REORGANIZATION AGREEMENT
This Reorganization Agreement ("Agreement") is made and entered into as of
this 23 rd day of December, 1999, between and among (i) Cybertel
Communications Corp., a Nevada corporation, which is referred to herein as the
"Company," (ii) Telenomics, Inc., a California corporation, which is referred
to herein as "Telenomics," and (iii) each person identified in Schedule A
attached hereto, who are, collectively the beneficial owners of 60,162.5
shares of the authorized stock of Telenomics, which constitutes 100% of the
issued and outstanding capital stock of Telenomics, who are referred to herein
individually as a "Telenomics Shareholder and collectively as the "Telenomics
Shareholders").
WHEREAS, the Telenomics Shareholders, as set forth in Schedule A
hereto, own and have the right to sell, transfer and convey, collectively,
60,162.5 shares of the authorized stock of Telenomics, which constitutes one
hundred percent (100%) of the issued and outstanding capital stock of
Telenomics; and
WHEREAS, the Company wishes to acquire one hundred percent (100%) of
the issued and outstanding capital stock of Telenomics, from the Telenomics
Shareholders; and
WHEREAS, the Telenomics Shareholders have agreed to deliver 60,162.5
shares of the authorized stock of Telenomics which constitutes one hundred
percent (100%) of the issued and outstanding shares of common stock of
Telenomics to the Company in exchange for that consideration set forth in
Schedule A hereto; and
WHEREAS, the parties hereto wish to formalize the above mentioned
agreements and thereafter accomplish such exchange on the terms and conditions
set forth herein.
NOW THEREFORE, for and in consideration of the premises, and the
agreement, covenants, representations and warranties hereinafter set forth,
and other good and valuable considerations, the receipt and adequacy all of
which are forever acknowledged and confessed, the parties hereto agree as
follows:
1. REPRESENTATIONS AND WARRANTIES BY TELENOMICS, AND THE TELENOMICS
SHAREHOLDERS. Telenomics and the Telenomics Shareholders hereby jointly and
severally make the following express representations and warranties to the
Company:
A. Telenomics is a corporation duly organized, validly existing and in
good standing under the laws of the State of California.
B. Telenomics and the Telenomics Shareholders have taken all
necessary steps to assure that Telenomics has the corporate power
and is duly authorized, qualified and licensed under all applicable
laws, regulations, ordinances and orders of public authorities to
own the property and conduct its business in the places and in the
manner now conducted. Copies of the Articles of Incorporation and
By-Laws of Telenomics have heretofore been furnished to the
Company by Telenomics and/or the Telenomics Shareholders, and
all such copies are true, correct and complete copies of the
original Articles of Incorporation and By-Laws including all
amendments thereto.
C. Telenomics has the corporate authority to issue a total of 100,000
shares of stock which have not been classified and which have no
par value designated, of which 60,162.5 shares have been issued
and are presently outstanding.
D. The execution, delivery and performance of this Agreement by
Telenomics and the Telenomics Shareholders and the transactions
contemplated hereby:
(i) Are within the corporate powers of Telenomics, are not in
contravention of the terms of any of the terms of the Articles of
Incorporation, Bylaws or any amendments thereto of Telenomics, and
have been duly authorized by the Board of Directors of Telenomics, and
to the best knowledge of the officers of Telenomics and the Telenomics
Shareholders are not in contravention of law;
(ii) Except as disclosed in Schedule B hereto, will neither conflict
with nor result in any breach or contravention of, or the creation of
any lien under, any indenture, agreement, lease, instrument or
understanding to which Telenomics or any Telenomics Shareholder is a
party or by which any of the Assets of Telenomics is or are bound; and
(iii) Are and will constitute the valid and legally binding
obligations of Telenomics and of each and every Telenomics
Shareholder, enforceable in accordance with the terms of this
Agreement.
E Except as disclosed in Schedule C hereto, Telenomics has no subsidiaries
and does not own any security of any corporation. Further, except as
disclosed in Schedule C, none of the Telenomics Shareholders has conducted the
business of Telenomics or any business similar to the business of Telenomics
or related to the business of Telenomics under any other name or identity
within the last three years.
F. Telenomics and the Telenomics Shareholders have prepared and delivered to
the Company an accurate list of any and all assets employed or possessed by
Telenomics as set forth on Schedule D hereto (the "Assets") which list
includes, but is not limited to all: (i) leasehold interests in all
properties, together with all improvements, and fixtures thereon (collectively
"Leasehold Interests"), (ii) all equipment, tool and machinery, (iii) the
value of all prepaid supplies as carried on the books of Telenomics, (iv) the
value of prepaid expenses of Telenomics as carried on the books of Telenomics,
(v) a listing of all cash, reserves, deposits, investments and all other cash
items of Telenomics, (vi) a listing of all accounts receivable of Telenomics,
whether recorded or unrecorded or assigned for collection, (vii) a listing of
all financial records, customer lists, personnel records, account receivable
records, equipment records, libraries, customer billing records, documents,
catalogs, books, records, files, operating manuals, and existing financial
data relating to the ownership and operation of Telenomics which is currently
in the possession of Telenomics or in the possession of a third party known to
Telenomics and/or the Telenomics Shareholders, (viii) a listing of those
commitments, contracts, leases and agreements relating to the business of
Telenomics ("Contracts"), (ix) a listing of all licenses and permits held by
Telenomics relating to the ownership, development and operations of the
Assets and of the business of Telenomics, (x) a listing of the trade
names or variations thereof (and associated goodwill) relating to
the Assets and to the business of Telenomics, and (xi) a listing of
all property, real or personal, tangible or intangible, arising or
acquired in the ordinary course of its business between the effective
date hereof and Closing. Telenomics shall hold good and marketable title to
the Assets and all parts thereof free and clear of all agreements,
liabilities, claims, security interest, liens, restrictions and encumbrances,
except as expressly noted in Schedule E hereto.
G. Telenomics and the Telenomics Shareholders have delivered to the Company
copies of those financial statements set forth on Exhibit I hereto respecting
operation of Telenomics, prepared by Xxxxxx & Xxxxxx, PLLC ("Existing
Financial Statements").
The audited balance sheets and income statements have been prepared by
Telenomics and the Telenomics Shareholders from the books and records of
Telenomics and, to the best of their knowledge, accurately reflect the status
and results of operations of Telenomics as of the dates specified therein.
Except as disclosed in Schedule F, since June 30, 1999 (the "Balance Sheet
Date"), to the best knowledge of Telenomics and the Telenomics Shareholders
there have occurred no material adverse changes in the financial condition or
business of Telenomics as reflected in such Existing Financial Statements,
other than changes in the ordinary course of business which have not had any
material adverse effect on the business or financial condition of Telenomics,
or any of its Assets.
H. Telenomics and the Telenomics Shareholders have delivered to the Company
an accurate list and summary description (See Schedule G) as of the Balance
Sheet Date of all licenses, permits, franchises, certificates of need,
certificate of need applications, trademarks, trade names, patents, patent
applications and copyrights, owned or held by Telenomics relating to the
ownership, development or operations of Telenomics, all of which are now
valid, in good standing, not subject to renewal prior to Closing. Except as
disclosed in Schedule G, Telenomics and the Telenomics Shareholders are not
aware of any licenses, permits, franchises, certificates of need, certificate
of need applications, trademarks, trade names, patents, patent applications
and copyrights which are not possessed or held by which taken together with
the business of Telenomics such failure to possess or hold the same would
materially adversely effect the ability of Telenomics to conduct its
existing business or any proposed business.
I. Telenomics and the Telenomics Shareholders have delivered to the Company
an accurate list (Schedule H) as of the Balance Sheet Date of all material
agreements which relate to or may affect the Assets or the operation of the
Telenomics, to which Telenomics is a party or by which Telenomics or any of
its Assets is bound, and have made copies of such agreements available to the
Company for inspection. None of such agreements unduly burdens or restricts
Telenomics in conducting its current ordinary course of businesses.
Telenomics has, complied with all material commitments and obligations under
all such agreements; such agreements constitute the entire agreements by and
between the parties as respectively indicated on Schedule H.
Telenomics is not a party to nor are its Assets bound by:
(i) Except as expressly set forth in Schedule H, any contracts or commitments
affecting ownership of, title to, use of, or any interest in the Assets;
(ii) Except as expressly set forth in Schedule H, any patent licensing
agreements or any other agreements or commitments with respect to patents,
patent applications, trademarks, trade names, technical assistance, copyrights
or other like terms;
(iii) Except as expressly set forth in Schedule H, any incentive compensation,
pension, retirement, profit sharing or other like employee pension or welfare
plans of any nature whatsoever, other than sick leave and vacation policies
for any of the employees of Telenomics;
(iv) Except as expressly set forth in Schedule H, any collective bargaining
agreements or other contracts or commitments to or with any labor unions or
other employee representatives or groups of employees affecting or which could
affect the Assets;
(v) Except as expressly set forth in Schedule H, any employment contracts or
any other contracts, agreements or commitments to or with individual employees
or agents affecting or which could affect its business or the Assets extending
for a period of more than ninety (90) days from the Closing Date, or which
cannot be terminated without cause upon not more than ninety (90) days notice
without payment of penalty or equivalent thereof;
(vi) Except as expressly set forth in Schedule H, any other contracts or
commitments providing for payments based in any way on the revenues, purchases
or profits of Telenomics; or
(vii) Except as expressly set forth in Schedule I, any contract or commitment,
not in the ordinary course of business, which involves future payments,
performance of services or delivery of goods or materials, to or by Telenomics
or the Telenomics Shareholders of any amount or value in excess of Five
Thousand Dollars ($5,000) in the aggregate affecting or which affects or which
could affect the business or the Assets of Telenomics.
J. Telenomics and the Telenomics Shareholders have delivered to the Company a
list and description of the Contracts. Telenomics and the Telenomics
Shareholders warrant and represent that:
(i) The Contracts constitute the entire agreements by and between the
respective parties thereto; and
(ii) In all material respects, all obligations required to be performed under
the terms of the Contracts have been performed, and each of the Contracts is
now and, except as noted in one or more of the schedules hereto, will be, upon
and after the Closing Date, in full force and effective without default on the
part of the parties thereto; and
(iii) With respect to any leases respecting real estate:
(a) Telenomics and the Telenomics Shareholders, to the best of their
knowledge, have not received any notice of violation of any applicable
ordinance or other law, order, regulation or requirement, or notice of
condemnation, lien, assessment or the like, relating to any part of
the real property at which any business conducted by Telenomics are
located or from which they are operated;
(b) To the best knowledge of Telenomics and the Telenomics
Shareholders, each operation of Telenomics, wherever located, is in
compliance with all applicable zoning ordinances and the consummation
of transactions contemplated herein will not result in a violation of
any applicable zoning ordinance or termination of any applicable
zoning variance now existing;
(c) All fixtures and improvements within or upon real estate utilized
by Telenomics is in operating condition and in a reasonable state of
maintenance and repair, except for deterioration caused by normal wear
and tear in the ordinary course of business;
K. All the inventory and prepaid supplies constituting any part of the Assets
are of a quality usable and salable in the ordinary course of the business of
Telenomics.
