SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
October 19, 1999
Date of Report
(Date of Earliest Event Reported)
CBCOM, INC.
(Exact Name of Registrant as Specified in its Charter)
15260 Ventura Boulevard
Suite 1200
Sherman Oaks, California 91403
(Address of principal executive offices)
818/461-0800
Registrant's telephone number
ABBACY CORPORATION
1504 R Street, N.W.
Washington, D.C. 20009
Former name and former address
Delaware 0-26421 95-4635025
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to an Agreement and Plan of Merger (the
"Merger Agreement") dated as of September 24, 1999 between Abbacy
Corporation ("Abbacy"), a Delaware corporation, and CBCom, Inc., a
Delaware corporation, all the outstanding shares of common stock of
Abbacy Corporation were exchanged for 250,000 shares of common stock
of CBCom, Inc. ("CBCom" or the "Company") in a transaction in which
CBCom was the surviving company.
The Merger Agreement was adopted by the unanimous consent of
the Board of Directors of Abbacy and approved by the unanimous
consent of the shareholders of Abbacy. The Merger Agreement was
adopted by the unanimous consent of the Board of Directors of CBCom.
The merger was effected on October 18, 1999, with the filing of the
Certificate of Merger with the State of Delaware.
Prior to the merger, Abbacy had 5,000,000 shares of common
stock outstanding which shares were exchanged for 250,000 shares of
common stock of CBCom. By virtue of the merger, CBCom acquired 100%
of the issued and outstanding common stock of Abbacy.
Prior to the effectiveness of the merger, CBCom had an
aggregate of 15,635,500 shares of common stock issued and
outstanding,. Upon effectiveness of the merger, CBCom had an
aggregate of 15,885,500 shares of common stock outstanding.
The officers of CBCom will continue as officers of the
successor issuer. See "Management" below. The officers, directors,
and by-laws of CBCom will continue without change as the officers,
directors, and by-laws of the successor issuer.
A copy of the Merger Agreement is filed as an exhibit to
this Form 8-K and is incorporated in its entirety herein. The
foregoing description is modified by such reference.
(b) The following table contains information regarding the
shareholdings of CBCom's current directors and executive officers
and those persons or entities who beneficially own more than 5% of
its common stock (giving effect to the exercise of warrants or
options exercisable within six months held by each such person or
entity):
Amount of Common Percent of
Stock Beneficially Common Stock
Name Owned(1)(2) Beneficially Owned (2)
Chian Yi (Max) Sun (3) 2,865,966 16.6%
President, Director
52, Jalan Keldchor
Kota Bharu, Kelanta, Malaysia
Charles A. Lesser (4) 625,000 3.8%
Chief Financial Officer, Director
5801 Serrania Avenue
Woodland Hills, California 91367
Hong Wei (Frank) Zhu (5) 587,500 3.6%
Director
1119 A Valencia Way
Arcadia, California 91006
Gordon Xia Gao (6) 582,500 3.6%
Director
4955 Casa Drive
Tarzana, California 91356
All directors and
executive officers as
a group (4 persons)(7) 4,660,466 26.1%
Topbest Worldwide Group (8) 1,000,000 6.3%
Suite 12.33 Petama Komplek
Jalan Tunku Abdul Rahman
Kuala Lumpur, Malaysia
Wake Little Treasure Ltd.(8) 1,250,000 7.9%
297 Prince Edward Road
Suite 6A
Erin Court, Hong Kong
Jesmax Investment Ltd. (8) 1,000,000 6.3%
Suite 12.33, Petama Komplek
Jalan Tunku Abdul Rahman
Kuala Lumpur, Malaysia
Tan Eng Khong 787,500 4.9%
152 Kampung Lundang
Jalan Sultan Yahya Petra
15200 Kota Bharu
Kelantan, Malaysia
Ren Zhen Tian (9) 1,250,000 7.9%
7C, 1 Block Jia 2
Zuo Jia Zhuang Road
Chao Yang District
Beijing, China
Gao Bo (10) 800,000 5.0%
Block 901, #03-107
Jurong West St. 91
Singapore 640 902
Sinoway Co. Ltd. 1,250,000 7.9%
Unit 2502, 25/F, K.Wah Centre
191 Java Road
North Point, Hong Kong
Cuong Hai Tran (11) 970,000 5.8%
1860 Lucretia Avenue
Los Angeles, California 90026
* Less than 1% percent
(1) Based upon 15,885,500 outstanding shares of common stock
(subsequent to the effectiveness of the merger).
(2) Assumes exercise of warrants, options or other rights, if
any, to purchase securities held by the named shareholder
exercisable within six months of the date hereof.
(3) Includes 562,500 shares owned directly by Mr. Sun and
1,000,000 shares held by Joy Luck Communication Ltd. of
which Mr. Sun may be deemed to be the beneficial owner. Mr.
Sun also has beneficial ownership of an additional possible
1,303,466 shares of common stock consisting of options to
purchase 312,500 shares exercisable at $.20 per share and
990,966 shares obtainable upon conversion of a convertible
note at a conversion price of $.50 per share.
(4) Includes 250,000 shares and options to purchase 375,000
shares of common stock held by the named shareholder which
are exercisable within the next six months, but does not
include options to purchase 125,000 shares not exercisable
until June, 2000.
(5) Includes 400,000 shares owned directly by Mr. Wei and
options to purchase 187,500 shares of common stock at an
exercise price of $.20 per share.
(6) Includes 457,500 shares owned by Mr. Gao and options to
purchase 125,000 shares of common stock at an exercise price
of $.20 per share.
(7) Includes 2,669,500 shares and options to purchase 1,990,966
shares.
(8) Beneficially owned by persons who are familially related to
Max Sun, President and a director of the Company. Mr. Sun
disclaims beneficial ownership of these shares.
(9) Beneficially owned by persons who are familially related to
Zhu Hong Wei, a director of the Company. Mr. Zhu disclaims
beneficial ownership of these shares.
(10) Beneficially owned by persons who are familially related to
Gordon Gao, a director of the Company. Mr. Gao disclaims
beneficial ownership of these shares.
(11) Includes 370,000 shares and options to purchase 600,000
shares of common stock currently exercisable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Merger
Agreement was negotiated between Abbacy and CBCom.
In evaluating CBCom as a candidate for the proposed merger,
Abbacy used criteria such as its business plan and arrangements with
the Shanghai Stock Exchange Communication Co., Ltd., the business
knowledge of its management, and the anticipated increased
telecommunications market in China. Abbacy determined that the
consideration for the merger was reasonable.
(b) CBCom intends to continue developing its business plan
consisting of proceeding with the joint venture established with
Shanghai Xingtong Telecommunications Science & Technology Co., Ltd.
and the Shanghai Stock Exchange Communication Co., Ltd. to form a
financial data network in China called the "China Financial Network".
THE MARKET
CBCom believes that as the economy of China expands,
increased capital investment will expand which will result in a more
sophisticated financial market and a greater demand for local and
global financial information. Certain obstacles face all Internet
development in China including the lack of local telephone lines,
expense of obtaining lines and usage, required government approvals
to link local servers, the lack of adequate World Wide Web access
and the small number of Chinese language Web sites.
BUSINESS
CBCom is a development stage company incorporated in Delaware in
April, 1997. CBCom was formed to develop telecommunications projects and
Internet-related information services in the People's Republic of China
by establishing joint venture partnerships with Chinese companies having
data networking technologies or installed bases of telecommunications
to which CBCom will contribute United States technology and management
resources. In August, 1997, CBCom acquired selected assets of
Beijing CBCom Telecommunications and Consulting Co., Ltd., a
Chinese private company owned by Gordon Gao, a shareholder and director
of CBCom.
