EXHIBIT 99.1
AGREEMENT
AGREEMENT, dated as of 24 March, 2000 (the "Agreement") between and among
TeleHubLink Corporation, a Delaware corporation ("THLC"), and COMSEC Solutions,
LLC. ("COMSEC") a Pennsylvania Limited Liability Corporation located at 131
Richland Road, Carlisle, PA 17013 and Randall K. Nichols as "the Member" of
COMSEC residing at 131 Richland Road, Carlisle, PA 17013.
WITNESSETH
WHEREAS, Randall K. Nichols is the owner of a one-hundred percent (100%)
Membership interest in COMSEC; and
WHEREAS, COMSEC has been engaged in a Consulting Agreement, pursuant to
which COMSEC is providing THLC with certain consulting services in the field of
advanced ultra-secure signal processing technology for THLC's benefit.
WHEREAS, THLC is developing advanced ultra-secure signal processing
technology for wireless and Internet communications as well as other data
transmissions (the "Business"); and
WHEREAS, THLC wishes to acquire all of the COMSEC Membership interest from
the Member in a transaction qualifying as a reorganization under (S)368(a)(1)(B)
of the Internal Revenue Code, upon the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto do hereby agree as follows:
1. Transfer of COMSEC Membership
Subject to the terms and conditions set forth in this Agreement and in
reliance upon the representations, warranties, covenants and conditions herein
contained, on the Closing Date (as defined in Section 8 hereof) the Member shall
sell, convey, assign, transfer and deliver to THLC the COMSEC Membership
interest, free and clear of any and all liens, adverse claims, security
interests, pledges, mortgages, charges and encumbrances of any nature
whatsoever.
2. Consideration
2.1 Transfer. Subject to Section 2.2 below, the purchase price (the
"Purchase Price") for the purchase of the COMSEC Membership interest by THLC
shall be an aggregate of 100,000 unregistered shares (the "Stock Consideration")
of the common stock, $.01 par value, of THLC ("THLC Common Stock").
2.2 Payment of Taxes upon Transfer of Business. It is the presumption
of the parties that the transfer of the COMSEC Membership interest for THLC
stock will qualify as a tax-free B reorganization. The Member shall be
responsible for, and shall pay, any and all sales, use, purchase, transfer and
similar taxes and any and all filing, recording, registration and similar fees
arising out of the transactions contemplated by this Agreement. THLC shall pay
all filing, recording, registration and similar fees arising out of the issuance
of the THLC Common Stock.
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3. Representations and Warranties as to COMSEC. The Member and COMSEC,
severally, represent and warrant to THLC as follows:
3.1 Organizations, Standing and Power. COMSEC is a Limited Liability
Company duly organized, validly existing and in good standing under the laws of
Pennsylvania, with full power and authority to: (a) own, lease and operate its
properties; (b) carry on the Business as currently conducted by it; and (c)
execute and deliver, and perform under this Agreement and each other agreement
and instrument to be executed and delivered by it pursuant to hereto. There are
no states or jurisdictions in which the character and location of any of the
properties owned or leased by COMSEC, or the conduct of the Business makes it
necessary for COMSEC to qualify to do business as a foreign corporation or
company. True and complete copies of the Certificate of Organization of COMSEC
Solutions, LLC, and all amendments thereof, and of the Management Operating
Agreement of COMSEC, as amended to date, have heretofore been furnished to THLC.
COMSEC's minute books made available to THLC contain accurate records of all
meetings and other actions of COMSEC's Members and Managers.
3.2 Capitalization. The authorized capital stock of COMSEC consists
of: one (1) Membership interest comprising one hundred percent (100%) ownership
of COMSEC. The COMSEC Membership interest is duly authorized, validly issued,
fully paid and nonassessable. Schedule 3.2 sets forth a true and complete list
of the sole holder of COMSEC Membership interests. There are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the Membership interest of COMSEC or obligating COMSEC to
issue or sell any Membership interest or other equity interests in COMSEC. There
is no personal liability, and there are no preemptive rights with regard to the
Membership interest in COMSEC. There are no outstanding contractual obligations
or other commitments or arrangements of COMSEC to: (a) repurchase, redeem or
otherwise acquire any Membership interest in COMSEC (or any interest therein);
or (b) to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any other entity; or (c) issue or
distribute to any person any Membership interest in COMSEC; or (d) issue or
distribute to the holder of the membership interest in COMSEC any evidences of
indebtedness or assets of COMSEC. All of the outstanding securities of COMSEC
have been issued and sold by COMSEC in full compliance with applicable federal
and state securities laws.
3.3 Ownership of COMSEC Membership Interest. The Member has good and
marketable title to all of the issued and outstanding Membership interest in
COMSEC, free and clear of any and all liens, adverse claims, security interests,
pledges, mortgages, charges and encumbrances of any nature whatsoever (the
"Liens"), and on the Closing Date will own all of such Membership interest in
COMSEC, free and clear of any and all Liens.
3.4 Interests in Other Entities.
(a) There are no direct or indirect subsidiaries of COMSEC.
3.5 Authority. The execution and delivery of COMSEC of this agreement
and each of the agreements to be executed and delivered by COMSEC pursuant
hereto (collectively, the "COMSEC Documents"), the performance by COMSEC of its
obligations hereunder and thereunder, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary action on the part of COMSEC and COMSEC has all necessary power and
authority with respect thereto. The Member has all necessary capacity, power and
authority to execute and deliver this Agreement and such other agreements to be
executed and delivered by him pursuant
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hereto (collectively, the "Member Documents") and to consummate the transactions
contemplated hereby and thereby. This Agreement is, and when executed and
delivered by COMSEC and the Member, and each of the other agreements to be
delivered by either of them pursuant hereto will be, valid and binding
obligations of COMSEC and the Member, to the extent they are parties thereto, in
accordance with their respective terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
rights of creditors generally and subject to the rules of law governing (and all
limitations on) specific performance, injunctive relief, and other equitable
remedies.
3.6 Noncontravention. Neither the execution and delivery by COMSEC or the
Member of this Agreement or of any other COMSEC Documents or Member Documents to
be executed and delivered by either or of them, nor the consummation of any of
the transactions contemplated hereby or thereby, nor the performance by either
or any of them of any of their respective obligations hereunder or thereunder,
will (nor with the giving of notice or the lapse of time or both would): (a)
conflict with or result in a breach of any provision of the Certificate of
Organization, Management Operating Agreement or other constituent documents of
COMSEC, each as amended to date; or (b) give rise to a default, or any right of
termination, cancellation or acceleration, or otherwise be in conflict with or
result in a loss of contractual benefits to any of them, under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which either or any of them is a
party or by which either or any of them or any of their respective assets may be
bound, or require any consent, approval or notice under the terms of any such
document or instrument; or (c) violate any order, writ, injunction, decree, law,
statute, rule or regulation of any court or governmental authority which is
applicable to either or any of them; or (d) result in the creation or imposition
of any lien, adverse claim, restriction, charge or encumbrance upon any of the
assets of COMSEC ("the "Assets") or the COMSEC Membership interest; or (e)
interfere with or otherwise adversely affect the ability of THLC or COMSEC to
carry on the Business after the Closing Date on substantially the same basis as
is now conducted by COMSEC.
3.7 Absence of Undisclosed Liabilities. COMSEC has no liabilities or
obligations of any nature whatsoever, whether accrued, matured, unmatured,
absolute, contingent, direct or indirect or otherwise (including without
limitation, liabilities or obligations for any taxes, governmental assessments,
duties or any related liabilities, penalties or fines) not previously disclosed
to THLC or adequately reserved for on its balance sheet.
3.8 Absence of Charges. Since February 29, 2000, there have not been: (a)
any adverse change (other than as is normal in the ordinary course of business)
in the condition (financial or otherwise), assets, liabilities, business,
prospects, results of operations or cash flows of COMSEC (including, without
limitation, any such adverse change resulting from damage, destruction or other
casualty loss, whether or not covered by insurance); (b) any waivers by COMSEC
of any right, or cancellation of any debt or claim, of substantial value; (c)
any declarations, set asides or payments of any dividend or other distributions
or payments in respect of the COMSEC Membership interest; or (d) any changes in
the accounting principles or methods which are utilized by COMSEC.
3.9 Litigation. There are no claims, suits or actions, or administrative,
arbitration or other proceedings or governmental investigations, pending or, to
the best knowledge of COMSEC and the Member, threatened, against or relating to
COMSEC or the Member, the transactions contemplated hereby or any of the Assets,
and there is no valid basis for any such matters. There are no judgments,
orders, stipulations, injunctions, decrees, or awards in effect which relate to
COMSEC, this Agreement, the transactions contemplated, the Business or any of
the Assets, the effect of which is: (a) to limit,
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restrict, regulate, enjoin or prohibit any business, or (b) otherwise adverse to
the Business, any of the Assets or the COMSEC Membership interest.
3.10 No Violation of Law. COMSEC is not engaging in any activity or
omitting to take any action as a result of which it is in violation of any law,
rule, regulation, zoning or other ordinance, statute, order, injunction or
decree, or any other requirement of any court or governmental or administrative
body or agency, applicable to COMSEC, the Business or any of the Assets.