L. Telenomics and the Telenomics Shareholders have delivered to the Company
an accurate list and a substantially complete description (Schedule C of all
the equipment (including all software) associated with, or constituting any
part of the Assets as of the Balance Sheet Date, designating which of the
equipment is owned or leased by Telenomics. The equipment included in Schedule
C), except as noted, is adequate in all material respects to fully equip and
operate Telenomics as now being operated and is in operating condition and in
a reasonable state of maintenance and repair, except for deterioration caused
by normal wear and tear in the ordinary course of business;
Except as disclosed in Schedule J, since the Balance Sheet Date, Telenomics
has not acquired or sold or otherwise disposed of any equipment associated
with, or constituting any part of, the Assets, other than in the ordinary
course of business.
M. Telenomics will have good and marketable title to all properties, assets
and leasehold estates, real and personal, constituting or associated with the
Assets or any part thereof, subject to no mortgage, lien, pledge, security
interest, conditional sales agreement, encumbrance or charge, except as set
forth on Schedule E and liens for current taxes and assessments, if any, with
respect to which no default exists.
N. Telenomics and the Telenomics Shareholders have delivered to the Company
an accurate schedule (Schedule K) as of the Balance Sheet Date reflecting the
insurance policies covering the ownership and operations of the Assets by
Telenomics, which Schedule K reflects the policies' numbers, terms, identity
of insurers, amounts and coverage. All of such policies are now and will be
until Closing in full force and effect on an occurrence basis with no premium
arrearages. True and correct copies of all such policies and any endorsements
thereto have been made available for inspection by the Company.
0. Telenomics currently employs those individuals set forth in Schedule L
hereto at the salary levels set forth therein. Telenomics and the Telenomics
Shareholders have provided to the Company access to all materials containing
policies and procedures governing employees of Telenomics. Except as set forth
in Schedule L, Telenomics does not have and has never had any pension, profit
sharing, deferred compensation or other employee pension or welfare benefit
plan or arrangement relating to the operations of Telenomics (other than sick
leave and vacation policies as expressly set forth in Schedule L. There is not
pending and, to the knowledge of Telenomics or the Telenomics Shareholders,
there is not threatened, any employee strike or work stoppage affecting
Telenomics. Further, no employee has threatened to leave the employ or has
left the employ of Telenomics for the preceding twelve months except as set
forth in Schedule L hereto. Schedule L hereto sets forth all employment
contracts entered into between Telenomics and any employees of Telenomics,
copies of which have been provided to the Company.
P. Telenomics and the Telenomics Shareholders have delivered to the Company
an accurate list and summary description (Schedule M) as of the Balance Sheet
Date of all litigation, complaints or proceedings to which Telenomics or any
Telenomics Shareholder is a party as the same relates to or in any way is
connected with the operation of Telenomics. Telenomics is not in default under
any law or regulation, or under any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality wherever located which would have a material adverse effect
on the Assets or the operation of Telenomics and, except to the extent set
forth on Schedule M there are no claims, actions, suits, proceedings or
investigations pending or to the best knowledge of Telenomics and/or the
Telenomics Shareholders threatened against or affecting Telenomics and/or the
Assets or the Telenomics Shareholders, at law or in equity, or before or by
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality wherever located.
Q. Since the Balance Sheet Date, except as disclosed in the Schedules
attached hereto, there has not been, other than in the ordinary course of
business:
(i) Any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or business of Telenomics;
(ii) Any damage, destruction or loss (whether or not covered by insurance)
materially adversely affecting the properties or business of Telenomics;
(iii) Any material increase in the compensation payable or to become payable
by Telenomics to any Telenomics: employee, officers, or agents, or any bonus
payment or arrangement made to or with any thereof,
(iv) Any labor dispute, proposed law or regulation or any event or condition
of any character materially adversely affecting the business or future
prospects of Telenomics; or
(v) Any transaction by Telenomics outside the ordinary course of its business.
R. The Telenomics Shareholders are acquiring the Shares of the Company solely
for their own account, for investment, and not with a view to any subsequent
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (said Act and rules and regulations promulgated thereunder being
hereinafter referred to as the "Act"). The Telenomics Shareholders understand
that the Company's Shares have not been registered under the Act or Securities
laws of any State ("State Act") by reason of the specific exemptions
therefrom, which exemptions depend in part upon their subjective investment
intent as expressed herein. In furtherance of the foregoing, each shall be
required to execute and deliver to the Company an Investment Letter, in the
form attached hereto as Exhibit 2, as a condition precedent to the issuance of
the Company's securities issuable to them hereunder.
S. The Telenomics Shareholders hereby acknowledges that they are:
(I) "Accredited Investors" as such term is defined in Regulation D
promulgated under the Act, or they have such knowledge and experience
in financial and business matters that they are capable of evaluating
the merits and risks of the proposed transaction and their acquisition
of the Company's Shares, and
(ii) That they are able to bear the economic risks associated with the
acquisition of the Company's Shares and are able to protect their own
interests in an investment of this nature.
T. Each Telenomics Shareholder possesses good title to his respective shares
of Telenomics common stock, free and clear of all liens, charges, encumbrances
and restrictions, except restrictions as to resale imposed by state and
federal securities laws. No consent, approval or authorization of any
government, administrative agency or court, domestic or foreign having
jurisdiction over the Telenomics Shareholders is legally required for the sale
or the transfer of the Telenomics Shares to the Company in the manner
contemplated by this Agreement.
U. The Shares of Telenomics common stock, to be tendered by each Telenomics
Shareholder to the Company pursuant to this Agreement were, when issued and
remain, duly and validly issued and authorized by Telenomics and remain issued
on a fully paid basis with no further right of assessment by the Company.
V. Those person designated in Schedule A hereto, who are husband and wife,
each reside in the State of California. The shares of Telenornics common stock
to be tendered by them to the Company are property of their respective marital
community estates. It is their intent and desire, which intent and desire is
hereby affirmed and acknowledged through execution and delivery of this
Agreement, to transfer the Telenomics Shares for and on behalf of their
respective marital community estates as such and in connection therewith, upon
tender of such shares of Telenomics common stock on Closing, each waives any
further interest as to such Shares for and on behalf of their respective
marital community estates.
Telenomics and each of the Telenomics Shareholders further represents
and warrants that all of the representations and warranties set forth above
are true as of the date of this Agreement, and shall be true at the Closing
Date. The Telenomics Shareholder's obligations with respect to the
truthfulness of said representations as of the date of Closing shall survive
the closing for a period of 90 days after the date of Closing. Further, the
Exhibits and Schedules hereto and all other documents and information
furnished to the Company and the Company's representatives by Telenomics and
the Telenomics Shareholders pursuant hereto do not and will not include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements made and to be made not misleading.
2. REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company hereby
makes the following express representations and warranties to Telenomics and
the Telenomics Shareholders:
A. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and has the corporate power to
own its properties and carry on its business as now being conducted. Certified
copies of the Company's Articles of Incorporation and By-Laws have heretofore
been furnished to Telenomics and the Telenomics Shareholders by the Company,
and all such copies are true, correct and complete copies of the original
Articles of Incorporation and By-Laws including all amendments thereto.
B. The Company has the corporate authority to issue a total of 20,000,000
shares of $0.001 par value per share common stock and 5,000,000 shares of
$0.001 par value per share preferred stock. As of the date of closing, the
Company will have issued and outstanding a total of 3,513,309 shares of common
stock. No shares of preferred stock are issued and outstanding.
C. The Company's has those subsidiaries set forth in Schedule N hereto.
D. Attached hereto as Schedule 0 is a list of all documents filed by the
Company with the United States Securities & Exchange Commission for the past
twelve months as of the date of this Agreement. The Company has provided to
each of the Telenomics Shareholders copies of each item set forth on Schedule
0.
E. The audited Financial Statements of the Company contained in the Company's
form lOKSB included in the Disclosure Information described in Schedule P
hereto (the "Company's Financial Statements") constitute substantially true
and correct statements of the financial condition of the Company and the
Company's assets, liabilities and income as of such date. Since the date of
the Balance Sheet contained in the Financial Statements, the Company has not:
(i) Issued any additional shares of its common stock to any person;
(ii) Paid or declared any dividends or distributions of capital,
surplus, or profits with respect to any of its issued and
outstanding shares of common stock;
(iii)Paid or agreed to pay any consideration in redemption of any of
its issued and outstanding shares of common stock; or
(iv) Entered into any other transaction or agreements that would, or
might, materially impair the shareholder's equity of the Company
as reflected in such Balance Sheet.
F. The execution and delivery of this Agreement, and issuance of the
Company's Shares required to be issued hereunder, will have been duly
authorized by all necessary corporate action and neither the execution nor
delivery of this Agreement nor issuance of the Company's Shares, nor the
performance, observance or compliance with the terms and provisions of this
Agreement will violate any provision of law, any order of any court or other
governmental agency, the Articles of Incorporation or By-Laws of the Company
or any indenture, agreement or other instrument to which the Company is a
party, or by which it is bound or by which any of its property is bound.
G. The Company is not involved in any pending litigation which would, or
might, materially affect its financial condition and which has not been:
(i) Provided for in the Company's Financial Statements, and
(ii) Disclosed to Telenomics, and/or the Telenomics Shareholders in
writing.
H. There are no unpaid assessments or proposed assessments of State or
Federal income taxes pending against the Company. All liabilities for Federal
and State income or franchise taxes, as shown on the tax returns filed, or to
be filed, by the Company, have been paid or the liability therefor has been
provided for in the attached Balance Sheet and all Federal and State income or
franchise taxes for periods subsequent to the periods covered by said returns
likewise have been paid or adequately accrued.
I. The shares of the Company's $0.001 par value per share common stock which
will be delivered to the Telenomics Shareholders pursuant to the terms of this
Agreement will, on delivery in accordance with the terms hereof, be duly
authorized, validly issued and fully paid and non assessable.
The Company further represents and warrants that all of the representations
and warranties set forth above are true as of the date of this Agreement. The
Company's obligations with respect to the truthfulness of said representations
as of the date of Closing shall survive the closing for a period of 90 days
after the date of Closing.