MEMORANDUM OF UNDERSTANDING
CBCom has entered into a memorandum of understanding with Shanghai
Stock Exchange Communication Co., Ltd. ("SSECC") and Shanghai Xingtong
Telecommunications Science & Technology Co., Ltd. to form a Sino-
foreign joint venture to develop a financial data network in China
called "China Financial Network" or "CFN". SSECC is a subsidiary of
the Shanghai Stock Exchange formed as a joint venture between Shanghai
Stock Exchange and Shanghai Stock Central Clearing Company. The
memorandum contemplates that SSECC will provide access to its
existing satellite communication system as well as licenses, permissions
and rights to use the logo, name and promotional information of the
Shanghai Stock Exchange. Shanghai Xingtong Telecommunications will
participate in network design and management to ensure efficient
utilization of the satellite network and will provide technical
assistance. CBCom will provide the resources to collect and compile
global financial information, United States technology, management
resources and capital.
The memorandum of understanding anticipates the project planned
in two phases. Phase I is to market and distribute financial information
in Chinese provided by the Shanghai Stock Exchange over a network to
various terminals throughout China, exclusively targeting Chinese
stockbrokers, financial institutions and corporate users. The financial
information provided will include prices for commodities and futures,
precious metals, Asian and global equities and foreign currencies, global
market indexes and real time international news and commentary. The
information provided will differ from information provided by
competitors in that it will be entirely in Chinese at a lower rate.
Phase II is to market to individual consumers real-time financial data,
news and on-line investment trading bundled as a single service,
developing into the equivalent of a commercial Internet Service Provider.
The parties to the memorandum must enter into a joint venture and
obtain the required approvals from the Chinese government authorities
by December 31, 1999 or may lose the exclusive right to the use of
the SSECC satellite communication system.
SHANGHAI STOCK EXCHANGE COMMUNICATION CO., LTD.
SSECC is in charge of the satellite system utilized by the Shanghai
Stock Exchange to distribute real time data to its members. Shanghai
Stock Exchange is a leading stock exchange in China with 560 member
brokerage companies aggregating 2,700 brokerage offices, 20,000
stockbrokers and 33 non-member regional security exchange centers
throughout China.
SHANGHAI XINGTONG TELECOMMUNICATIONS SCIENCE & TECHNOLOGY CO.
Shanghai Xingtong Telecommunications is a subsidiary of the China
Broadcastg Satellite Communication Company and can utilize its satellite
resources and operating license to provide specialized satellite
communication services. Shanghai Xingtong Telecommunications provides
assistance to numerous Chinese and other foreign companies in
building telecommunications networks.
SATELLITE NETWORK
The satellite network is used to transmit daily stock data and
information to selected brokerage firms and consists of three transponders
(relays) with satellite Asia-1 which are exclusively leased by the
Shanghai Stock Exchange for use by it 24 hours per day. The Shanghai
Stock Exchange utilizes the satellite network approximately 4 to 5 hours
per day during market hours to broadcast real-time financial information.
Even during this high use period, the transponders are utilizing only a
fraction of their 26 megabit bandwidth capacity. CBCom estimates that
approximately only 20% to 30% of the satellite network system capability
is utilized with additional usage limited to possible transactional
growth. CBCom anticipates that it will be able to broadcast on the
unused network during off hours and on the unused bandwidths during high
usage times.
COMPETITION
Presently, there are four Chinese government-affiliated Internet
service providers that control dirct access to the World Wide Web in
China and approximately 100 small independent Internet Service Providers
which are not linked directly to the World Wide Web. There are several
major ISPs which may pose direct competition to the anticipated business
of the joint venture including Prodigy, Inc., as a joint venture including
the Shanghai Municipal Commission of Foreign Relations and Trade and
China Internet Corporation, which was created in 1995 and has been
responsible for the creation of the China Wide Web, an on-line business
information and communications system which spans China. There are four
primary financial information vendors servicing the Chinese market:
Reuters, Telerate (Dow Jones), Hong Kong Data, and Shihua.
THE MARKET
CBCom believes that as the economy of China expands, increased capital
investment will expand which will result in a more sophisticated financial
market and a greater demand for local and global financial information.
Certain obstacles face all Internet development in China including the
lack of local telephone lines, expense of obtaining lines and usage,
required government approvals to link local servers, the lack of
adequate World Wide Web access and the small number of Chinese language
Web sites.
CBCOM'S PAGER BUSINESS
In August, 1997, CBCom acquired selected assets of Beijing CBCom
Telecommunications and Consulting Co., Ltd., a Chinese private company
owned by Gordon Gao, including its paging system development. In April,
1999, CBCom entered into an agreement with Radio, Computer & Telephone
Corporation (RC&T), a Minnesota corporation, for a 10-year license for the
non-exclusive license to market the Microtron 2000 pager, an
alphanumeric paging device originally developed by RC&T pursuant to
the specifications of Beijing CBCom for sale in China. Previously,
RC&T filed a complaint against CBCom and others alleging misuse of
information and appropriation of certain proprietary information in
regard to the Microtron 2000 and the April 1999 agreement was a
settlement of those claims.
In addition to the standard message taking capabilities, the
Microtron 2000 pager works as an electronic organizer with directory
and diary capabilities and has the capability to receive user-defined
information such as stock quotes, bank and brokerage accounts, and
e-mail. CBCom entered into an agreement with Samjin Co., Ltd., a
Korean corporation, for the manufacture of the paging devices. CBCom
ordered an initial 2000 paging units for sale in China. Upon receipt
of the initial shipment, over one-half of the units were not
functioning and required additional adjustments. CBCom has received
the repaired pager units and is beginning to market the pagers.
MARKETING
CBCom intends to continue its sale of the Microtron 2000 in
addition to the development of the joint venture project for the
creation of the China Financial Network. CBCom believes that the
Shanghai Stock Exchange and its members provide a ready market for the
sale of the Microtron 2000 and its capability to receive stock quotes.
The use of individual pagers has grown significantly since their
introduction in 1987. The rapid growth is believed to be a result of
the shortage of fixed-line phones and the growth of the private market
economic system. CBCom believes that pagers will compete favorably
in China with mobile telephones because in addition to the scarcity of
telephone lines and phones, pagers are small, easy to use, have lower
prices and annual fees, are easier to purchase, and provide retrieval of
data such as current affairs, weather forecasts, financial news, stock
quotes and sports scores.
PRIOR JOINT VENTURE
In October, 1997, CBCom and Beijing Great Wall Century
Communications Technology Company, Ltd., an established paging company
in China, entered into a 20-year joint venture contract to establish
a Sino-foreign joint venture company called GCC CBCom (Tianjin)
Communications Company, Ltd. to build a nationwide paging network.
The joint venture company was formed and CBCom advanced $107,500
in organizational and start-up costs. The joint venture was not
commenced and the business license for the joint venture expired.
PROPERTY
CBCom has 19 employees, of which seven are located in the
United States, eight are located in Beijing and four are located in
Shanghai.
The United States corporate headquarters has entered into a
5-year lease for approximately 8,000 square feet at 15260 Ventura
Boulevard, Suite 1200, Sherman Oaks, California 91403 at a monthly
rental of $14,371 of which it subleases approximately 5,775 feet at
a monthly rate of $10,972. The lease will expire in September,
2002.
