Document/Exhibit Description Pages Size
1: 8-K Current Report 5 19K
2: EX-2.1 Plan of Acquisition, Reorganization, Arrangement, 17 70K
Liquidation or Succession
3: EX-2.2 Plan of Acquisition, Reorganization, Arrangement, 2 12K
Liquidation or Succession
4: EX-10.1 Material Contract 9 36K
EX-2.1 — Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
Exhibit Table of Contents
EXHIBIT 2.1
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (this "Agreement") dated February 28,
1999 and effective as of December 10, 1998 is by and among Tel-Com Wireless
Cable TV Corporation, a Florida corporation ("Tel-Com"), IBC Partners, a Florida
partnership ("IBC"), Melvin Rosen ("Rosen") and Ivana Trump ("Ms. Trump").
WITNESSETH:
WHEREAS, the 5th Avenue Channel, Inc., a Florida corporation ("5th
Avenue") is premiering "The 5th Avenue Channel," a new television channel and
has launched its interactive website "5th Avenue Channel.com" offering for sale
a wide variety of products and services (The 5th Avenue Channel and
5thAvenueChannel.com, are hereinafter referred to as "5th Avenue Channel"); and
WHEREAS, Rosen, IBC and Ms. Trump (hereinafter sometimes collectively
referred to as the "Sellers") are, in the aggregate, the owners of one hundred
percent (100%) of the issued and outstanding shares of common stock ("5th Avenue
Common Stock), $.001 par value per share, of 5th Avenue with IBC owning 25 such
shares, Rosen owning 65 such shares and Ms. Trump owning 10 such shares (the
shares of 5th Avenue Common Stock owned by each of the Sellers are hereinafter
collectively referred to as the "5th Avenue Shares"); and
WHEREAS, Tel-Com desires to acquire the 5th Avenue Shares from the
Sellers, in exchange for an aggregate of 335,000 shares of authorized but
unissued common stock, par value $.001 per share, of Tel-Com (the "Tel-Com
Common Stock"), as well as an additional 665,000 shares of Tel-Com Common Stock,
the issuance of said additional 665,000 shares being contingent on 5th Avenue
meeting certain levels of revenue generation and of profitability in its
operations, (the aggregate of 1,000,000 shares of Tel-Com Common Stock are
hereinafter collectively referred to as the "Tel-Com Shares"), and the Sellers
desire to acquire the Tel-Com Shares in exchange for the 5th Avenue Shares; and
WHEREAS, it is the intention of the parties hereto that: (i) Tel-Com
acquire the 5th Avenue Shares in exchange solely for the Tel-Com Shares and the
Sellers acquire the Tel-Com Shares pursuant to the terms contained below in
exchange solely for the 5th Avenue Shares (collectively, the "Exchange"); (ii)
the Exchange shall qualify as a tax-free reorganization under Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, and related
sections, treasury regulations and interpretive rulings thereunder; and (iii)
the Exchange shall qualify as a transaction in securities exempt from
registration or qualification under the Securities Act of 1933, as amended (the
"Securities Act"), and under the applicable securities laws of the state where
Tel-Com and 5th Avenue are incorporated.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, Tel-Com and the Sellers agree
as follows:
1. EXCHANGE OF SHARES. Tel-Com and the Sellers agree that each will
effect the Exchange, pursuant to which the 5th Avenue Shares will be acquired by
Tel-Com at the "Closing" (as hereinafter defined), and the Tel-Com Shares will
be acquired by the Sellers as follows: (i) 335,000 shares of Tel-Com Common
Stock (the "Initial Shares") shall be transferred
by Tel-Com to the Sellers at the Closing in accordance with the Schedule set
forth on Exhibit "A" attached hereto; (ii) half of the remaining 665,000 shares
of Tel-Com Common Stock (the "Performance Shares") shall be transferred from
Tel-Com to the Sellers in accordance with the Schedule set forth on Exhibit "A"
attached hereto if, and within thirty days after, 5th Avenue Channel achieves
gross revenues in excess of $10,000,000 for any calendar quarter, and (iii) the
remaining half of the Performance Shares shall be transferred from Tel-Com to
the Sellers in accordance with the Schedule set forth on Exhibit "A" attached
hereto if, and within thirty days after, 5th Avenue Channel achieves either (a)
gross revenues in excess of $25,000,000 for any calendar quarter, or (b) net
income in excess of $1,000,000 for any calendar quarter.