3. COVENANTS OF TELENOMICS AND THE TELENOMICS SHAREHOLDERS PRIOR TO
CLOSING. Between the date of this Agreement and the Closing Date:
A. Telenomics and the Telenomics Shareholders shall afford to the officers and
authorized representatives of the Company reasonable access to the properties,
books and records of Telenomics, and will furnish the Company with such
additional financial and operating data and other information as to the
business and properties of Telenomics as the Company may from time to time
reasonably request without regard to where such information may be located.
Telenomics and Telenomics Shareholders shall cooperate with the Company, the
Company's representatives and counsel in the preparation of any document or
other material which may be required in connection with any document or
material required by any governmental agency as a predicate to or result of
the transaction herein contemplated. The Company shall cause all information
obtained in connection with the negotiation and performance of this Agreement
to be treated as confidential (except such information as the Company may be
required to disclose to any governmental agency) and will not use, and will
not knowingly permit others to use, any such information in a manner
detrimental to Telenomics or the Telenomics Shareholders.
B. With respect to the ownership, operations and development of Telenomics,
Telenomics and the Telenomics Shareholders agree to:
(i) Carry on the business of Telenomics in substantially the same manner
as heretofore and not make any material change in personnel, operations,
finance, accounting policies, or real or personal property;
(ii) Maintain the Assets and all parts thereof in as good working order
and condition as at present, ordinary wear and tear excepted;
(iii) Perform all of the obligations of Telenomics under agreements
relating to or affecting the assets, properties and rights of Telenomics;
(iv) Keep in full force and effect present insurance policies or other
comparable insurance coverage;
(v) Maintain and preserve the business organization of Telenomics
intact, retain the present employees of Telenomics and maintain the
relationship of Telenomics with suppliers, customers and others having
business relations with Telenomics;
C. With respect to the ownership, operation and development of Telenomics,
Telenomics and the Telenomics Shareholders will not, without the prior written
consent of the Company:
(i) Except in the normal course of business, enter into any contract or
commitment or incur or agree to incur any liability, or make any capital
expenditures, greater than $5,000.00 in the aggregate or extending for a
period in excess of ninety (90) days following Closing;
(ii) Increase compensation payable or to become payable, or make a bonus
payment to or otherwise enter into one or more agreements with; except as
disclosed in the Schedules hereto any officer, employee or agent;
(iii) Create, assume or permit to exist any new mortgage, pledge or
other lien or encumbrance upon any of the Assets
(iv) Except as disclosed in the Schedules hereto, sell, assign, lease
or otherwise transfer or dispose of any of the Assets; or
(v) Merge or consolidate or agree to merge or consolidate with or
into any other entity.
4. COVENANTS OF THE COMPANY SUBSEQUENT TO CLOSING.
Within 45 days following the Closing Date:
A. The Company shall adopt such employee and executive incentive plans as the
Company and the Telenomics Shareholders shall mutually agree covering both
employees and executives of the Company and Telenomics.
B. The Company and Telenomics shall adopt mutually agreed upon procedures and
protocols respecting the protection of proprietary information.
C. The Boards of Directors of Cybertel and the Company shall authorize and
appoint a "Joint Management Committee" which shall be composed of two nominees
from the Company and two nominees from Telenomics with a fifth member to be
mutually appointed by these four appointees, for a total of five members.
Such Joint Management Committee shall be responsible for the strategic
planning, implementation and oversight of both the Company and the Telenomics.
5. CASUALTY. If any part of the Assets is damaged or destroyed in whole
or in part prior to Closing, the Company may, at its option: (i) abandon the
transaction contemplated hereby: (ii) proceed with the Closing but reduce the
Purchase Price by the replacement cost of the Assets damaged or destroyed, and
return all insurance proceeds attributable to said loss for the sole account
and benefit of the Telenomics Shareholders, or (iii) proceed with the Closing
and retain the proceeds of applicable insurance attributable to said loss,
and.
6. INDEMNITY.
A. The Company shall indemnify and hold Telenomics and the Telenomics
Shareholders harmless from and against any and all liability, loss, damage or
deficiency resulting from any material misrepresentation, material breach of
warranty or material non fulfillment of any agreement on the part of the
Company under this Agreement, and from any material misrepresentation in or
occasioned by any certificate or other instrument furnished or to be furnished
by the Company hereunder, and from the management and conduct of the Company's
ownership and operation of Telenomics subsequent to Closing (except with
respect to acts performed by any Telenomics Shareholder) and from any material
act or material negligence of the Company and its employees in or about the
Assets subsequent to Closing (except with respect to acts or negligence of any
Telenomics Shareholder. To be entitled to such indemnification, the party
seeking indemnification shall give the Company prompt written notice of the
assertion by a third party of any claim with respect to which it might bring a
claim for indemnification hereunder, and in all events must have provided such
notice within the applicable period for defense of such claim by the Company.
The Company shall have the right, at the Company's own expense, to defend and
litigate any such third party claim. In no event shall the Company be liable
for the acts or omissions of prior owners, operators or managers of Telenomics
and/or their agents, contractors and/or employees.
B. The Telenomics Shareholders shall indemnify and hold the Company harmless
from and against any and all liability, loss, damage or deficiency resulting
from any material misrepresentation, material breach of warranty or material
non fulfillment of any agreement on their part or the part of Telenomics under
this Agreement, and from any misrepresentation in or occasioned by any
certificate or other instrument furnished or to be furnished by them or
Telenomics hereunder. To be entitled to such indemnification, the Company
shall give the Telenomics Shareholders prompt written notice of the assertion
by a third party of any claim with respect to which the Company might bring a
claim for indemnification hereunder, and in all events must have supplied such
notice to the Telenomics Shareholders within the applicable period for defense
of such claim by the Telenomics Shareholders. The Telenomics Shareholders
shall have the rights, at their own expense, to defend and litigate any such
third party claim. If the Telenomics Shareholders do not elect to so defend
the claims, the Company shall advance all costs of and fully defend against
the claims to the fullest extent possible. In connection therewith, the
Telenomics Shareholders hereby agree, prior to the expenditure of funds by the
Company in such defense, to secure the repayment of any costs advanced by the
Company in defending such claims, by pledge of the Company's Shares tendered
to them hereunder and in connection therewith agree to execute any all
documents necessary to perfect such security interest.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company hereunder are, at the option of the Company, subject to the
satisfaction, on or prior to the Closing Date, of the following conditions
unless waived in writing by the Company:
A. The representations and warranties of Telenomics and the Telenomics
Shareholders contained in this Agreement shall be true when made and on and as
of the Closing Date, as though such representations and warranties had been
made on and as of such Closing Date; and each and all of the terms, covenants
and conditions of this Agreement to be complied with or performed by
Telenomics and/or the Telenomics Shareholders on or before the Closing Date
pursuant to the terms hereof shall have been duly complied with and performed.
B. The Company shall have obtained documentation or other evidence
satisfactory to the Company confirming the following:
(i) The Company's verification of the financial statements of Telenomics
for the three most recent fiscal years;
(ii) The Company's confirmation of acceptable title to the Assets;
(iii) The Company's confirmation from all applicable licensing agencies
that upon Closing, all licenses required by law to operate Telenomics as
currently operated will, at the Company's discretion, be transferred to, or
reissued in the name of, the Company;
(iv) Approval from all governmental agencies whose approval is necessary
to complete the transactions herein contemplated;
(v) The Company's confirmation that no uncorrected material deficiencies
exist with respect to the condition or operations of Telenomics according to
one or more governmental and accreditation agencies.
C. No material adverse change in the results of operations, financial
condition or business of Telenomics shall have occurred, and Telenomics
Shareholders shall not have suffered any material change, loss or damage to
its business or to the Assets, whether or not covered by insurance, since the
Balance Sheet Date.
D. Telenomics and the Telenomics Shareholders shall have delivered to the
Company an accurate and updated Schedule D as of the Closing Date, (I) listing
the name of each depository. in which Telenomics has accounts or safe deposit
boxes, (ii) listing the names in which the accounts or boxes are held, (iii)
listing the name of each person authorized to draw thereon or have access
thereto and (iv) amounts held in such accounts or boxes.
E. Telenomics and the Telenomics Shareholders shall have delivered to the
Company accurate updated Schedules D, E, H and I, as of the Closing Date,
showing all contracts and commitments relating to the operation of Telenomics
and its Assets entered into by Telenomics and or the Telenomics Shareholders
since the Balance Sheet Date, which agreements the Company may assume at its
option.
F. Telenomics and the Telenomics Shareholders shall have furnished to the
Company, upon the Company's election, in form acceptable to the Company and
approved by the Company's legal counsel, deeds, licensing agreements, bills of
sale, assignments or other instruments of transfer and (except in minor
instances) consents and waivers by others, necessary or appropriate to
transfer to and effectively vest in the Company, at the Company's option, all
right, title and interest of Telenomics in and to its Assets, in proper
statutory form for recording if such recording is necessary or appropriate.
G. All consents of third parties which are necessary, in the opinion of the
Company, effectively to complete the transaction herein contemplated shall
have been obtained and will be in form and substance satisfactory to the
Company.
CONDITIONS TO THE OBLIGATIONS OF TELENOMICS AND THE TELENOMICS SHAREHOLDERS.
The obligations of the Telenomics Shareholders and Telenomics hereunder are
subject to the following conditions:
The Telenomics Shareholders and Telenomics shall not have discovered any
material error or misstatement in any of the representations and warranties
made by the Company herein and all the terms and conditions of this Agreement
to be performed and complied with by the Company have been performed and
complied with.
B. There shall have been no substantial adverse changes in the financial
condition, business or operations of the Company, except for changes resulting
from those operations in the usual ordinary course of the business, and no
business and assets of the Company shall have been materially adversely
affected as the result of any fire, explosion, earthquake, flood, accident,
strike, lockout, combination of the workmen, taking over of any such assets by
any governmental authorities, riot, activities of armed forces, or Acts of God
or of the public enemies.
C. At the time of Closing of the Reorganization, the Company shall provide
or shall have provided Telenomics a total of $250,000 in working capital
through a loan, which shall be evidenced by a promissory note in the form of
Exhibit 6 hereto.
D. The Company shall have received a financing commitment from Capital Growth
Planning, respecting the provision of up to $2,000,000 in funding to the
Company within six months following the contemplated Reorganization (the
"Subsequent Financing"). Such Subsequent Financing commitment shall include a
use of proceeds which shall provide for an allocation of not less than $
1,000,000 (less finding provided in paragraph C herein above) in working
capital to Telenomics from the Subsequent Financing proceeds payable in
installments of $250,000 every ninety days, until paid in full.
9. CLOSING DATE. The Closing of this Agreement (the "Closing" or" Closing
Date") shall take place on or before January 1, 2000.
