SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of
the Securities Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
/X/ Preliminary Information Statement
/ / Confidential, for Use of the Commission Only (as
permitted by
Rule 14c-5(d)(2))
/ / Definitive Information Statement
AMERICOM USA, INC.
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(Name of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required
/X/ Fee computed on table below per Exchange Act Rules 14c-5(g) and
0-11 (1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
$500,000; amount of capital investment commitments acquired as a
result of the transaction
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(3) Proposed maximum aggregate value of transaction:
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(4) Total fee paid:
$333.34
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>1
INFORMATION STATEMENT
of
AMERICOM USA, INC.
1303 Grand Avenue
Arroyo Grande, California 93420
(805) 542-6700
Information Concerning Stockholder Action By Written Consent
This Information Statement is furnished to the stockholders of AmeriCom USA,
Inc., a Delaware corporation ("AmeriCom") in connection with an action taken by
written consent of the holders of a majority of AmeriCom's outstanding capital
stock (the "Majority Stockholders"), pursuant to Section 228 of the Delaware
General Corporation Law ("DGCL"). The Majority Stockholders hold 19,596,738
shares of AmeriCom's voting common stock, representing 61.4% of its outstanding
shares, and have executed written consents authorizing and approving the merger
of AmeriCom with and into Telespace Limited, a Delaware corporation
("Telespace"), whereupon the separate existence of AmeriCom will cease and
Telespace will continue as the surviving corporation. Control of Telespace will
be acquired by the stockholders of AmeriCom. This information statement is also
being provided as a notice of the action taken by written consent of the
Majority Stockholders, pursuant to Section 228(d) of the DGCL.
This Information Statement is being mailed to stockholders on or about July __,
1999.
THIS IS ONLY AN INFORMATION STATEMENT. WE ARE NOT ASKING YOU FOR
A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
Record Date and Voting Rights
AmeriCom is authorized to issue up to 100,000,000 shares of common stock, par
value $0.001, and 20,000,000 shares of preferred stock, par value $0.001. As of
July 22, 1999, 34,510,834 shares of common stock and no shares of preferred
stock were issued and outstanding. Each share of common stock is entitled to one
vote on all matters submitted for stockholder approval. The record date for
determination of stockholders entitled to consent to the action is July 15,
1999. The amount of currently outstanding shares of common stock does not
include an additional 3,500,000 shares of common stock to be issued to the
shareholders of Digicities, Inc. in conjunction with the acquisition of
Digicities by AmeriCom. See "AmeriCom Business" below.
Principal Stockholders
The following table sets forth certain information concerning the beneficial
ownership of the voting common stock as of July 15, 1999 with respect to each
person known by AmeriCom to be the beneficial owner of more than 5% of the
outstanding common stock. Except as otherwise indicated, AmeriCom believes that
all beneficial owners named below have sole voting and investment power with
respect to all shares of capital stock beneficially owned by them.
<PAGE>2
<TABLE>
<S> <C> <C>
Number of Shares Percentage
Name of Beneficial Owner Beneficially Owned Beneficially Owned
- --------------------------------------- --------------------- ----------------------
Robert Cezar 17,336,054* 54.31%
David Loomis 2,260,684 7.10%
All directors and officers as a group 21,198,637 65.91%
</TABLE>
* Of this amount 7,335,946 share are held in the Robert M. Cezar Trust.
PROPOSAL ONE
APPROVAL OF MERGER
AmeriCom's Board of Directors has unanimously approved the merger of AmeriCom
with and into Telespace. The Majority Stockholders also approved the merger by
an action by written consent, without a meeting, dated July __, 1999.
Accordingly, all corporate actions necessary to authorize the merger have been
taken. In accordance with the regulations promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the merger will not
become effective until twenty days after AmeriCom has mailed this Information
Statement to the stockholders of AmeriCom. The approval by the Board of
Directors and the Majority Stockholders constitutes approval of the Merger
Agreement and Plan of Reorganization, attached hereto as Exhibit A (the "Merger
Agreement").
General
Upon the effectiveness of the Merger (the "Effective Date"), (i) the legal
existence of AmeriCom as a separate corporation will cease, (ii) Telespace will
succeed to the assets and assume the liabilities of AmeriCom; (iii) the officers
and directors of AmeriCom will become the officers and directors of Telespace
and (iii) each outstanding share, option and convertible note to purchase
AmeriCom common stock, $.001 par value will automatically be converted into one
share, option or convertible note to purchase common stock, $.001 par value, of
Telespace. Each outstanding certificate representing a share or shares of
AmeriCom common stock, option or convertible note will continue to represent the
same number of respective shares, options or convertible notes of Telespace.
Upon consummation of the Merger, each AmeriCom stockholder (other than
dissenting stockholders who seek appraisal rights) will be requested to submit
his or her AmeriCom stock certificates to AmeriCom's transfer agent in exchange
for a like number of Telespace shares.
To consummate the merger, Telespace will issue an aggregate of 33,265,756 shares
of its common stock to stockholders of AmeriCom in exchange for all of the
<PAGE>3
outstanding shares of AmeriCom. The conversion ratio will be such that each
share of outstanding AmeriCom common stock will be converted into one share of
Telespace common stock. Telespace will also exchange options to purchase its
common stock to the holders of AmeriCom options. AmeriCom currently has
outstanding options to purchase 11,362,500 shares of its common stock. In
addition, Telespace will set aside approximately 666,750 shares of its common
stock in the event the holders of AmeriCom convertible subordinated promissory
notes, in the aggregate principal amount of $1,333,500, convert their notes into
shares of Telespace.
Prior to the effective date of the merger, Telespace will conduct a 1 for 8
reverse stock split, reducing Telespace's total outstanding common stock from
10,000,000 to approximately 1,250,000 shares. Of this amount, AmeriCom owns or
will acquire prior to the Merger 1,037,500 shares, all of which will be canceled
simultaneously with the merger transaction.
Upon completion of the Merger, AmeriCom stockholders will receive an aggregate
of 99.3% of the outstanding shares of Telespace. The holders of AmeriCom options
will hold options to purchase, in the aggregate, approximately 24% of
Telespace's outstanding common stock (on a fully diluted basis) and holders of
AmeriCom's convertible subordinated promissory notes would be entitled to
convert such debt into 2% of Telespace's outstanding common stock after the
Merger (on a fully diluted basis).
The Telespace Certificate of Incorporation and Bylaws will continue in effect
after completion of the Merger. However, the dividend, voting and preemption
rights of AmeriCom stockholders will not be materially affected by the exchange
of AmeriCom shares for shares of Telespace. In addition, there are no dividends
in arrears and there will be no defaults in the payment of principal or interest
in respect of any securities of AmeriCom or Telespace as a result of the Merger.
As discussed above, the Boards of Directors of both Telespace and AmeriCom have
unanimously approved the Merger. The Majority Stockholders have also approved
the Merger. However, pursuant to the Merger Agreement, the Merger may be
abandoned, even after stockholder approval has been obtained, if, among other
things, more than 8% of the outstanding shares of Telespace request appraisal
rights.
Appraisal rights are available to stockholders of AmeriCom and stockholders of
Telespace in connection with the Merger. Delaware law establishes the procedures
to be followed and failure to do so may result in the loss of all appraisal
rights. Please carefully review "Dissenting Stockholders' Right of Appraisal"
set forth below.
Principal Reasons for Merger
The Board believes that the best interests of AmeriCom and its stockholders will
be served by merging with and into Telespace. The principal reasons for merging
with Telespace are to provide access to additional working capital and to
develop an active trading market with the liquidity provided by an
Over-The-Counter ("OTC") Bulletin Board listing.
<PAGE>4
After the Merger, the Telespace OTC Bulletin Board listing will continue with
Telespace assuming AmeriCom's reporting status under the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"). As a result, AmeriCom and its
stockholders will benefit from the liquidity provided by being an OTC Bulletin
Board listed company as well as the disclosure benefits provided by being a
reporting company under the Exchange Act.
In addition, Telespace currently holds capital investment commitments of
approximately $500,000, contingent upon the issuance of a qualification permit
and fairness order by the California Department of Corporations, which would be
available to AmeriCom upon completion of the Merger.
Other than the minimal dilutive effect of the Merger on AmeriCom's stockholders,
less than 1% of the outstanding shares, management believes there are no
material disadvantages to the Merger.
Telespace Business
Telespace was incorporated under the laws of the state of Delaware on May 31,
1989. Telespace was originally incorporated under the name Specialistics Inc. In
July of 1996 its name was changed from "Specialistics Inc." to "Eastern Group
International Co., Ltd." and in December of 1996 was changed from "Eastern Group
International Co., Ltd." to "Telespace Limited".
Since inception, Telespace has conducted research regarding the development of
telecommunications in Asia as well as concepts in web design and Internet
advertising features for international markets. However, Telespace has not
generated any revenues from its business operations. Telespace is listed for
trading on the NASD's OTC Bulletin Board under the trading symbol "TLTD".
Telespace's executive offices are located at 16910 Dallas Parkway, Suite 100,
Dallas, Texas 75248, and their phone number is (972) 248-1922.
AmeriCom Business
AmeriCom was incorporated under the laws of the state of Delaware on May 4,
1994. AmeriCom's primary business is providing systems for the delivery of
advertisements and merchandising on Internet Web sites through its proprietary
technology systems, AdCast(R) and TrueManagement(R). The AdCast system is the
primary product offered by AmeriCom. The AdCast system is an advertising
delivery system which delivers non-scrollable advertisement frames
("billboards") which can contain animated ads lasting from 15 to 90 seconds in
length with audio, video and pop-up frame capability to Web sites which have
agreed to the placement of a billboard on such Web site ("AdCast Affiliates") as
well as hot links to other Web sites. The AdCast advertisement space appears on
an AdCast Affiliate Site each time a visitor to that Web site logs on. The ad
appears as an outlined frame in which an advertisement is run. Because the
AdCast frame does not scroll, complete viewing of the advertisement is likely
despite the typical paging and scrolling that occurs during a Web site visit.
<PAGE>5
The TrueManagement system provides management tools, analytical reports, and
operating control data pertaining to advertising on the Internet for users of
the AdCast system.
AmeriCom contracts with Web site owners to allow placement of the AdCast
billboards on the Web sites and AmeriCom sells the billboard space to
advertisers and sponsors. The AdCast Affiliates receive a fee based on the
number of visitors to their Web site and advertising credits which can be used
to promote their Web site on other AdCast Affiliate Sites.
The pricing structure for the AdCast advertising rates is based on spot minute
increments, similar to spot pricing on television. As with television, billboard
ads can vary in length. Unlike television, however, AdCast billboard ads play
only when a viewer is watching i.e. a Web site visitor has logged on. The
billboard ad delivery is initiated by the act of visiting an AdCast Affiliate
Site.
AmeriCom began online operation on February 1, 1999 showing unpaid
advertisements while it tests the AdCast system. This phase is commonly referred
to as the "beta" phase of development. AmeriCom is currently displaying
approximately 900,000 unpaid ads per day. These ads are displayed on the AdCast
Affiliate Sites and are ads promoting products of AmeriCom's sponsorship
advertiser, advertisers with whom AmeriCom has entered into commission based
contracts and cross-promotion of AdCast Affiliate Sites.
AmeriCom anticipates that it will receive future revenue from (i) its
sponsorship ad program which provides display of a sponsor's logo on AdCast
Affiliate Sites (ii) sale of advertising space on the billboard ads displayed on
AdCast Affiliate Sites and (iii) commissions from sales of merchandise from ads
displayed. AmeriCom has one member in its sponsorship program and has received
negligible revenues from sales of merchandise and no revenue from the sale of
paid advertisements.
AmeriCom's main target industry to date has been to aggregate site owners of Web
sites concerning the sport of wrestling. AmeriCom believes that it has almost
saturated this market and intends to focus on more diverse site groups in the
future.