3.11 Properties. COMSEC neither owns nor leases any real property. All
equipment which is utilized in the Business, or is material to the condition
(financial or otherwise) of COMSEC is owned or leased by COMSEC and is in good
operating condition and repair (ordinary wear and tear excepted), and is
adequate and suitable for the purposes for which they are used. THLC recognizes
that the computing laboratory currently used by COMSEC in its business is
located in and is part of the residence belonging to Randall K. Nichols and
Elizabeth Montine Nichols, and agrees that the acquisition of the Membership
Interest in COMSEC confers no property rights of any kind, including but not
limited to leasehold rights, in the property located at 131 Richland Road,
Carlisle, PA 17013.
3.12 Intangibles/Inventions. Schedule 3.12 identifies (by a summary
description) the Intangibles (as defined below), the ownership thereof and, if
applicable, COMSEC's authority for use of the same, which Schedule is complete
and correct and encompasses: (a) all United States and foreign patents,
trademark and trade name registrations, trademarks and trade names, brandmarks
and brand name registrations, servicemarks and servicemark registrations,
assumed names and copy rights and copyright registrations, owned in whole or in
part or used by COMSEC, and all applications therefor (collectively, the
"Marks"), (b) all inventions, discoveries, improvements, processes, formulae,
technology, know-how, processes and other intellectual property, proprietary
rights and trade secrets relating to the Business (collectively, the
"Inventions") and (c) all licenses and other agreements to which COMSEC is a
party or otherwise bound which relate to any of the Intangibles or the
Inventions or COMSEC's use thereof in connection with the Business
(collectively, the "Licenses, and together with the Marks and the Inventions,
the "Intangibles"). No violations of the terms of any of the aforesaid licenses
and/or agreements have occurred. Prior to the date hereof, the Member
transferred to COMSEC all of his respective rights, title and interests in and
to the ideas, technology and inventions relating to the Business, including
without limitation, the Marks, Inventions and Intangibles, with the exception of
the Automated Testing System which belongs to Randall K. Nichols and is leased
to COMSEC Solutions and no other party (except COMSEC) has any rights in respect
thereof. Except as disclosed on Schedule 3.12 (1) COMSEC owns or is authorized
to use in connection with the Business all of the Intangibles; (2) no
proceedings have been instituted, are pending, or to the best knowledge of the
Member, are threatened which challenge the rights of COMSEC with respect to the
Intangibles or its use thereof in connection with the Business and/or the Assets
or the validity thereof and, there is no valid basis for any such proceedings;
(3) neither COMSEC's ownership of the Intangibles nor its use thereof in
connection with the Business and/or the Assets violates any laws, statutes,
ordinances or regulations, or has at any time infringed upon or violated any
rights of others, or is being infringed by others; (4) none of the Intangibles,
or COMSEC's use thereof in connection with the Business and/or the Assets is
subject to any outstanding order, decree, judgment, stipulation or any lien,
security interest or other encumbrance; and (5) COMSEC has not granted any
license to third parties with regard to its Intangibles.
3.13 Systems and Software. COMSEC owns or has the right to use pursuant to
lease, license, sublicense, agreement, or permission certain computer hardware,
software and information systems necessary for the operation of the business of
COMSEC as presently conducted (collectively, "Systems"). These Systems are
identified in Schedule 3.13. All systems or equipment located at 131
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Richland Road, Carlisle, PA 17013, and which are not included in Schedule 3.13,
are the personal property of Randall K. Nichols and Elizabeth Montine Nichols
and are neither used by nor necessary to the business operations of COMSEC as
presently conducted, and are not included in this sale. Each System owned or
used by COMSEC immediately prior to the Closing Date, and which is included in
Schedule 3.13, will be owned or available for use by THLC on identical terms and
conditions immediately subsequent to the Closing Date. With respect to each
System owned by a third party and used by COMSEC pursuant to lease, license,
sublicense, agreement or permission: (a) the lease, license, sublicense,
agreement or permission covering the System is legal, valid, binding,
enforceable, and in full force and effect; (b) the lease, license, sublicense,
agreement or permission will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms following the Closing Date; (c)
no party to any such lease, license, sublicense, agreement or permission is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, and permit termination, modification or
acceleration thereunder; (d) no party to any such lease, license, sublicense,
agreement or permission has repudiated any provision thereof; (e) COMSEC has not
retained any sublicense, sublease or similar right with respect to any such
lease, license, sublicense, agreement or permission; and (f) COMSEC's use and
continued use of such Systems does not and will not interfere with, infringe
upon, misappropriate, or otherwise come into conflict with, any intellectual
property rights of third parties as a result of the continued operation of the
Business.
3.14 Banks; Powers of Attorney. Schedule 3.14 is a complete and correct
list showing: (a) the names of each bank in which COMSEC has an account or safe
deposit box and the names of all persons authorized to draw thereon or who have
access thereto; and (b) the names of all persons, if any, holding powers of
attorney from COMSEC.
3.15 Employee Arrangements. Schedule 3.15 is a complete and correct list
and summary description of all: (a) employment, management, termination and
consulting agreements to which COMSEC is a party or otherwise bound; and (b)
compensation plans and arrangements; bonus and incentive plans and arrangements;
deferred compensation plans and arrangements; pension and retirement plans and
arrangements; profit-sharing and thrift plans and arrangements; stock purchase
and stock option plans and arrangements; hospitalization and other life, health
or disability insurance or reimbursement programs; holiday, sick leave,
severance, vacation and personal loan policies and arrangements; and also lists
the names and compensation of all employees of COMSEC. Randall K. Nichols will
become an employee of THLC pursuant to the Employment Agreement attached hereto
as Exhibit E. No other employees of COMSEC will continue to be employees of
COMSEC after the execution of this Agreement, unless separate agreements are
established between THLC and those employees at a later date.
3.16 ERISA. COMSEC neither maintains nor is obligated to contribute to an
"employee pension benefit plan", as such term is defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
COMSEC's "welfare benefit plan" as such term is defined in Section 3(1) of
ERISA.
3.17 Certain Business Matters. Neither COMSEC nor the Member is a party to
or bound by any agreement which limits its or his, as the case may be, freedom
to compete in any line of business or with any person, or which is otherwise
materially burdensome to COMSEC or the Member, and COMSEC is not a party to or
bound by any agreements in which any officer or Member of COMSEC (or any
affiliate of any such person) has, or had when made, a direct or indirect
material interest except as set forth in Schedule 3.17.
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3.18 Certain Contracts. Schedule 3.18 is a complete and correct list of
all material contracts, commitments, obligations and understandings to which
COMSEC is a party. Except as expressly stated on such Schedule: (1) each of the
agreements listed on Schedule 3.18 is in full force and effect, no person or
entity which is a party thereto or otherwise bound thereby is in material
default thereunder, and no event occurrence, condition or act exists which does
(or which with the giving of notice or the lapse of time or both would) give
rise to a material default or right of cancellation, acceleration or loss of
contractual benefits thereunder; (2) there has been no threatened cancellations
thereof, and there are no outstanding disputes thereunder; (3) none of them is
materially burdensome to COMSEC; and (4) each of them is fully assignable
without the consent, approval, order or any waiver by, or any other action of or
with any individual or individuals, without the payment of any penalty, the
incurrence of any additional debt, liability or obligation of any nature
whatsoever or the change of any term. Certain loans detailed in Schedule 3.18
may be or are secured by property (the "Security Properties") owned by Randall
K. Nichols and/or Elizabeth Montine Nichols, and THLC hereby agrees: (i) that
the acquisition of the Membership Interest in COMSEC confers no ownership rights
or other rights of any kind on THLC in or with regard to the Security
Properties, and (ii) that THLC shall make all payments against such loans in a
timely manner and take all steps necessary to preserve the ownership interests
of Randall K. Nichols and/or Elizabeth Montine Nichols in the Security
Properties.
3.19 Approvals/Consents. COMSEC currently holds all governmental and
administrative consents, permits, appointments, approvals, licenses,
certificates and franchises which are necessary for the operation of the
Business, all of which are in full force and effect and are transferable
pursuant to the transaction contemplated hereby without the payment of any
penalty or the incurrence of any additional debt, liability or obligation of any
nature whatsoever or the change of any term. No material violations of the terms
thereof have heretofore occurred or are known by the Member to exist as of the
date of this Agreement. No permit, consent, approval, order, license, permit or
authorization from any filing, registration or qualification with any
governmental authority or any other person or entity on the part of THLC is
required in connection with the execution or delivery by THLC of this Agreement
or the consummation of the transactions contemplated hereby.
3.20 Securities Act Representation. The Member is acquiring the Stock
Consideration solely for investment purposes, with no intention of distributing
or reselling any such stock or any interest therein. He is an accredited
investor, has knowledge about THLC, had access to information about THLC and had
all questions answered. The Member is aware that the Stock Consideration will
not be registered under the Securities Act of 1933, as amended (the "Securities
Act"), and that neither the Stock Consideration nor any respective interests
therein, may be sold, pledged, or otherwise transferred unless the Stock
Consideration is registered under the Securities Act or qualifies for an
exemption under the Securities Act.
3.21 Information as to COMSEC. None of the representations or
warranties made by COMSEC or the Member in this Agreement is, or contained in
any of the COMSEC Documents to be executed and delivered hereto will be, false
or misleading with respect to any material fact, or omits to state any material
fact necessary in order to make the statements therein contained not misleading.