10. ACTIONS AT CLOSING. Subject to the terms and conditions set forth
herein. At the time of the Closing referred to in Section 9 hereof, the
Company will issue and deliver, or cause to be issued and delivered to the
Telenomics Shareholders, identified in Schedules A hereto, certificates
evidencing the ownership of the securities as designated therein and
concurrently therewith the Telenomics Shareholders, identified in Schedule A
hereto, shall directly or through their agent deliver or cause to be delivered
to the Company, certificates evidencing the ownership of securities as
designated therein, all duly endorsed to the Company, and each party shall pay
any and all Federal and State taxes required to be paid in connection with the
issuance and the delivery of their own securities. All stock certificates
shall be in the name of the party to which the same is deliverable. In
addition to the above-mentioned exchange of certificates, the following
transactions will take place at the Closings.
The Company will deliver to the Telenomics Shareholders and Telenomics:
A. Duly certified copies of corporate resolutions and other corporate
proceedings taken by the Company to authorize the execution, delivery and
performance of this Agreement;
B. A certificate executed by a principal officer of the Company attesting to
the fact that all of the foregoing representations and warranties of the
Company are true and correct as of the Closing Date and that all of the
conditions to the obligations of Telenomics, and Telenomics Shareholders which
are to be performed by the Company have been performed as of the Closing Date;
and
C. A certificate of corporate good standing for the Company from the State of
Nevada which shall be dated no more than 60 days prior to the Closing Date;
and
The Telenomics Shareholders and Telenomics will deliver to the Company:
A. Duly certified copies of corporate resolutions and other corporate
proceedings taken by Telenomics to authorize the execution, delivery and
performance of this Agreement;
B. A certificate of corporate good standing for Telenomics from the Secretary
of State of the State of California which shall be dated no more than 60 days
prior to the Closing Date; and
C. A certificate by a principal officer of Telenomics, and the Telenomics
Shareholders that each of the representations and warranties of Telenomics and
the Telenomics Shareholders are true and correct as of the Closing Date and
that all of the conditions to the obligations of the Company which are to be
performed by Telenomics and the Telenomics Shareholders have been performed as
of the Closing Date.
D. Those schedules, list and documents required under Section 3 hereof.
11. BOARD OF DIRECTORS. Immediately after the Closing, the Boards of Directors
of the Company and Telenomics shall hold a meeting at which the Company's
Board of Directors will appoint representatives of the Company to sit on the
Telenomics board of directors, in accordance with the Articles of
Incorporation and By-Laws of Telenomics. In addition, the Company shall
nominate and place Xxxx Xxxx and Xxxxx Xxxxxxx on the Company's ballot for
purposes of his election by the Company's shareholders as a member of the
Company's board of directors for the year 2000.
12. FUTURE REGISTRATION. The Telenomics Shareholders understand that
because the Company's Shares to be delivered to them have not been registered
under the Act or any State Act, they cannot dispose of any or all of them
unless they are subsequently registered under the Act and any applicable State
Act, or exemptions from registration are available. The Telenomics
Shareholders acknowledge and understand that, except as provided herein, they
have no independent right to require the Company to
register the Shares. The Telenomics Shareholders further understand that the
Company may, as a condition to the transfer of any of the Shares require that
the request for transfer be accompanied by an opinion of legal counsel, in
form and substance satisfactory to the Company, provided at such Telenomics
Shareholder's expense, to the effect that the proposed transfer does not
result in violation of the Act or any applicable State Act, unless such
transfer is covered by an effective registration statement under the Act and
is in compliance with all applicable State Acts. Notwithstanding the
foregoing, the Company agrees that, if at any time within the period beginning
on the Closing Date and ending five years after the Closing Date hereunder, it
should file a registration statement with the Commission pursuant to the Act,
registering thereunder any shares held by the Company's existing shareholders
for resale by such existing shareholders, the Company, at its own expense,
will offer the holder(s) of the Shares acquired pursuant to this Agreement the
opportunity to participate in such registration; provided, however, that the
number of Shares that may be included by the Telenomics Shareholders in such
registration shall be limited to that number determined by multiplying the
number of Shares held by the Telenomics Shareholders by the ratio determined
by dividing the number of Shares held by the Telenomics Shareholders by the
total number of shares of the Company's restricted stock issued and
outstanding at the time of filing such registration. This paragraph is not
applicable to a registration statement filed by the Company with the
Commission on Form S-4 or Form S-8, or any other inappropriate form.
13. TRANSFERABILITY. All Shares which are issued to the Telenomics -
Shareholders; pursuant to the terms of this Agreement shall be "restricted
securities" within the meaning of Rule 144 of the Act. The Company shall issue
stop transfer instructions to the transfer agent for its common stock and with
respect to the Shares and shall place the following legend, or one
substantially similar thereto, on the certificates representing such Shares:
"The securities represented by this certificate have been acquired
pursuant to a transaction effected in reliance upon an exemption under the
Securities Act of 1933, as amended (the "Act"), and have not been the subject
to a Registration Statement under the Act or any state securities act. The
securities may not be sold or otherwise transferred in the absence of such
registration or applicable exemption therefrom under the Act or any applicable
state securities act."
14. ACCESS TO INFORMATION. Concurrently herewith, the Company has delivered to
the Telenomics Shareholders and their respective representatives those
materials set forth in Schedule P hereto along with correct and complete
copies of all Documents and records requested by them. In addition, the
Telenomics Shareholders have had the opportunity to ask questions of, and
received answers from, officers and directors of the Company, and persons
acting on its behalf concerning such information and the terms and conditions
of the Agreement, and have received sufficient information relating to the
Company to enable them to make an informed decision with respect to the
acquisition of the common stock.
15. NO SOLICITATION. At no time were the Telenomics Shareholders
presented with or solicited by any leaflet, public promotion meeting,
circular, newspaper or magazine article, radio or television advertisement, or
any other form of general advertising in connection with their acquisition of
the common stock.
16. SHAREHOLDERS AGREEMENT. Simultaneous with the execution and delivery
of this Agreement Xxxx Xxxxx, the Six M Irrevocable Family Trust and the
Telenomics Shareholders shall each execute and deliver to the other a binding
Shareholders Agreement in the form of Exhibit 4 hereto.
17. EXPENSES. The Telenomics Shareholders Telenomics and the Company
shall each pay their respective expenses incident to this Agreement and the
transactions contemplated hereby, including all fees of their counsel and
accountants, whether or not such transactions shall be consummated..
18. FINDERS. The Telenomics Shareholders and Telenomics shall indemnify
and hold the Company harmless against and with respect to all claims or
brokerage or other commissions relative to this Agreement or the transactions
contemplated hereby, based on any agreements, arrangements, or understandings
claimed to have been made by the Telenomics Shareholders and Telenomics with
any third party. The Company shall indemnify and hold the Telenomics
Shareholders and Telenomics harmless against and with respect to all claims
for brokerage or other commissions relative to this Agreement or the
transactions contemplated hereby, based in any agreements, arrangements, or
understandings claimed to have been made by the Company with any third party.
Except as provided in Exhibit 5, each party to this Agreement represents and
warrants to each other party that it has not dealt with and does not know of
any person, firm or corporation asserting a brokerage, finder's or similar
claim in connection with the making or negotiation of this Agreement or the
transactions contemplated hereby.
19. MISCELLANEOUS.
A. Each Exhibit, Certificate and Schedule to this Agreement shall be
considered a part hereof as if set forth herein in full. Notwithstanding any
other provision herein to the contrary, all Exhibits, Certificates, Schedules
or other instruments provided for herein and not delivered at the time of
execution of this Agreement shall be delivered or completed on or before
Closing; and it shall be deemed a condition precedent to the Closing hereunder
that each such Exhibit, Certificate, Schedule or other instrument shall meet
with the approval of the party to whom such Exhibit, Certificate, Schedule or
other instrument is to be delivered hereunder.
B. The provisions of this Agreement shall be self-operative and shall not
require further agreement by the parties except as may be herein specifically
provided to the contrary; provided, however, at the request of either party,
the other party shall execute such additional instruments and take such
additional acts as the requesting party may deem necessary to effectuate this
Agreement.
C. Except as herein expressly provided to the contrary, whenever this
Agreement requires any consent or approval to be given by either party or
either party must or may exercise discretion, the parties agree that such
consent or approval shall not be unreasonably withheld or delayed and such
discretion shall be reasonably exercised.
D. In the event either party elects to incur legal expenses to enforce or
interpret any provision of this Agreement, the prevailing party will be
entitled to recover such legal expenses, including, without limitation,
attorney's fees, costs and necessary disbursements, in addition to any other
relief to which such party shall be entitled.
E. The parties agree that this Agreement shall be governed by and construed
in accordance with the laws of the State of California, and that the courts of
the State of California shall be the exclusive courts of jurisdiction and
venue for any litigation, special proceeding or other proceeding as between
the parties that may be brought, or arise out of, in connection with or by
reason of this Agreement.
F. Subject to provisions herein to the contrary, this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
legal representatives, successors and assigns; provided, however, that no
party may assign this Agreement without the prior written consent of the other
party, which consent shall not be unreasonably withheld. All provisions
contained herein shall be binding upon the respective parties their legal
representatives, successors and assigns unless otherwise explicitly stated;
provided however that the use of a party's name without more shall not be
deemed such an explicit statement.
G. The transactions contemplated hereby shall be effective for accounting
purposes as of the Closing Date, unless otherwise agreed in writing by the
Telenomics Shareholders and the Company.
H. The Telenomics Shareholders and the Company mutually agree that no party
hereto shall release, publish or otherwise make available to the public in any
manner whatsoever any information or announcement regarding the transactions
herein contemplated without the prior written consent of the Telenomics
Shareholders and the Company, except for information and filings reasonably
necessary to be directed to governmental. agencies to fully and lawfully
effect the transactions herein contemplated.
I. The waiver by either party of breach or violation of any provision of this
Agreement shall not operate as, or be construed to be, a waiver of any
subsequent breach of the same or other provision hereof.
J. Any notice, demand or communication required, permitted, or desired to be
given hereunder shall be deemed effectively given when personally delivered or
mailed by prepaid certified mail, return receipt requested, addressed as
follows:
If to Telenomics or the Telenomics Shareholders:
Telenomics, Inc.
00000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
With Copy to:
Xxxxxxx X. Xxxxxxx, Esq.
0000 Xxxx Xxxxxx
Xxxxx Xxxxxx Xxxxxxxxxx 00000
Xxx Xxxxxxx, XX 00000
If to the Company
Cybertel Communications Corp.
