of the Board
Counsel for the Parties:
________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esquire
Counsel for Telecomm Industries
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
________________________________
▇▇▇▇ ▇. Fine, Esq.
Counsel for Division-Tel and ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, FINE & ▇▇▇▇▇▇, LLP
221 NW Fifth Street, Second Floor
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
ADDENDUM TO MERGER AGREEMENT
Come now the Parties, Telecomm Industries, Corp. (hereinafter
"Telecomm") and ▇▇▇▇▇▇▇ ▇▇▇▇▇, (hereinafter "▇▇▇▇▇") and agree to this Addendum
to Merger Agreement, executed contemporaneously with a General Release of
Liability.
Recitals
A. That the Merger Agreement executed on February 19, 1998 by
and among Telecomm, ▇▇▇▇▇ and Division Tel Communications
Group, Inc.(hereinafter "Division-Tel"), be and hereby is
amended by this Addendum.
B. That Division-Tel ceased to exist following the perfection
of the Merger as outlined in the Merger Agreement, and as
such, is not a necessary party to this Addendum.
C. That ▇▇▇▇▇ was sole shareholder of Division-Tel prior to
the transaction set forth in the Merger Agreement.
D. That other than as set forth in this Addendum, and the
contemporaneously executed General Release of Liability,
the previously executed Merger Agreement remains in full
force and effect.
The Parties agree as follows:
1. That Section 4.1.7 (b) of the Merger Agreement shall be, and
hereby is, replaced in full by the following text:
The Telecomm shares being acquired by such Shareholder under
this Agreement are being acquired for such Shareholder's own
account, for investment purposes, not for the interest of any
other person, firm or entity and not with a view to or present
intention of reselling or distributing all or any portion of,
or interest in, the Telecomm shares. In order to assure the
foregoing and the status of the Merger as a tax-free
reorganization, the Telecomm shares are restricted as follows:
One hundred thousand (100,000) shares cannot be sold,
assigned, transferred, conveyed, pledged, hypothecated, or
otherwise disposed of by the Shareholder without the prior
written consent of the Company prior to February 20, 1999.
The remaining shares, or more specifically, two hundred fifty
thousand (250,000) shares cannot be sold, assigned,
transferred, conveyed, pledged, hypothecated, or otherwise
disposed of by the Shareholder without the prior written
consent of the Company prior to February 20, 2000.
2. That Section 5 of the Merger Agreement be, and hereby is, modified
as necessary to give the true and anticipated meaning to the
language set forth in the General Release of Liability executed
contemporaneously herewith, and attached hereto as Exhibit A1.
3. That the Parties agree that the transfers anticipated in Paragraph
one of this Addendum may only be performed in a manner not
violative of any Federal, State or Local law, statute, regulation,
or ordinance, including but not limited to, the rules and
regulations of the Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "Securities
Act").
4. That the contemporaneous execution of both this Addendum and the
General Release of Liability is required before any obligation or
relief from obligation as set forth in any of the same occurs.
5. That both this Addendum and the General Release of Liability
become Null and Void if, and only if, all of the following
conditions are met:
a. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually or through an appropriate
transfer agent, requests an opinion to sell or transfer a
number of shares equal to or less than 100,000 shares;
b. The request is made after February 19, 1999; c. The request
is made before May 19, 1999;
d. The requested opinion is not issued within 30 days of the
request or the opinion is issued that said sale would not be
permissible;
e. That the failure to issue a timely opinion authorizing the
sale or transfer is not a result of any act or omission of
▇▇▇▇▇ or any person acting on his behalf;
Telecomm Industries, Corp. by:
______________________________________________ __________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CEO and Chairman of the Board Dated
______________________________________________ __________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, General Counsel Dated
______________________________________________ __________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually Dated