4. Representations and Warranties as to THLC. THLC represents and warrants
to COMSEC and the Member, as follows:
4.1 Authority. The execution and delivery of THLC of this Agreement and
of each agreement to be executed and delivered by it pursuant hereto
(collectively, the "Purchase Documents"), the performance by THLC of its
obligations hereunder and thereunder, and the consummation of the
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transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of THLC, and THLC has
all necessary corporate action on the part of THLC, and THLC has all necessary
corporate power and corporate authority with respect thereto. This Agreement is,
and when executed and delivered by THLC each other Purchase Document will be,
the valid and binding obligation of THLC in accordance with the respective terms
thereof, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the rights of creditors
generally and subject to the rules of law governing (and all limitations on)
specific performance, injunctive relief, and other equitable remedies.
4.2 Information as to THLC. None of the representations or warranties made
by THLC in this Agreement, or contained in any of the Purchase Documents, to be
executed and delivered hereto, is or will be false or misleading with respect to
any material fact, or omits to state any material fact necessary in order to
make the statements therein contained not misleading.
4.3 (a) Organization; Good Standing; Power; etc. THLC is a duly organized,
validly existing corporation in good standing under the laws of the State of
Delaware. THLC has the corporate power, authority and capacity to own, lease and
operate its properties, and to carry on its business as and where the same is
now being conducted. THLC is qualified as a foreign corporation, is in good
standing and licensed in all such other jurisdictions, set forth in Schedule
4.3(a) hereto, where the business conducted or the assets owned by THLC requires
such qualification, except in the jurisdictions identified in Schedule 4.3(a)
hereto and in such other jurisdictions where the failure to so qualify does not
have a material adverse effect on the business, properties, or financial
condition (hereinafter, collectively, "business conditions") of THLC. THLC has
no equity interest, direct or indirect, in any corporation, partnership, joint
venture or other entity, other than its subsidiaries.
(b) Capitalization. (i) The authorized capital stock of THLC consists of no
more than 50,000,000 shares of voting common stock, with par value of $0.01 per
share, of which no more than 25,000,000 shares are issued and outstanding prior
to this Agreement. There are no other classes or series of capital stock of THLC
authorized, issued or outstanding. All of the issued and outstanding shares of
capital stock of THLC are validly issued, fully paid and non-assessable. Except
as set forth in Schedule 4.3(b)(i) hereto, there are no outstanding rights of
subscription, warrants, call options, contracts or other agreements of any kind
issued or granted by THLC to acquire securities of THLC.
(ii) Schedule 4.3(b)(ii) correctly sets forth the names of all
Subsidiaries of THLC. Except as set forth in Schedule 4.3(b)(ii), all of the
outstanding shares of capital stock of each subsidiary are owned of record and
beneficially by THLC.
(c) Authorization, Effective Agreement. THLC has the requisite corporate
power, authority and capacity to enter into this Agreement and to perform all of
its obligations hereunder. All corporate proceedings required to be taken by
THLC to authorize the execution and delivery of this Agreement and the
performance of THLC's obligations hereunder have been duly taken, and this
Agreement constitutes the legal, valid and binding obligation of THLC,
enforceable against it in accordance with its terms. Except as set forth on
Schedule 4.3(c) hereto, the execution, delivery and performance of this
Agreement by THLC does not, and will not, conflict with, violate or result in
the breach of any of the terms or conditions of, or constitute a default under,
the Articles of Incorporation or by-laws of THLC or, to the knowledge of THLC,
any law, rule, regulation, order, judgment, writ, indenture, mortgage, pledge,
note, bond, license, permit or other agreement, commitment or lease to which
THLC is a party or by which THLC or its assets are subject, except for
requirements for consents of governmental authorities or persons, or such
violations of any law, regulation, ordinance or decrees,
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which are referred to in Section 6(d) hereof or which would not have a material
adverse effect on the business conditions of THLC.
(d) Consents. No permit, consent, approval, order, license, permit or
authorization from any filing, registration or qualification with any
governmental authority or any other person or entity on the part of THLC is
required in connection with the execution or delivery by THLC of this Agreement
or the consummation of the transactions contemplated hereby, other than those
specified in Schedule 4.3(d) hereto.
(e) Financial Statements. The Financial Statements reflected in the
filed 10K's and 10Q's (a) present fairly the financial position and results of
operations of THLC, as of the dates and for the periods indicated; and (b) have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis.
(f) No Material Adverse Change. Reference filed 10K's and 10Q's
included herein. Since October 31, 1999, there has been no material adverse
change in the business conditions of THLC. To the best of THLC's knowledge,
there is no fact or condition that exists which is reasonably likely to
materially adversely affect THLC (other than general economic conditions or
facts or conditions affecting the industry of THLC as a whole).
(g) Deliveries. THLC has delivered or made available to the Member
true, correct and complete copies of the by-laws, articles of incorporation and
organization documents of THLC.
(h) Undisclosed Liabilities. Except as set forth on Schedule 4.3(h)
hereto or reflected or reserved against on the Financial Statements or incurred
since October 30, 1999 in the ordinary course of business, as of the date
hereof, there are no material liabilities or obligations of THLC of a type that
would be required to be set forth on a balance sheet prepared in accordance with
GAAP (or in the notes thereto).
(i) Brokers. There is no broker or finder or other person or entity
who would have any valid claim against THLC for a fee, commission or brokerage
in connection with this Agreement or the transactions contemplated hereby as a
result of any agreement, understanding, arrangement or action by THLC. THLC
hereby agrees to save the Member harmless and agrees to indemnify and defend the
Member from any Loss or Litigation Expense incurred by the Member on account of
a claim by a broker, finder, or any other Person arising out of this Agreement
or the transactions contemplated hereby as a result of any agreement,
understanding, arrangement, or action by THLC.
5. Indemnification.
5.1 Indemnification by the Member. The Member indemnifies and agrees
to defend and hold harmless THLC and its officers, directors, employees, agents
and representatives from and against any and all losses, obligations,
deficiencies, liabilities, claims, damages, costs and expenses (including,
without limitation, the amount of any settlement entered into pursuant hereto,
and all reasonable legal and other expenses incurred in connection with the
investigation, prosecution or defense of any matter indemnified pursuant hereto)
which THLC may sustain, suffer or incur and which arise out of, are caused by,
relate to, or result or occur from or in connection any misrepresentation of a
material fact contained in any representation of COMSEC or the Member, or the
breach by COMSEC or the Member of any warranty or covenant made by COMSEC or him
in any COMSEC Document or Member
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Document. The foregoing indemnification shall also apply to direct claims by
THLC against COMSEC or the Member.
5.2 Indemnification by THLC. THLC indemnifies and agrees to defend and
hold harmless the Member from and against any and all losses, obligations,
deficiencies, liabilities, claims, damages, costs and expenses (including,
without limitation, the amount of any settlement entered into pursuant hereto,
and all reasonable legal and other expenses incurred in connection with the
investigation, prosecution or defense of any matter indemnified pursuant
hereto) which the Member may sustain, suffer or incur and which arise out of,
are caused by, relate to, or result or occur from or in connection any
misrepresentation of a material fact contained in any representation of THLC, or
the breach by THLC of any warranty or covenant made by THLC in any document
delivered to the Member pursuant to this Agreement. The foregoing
indemnification shall also apply to direct claims by the Member against THLC.
5.3 Third Party Claims. If a claim by a third party is made against any
party or parties hereto and the party or parties against whom said claim is made
intends to seek indemnification with respect thereto under Subsections 5.1, the
party or parties seeking such indemnification shall promptly notify the
indemnifying party or parties, in writing, of such claim; provided, however,
that the failure to give such notice shall not affect the rights of the
indemnified party or parties hereunder except to the extent that such failure
materially and adversely affects the indemnifying party or parties due to the
inability to timely defend such action. The indemnifying party or parties shall
have 10 business days after said notice is given to elect, by written notice
given to the indemnified party or parties, to undertake, conduct and control,
through counsel of their own choosing (subject to the consent of the indemnified
party or parties, such consent not to be unreasonably withheld) and at their
sole risk and expense, the good faith settlement or defense of such claim, and
the indemnified party or parties shall cooperate with the indemnifying parties
in connection therewith; provided: (a) all settlements require the prior
reasonable consultation with the indemnified party or parties and the prior
written consent of the indemnified party, which consent shall not be
unreasonably withheld, and (b) the indemnified party or parties shall be
entitled to participate in such settlement or defense through counsel chosen by
the indemnified party or parties, provided that the fees and expenses of such
counsel shall be borne by the indemnified party or parties. So long as the
indemnifying party or parties are contesting any such claim in good faith, the
indemnified party or parties shall not pay or settle any such claim; provided,
however, that notwithstanding the foregoing, the indemnified party or parties
shall have the right to pay or settle any such claim at any time, provided that
in such event they shall waive any right of indemnification thereof by the
indemnifying party or parties. If the indemnifying party or parties do not make
a timely election to undertake the good faith defense or settlement of the claim
as aforesaid, or if the indemnifying parties fail then, in either such event,
the indemnified party or parties shall have the right to contest, settle or
compromise (provided that all settlements or compromises require the prior
reasonable consultation with the indemnifying party and the prior written
consent of the indemnifying party, which consent shall not be unreasonably
withheld) the claim at their exclusive discretion, at the risk and expense of
the indemnifying parties.
5.4 Assistance. Regardless of which party is controlling the defense of
any claim, each party shall act in good faith and shall provide reasonable
documents and cooperation to the party handling the defense.
6. Additional Covenants.
COMSEC--THLC Stock Purchase Agreement 9.