0000 Xxxxxxxxx Xxxxxx #0 00
Xx Xxxxx, Xxxxxxxxxx 00000
With Copy to:
Xxxxx X. Xxxxxx
0000 Xxxx Xxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
or to such other address, and to the attention of such other person or officer
as any party may designate, with copies thereof to the respective counsel
thereof as notified by such party.
K. In the event any provision of this Agreement is held to be invalid,
illegal or unenforceable for any reason and in any respect, such invalidity,
illegality, or unenforceability shall in no event affect, prejudice or disturb
the validity of the remainder of this Agreement, which shall be in full force
and effect, enforceable in accordance with its terms.
L. Whenever the context of this Agreement requires, the gender of all words
herein shall include the masculine, feminine and neuter, and the number of all
words herein shall include the singular and plural.
M. The divisions of this Agreement into sections and subsections and the use
of captions and headings in connection therewith are solely for convenience
and shall have no legal effect in construing the provisions of this Agreement.
N. This Agreement supersedes all previous contracts, and constitutes the
entire agreement of whatsoever kind or nature existing between or among the
parties respecting the within subject matter and no party shall be entitled to
benefits other than those specified herein. As between or among the parties,
no oral statements or prior written material not specifically incorporated
herein shall be of any force and effect; the parties specifically acknowledge
that in entering into and executing this Agreement, the parties rely solely
upon the representations and agreements contained in this Agreement and no
others. All prior representations or agreements, whether written or verbal,
not expressly incorporated herein are superseded and no changes in or
additions to this Agreement shall be recognized unless and until made in
writing and signed by all parties hereto. The provisions of this Agreement
shall survive the Closing and remain of full force and effect for a period of
one year; All other agreements described, referenced or contemplated herein
shall not be merged herewith. This Agreement may be executed in two or more
counterparts, each and all of which together shall constitute but one and the
same instrument.
REORGANIZATION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
Cybertel Communications Corp., a
Nevada corporation
By:/s/Xxxxxxx Mangerelli
REORGANIZATION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
Telenomics, , a California corporation
/s/Xxxx X. Xxxx
REORGANIZATION AGREEMENT
COUNTERPART SIGNATURE PAGE
TELENOMICS SHAREHOLDERS
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
/s/Xxxx X. Xxxx
Signature
Xxxx X. Xxxx
Print Name
/s/Xxxxxx Xxxx
Spouses Signature
Xxxxxx Xxxx
Print Name
Schedule A
Telenomics Shareholders
Name Telenomics Shareholdings No. Company's Shares
Xxxx Xxxx and Xxxxxxx 16,100 160,565
Xxxx, husband and wife
Xxxxxxx Xxxxxx and Xxxxx 17,100 170,538
X. Xxxxxx, husband and
wife
Xxxxx Xxxxxxx and Xxxxxxx 14,962.5 149,221
Xxxxxxx, husband and wife
Xxxx Xxxxx 10,000 99,730
Xxxx Xxxxxx and Xxxxxxxx 1,000 9,973
Xxxxxx, husband and wife
Xxxxxxx X. Xxxxxxx 1,000 9,973
Telenomics, Inc.
Schedule of Debt and Equity Holders
The Company has no Debt Holders and has never issued any bonded indebtedness
The Company has 100,000 authorized shares of Common Stock, and the following
are the shareholders of record as of September 29, 1999:
Xxxx Xxxx 16,100
Xxxxxxx Xxxxxx 17,100
Xxxxx Xxxxxxx 14,962.5
Xxxx Xxxxx 10,000
Xxxx Xxxxxx 1,000
Xxxxxxx X. Xxxxxxx 1,000
I certify that the foregoing Schedule of Debt and Equity Holders is true and
correct.
Date: September 29, 1999 /s/Xxxx Xxxx
Xxxx Xxxx
Chief Executive Officer
Schedule B
Telenomics Conflicts or Potential Breaches of Contracts
NONE
Schedule C
Telenomics Subsidiaries and Prior Business Dealings
NONE
Schedule D
Telenomics Comprehensive List of Assets
Assets owned by Telenomics are set forth in full in the Financial Statements
contained in Exhibit 1 to this Reorganization Agreement. The items set forth
below reflect the only changes to the Assets set forth in the Financial
Statements as of December 15, 1999:
Bank of America General Account $ 129.59
Bank of America Payroll Account $ 836.43
Bank of America Savings Account $2,785.62
Accounts Receivable $58,034.49
Equipment $251,681.00
Schedule E
Telenomics Exceptions to Tiles to Assets
NONE
Schedule F
Material changes to Financial Statements
Schedule G
Telenomics Required Permits, Franchises, Licenses, Etc.
NONE
Schedule H
Telenomics Contracts affecting assets
NONE
Schedule I
Telenomics Contracts Requiring Future Performance
NONE
Schedule J
Telenomics Disposition of Assets
NONE
Schedule K
Telenomics Insurance
The Company has a Commercial Package Policy with policy dates of 01-09-1999 to
01-09-2000, policy Number B0529021 with Unigard Insurance Company.
Policy attached
Schedule L
Telenomics Employees, Pensions and Sick Leave Policies
NONE
Schedule M
Telenomics Litigation
NONE
Schedule N
Cybertel Communications Corp. Subsidiaries
NONE
Schedule O
Cybertel Communications Corp.
Documents filed with the Securities and Exchange Commission
1. Form 10-SB for the period Ending December 31, 1998
Schedule P
Cybertel Communications Corp.
Disclosure Materials
1. Form 10-SB for the period Ending December 31, 1998
2. Offering Memorandum dated October 1, 1999
Exhibit 1
Telenomics Financial Statements
Exhibit 2
Investment Letter
CYBERTEL COMMUNICATIONS CORP.
INVESTMENT LETTER
Cybertel Communications Corp.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Re: Acquisition of shares of Cybertel Communications Corp., a Nevada
corporation (the "Company").
Gentlemen:
Pursuant to that certain Reorganization Agreement ("Agreement") between and
among (i) Cybertel Communications Corp., a Nevada corporation, which is
referred to herein as the "Company," (ii) Telenomics, Inc., a California
corporation which is referred to herein as "Telenomics" and each person
identified in Schedule A to the Agreement, who are the holders of 60,162.5
shares of the authorized capital stock of Telenomics, which constitutes one
hundred percent (100%) of the issued and outstanding capital stock of
Telenomics who are referred to herein collectively as the "Telenomics
Shareholders and individual as a "Telenomics Shareholder", the undersigned has
agreed to exchange his shares of Telenomics, for a total of that number of
shares of the Company's $0.001 par value per share common stock as set forth
in Schedule A of the Agreement (the "Shares"). In connection therewith,
undersigned hereby acknowledges that he has approved this exchange; that he is
aware of all of the terms and conditions of the Agreement; that he has
received and personally reviewed a copy of any and all material documents
regarding the Company which have been delivered to him for his review, and,
based upon such review, desires to acquire the Shares, upon the terms set
forth in the Agreement. In connection therewith:
1 Representations and Warranties of the Undersigned.
(a) Respecting Offering Materials. The undersigned hereby represent and
warrant that he:
(1) has been furnished with those materials and documents set
forth in the Agreement ("Disclosure Materials").
(2) has been given the opportunity to ask questions of and
receive answers from the officers and directors of the Company with respect to
the issuance of the Shares pursuant to the Agreement, the Shares, the
business of the Company and any other matters which they considered to be
material to his investment decision and all such questions have been answered
to his, full satisfaction;
(3) has not relied on any information or representation other
than those set forth in the Disclosure Materials and such other written
information and representations as have been provided by the officers and
directors of the Company pursuant to a specific question or request for
additional information;
(4) has not been presented with or solicited by any leaflet,
public promotional meeting, circular, newspaper or magazine article, radio or
television advertisement, or any other form of general advertising.
(b) Respecting Investor Suitability. The undersigned hereby represents
and warrants that he:
(1) is an "Accredited Investors" as that term is defined in
Securities and Exchange Commission Regulation D, promulgated under the
Securities Act of 1933, as amended (the "Act");
(2) is capable of bearing the high degree of economic risk
associated with this investment including, but not limited to, the possibility
of complete loss of all his investment capital;
(3) has sufficient financial and other resources to provide for
anticipated financial needs, without taking into account any income which may
be generated as a result of his investment in the Shares, and has no need for
liquidity with respect to the investment in the Shares;
(4) has total investments in illiquid investments that are
reasonable in relation to his net worth and can afford the total loss of the
investment in the Shares;
(5) has had substantial experience in business of investments in
one or more of the following: (i) investment experience with securities, such
as stock and bonds; (ii) ownership of interests in new ventures and start-up
companies; and (iii) experience in business and financial dealings; and
(6) can protect his own interests in an investment of this nature
and does not have a "Purchaser Representative," as that term is defined in
Regulation D of the Act and does not need such Representative.
(7) understands and agrees that the Shares acquired pursuant to
the Agreement have not been and will not be registered under the Act, that the
Shares are being offered and sold in reliance upon the exemption from
registration afforded by Section 4(2) and Rule 506 of Regulation D as
promulgated under the and that the Shares have not been registered with any
state securities commission or other governmental authority. Undersigned
hereby acknowledge that pursuant to the requirements of Section 4(2) and Rule
506 or Regulation D, the Shares acquired from the Company may not be
transferred, sold or otherwise exchanged unless registered or in transactions
that are exempt therefrom.
(8) undersigned acknowledges that the Company is relying upon the
representations made by him herein in transferring the Shares hereunder
without registration under the Act pursuant to an exemption therefrom as
provided in Section 4(2) and Rule 506 or Regulation D promulgated thereunder.
Undersigned has consulted with legal counsel in connection with this
transaction.
(9) is purchasing the Shares exclusively for his own account and
not for the account or benefit or on behalf of another person.
(c) Respecting Investment Liquidity. The. undersigned hereby represent
and warrant that he:
(1) has been advised that the Shares have not been registered
under the Securities Act of 1933 in reliance on the exemption provided by
Section 4(2) and Rule 506 of Regulation D of the Act relating to transactions
not involving public offering;
(2) understands that the issuance of the Shares has not been
approved or disapproved by the Securities and Exchange Commission or the
securities regulatory authority of any state;
(3) understands that the Shares, are, and will continue to be,
unregistered securities which may not be assigned, sold, transferred, conveyed
or hypothecated to any person unless such are subsequently registered under
applicable Federal and state law, or unless an exemption from such
registration is available to both the undersigned and the proposed transferee
under such laws;
(4) understands that the Company has no obligation or intention to
register the Shares for sale under the Act except as provided in the
Agreement;
(5) understands that there is at present a limited public market
for the Shares and that the lack of a liquid market may make it impossible to
liquidate the Shares when desired or at then current asking prices, and there
can be no assurances that an active public market will ever develop; and
(6) understands and acknowledges that this investment may be long
term, must be held indefinitely, and is, by nature, highly speculative.