AmeriCom currently conducts its business through six subsidiaries: RMC
Diversified Associates International, Ltd. ("DAI"), AdCast, Inc., AdCast Canada
Inc., Kiosk Software, Inc., Hiero Graphix and Telespace, Inc. (which is not
affiliated with Telespace).
On July 2, 1999 AmeriCom entered into a Memorandum of Understanding ("MOU") with
Digicities, Inc. ("Digicities"). Pursuant to the MOU, AmeriCom will acquire all
of the outstanding common stock of Digicities in exchange for 3,500,000 shares
of AmeriCom common stock. Consummation of this transaction is subject to various
terms and conditions including the signing of a definitive acquisition agreement
approved by both companies Boards of Directors and all necessary stockholder
approvals. This transaction is also contingent upon completion of the merger
between AmeriCom and Telespace, described above. After the acquisition of
Digicities, AmeriCom will be the parent company and Digicities will continue to
operate as a wholly-owned subsidiary of AmeriCom.
<PAGE>6
Digicities is located in Santa Monica, California and is a one year old company
that designs and supports Internet websites and conducts direct sales campaigns
to promote its services. Digicities currently has approximately 10,000 web site
customers.
AmeriCom's executive offices are located at 1303 Grand Avenue, Arroyo Grande,
California 93420 and the phone number is (805) 542-6700.
High and Low Bids of Telespace Common Stock
As of _________, 1999, the day preceding the approval of the Merger by
AmeriCom's Board of Directors, the low reported bid price of Telespace's common
stock, as furnished by the NASD's OTC Bulletin Board, was $___ per share and the
high reported bid price was $___ per share.
Shares of AmeriCom common stock are not admitted to trading on any public
market.
Dissenting Stockholders' Right of Appraisal
Any AmeriCom stockholder is entitled to be paid the fair value of its shares in
accordance with Section 262 of the DGCL if the stockholder neither votes in
favor of nor consents in writing to the Merger. A brief summary of the
provisions of DGCL Section 262 are set forth below and the complete text of said
Section is set forth in Exhibit B.
Since the Merger has been approved by the required vote of AmeriCom's
stockholders, effective 20 days from the mailing of this Information Statement
(unless the merger is abandoned or terminated) each holder of shares of AmeriCom
common stock who asserts appraisal rights and who follows the procedures set
forth in Section 262 of the DGCL, will be entitled to have his or her shares of
AmeriCom common stock purchased by AmeriCom for cash at their fair market value.
A holder who wishes to exercise their appraisal rights must mail or deliver a
written demand to AmeriCom at 1303 Grand Avenue, Arroyo Grande, California
93420, with a copy to Roger D. Linn, Esq., Bartel Eng Linn & Schroder, 300
Capitol Mall, Suite 1100, Sacramento, California 95814, on or before 10:00 a.m.
Eastern Daylight Time on August , 1999. The demand should reasonably inform
AmeriCom of the identity of the dissenting stockholder and his intention to
exercise appraisal rights. Any stockholder who does not follow the foregoing is
not entitled to payment for his shares under the DGCL.
AmeriCom will pay each stockholder requesting appraisal rights who complied with
the requirements of Section 262 the amount it estimates to be the fair value of
the stockholder's shares, plus accrued interest (computed from the effective
date of the action until the date of payment) upon his surrender of stock
certificates representing the shares to AmeriCom.
A stockholder requesting appraisal rights may notify AmeriCom in writing of his
estimate of the fair value of the shares and the amount of interest due and
demand payment of his estimate, less any payment made pursuant to Section 262 of
<PAGE>7
DGCL, or reject AmeriCom's offer of fair value of the stockholder's shares made
pursuant to DGCL Section 262.
Within 120 after the Effective Date of the Merger, any stockholder who has
perfected his appraisal rights and complied with Section 262 of DGCL and who is
otherwise entitled to appraisal rights may file a petition in the Delaware Court
of Chancery demanding a determination of the value of the shares held by all
stockholders entitled to an appraisal. Upon the filing of any such petition by a
stockholder, a copy of the petition must be delivered to AmeriCom. AmeriCom
must, within 20 days after such delivery, file in the office of the Register in
Chancery in which the petition was filed a duly verified list of the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of the shares have not been reached.
If the petition for an appraisal is timely filed, the Delaware Court of Chancery
will hold a hearing to determine the stockholders of AmeriCom entitled to
appraisal rights and will appraise the shares owned by such stockholders. Such
stockholders have a right to receive the "fair value" of their shares, exclusive
of any element of value arising from the accomplishment or expectation of the
Merger and exclusive of any claims for unfair dealing or violation of fiduciary
duty, together with a fair rate of interest, if any, to be paid thereon.
Following the appraisal proceeding, the Court will direct AmeriCom to make
payment of the fair value of such shares as so determined, together with a fair
rate of interest, if any, on such shares to the stockholders entitled thereto.
Payment will be made upon surrender of the stock certificates representing the
shares delivered to AmeriCom.
Any stockholder who has demanded appraisal rights in compliance with Section 262
will not, after the Effective Date, be entitled to vote his shares for any
purpose nor be entitled to the payment of dividends or other distributions on
his shares (other than those payable as of a date prior to the Effective Date).
The foregoing summary does not purport to provide a comprehensive statement of
the procedures to be followed by a stockholder who seeks appraisal rights and
payment of the fair value of his shares of AmeriCom common stock. DGCL
establishes the procedures to be followed and failure to do so may result in the
loss of all appraisal rights. Accordingly, each stockholder who might desire to
exercise appraisal rights should carefully consider and comply with the
provisions of this section, the full text of which is set out in Exhibit B to
this Information Statement and consult his legal advisor.
The discussion contained herein is qualified in its entirety by and should be
read in conjunction with the Merger Agreement.
Federal Income Tax Consequences of the Merger
The Merger is intended to be a tax free reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code").
However, no foreign, state or local tax considerations are addressed herein. IN
VIEW OF THE VARYING NATURE OF THOSE TAX CONSEQUENCES, EACH STOCKHOLDER IS URGED
<PAGE>8
TO CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE
MERGER, INCLUDING THE APPLICABILITY OF FEDERAL, STATE, LOCAL OR FOREIGN TAX
LAWS. This discussion is based on the Code, the applicable Treasury Regulations
promulgated thereunder, judicial authority and current administrative rulings
and practices in effect on the date of this Information Statement.
The Merger is expected to qualify as a reorganization within the meaning of
Section 368(a) of the Code, with the following tax consequences:
No gain or loss will be recognized to the stockholders of AmeriCom upon the
receipt of Telespace common stock solely in exchange for their AmeriCom common
stock. The basis of the shares of Telespace common stock received by
stockholders of AmeriCom will be, in each instance, the same as the basis of the
AmeriCom common stock surrendered in exchange therefor (ss.358(a)(1)). The
holding period of the Telespace common stock to be received by the stockholders
of AmeriCom will include the holding period of the AmeriCom common stock
surrendered in exchange therefor, provided the shares of AmeriCom common stock
were held as a capital asset on the date of the exchange.
The foregoing is only a summary of the federal income tax consequences and is
not tax advice. AmeriCom has not obtained and will not seek a ruling from the
Internal Revenue Service or an opinion of legal or tax counsel with respect to
the tax consequences of the Merger. Stockholders should consult their own tax
advisors regarding the specific tax consequences to them of the Merger,
including the applicability of the laws of any state or other jurisdiction.
Tax Consequences of Dissenting Stockholders' Receiving Appraisal Rights
A stockholder requesting appraisal rights under Section 262 of the DGCL and who
exercises his or her rights and receives payment for such shares in cash
generally will recognize capital gain or loss measured by the difference between
the amount of cash received and such stockholder's basis in the shares. However,
different tax consequences could apply depending upon the stockholder's
particular circumstances. Accordingly, each stockholder should consult his or
her own tax advisors regarding the specific tax consequences of exercising
appraisal rights under his or her particular circumstances.
AmeriCom USA, Inc.
By Order of the Board of Directors
Helen E. Cooper, Secretary
Arroyo Grande, California
August __, 1999
EXHIBIT A
MERGER AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
MERGER AGREEMENT
AND PLAN OF REORGANIZATION
AmeriComUSA, Inc.
A Delaware Corporation
and
Telespace, Limited
A Delaware Corporation
July 1, 1999
<PAGE>
TABLE OF CONTENTS
PREAMBLE..................................................................1
DEFINITIONS...............................................................1
PRELIMINARY STATEMENT.....................................................3
ARTICLE I. THE MERGER..........................................3
Section 1.1. The Merger..........................................3
Section 1.2. Closing.............................................4
Section 1.3. Certificate.........................................4
Section 1.4. Bylaws..............................................4
Section 1.5. Directors...........................................4
Section 1.6. Officers............................................4
ARTICLE II. CONVERSION..........................................4
Section 2.1. AmeriCom's Shares...................................4
Section 2.2. Stock Options.......................................5
Section 2.3. AmeriCom Convertible Subordinated Promissory Notes..6
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF AMERICOM..........6
Section 3.1. Organization, Authority and Qualification...........6
Section 3.2. Ownership of Shares; Subsidiaries...................7
Section 3.3. Financial Statement, Financial Condition. ..........7
Section 3.4. Title of Properties.................................7
Section 3.5. Inventory...........................................7
Section 3.6. Accounts Receivable.................................8
Section 3.7. Interest in AmeriCom's Property.....................8
Section 3.8. Real Property.......................................8
Section 3.9. Absence of Specific Changes.........................8
Section 3.10. Permit, Licenses, and Franchises....................9
Section 3.11. Judgments, Decrees, or Orders Restraining Business..9
Section 3.12. Insurance..........................................10
Section 3.13. Labor Disputes.....................................10
Section 3.14. Environmental Compliance; Hazardous Materials......10
Section 3.15. Power of Attorney..................................10
Section 3.16. No Violation of Other Instruments..................10
Section 3.17. Contracts..........................................11
Section 3.18. Litigation.........................................11
Section 3.19. Taxes..............................................11
Section 3.20. Employee Benefit Matters..........................12
<PAGE>
Section 3.21. AmeriCom Documents.................................12
Section 3.22. Disclosure.........................................12
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF TELESPACE........12
Section 4.1. Organization, Authority and Qualification..........12
Section 4.2. Ownership of Shares; Subsidiaries..................13
Section 4.3. Financial Statement, Financial Condition. .........13
Section 4.4. Accounts Receivable................................13
Section 4.5. Interest in Telespace's Property...................13
Section 4.6. Real Property......................................13
Section 4.7 Absence of Undisclosed Liabilities.................14
Section 4.8. Absence of Specific Changes........................14
Section 4.9. Permit, Licenses, and Franchises...................15
Section 4.10. Judgments, Decrees, or Orders Restraining Business.15
Section 4.11. Power of Attorney..................................15
Section 4.12. No Violation of Other Instruments..................15
Section 4.13. Contracts..........................................15
Section 4.14. Litigation.........................................16
Section 4.15. Taxes..............................................16
Section 4.16. Employee Benefit Matters..........................16
Section 4.17. Reporting Requirements............................17
Section 4.18. Records...........................................17
Section 4.19. Shareholder Relations.............................17
Section 4.20. Disclosure.........................................17
ARTICLE V. COVENANTS..........................................18
Section 5.1 Covenants of Telespace.............................18
Section 5.2. Covenants of AmeriCom..............................20
ARTICLE VI. CONDITIONS TO THE MERGER...........................22
Section 6.1. Conditions Precedent to AmeriCom's Obligation to
Close.............................................22
Section 6.2. Additional Conditions to the Obligations of
AmeriCom..........................................23
Section 6.3. Conditions Precedent to Telespace's Obligation to
Close.............................................23
ARTICLE VII SURVIVAL OF WARRANTIES.............................24
ARTICLE VIII. TERMINATION OF AGREEMENT...........................24
Section 8.1. Termination by AmeriCom............................24
Section 8.2. Termination........................................24
Section 8.3. Right to Proceed...................................25
Section 8.4. Return of Documents................................26
Section 8.5. Cost in the Event of Termination...................26
<PAGE>
ARTICLE IX. ADDITIONAL AGREEMENTS..............................26
Section 9.1. Expenses...........................................26
Section 9.2. Publicity..........................................26
Section 9.3. Approval of Telespace Shareholders.................26
Section 9.4. Approval of AmeriCom Shareholders..................26
ARTICLE X. MISCELLANEOUS......................................27
Section 10.1. Governing Law; Counterparts........................27
Section 10.2. Notices............................................27
Section 10.3. Waiver.............................................27
Section 10.4. Binding Effect.....................................28
Section 10.5. No Third Party Beneficiaries.......................28
Section 10.6. Amendments.........................................28
<PAGE>A-1
MERGER AGREEMENT
AND PLAN OF REORGANIZATION
PREAMBLE
This merger agreement and plan of reorganization (the "Agreement") is
made as of July 1, 1999, between AmeriComUSA, Inc., a Delaware corporation
("AmeriCom"), and Telespace, Limited, a Delaware corporation ("Telespace").