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1. 6.1 Noncompete Covenant. For a period of one year or after the end of
employment, the Employee shall not control, consult to or be employed by any
business similar to that conducted by the Company, as defined below, either by
soliciting any of Company's accounts or by operating within the Company's
general trading area. In addition to the constraints provided under this
Agreement which restrict post-employment in areas of competitors for
COMSEC-Solution's business, these areas of post-employment are further defined
as companies engaged in "designing encryption and authentication ASIC's
(application-specific integrated circuits), which explicitly are designed for
and destined to be used in (a) securing wireless e-commerce transactions,
cellular telephone communications or palmtop computing, and/or (b) contain
embedded in silicon an underlying hardware-based elliptic curve cryptography,
and/or (c) also contain simultaneously to the above-described functionality,
signal recovery and reconstruction functions."
Any non-competition provisions contained in any Agreement between THLC and the
Member shall be null and void if the Company shall breach its obligations under
any agreement between it and the Member.
6.2 Consummation of Transaction. Each of the parties hereto hereby
agrees to use its best efforts to cause all conditions precedent to his or its
obligations (and to the obligations of the other parties hereto to consummate
the transactions contemplated hereby) to be satisfied, including, but not
limited to, using all reasonable efforts to obtain all required (if so required
by this Agreement) consents, waivers, amendments, modifications, approvals,
authorizations, innovations and licenses; provided, however, that nothing herein
contained shall be deemed to modify any of the absolute obligations imposed upon
any of the parties hereto under this Agreement or any agreement executed and
delivered pursuant hereto.
6.3 Cooperation/Further Assurances. Each of the parties hereto hereby
agrees (i) to fully cooperate with the other parties hereto in preparing and
filing any notices, applications, reports and other instructions and documents
and (ii) to execute, acknowledge, deliver, file and/or record, or cause such
other parties to the extent permitted by law to execute, acknowledge, deliver,
file and/or record such other documents, which may be required by this Agreement
or which are desirable in the reasonable opinion of any of the parties hereto,
or their respective legal counsel, in respect of, any statute, rule, regulation
or order of any governmental or administrative body in connection with the
transactions contemplated by this Agreement.
6.4 Accuracy of Representations. Each party hereto agrees that prior to
the Closing Date he or it will not enter into any transaction and to take any
action, and will use his or its best efforts to prevent occurrence of any event
(but excluding events which occur in the ordinary course of business and events
over which such party has no control), which would result in any of his or its
representations, warranties or covenants contained in this Agreement or in any
agreement, document or instruction executed and delivered by him or it pursuant
hereto not to be true and correct, or not to be performed as contemplated, at
and as of the time immediately after the occurrence of such transaction or
event.
6.5 Notification of Certain Matters. COMSEC and the Member shall give
prompt notice to THLC, and THLC shall give prompt notice to COMSEC and the
Member, as the case may be, of: (a) the occurrence, or nonoccurrence, or any
event the occurrence, or nonoccurrence, of which would be likely to cause any
representation contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Closing Date; and (b) any material failure
of COMSEC and/or the
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Member, on the one hand, and of THLC, on the other, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by him or
it hereunder; provided, however, that the delivery of any notice pursuant to
this Subsection 6.5 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
6.6 Broker. Each of THLC, COMSEC, and the Member represents and
warrants to the other parties that no broker or finder was engaged or dealt with
in connection with any of the transactions contemplated by this Agreement, and
each of the parties shall indemnify and hold the other harmless from and against
any and all claims or liabilities asserted by or on behalf of any alleged broker
or finder for broker's fees, finder's fees, commissions or like payments.
6.7 Employment Agreement. At the Closing Date, Mr. Randall K. Nichols
shall finalize and enter into an employment arrangement with THLC, (the
"Employment Agreement"), such Employment Agreement to be in the form of Exhibit
E, attached hereto and incorporated herein by reference.
7. Conditions of Closing.
7.1 Conditions to Obligations of THLC to Close. The obligations of
THLC to consummate the transactions contemplated herein shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of each of COMSEC and the Member contained in any
Member Document or COMSEC Document delivered by any of them shall have been true
when made, and, in addition, shall be true in all material respects on and as
of the Closing Date with the same force and effect as though made on and as of
the Closing Date.
(b) Performance of Agreements. Each of COMSEC and the Member,
as the case may be, shall have performed, observed and complied in all material
respects with all of their respective obligations, covenants and agreements, and
shall have satisfied or fulfilled in all material respects conditions contained
in any Member Document or COMSEC Document and required to be performed, observed
or complied with, or to be satisfied or fulfilled, by COMSEC or the Member at or
prior to the Closing Date.
(c) Due Diligence. THLC is satisfied with the results of its
"due diligence" investigation of COMSEC's business, liabilities, assets and
prospects.
(d) Litigation. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
hereby, and no claim, suit, action, inquiry, investigation or proceeding in
which it will be, or it is, sought to restrain, prohibit or change the terms
of or obtain damages or other relief in connection with this Agreement or any of
the transactions contemplated hereby, shall have been instituted or threatened
by any person or entity, and which, in the reasonable judgment of THLC (based on
the likelihood or success and material consequences of such claim, suit, action,
inquiry or proceeding), makes it inadvisable in proceed with the consummation of
such transactions.
(e) Consents and Approvals. All consents, waivers, approvals,
licenses and authorizations by third parties and government and administrative
authorities (and all amendments or
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modifications to existing agreements with third parties) required as a
precondition to the performance by COMSEC and the Member of their respective
obligations hereunder and under any agreement delivered pursuant hereto, or
which in THLC's reasonable judgment are necessary to continue unimpaired,
subsequent to the Closing Date, any rights in and to the Assets and/or the
Business which could be impaired by the consummation of this transaction, shall
have been duly obtained and shall be in full force and effect.
(f) Date of Consummation. The transactions contemplated shall
have been consummated on or prior to March 27, 2000, or such later date as the
parties shall agree by a written instrument signed by all of them.
(g) Validity of Transactions. The validity of all transactions
contemplated hereby, as well as the form and substance of all agreements
instruments, opinions, certificates and other documents delivered by COMSEC and
the Member pursuant hereto, shall be satisfactory in all material respects to
THLC and its counsel.
(h) No Material Adverse Change. Except as otherwise by this
Agreement, there shall not have occurred after the date hereof, in the
reasonable judgment of THLC, a material adverse change in the financial or
business condition of COMSEC and its subsidiaries, taken as a whole.
(i) Employment Agreement. Randall K. Nichols shall have executed
the Employment Agreement described above in Paragraph 6.7.
(j) Closing Certificate. The Member shall have furnished THLC
with certificates, all dated the Closing Date, to the effect that all the
representations and warranties of COMSEC and the Member are true and complete
and all covenants to be performed by COMSEC or the Member at or as of the
Closing have been performed and conditions to be satisfied at or as of the
Closing have been waived or satisfied.
(k) Board Authorization. The approval of this Agreement and all
of the transactions contemplated hereby the Board of Directors of THLC.
7.2 Conditions to Obligations of COMSEC and the Member to Close. The
obligations of COMSEC and the Member to consummate the transactions
contemplated herein shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions.
(a) Accuracy of Representations and Warranties. The representations
and warranties of THLC contained in any Purchase Documents delivered by THLC
shall have been true when made, and, in addition, shall be true in all material
respects, on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date.
(b) Performance of Agreements. THLC shall have performed, observed
and complied, in all material respects,with all obligations, covenants and
agreements, and shall have satisfied or fulfilled in all material respects
all conditions contained in any Purchase Document and required to be performed,
observed or complied with, or satisfied or fulfilled, by any of them at or
prior to the Closing Date.
(c) Consents and Approvals. All consents, waivers, approvals,
licenses and authorizations by third parties and government and administrative
authorities (and all amendments and
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modifications to existing agreements with third parties) required as a
precondition to the performance by THLC of its obligations hereunder and under
any agreement delivered pursuant hereto, shall have been duly obtained and shall
be in full force and effect.
(d) Validity of Transactions. The validity of all transactions
contemplated hereby, as well as the form and substance of all agreements,
instruments, opinions, certificates and other documents delivered by THLC
pursuant hereto, shall be satisfactory in all material respects to the Member
and his counsel.
(e) Closing Certificate. THLC shall have furnished COMSEC with
certificates executed by its executive officer, dated the Closing Date, to the
effect that all the representations and warranties of THLC are true and complete
in all material respects and all covenants to be performed by THLC at or as of
the Closing have been performed in all material respects and conditions to be
satisfied at or as of the Closing have been waived or satisfied in all material
respects.
(f) THLC shall have entered into the Employment Agreement.
7.3 Effects of Termination. In the event that this Agreement is
terminated and the transactions contemplated hereby are abandoned pursuant to
the terms of this Article 7, this Agreement shall, forthwith become null and
void and of no force and effect, except as to Section 10.1 hereof and the
obligations of the parties with respect to the Confidential Information;
provided, however, that nothing herein shall relieve any party from liability
for any breach hereof prior to termination.
8. The Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to
Section 7, the closing of the transactions contemplated by this Agreement (the
"Closing") will take place at the offices of THLC in Burlington, Massachusetts
as promptly as practicable (and in any event within five business days) after
satisfaction or waiver of the conditions set forth in Section 7 but in no event
later than March 27, 2000 (the "Closing Date"), or such date as shall have been
fixed by a written instrument signed by the parties.
8.1 Deliveries by THLC at the Closing. At the Closing, or within thirty
(30) days thereafter for the THLC stock certificates, THLC shall deliver the
following:
(a) stock certificate(s), representing the Stock Consideration,
registered in the name of the Member; and
(b) the Employment Agreement.