2. REPRESENTATIONS AND WARRANTIES OF TEL-COM. Tel-Com represents and
warrants that, except as set forth in Tel-Com's Annual Report on Form 10-KSB for
the year ended December 31, 1997 (the "Tel-Com Form 10-KSB") and Tel-Com's
Quarterly Reports on Form 10-QSB for the Quarterly Periods ended March 31, 1998,
June 30, 1998 and September 30, 1998 (the "Tel-Com Forms 10-QSB"):
(a) RECEIPT OF CORPORATE INFORMATION. All requested documents,
records and books pertaining to 5th Avenue have been delivered to Tel-Com, and
all of Tel-Com's questions and requests for information of 5th Avenue have been
answered to the satisfaction of Tel-Com.
(b) RISKS. Tel-Com is sufficiently experienced in financial
and business matters to be capable of evaluating the merits and risks of an
investment in 5th Avenue; has evaluated such merits and risks, including risks
particular to its situation; and Tel-Com has determined that the investment in
5th Avenue is suitable for it.
(c) INVESTMENT INTENT. The 5th Avenue Shares are being
acquired by Tel-Com for its own account with no intention of distributing the
5th Avenue Shares to others. Tel-Com does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or otherwise
distribute to any person or to have any person sell, transfer or otherwise
distribute the 5th Avenue Shares. Except as specifically contemplated hereby,
Tel-Com is not presently engaged nor plans to engage within the presently
foreseeable future in any discussion with any person regarding such a sale,
transfer or other distribution of the 5th Avenue Shares or any interest therein.
(d) COMPLIANCE WITH FEDERAL AND STATE SECURITIES LAWS. Tel-Com
understands that the 5th Avenue Shares have not been registered under the
Securities Act. Tel-Com understands that the 5th Avenue Shares must be held
indefinitely unless the sale or other transfer thereof is subsequently
registered under the Securities Act or an exemption from such registration is
available. Tel-Com understands that its right to transfer the 5th Avenue Shares
will be subject to certain restrictions, which include restrictions against
transfer under the Securities Act and applicable state securities laws. In
addition to such restrictions, Tel-Com realizes that it may not be able to sell
or dispose of the 5th Avenue Shares as there may be no public or other market
for the 5th Avenue Shares. Tel-Com understands that certificates evidencing the
5th Avenue Shares shall bear a legend substantially as follows:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY
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APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR PLEDGED UNLESS REGISTERED UNDER THE SECURITIES ACT AND
ANY APPLICABLE STATE LAW OR PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
(e) CORPORATE ORGANIZATION. Tel-Com is duly organized, validly
existing and in good standing under the laws of the state of its incorporation
and has full corporate power, authority and legal right to own its properties
and to conduct the businesses in which it is now engaged. Tel-Com is duly
licensed or qualified to transact business as a foreign corporation and is in
good standing in each jurisdiction where the ownership or lease of its assets or
the operation of its business requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
business, operations, property or financial or other condition of Tel-Com taken
as a whole. All of the capital stock of the subsidiaries of Tel-Com is owned of
record and beneficially by Tel-Com.
(f) AUTHORITY. Tel-Com has the corporate power and authority
to execute and deliver this Agreement and to perform all of its covenants and
agreements hereunder. The execution and delivery of this Agreement by Tel-Com,
the performance by Tel-Com of its covenants and agreements hereunder and the
consummation by Tel-Com of the transactions contemplated hereby have been duly
authorized by all necessary corporate action.
(g) ENFORCEABILITY. This Agreement has been duly executed and
delivered and constitutes the valid and legally binding obligation of Tel-Com,
enforceable against Tel-Com in accordance with its terms except as such
enforceability may be limited by (i) bankruptcy, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights generally or by the
principles governing the availability of specific performance, injunctive relief
and other equitable remedies (regardless of whether such enforceability is
considered in equity or at law), including requirements of reasonableness and
good faith in the exercise of rights and remedies thereunder; (ii) applicable
laws and court decisions which may limit or render unenforceable certain terms
and provisions contained therein, but which do not substantially interfere with
the practical realization of the benefits thereof, except for the economic
consequences of any procedural delay which may be imposed by, relate to or
result from such laws and court decisions; and (iii) the limitations on the
enforceability of the securities indemnification provisions set forth herein by
reason of matters of public policy.