DEFINITIONS
In this Agreement, unless the context otherwise requires:
(a) "Action" shall mean any action, suit, litigation, complaint,
counterclaim, claim, petition, mediation contest, or administrative proceeding,
whether at law, in equity, in arbitration or otherwise, and whether conducted by
or before any Government or other Person.
(b) "Closing Date" means August 15, 1999, or such later date on or
before the Termination Date as the parties may agree to in writing.
(c) "Dissenting Shares" shall have the meaning set forth in Section 262
of the Delaware General Corporation Law.
(d) "Effective Time" shall mean the date on which a certificate of
merger is filed in the office of the Secretary of State of the State of
Delaware.
(e) "Exchange Act" means the Securities Exchange Act of 1934.
(f) "Forum" shall mean any federal, national, state, local, municipal or
foreign court, governmental agency, administrative body or agency, tribunal,
private alternative dispute resolution systems, or arbitration panel.
(g) "Government" shall mean any federal, national, state, provincial,
local, municipal, or foreign government or any department, commission, board,
bureau, agency, instrumentality, unit, or taxing authority thereof.
(h) "Laws" shall mean all federal, national, state, provincial, local,
municipal or foreign constitutions, statutes, rules, regulations, norms,
ordinance, acts, codes, legislation, treaties, conventions, common law
principles, judicial decisions and similar laws and legal requirements, whether
of the United States of America or any other jurisdiction as in effect form time
to time.
<PAGE>A-2
(i) "Liability" shall mean any liability or obligation whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due.
(j) "NASD" means the National Association of Securities Dealers, Inc.
(k) "Order" shall mean all applicable orders, writs, judgments,
injunctions, decrees, rulings, consent agreements, and awards of or by any Forum
or entered by consent of the party to be bound.
(l) "Person" shall include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an unincorporated
organization and a Government.
(m) "SEC" means the Securities and Exchange Commission.
(n) "Surviving Corporation" shall mean Telespace Limited.
(o) "Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of whatever
nature, including, without limitation, income, gross receipts, excise, property,
sales, use, customs, value added, consumption, transfer, license, payroll,
employee income, withholding, social security, and franchise taxes, now or
hereafter imposed or levied by the United States of America or any Government or
by any department, agency or other political subdivision or taxing authority
thereof or therein, all deposits required in connection therewith, and all
interests, penalties, additions to tax, and other similar Liabilities with
respect thereto.
(p) "Contract" shall mean all existing written and oral material
agreements and commitments, including, without limitation, all employment and
consulting contracts, union contracts, distributorship agreements, agreements
with suppliers and customers (except purchase or sale orders entered into in the
ordinary course of business involving the purchase or sale of goods or services
for not more than Ten Thousand Dollars ($10,000.00) and for a term of not more
than twelve (12) months), leases, licenses, employee benefit plans, deferred
compensation agreements, indentures, notes, bonds, mortgages, security
agreements, loan agreements, guarantees, franchise agreements, agreements in
respect of the issuance, sale, repurchase or transfer of capital stock, bonds or
other securities, power of attorney, and any contract which involves a payment
by Telespace of more than Ten Thousand Dollars ($10,000.00) or has a term or
requires performance over a period of more than ninety (90) days.
(q) "AmeriCom Subsidiary" shall mean all such Persons required to be
disclosed in Schedule 3.2(b) pursuant to Section 3.2(b).
(r) "Termination Date" has the meaning Section 8.2(i) specifies.
<PAGE>A-3
PRELIMINARY STATEMENT
The parties to this Agreement have determined it is in their best
long-term interests to effect a Plan of Reorganization pursuant to which:
(a) AmeriCom will merge into Telespace on the terms and subject to the
conditions set forth herein;
(b) Immediately after the Effective Date, the stockholders of AmeriCom
will hold approximately 99% of the issued and outstanding capital stock of the
Surviving Corporation;
(c) The respective Boards of Directors of AmeriCom and Telespace have
approved the Merger, and declared advisable and in the best interests of their
respective stockholders; and
(d) The Merger transaction described in this Agreement is intended to be
a tax-free reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I.
THE MERGER
Section 1.1. The Merger.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as hereinafter defined), AmeriCom shall
be merged with and into Telespace (the "Merger") in accordance with the General
Corporation Law of the State of Delaware ("Delaware Law"), whereupon the
separate existence of AmeriCom shall cease, and Telespace shall continue as the
surviving corporation (the "Surviving Corporation").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger set forth herein,
Telespace and AmeriCom will file a Certificate of Merger with the Secretary of
State of the State of Delaware and make all other filings or recordings required
by Delaware Law in connection with the Merger. The Merger shall become effective
at such time as the certificate of merger is duly filed with the Secretary of
State of the State of Delaware or at such later time as is agreed upon by
AmeriCom and Telespace and specified in the certificate of merger (the
"Effective Time").
(c) The Merger shall have the effects set forth in Section 259
of the Delaware Law.
<PAGE>A-4
(d) The Merger is intended to be a tax-free reorganization
pursuant to Section 368(a)(1)(A) of the Code and the regulations promulgated
under Section 368 of the Code.
Section 1.2. Closing. On or before the Closing Date, the parties hereto
will take all actions necessary to (i) effect the Merger (including as permitted
by Delaware Law and the California Corporations Code, the execution of the
Certificate of Merger meeting the requirement of Delaware Law and providing that
the Merger will become effective at the Effective Time; (ii) the transmitting
for filing of the Certificate of Merger with the Secretary of State of Delaware;
(iii) satisfying the conditions set forth in Article V; and (iv) all
transactions this Agreement contemplates, as the case may be (all those actions
collectively being the "Closing"). The Closing will take place at the office of
Bartel Eng Linn & Schroder in Sacramento, California, at 10:00 a.m., Pacific
Time, on the Closing Date, or at such other time and place as the parties may
agree to in writing.
Section 1.3. Certificate. The Certificate of Incorporation of Telespace
in effect on the Effective Time of the Merger will become the Certificate of
Incorporation of the Surviving Corporation. From and after the Effective Time of
the Merger, said Certificate of Incorporation, as it may be amended from time to
time as provided by law, will be, and may be separately certified as, the
Certificate of Incorporation of the Surviving Corporation.
Section 1.4. Bylaws. The Bylaws of Telespace in effect on the
Effective Time of the Merger will be the Bylaws of the Surviving Corporation
until they are thereafter duly altered, amended, or repealed.
Section 1.5. Directors. The directors of AmeriCom immediately prior to
the Effective Time of the Merger will be the directors of the Surviving
Corporation. They will hold office until their successors have been elected and
qualified.
Section 1.6. Officers. The officers of AmeriCom immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation, each
of such officers to serve until his or her successor, if there is to be one, is
duly qualified.
ARTICLE II.
CONVERSION
Section 2.1. AmeriCom's Shares.
(a) On the Effective Time, each share of AmeriCom Common Stock,
$0.001 par value, issued and outstanding immediately before the Effective Time,
will by virtue of the Merger and without action on the part of the shareholder,
be converted into one (1) share of Common Stock, $0.00001 par value, of the
Surviving Corporation.
(b) After the Effective Time, each holder of AmeriCom Common
Stock certificates, upon surrender thereof to Securities Transfer Corporation,
(the "Exchange Agent") shall be entitled to receive in exchange therefor a
certificate or certificates representing the same number
<PAGE>A-5
of shares of Telespace Common Stock. No certificates or scrip for fractional
shares of AmeriCom Common Stock have been or will be issued. Until surrendered
and exchanged, each AmeriCom share certificate shall, after the Effective Time,
be deemed for all corporate purposes to represent only the right to receive the
same number of shares of Telespace Common Stock into which the AmeriCom Common
Stock shall have been converted pursuant to the Merger.
(c) As of the Effective Time, no transfer of the shares of
AmeriCom Common Stock outstanding prior to the Effective Time shall be made on
the stock transfer books of the Surviving Corporation. If, after the Effective
Time, AmeriCom stock certificates are presented to AmeriCom or the Surviving
Corporation, they shall be exchanged pursuant to Section 2.1(b) above.
Section 2.2. Stock Options.
(a) As soon as practicable following the date of this Agreement
but before the Closing Date, the Board of Directors of AmeriCom and Telespace
shall adopt such resolutions or take such other actions as may be required to
effect the following:
(i) At the Effective Time, Telespace shall assume
AmeriCom Stock Options granted under the AmeriCom Stock Option Plan and shall
substitute in AmeriCom's place as a party to the AmeriCom Stock Options;
(ii) The parties shall adjust the terms of all outstanding
AmeriCom Stock Options granted under the AmeriCom Option Plan and the terms of
the AmeriCom Option Plan, to provide that at the Effective Time, each AmeriCom
Stock Option outstanding immediately prior to the Effective Time shall be deemed
to constitute an option to acquire, on the same terms and conditions as were
applicable under such AmeriCom Stock Option (subject to adjustments and lapsing
of restrictions, vesting or acceleration of exercisability of AmeriCom Stock
Options required by this Section 2.2), the same number of shares of the
Surviving Corporation's Common Stock as the holder of such AmeriCom Stock Option
would have been entitled to receive pursuant to the Merger had such holder
exercised such AmeriCom Stock Option in full immediately prior to the Effective
Time; and
(iii) Make such other changes to the AmeriCom Option Plan
as it deems appropriate to give effect to the Merger.
(b) Prior to the Closing, AmeriCom shall seek consent from each
of its stock option holders agreeing to convert his/her AmeriCom Stock Options
into stock options exercisable into Telespace Common Stock.
(c) As soon as practicable after the Effective Time, the
Surviving Corporation shall deliver to the holders of AmeriCom Stock Options
appropriate notices setting forth such holders' rights pursuant to the AmeriCom
Option Plan and the agreements evidencing the grants of such AmeriCom Stock
Options shall continue in effect on the same terms and conditions.
<PAGE>A-6
(d) The Surviving Corporation shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Surviving
Corporation's Common Stock for delivery on exercise of AmeriCom Stock Options
assumed in accordance with this Section 2.2.
Section 2.3. AmeriCom Convertible Subordinated Promissory Notes.
(a) As soon as practicable following the date of this Agreement
but before the Closing Date, the Board of Directors of AmeriCom and Telespace
shall adopt such resolutions or take such other actions as may be required to
adjust the terms of the AmeriCom Convertible Subordinated Promissory Notes (the
"Notes") to provide that after the Effective Time, such Notes shall be
convertible into shares of Telespace Common Stock, on the same terms and
conditions as provided in the Notes.