8.2 Deliveries by COMSEC and/or the Member at the Closing. At the Closing,
COMSEC or the Member, as applicable, shall deliver to THLC, the following:
(a) A Membership certificates representing the COMSEC Membership
interest, together with Membership powers duly executed by the Member; and
(b) The Employment Agreement.
8.3 Other Deliveries. In addition, the parties shall execute and deliver
such other documents as may be required by this Agreement and as either of them
or their respective counsel may reasonably require in order to document and
carry out the transactions contemplated by this Agreement.
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9. Survival of Representations and Warranties.
Each of the parties hereto hereby agrees that representations and
warranties made by or on behalf of him or it in this Agreement or in any
document or instrument delivered pursuant hereto shall survive the Closing Date
for a period of three (3) years or the period defined by the statute of
limitations for actions with regard to tax forms filed prior to Closing,
whichever is later.
10. General Provision.
10.1 Fees and Expenses. THLC, on the one hand, and the Member, on
the other hand, shall bear their own expenses in connection with the
transactions contemplated hereby.
10.2 Publications. No party hereto shall issue any press release
or otherwise divulge or disclose the existence of this Agreement, the terms
hereof, or the transactions contemplated hereby without the prior written
approval of the other parties hereto, except (i) as may be required by
applicable law or the applicable rules or regulations of any stock exchange, or
(ii) THLC's representatives, agents, financing sources, lenders and/or
investors.
10.3 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the earlier of the date delivered or mailed if delivered
personally, by overnight courier or mailed by express, registered or certified
mail (postage prepaid, return receipt requested) or by facsimile transmittal,
confirmed by express, certified or registered mail, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice, except that notices of changes of address shall be effective
upon receipt):
If to THLC: TeleHubLink Corporation
24 New England Executive park
Burlington, MA 01803
Attn: Mr. Bruce Young, President/CEO
with a copy to: Blank Rome Tenzer Greenblatt LLP
405 Lexington Avenue
New York, NY 10174
Attn: James Martin Kaplan, Esq.
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If to COMSEC or
the Member: Randall K. Nichols (President)
COMSEC Solution, LLC
Pennsylvania Limited Liability Company
131 Richland Road,
Carlisle, PA 17013
with a copy to: Daniel J. Ryan, Esq.
Attorney at Law
380 Forelands Road
Annapolis, MD 21401
10.4 Amendment. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
10.5 Waiver. At any time prior to the Closing Date, any party
hereto may: (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto; (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto; and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
hereby.
10.6 Severability. If any term or other provisions of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the greatest extent
possible.
10.7 Entire Agreement. This Agreement (together with the Schedules
annexed hereto and incorporated herewith) and the agreements referred to herein
constitute the entire agreement, and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
10.8 No Assignment. This Agreement shall not be assigned by
operation of law or otherwise, and any assignment shall be null and void.
10.9 Headings. Headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
10.10 Schedules. All references in this Agreement to Schedules
shall mean the schedules identified in this Agreement, which are incorporated
into this Agreement and shall be deemed a part of the representations and
warranties to which they relate.
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10.11 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law Commonwealth of Massachusetts without
regard to its choice of law principles. Each of THLC, COMSEC and the Member
hereby irrevocably and unconditionally consents to submit to the jurisdiction
of the courts of the Commonwealth of Massachusetts and of the United States
located in the county of Middlesex, Commonwealth of Massachusetts for any
litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any litigation relating thereto
except in such courts), waivers any objection to the laying of venue of any
such litigation in such courts and agrees not to plead or claim that such
litigation brought in any such courts has been brought in any inconvenience
forum.
10.12 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
10.13 Arbitration. The parties agree that any legal disputes that
arise out of or are related in any way to this Agreement, its interpretation or
issues regarding compliances or breach of any of its provisions, which disputes
cannot be resolved informally, shall be resolved exclusively through final and
binding arbitration before an arbitrator appointed by the American
Arbitration Association, with each party to bear its own costs and legal fees.
All arbitration hearings shall be conducted in Worcester, Massachusetts
according to the AAA rules in effect at the time of such hearing.
IN WITNESS WHEREOF, each of THLC and COMSEC, by their respective officers
thereunto duly authorized, and the Member has caused this Agreement to be
executed as of the date first written above.
TeleHubLink Corporation
By /s/ Bruce Young
---------------------------------
Name: Bruce Young
Title: President/CEO
COMSEC Solutions, L.L.C.
By /s/ Randall K. Nichols
---------------------------------
Name: Randall K. Nichols
Title: President
/s/ Randall K. Nichols
----------------------------------
Randall K. Nichols
COMSEC--THLC Stock Purchase Agreement 16.
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<PAGE>
SCHEDULES
Schedule 2.1 Transfer of Membership Interests in COMSEC Solutions, L.L.C.
Schedule 3.2 Capitalization of COMSEC Solutions, L.L.C.
Schedule 3.12 Intangibles
Schedule 3.13 Equipment currently in use by COMSEC Solutions
Schedule 3.14 COMSEC Bank Accounts and Powers of Attorney
Schedule 3.15 COMSEC Employee Arrangements
Schedule 3.17 COMSEC: Certain Business Matters
Schedule 3.18 COMSEC: Contracts, commitments, obligations and
understandings
Schedule 4.3(a) TeleHubLink Corporation: Organization, Good Standing, Power,
etc.
Schedule 4.3(b)(i) THLC Capitalization
Schedule 4.3(b)(ii) THLC Subsidiaries and Affiliates
Schedule 4.3(c) THLC: Authorization, Effective Agreement
Schedule 4.3(d) THLC: Consents
Schedule 4.3(h) THLC: Undisclosed Liabilities
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SCHEDULE 2.1
TRANSFER OF MEMBERSHIP INTERESTS IN COMSEC SOLUTIONS, L.L.C.
Member Address Percent to be
Transferred
Randall K. Nichols 131 Richland Road, Carlisle, PA 17013 100%
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SCHEDULE 3.2
CAPITALIZATION OF COMSEC SOLUTIONS, L.L.C.
Member Address Percent Ownership
Randall K. Nichols 131 Richland Road, Carlisle, PA 17013 100%
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SCHEDULE 3.12
INTANGIBLES
Intangible Ownership/authority for use
Automated Testing System Software License from
Randall K. Nichols
Trade Name "COMSEC Solutions, LLC" Ownership
Domain Name "COMSEC-Solutions.com" InterNic License
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SCHEDULE 3.13
EQUIPMENT CURRENTLY IN USE BY COMSEC SOLUTIONS
The following equipment is owned or used by COMSEC Solutions in its business
operations. All systems or equipment located at 131 Richland Road, Carlisle, PA
17013, and which are not included in this Schedule, are the personal property of
Randall K. Nichols and Elizabeth Montine Nichols and are neither used by nor
necessary to the business operations of COMSEC as presently conducted, and are
not included in this sale.
Equipment Location Lease/Own
131 Richland Road, Carlisle, PA 17013 All Owned
1) 1997 - Xerox Printer Model #XC1255 - SN# 067017
2) 1997 - COMPAQ Presario #1200 - SN# V739BQH2E029
3) 1997 - HP Printer Laserjet 6P - SN# USBD058947
4) 1997 - Brothers MFC-1850 - SN# G75203110
5) 1998 - K2r Pentium Computer - SN# PCD25405060922-496
6) 1999 - Pionex Pentium II Computer - SN# 7001841513
7) 1999 - HP Color Printer - Deskjet 970CX1 - SN# SG97L1W08V
8) 1999 - TDE Shredder - SN #91S
9) 1999 - Imation Super Disk 120 Mb - SN# AA9708014991
10) 1999 - Packard Bell Pentium II - SN# Y130215069
11) 1999 - Iomega Zip 250 - SN# P7CW328A6V
12) 1999 - o/h projector - SN# 960747
13) 2000 - Addonics Zip - SN# 0350000698
14) 2000 - HP Deskjet 612C - SN# TH9A317BPK
15) 2000 - TDE Shredder - SN# 91S
16) 2000 - HP ScanJet 5200Cse - SN# SG99S132N7
17) 2000 - Iomega Zip 250 - SN# P7CW1119C9
18) 2000 - Acer Prism 610c - SN# 9167524APA94604769SS2000
19) 2000 - HP Color Printers Deskjet 812c - SN# - CN9CFIN201
20) 2000 - COMPAQ Presario - Pentium III 1200XL - SN# IV9CDCH2D5WB
21) 2000 - Office furniture - chairs, storage cabinets, tables, desks, cabling,
lights, electric.
22) 2000 - Proprietary software - ATS (licensed) cryptographic certification
software
23) 2000 - Datafellows Security Software - VPN+, SSH, AV, Namesurfer, Desktop
crypto, file crypto, Gateway, Workstation Enterprise, MS mail
Platforms: Win 3.1/95/98, Novell/Linux/Solaris/Mac/DOS/UNIX
Management Tools
21) 2000 InvisiMail encryption PKI software - Lite, Delux, Pro, Enterprise
22) 2000 Misc software in intrusion detection tools - TwoFish, Yarrow,
McAffee Fortress, Revelation, Windowwasher, CPIX, RC2/RC4, PGP 6.02
23) 2000 Biometric software - Voicecrypt, Videomail, Netphone
24) 2000 Steganographic software - Stealth, internet security suite
25) 2000 ACA programs in various programming languages to characterize 75
different classical cipher systems.