(h) NONCONTRAVENTION. Neither the execution and delivery of
this Agreement by Tel-Com, nor the consummation of the transactions contemplated
hereby, nor the performance by Tel-Com of its covenants and agreements hereunder
(i) violates any provision of the Articles of Incorporation or By-Laws of
Tel-Com; (ii) violates any existing law, statute, ordinance, regulation, or any
order, judgment or decree of any court or governmental agency to which Tel-Com
is a party or by which any of its assets is bound; or (iii) conflicts with or
will result in any breach of any of the terms of or constitute a default under
or result in the termination of or the creation of any lien pursuant to the
terms of any indenture, mortgage, real property lease, securities purchase
agreement, credit or loan agreement or other material agreement to which Tel-Com
is a party or by which Tel-Com or any of its assets is bound, to the extent such
violation thereof, conflict therewith, breach thereof, default thereunder or
termination thereof would have a material adverse effect.
3
(i) CAPITALIZATION. The authorized capital stock of Tel-Com
consists of (i) 5,000,000 shares of preferred stock, $.001 par value per share
(the "Tel-Com Preferred Stock"), of which no shares are issued and outstanding;
and (ii) 10,000,000 shares of Tel-Com Common Stock, $.001 par value per share of
which, prior to the effective date of the Exchange, 4,093,143 shares are issued
and outstanding. The Tel-Com Form 10-KSB sets forth a list of all options,
warrants or other securities exercisable for, convertible into or exchangeable
for Tel-Com Preferred Stock or Tel-Com Common Stock or other subscription,
commitments or agreements for Tel-Com to issue Tel-Com Preferred Stock or
Tel-Com Common Stock.
(j) APPROVALS. Except as may be required under federal and
state securities laws (which have been or, in the case of compliance required on
a post-sale basis, will be complied with), the execution, delivery and
performance of this Agreement by Tel-Com does not require (i) the consent,
waiver, approval, license or authorization of or any filing with any person or
any governmental authority; or (ii) the approval or authorization of the
shareholders of Tel-Com. The issuance of the Tel-Com Shares pursuant to this
Agreement is not subject to the registration or prospectus delivery requirements
of Section 5 of the Securities Act.
(k) LEGAL PROCEEDINGS. There are no (i) actions, suits,
claims, investigations or legal, or administrative or arbitration proceedings
pending or, to the best knowledge of Tel-Com, threatened against or affecting
Tel-Com, whether at law or in equity, or before or by any governmental authority
or (ii) judgments, decrees, injunctions or orders of any governmental authority
or arbitrator against Tel-Com which, in any case, could have a material adverse
effect.
(l) FINANCIAL STATEMENTS. The audited consolidated financial
statements of Tel-Com as of December 31, 1997 included in the Tel-Com Form
10-KSB and the unaudited consolidated financial statements of Tel-Com included
in the Tel-Com Forms 10-QSB (collectively, the "Tel-Com Financial Statements")
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may have
been indicated in the notes thereto or to the extent footnotes thereto have been
omitted) and fairly present (subject to normal audit adjustments) the financial
position of the Company at the dates thereof and the consolidated results of the
operations and statement of changes in financial position for the periods then
ended.
(m) ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in
the Tel-Com Financial Statements or as incurred in the ordinary course of
business subsequent to September 30, 1998, as of the date hereof (i) Tel-Com has
no material liability of any nature (matured or unmatured, fixed or contingent)
that was not provided for or disclosed in the Tel-Com Financial Statements, and
(ii) to the best knowledge of Tel-Com, all liability reserves established by
Tel-Com set forth in the Tel-Com Financial Statements were adequate in all
material respects for the purposes indicated therein.