Undersigned further represents and warrants that all of the representations
and warranties set forth above are true as of the date of this Investment
Letter.
2. Representations and Warranties of the Company
a. The Company is a corporation organized under the laws of the Nevada
with full corporate authority to conduct its business as now being conducted.
b. The issuance of the Shares required to be delivered by the Company
pursuant to the Agreement, will have been duly authorized by all necessary
corporate action by the Company and will not violate any provision of the
corporate statutes or similar organic documents of the Company.
c. Neither the execution nor delivery of this Investment Letter nor the
issuance of Shares, nor the performance, observance or compliance with the
terms and provisions of this Agreement by the Company will violate any
provision of law, any order of any court or other governmental agency, or any
indenture, agreement or other instrument to which the Company is a party or by
which the Company is bound. This Investment Letter and the Agreement, upon
execution and delivery by the Company and assuming the due authorization,
execution and delivery by the other parties hereto, will be the valid,
binding, and legally enforceable obligations of the Company.
d. The Shares, when issued to undersigned will be duly and validly
authorized and issued on a fully paid basis with no further right of
assessment by the Company. In order to further compliance with the
requirements of Regulation D under the Act, the Company shall cause the
certificates delivered by the
Company's transfer agent for delivery to the Purchaser to bear the following
legend or one substantially similar thereto, to be contained on the
certificate representing the Shares:
"The securities represented by this certificate have been acquired
pursuant to a transaction effected in reliance upon an exemption
under the Securities Act of 1933, as amended (the "Act"), and have
not been the subject to a Registration Statement under the Act or
any state securities act. The securities may not be sold or
otherwise transferred in the absence of such registration or
applicable exemption therefrom under the Act or any applicable
state securities act."
e. The Company will take any and all reasonable action necessary to
assist the undersigned in obtaining timely transfer and delivery of the Shares
as contemplated hereby (including the execution and delivery of such
additional documents as may be required to effect transfer of the Shares to
the undersigned thereof as contemplated hereby).
3. Express Covenants of the Undersigned.
(a) Respecting Resales and Transfers. The undersigned expressly
represent, covenant and warrant that he:
(1) will not transfer or assign this Investment Letter or any of its
rights hereunder, and further agrees that the assignment and transferability
of the Shares shall be made only in accordance with this Investment Letter and
the Agreement; and
(2) will not, without the prior written consent of the Company,
assign, sell, transfer, convey or hypothecate any interest in the Shares to
any person, unless the proposed transfer may be lawfully completed without
such consent under the applicable provisions of the Securities and Exchange
Commission Rule 144 and/or Regulation D or pursuant to a registration.
(b) Respecting Indemnification of the Company. The undersigned
represents, warrants and agrees that he, will indemnify and hold the Company
and each of its officers, directors and principal shareholders harmless from
and against all costs and expenses, including attorney's fees, judgments and
amounts paid in settlement, which may be paid or incurred by any such person
in connection with or as a result of any claim, demand, action or right of
action which in anyway arises from or relates to any breach by the undersigned
of any representation, warranty or covenant set forth in this Investment
Letter or any incomplete, evasive or misleading answer to any question set
forth in herein which has been completed by them and submitted herewith.
4. Restrictive Legend. The Company intends to place the following restrictive
legend, or a legend similar thereto, on each certificate representing the
Shares:
"The securities represented by this certificate have been acquired pursuant to
a transaction effected in reliance upon an exemption under the Securities Act
of 1933, as amended (the "Act"), and have not been the subject to a
Registration Statement under the Act or any state securities act. The
securities may not be sold or otherwise transferred in the absence of such
registration or applicable exemption therefrom under the Act or any applicable
state securities act."
5. Notices. All notices or other communications which are, or may be, required
or permitted to be given or made hereunder shall be in writing and shall be
delivered or mailed by registered or certified mail, return receipt requested,
postage prepaid, to the Company at the address first above written and to the
undersigned at the address designated in undersigned's counterpart signature
page to this Investment Letter tendered herewith.
6. Governing Law. The offer and other transactions contemplated under this
Agreement shall be construed in accordance with the governed by the laws of
the Nevada.
7. Entire Agreement. This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof and may be amended
only by a writing executed by all parties.
IN WITNESS WHEREOF, the undersigned has executed this Investment
Letter in the City of Temecula, County of Riverside, on this 29 day of
December, 1999.
/s/Xxxxxxxxx X. Xxxxx
(Signature of Subscriber) (Signature of Joint Owner)
Xxxxxxxxx X. Xxxxx
(Name Printed) (Name Printed)
000 Xxxxxx
(Xxxxxx Xxxxxxx) (Xxxxxx Address)
Vista, CA, San Diego
(City, State, County) (City, State, County)
SUBSCRIPTION ACCEPTANCE
The subscription for Shares set forth in this Investment Letter is accepted by
the Company on this _ day of , 1999.
Cybertel Communications Corp.
By
Xxxxxxx Xxxxxxxxxxx
Its President
Exhibit 3
Cybertel Communications Corp.
Financial Statements
CYBERTEL, COMMUNICATIONS CORP.
FINANCIAL STATEMENTS
Two Years Ended December 31, 1998
June 23, 1999
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Cybertel, Communications Corp.
Las Vegas, Nevada
We have audited the accompanying balance sheet of Cybertel, Communications
Corp. as of December 31, 1998, and the related statements of income,
stockholders' equity and cash flows for the two years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cybertel, Communications
Corp. as of December 31, 1998, and the results of its operations and its cash
flows for the two years then ended.
XXXXXX & XXXXXX, PLLC
June 23, 0000
Xxxxxxx, Xxxxx
CYBERTEL, COMMUNICATIONS CORP.
BALANCE SHEET
December 31, 1998
ASSETS
Current Assets
Cash $ 50,344
Accounts receivable 1,278
Subscriptions receivable 34,500
Total Current Assets 86,122
Equipment, net of $2,612 accumulated depreciation 8,085
Deposits 4,500
TOTAL ASSETS $ 98,707
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 2,554
Accounts payable 2,241
Accrued interest 1,673
Loan from a founding stockholder 12,700
Total Current Liabilities 19,168
Long-term Debt 2,575
Total Liabilities 21,743
STOCKHOLDERS' EQUITY
Preferred stock, no par value, 5,000,000 shares
authorized, no shares issued or outstanding
Common stock, $.001 par value, 20,000,000
shares authorized, 2,806,659 shares
issued and outstanding 2,807
Paid in capital 1,626,813
Stock subscriptions receivable ( 113,500)
Retained (deficit) (1,439,156)
TOTAL STOCKHOLDERS' EQUITY 76,964
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 98,707
See accompanying accounting policies
and notes to financial statements.
2
CYBERTEL, COMMUNICATIONS CORP.
INCOME STATEMENTS
For the Years Ended December 31, 1998 and 1997
1998 1997
Revenues $ 16,004 $ 26,862
Operating Expenses
Selling 26,657 12,851
General and administrative
- paid in cash 174,661 74,275
- paid in stock 976,218 180,000
Depreciation 2,400 212
Interest (income) (1,553) ( 236)
Interest expense 2,262 975
Total Operating Expenses 1,180,645 268,077
NET INCOME (LOSS) $(1,164,641) $(241,215)
Net (loss) per common share $(0.51) $(0.13)
Weighted average common shares
outstanding 2,298,053 1,858,025
See accompanying accounting policies
and notes to financial statements.
3
CYBERTEL, COMMUNICATIONS CORP.
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1998 and 1997
Stock
Common Stock Subscrip. Paid in Retained
Shares $ Receivable Capital Deficit Totals
Balances,
December 31, 1996 2,000,000 $2,000 $(3,900) $ 38,000 $( 33,300) $ 2,800
Stock certificates
canceled ( 558,500) (559) 3,900 ( 3,341)
Cash contribution from
founding shareholder 8,702 8,702
Stock issued
- for cash 84,550 85 81,515 81,600
- less subscriptions
rec. (25,000) (25,000)
- for services 190,000 190 279,810 280,000
- less costs of
fundraising (100,000) (100,000)
Net (loss) (241,215) (241,215)
Balances,
December 31, 1997 1,716,050 1,716 (25,000) 304,686 (274,515) 6,887
Stock issued
- for cash 393,750 394 376,606 377,000
- less: subscriptions
rec. (88,500) (88,500)
- for services 696,859 697 1,393,021 1,393,718
- less costs of
fundraising
- in cash paid (30,000) (30,000)
- in stock issued (417,500) (417,500)
Net (loss) (1,164,641)(1,164,641)
Balances,
December 31, 1998 2,806,659 $2,807$(113,500)$1,626,813$(1,439,156) $ 76,964
See accompanying accounting policies
and notes to financial statements.
4
CYBERTEL, COMMUNICATIONS CORP.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1998 and 1997
1998 1997
CASH FLOWS USED BY OPERATING ACTIVITIES
Net income (loss) $(1,164,641) $(241,215)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 2,400 212
Stock issued for services 1,393,718 180,000
Less: amount charged to equity ( 417,500)
Changes in
Accounts receivable 15,195 ( 16,473)
Accounts payable ( 1,477) 3,718
Accrued interest 762 910
NET CASH USED BY OPERATING ACTIVITIES ( 171,543) ( 72,848)
CASH FLOWS USED BY INVESTING ACTIVITIES
Purchase of equipment ( 3,073) ( 7,624)
Deposits acquired ( 4,500)
NET CASH USED BY INVESTING ACTIVITIES ( 3,073) ( 12,124)
CASH FLOWS FROM FINANCING ACTIVITIES
Debt proceeds
7,624
Repayment of debt ( 2,127) ( 367)
Loan from a shareholder 12,700
Sales of common stock, net of
costs of fundraising 224,000 65,302
NET CASH FLOWS FROM FINANCING ACTIVITIES 221,873 85,259
NET INCREASE IN CASH 47,257 287
CASH BALANCES
- Beginning of period 3,087 2,800
- End of period $ 50,344 $ 3,087
SUPPLEMENTAL DISCLOSURES
Interest paid $ 1,500 $ 64
Income taxes paid 0 0
See accompanying accounting policies
and notes to financial statements.
5
NOTE 1 - ACCOUNTING POLICIES
Nature of Business. Cybertel, Communications Corp. ("Company") was
incorporated in Nevada in June, 1996. The Company sells telecommunications
services to commercial customers and began operations in 1997.
Estimates and assumptions. Preparing financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenue and expenses at the balance sheet date and for the period then ended.
Actual results could differ from these estimates.
Revenue recognition occurred when commercial businesses are signed up with
various commercial carriers, and incur long-distance bills. The Company earns
a fractional portion of these charges as a referral fee. Beginning May 1999,
the Company began purchasing time from carriers and reselling it to its
customers.