CBCom has entered into a 5-year lease for its China
headquarters of approximately 6,000 square feet at A No. 9 Dong
Tucheng Road, Heping Street, Chao Yang District, Beijing, China, at
a monthly rental of $6,000 per month payable in the form of shares
of CBCom common stock. The aggregate rental ($360,000) has been
prepaid by the issuance of 625,000 shares of CBCom to Far East
Trading Company, beneficially owned by shareholders of CBCom.
The four employees located in Shanghai are currently
utilizing space in the Shanghai Xingtong Telecommunications Science
& Technology Co. offices.
LITIGATION
CBCom entered into a settlement agreement with Bernard
Luskin, the former Chief Executive Officer of CBCom, in January,
1999, settling an outstanding dispute for unpaid salary and other
compensation. Mr. Luskin had an employment contract with CBCom
which guaranteed payment of his salary through an escrow account
containing 800,000 shares of common stock of Amtec, Inc., which
shares were pledged by Polmont Investments, Ltd., a British Virgin
Islands corporation, the beneficial owner of which is a shareholder
of CBCom.
Through the settlement, the parties agreed that Mr. Luskin
will receive unpaid salary and bonus through May 15, 1999 totaling
$520,833 plus additional compensation as may be determined by
binding arbitration but in no event shall CBCom's liability exceed
the value of the shares held in escrow. Mr. Luskin waived any
rights to satisfy any claims against CBCom from any assets other
than those shares held in the escrow account. CBCom is obligated to
repay Polmont the amount it paid to Mr. Luskin from the sale of its
Amtec, Inc. shares. Polmont has agreed to accept payment in the
form of shares of CBCom, Inc. valued at $0.50 per share.
On August 30, 1999, a law suit was filed in the Superior
Court of the State of California against CBCom, Inc., Max Sun, and
Charles Lesser (Case No. LCO49888) by Com VU Corporation, a Delaware
corporation, based on an alleged breach of a prior agreement between
CBCom and Com VU. The parties entered into a merger agreement on
March 26, 1999, which merger was never effected. Com VU is
alleging CBCom (i) failed to consummate the merger by failure to use
its best efforts to effect it (ii) failed to pay $50,000 in
outstanding debts to two shareholders on behalf of Com Vu (iii)
terminated the agreement improperly and (iv) breached a covenant of
good faith. Com Vu is requesting payment of the $50,000 plus losses
of approximately $15,000 in expenses and costs. CBCom disputes the
allegations of the claims and intends to defend the action vigorously.
MARKET FOR CBCOM'S SECURITIES
There is no market for the securities of CBCom.
MANAGEMENT
Name Age Title
Chian Yi (Max) Sun 35 Chairman of the Board,
President, Director
Charles A. Lesser 52 Secretary, Treasurer, Chief
Financial Officer, Director
Hong Wei (Frank) Zhu 43 Director
Gordon Xia Gao 30 Director
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to the
executive officers of CBCom in 1998 who received an annual
compensation of greater than $100,000.
Car Retirement
Salary Bonus Allowance Plan
Bernard J. Luskin,(1) $350,000 100,000 15,086 $10,000
former CEO
Charles A. Lesser 150,000 0 6,000 9,000
CFO
Steven Meadows(2) 150,000 0 6,000 0
Vice President
(1) $389,583 of total compensation has been deferred and amounts
owed are included in the settlement agreement.
(2) $12,500 has been deferred.
RELATED TRANSACTIONS
Since inception, Max Sun, President, a director, and
controlling shareholder, has extended credit to CBCom and is
expected to continue to extend credit to it. CBCom has executed a
note for the funds borrowed from Mr. Sun. On April 24, 1998 CBCom
converted $1,600,000 of its outstanding note and issued 8,125,000
shares of common stock to Mr. Sun or designee. The outstanding note
provides for interest at 7% per annum but such interest charge has
been waived by Mr. Sun. The note also contains conversion rights
for all outstanding amounts owed subsequent to April 24, 1998, at a
conversion rate of $.50 per share. Between April 24, 1998 and
December 1, 1998, $160,000 of the loan was converted into 320,000
shares of common stock. At December 31, 1998 the balance owed to
Mr. Sun is $495,483.
Polmont Investments, Ltd. has agreed to pay on behalf of
CBCom, Inc., through sale of up to 800,000 of the Amtec, Inc. shares
owned by it, the agreed funds payable to Mr. Luskin in regard to
CBCom's settlement with Mr. Luskin. Polmont Investments, Ltd., a
British Virgin Islands corporation, is controlled by a shareholder
of CBCom and the sibling of the president of CBCom. Polmont has
agreed to accept repayment in the form of shares of CBCom, Inc.
valued at $0.50 per share.
RISK FACTORS
CBCOM IS CURRENTLY OPERATING AT A LOSS
Revenues from CBCom's sales to date have not been sufficient
to cover the costs of such operations and CBCom has borrowed funds
to maintain its operations. Its ability to develop operations is
dependent upon its ability to generate sales of its paging units or
to develop the proposed China Financial Network.
CBCOM COMMENCED OPERATIONS IN 1997 AND HAS A LIMITED OPERATING HISTORY
CBCom commenced operations in 1997 and has only a limited
history of operations which to date have not been profitable. Its
operations are subject to the risks and competition inherent in the
establishment of a relatively new business enterprise. There can be
no assurance that future operations will be profitable. Revenues
and profits, if any, will depend upon various factors, including
market acceptance of its concepts, market awareness, reliability and
acceptance of the Internet, dependability of its distribution
network, and general economic conditions. There is no assurance
that CBCom will achieve its expansion goals and the failure to
achieve such goals would have an adverse impact on it.
NEED FOR ADDITIONAL CAPITAL
CBCom needs additional capital in order to implement its
business plan, to continue its operations and pay outstanding
liabilities. CBCom anticipates that it will seek to raise
additional capital through the sale of its equity or debt securities
or through borrowings from commercial lending institutions. CBCom
has no commitments from any financial sources for such funding and
there is no assurance that CBCom will be able to locate any such
funding. The inability of CBCom to raise additional capital could
result in its inability of continue its operations.
ADVANCES TO AN AFFILIATE
CBCom has borrowed over $2,100,000 from its president and
shareholder. There is no commitment for any additional loans to be
made to CBCom from such shareholder. If CBCom is unable to generate
sales or other revenue sources, CBCom may require additional
borrowings in order to continue development of its operations. The
current loan to the affiliate is unsecured and is convertible into
shares of CBCom at $.50 per share.
PRIOR JOINT VENTURE DID NOT SUCCEED
CBCom entered into an earlier joint venture for the
development of its paging network. CBCom was unable to provide the
capital required to fund the joint venture and the term of the joint
venture expired without development. There is no assurance that
CBCom will be able to provide the funding necessary in the proposed
joint venture with SSECC. If it is unable to provide such capital,
the proposed business plan of the joint venture would not be able to
continue.
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES
Certain of CBCom's officers and directors reside outside the
United States. Many of the assets of these persons are, and CBCom
anticipates that a substantial portion of the assets that may
developed or acquired by it will be located outside the United
States. As a result, it may not be possible for investors to effect
service of process within the United States upon such persons, or to
enforce against CBCom's assets or against such personal judgments
obtained in United States courts predicated upon the liability
provisions, and most particularly the civil liability provisions, of
the United States securities laws or state corporation or other law.
INVESTMENT IN FAR EAST GENERALLY
The Company anticipates that it will initially focus its
development efforts on telecommunication projects and opportunities
located in China and the Far East. Because of government controls
and lack of established information systems, information regarding
projects in which the Company may participate located in China and
the Far East will be difficult for United States investors to obtain
and investors will be unable to track the progress of the Company.