(n) NO CHANGE. Since September 30, 1998 there has not been (i)
any material adverse change in the condition (financial or otherwise),
operations, results of operations, assets, liabilities, business or prospects of
Tel-Com taken as a whole; (ii) any material liability or obligation (contingent
or otherwise) incurred by Tel-Com, other than current liabilities (or
obligations) or capital leases incurred in the ordinary of business; (iii) any
asset or property of Tel-Com made subject to a lien of any kind, except (A)
liens for taxes not yet due or which are being contested in good faith and by
appropriate proceedings provided adequate
4
reserves with respect thereto are maintained on Tel-Com's books in accordance
with generally accepted principles; (B) landlords', carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like liens arising in the
ordinary course of business which are not overdue for a period of more than 60
days or which are being contested in good faith and by appropriate proceedings;
(C) pledges or deposits in connection with worker's compensation, unemployment
insurance and other social security legislation; (D) deposits to secure the
performance of contracts, bids, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature; (E) easements,
rights-of-way, restrictions and other similar encumbrances incurred in the
ordinary course of business; and (F) liens which, in the aggregate, are not
material in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
Tel-Com's business; (iv) any waiver of any material valuable right of Tel-Com,
or the cancellation of any material debt or claim held by Tel-Com; (v) any
payment of dividends on, or other distributions with respect to, or any direct
or indirect redemption or acquisition of, any shares of Tel-Com Common Stock, or
any agreement or commitment therefor; (vi) any mortgage, pledge, sale,
assignment or transfer of any tangible or intangible assets of Tel-Com, except,
with respect to tangible assets, in the ordinary course of business; (vii) any
loan by Tel-Com to any officer, director, employee or shareholder of Tel-Com, or
any agreement or commitment therefor; (viii) any material damage, destruction or
loss (whether or not covered by insurance) which does or may adversely affect
the condition (financial or otherwise), operations, results of assets, property,
business or prospects of Tel-Com; or (ix) any change in the accounting methods
or practices followed by Tel-Com.
(o) TAXES. Tel-Com has accurately prepared and timely filed,
or has had accurately prepared and timely filed on its behalf, or has filed
appropriate extensions of time to file, all tax returns which, to its knowledge,
are required to be filed by it, and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any nation or government, any state or other political subdivision
thereof, and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government (other than those the
amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
generally accepted accounting principles have been provided on the books); and,
to its knowledge, no tax liens have been filed nor claims being asserted with
respect to any such taxes, fees or other charges.
(p) DISCLOSURE. The representations or warranties made by
Tel-Com in this Agreement or in any other document or certificate furnished in
connection herewith did not contain at the time made or, if set forth herein, do
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements herein or therein, in light of
the circumstances under which they are made, not misleading in any material
respect. There is no fact known to Tel-Com that has a material adverse effect
or, other than general economic conditions in the industry in which the Company
operates, that the Company reasonably believes will in the future not have a
material adverse effect, which has not been set forth in this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS. Except where the
following representations and warranties refer to Rosen individually, in which
case such representation and warranty is made solely by Rosen, the Sellers,
jointly and severally, and represent and warrant
5
that, except as set forth on the Sellers' disclosure schedule attached hereto
(the "Sellers Disclosure Schedule"):
(a) RECEIPT OF CORPORATE INFORMATION. All requested documents,
records and books pertaining to Tel-Com have been delivered to the Sellers, and
all of the Sellers' questions and requests for information of the Sellers have
been answered to the satisfaction of the Sellers.
(b) RISKS. The Sellers are sufficiently experienced in
financial and business matters to be capable of evaluating the merits and risks
of an investment in Tel-Com; have evaluated such merits and risks, including
risks particular to their situations; and the Sellers have determined that their
investment in Tel-Com is suitable for them.
(c) INVESTMENT INTENT. The Tel-Com Shares are being acquired
by the Sellers for their own account with no present intention of distributing
the Tel-Com Shares to others. The Sellers do not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or otherwise
distribute to any person or to have any person sell, transfer or otherwise
distribute the Tel-Com Shares. The Sellers are not presently engaged nor plan to
engage within the presently foreseeable future in any discussion with any person
regarding such a sale, transfer or other distribution of the Tel-Com Shares or
any interest therein.