(b) Prior to the Closing, AmeriCom shall seek consent from the
holders of the Notes to allow the Notes to be convertible into Telespace Common
stock under identical terms and conditions, as originally provided for in the
Notes
(c) The Surviving Corporation shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Telespace
Common Stock for delivery upon conversion of the Notes.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF AMERICOM
AmeriCom represents and warrants to, and agrees with, Telespace that all
the following representations and warranties in this Article III are as of the
date of this Agreement, and will be, as amended or supplemented pursuant to
Section 6.3 on the Closing Date, true and correct:
Section 3.1. Organization, Authority and Qualification
(a) AmeriCom is duly organized, validly existing, and in good
standing under the laws of Delaware, and has the corporate power to own all of
its properties and assets and to carry on its business as it is now being
conducted. AmeriCom is duly qualified to do business as a foreign corporation
and is in good standing in the jurisdictions listed in Schedule 3.1, and, except
as set forth in Schedule 3.1, neither the ownership of its property nor the
conduct of its business requires it to be qualified to do business in any other
jurisdiction.
(b) AmeriCom's Board of Directors has authorized the execution of
this Agreement, and AmeriCom has the corporate power and is duly authorized to
merge AmeriCom into Telespace pursuant to this Agreement.
<PAGE>A-7
Section 3.2. Ownership of Shares; Subsidiaries.
(a) AmeriCom's authorized capital stock consists of 100,000,000
shares of Common Stock, $0.001 par value, of which 33,265,756 shares are issued
and outstanding and 20,000,000 shares of Preferred Stock, $0.001 par value, of
which no shares are issued and outstanding. All issued and outstanding shares
have been validly issued in full compliance with all federal and state
securities laws, are fully paid and nonassessable, and have voting rights.
Except as set forth in Schedule 3.2(a), there are no outstanding subscriptions,
options, rights, warrants, convertible securities, or other agreements or
commitments obligating AmeriCom to issue or to transfer from treasury any
additional shares of its capital stock of any class.
(b) AmeriCom does not own or have an interest, direct or
indirect, or any commitment to purchase or otherwise acquire, any capital stock
or other equity interest, direct or indirect, in any other Person, except as set
forth in Schedule 3.2(b). All such interests so set forth are owned of record
and beneficially by AmeriCom as set forth in Schedule 3.2(b) and are duly
authorized, validly issued, fully paid and nonassessable, and were authorized,
offered, issued and sold in accordance with all applicable securities and other
Laws.
Section 3.3. Financial Statement, Financial Condition. The balance sheet
of AmeriCom as of March 31, 1999 ("AmeriCom Current Balance Sheet ") and the
related statement of profits and losses through March 31, 1999 and for the last
two (2) fiscal years then ended, prepared by AmeriCom, copies of which have been
delivered by AmeriCom to Telespace, fairly present the financial position of
AmeriCom as of that date and the results of operations for March 31, 1999, and
have been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with that of preceding years.
Section 3.4. Title of Properties. Except as set forth in Schedule 3.4,
and except for the lien for any current taxes or assessments not yet delinquent,
AmeriCom owns free and clear of any liens, claims, charges, options, or
encumbrances all the property reflected on its books at the AmeriCom Current
Balance Sheet dated March 31, 1999 ("AmeriCom Balance Sheet Date") and all
property acquired since that date, except such property as has been disposed of
in the ordinary course of business consistent with prior practices of AmeriCom
or with Telespace's written consent. For purposes of this Section 3.4, a
disposition of any single asset (other than inventories) carried on the books of
AmeriCom at more than $10,000 will be considered to be a disposition not in the
ordinary course of business.
Section 3.5. Inventory. The inventories of AmeriCom and each AmeriCom
Subsidiary reflected on the AmeriCom Current Balance Sheet, as well as all
inventory items acquired since the AmeriCom Balance Sheet Date that are now the
property of AmeriCom or an AmeriCom Subsidiary, consist of raw materials,
supplies, work in process, and finished goods, of such quality and in such
quantities as are being used and will be usable or are being sold and will be
salable in the ordinary course of the business of AmeriCom and AmeriCom
Subsidiaries. These inventories exclude scrap, slow moving items, and obsolete
items, and are valued at the lower of cost or market value, determined in
accordance with generally accepted accounting principles consistently applied.
Since the AmeriCom Balance Sheet Date, AmeriCom and each AmeriCom Subsidiary
<PAGE>A-8
have continued to replenish these inventories in a normal and customary manner
consistent with prudent practice prevailing in the business.
Section 3.6. Accounts Receivable. Except as set forth in Schedule 3.6,
all notes and accounts receivable shown on the AmeriCom Current Balance Sheet
and all such receivables now held by AmeriCom are valid and collectible
obligations and were not and are not subject to any offset or counterclaim,
except for amounts reserved against such receivables which are reflected on the
AmeriCom Current Balance Sheet or otherwise set forth in Schedule 3.6. With
respect to notes and accounts receivable arising after the AmeriCom Balance
Sheet Date and now outstanding, (except for a percentage thereof equal to the
percentage which has been historically reserved against receivable amounts on
the AmeriCom Current Balance Sheet or in Schedule 3.6 for bad debts) constitutes
valid and collectible obligations on such AmeriCom Current Balance Sheet.
Section 3.7. Interest in AmeriCom's Property. Except as set forth in
Schedule 3.7, no officer, director, or shareholder of AmeriCom or any AmeriCom
Subsidiary has any interest in any property, real or personal, tangible or
intangible, including copyrights, trademarks, or trade names, used in or
pertaining to the business of AmeriCom or any AmeriCom Subsidiary.
Section 3.8. Real Property. AmeriCom has good title to all of the real
property reflected in the AmeriCom Current Balance Sheet as owned by AmeriCom,
free and clear from all defects and liens, except as may be set forth in the
notes to the AmeriCom Current Balance Sheet or in Schedule 3.8. Schedule 3.8
lists all real property, whether owned or not owned by AmeriCom, listing with
respect to each parcel the street address and the owner or lessor.
Section 3.9. Absence of Specific Changes. Except as set forth in
Schedule 3.9, since the AmeriCom Balance Sheet Date there has not been:
(a) Any change in the business, personnel, results of operations,
assets, financial condition, or manner of conducting the business of AmeriCom or
any AmeriCom Subsidiary other than changes in the ordinary course of business,
none of which has had an adverse effect on the business, results of operations,
assets, financial condition, or prospects of AmeriCom or any AmeriCom
Subsidiary;
(b) Any damage, destruction, or loss (whether or not covered by
insurance) adversely affecting any aspect of the business or operations of
AmeriCom or any AmeriCom Subsidiary;
(c) Any direct or indirect redemption or other acquisition by
AmeriCom of any of AmeriCom's shares of capital stock of any class, or any
declaration, setting aside, or payment of any dividend or other distribution of
AmeriCom's capital stock of any class;
<PAGE>A-9
(d) Any increase in the compensation payable or to become payable
by AmeriCom or any AmeriCom Subsidiary to any of its officers, employees, or
agents, other than the normal increases granted in the ordinary course of
business;
(e) Any option to purchase or other right to acquire stock of any
class of AmeriCom or any AmeriCom Subsidiary granted by AmeriCom or any AmeriCom
Subsidiary to any Person (other than as specified in Schedule 3.2(a) above);
(f) Any employment, bonus, or deferred compensation agreement
entered into between AmeriCom or any AmeriCom Subsidiary and any of its
directors, officers, or other employees or consultants;
(g) Any issuance of capital stock of any class by AmeriCom or any
AmeriCom Subsidiary;
(h) Any indebtedness incurred by AmeriCom or any AmeriCom
Subsidiary for borrowed money or any commitment to borrow money entered into by
AmeriCom or any guaranty given by AmeriCom;
(i) Any amendment to AmeriCom's Certificate of Incorporation or
Bylaws;
(j) Any delayed or postponed payment of any accounts payable or
other Liabilities outside the ordinary course of business; or
(k) Any discontinued or determined to be discontinued selling of
any products or services offered by AmeriCom, the sales of which have been
material to AmeriCom.
Section 3.10. Permit, Licenses, and Franchises. AmeriCom and each
AmeriCom Subsidiary have obtained all necessary permits, licenses, franchises,
and other authorizations and have complied with all laws applicable to the
conduct of their business in the manner and in the areas in which business is
presently being conducted; and all such permits, licenses, franchises, and
authorizations are valid and in full force and effect. Neither AmeriCom nor any
AmeriCom Subsidiary has engaged in any activity that would cause revocation or
suspension of any such permits, licenses, franchises, or authorizations; no
action or proceeding contemplating the revocation or suspension of any of them
is pending or threatened; and no approvals or authorizations will be required
after the consummation of the Merger to permit AmeriCom to continue its business
as presently conducted.
Section 3.11. Judgments, Decrees, or Orders Restraining Business.
Neither AmeriCom nor any AmeriCom Subsidiary is a party to or subject to any
judgment, decree, or Order entered in any suit or proceeding brought by any
governmental agency or by any other Person, enjoining AmeriCom or any AmeriCom
Subsidiary with respect to any business practice, the acquisition of any
property, or the conduct of business in any area.
<PAGE>A-10
Section 3.12. Insurance. During each of the past two (2) fiscal years,
AmeriCom and each AmeriCom Subsidiary have been adequately insured by
financially sound and reputable insurers with respect to risks normally insured
against and in amounts normally carried by companies similarly situated; all
such policies are in full force and effect; all premiums due on such policies
have been fully paid; and no notice of cancellation or termination has been
received with respect to any policy.
Section 3.13. Labor Disputes. No work stoppage or other labor dispute
with respect to AmeriCom or any AmeriCom Subsidiary is pending or threatened,
and no application for certification of a collective bargaining agent is pending
or threatened.
Section 3.14. Environmental Compliance; Hazardous Materials. AmeriCom
and each AmeriCom Subsidiary have complied in all material respects with, and
have not been cited for any violation of, federal, state, and local
environmental protection laws and regulations; and no material capital
expenditures will be required for compliance with any federal, state, or local
laws or regulations now in force relating to the protection of the environment.
As used in this paragraph, "Hazardous Material" means any hazardous or toxic
substance, material, or waste that is regulated by any federal authority or by
any state or local authority where the substance, material, or waste is located.
There are no underground storage tanks located on the real property described in
Schedule 3.8 in which any Hazardous Material has been or is being stored, nor
has there been any spill, disposal, discharge, or release of any Hazardous
Material into, upon, or over that real property or into or upon ground or
surface water on that real property. There are no asbestos containing materials
incorporated into the buildings or interior improvements that are part of that
real property or into other assets of AmeriCom or any AmeriCom Subsidiary, nor
is there any electrical transformer, fluorescent light fixture with ballasts, or
other equipment containing PCBs on that real property.
Section 3.15. Power of Attorney. AmeriCom has no powers of attorney
outstanding other than those issued in the ordinary course of business with
respect to insurance, tax, and customs matters.
Section 3.16. No Violation of Other Instruments. The execution and
delivery of this Agreement do not, and the consummation of the Merger will not,
(i) violate any provision of AmeriCom's Certificate of Incorporation or Bylaws;
(ii) violate any provision of, result in the acceleration of any obligation
under, or result in the imposition of any lien or encumbrance on any asset of
AmeriCom pursuant to the terms of any mortgage, note, lien, lease, franchise,
license, permit, agreement, instrument, order, arbitration award, judgment, or
decree; (iii) result in the termination of any license, franchise, lease, or
permit to which AmeriCom is a party or by which AmeriCom is bound; or (iv)
violate or conflict with any other restriction of any kind or character to which
AmeriCom is subject. AmeriCom's Board of Directors will take all actions
required by law or by AmeriCom's Certificate of Incorporation or Bylaws, or
otherwise required or necessary to authorize the execution and delivery of this
Agreement and to authorize the merger of AmeriCom with and into Telespace
pursuant to this Agreement.
<PAGE>A-11
Section 3.17. Contracts.