In addition, if the Company begins operations in China or the Far
East it will be subject to the risks incident to the ownership and
operation of businesses therein. These risks include, among others,
the risks of internal political or civil unrest, war, or government
restrictions. These risks are dynamic and difficult to quantify.
The Company will be subject to the risks normally associated with
changes in general national economic conditions or local market
conditions, competition, patronage, changes in market rates, and the
need to periodically upgrade and replace equipment to maintain
desirability, and to pay the costs thereof. Although many of the
governments of the countries of the Far East have liberalized
policies on international trade, foreign ownership and development,
investment, and currency repatriation, increasing both international
trade and investment accordingly, such policies might change
unexpectedly. The Company will be affected by the rules and
regulations regarding foreign ownership of real and personal
property, including telecommunication switching stations, land lines
and other property. Such rules may change quickly and dramatically
which may have an adverse impact on ownership and may result in a
loss without recourse of property or assets of the Company.
INVESTMENT IN CHINA IN PARTICULAR
Because the operations of the Company are expected to be
based to a substantial extent in China, the Company will be subject
to the rules and restrictions governing China's legal and economic
system as well as general economic and political conditions in that
country. These include the following:
Political and Economic Matters. Under its current leadership,
the government of the People's Republic of China ("PRC") has been
pursuing economic reform policies, which include
encouragement of private economic activity and greater economic
decentralization. There can be no assurance, however, that the
Chinese government will continue to pursue such policies, or that
such policies will be successful if pursued. Changes in policies
made by the Chinese government may result in new laws, regulations,
or the interpretation thereof, confiscatory taxation, restrictions
on imports, currency devaluations or the expropriation of private
enterprise which may, in turn, adversely affect the Company.
Furthermore, business operations in China can become subject to the
risk of nationalization, which could result in the total loss of
ownership and control of any assets or operations that may be
developed by the Company in China. Also, economic development may
be limited by the imposition of austerity measures intended to
reduce inflation, the inadequate development of an infrastructure,
and the potential unavailability of adequate power and water,
transportation, communication networks, raw materials and parts.
Legal System. The PRC's legal system is a civil law system
based on written statutes. Unlike the common law system in the
United States, decided legal cases in the PRC have little value as
precedents. Furthermore, the PRC does not have a well-developed
body of laws governing foreign enterprises. Definitive regulations
and policies with respect to such matters as the permissible
percentage of foreign investment and permissible rates of equity
returns have not yet been published, statements regarding these
evolving policies have been conflicting, and any such policies, as
administered, are likely to be subject to broad interpretation and
modification, perhaps on a case-by-case basis. As the legal system
in the PRC develops with respect to such new forms of enterprise,
foreign investors may be adversely affected by new laws, changes in
existing laws (or interpretation thereof) and the preemption of
provincial or local laws by national laws. The Company's operations
in China, if any are developed (of which there can be no assurance)
will be subject to administrative review and approval by various
national and local agencies of the PRC government. Management
intends that the Company's operations will comply with applicable
administrative requirements; however, there is no assurance that the
Company will be able to timely obtain the necessary administrative
approvals for any projects that it determines to develop.
Foreign Currency Exchange. The Renminbi ("Rmb"), the
currency of China, is not a freely convertible currency. Both
conversion of Rmb into foreign currencies and the remittance of Rmb
abroad are subject to the PRC government approval. The Company
intends to develop telecommunication systems in the Far East
including China and anticipates that initially it may earn revenues,
if any, and incur costs, in Rmb.
Prior to January 1, 1994, Rmb earned within China were not
freely convertible into foreign currencies except with government
permission, at rates determined at swap centers, where the exchange
rates often differed substantially from the official rates quoted by
the People's Bank of China. On January 1, 1994, the People's Bank
of China introduced a managed floating exchange rate system based on
the market supply and demand and proposed to establish a unified
foreign exchange inter-bank market among designated banks. In place
of the official rate and the swap center rate, the People's Bank of
China publishes a daily exchange rate for Rmb based on the previous
day's dealings in the inter-bank market. It is expected that swap
centers will be phased out. However, the unification of exchange
rates does not imply full convertability of Rmb into United States
dollars or other foreign currencies. Payment for imported materials
and remittance of earnings outside of China are subject to the
availability of foreign currency which is dependent on the foreign
currency-denominated earnings of the entity or allocated to the
Company by the government at official exchange rates.
Approval for exchange at the exchange center is granted to
enterprises in China for valid reasons such as purchases of imported
goods and remittance of earnings. While conversion of Rmb into
dollars or other foreign currencies can generally be effected at the
exchange center, there is no guarantee that it can be effected at
all times. There is still uncertainty as to how foreign enterprises
will be treated under this new system or whether the system will be
changed again in the future. In the event of shortages of foreign
currency, the Company may be unable to convert sufficient Renminbi
into foreign currency to enable it to comply with foreign currency
payment obligations it may have.
PRC Regulation of the Telecommunications Industry. The
Ministry of Posts and Telecommunications (the "MPT") regulates the
telecommunications industry in China. The MPT directly or
indirectly regulates entry into the telecommunications industry,
scope of permissible business, interconnection and transmission line
arrangements, technology and equipment standards, and other aspects
of the Chinese telecommunications industry. Such regulation may
limit the Company's flexibility to respond to certain development
opportunities. In addition, changes in the regulations or policies
governing such regulatory framework could have an adverse effect on
the Company. The Company may have to obtain certain licenses, if
required, from the MPT in order to commence its proposed business.
There is no assurance that it will be able to obtain such licenses,
or if obtained, that they will not be untimely revoked or suspended.
The rates that the Company will be permitted to charge for
telecommunications services, if any are developed, are subject to
regulation by the State Planning Commission, the MPT, and relevant
Provincial Price Bureaus. Once authorized by such regulatory
agencies, there can be no assurance that changes in the tariffs and
rates would not have a material adverse effect on any Company
business and results of operations, if any had been developed.
MANAGEMENT AND AFFILIATES OWN ENOUGH SHARES TO CONTROL SHAREHOLDER VOTE
CBCom's executive officers and directors beneficially own
approximately 24.7% of the outstanding common stock of CBCom. These
officers and directors do not have controlling interest over matters
requiring shareholder approval. Over 5,750,000 shares of the
outstanding common stock of CBCom are owned by companies or
individuals with familial relationships to the officers and
directors of CBCom, over which such officers and directors claim no
beneficial ownership or voting control. However, taken together the
shares owned by the executive officers and directors and those
individuals or entities with familial relationships have controlling
interest over matters requiring stockholder approval, including the
election of directors and the approval of material corporate matters
such as change of control transactions. The effects of such control
could be to delay or prevent any attempt to change control of CBCom
instigated by shareholder action without management support.
ISSUANCE OF FUTURE SHARES MAY DILUTE INVESTORS SHARE VALUE
The Certificate of Incorporation as amended of CBCom
authorizes the issuance of 80,000,000 shares of common stock and
20,000,000 shares of preferred stock. The future issuance of all or
part of the remaining authorized common stock may result in
substantial dilution in the percentage of the Company's common stock
held by the its then existing shareholders. Moreover, any common
stock issued in the future may be valued on an arbitrary basis
by CBCom. The issuance of the Company's shares for future services or
acquisitions or other corporate actions may have the effect of
diluting the value of the shares held by investors, and might have
an adverse effect on any trading market, should a trading market
develop for the Company's common stock.