26) 2000 AES (Advanced Encryption Standard) Licensed and numbered by NIST/NSA
US0448
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SCHEDULE 3.14
COMSEC BANK ACCOUNTS AND POWERS OF ATTORNEY
Names of each bank in which COMSEC has an account or safe deposit box and the
names of all persons authorized to draw thereon or who have access thereto
1) Bank of Des Arc, Des Arc, AR Checking (secured), account no. -1929892,
address - Buena Vista St., Des Arc, AR 72040-1090. 1-870-256-4152; Authorized
signatures: Randall K. Nichols, President, Elizabeth M. Nichols, VP.
2) Keystone Financial Checking (secured), account no. -3740129824, address -
Walnut Bottom Road, Carlisle, PA 17013, Customer Service No. 1-717-240-4524,
Authorized signatures: Randall K. Nichols, President, Elizabeth M. Nichols, VP.
Names of all persons, if any, holding powers of attorney from COMSEC.
None.
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SCHEDULE 3.15
COMSEC EMPLOYEE ARRANGEMENTS
Employment, management, termination and consulting agreements to which COMSEC is
a party or otherwise bound
None
Compensation plans and arrangements; bonus and incentive plans and arrangements;
deferred compensation plans and arrangements; pension and retirement plans and
arrangements; profit-sharing and thrift plans and arrangements; stock purchase
and stock option plans and arrangements; hospitalization and other life, health
or disability insurance or reimbursement programs; holiday, sick leave,
severance, vacation and personal loan policies and arrangements.
1) COMSEC Solutions, LLC Medical/Dental/Disability Insurance Business
Insurance Group Trust, Medical Life Insurance Company, Cleveland Ohio, Group No
B008422 -- Family coverage; Class I; LTDisability MCP #55660, plan C017-419-C;
PCI Insurance, Inc., Group 5 Select Program ADD B008422.
2) Blue Cross Blue Shield Family coverage: Comprehensive Major Medical,
PCI Insurance, Concordia Flex, optichoice, QAC108342063/Group # 002150000 --
BS866 and BC366. Paid direct prescription program -- CAP0337 --
###-##-####/family.
3) Baltimore Life Insurance: "Key Man" Life Insurance on Randall K. Nichols,
President, Elizabeth Montine Nichols, VP; Also Gp 0002 BLI ###-##-####
Prescription program NCPDP # 0066631.
Names and compensation of all employees of COMSEC
1) Randall K. Nichols, President, 131 Richland Road, Carlisle, PA 17013
2) Elizabeth M. Nichols, CFO, 131 Richland Road, Carlisle, PA 17013
3) Charles M. Thatcher, VP, P. O. Bpx 925, Friendswood, TX 77546 (Contract
Consultant)
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SCHEDULE 3.17
COMSEC: CERTAIN BUSINESS MATTERS
Randall K. Nichols is the owner of certain software known as the "Automated
Testing System" or "ATS" which is used to test the strength and features of
cryptographic systems. The ATS is leased to COMSEC Solutions for an annual
retainer and per/engagement fee.
Certain loans detailed in Schedule 3.18 may be or are secured by property (the
"Security Properties") owned by Randall K. Nichols and/or Elizabeth Montine
Nichols.
COMSEC Solutions loans secured by real property.
1) Bank of Des Arc, Des Arc, AR Line of Credit (secured), account no.--86006,
payment address -- Buena Vista St, Des Arc, AR 72040-1090. Customer Service No.
1-870-256-4152; Balance 3/23/00 = $11,109.81; Payments 3/9/00 -$501.08; Min due
$200.00, Terms 30 days. 1 year Balloon, not automatically renewable Next
4/08/00.
Collateral: Real Estate secured by mortgage in the County of Prairie and State
of Arkansas, to wit:
Lots 6 and 7 of the Northwest Quarter of Section 2 and Lots 5, 6, 7 and 8 of the
Northwest Quarter of Section 3, all in Township 4 North, Range 4 West,
containing 239.80 acres, more or less, located in Prairie County, Arkansas.
2) Keystone Financial Line of Credit (secured), account no. --30015, commercial
loan payment address -- P. O. Box 708, Altoona, PA 16603-0708. Customer Service
No. 1-717-240-4524; Balance 3/5/00 = $20,720.30; Payments 3/17/00 = $200; Min
due $400.00, Terms 30 days. Next 4/10/00
Collateral: Real Estate at 131 Richland Road, Carlisle, PA 17013 secured by
mortgage and approximately 6 acres.
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SCHEDULE 3.18
CONTRACTS, COMMITMENTS, OBLIGATIONS AND
UNDERSTANDINGS TO WHICH COMSEC IS A PARTY
1) Lease on Automated Testing System from Randall K. Nichols dated August 15,
1999. The fee for the use of the software is US$1,000, to be paid annually, plus
US$500.00 per use on each engagement for which the software is used on behalf of
Licensee's clients and customers. The first annual payment was paid on August
15, 1999, and individual payments for engagements are to be made within thirty
(30) days of the end of any engagement on which the software is used.
2) EPIX, account no. --00071970, automatic charge to AMEX, Customer Service No.
1-800-EPIX-now; Balance 3/23/00 = $0; Payments due 4/07/00 - $20.99/mo. Contract
2 years beginning January, 1998. [Website]
3) ADT Security, account no. --680-10648, automatic charge to AMEX. Customer
Service No. 1-877-301-2425; Balance 3/23/00=$0; Payments due 4/10/00 -$31.50/mo.
Contract 3 years.
4) AT&T Wireless -- 2 cell phones--, account no. 2002529746, Contract 2 years,
monthly -- $158.52
5) Accounts-Payable -- as of 3-23-00 -- $35,050.93 Includes payments for
software that is included in accounts receivable below and payment to Randall K.
Nichols of $7,125.00 and Chuck Thatcher of $6,750.00 for consulting services
performed for and invoiced to THLC.
6) PA Taxes -- (a) Corporate Taxes Estimated $485/quarter. Payment was due
3/15/00. Not yet paid. Annual = $1,940; (b) PA Sales Taxes reportable and paid
monthly at 6% of taxable sales of security software. $1,417.98 currently due
4/20/00.
7) Federal Taxes -- Estimated $2,530/quarter. First payment due 4/15/00. annual
= $10,120
8) Bank of Des Arc, Des Arc. AR Line of Credit (secured), account no.--86006,
payment address -- Buena Vista St, Des Arc, AR 72040-1090. Customer Service No.
1-870-256-4152; Balance 3/23/00 = $11,109.81; Payments 4/08/00 -$200; Min due
$200.00, Terms 30 days. 1 year Balloon, RENEWED 3/08/00.
9) Keystone Financial Line of Credit (secured), account no. -- 30015, commercial
loan repayment address -- P. O. Box 708, Altoona, PA 16603-0708. Customer
Service No. 1-717-240-4524; Balance 3/23/00 = $20,720.30; Payments 4/10/00 -
$400; Min due $400.00, Terms 30 days. RENEWED 3/10/00.
10) Platinum Level Contract with F-Secure Inc to be a Valued Added Reseller
(VAR) at 34% margin through 1 April 2000. Cost to renew of $3,500 plus training
expenditure has been paid. Contract requires first tier support for customers.
11) Contract with InvisiMail to VAR for IM product line at 40% margin. Good
through December 2000. Contract requires first tier support for customers. No
cost to renew.
12) COMSEC Solutions, LLC Med/Den/LTD/RX Contract Insurance providers per
Schedule 3.15; Baltimore/PCI/BS/BC -- approximately $522.87/mo combined.
13) Accounts Receivables as of 3/23/00; $38,955.98, which includes two sales (1)
Telcordia and (2) AIG and the invoice to THLC.
COMSEC--THLC Stock Purchase Agreement 26.
01/11/2000
<PAGE>
Page 27 of 39
14) Credit Cards in the name of COMSEC Solutions: (1) AMEX $1,450.74, (2) AMEX
Optima $3,189.11 (3) Diner's Club $0.00, (4) Exxon $1,123.30, (5) Lowe's
$3,098.94, (6) Sam's Business Account $415.55, (7) Staples $2,700.52, (8) Texaco
$191.59, (9) Diner's Club LOC $0.00. Total $12,047.78.
COMSEC--THLC Stock Purchase Agreement 27.
01/11/2000
<PAGE>
Page 28 of 39
SCHEDULE 4.3(a)
TELEHUBLINK CORPORATION: ORGANIZATION, GOOD STANDING, POWER, ETC.
COMSEC--THLC Stock Purchase Agreement 28.
01/11/2000
<PAGE>
Page 29 of 39
SCHEDULE 4.3(b)(i)
THLC CAPITALIZATION
COMSEC--THLC Stock Purchase Agreement 29.
01/11/2000
<PAGE>
Page 30 of 39
SCHEDULE 4.3(b)(ii)
THLC SUBSIDIARIES AND AFFILIATES
COMSEC--THLC Stock Purchase Agreement 30.
01/11/2000
<PAGE>
Page 31 of 39
SCHEDULE 4.3(c)
THLC: AUTHORIZATION, EFFECTIVE AGREEMENT
COMSEC--THLC Stock Purchase Agreement 31.
01/11/2000
<PAGE>
Page 32 of 39
SCHEDULE 4.3 (d)
THLC: CONSENTS
COMSEC--THLC Stock Purchase Agreement 32.
01/11/2000
<PAGE>
Page 33 of 39
SCHEDULE 4.3 (h)
THLC: UNDISCLOSED LIABILITIES
COMSEC--THLC Stock Purchase Agreement 33.