(a) Except as set forth in Schedule 3.17, all AmeriCom Contracts
have been entered into in the ordinary course of AmeriCom's business on
commercially reasonable terms, are valid and enforceable in all material
respects in accordance with their terms, are in full force and effect, and will
continue to be valid and enforceable and in full force and effect on identical
terms following the Effective Time. Except as set forth in Schedule 3.17, no
AmeriCom Contract is likely to result in a loss to AmeriCom upon completion of
the performance, and all AmeriCom Contracts can be fulfilled or performed by the
AmeriCom in accordance with their respective terms without undue or unusual
expenditures of money or effort. All AmeriCom Contracts are listed on Schedule
3.17, and true, correct and complete copies of all AmeriCom Contracts have been
delivered to Telespace.
(b) There are no existing material defaults, events of default or
events which, with the giving of notice or lapse of time, or both, would
constitute a material default by AmeriCom under any AmeriCom Contract. No event
has occurred which may hereafter give rise to any right of termination,
acceleration, damages or any other remedy under any AmeriCom Contract.
(c) To AmeriCom's knowledge, neither this Agreement, the Closing
nor the relationship between AmeriCom and Telespace has caused or is likely to
cause the termination, redetermination, or renegotiation of any AmeriCom
Contract.
Section 3.18. Litigation. Except as set forth in Schedule 3.18, no
Action is pending or, to the knowledge of AmeriCom, threatened against, by or
affecting AmeriCom or any AmeriCom Subsidiary.
Section 3.19. Taxes. Except as set forth in Schedule 3.19, AmeriCom has
duly and timely filed all federal, state, municipal, local and foreign, if any,
tax returns and reports (including returns for estimated tax), and all reports
and returns of all other Governments having jurisdiction (collectively,
"Returns") with respect to all Taxes (including, without limitation,
consolidated or combined Returns of some or all of AmeriCom and any AmeriCom
Subsidiary); all such Returns and reports show the correct and proper amount
due; and the Taxes shown on all Returns and reports and all tax assessments
received by AmeriCom or any AmeriCom Subsidiary have been paid to the extent
that such Taxes or estimates are due. AmeriCom has previously provided to
Telespace true, correct and complete copies of all Returns filed with respect to
the two (2) tax years preceding the date hereof. Except as set forth in Schedule
3.19, all Taxes imposed on AmeriCom and any AmeriCom Subsidiary by any
Government (including all deposits in connection therewith required by
applicable Law, and all interest and penalties thereon) which have become due
and payable by AmeriCom for all periods through the date hereof have been paid
in full, and adequate reserves for all other Taxes, whether or not due and
payable, and whether or not disputed, have been set up on the books of AmeriCom,
and such reserves will be adequate to pay all Taxes of AmeriCom for all periods
through the Closing. There is not now any proposed assessment against AmeriCom
or any AmeriCom Subsidiary of additional Taxes of any kind. AmeriCom is not a
party to any tax sharing or tax allocation agreement, understanding,
<PAGE>A-12
arrangement or commitment. There is no dispute or Action concerning any Tax
Liability of the AmeriCom raised by a Government in writing.
Section 3.20. Employee Benefit Matters. Except as set forth in Schedule
3.20, neither AmeriCom nor any AmeriCom Subsidiary (i) has established or
contributed to any pension, profit-sharing, option, other incentive plan, or any
other type of employee benefit plan, (ii) maintains or has maintained, is or was
a party to, and otherwise participates and has participated in, on its own
behalf or on behalf of any former employees, any pension, profit-sharing,
option, other incentive plan, or any other type of employee benefit plan, or
(iii) has any obligation to, or customary arrangement with, former employees, if
any, for bonuses, incentive compensation, vacations, severance pay, sick pay,
sick leave, insurance, service award, relocation, disability, tuition refund, or
other benefits, whether oral or written.
Section 3.21. AmeriCom Documents. The AmeriCom Common Stock is
registered under Section 12 of the Exchange Act and AmeriCom is subject to the
periodic reporting requirements of Section 13 of the Exchange Act. AmeriCom, is
and has been for the last 12 months, current in all filings required to be made
with the SEC. AmeriCom has heretofore provided Telespace copies of all forms,
reports and other documents filed by it under the Exchange Act since January 1,
1999.
Section 3.22. Disclosure. No representation or warranty by AmeriCom in
this Agreement and no statement by AmeriCom or any AmeriCom Subsidiary, by any
executive officer or other person or contained in any document, certificate, or
other writing furnished by or on behalf of AmeriCom to Telespace in connection
with this transaction, contains or will contain any untrue statement of material
fact, or omits or will omit to state any material fact necessary to make it not
misleading or to fully provide the information required to be provided in the
document, certificate, or other writing.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF TELESPACE
Telespace represents and warrants to, and agrees with, AmeriCom that all
the following representations and warranties in this Article IV are as of the
date of this Agreement, and will be, as amended or supplemented pursuant to
Section 6.1 on the Closing Date, true and correct:
Section 4.1. Organization, Authority and Qualification.
(a) Telespace is duly organized, validly existing, and in good
standing under the laws of Delaware, and has the corporate power to own all of
its properties and assets and to carry on its business as it is now being
conducted. Telespace is duly qualified to do business as a foreign corporation
and is in good standing in the jurisdictions listed in Schedule 4.1, and, except
as set forth in Schedule 4.1, neither the ownership of its property nor the
conduct of its business requires it to be qualified to do business in any other
jurisdiction.
(b) Telespace's Board of Directors has authorized the execution
of this Agreement, and Telespace has the corporate power and is duly authorized,
subject to the approval of this Agreement by its shareholders, to merge
<PAGE>A-13
AmeriCom into Telespace pursuant to this Agreement.
Section 4.2. Ownership of Shares; Subsidiaries.
(a) Telespace's authorized capital stock consists of 50,000,000
shares of Common Stock, $0.00001 par value, of which 10,000,005 shares are
issued and outstanding (prior to the proposed 1-for-8 reverse stock split). All
issued and outstanding shares have been validly issued in full compliance with
all federal and state securities laws, are fully paid and nonassessable, and
have voting rights. Except as set forth in Schedule 4.2, there are no
outstanding subscriptions, options, rights, warrants, convertible securities, or
other agreements or commitments obligating Telespace to issue any additional
shares of its Common Stock.
(b) Telespace does not have any subsidiary.
Section 4.3. Financial Statement, Financial Condition. The compilation
balance sheet of Telespace as of May 31, 1999 ("Telespace Current Balance Sheet
") and the related statement of profits and losses through May 31, 1999 and the
audited financial statements of Telespace for the last two (2) fiscal years
ended December 31, 1998 and 1997, prepared by S.W. Hatfield + Associates, copies
of which have been delivered by Telespace to AmeriCom, fairly present the
financial position of Telespace as of May 31, 1999 and the results of operations
for those years, and have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with that of preceding
years.
Section 4.4. Accounts Receivable. Except as set forth in Schedule 4.4,
all notes and accounts receivable shown on the Telespace Current Balance Sheet
and all such receivables now held by Telespace are valid and collectible
obligations and were not and are not subject to any offset or counterclaim,
except for amounts reserved against such receivables which are reflected on the
Telespace Current Balance Sheet or otherwise set forth in Schedule 4.4. With
respect to notes and accounts receivable arising after the Telespace Balance
Sheet Date and now outstanding, (except for a percentage thereof equal to the
percentage which has been historically reserved against receivable amounts on
the Telespace Current Balance Sheet or in Schedule 4.4 for bad debts)
constitutes valid and collectible obligations on such Telespace Current Balance
Sheet.
Section 4.5. Interest in Telespace's Property. Except as set forth in
Schedule 4.5, no officer, director, or shareholder of Telespace has any interest
in any property, real or personal, tangible or intangible, including copyrights,
trademarks, or trade names, used in or pertaining to the business of Telespace.
Section 4.6. Real Property. Telespace has good title to all of the real
property reflected in the Telespace Current Balance Sheet as owned by Telespace,
free and clear from all defects and liens, except as may be set forth in the
notes to the Telespace Current Balance Sheet or in Schedule 4.6. Schedule 4.6
lists all real property, whether owned or not owned by Telespace, listing with
respect to each parcel the street address and the owner or lessor.
<PAGE>A-14
Section 4.7 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 4.7, there are no Liabilities of Telespace other than the following:
(a) Liabilities disclosed or provided for in the Telespace
Current Balance Sheet, including the notes to the Telespace Current Balance
Sheet; or
(b) Liabilities incurred in the ordinary course of business since
May 31, 1999, none of which has been adverse to the business of Telespace, and
none of which is attributable to any period before the Telespace Current Balance
Sheet.
Section 4.8. Absence of Specific Changes. Since the Telespace Current
Balance Sheet there has not been:
(a) Any change in the business, personnel, results of operations,
assets, financial condition, or manner of conducting the business of Telespace
other than changes in the ordinary course of business, none of which has had an
adverse effect on the business, results of operations, assets, financial
condition, or prospects of Telespace;
(b) Any damage, destruction, or loss (whether or not covered by
insurance) adversely affecting any aspect of the business or operations of
Telespace;
(c) Any direct or indirect redemption or other acquisition by
Telespace of any of Telespace's shares of capital stock of any class, or any
declaration, setting aside, or payment of any dividend or other distribution of
Telespace's capital stock of any class;
(d) Any option to purchase, or other right to acquire stock of
any class of Telespace granted by Telespace to any Person (other than as
specified in Schedule 4.2 above);
(e) Any issuance of capital stock of any class by Telespace;
(f) Any indebtedness incurred by Telespace for borrowed money or
any commitment to borrow money entered into by Telespace or any guaranty given
by Telespace;
(g) Any amendment to Telespace's Certificate of Incorporation or
Bylaws (other than the purposed 1-for-8 reverse stock split); or
(h) Any delayed or postponed payment of any accounts payable or
other Liabilities outside the ordinary course of business.
Section 4.9. Permit, Licenses, and Franchises. Telespace has obtained
all necessary permits, licenses, franchises, and other authorizations for
trading (including the authorization to list its Common Stock on the OTC
Bulletin Board) and has complied with all laws applicable to the conduct of
their business in the manner and in the areas in which business is presently
being conducted; and all such permits, licenses, franchises, and authorizations
are valid and in full force and effect. Telespace has not engaged in any
<PAGE>A-15
activity that would cause revocation or suspension of any such permits,
licenses, franchises, or authorizations; no action or proceeding contemplating
the revocation or suspension of any of them is pending or threatened; and no
approvals or authorizations will be required after the consummation of the
Merger to permit Telespace to continue its business as presently conducted.
Section 4.10. Judgments, Decrees, or Orders Restraining Business.
Telespace is not a party to or subject to any judgment, decree, or Order entered
in any suit or proceeding brought by any governmental agency or by any other
Person (including the NASD), enjoining Telespace with respect to any business
practice, the acquisition of any property, the trading of its Common Stock, or
the conduct of business in any area.
Section 4.11. Power of Attorney. Telespace has no powers of attorney
outstanding other than those issued in the ordinary course of business with
respect to insurance, tax, and customs matters.
Section 4.12. No Violation of Other Instruments. The execution and
delivery of this Agreement do not, and the consummation of the Merger will not,
(i) violate any provision of Telespace's Certificate of Incorporation or Bylaws;
(ii) violate any provision of, result in the acceleration of any obligation
under, or result in the imposition of any lien or encumbrance on any asset of
Telespace pursuant to the terms of any mortgage, note, lien, lease, franchise,
license, permit, agreement, instrument, order, arbitration award, judgment, or
decree; (iii) result in the termination of any license, franchise, lease, or
permit to which Telespace is a party or by which Telespace is bound; or (iv)
violate or conflict with any other restriction of any kind or character to which
Telespace is subject. Telespace's Board of Directors will take all actions
required by law, NASD provisions, or by Telespace's Certificate of Incorporation
or Bylaws, or otherwise required or necessary to authorize the execution and
delivery of this Agreement and to authorize the merger of AmeriCom with and into
Telespace pursuant to this Agreement.
Section 4.13. Contracts.