(d) COMPLIANCE WITH FEDERAL AND STATE SECURITIES LAWS. The
Sellers understand that the Tel-Com Shares have not been registered under the
Securities Act. The Sellers understand that they may have to hold the Tel-Com
Shares indefinitely unless and until the sale or other transfer thereof is
subsequently registered under the Securities Act or an exemption from such
registration is available. The Sellers understand that their right to transfer
the Tel-Com Shares will be subject to certain restrictions, which include
restrictions against transfer under the Securities Act and applicable state
securities laws. In addition to such restrictions, the Sellers realize that they
may not be able to sell or dispose of the Tel-Com Shares as there may be no
public or other market for the Tel-Com Shares. The Sellers understand that
certificates evidencing the Tel-Com Shares shall bear a legend substantially as
follows:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY APPLICABLE STATE LAW. THEY MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR PLEDGED UNLESS REGISTERED UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE LAW OR PURSUANT TO AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
(e) CORPORATE ORGANIZATION. Rosen represents and warrants that
5th Avenue: (i) is duly organized, validly existing and in good standing under
the laws of the state of its incorporation; (ii) has full corporate power,
authority and legal right to own its properties and to conduct its business in
which it is now engaged; (iii) is duly licensed or qualified to transact
business as a foreign corporation and is in good standing in each jurisdiction
where the ownership or lease of its assets or the operation of its business
requires such qualification, except where the failure to be so qualified would
not have a material adverse effect on its business, operations, properties or
financial or other condition taken as a whole; and (iv) does not have any
subsidiaries and does not own any equity interest in any other business entity.
6
(f) ENFORCEABILITY. This Agreement has been duly executed and
delivered and constitutes the valid and legally binding obligation of the
Sellers, enforceable against the Sellers in accordance with its terms except as
such enforceability may be limited by (i) bankruptcy, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights generally or by the
principles governing the availability of specific performance, injunctive relief
and other equitable remedies (regardless of whether such enforceability is
considered in equity or at law), including requirements of reasonableness and
good faith in the exercise of rights and remedies thereunder; (ii) applicable
laws and court decisions which may limit or render unenforceable certain terms
and provisions contained therein, but which do not substantially interfere with
the practical realization of the benefits thereof, except for the economic
consequences of any procedural delay which may be imposed by, relate to or
result from such laws and court decisions; and (iii) the limitations on the
enforceability of the securities indemnification provisions set forth herein by
reason of matters of public policy.
(g) NONCONTRAVENTION. Rosen represents and warrants that
neither the execution and delivery of this Agreement by the Sellers, nor the
consummation of the transactions contemplated hereby, nor the performance by the
Sellers of their respective covenants and agreements hereunder (i) violates any
provision of the Articles or Certificate of Incorporation or By-Laws of 5th
Avenue; (ii) violates any existing law, statute, ordinance, regulation, or any
order, judgment or decree of any court or governmental agency to which the
Sellers or 5th Avenue are a party or by which any of their respective assets are
bound; or (iii) conflicts with or will result in any breach of any of the terms
of or constitute a default under or result in the termination of or the creation
of any lien pursuant to the terms of any indenture, mortgage, real property
lease, securities purchase agreement, credit or loan agreement or other material
agreement to which the Sellers or 5th Avenue are a party or by which the
Sellers, 5th Avenue or any of their respective assets are bound, to the extent
such violation thereof, conflict therewith, breach thereof, default thereunder
or termination thereof would have a material adverse effect.
(h) CAPITALIZATION. Rosen represents and warrants that the
authorized capital stock of 5th Avenue consists of 10,000 shares of common
stock, $.001 par value per share, of which, prior to the Exchange, 100 shares
are issued and outstanding, 10 of such outstanding shares being held by Ms.
Trump, 65 of such outstanding shares being held by Rosen and 25 of such
outstanding shares being held by IBC. The Sellers have no knowledge of the
existence of any options, warrants or other securities exercisable for,
convertible into or exchangeable for 5th Avenue common stock or other
subscription, commitments or agreements for 5th Avenue to issue 5th Avenue
common stock.
(i) NO ENCUMBRANCES. Each Seller represents that he, she or
it, as the case may be, is the sole owner, legally and beneficially, of its
portion of the 5th Avenue Shares, free and clear of all liens, pledges,
encumbrances and claims of every kind and that upon execution and delivery of
this Agreement and the consummation of the transactions contemplated hereunder,
all legal and beneficial ownership of the 5th Avenue Shares owned by such Seller
will be validly transferred to and vested in Tel-Com free and clear of all
liens, pledges, encumbrances and claims of every kind.
(j) APPROVALS. Rosen represents and warrants that, except as
may be required under federal and state securities laws (which have been or, in
the case of compliance required on a post-sale basis, will be complied with),
the execution, delivery and performance of
7
this Agreement by the Sellers does not require the consent, waiver, approval,
license or authorization of or any filing with any person or any governmental
authority, and that the transfer of the 5th Avenue Shares pursuant to this
Agreement is not subject to the registration or prospectus delivery requirements
of Section 5 of the Securities Act.