01/11/2000
<PAGE>
Page 34 of 39
EXHIBITS
Exhibit A COMSEC Certificate of Organization
Exhibit B COMSEC Management Agreement
Exhibit C Minutes of COMSEC Management Meetings
Exhibit D COMSEC Financial Statements
Exhibit E Employment Agreement
COMSEC--THLC Stock Purchase Agreement 34
01/11/2000
<PAGE>
Page 35 of 39
EXHIBIT A
COMSEC CERTIFICATE OF ORGANIZATION
COMSEC--THLC Stock Purchase Agreement 35.
01/11/2000
<PAGE>
Page 36 of 39
EXHIBIT B
COMSEC MANAGEMENT AGREEMENT
COMSEC--THLC Stock Purchase Agreement 36.
01/11/2000
<PAGE>
Page 37 of 39
EXHIBIT C
MINUTES OF COMSEC MANAGEMENT MEETINGS
COMSEC--THLC Stock Purchase Agreement 37.
01/11/2000
<PAGE>
Page 38 of 39
EXHIBIT D
COMSEC FINANCIAL STATEMENTS
COMSEC--THLC Stock Purchase Agreement 38.
01/11/2000
<PAGE>
Page 39 of 39
EXHIBIT E
EMPLOYMENT AGREEMENT
COMSEC--THLC Stock Purchase Agreement 39.
01/11/2000
<PAGE>
MEMBERSHIP CERTIFICATE
CANCELLED 3/24/00
COMSEC SOLUTIONS, L.L.C.
A Manager-Managed Limited Liability Company
Under the laws of the
Commonwealth of Pennsylvania
Randall K. Nichols
------------------
Member
Certificate Number Percent of Ownership
represented by this Certificate
1 100%
<PAGE>
MEMBERSHIP CERTIFICATE
COMSEC SOLUTIONS, L.L.C.
A Manager-Managed Limited Liability Company
Under the laws of the
Commonwealth of Pennsylvania
TeleHubLink Corporation
-----------------------
Member
Certificate Number Percent of Ownership
represented by this Certificate
2 100%
<PAGE>
COMSEC--SOLUTIONS, L.L.C.
MEMBERSHIP LIST
Certificate Percent
Date Number Member Ownership
---- ------------ ------ -------
8/15/99 1 Randall K. Nichols 100
3/24/00 1 Cancelled
3/24/00 2 TeleHubLink Corporation 100
<PAGE>
MINUTES OF MEETING OF THE
INITIAL MEETING
OF
COMSEC SOLUTIONS, LLC
A meeting of the managers of the above named limited liability company was held
on August 15, 1999 at 9:00 AM., at 131 Richland Road, Carlisle, State of
Pennsylvania, for the following purpose(s):
Organizing the company.
Adopting a Management Operating Agreement.
Election of officers.
Randall K. Nichols acted as chairperson, and Randall K. Nichols acted as
secretary of the meeting.
The chairperson called the meeting to order.
The following manager was present at the meeting:
Randall K. Nichols
After discussion, on motion duly made and carried by the affirmative vote of all
of the managers, the following resolution(s) was/were adopted:
Resolved: That the attached Management Operating Agreement be and is hereby
adopted for the company.
Resolved: That Randall K. Nichols be named President and Chief Executive
Officer of the company and act for the company in that capacity beginning
immediately.
There being no further business to come before the meeting, it was adjourned
on motion duly made and carried.
Date: August 15, 1999
Signature: SIGNATURE APPEARS HERE
_______________________
Printed Name: Randall K. Nichols
Title: President and CEO
<PAGE>
CERTIFICATION OF AUTHORITY OF
COMSEC SOLUTIONS, AN LLC
This LLC is managed by its managers. The names and addresses of each of its
current managers as of August 15, 1999 are listed below. Each of these persons
has managerial authority of the LLC and is empowered to transact business on its
behalf.
Name of
Managers Addresses
Randall K. Nichols 131 Richland Road, Carlisle PA 17013
------------------------- --------------------------
------------------------- --------------------------
------------------------- --------------------------
Further, each of the following managers is specifically authorized to transact
the following business on behalf of the LLC:
Randall K. Nichols
____________________________________________________________________
____________________________________________________________________
Date: August 15, 1999
Name of LLC: COMSEC Solutions, LLC
by:
Signature: SIGNATURE APPEARS HERE
-----------------------
Printed Name: Randall K. Nichols
Title: President and Chief Executive Officer
<PAGE>
MINUTES OF MEETING OF THE
MANAGERS MEETING
OF
COMSEC SOLUTIONS, LLC
A meeting of the managers of the above named limited liability company was held
on February 28, 2000 at 9:00 AM., at 131 Richland Road, Carlisle, State of
Pennsylvania, for the following purpose(s):
Discussing the sale of the Company.
Randall K. Nichols acted as chairperson, and Randall K. Nichols acted as
secretary of the meeting.
The chairperson called the meeting to order.
The following manager was present at the meeting.
Randall K. Nichols
After discussion, on motion duly made and carried by the affirmative vote of all
managers, the following resolution(s) was/were adopted:
Resolved: That the 100 percent Membership interest in the Company be exchanged
by Randall K. Nichols for 100,000 shares of Common Stock of TeleHubLink
Corporation of Boston, Massachusetts, in a tax-free reorganization.
There being no further business to come before the meeting, it was adjourned on
motion duly made and carried.
Date: February 28, 2000
Signature: SIGNATURE APPEARS HERE
------------------------
Printed Name: Randall K. Nichols
Title: President and CEO
<PAGE>
EMPLOYMENT AGREEMENT
Employment agreement, between TeleHubLink Corporation (hereinafter "THLC" or
"Company") and Randall K. Nichols (hereinafter "Employee").
For good consideration, the Company employees the Employee on the following
terms and conditions:
1. TERM OF EMPLOYMENT: Subject to the provisions for termination and
modification set forth below, the employment established by this agreement is
effective, March 24, 2000, for a term of one year, and shall automatically
renew on March 24, 2001, and annually thereafter.
2. SALARY. The Company shall pay the Employee a salary of $100,000.00 per year,
for the services of the employee, payable at regular payroll periods. This
salary rate will be reviewed by the Company after the initial 12 months of
employment and annually thereafter.
3. OTHER COMPENSATION: The company shall provide a bonus plan which enables the
Employee, based upon meeting certain milestones developed and agreed to by
Employee and Company's Chief Technology Officer (hereinafter "CTO"), Mr.
Panos Lekkas, to achieve an annual bonus equal to 100% of Employees base
salary. The bonus plan will be established in such a fashion as to enable the
Employee to earn the bonus in $10,000 increments upon the achievement of the
agreed upon milestones.
4. STOCK OPTIONS: The Company shall grant the Employee options to purchase up to
a total of 25,000 shares of THLC stock at an exercise price of $4.00 per
share. These stock options vest 1/2 upon the first anniversary of employment
with the Company, and 1/2 upon the second anniversary of employment. The
Employee must be in the employment of the Company on the date of the vesting
for these shares to vest.
5. DUTIES AND POSITION: The Company hires the employee in the capacity of Vice
President, Cryptography, THLC, reporting to the CTO. In this capacity the
Employee's duties will consist mainly of developing certain functions and
related critical components of a very elaborate, highly proprietary
architecture, which the Company intends to make the "de facto" standard in
the communications security industry. Additionally, such other duties are
envisioned as advising and counseling the CTO. The Employee will be expected
to participate in the general management of the Company, helping top
management meet its stated objectives, including various milestones
established within THLC. The Employee's duties may be reasonably modified at
the Company's direction from time to time.
6. EMPLOYEE TO DEVOTE FULL TIME TO COMPANY: the Employee will devote his
attention and energies full time to the business of the Company, and during
this
<PAGE>
employment will not engage in any other business activity, regardless of whether
such activity is pursued for profit, gain, or other pecuniary advantage, except
for the specific cases explicitly provided herein or otherwise agreed upon in
writing hereafter.
. The Employee is not prohibited from making personal investments in any
other business provided those investments do not require active
participation in the operation of said companies.
. Any ideas, inventions or intellectual capital relevant to the business
of the Company during the term of this agreement are the sole property
of the Company unless specifically rejected in writing by the company
and released to the employee.
. During his employment with the Company, the Employee will not engage in
authoring books unless specifically authorized in writing by the CTO.
. For the spring semester of the year 2000, and in view of previously
taken legal commitments, the employee is authorized by the Company to
continue teaching his information security-related classes for George
Washington University. All costs associated with teaching these classes
including commuting costs, are at the exclusive expense of the
employee. Company-related tasks will always stable over teaching or
class research work when conflicting work priorities must be set.
. In view of the importance for the Employee's intellectual growth and the
strong positive public relations that this teaching activity could
generate for the Company, the Company hereby authorizes the Employee to
continue teaching for George Washington University during the Fall 2000
semester and thereafter, under the same conditions, for a maximum of one
class per semester, with a workload that will not exceed one evening
per week.
7. CONFIDENTIALITY OF PROPRIETARY INFORMATION: Employee agrees, during or after
the term of this employment, not to reveal confidential information, or trade
secrets to any person, firm, corporation or entity. Should the Employee
reveal or threaten to reveal this information, the Company shall be entitled
to an injunction restraining the Employee from disclosing same, or from
rendering any services to any entity to whom said information has been or it
is threatened to be disclosed. The right to secure an injunction is not
exclusive, and the Company may pursue any other remedies it has against the
Employee for any breach or threatened breach of this condition, including the
recovery of damages from the Employee.