(a) Schedule 4.13 sets forth all Telespace Contracts which have
been entered into in the ordinary course of Telespace's business on commercially
reasonable terms, are valid and enforceable in all material respects in
accordance with their terms, are in full force and effect, and will continue to
be valid and enforceable and in full force and effect on identical terms
following the Effective Time. Except as set forth in Schedule 4.13, no Telespace
Contract is likely to result in a loss to Telespace upon completion of the
performance, and all Telespace Contracts can be fulfilled or performed by the
Telespace in accordance with their respective terms without undue or unusual
expenditures of money or effort. All Telespace Contracts are listed on Schedule
4.13, and true, correct and complete copies of all Telespace Contracts have been
delivered to AmeriCom.
(b) There are no existing material defaults, events of default or
events which, with the giving of notice or lapse of time, or both, would
constitute a material default by Telespace under any Telespace Contract. No
<PAGE>A-16
event has occurred which may hereafter give rise to any right of termination,
acceleration, damages or any other remedy under any Telespace Contract.
(c) To Telespace's knowledge, neither this Agreement, the Merger
nor the relationship between Telespace and AmeriCom has caused or is likely to
cause the termination, redetermination, or renegotiation of any Telespace
Contract.
Section 4.14. Litigation. Except as set forth in Schedule 4.14, no
Action is pending or, to the knowledge of Telespace, threatened against, by or
affecting Telespace.
Section 4.15. Taxes. Except as set forth in Schedule 4.15, Telespace has
duly and timely filed all federal, state, municipal, local and foreign, if any,
tax returns and reports (including returns for estimated tax), and all reports
and returns of all other Governments having jurisdiction (collectively,
"Returns") with respect to all Taxes; all such Returns and reports show the
correct and proper amount due; and the Taxes shown on all Returns and reports
and all tax assessments received by Telespace has been paid to the extent that
such Taxes or estimates are due. Telespace has previously provided to AmeriCom
true, correct and complete copies of all Returns filed with respect to the two
(2) tax years preceding the date hereof. Except as set forth in Schedule 4.15,
all Taxes imposed on Telespace by any Government (including all deposits in
connection therewith required by applicable Law, and all interest and penalties
thereon) which have become due and payable by Telespace for all periods through
the date hereof have been paid in full, and adequate reserves for all other
Taxes, whether or not due and payable, and whether or not disputed, have been
set up on the books of Telespace, and such reserves will be adequate to pay all
Taxes of Telespace for all periods through the Closing. There is not now any
proposed assessment against Telespace of additional Taxes of any kind. Telespace
is not a party to any tax sharing or tax allocation agreement, understanding,
arrangement or commitment. There is no dispute or Action concerning any Tax
Liability of the Telespace raised by a Government in writing.
Section 4.16. Employee Benefit Matters. Telespace (i) has not
established or contributed to any pension, profit-sharing, option, other
incentive plan, or any other type of employee benefit plan, (ii) has not
maintain or maintained, is or was a party to, and otherwise participates and has
participated in, on its own behalf or on behalf of any former employees, any
pension, profit-sharing, option, other incentive plan, or any other type of
employee benefit plan, or (iii) has no obligation to, or customary arrangement
with, former employees, if any, for bonuses, incentive compensation, vacations,
severance pay, sick pay, sick leave, insurance, service award, relocation,
disability, tuition refund, or other benefits, whether oral or written.
Section 4.17. Reporting Requirements. The Telespace Common Stock has not
been registered under Section 12 of the Exchange Act and Telespace is not
subject to the periodic reporting requirements of Section 15(d) of the Exchange
Act. The Telespace Common Stock is traded in the over-the-counter market on the
OTC Bulletin Board. Telespace has filed with the NASD, or its affiliates, all
information require by Rule 15c2-11 under the Exchange Act. Telespace has
heretofore provided AmeriCom true, complete, and correct copies of all forms,
reports, schedules, statements, and other documents, and other documents
required to be filed by it under the Exchange Act since at least June, 1998 as
<PAGE>A-17
such documents have been amended since the time of the filing thereof (the "NASD
Documents"). The NASD Documents, including, without limitation, any financial
statements and schedules included therein, at the time filed or, if subsequently
amended, as so amended, (i) did not contain any untrue statement of material
fact required to be stated therein or necessary in order to make the statements
therein not misleading and (ii) complied in all respect with the applicable
requirements of the Exchange Act and the Applicable rules and regulations
thereunder.
Section 4.18. Records The stock ledgers and stock transfer books and the
minutes records of Telespace relating to all issuances and transfers of stock by
Telespace, and all proceedings of the stockholders and the Board of Directors
committees hereof of Telespace since its incorporation made available to
AmeriCom are accurate stock ledgers and stock transfer books (as provided by the
transfer agent) and minute book records of Telespace or exact copies thereof.
The corporate minute books of Telespace are complete and each of the minutes
contained therein accurately reflect the actions that were taken at the duly
called and held meeting or by consent without a meeting. All actions by
Telespace which required director or stockholder approval are reflected in the
corporate minute books of Telespace. Telespace is not in violation or breach of,
or in default with respect to, any terms of its respective certificates of
incorporation (or other charter documents) or bylaws.
Section 4.19. Shareholder Relations. Telespace is not aware of any
actions or threatened action by any shareholder(s) against Telespace or any
officers or directors thereof. Telespace believes its shareholder relations are
good.
Section 4.20. Disclosure. No representation or warranty by Telespace in
this Agreement and no statement by Telespace, by any executive officer or other
person or contained in any document, certificate, or other writing furnished by
or on behalf of Telespace to AmeriCom to in connection with this transaction,
contains or will contain any untrue statement of material fact, or omits or will
omit to state any material fact necessary to make it not misleading or to fully
provide the information required to be provided in the document, certificate, or
other writing.
ARTICLE V.
COVENANTS
Section 5.1 Covenants of Telespace.
Telespace hereby covenants to AmeriCom as follows:
(a) Until the Effective Time, Telespace will immediately advise
AmeriCom in a detailed written notice of any fact or occurrence of any pending
or threatened occurrence of which Telespace obtains knowledge and which (if
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement or
which, if existing and known at any time prior to or at the Effective Time,
would make the performance by any party of a covenant contained in this
Agreement impossible or make such performance materially more difficult than in
the absence of such fact or occurrence.
<PAGE>A-18
(b) Before Telespace releases any information concerning this
Agreement, the Merger, or any of the other transactions contemplated by this
Agreement which is intended for, or may result in, public dissemination thereof,
Telespace shall notify AmeriCom, shall furnish drafts of all documents or
proposed oral statements to AmeriCom for comment, and shall not release any such
information without the consent of AmeriCom, which consent shall not be
unseasonably withheld. Nothing contained herein shall prevent Telespace from
releasing any information if required to do so by law, or by NASD/OTC Bulletin
Board regulations.
(c) Until the Effective Time, no amendment will be made in the
Certificate of Incorporation or Bylaws of Telespace, except to effect a 1-for-8
reverse stock split of the outstanding Telespace Common Stock.
(d) Until the Effective Time, no share of capital stock of
Telespace, option or warrant for any such share, right to subscribe for or
purchase any such share, or security convertible into or exchangeable for any
such share shall be issued or sold by Telespace except with notice to and the
consent of AmeriCom.
(e) Until the Effective Time, no dividend or liquidating or other
distribution or stock split (except a 1-for-8 reverse stock split) shall be
authorized, declared paid, or effected by Telespace in respect of the
outstanding shares of Telespace Common Stock. Until the Effective Time, no
direct or indirect redemption, purchase, or other acquisition shall be made by
Telespace of shares of Telespace Common Stock.
(f) Until the Effective Time, Telespace shall not borrow money or
otherwise incur any indebtedness, except with notice to and consent of AmeriCom.
(g) Until the Closing Date, Telespace will afford the officers,
directors, employees, counsel, agents, investment bankers, accountants, and
other representatives of AmeriCom free and full access to the properties, books,
and records of Telespace, will permit them to make extracts from and copies of
such books and records, and will from time to time furnish AmeriCom with such
additional financial and operating data and other information as to the
financial condition, results of operations, businesses, properties, assets,
liabilities, or future prospects of Telespace as AmeriCom from time to time may
request. Until the Closing Date, Telespace will cause the independent certified
public accountants of Telespace to make available to AmeriCom and its
independent certified public accountants the work papers relating to the
Telespace financial statements prepared by them.
(h) Until the Effective Time, Telespace will conduct its affairs
so that at the Effective Time, no representation or warranty of Telespace will
be inaccurate, no covenant or agreement of Telespace will be breached, and no
condition in this Agreement will remain unfulfilled by reason of the actions or
omissions of Telespace. Until the Effective Time, Telespace will conduct its
affairs in all respects only in the ordinary course (except for the proposed
1-for-8 reverse stock split).
<PAGE>A-19
(i) Commencing at the Effective Time, Telespace shall comply in
all material respects with the disclosure requirements of Section 13 under the
Exchange Act as the successor reporting company to AmeriCom.
(j) Telespace shall not make any agreement or reach any
understanding not approved by AmeriCom as a condition for obtaining any consent,
authorization, approval, order, license, certificate, or permit required for the
consummation of the transactions contemplated by this Agreement.
(k) Prior to the Closing Date, Telespace shall timely prepare and
file all documents necessary to be filed with the Delaware Secretary of State
and the NASD relating to the proposed reverse stock split and this Merger.
Telespace shall timely prepare and file any declaration or filing necessary to
comply with any applicable transfer tax statutes that require any such filing
before the Effective Time.
(l) Telespace agrees to indemnify and hold harmless AmeriCom's
officers, directors, employees, agents, and counsel, in each case past, present,
or as they may exist at any time after the date of this Agreement, and each
person, if any, who controls, controlled, or will control AmeriCom within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, and, if the Merger is abandoned or terminated pursuant to Article VIII or
otherwise except solely as a result of a breach of this Agreement by AmeriCom
(the "AmeriCom Indemnitees"), against any and all losses, liabilities, claims,
damages, and expenses whatsoever (which shall include, for all purposes of this
Section 5.1(l), but not be limited to, counsel fees and any and all expenses
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation, in each case whether or
not involving a third party) as and when incurred arising out of, based upon, or
in connection with (i) any untrue statement or alleged untrue statement of a
material fact contained in any application or other document or communication
executed by, or on behalf of, Telespace filed with any governmental authority in
connection with the Merger or filed with the OTC Bulletin Board or the NASD; or
any omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided in
each case that such untrue statement, alleged untrue statement, omission, or
alleged omission relates to information furnished by or on behalf of, or
pertaining to, Telespace, or any Telespace security holder, and (ii) any breach
of any representation, warranty, covenant, or agreement of Telespace contained
in this Agreement. The foregoing agreement to indemnify shall be in addition to
any liability Telespace may otherwise have, including liabilities arising under
this Agreement.
(m) Prior to the Closing Date, Telespace shall prepare, have
approved and consummate a 1-for-8 reverse stock split. The record date and
effective date of such reverse stock split shall be prior to the Closing Date.
(n) Prior to the Closing Date, Telespace shall prepare and file
with the California Department of Corporations ("DOC") applications for a
Fairness Hearing and reorganization permit.
<PAGE>A-20
Telespace shall use its best efforts to obtain a Fairness Order and limited
offering qualification for the Merger.
Section 5.2. Covenants of AmeriCom.
(a) Until the Effective Time, AmeriCom will comply with all
disclosure requirements of Sections 13, 14 and 16 of the Exchange Act.
(b) Before AmeriCom or any AmeriCom Subsidiary releases any
information concerning this Agreement, the Merger, or any of the other
transactions contemplated by this Agreement which is intended for, or may result
in, public dissemination thereof, AmeriCom and the AmeriCom Subsidiaries shall
notify Telespace, shall furnish drafts of all documents or proposed oral
statements to Telespace for comment, and shall not release any such information
without the consent of Telespace, which consent shall not be unreasonably
withheld. Nothing contained herein shall prevent AmeriCom from releasing any
information if required to do so by law, or pursuant to Section 5.2(a).