THE POSSIBILITY OF CBCOM ISSUING PREFERRED STOCK WITH CERTAIN
PREFERENCES MAY DEPRESS MARKET PRICE OF THE COMMON STOCK
CBCom has 20,000,000 shares of non-designated preferred
stock authorized which it may issue from time to time by action of
the Board of Directors. The Board of Directors may designate series
or classes of preferred shares without shareholder consent which
designations may give the holders of the preferred stock voting
control and other preferred rights such as to liquidation and
dividends. The authority of the Board of Directors to issue such
stock without shareholder consent may have a depressive effect on
the market price of CBCom's common stock even prior to any such
designation or issuance of the preferred stock.
THE POSSIBILITY OF ISSUING PREFERRED STOCK FOR ANTI-TAKEOVER EFFECT
COULD PREVENT TAKEOVERS FAVORED BY SHAREHOLDERS
The Board of Directors has the authority, without further
approval of stockholders, to issue preferred stock, having such
rights, preferences and privileges as the Board of Directors may
determine. Any such issuance of shares of preferred stock, under
certain circumstances, could have the effect of delaying or
preventing a change in control of CBCom or other take-over attempt
and could adversely materially affect the rights of holders of
shares of the common stock.
OFFICERS AND DIRECTORS HAVE LIMITED LIABILITY AND HAVE INDEMNITY
RIGHTS
The Certificate of Incorporation and By-Laws of CBCom provide that
CBCom indemnify its officers and directors against losses sustained
or liabilities incurred which arise from any transaction in such
officer's or director's respective managerial capacity unless such
officer or director violates a duty of loyalty, did not act in good
faith, engaged in intentional misconduct or knowingly violated the
law, approved an improper dividend, or derived an improper benefit
from the transaction. The Company's Certificate of Incorporation
and By-Laws also provide for the indemnification by it of its
officers and directors against any losses or liabilities incurred as
a result of the manner in which such officers and directors operate
the Company's business or conduct its internal affairs, provided
that in connection with these activities they act in good faith and
in a manner which they reasonably believe to be in, or not opposed
to, the best interests of the Company and their conduct does not
constitute gross negligence, misconduct or breach of fiduciary
obligations.
PENNY STOCK REGULATION
Upon commencement of trading in the Company's stock, if a
market is developed and if the Company is accepted for trading on
the OTC Bulletin Board (of which there can be no assurance) the
Company's common stock may be deemed a penny stock. Penny stocks
generally are equity securities with a price of less than $5.00 per
share other than securities registered on certain national
securities exchanges or quoted on the Nasdaq Stock Market, provided
that current price and volume information with respect to
transactions in such securities is provided by the exchange or
system. The Company's securities may be subject to "penny stock
rules" that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally those with
assets in excess of $1,000,000 or annual income exceeding $200,000
or $300,000 together with their spouse). For transactions covered
by these rules, the broker-dealer must make a special suitability
determination for the purchase of such securities and have received
the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny
stock, unless exempt, the "penny stock rules" require the delivery,
prior to the transaction, of a disclosure schedule prescribed by the
Commission relating to the penny stock market. The broker-dealer
also must disclose the commissions payable to both the broker-dealer
and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing
recent price information on the limited market in penny stocks.
Consequently, the "penny stock rules" may restrict the ability of
broker-dealers to sell the Company's securities. The foregoing
required penny stock restrictions will not apply to the Company's
securities if such securities maintain a market price of $5.00 or
greater. There can be no assurance that the price of the Company's
securities will reach or maintain such a level.
COMPUTER SYSTEMS REDESIGNED FOR YEAR 2000
Many existing computer programs use only two digits to
identify a year in such program's date field. These programs were
designed and developed without consideration of the impact of the
change in the century for which four digits will be required to
accurately report the date. If not corrected, many computer
applications could fail or create erroneous results by or following
the year 2000 (the "Year 2000 problem"). Many of the computer
programs containing such date language problems have been corrected
by the companies or governments operating such programs. The
Company's proposed operations will be dependent upon the services of
other companies, particularly those involved in the
telecommunications and Internet industry. The Company does not know
what steps, if any, have been taken by any of these companies or by
the government of China in regard to the Year 2000 problem. The
Company has not made inquiries as to the Year 2000 Problem readiness
of the Shanghai Stock Exchange satellite network. The Company's
operations will be severally curtailed if the SSECC suffer a shut
down or malfunction based on the Year 2000 Problem.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Successor Issuer Election.
Upon effectiveness of the merger, pursuant to Rule 12g-3(a)
of the General Rules and Regulations of the Securities and Exchange
Commission, CBCom became the successor issuer to Abbacy Corporation
for reporting purposes under the Securities Exchange Act of 1934 and
elects to report under the Act effective herewith.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
James M. Cassidy, the director and President of Abbacy
Corporation, resigned those offices effective with the effectiveness
of the merger of Abbacy into CBCom, Inc.
ITEM 7. FINANCIAL STATEMENTS
No financial statements are filed herewith. The Registrant
shall file financial statements by amendment hereto not later than
60 days after the date that this initial report on Form 8-K must be
filed.
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
EXHIBITS
1.1 Agreement and Plan of Merger and amendment thereto between
Abbacy Corporation and CBCom, Inc.
1.2* Certificate of Incorporation of CBCom, Inc. and amendments
1.3* By-Laws of CBCom, Inc.
* To be filed by amendment
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
CBCOM, INC.
/s/ Max Sun
President, Director
October 20, 1999
Agreement and Plan of Merger
AGREEMENT AND PLAN OF MERGER between ABBACY CORPORATION, a
Delaware corporation ("Abbacy"), and CBCOM, INC., a Delaware
corporation ("CBCom"), Abbacy and CBCom being sometimes referred to
herein as the "Constituent Corporations."
WHEREAS, the board of directors of each Constituent
Corporation deems it advisable that the Constituent Corporations
merge into a single corporation in a transaction intended to qualify
as a reorganization within the meaning of Section368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "Merger");
NOW, THEREFORE, in consideration of the premises and the
respective mutual covenants, representations and warranties herein
contained, the parties agree as follows:
1. SURVIVING CORPORATION. Abbacy shall be merged with
and into CBCom which shall be the surviving reporting corporation
(hereinafter the "Surviving Corporation") in accordance with the
applicable laws of the State of Delaware.
2. MERGER DATE. The Merger shall become effective (the
"Merger Date") upon the completion of:
2.1 Adoption of this Agreement by Abbacy pursuant to the
General Corporation Law of Delaware and by CBCom pursuant to the
General Corporation Law of Delaware.
2.2 Execution and filing of the Certificate of Merger
with the Secretary of State of the State of Delaware in accordance
with the General Corporation Law of Delaware.
3. TIME OF FILINGS. The Certificate of Merger shall be
filed with the Secretary of State of Delaware upon the approval, as
required, of this Agreement by the Constituent Corporations and the
fulfillment or waiver of the terms and conditions herein.
4. GOVERNING LAW. The Surviving Corporation shall be
governed by the laws of the State of Delaware.
5. CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of CBCom shall be the Certificate of Incorporation of
the Surviving Corporation from and after the Merger Date, subject to
the right of the Surviving Corporation to amend its Certificate of
Incorporation in accordance with the laws of the State of Delaware.
6. BYLAWS. The Bylaws of the Surviving Corporation
shall be the Bylaws of CBCom as in effect on the date of this
Agreement.
7. NAME OF SURVIVING CORPORATION. The Surviving
Corporation will continue to use its name "CBCom, Inc." or such name
as it may choose and shall be available.