Equipment is computer-related and is stated at cost. Depreciation is computed
by the straight-line method using rates based on an estimated 3-year life of
the related assets.
Income taxes are computed using the tax liability method of accounting,
whereby deferred income taxes are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates that will be in effect when the differences
reverse.
Loss per share is reported under Statement No. 128 of the Financial Accounting
Standards Board ("FAS 128"). FAS 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share exclude any
dilutive effects of options, warrants, and convertible securities. Diluted
earnings per share are very similar to the previously reported fully diluted
earnings per share. All earnings per share amounts for all periods have been
presented and, where appropriate, restated to conform to the FAS 128
requirement. For 1998, warrants outstanding are not included in the earnings
calculation because their effect in a loss year would be antidilutive.
NOTE 2 - INSTALLMENT DEBT
The Company capitalized two equipment leases payable in 24 equal remaining
installments of $246, beginning December 1997, using a 10% discount factor.
The debt is secured by the equipment, valued at about $4,000. Total debt of
$5,129 is due $2,554 in 1999 and $2,575 in 2000.
NOTE 3 - LOAN FROM A FOUNDING STOCKHOLDER
In 1997, a founding shareholder loaned $12,700 to the Company. This loan is
repayable on demand, and bears no interest.
NOTE 4 - INCOME TAXES
As of December 31, 1998, the Company has approximately $0,000 in unused net
operating loss carryforwards which expire in 2018.
NOTE 5 - COMMON STOCK
During 1998, the Company sold 393,750 shares of stock for $376,100 pursuant to
a placement offering exempt from registration under Rule 504 of the Securities
and Exchange Commission. Of this amount, $253,100 was collected during 1998
and another $34,500 was collected in 1999 prior to June 23, 1999, and is
recorded as an asset "Subscriptions receivable." The $88,500 balance is shown
as a reduction in Stockholders' Equity. The Company raised another $907,400
both through additional stock sales and through the exercise of warrants at $2
per share issued with the 1998 and 1999 stock sales through June 23, 1999 and
services worth another $986,800. Total stock issued in 1999 through June 23
is 777,250 shares.
570,077 warrants to purchase Company common stock at $2 were issued in
connection with this offering and other 1998 issuances. 368,550 have been
exercised in 1999 through June 23, 1999. 1999 sales of stock through June 23,
1999 totaled 777,250 shares for net cash proceeds of $907,400 and services
valued at $986,800.
NOTE 6 - OPERATING LEASES
The Company's office in La Jolla, California has 1,500 square feet. Rent
obligations are $2,525 per month for 11 remaining months in 1999.
NOTE 7 - SUBSEQUENT EVENTS
The Company is spending its 1999 stock sales proceeds to acquire equipment to
scale up its implementation of providing long distance and data
telecommunications services. In March 1999, the Company signed a service
agreement with General Telecom, Inc. to use its telecommunications equipment
for a one year term, with five renewable one-year options. Contract pricing
is per the agreement and is based on usage volume and line types, beginning at
$6,500 per month. Total equipment purchases to date are $37,909.
Exhibit 4
Shareholders Agreement
SHAREHOLDER AGREEMENT
AGREEMENT made as of this 23rd day of December, 1999, among Cybertel
Communications Corp., a Nevada corporation (the "Company"), and the additional
signatories hereto, as set forth in Schedule A hereto (collectively the
"Shareholders")
WHEREAS, the Shareholders are owners of the issued and outstanding stock of
the Company as set forth in Schedule A hereto;
WHEREAS, the Company and the Shareholders desire to promote their mutual
interests and the interests of the Company by imposing certain restrictions
and obligations on themselves and the shares of stock of the Company;
NOW, THEREFORE, in consideration of the mutual promises contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, it is hereby agreed as follows:
1. Definitions. As used in this Agreement:
(a) The term "Stock" shall mean all issued and outstanding shares of
common stock of the Company, together with all shares of capital stock of the
Company of any class which may hereafter be issued. Moreover, all references
herein to Stock owned by a Shareholder includes the community interest, if
any, of the spouse of such Shareholder in such Stock.
(b) The term "Disposition" shall mean any inter vivos transfer,
pledge, mortgage or other encumbrance, or any other disposition of Stock
whatsoever, whether voluntary or involuntary.
(c) The term "Determination Date" shall mean the last day of the month
during which, in the case of a purchase of Stock under Section 2 hereof, the
Offer referred to in paragraph 2(a) is sent in accordance with paragraph 2(b)
or, in the case of a purchase of Stock of a deceased Shareholder under section
4 hereof or in connection with the occurrence of any event specified in
Sections 5 and 7, such event or the death of such Shareholder occurs;
provided, however, that if such determinative event occurs within two months
before or after the end of a fiscal year of the Company, the last day of such
fiscal year shall be deemed the Determination Date.
2. Offer to the Company and the Shareholders. Except as herein provided, no
Shareholder, for a period of one year from the date of this Agreement (the
"Restricted Period") shall make any Disposition of any Stock without the
written consent of the other Shareholders and the Company, or in the absence
of such written consent, except pursuant to the provisions hereinafter set
forth:
(a) Any Shareholder desiring to make a Disposition of Stock during the
Restricted Period shall first make an offer (the "Offer") to sell such Stock
to the Company and to the other Shareholders.
(b) The Offer shall be sent by certified or registered mail, return
receipt requested, to the Company and to the other Shareholders and shall
state the number of shares involved and the names of, and the price to be
paid, by any proposed purchasers. The date of the offer shall be the date on
which a notice containing the Offer has been so sent to all parties entitled
to receive it. The Offer may be withdrawn prior to the exercise of either
option granted in paragraphs 2(c) or 2(d).
(c) The Company shall have the option for thirty (30) days following the
Offer to purchase the Stock offered. The Company shall buy no such stock
unless it and the other Shareholders exercising their option pursuant to
paragraph 2(d) purchase all Stock subject to the Offer.
(d) If the Company does not exercise its option, the other Shareholders
shall have the option, for thirty (30) days following the expiration of the
Company's option, to purchase not less than all of the remaining Stock offered
in such proportions as they mutually agree. Each Shareholder electing to
purchase Stock pursuant to the offer shall have the right to purchase that
proportion of the number of shares of such stock which number of shares of
stock owned by such Shareholder bears to the total number of shares of Stock
owned by all Shareholders electing to purchase. If the Company and the other
Shareholders do not purchase all the Stock subject to an Offer, the selling
Shareholder shall be permitted, at any time or times within, but not after,
ninety (90) days after the lapse of all options arising in connection with
such Offer to sell the Stock which was the subject of such Offer; provided
however, that no such sale shall be made at a lower price or to any person
other than specified in such Offer. If after the lapse of the ninety-day
period such Stock has not been sold, the selling Shareholder must make a new
Offer prior to selling such Stock.
(e) The price per share to be paid upon the purchase of Stock under
either paragraph 2(c) or 2(d) shall be the lower of either (i) the price to be
paid by any proposed purchasers of the Stock or (ii) the price to be
determined as follows:
(1) If all the Shareholders and the Company signed a statement
setting forth the agreed value of one share of stock as of a date not more
than one year prior to the Determination Date of the Offer, the price shall be
an amount equal to such agreed value adjusted for the net earnings or losses
of the Company as determined in accordance with generally accepted accounting
principles for period from the date of such agreed value to the Determination
Date.
(2) In the absence of a statement of agreed value complying with
the preceding subparagraph (1), the price per share shall be an amount equal
to the average closing bid price for the Company's shares of common stock for
the period commencing 20 days prior to the Determination Date and terminating
twenty days thereafter. Such closing bid price shall be the bid price quoted
on the National Association of Securities Dealers Automated Quotation System
or the Bulletin Board System maintained by the NASD.
(f) The closing shall be sixty (60) days from the date of the Offer. At
least twenty-five percent (25%) of the purchase price determined under
paragraph 2(e) of the Stock being acquired by each purchaser shall be paid by
certified or cashier's check upon the closing, and any balance shall be
evidenced at such time by the negotiable promissory note of such purchaser
payable in five or fewer equal annual installments, bearing interest at the
rate of six percent (6%) per annum and secured by the Stock purchased;
provided that in no event shall an amount exceeding thirty percent (30%) of
the total purchase price be paid in any calendar year unless the total balance
of such price then remaining unpaid is paid in such year. Such check and notes
shall be actually delivered to the selling Shareholder or sent by certified or
registered mail, return receipt requested, to the address of the Selling
Shareholder. In the latter case, delivery shall be deemed to have been made to
the selling Shareholder upon the deposit of such documents in the mails.
(g) The Company and the Shareholders shall exercise their options to
purchase Stock hereunder by actual delivery to the selling Shareholder of a
written notice of intent to purchase such Stock or by sending such notice by
certified or registered mail, return receipt requested, properly stamped and
addressed to the address of the selling Shareholder. Upon the exercise of an
option, the purchaser shall be obligated to make payment at the closing as
provided in paragraph 2(f).
3. Life Insurance.
(a) To provide a fund with which to purchase Stock upon the death of a
Shareholder, the Company may apply for insurance on the lives of the
Shareholders. The Company shall be the owner and beneficiary of all insurance
policies issued pursuant to such applications. The Company shall pay all
premiums on such insurance policies and shall give proof of payment to the
Shareholders within twenty (20) days after the due date of each premium. If
any premium on any such policy shall not be paid within twenty (20) days
after its due date, the person insured under such policy shall have the right
to pay such premium and be reimbursed by the Company. The Company shall be the
sole owner of such policies and may apply any dividends toward the payment of
premiums, but during the term of this Agreement the Company shall not exercise
any rights under the policies or modify or impair any of the values of such
policies Without the written consent of all Shareholders. The policies covered
by and subject to this Agreement shall be listed in the Insurance Exhibit,
which shall be attached hereto and is hereby incorporated into this Agreement
by reference for all purposes. Upon the death of any Shareholder insured by
any such policy, the Company shall collect all proceeds of such policy, and
such proceeds shall be applied by the Company to purchase, under section 4
hereof, the stock of such decedent. If, however, the proceeds of the policy
exceed the purchase price of the Stock of such decedent, the Company shall
retain such excess proceeds.
(b) Each insurance policy on the life of a Shareholder obtained by the
Company pursuant to this Agreement may be purchased by such Shareholder at his
option (the "Option") upon the happening of either of the following events:
(1) the termination of such Shareholder's ownership of all his Stock for any
reason other than death or (2) the termination of this Agreement. The Option
shall be exercised by payment to the Company within ninety (90) days from the
date of the event giving rise to the Option (the "Date") of an amount equal to
the cash surrender value of each policy as of the Date, minus the amount of
any indebtedness outstanding against such policy, plus an amount equal to the
portion of any premium paid which covers the period beginning with the Date.