(c) Until the Effective Time, no amendment will be made in the
Certificate of Incorporation or Bylaws of AmeriCom.
(d) Until the Effective Time, no dividend or liquidating or other
distribution or stock split shall be authorized, declared, paid, or effected by
AmeriCom in respect of the outstanding shares of AmeriCom Common Stock. Until
the Effective Time, no direct or indirect redemption, purchase, or other
acquisition shall be made by AmeriCom or any Subsidiary of shares of AmeriCom
Common Stock.
(e) Until the Closing Date, AmeriCom will afford the officers,
directors, employees, counsel, agents, investment bankers, accountants, and
other representatives of Telespace and lenders, investors, and prospective
lenders and investors free and full access to the plants, properties, books, and
records of AmeriCom and the Subsidiaries, and will permit them to make extracts
from and copies of such books and records.
(f) Until the Effective Time, AmeriCom and AmeriCom Subsidiaries
will conduct their affairs so that at the Effective Time no representation or
warranty of AmeriCom will be inaccurate, no covenant or agreement of AmeriCom
will be breached, and no condition in this Agreement will remain unfulfilled by
reason of the actions or omissions of AmeriCom or any AmeriCom Subsidiary.
Except as otherwise requested by Telespace in writing, until the Effective Time,
AmeriCom will cause each of AmeriCom Subsidiary to use its best efforts to
preserve the business operations of AmeriCom and AmeriCom Subsidiaries intact,
to keep available the services of their present personnel, to preserve in full
force and effect the contracts, agreements, instruments, leases, licenses,
arrangements, and understandings of AmeriCom and each AmeriCom Subsidiary, and
to preserve the good will of their suppliers, customers, and others having
business relations with any of them.
<PAGE>A-21
(g) AmeriCom agrees to indemnify and hold harmless Telespace's
officers, directors, employees, agents, and counsel, in each case past or
present, and each person, if any, who controls, controlled, or will control
Telespace within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act and, if the Merger is abandoned or terminated pursuant
to Article VIII or otherwise solely as a result of a breach of this Agreement by
AmeriCom (the "Telespace Indemnitees"), against any and all losses, liabilities,
claims, damages and expenses whatsoever (which shall include, for all purposes
of this Section 5.2(g), but not be limited to, counsel fees and any and all
expenses whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation, in each case whether
or not involving a third party) as and when incurred arising out of, based upon,
or in connection with (i) any untrue statement or alleged untrue statement of a
material fact contained in any application or other document or communication
decided by or on behalf of AmeriCom filed with any governmental authority in
connection with the Merger; or any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, provided in each case that such untrue statement,
alleged untrue statement, omission, or alleged omission relates to information
furnished by or on behalf of, or pertaining to, AmeriCom, any AmeriCom
Subsidiary, or any AmeriCom security holder, or (ii) any breach of any
representation, warranty, covenant, or agreement of AmeriCom contained in this
Agreement. The foregoing agreement to indemnify shall be in addition to any
liability AmeriCom may otherwise have, including liabilities arising under this
Agreement.
(h) Prior to the Effective Time, neither AmeriCom nor any
AmeriCom Subsidiary shall recapitalize or reclassify its respective outstanding
capital stock or effect any stock dividend, stock split, or reverse stock split.
ARTICLE VI.
CONDITIONS TO THE MERGER
Section 6.1. Conditions Precedent to AmeriCom's Obligation to Close.
AmeriCom's obligation to consummate the Merger is subject to the satisfaction,
on or before the Closing Date, of the following conditions:
(a) Each of the acts and undertakings of Telespace to be
performed on or before the Closing Date pursuant to the terms of this Agreement
has been duly performed, including the consummation of a 1-for-8 reverse stock
split of the Telespace Common Stock.
(b) Telespace has furnished AmeriCom with a copy, certified by
Telespace's secretary, of (i) a resolution or resolutions duly adopted by
Telespace's Board of Directors authorizing and approving this Agreement and
directing that it be submitted to a vote of Telespace's shareholders, and (ii) a
resolution or resolutions adopting this Agreement, duly approved by the holders
of at least a majority of the total number of outstanding shares of Common Stock
of Telespace.
<PAGE>A-22
(c) All the representations and warranties of Telespace contained
in this Agreement and in the schedules required pursuant to Article IV are true
in every respect on the Closing Date, with the same effect as though such
representations and warranties had been made on that date; and AmeriCom has
received at the Closing a certificate, dated the Closing Date and executed by
the President or a Vice President of Telespace, containing a verification to
that effect.
(d) Telespace has furnished AmeriCom with a favorable opinion of
Telespace's counsel dated the Closing Date, substantially in the form attached
as Appendix A. In addition to matters specified in the form, the opinion must
include such other matters incident to the contemplated transactions as are
reasonably requested by AmeriCom or its counsel.
(e) AmeriCom has received, or has satisfied itself that it will
receive, in form satisfactory to it, all necessary approvals of the transactions
contemplated by this Agreement from authorities having any jurisdiction over the
business or transactions of Telespace so that Telespace may continue to carry on
their business as presently conducted after consummation of the Merger; and no
such approval and no license or permit granted to Telespace has been withdrawn
or suspended.
(f) All consents of other parties to the mortgages, notes,
leases, franchises, agreements, licenses, and permits of Telespace necessary to
permit consummation of the Merger have been obtained.
(g) Not more than eight percent (8%) of the outstanding shares of
Telespace Common Stock are Dissenting Shares within the definition of Delaware
General Corporations Code Section 262.
(h) Prior to the Closing Date, AmeriCom shall have satisfied
itself that, contingent upon the Merger, a commitment of $500,000 of investment
capital shall be available to the Surviving Corporation.
(i) Telespace has delivered the schedules as required in Section
IV, updated through the Closing Date.
(j) In its sole and absolute discretion, AmeriCom is satisfied
with any matter reflected, listed, or disclosed in the updated schedules that
was not reflected, listed, or disclosed in the original schedules.
Section 6.2. Additional Conditions to the Obligations of AmeriCom. The
obligations of AmeriCom to consummate the Merger is subject to the satisfaction
of the following additional conditions: (i) AmeriCom shall receive a limited
offering permit from the State of California, Department of Corporations
pursuant to Section 25120 of the California Corporations Code and a Fairness
Order pursuant to Section 25142 of the California Corporations Code; and (ii)
the availability of Section 3(a)(10) exemption under the Securities Act of 1933,
as amended.
<PAGE>A-23
Section 6.3. Conditions Precedent to Telespace's Obligation to Close.
Telespace's obligation to consummate the Merger is subject to the satisfaction,
on or before the Closing Date, of the following conditions:
(a) Each of the acts and undertakings of AmeriCom to be performed
on or before the Closing Date pursuant to the terms of this Agreement has been
duly performed.
(b) AmeriCom has furnished Telespace with a copy, certified by
AmeriCom's secretary, of a resolution or resolutions duly adopted by AmeriCom's
Board of Directors authorizing and approving this Agreement.
(c) All the representations and warranties of AmeriCom contained
in this Agreement and in the schedules required pursuant to Article III are true
in every respect on the Closing Date, with the same effect as though such
representations and warranties had been made on that date; and Telespace has
received at the Closing a certificate, dated the Closing Date and executed by
the President or a Vice President of AmeriCom, containing a verification to that
effect.
(d) Telespace has received, or has satisfied itself that it will
receive, in form satisfactory to it, all necessary approvals of the transactions
contemplated by this Agreement from authorities having jurisdiction over the
business or transactions of AmeriCom or any AmeriCom Subsidiary so that AmeriCom
and AmeriCom Subsidiaries may continue to carry on their business as presently
conducted after consummation of the Merger; and no such approval and no license
or permit granted to AmeriCom or any AmeriCom subsidiary has been withdrawn or
suspended.
(e) All consents of other parties to the mortgages, notes,
leases, franchises, agreements, licenses, and permits of AmeriCom or any
AmeriCom Subsidiary necessary to permit consummation of the Merger have been
obtained.
(f) At least a majority of the outstanding shares of Telespace
Common Stock have been voted for the adoption of the reverse stock split set
forth in this Agreement.
(g) AmeriCom has delivered the schedules as required in Article
III, updated through the Closing Date.
ARTICLE VII
SURVIVAL OF WARRANTIES
The representations and warranties included or provided for in this
Agreement or in any schedule or certificate or other document delivered pursuant
to this Agreement will survive the Closing Date for a period of one (1) year. No
claim may be made under this Article VII unless written notice of the claim is
given within that one (1) year period.
<PAGE>A-24
ARTICLE VIII.
TERMINATION OF AGREEMENT
Section 8.1. Termination by AmeriCom. As soon as practicable, and in any
event within fifteen (15) days after the receipt of (i) the last schedule
required to be delivered to AmeriCom by Telespace pursuant to Article VI and
(ii) any supporting documentation requested by AmeriCom, AmeriCom will give
Telespace notice if AmeriCom has decided that it wishes to terminate this
Agreement based on any information contained in any of the schedules or obtained
during the course of its investigation pursuant to Section 5.1. The notice will
specify the information contained in the schedules or obtained during the
investigation on which AmeriCom's decision to terminate is based. Telespace will
have ten (10) days after the receipt of the notice to review that information
with AmeriCom. If AmeriCom does not withdraw its notice within this five (5) day
period, all further obligations of AmeriCom and Telespace under this Agreement
will terminate without further liability of AmeriCom to Telespace or of
Telespace to AmeriCom, except their respective obligations as provided in
Section 8.3. If AmeriCom does not advise Telespace within the fifteen (15) day
period specified in the first sentence above that it wishes to terminate this
Agreement, AmeriCom will be considered to be satisfied with the information
relating to Telespace contained in the schedules or obtained during the course
of its investigation, subject to AmeriCom's rights concerning the continued
accuracy of Telespace's representations and warranties as required in Section
6.1.
Section 8.2. Termination. This Agreement and the transactions
contemplated under this Agreement may be terminated at any time before the
Closing Date, either before or after the approval of Telespace's shareholders is
obtained:
(a) By mutual consent of AmeriCom and Telespace;
(b) By AmeriCom if there has been a material misrepresentation or
a material breach of warranty in Telespace's representations and warranties set
forth in this Agreement or in any schedule or certificate delivered pursuant to
this Agreement;
(c) By Telespace if there has been a material misrepresentation
or a material breach of warranty in AmeriCom's representations and warranties
set forth in this Agreement;
(d) By AmeriCom or Telespace if either party will have determined
in its sole discretion that the transactions contemplated by this Agreement have
become inadvisable or impracticable by reason of the institution or threat of
institution, by governmental authorities (local, state, or federal) or by any
other Person, of material litigation or proceedings against either or both of
the parties, it being understood and agreed that a written request by
governmental authorities for information with respect to the proposed
transactions, which could be used in connection with such litigation or
proceedings, may be considered by AmeriCom or Telespace to be a threat of
material litigation or proceedings, whether such request is received before or
after the date of this Agreement;
(e) By AmeriCom if it has determined that the business, assets,
or financial condition of Telespace taken as a whole, have been materially and
adversely affected, whether by reason of changes, developments, or operations in
the ordinary course of business or otherwise;
<PAGE>A-25
(f) By Telespace if it has determined that the business, assets,
or financial condition of Telespace taken as a whole, have been materially and
adversely affected, whether by reason of changes, developments, or operations in
the ordinary course of business or otherwise;
(g) By AmeriCom if any condition set forth in Sections 6.1 or 6.2
is not satisfied prior to the Closing Date;
(h) By Telespace if any condition set forth in Section 6.3 is not
satisfied prior to the Closing Date; and
(i) By Telespace or by AmeriCom if the Closing Date referred to
in Section 1.2 has not occurred by August 31, 1999.