(k) LEGAL PROCEEDINGS. Rosen represents and warrants that
there are no (i) actions, suits, claims, investigations or legal, or
administrative or arbitration proceedings pending or threatened against or
affecting 5th Avenue, whether at law or in equity, or before or by any
governmental authority; (ii) judgments, decrees, injunctions or orders of any
governmental authority or arbitrator against 5th Avenue which, in any case,
could have a material adverse effect.
(l) ABSENCE OF UNDISCLOSED LIABILITIES. Rosen represents and
warrants with respect to 5th Avenue, that 5th Avenue has no material liability
of any nature (matured or unmatured, fixed or contingent) that is not disclosed
in the Sellers Disclosure Schedule.
(m) TAXES. Rosen represents and warrants that 5th Avenue has
accurately prepared and timely filed or has had accurately prepared and timely
filed on its behalf all tax returns which, to the Rosen's knowledge, are
required to be filed by 5th Avenue, and 5th Avenue has paid all taxes shown to
be due and payable on said returns or on any assessments made against it or any
of its respective properties and all other taxes, fees or other charges imposed
on it or any of its properties by any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
(other than those the amount or validity of which is currently being contested
in good faith by appropriate proceedings and with respect to which reserves in
conformity with generally accepted accounting principles have been provided on
the books); and, to Rosen's knowledge, no tax liens have been filed nor claims
being asserted with respect to any such taxes, fees or other charges.
(n) DISCLOSURE. To the best of the Sellers' knowledge, the
representations or warranties made by the Sellers in this Agreement or in any
other document or certificate furnished in connection herewith did not contain
at the time made or, if set forth herein, do not contain any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements herein or therein, in light of the circumstances under which they are
made, not misleading in any material respect. There is no fact known to the
Sellers that has a material adverse effect or, other than general economic
conditions in the industry in which 5th Avenue operates, that the Sellers
reasonably believe will in the future have a material adverse effect, which has
not been set forth in this Agreement.
4. REGISTRATION OF TEL-COM SHARES. Tel-Com agrees to register the
Tel-Com Shares for resale by the Sellers by amending its pending registration
statement on Form SB-2, File No. 33-41459, to include such shares, and shall
diligently pursue completion of such filing and undertake its best efforts to
have such registration statement declared effective by the Securities and
Exchange Commission (the "SEC") as soon as reasonably practicable.
(a) OBLIGATIONS OF TEL-COM. In connection with the
registration of the Tel-Com Shares pursuant to this Section 4, Tel-Com shall:
8
(i) Prepare and file any necessary amendments
(including post-effective amendments) and supplements to the registration
statement and the prospectus used in connection with the registration statement
and take such other reasonable action as may be necessary to have the
registration statement declared effective by the SEC and keep the registration
statement effective until the Tel-Com Shares are capable of full and complete
public sale without registration under the Securities Act and to comply with the
provisions of the Securities Act and the Exchange Act, and the rules and
regulations thereunder, with respect to the disposition of the Tel-Com Shares;
(ii) Notify the Sellers, immediately after becoming
aware thereof, (A) when the registration statement or the prospectus included
therein or any prospectus amendment or supplement or post-effective amendment
has been filed and, with respect to the registration statement or any
post-effective amendment, when the same has become effective or (B) of any
request by the SEC for amendment of or supplement to the registration statement
or related prospectus or for additional information;
(iii) Furnish promptly to the Sellers such reasonable
number of copies of a prospectus, and all amendments and supplements thereto, in
conformity with the requirements of the Securities Act, and such other documents
as the Sellers may reasonably request in order to facilitate their disposition
of the Tel-Com Shares;
(iv) Use its best efforts to register and qualify the
Tel-Com Shares under the securities or Blue Sky laws of such states as shall be
reasonably requested by the Sellers, and prepare and file in those states such
amendments (including post-effective amendments) and supplements and to take
such other actions as may be necessary to maintain such registration and
qualification in effect at all times during the period Tel-Com is required to
maintain the registration statement effective, and to take all other actions
necessary or advisable to enable the disposition of such securities in such
states, provided that Tel-Com shall not be required in connection therewith or
as a condition thereto to subject itself to taxation, to qualify to do business
or to file a general consent to service of process in any such states; and
(v) Notify the Sellers, immediately, at any time when
a prospectus relating to the Tel-Com Shares is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in the registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Tel-Com shall promptly amend or supplement the registration statement to correct
any such untrue statement or omission, and provide the Sellers with an amended
or supplemented prospectus with respect to the Tel-Com Shares that corrects such
untrue statement or omission.