4. Sale of Stock Upon Death of a Shareholder.
(a) Upon the death of a Shareholder, the Company shall have the option
to purchase all his Stock, and each deceased Shareholders spouse and his
executor or administrator, upon exercise of such option by the Company, shall
be obligated to sell such stock to the Company. Such sale shall be consummated
within six (6) months after the date of death of the deceased Shareholder. The
price per share at which such Stock shall be purchased shall be an amount
equal to the purchase price determined as provided in paragraph 2(e) and
payable as provided in paragraph 2(f) hereof or in this section 4, whichever
is applicable. If the proceeds of any insurance policies obtained on the life
of the deceased Shareholder pursuant to this Agreement are not equal to or in
excess of the purchase price of the Stock of such deceased Shareholder, then:
(1) If the proceeds are equal to or in excess of twenty-five
percent (25%) of the purchase price determined under paragraph 2(e) of the
Stock being acquired by the Company. The balance shall be evidenced by the
promissory of the Company payable in five (5) or fewer equal annual
installments bearing interest at the rate of six percent (6%) per annum and
secured by the Stock purchased; or
(2) If the proceeds of the insurance policy are less than twenty-
five percent (25%) of the purchase price determined under paragraph 2(e) of
the Stock being acquired by the Company. The difference between the amount of
such proceeds and twenty-five percent (25%) of such purchase price shall be
paid in cash upon closing, and the balance shall be evidenced by the
promissory note of the Company payable in five (5) or fewer equal installments
bearing interest at the rate of six percent (6%) per annum and secured by the
Stock purchased. If the Company, nevertheless, is unable at that time lawfully
to purchase all the stock of the deceased Shareholder, the obligation of the
Company to buy and the obligation of the deceased Shareholder's executor or
administrator and the deceased shareholder's spouse to sell the remaining
shares which the Company could not lawfully buy shall continue until such time
as the Company may lawfully discharge such obligation and, in addition,
paragraphs 2(d) through 2(g) shall apply to all such remaining shares, the
date of the effectiveness of the option of the surviving Shareholders being,
for purposes of this paragraph 4(c), the date upon which the six (6) month
period following the death of such deceased Shareholder expires. In the event
of the exercise of the option granted by paragraph 2(d), the aforementioned
continuing obligations to buy or sell shall be discharged.
5. Disposition Upon termination of the Marital Relationship. If the marital
relationship of a Shareholder is terminated by death or divorce and such
Shareholder does not succeed to his spouse's community interest in the Stock,
he shall have the option to purchase all of his spouse's interest in the
Stock, and his spouse or the executor or administrator of her estate shall be
obligated to sell such Stock. The price per share at which such Stock shall be
purchased shall be an amount equal to the purchase price determined as
provided in paragraph 2(e) and payable as provided in paragraph 2(f). Such
option must be exercised within ninety (90) days after such death or divorce.
Should such Shareholder fail to exercise such option within such ninety (90)
day period, such failure shall constitute an Offer, and the provisions of
paragraph 2(c) through 2(g) shall apply. The date of the Offer shall be the
ninety-first (91st) day after such death or divorce.
6. Endorsement of Stock certificates. All certificates of Stock of the Company
now owned or that may hereafter be acquired by the Shareholders shall be
endorsed on the back thereof as follows:
"Reference is hereby made to that certain Shareholder Agreement dated as
of December 23, 1999 which restricts the transfer of securities, a copy
of which Shareholder Agreement is on file at the principal place of
business and registered office of Cybertel Communications Corp. subject
to the rights of reasonable examination by Shareholders of said
corporation."
Such certificates shall be endorsed on the front thereof as follows:
"See restrictions on reverse side hereof".
7. Involuntary Disposition. Prior to or upon any involuntary Disposition of
Stock, the Shareholder who owns such Stock or his representative shall send
written notice thereof by certified or registered mail, return receipt
requested, disclosing in full to the Company and the other Shareholders the
nature and details of such involuntary Disposition, and the provisions of
Paragraph 2(c) through 2(g) shall apply; provided that the option of the
Company pursuant to Paragraph 2(c) shall be for ninety (90) days from the
later of such involuntary Disposition or the sending of such notice.
8. Notice. In the event a notice or other document is required to be sent
hereunder to the Company or to any Shareholder or spouse of a Shareholder,
such notice or other document shall be sent by registered or certified mail,
return receipt requested, to the party entitled to receive such notice or
other document at the address reflected below or listed by a party hereto or
at such other address as such party shall request in a written notice, sent to
the Company and all Shareholders and spouses of Shareholders:
Cybertel Communications Corp.
0000 Xxxxxxxxx Xxxxxx #000
Xx Xxxxx, XX 00000
9. Miscellaneous Provisions.
(a) This Agreement shall be subject to and governed by the laws of the
State of California.
(b) Whenever the context requires, the gender of all words used herein
shall include the masculine, feminine and neuter, and the number of all words
shall include the singular and plural.
(c) This Agreement shall be binding upon the Company, the Shareholders,
the spouses of the Shareholders and their heirs, executors, administrators,
successors and assigns.
(d) This Agreement may be Amended from time to time by an instrument in
writing signed by all those who are parties to this Agreement at the time of
such amendment, such instrument being designated on its face as an "Amendment"
to this Agreement.
(e) This Agreement shall terminate automatically upon the bankruptcy or
dissolution of the Company, upon the occurrence of any event that reduces the
number of Shareholders to one or upon the deaths of all the Shareholders
within a period of sixty (60) days. In the last event, the ownership of the
Stock of the Company which existed immediately prior to the death of the first
Shareholder in such 60 day period shall not be altered by this Agreement. This
Agreement may also be terminated by an instrument in writing signed by all
those who are parties to this Agreement at the time of the signing of such
instrument.
(f) Any Shareholder who sells his Stock shall cease to be a party to
this Agreement and shall have no further rights hereunder.
(g) The spouses of the Shareholders are fully aware of, understand, and
fully consent and agree to the provisions of this Agreement and its binding
effect upon any community property interests they may now or hereafter own,
and agree that the termination of their marital relationship with any
Shareholder for any reason shall not have the effect of removing any Stock of
the Company otherwise subject to this Agreement from the coverage thereof and
that their awareness, understanding consent and agreement are evidenced by
their signing this Agreement and initialing this paragraph.
Initial
SHAREHOLDER
SPOUSE
(h) Any attempted Disposition in breach of this Agreement shall be void
and of no effect, and shall constitute an Offer, and the provisions of
paragraphs 2(c) and 2(g) shall apply thereto; provided that the date of the
Offer for purposes of this paragraph 9(h) shall be deemed to be the date as of
which the Company has actual knowledge of such attempted Disposition. Each
party hereto acknowledges that a remedy at law for any breach or attempted
breach of Sections 2, 4, 5 and 7 of this Agreement will be inadequate, agrees
that each other party hereto shall be entitled to specific performance and
injunctive and other equitable relief in case of any such breach or attempted
breach and further agrees to waive any requirement for the securing or posing
of any bond in connection with the obtaining of any such injunctive or other
equitable relief.
(i) The Company hereby agrees not to issue or sell shares of its Stock to any
person who is not already a party hereto unless such person and his spouse
agree to become parties to this Agreement contemporaneously with the issuance
of such shares. Any such person and his spouse shall become parties to this
Agreement by the execution of an Addendum Agreement in the form attached
hereto as Exhibit "A", which Addendum Agreement shall bind them to, and grant
them the benefits of, this Agreement as though they were original parties
hereto. For this purpose all the Shareholders hereby appoint the Company
as their agent and attorney to execute such Addendum Agreement on their behalf
and expressly bind themselves to the Addendum Agreement by the Company's
execution of that Agreement without further action on their part. Immediately
upon the execution of an Addendum Agreement by such person, his spouse and the
Company. Action shall be taken by the Shareholders to incorporate the Addendum
Agreement by reference into the By Laws of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
multiple counterparts each of which shall be deemed an original on the date
and year first above written.
SHAREHOLDER SPOUSE
Print Name Print Name
Address Address
SCHEDULE A
LIST OF SHAREHOLDERS
Name No. Company's
Shares
Xxxx Xxxx and Xxxxxxx Xxxx, 160,565
husband and wife
Xxxxxxx Xxxxxx and Xxxxx X. 170,538
Xxxxxx, husband and wife
Xxxxx Xxxxxxx and Xxxxxxx 149,221
Xxxxxxx, husband and wife
Xxxx Xxxxx 99,730
Xxxx Xxxxxx and Xxxxxxxx Xxxxxx, 9,973
husband and wife
Xxxxxxx X. Xxxxxxx 9,973
Xxxx Xxxxx 100,000
Six M Irrevocable Family Trust 127,506
Exhibit A
ADDENDUM AGREEMENT
ADDENDUM AGREEMENT made this day of by and
between ("New Shareholder') and the New
Shareholder's spouse, Cybertel Communications Corp., a Nevada corporation
(the "Company"), and the other Shareholders (the "Shareholders") of the
Company, who are parties to that certain Agreement, dated
(the "Agreement'), between the Company and its Shareholders.
W I T N E S S E T H:
WHEREAS, the Company and the Shareholders and their respective spouses entered
into the Agreement to impose certain restrictions and obligations upon
themselves and the shares of the stock (the "Stock") of the Company; and
WHEREAS, the New Shareholder is desirous of becoming a Shareholder of the
Company; and
WHEREAS, the Company and the Shareholders have required in the Agreement that
all persons being offered Stock must enter into an Addendum Agreement binding
the New Shareholder and the New Shareholder's spouse to the Agreement to the
same extent as if they were original parties thereto, so as to promote the
mutual interests of the Company, the Shareholders and the New Shareholder by
imposing the same restrictions and obligations on the New Shareholder and the
shares of Stock to be acquired by him as were imposed upon the Shareholders
under the Agreement,
NOW THEREFORE, in consideration of the mutual promises of the parties, and as
a condition of the purchase of Stock in the Company, the New Shareholder and
his spouse acknowledge that they have read the Agreement. The New Shareholder
and his spouse shall be bound by, and shall have the benefit of, all the terms
and conditions set out in the Agreement to the same extent as if they were
"Shareholders" as defined in the Agreement. This Addendum Agreement shall be
attached to and become part of the Agreement.
New Shareholder
Spouse of New Shareholder
AGREED to on behalf of the Shareholders and the Company pursuant to section
9(i) of the Agreement.
Cybertel Communications Corp.
Its President
Exhibit 5
finders
NONE
Exhibit 6
Telenomics Promissory Note