Section 8.3. Right to Proceed. In the event that this Agreement is
terminated pursuant to Article VIII, or because of the failure to satisfy any of
the conditions specified in Article VI, all further obligations of AmeriCom and
of Telespace under this Agreement will terminate without further liability of
AmeriCom to Telespace or Telespace to AmeriCom, except for the obligations of
both parties under Sections 8.3, 8.4, 8.5, 9.2 and 10.5; provided, however,
despite anything in this Agreement to the contrary, that if Telespace fails to
satisfy any of the conditions specified in Article VI, AmeriCom will nonetheless
have the right, in its discretion, to proceed with the transactions contemplated
by this Agreement.
Section 8.4. Return of Documents. In the event of the termination of
this Agreement for any reason, each party will return to the other party all
documents, work papers, and other materials (including copies) relating to the
transactions contemplated in this Agreement, whether obtained before or after
execution of this Agreement. Each party will not use any information so obtained
for any purpose, and will take all practicable steps to have such information
kept confidential.
Section 8.5. Cost in the Event of Termination. In the event of the
termination of this Agreement for any reason, each party will bear its own costs
and expenses, including attorneys' fees.
ARTICLE IX.
ADDITIONAL AGREEMENTS
Section 9.1. Expenses. Except as otherwise provided herein, all expenses
incurred by AmeriCom in connection with the negotiations among the parties, and
the authorization, preparation, execution and performance of this Agreement and
the transactions contemplated hereby shall be paid by AmeriCom. Except as
otherwise provided herein, all expenses incurred by Telespace in connection with
the negotiations among the parties, and the authorization, preparation,
execution and performance of this Agreement and the transactions contemplated
hereby shall be paid by Telespace.
<PAGE>A-26
Section 9.2. Publicity. All press releases and other public
announcements respecting the subject matter hereof shall be made in compliance
with Sections 5.1(b) and 5.2(b).
Section 9.3. Approval of Telespace Shareholders. Telespace will take all
necessary steps to obtain approval of the merger transaction by a majority of
the Telespace shareholders within ten (10) days from the date of this Agreement,
which number of days includes adequate time for the preparation and mailing of
information to shareholders. In all material sent to or other communications
with the shareholders on this subject, Telespace's Board of Directors will
recommend to the shareholders that they adopt the Plan of Merger and approve the
terms of this Agreement. Telespace shareholders will also be advised of their
appraisal rights, should they object to the merger transaction.
Section 9.4. Approval of AmeriCom Shareholders. AmeriCom will take all
necessary steps to obtain approval of the merger transaction by a majority of
the AmeriCom shareholders within ten (10) days from the date of this Agreement,
which number of days includes adequate time for the preparation and mailing of
information to shareholders. In all material sent to or other communications
with the shareholders on this subject, AmeriCom's Board of Directors will
recommend to the shareholders that they adopt the Plan of Merger and approve the
terms of this Agreement. AmeriCom shareholders will also be advised of their
appraisal rights, should they object to the merger transaction.
ARTICLE X.
MISCELLANEOUS
Section 10.1. Governing Law; Counterparts. This Agreement (a) will be
construed under and in accordance with the laws of the State of California; (b)
will be binding on and will inure to the benefit of the parties to the Agreement
and their respective successors and assigns; (c) may be executed in one or more
counterparts, all of which will be considered one and the same Agreement, and
will become effective when one (1) or more counterparts will have been signed by
each of the parties and delivered to AmeriCom and Telespace; and (d) embodies
the entire Agreement and understanding, superseding all prior agreements and
understandings between Telespace and AmeriCom relating to the subject matter of
this Agreement.
Section 10.2. Notices. All notices or other communications required
hereunder shall be in writing and shall be sufficient in all respects and shall
be deemed delivered after five (5) days if sent via registered or certified
mail, postage prepaid; the next day if sent by overnight courier service; or one
(1) business day after transmission, if sent by facsimile to the following:
If to AmeriCom: Robert Cezar
AmeriComUSA, Inc.
1303 Grand Avenue
Arroyo Grande, CA 93420
<PAGE>A-27
With A Copy To: Scott E. Bartel, Esq.
Bartel Eng Linn & Schroder
300 Capitol Mall, Suite 1100
Sacramento, CA 95814
Facsimile: (916) 442-3442
If to Telespace: Winston Lee
c/o Kevin Halter, Jr.
Telespace Limited
16910 Dallas Parkway, Suite 100
Dallas, TX 75248
Each party shall promptly notify the other party in writing of any
change of address.
Section 10.3. Waiver. Any waiver by any party of a breach of any term of
this Agreement shall not operate as, or be construed to be, a waiver of any
other breach of that term or of any breach of any other term of this Agreement.
The failure of a party to insist upon strict adherence to any term of this
Agreement on one or more occasions will not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to that term
or any other term of this Agreement. Any waiver must be in writing and be
authorized by a resolution of the Board of Directors or by a duly authorized
officer of the waiving party.
Section 10.4. Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of Telespace and AmeriCom and their
respective successors and assigns; provided, however, that no party hereto shall
have the right to assign its rights and obligations hereunder without the prior
written consent of the other parties hereto.
Section 10.5. No Third Party Beneficiaries. This Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this Agreement, except as provided in Section 10.4.
Section 10.6. Amendments. This Agreement may be amended only by the
written agreement of all parties; provided, however, that if amended after the
meeting of the shareholders of Telespace, the terms regarding the conversion
contained in Section 2.1 will not be amended without the further approval of
Telespace's shareholders as required by law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>A-28
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its duly authorized officers, all as of the day and
year first above written.
AmeriComUSA, Inc.,
A Delaware Corporation
By: ____________________________
Robert Cezar, President
By: ____________________________
Helen Cooper, Secretary
Telespace, Limited,
A Delaware Corporation
By: ____________________________
Winston Lee, President
By: ____________________________
Winston Lee, Secretary
EXHIBIT B
THE DELAWARE GENERAL CORPORATION LAW
SECTION 262. APPRAISAL RIGHTS
<PAGE>
EXHIBIT B
SECTION 262 OF THE DELAWARE
GENERAL CORPORATION LAW
SECTION 262. Appraisal Rights
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to ss.228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to ss. 261, ss. 252, ss. 264, ss. 257, ss. 268, ss. 263 or ss.
264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series of
stock, which stock, or depository receipts in respect thereof, at the
record date fixed to determine the stockholders entitled to receive
notice of and to vote at the meeting of stockholders to act upon the
agreement of merger or consolidation, were either (i) listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000
holders; and further provided that no appraisal rights shall be
available for any shares of stock of the constituent corporation
surviving a merger if the merger did not require for its approval the
vote of the stockholders of the surviving corporation as provided in
subsections (f) or (g) of ss. 261 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the shares of
any class or series of stock of a constituent corporation if the holders
thereof are required by the terms of an agreement of merger or
consolidation pursuant to ss.ss. 261,262, 264, 267, 268, 263 and 264 of
this title to accept for such stock anything except:
<PAGE>B-1
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository
receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock or depository
receipts at the effective date of the merger or consolidation
will be either listed on a national securities exchange or
designated as a national market system security on an interdealer
quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders:
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.
and b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.,
b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under ss. 253 of this title is
not owned by the parent corporation immediately prior to the merger,
appraisal rights shall be available for the shares of the subsidiary
Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares
of any class or series of its stock as a result of an amendment to its
certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this section,
including those set forth in subsections (d) and (e) of this section, shall
apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal
rights are provided under this section is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20 days
prior to the meeting, shall notify each of its stockholders who was such
on the record date for such meeting with respect to shares for which
"appraisal rights are available pursuant to subsection (b) or (c) hereof
that appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of
this section. Each stockholder electing to demand the appraisal of his
shares shall deliver to the corporation, before the taking of the vote
on the merger or consolidation, a written demand for appraisal of his
shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of his shares. A proxy or vote
against the merger or consolidation shall not constitute such a demand.
A stockholder electing to take such action must do so by a separate
written demand as herein provided. Within 10 days after the
<PAGE>B-2
effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that
the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to
ss.228 or 253 of this title, the surviving or resulting corporation,
either before the effective date of the merger or consolidation or
within 10 days thereafter, shall notify each of the stockholders
entitled to appraisal rights of the effective date of the merger or
consolidation and that appraisal rights are available for any or all of
the shares of the constituent corporation, and shall include in such
notice a copy of this section. The notice shall be sent by certified or
registered mail, return receipt requested, addressed to the stockholder
at his address as it appears on the records of the corporation. Any
stockholder entitled to appraisal rights may, within 20 days after the
date of mailing of the notice, demand in writing from the surviving or
resulting corporation the appraisal of his shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of
the stockholder and that the stockholder intends thereby to demand the
appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder
who has complied with subsections (a) and (d.) hereof ami who is otherwise
entitled to appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within 60 days
after the effective date of the merger or consolidation, any stockholder
shall have the right to withdraw his demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within 120 days after the
effective date of the merger or consolidation, any stockholder who has
complied with the requirements of subsections (.a) and {&) hereof, upon
written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement
setting forth the aggregate number of shares not voted in favor of the
merger or consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such shares. Such
written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of
a copy thereof shall be made upon the surviving or resulting corporation,
which shall within 20 days after such service file in the office of the
Register in Chancery in which the petition was filed a duly verified list
containing the names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting corporation. If
the petition shall be filed by the surviving or resulting corporation, the
petition shall be accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the time and
place fixed for the hearing of such petition by registered or certified
mail to the surviving or resulting corporation and to the stockholders
shown on the list at the addresses therein stated. Such notice shall also
be given by I or more publications
<PAGE>B-3
at least I week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become
entitled to appraisal rights. The Court may require the stockholders who
have demanded an appraisal for their shares and who hold stock represented
by certificates to submit their certificates of stock to the Register in
Chancery for notation thereon of the pendency of the appraisal proceedings;
and if any stockholder fails to comply with such direction, the Court may
dismiss the proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of
any element of value arising from the accomplishment or expectation of the
merger or consolidation, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In determining
such fair value, the Court shall take into account all relevant factors. In
determining the fair rate of interest, the Court may consider all relevant
factors, including the rate of interest which the surviving or resulting
corporation would have had to pay to borrow money during the pendency of
the proceeding. Upon application of the surviving or resulting corporation
or by any stockholder entitled to participate in the appraisal proceeding,
the Court may, in its discretion, permit discovery or other pretrial
proceedings and may proceed to trial upon the appraisal prior to the final
determination of the stockholder entitled to an appraisal. Any stockholder
whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has
submitted his certificates of stock to the register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that he is not entitled to appraisal rights under this section
(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or resulting
corporation to the stockholders entitled thereto. Interest may be simple or
compound, as the Court may direct. Payment shall be so made to each such
stockholder, in the case of holders of uncertificated stock forthwith, and
the case of holders of shares represented by certificates upon the
surrender to the corporation of the certificates representing such stock.
The Court's decree may be enforced as other decrees in the Court of
Chancery may be enforced, whether such surviving or resulting corporation
be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances.
Upon application of a stockholder, the Court may order all or a portion of
the expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against the value
of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded his appraisal rights as provided in
subsection (d) of this section shall be entitled to
<PAGE>B-4
vote such stock for any purpose or to receive payment of dividends or other
distributions on the stock (except dividends or other distributions payable to
stockholders of record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition for an
appraisal shall be filed within the time provided in subsection (e) of this
section, or if such stockholder shall deliver to the surviving or resulting
corporation a written withdrawal of his demand for an appraisal and an
acceptance of the merger or consolidation, either within 60 days after the
effective date of the merger or consolidation as provided in subsection (e) of
this section or thereafter with the written approval of the corporation, then
the right of such stockholder to an appraisal shall cease. Notwithstanding the
foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed
as to any stockholder without the approval of the Court, and such approval may
be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized
and unissued shares of the surviving or resulting corporation.