8. REIMBURSEMENT OF EXPENSES: The Employee may incur reasonable pre-approved
expenses for furthering the Company's business, including expenses for
entertainment, travel, and similar items. The Company shall reimburse
Employee for all business expenses after the Employee presents an itemized
account of expenditures, pursuant to Company policy.
<PAGE>
9. VACATION: The Employee shall be entitled to a yearly vacation of two weeks
at full pay in the first year, three weeks in the second year and four weeks
annually thereafter. This formula is intended to ensure significant attention
during the initial stages of design, documentation and product launch.
10. TERMINATION OF AGREEMENT: Without cause, the Company may terminate this
agreement at anytime upon thirty days written notice to the Employee. If the
Company terminates the Employee without cause, the Company will pay a severance
amount equal to three months of the Employee's base pay less taxes and Social
Security required to be withheld. If the Company requests, the Employee will
continue to perform his duties and to be paid his regular salary up to the dates
of termination. In addition, the Company will pay the Employee on the date of
termination all accrued compensation including any relevant bonuses accrued,
less taxes and Social Security required to be withheld.
Without cause, the Employee may terminate his employment upon 60 days written
notice to the Company. Employee may be required to perform his duties and shall
be paid the regular salary to date of termination.
Notwithstanding anything to the contrary contained in this agreement, the
Company may terminate the Employee's employment upon thirty days notice to the
Employee should any of the following events occur:
a. the sale of substantially all of the Company's assets to a single purchaser
or group of associated purchaser; or
b. the sale, exchange or other disposition, in one transaction, of the
majority of the Company's outstanding corporate shares; or
c. the Company's decision to terminate its business and liquidate its assets;
or
d. the merger or consolidation of the Company with another company; or
e. bankruptcy or chapter 11 reorganization.
In the case of a. through e. above, if the Company terminates the Employee
without cause, he would be entitled to the termination benefits described in the
termination section above.
11. DEATH BENEFIT: Should the Employee die during the term of employment, the
Company shall pay to Employee's estate any compensation due.
12. RESTRICTION ON POST-EMPLOYMENT: For a period of one year or after the end of
employment, the Employee shall not control, consult to be or be employed by
any business similar to that conducted by the Company, as defined below,
either by soliciting any of Company's accounts or by operating within the
Company's
<PAGE>
general trading area. In addition to the constraints provided under the
Stock Purchase Agreement between COMSEC Solutions, LLC and THLC which
restrict post-employment in areas of competitors for COMSEC Solution's
business, these areas of post-employment are further defined as
companies engaged in "designing encryption and authentication ASIC's
(application-specific integrated circuits), which explicitly are designed
for and destined to be used in (a) securing wireless e-commerce
transactions, cellular telephone communications or palmtop computing,
and/or (b) contain embedded in silicon an underlying hardware-based
elliptic curve cryptography, and/or (c) also contain simultaneously to be
above-described functionality, signal recovery and reconstruction
functions."
13. ASSISTANCE IN LITIGATION: Employee shall upon notice, furnish such
information and proper assistance to the Company as it may reasonably
require in connection with any litigation in which Company is, or may
become, a party either during or after employment.
14. EFFECT OF PRIOR AGREEMENTS: This agreement supersedes any prior agreement
between the Company or any predecessor of the Company and the Employee,
except that this agreement shall not affect or operate to reduce any
benefit or compensation inuring to the Employee of a kind elsewhere
provided and not expressly provided in this agreement.
15. SETTLEMENT BY ARBITRATION: Any claim or controversy that arises out of or
relates to this agreement, or the breach of it, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. Judgement upon the award rendered maybe entered in any court
with jurisdiction.
16. LIMITED EFFECT OF WAIVER BY COMPANY: Should Company waive breach of any
provision of this agreement by the Employee, that waiver will not operate
or be construed as a waiver of further breach by the Employee.
17. SEVERABILITY: If, for any reason, any provision of this agreement is held
invalid, all other provisions of this agreement shall remain in effect. If
this agreement is held invalid or cannot be enforced, then to the full
extent permitted by law any prior agreement between the Company (or any
predecessor thereof) and the Employment shall be deemed reinstated as if
this agreement had not been executed.
18. ASSUMPTION OF AGREEMENT BY COMPANY'S SUCCESSORS AND ASSIGNS: The Company's
rights and obligations under this agreement will inure to the benefit and
be binding upon the Company's successors and assigns.
19. ORAL MODIFICATIONS NOT BINDING: This instrument is the entire agreement
of the Company and the Employee. Oral changes shall have no effect. It may
be altered only by a written agreement signed by both parties.
<PAGE>
Signed this 24th day of March, 2000.
/s/ Bruce Young /s/ Randall K. Nichols
------------------------------ --------------------------------
For TeleHubLink Corporation Randall K. Nichols
Bruce Young
------------------------------
Printed name
President/CEO
------------------------------
Title
<PAGE>
DEPARTMENT OF THE TREASURY DATE OR THIS NOTICE: 08-30-1999
INTERNAL REVENUE SERVICE NUMBER OF THIS NOTICE: CP 575 B
PHILADELPHIA PA 19255 EMPLOYER IDENTIFICATION NUMBER: 25-1842756
FORM: SS-4
2877709128 B
FOR ASSISTANCE CALL US AT:
1-800-829-1040
COMSEC SOLUTIONS LLC
% RANDALL K NICHOLS
131 RICHLAND RD
CARLISLE PA 17013 OR WRITE TO THE ADDRESS
SHOWN AT THE TOP LEFT.
IF YOU WRITE, ATTACH THE
STUB OF THIS NOTICE.
WE ASSIGNED YOU AN EMPLOYER IDENTIFICATION NUMBER (EIN)
Thank you for your Form SS-4, Application for Employer Identification
Number (EIN). We assigned you EIN 25-1842756. This EIN will identify your
business account, tax returns, and documents, even if you have no employees.
Please keep this notice in your permanent records.
Use your complete name and EIN as shown above on all federal tax forms,
payments, and related correspondence. If you use any variation in your name or
EIN, it may cause a delay in processing, incorrect information in your account,
or cause you to be assigned more than one EIN.
Based on the information shown on your Form SS-4, you must file the
following forms(s) by the date we show.
Form 1065 04/15/2000
Please file your Form by the due date shown above. If the due date above
has passed and you have not yet filed, please file your Form by 09/14/1999. If
we don't receive your form by that date, we will charge additional penalties and
interest. We charge penalties and interest from the due date of the return until
it is filed.
Your assigned tax classification is based on information obtained from
your Form SS-4. It is not a legal determination of your tax classification and
is not binding on the Service. If you want a determination on your tax
classification, you may seek a private letter ruling from the Service under the
procedures set forth in Rev. Proc. 98-01, 1998-1 I.R.S. 7 (or the superceding
revenue procedure for the year at issue).
If you need help in determining what your tax year is, you can get
Publication 53B, Accounting Periods and Methods, at your local IRS office.
If you have any questions about the forms shown or the date they are
due, you may call us at 1-800-829-1040 or write to us at the address above.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
BUREAU OF CORPORATION TAXES COMMONWEALTH OF PENNSYLVANIA [LOGO appears here]
DEPT. 28-1905 DEPARTMENT OF REVENUE
HARRISBURG, PA 17128-0705
</TABLE>
OCT 04 1999
COMSEC SOLUTIONS LLC File Number 4158-314
131 RICHLAND RD Fiscal Year End DEC
CARLISLE PA 17013 Federal ID # 25-1842756
Incorporation-
Authority Date 09-01-1999
Std. Industry Code 6448
Taxes Subject DF
CAPITAL STOCK
LOANS
CORPORATE NET INCOME
DEAR TAXPAYER,
Welcome to Pennsylvania's business community. The Department of Revenue has been
advised that you are authorized to conduct business within the Commonwealth of
Pennsylvania.
An account (file number) has been assigned for tax reporting purposes and is
listed above. Please reference this number on all correspondence. The types of
taxes that you are subject to report annually are also listed. Carefully review
this information and make sure that your name, address and other tax information
is complete and accurate. If no Federal Identification number is indicated
above, please provide this number as soon as it is available to you from the
Federal Government. If there are changes or additions, make the appropriate
adjustments on a copy of this letter and return it promptly to:
PA Department of Revenue
Processing Division-Registry Unit
Dept. 280705
Harrisburg, PA 17128-0705
Pay particular attention to the month your business or fiscal year ends. This
month determines when the department will automatically mail to you current tax
forms and instructions. For most taxes, the annual report must be filed within
105 days after the close of your tax year.
For Capital Stock, Foreign Franchise, Corporate Net Income, and Mutual Thrift
Taxes, your first quarterly estimated payments are due within 75 days following
the incorporation/authority date. Likewise, form REV-1640 (attached for your
convenience) requesting Subchapter S status for Pennsylvania must be filed
within 75 days in addition to such election for the Federal Government.
Tax reports must be timely filed annually even if your first year is less than
12 months long and regardless of the extent of business activity. Until you
formally dissolve your corporate charter, file an out of existence affidavit or
cancel a (PUC) license of authorization, you legally are obligated to pay timely
and file all appropriate tax returns. Failure to maintain a current filing
status can result in penalties and liens.
The Department of Revenue appreciates your cooperation and wishes your business
much success in Pennsylvania. If you have any questions please call the
Telephone Unit at (717) 787-1064.
Sincerely,
Bureau of Corporation Taxes
PA Department of Revenue