(b) SELLERS' OBLIGATIONS. It shall be a condition precedent to
the obligations of Tel-Com to the Sellers to take any action pursuant to this
Section 4 that the Sellers shall furnish to Tel-Com such information regarding
the Sellers, the Tel-Com Shares and other shares of Tel-Com Common Stock held by
the Sellers and the intended method of disposition of such securities as shall
be reasonably required to effect the registration of the Tel-Com Shares and
shall execute such documents in connection with such registration as Tel-Com may
reasonably request.
9
(c) EXPENSES OF REGISTRATION. All expenses incurred by Tel-Com
in complying with this section, including, without limitation, registration and
filing fees, fees and expenses of complying with state securities and Blue Sky
laws, printing expenses, and fees and disbursements of Tel-Com's counsel and
accountants, shall be paid by Tel-Com.
(d) INDEMNIFICATION RELATING TO REGISTRATION.
(i) Tel-Com will indemnify and hold harmless the
Sellers, the directors and officers of the Sellers, if any, and each person, if
any, who controls the Sellers within the meaning of the Securities Act or the
Exchange Act (each a "Seller Indemnified Party" and collectively, the "Seller
Indemnified Parties"), against any losses, claims, damages, expenses or
liabilities (joint or several) to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, expenses or liabilities (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively, a "Violation"): (A)
any untrue statement or alleged untrue statement of a material fact contained in
the registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (B) the
omission or alleged omission to state therein information required to be stated
therein, or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading or (C) any violation or
alleged violation by Tel-Com of the Securities Act, the Exchange Act or any
state securities or Blue Sky law; and Tel-Com will reimburse each Seller
Indemnified Party, promptly as such expenses are incurred, for any legal or
other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding; provided, however, that the indemnity agreement contained in this
section shall not apply to amounts paid in settlement of any such loss, claim,
damage, expense, liability, action or proceeding if such settlement is effected
without the consent of Tel-Com, which consent shall not be unreasonably
withheld.
(ii) Promptly after receipt by an indemnified party
under this Section 4 of notice of the commencement of any action (including any
governmental action), such indemnified party shall, if a claim in respect
thereof is to be made against Tel-Com under this section, deliver to Tel-Com a
written notice of the commencement thereof and Tel-Com shall have the right to
participate in and, to the extent it so desires, to assume control of the
defense thereof with counsel mutually satisfactory to Tel-Com and the
indemnified parties; provided, however, that an indemnified party shall have the
right to retain its own counsel, with the fees and expenses to be paid by
Tel-Com, if, in the reasonable opinion of counsel for the indemnified party,
representation of such indemnified party by the counsel retained by Tel-Com
would be inappropriate due to actual or potential differing interests between
such indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to Tel-Com within a reasonable
time of the commencement of any such action shall relieve Tel-Com of any
liability to the indemnified party under this section only to the extent
prejudicial to its ability to defend such action, but the omission so to deliver
written notice to Tel-Com shall not relieve it of any liability that is may have
to any indemnified party otherwise than under this section. The indemnification
required by this section shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, promptly as such
expense, loss, damage or liability is incurred.
10
(iii) To the extent any indemnification by Tel-Com is
prohibited or limited by law, or is otherwise unavailable to or insufficient to
hold harmless an indemnified party, Tel-Com agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under this section, provided that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
5. CLOSING DATE; DELIVERIES BY THE PARTIES. The Exchange shall be
closed contemporaneously with the execution of this Agreement (the "Closing").
(a) DOCUMENTS TO BE DELIVERED BY THE SELLERS. On the Closing,
the Sellers will deliver, or cause to be delivered, to Tel-Com the following:
(i) stock certificates for the 5th Avenue Shares
being sold by each of the Sellers to Tel-Com together with stock powers executed
in blank for each; and
(ii) such other instruments, documents and
certificates, if any, as are required to be delivered pursuant to the provisions
of this Agreement or that may be reasonably requested in furtherance of the
provisions of this Agreement.