8. CONVERSION. The mode of carrying the merger into
effect and the manner and basis of converting the shares of Abbacy
into shares of the Surviving Corporation are as follows:
8.1 The aggregate number of shares of Abbacy common stock
issued and outstanding on the Merger Date shall, by virtue of the
merger and without any action on the part of the holders thereof, be
converted into an aggregate of 250,000 shares of CBCom common stock
adjusted by any increase for fractional shares and reduced by any
Dissenting Shares (defined below).
8.2 Upon completion of the Merger, there shall be
15,885,500 shares of CBCom common stock issued and outstanding,
subject to such adjustments, held as follows: 15,635,500 shares of
common stock held by the shareholders of CBCom and 250,000 common
shares held by the existing shareholders of Abbacy.
8.3 The CBCom common stock shall be issued to the holders
of such Abbacy common stock in exchange for their shares on a pro
rata basis in accordance with each holder's relative ownership of
the Abbacy common stock that is being exchanged.
8.4 The shares of CBCom common stock to be issued in
exchange for Abbacy common stock hereunder shall be proportionately
reduced by any shares owned by Abbacy shareholders who shall have
timely objected to the Merger (the "Dissenting Shares") in
accordance with the provisions of General Corporation Law of
Delaware which objections will be dealt with as provided in those
sections.
8.5 Each share of Abbacy common stock that is issued and
outstanding and owned by Abbacy on the Merger Date shall, by virtue
of the Merger and without any action on the part of Abbacy, be
retired and canceled.
8.6 Each certificate evidencing ownership of shares of
CBCom common stock issued and outstanding on the Merger Date or held
by CBCom in its treasury shall continue to evidence ownership of the
same number of shares of CBCom common stock.
9. EXCHANGE OF CERTIFICATES. As promptly as practicable
after the Merger Date, each holder of an outstanding certificate or
certificates theretofore representing shares of Abbacy common stock
(other than certificates representing Dissenting Shares) shall
surrender such certificate(s) for cancellation to the party
designated by the Surviving Corporation to handle such exchange (the
"Exchange Agent"), and shall receive in exchange a certificate or
certificates representing the number of full shares of CBCom common
stock into which the shares of Abbacy common stock represented by
the certificate or certificates so surrendered shall have been
converted.
10. UNEXCHANGED CERTIFICATES. Until surrendered, each
outstanding certificate that prior to the Merger Date represented
Abbacy common stock (other than certificates representing Dissenting
Shares) shall be deemed for all purposes, other than the payment of
dividends or other distributions, to evidence ownership of the
number of shares of CBCom common stock into which it was converted.
No dividend or other distribution payable to holders of CBCom common
stock as of any date subsequent to the Merger Date shall be paid to
the holders of outstanding certificates of Abbacy common stock;
provided, however, that upon surrender and exchange of such
outstanding certificates (other than certificates representing
Dissenting Shares), there shall be paid to the record holders of the
certificates issued in exchange therefor the amount, without
interest thereon, of dividends and other distributions that would
have been payable subsequent to the Merger Date with respect to the
shares of CBCom common stock represented thereby.
11. BOARD OF DIRECTORS AND OFFICERS. The members of the
board of directors of the Surviving Corporation shall be the members
of the board of directors of CBCom on the Merger Date or such others
as CBCom may designate. The officers of the Surviving Corporation
shall be the officers of CBCom on the Merger Date or such others as
CBCom may designate.
12. EFFECT OF THE MERGER. On the Merger Date, the
separate existence of Abbacy shall cease (except insofar as
continued by statute), and it shall be merged with and into the
Surviving Corporation. All the property, real, personal, and mixed,
of each of the Constituent Corporations, and all debts due to either
of them, shall be transferred to and vested in the Surviving
Corporation, without further act or deed. The Surviving Corporation
shall thenceforth be responsible and liable for all the liabilities
and obligations, including liabilities to holders of Dissenting
Shares, of each of the Constituent Corporations, and any claim or
judgment against either of the Constituent Corporations may be
enforced against the Surviving Corporation.
13. REPRESENTATIONS AND WARRANTIES OF ABBACY. Abbacy
represents and warrants that:
13.1 CORPORATE ORGANIZATION AND GOOD STANDING. Abbacy is
a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware, and is qualified to do
business as a foreign corporation in each jurisdiction, if any, in
which its property or business requires such qualification.
13.2 REPORTING COMPANY. Abbacy has filed with the
Securities and Exchange Commission a registration statement on Form
F-10 which became effective pursuant to the Securities Exchange Act
of 1934 and is a reporting company pursuant to Section12 thereunder.
13.3 REPORTING COMPANY STATUS. Abbacy has timely filed
and is current on all reports required to be filed by it pursuant to
the Securities Exchange Act of 1934.
13.4 CAPITALIZATION. Abbacy's authorized capital stock
consists of 120,000,000 shares of common stock, $.0001 par value, of
which 5,000,000 shares are issued and outstanding, and 20,000,000
shares of non-designated preferred stock of which no shares are
designated or issued.
13.5 ISSUANCE OF STOCK. All the outstanding shares of its
common stock are duly authorized and validly issued, fully paid and
non-assessable.
13.6 STOCK RIGHTS. There are no stock grants, options,
rights, warrants or other rights to purchase or obtain the Abbacy
common or preferred stock issued or committed to be issued.
13.7 CORPORATE AUTHORITY. Abbacy has all requisite
corporate power and authority to own, operate and lease its
properties, to carry on its business as it is now being conducted
and to execute, deliver, perform and conclude the transactions
contemplated by this Agreement and all other agreements and
instruments related to this Agreement.
13.8 AUTHORIZATION. Execution of this Agreement has been
duly authorized and approved by Abbacy's board of directors.
13.9 SUBSIDIARIES. Abbacy has no subsidiaries.
13.10 FINANCIAL STATEMENTS. Abbacy's audited financial
statements of June 7, 1999, copies of which will have been delivered
by Abbacy to CBCom prior to the Merger Date (the "Abbacy Financial
Statements"), fairly present the financial condition of Abbacy as of
the date therein and the results of its operations for the periods
then ended in conformity with generally accepted accounting
principles consistently applied.
13.11 ABSENCE OF UNDISCLOSED LIABILITIES. Except to the
extent reflected or reserved against in the Abbacy Financial
Statements, Abbacy did not have at that date any liabilities or
obligations (secured, unsecured, contingent, or otherwise) of a
nature customarily reflected in a corporate balance sheet prepared
in accordance with generally accepted accounting principles.
13.12 NO MATERIAL CHANGES. There has been no material
adverse change in the business, properties, or financial condition
of Abbacy since the date of the Abbacy Financial Statements.
13.13 LITIGATION. There is not, to the knowledge of
Abbacy, any pending, threatened, or existing litigation, bankruptcy,
criminal, civil, or regulatory proceeding or investigation,
threatened or contemplated against Abbacy or against any of its
officers.
13.14 CONTRACTS. Abbacy is not a party to any material
contract not in the ordinary course of business that is to be
performed in whole or in part at or after the date of this Agreement.
13.15 TITLE. Abbacy has good and marketable title to all
the real property and good and valid title to all other property
included in the Abbacy Financial Statements. Except as set out in
the balance sheet thereof, the properties of Abbacy are not subject
to any mortgage, encumbrance, or lien of any kind except minor
encumbrances that do not materially interfere with the use of the
property in the conduct of the business of Abbacy.
13.16 TAX RETURNS. All federal, state, county, municipal,
local, foreign and other taxes and assessments, including any and
all interest, penalties and additions imposed with respect to such
amounts, have been properly prepared and filed by Abbacy. The
provisions for federal and state taxes reflected in the Abbacy
Financial Statements are adequate to cover any such taxes that may
be assessed against Abbacy in respect of its business and its
operations during the periods covered by the Abbacy Financial
Statements and all prior periods.
13.17 NO VIOLATION. Consummation of the merger will not
constitute or result in a breach or default under any provision of
any charter, bylaw, indenture, mortgage, lease, or agreement, or any
order, judgment, decree, law, or regulation to which any property of
Abbacy is subject or by which Abbacy is bound.
14. REPRESENTATIONS AND WARRANTIES OF CBCOM. CBCom
represents and warrants that:
14.1 CORPORATE validly existing, and in good standing
under the laws of the State of Delaware and is qualified to do
business as a foreign corporation in each jurisdiction, if any, in
which its property or business requires such qualification.
14.2 CAPITALIZATION. CBCom's authorized capital stock
consists of 100,000,000 shares of common stock, $.001 par value, of
which 15,635,500 shares are issued and outstanding, and no shares of
preferred stock.
14.3 ISSUED STOCK. All the outstanding shares of its
common stock are duly authorized and validly issued, fully paid and
non-assessable.
14.4 CORPORATE AUTHORITY. CBCom has all requisite
corporate power and authority to own, operate and lease its
properties, to carry on its business as it is now being conducted
and to execute, deliver, perform and conclude the transactions
contemplated by this Agreement and all other agreements and
instruments related to this Agreement.
14.5 AUTHORIZATION. Execution of this Agreement has been
duly authorized and approved by CBCom's board of directors.
14.6 SUBSIDIARIES. CBCom has no subsidiaries.
14.7 FINANCIAL STATEMENTS. CBCom's unaudited financial
statements of December 31, 1998, copies of which will have been
delivered by CBCom to Abbacy by the Merger Date (the "CBCom
Financial Statements"), are correct and fairly present the financial
condition of CBCom as of the dates and for the periods involved, and
such statements were prepared in accordance with generally accepted
accounting principles consistently applied.
14.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except to the
extent reflected or reserved against in the CBCom Financial
Statements, CBCom did not have at that date any liabilities or
obligations (secured, unsecured, contingent, or otherwise) of a
nature customarily reflected in a corporate balance sheet prepared
in accordance with generally accepted accounting principles.
14.9 NO MATERIAL CHANGES. Except as reflected by
attached exhibit, there has been no material adverse change in the
business, properties, or financial condition of CBCom since the date
of the CBCom Financial Statements.
14.10 LITIGATION. Except as heretofore disclosed to
Abbacy, there is not, to the knowledge of CBCom, any pending,
threatened, or existing litigation, bankruptcy, criminal, civil, or
regulatory proceeding or investigation, threatened or contemplated
against CBCom or against any of its officers.
14.11 CONTRACTS. CBCom is not a party to any material
contract not in the ordinary course of business that is to be
performed in whole or in part at or after the date of this Agreement.
14.12 TITLE. CBCom has good and marketable title to all
the real property and good and valid title to all other property
included in the CBCom Financial Statements. Except as set out in
the balance sheet thereof, the properties of CBCom are not subject
to any mortgage, encumbrance, or lien of any kind except minor
encumbrances that do not materially interfere with the use of the
property in the conduct of the business of CBCom.
14.13 NO VIOLATION. Consummation of the Merger will not
constitute or result in a breach or default under any provision of
any charter, bylaw, indenture, mortgage, lease, or agreement, or any
order, judgment, decree, law, or regulation to which any property of
CBCom is subject or by which CBCom is bound.
15. CONDUCT OF ABBACY PENDING THE MERGER DATE. Abbacy
covenants that between the date of this Agreement and the Merger Date:
15.1 No change will be made in Abbacy's certificate of
incorporation or bylaws.
15.2 Abbacy will not make any change in its authorized or
issued capital stock, declare or pay any dividend or other
distribution or issue, encumber, purchase, or otherwise acquire any
of its capital stock other than as provided herein.
15.3 Abbacy will use its best efforts to maintain and
preserve its business organization, employee relationships, and
goodwill intact, and will not enter into any material commitment
except in the ordinary course of business.
16. CONDUCT OF CBCOM PENDING THE MERGER DATE. CBCom
covenants that between the date of this Agreement and the Merger Date:
16.1 No change will be made in CBCom's certificate of
incorporation or bylaws.
16.2 CBCom will not make any change in its authorized or
issued capital stock, declare or pay any dividend or other
distribution or issue, encumber, purchase, or otherwise acquire any
of its capital stock otherwise than as provided herein.
16.3 CBCom will use its best efforts to maintain and
preserve its business organization, employee relationships, and
goodwill intact, and will not enter into any material commitment
except in the ordinary course of business.
17. CONDITIONS PRECEDENT TO OBLIGATION OF ABBACY.
Abbacy's obligation to consummate the Merger shall be subject to
fulfillment on or before the Merger Date of each of the following
conditions, unless waived in writing by Abbacy:
17.1 CBCOM'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of CBCom set forth herein shall be
true and correct at the Merger Date as though made at and as of that
date, except as affected by transactions contemplated hereby.
17.2 CBCOM'S COVENANTS. CBCom shall have performed all
covenants required by this Agreement to be performed by it on or
before the Merger Date.
17.3 APPROVAL. This Agreement shall have been approved in
such manner as is required by law including all appropriate action
by directors and, if required, by shareholders.
17.4 SUPPORTING DOCUMENTS OF CBCOM. CBCom shall have
delivered to Abbacy supporting documents in form and substance
satisfactory to Abbacy to the effect that:
(i) CBCom is a corporation duly organized, validly
existing, and in good standing.
(ii) CBCom's authorized and issued capital stock is
as set forth herein.
(iii) The execution and consummation of this
Agreement have been duly authorized in such manner
as is required by law including all appropriate
action by directors and, if required, by shareholders.
18. CONDITIONS PRECEDENT TO OBLIGATION OF CBCOM. CBCom's
obligation to consummate the Merger shall be subject to fulfillment
on or before the Merger Date of each of the following conditions,
unless waived in writing by CBCom:
18.1 ABBACY'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Abbacy set forth herein shall be
true and correct at the Merger Date as though made at and as of that
date, except as affected by transactions contemplated hereby.
18.2 ABBACY'S COVENANTS. Abbacy shall have performed all
covenants required by this Agreement to be performed by it on or
before the Merger Date.
18.3 APPOVAL. This Agreement shall have been approved in
such manner as is required by law including all appropriate action
by directors and, if required, by shareholders.
18.4 SUPPORTING DOCUMENTS OF ABBACY. Abbacy shall have
delivered to CBCom supporting documents in form and substance
satisfactory to CBCom to the effect that:
(i) Abbacy is a corporation duly organized, validly
existing, and in good standing.
(ii) Abbacy's authorized and issued capital stock is as set
forth herein.
(iii) The execution and consummation of this
Agreement have been duly authorized in such manner
as is required by law including all appropriate
action by directors and, if required, by shareholders.
19. ACCESS. From the date hereof to the Merger Date,
CBCom and Abbacy shall provide each other with such information and
permit each other's officers and representatives such access to its
properties and books and records as the other may from time to time
reasonably request. If the merger is not consummated, all documents
received in connection with this Agreement shall be returned to the
party furnishing such documents, and all information so received
shall be treated as confidential.
20. CLOSING. The transfers and deliveries to be made
pursuant to this Agreement (the "Closing") shall be made by and take
place at the offices of the Exchange Agent or other location
designated by the Constituent Corporations without requiring the
meeting of the parties hereof. All proceedings to be taken and all
documents to be executed at the Closing shall be deemed to have been
taken, delivered and executed simultaneously, and no proceeding
shall be deemed taken nor documents deemed executed or delivered
until all have been taken, delivered and executed.
20.1 Any copy, facsimile telecommunication or other
reliable reproduction of the writing or transmission required by
this Agreement or any signature required thereon may be used in lieu
of an original writing or transmission or signature for any and all
purposes for which the original could be used, provided that such
copy, facsimile telecommunication or other reproduction shall be a
complete reproduction of the entire original writing or transmission
or original signature.
20.2 At the Closing, Abbacy shall deliver to the Exchange
Agent in satisfactory form, if not already delivered to CBCom:
(i) A list of the holders of the shares of Abbacy common
stock being exchanged with an itemization of the number of shares
held by each, the address of each holder, and the aggregate number
of shares of CBCom common stock to be issued to each holder;
(ii) Evidence of the execution and adoption of this
Agreement in such manner as is required by law including all
appropriate action by directors and, if required, by shareholders;
(iii) Certificate of the Secretary of State of Delaware as
of a recent date as to the good standing of Abbacy;
(iv) Certified copies of the resolutions of the board of
directors of Abbacy authorizing the execution of this Agreement and
the consummation of the Merger;
(v) The Abbacy Financial Statements;
(vi) Secretary's certificate of incumbency of the officers
and directors of Abbacy; and
(vii) Any document as may be specified herein or required
to satisfy the conditions, representations and warranties enumerated
elsewhere herein.
20.3 At the Closing, CBCom shall deliver to the Exchange
Agent in satisfactory form, if not already delivered to Abbacy:
(i) A list of the shareholders of record of CBCom,
including, wherever available, addresses and telephone numbers;
(ii) Evidence of the execution and adoption of this
Agreement in such manner a is required by law including all
appropriate action by directors and, if required, by shareholders;
(iii) Certificate of the Secretary of State of Delaware as
of a recent date as to the good standing of CBCom;
(iv) Certified copies of the resolutions of the board of
directors of CBCom authorizing the execution of this Agreement and
the consummation of the merger;
(v) The CBCom Financial Statements;
(vi) Secretary's certificate of incumbency of the officers
and directors of CBCom; and
(vii) Any document as may be specified herein or required
to satisfy the conditions, representations and warranties enumerated
elsewhere herein.
21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Constituent Corporations set
out herein shall survive the Merger Date.
22. ARBITRATION.
22.1 SCOPE. The parties hereby agree that any and all
claims (except only for requests for injunctive or other equitable
relief) whether existing now, in the past or in the future as to
which the parties or any affiliates may be adverse parties, and
whether arising out of this agreement or from any other cause, will
be resolved by arbitration before the American Arbitration
Association within the District of Columbia.
22.2 CONSENT TO JURISDICTION, SITUS AND JUDGEMENT. The
parties hereby irrevocably consent to the jurisdiction of the
American Arbitration Association and the situs of the arbitration
within the District of Columbia. Any award in arbitration may be
entered in any domestic or foreign court having jurisdiction over
the enforcement of such awards.
22.3 APPLICABLE LAW. The law applicable to the arbitration
and this agreement shall be that of the District of Columbia,
determined without regard to its provisions which would otherwise
apply to a question of conflict of laws.
22.4 DISCLOSURE AND DISCOVERY. The arbitrator may, in its
discretion, allow the parties to make reasonable disclosure and
discovery in regard to any matters which are the subject of the
arbitration and to compel compliance with such disclosure and
discovery order. The arbitrator may order the parties to comply
with all or any of the disclosure and discovery provisions of the
Federal Rules of Civil Procedure, as they then exist, as may be
modified by the arbitrator consistent with the desire to simplify
the conduct and minimize the expense of the arbitration.
22.5 RULES OF LAW. Regardless of any practices of
arbitration to the contrary, the arbitrator will apply the rules of
contract and other law of the jurisdiction whose law applies to the
arbitration so that the decision of the arbitrator will be, as much
as possible, the same as if the dispute had been determined by a
court of competent jurisdiction.
22.6 FINALITY AND FEES. Any award or decision by the
American Arbitration Association shall be final, binding and
non-appealable except as to errors of law or the failure of the
arbitrator to adhere to the arbitration provisions contained in this
agreement. Each party to the arbitration shall pay its own costs
and counsel fees except as specifically provided otherwise in this
agreement.
22.7 MEASURE OF DAMAGES. In any adverse action, the
parties shall restrict themselves to claims for compensatory damages
and\or securities issued or to be issued and no claims shall be made
by any party or affiliate for lost profits, punitive or multiple
damages.
22.8 COVENANT NOT TO SUE. The parties covenant that under
no conditions will any party or any affiliate file any action
against the other (except only requests for injunctive or other
equitable relief) in any forum other than before the American
Arbitration Association, and the parties agree that any such action,
if filed, shall be dismissed upon application and shall be referred
for arbitration hereunder with costs and attorney's fees to the
prevailing party.
22.9 INTENTION. It is the intention of the parties and
their affiliates that all disputes of any nature between them,
whenever arising, whether in regard to this agreement or any other
matter, from whatever cause, based on whatever law, rule or
regulation, whether statutory or common law, and however
characterized, be decided by arbitration as provided herein and that
no party or affiliate be required to litigate in any other forum any
disputes or other matters except for requests for injunctive or
equitable relief. This agreement shall be interpreted in
conformance with this stated intent of the parties and their
affiliates.
22.10 SURVIVAL. The provisions for arbitration contained
herein shall survive the termination of this agreement for any reason.
23. GENERAL PROVISIONS.
23.1 FURTHER ASSURANCES. From time to time, each party
will execute such additional instruments and take such actions as
may be reasonably required to carry out the intent and purposes of
this Agreement.
23.2 WAIVER. Any failure on the part of either party
hereto to comply with any of its obligations, agreements, or
conditions hereunder may be waived in writing by the party to whom
such compliance is owed.
23.3 BROKERS. Each party agrees to indemnify and hold
harmless the other party against any fee, loss, or expense arising
out of claims by brokers or finders employed or alleged to have been
employed by the indemnifying party.
23.4 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been given
if delivered in person or sent by prepaid first-class certified
mail, return receipt requested, or recognized commercial courier
service, as follows:
If to Abbacy, to:
Abbacy Corporation
1504 R Street, N.W.
Washington, D.C. 20009
If to CBCom, to
CBCom, Inc.
15260 Ventura Boulevard
Suite 1200
Sherman Oaks, California 91403
24. ASSIGNMENT. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their
successors and assigns; provided, however, that any assignment by
either party of its rights under this Agreement without the written
consent of the other party shall be void.
25. COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument. Signatures sent by facsimile transmission
shall be deemed to be evidence of the original execution thereof.
26. EXCHANGE AGENT AND CLOSING DATE. The Exchange Agent
shall be Cassidy & Associates. Closing shall take place as soon as
practicable. The date of Closing may be accelerated or extended by
agreement of the parties.
28. EFFECTIVE DATE. This effective date of this
Agreement shall be October 8, 1999.
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
BETWEEN ABBACY CORPORATION AND
CBCOM, INC.
IN WITNESS WHEREOF, the parties have executed this Agreement.
ABBACY CORPORATION
By
CBCOM, INC.
By