(b) DOCUMENTS TO BE DELIVERED BY TEL-COM. Tel-Com will deliver
or cause to be delivered to the Sellers:
(i) stock certificates representing the Initial
Shares being issued to each of the Sellers in connection with the Closing as set
forth on Exhibit "A" attached hereto; and
(ii) such other instruments, documents and
certificates, if any, as are required to be delivered pursuant to the provisions
of this Agreement, or that may be reasonably requested in furtherance of the
provisions of this Agreement.
(c) ADDITIONAL DELIVERIES. In addition to the above-described
deliveries, Tel-Com and Ms. Trump shall each execute and deliver to each other a
counterpart of the Consulting Agreement in the Form of Exhibit "B" attached
hereto.
6. DOCUMENTS TO SUPERCEDE PRIOR SHAREHOLDER AGREEMENT. This Share
Exchange Agreement, together with the Consulting Agreement as set forth in
Exhibit "B" attached hereto, shall supercede that one certain Shareholder
Agreement executed as of July 16, 1997 by and among Fifth Avenue Shopping
Channel, Inc., Rosen and Ms. Trump.
7. INDEMNIFICATION.
(a) INDEMNIFICATION BY TEL-COM. Tel-Com hereby indemnifies and
holds harmless the Sellers in respect of any and all losses, claims, demands,
judgments, expenses, or liabilities, including all attorneys' fees and court
costs in any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before an arbitrator ("Adverse
Consequence") suffered by the Sellers in connection with each and all of the
following:
11
(i) Any material misrepresentation or material breach
of any representation or warranty made by Tel-Com in this Agreement or other
document attached hereto or delivered to the Sellers by Tel-Com in connection
with the transactions contemplated hereby.
(ii) The breach of any covenant, agreement, or
obligation of Tel-Com contained in this Agreement or any other instrument
specifically contemplated by this Agreement.
(iii) Any misrepresentation contained in any
statement in writing or certificate furnished by Tel-Com pursuant to this
Agreement or in connection with the transactions contemplated by this Agreement,
which results in a material adverse effect.
(b) INDEMNIFICATION BY THE SELLERS. Each of the Sellers
individually, hereby indemnifies and holds harmless Tel-Com and its directors,
officers, employees and agents in respect of any and all Adverse Consequences
incurred by Tel-Com in connection with each and all of the following:
(i) Any material misrepresentation or material breach
of any representation or warranty made by such Seller in this Agreement or other
document attached hereto or delivered to Tel-Com by the Sellers in connection
with the transactions contemplated hereby.
(ii) The breach of any covenant, agreement, or
obligation of such Seller contained in this Agreement or any other instrument
specifically contemplated by this Agreement.
(iii) Any material misrepresentation contained in any
statement in writing or certificate furnished by such Seller pursuant to this
Agreement or in connection with the transactions contemplated by this Agreement.
(c) PROCEDURE FOR INDEMNIFICATION. Whenever any claim shall
arise for indemnification hereunder, the party seeking indemnification
("Indemnitee") shall promptly notify the other party ("Indemnitor") of the claim
and, when known, the facts constituting the basis for such claim. If any claim
for indemnification hereunder results from or is in connection with any claim or
Adverse Consequence by a person who is not a party to this Agreement ("Third
Party Claim"), such notice shall also specify, if known, the amount or an
estimate of the amount of the liability arising therefrom. The Indemnitee shall
give the Indemnitor prompt notice of any such claim and the Indemnitor shall
undertake the defense thereof by representatives of its own choosing, reasonably
satisfactory to the Indemnitee, at the expense of the Indemnitor. The Indemnitee
shall have the right to participate in any such defense of a Third Party Claim
with advisory counsel of its own choosing, at its own expense. If the
Indemnitor, within a reasonable time after notice of any such Third Party Claim,
fails to defend, the Indemnitee or any Affiliate of the Indemnitee shall have
the right to undertake the defense, compromise or settlement of such Third Party
Claim on behalf of, and for the account of, the Indemnitor, at the expense and
risk of the Indemnitor. The Indemnitor shall not, without the Indemnitee's
written consent, settle or compromise any such Third Party Claim or consent to
entry of any judgment that does not include, as an unconditional term thereof,
the giving by the claimant or the plaintiff to Indemnitee and Indemnitee's
directors, officers, employees and
12
agents, an unconditional release from all liability in respect of such Third
Party Claim. The Indemnitee shall not pay any claim covered by this right to
indemnification prior to giving the Indemnitor the notice of such claim required
by this Section 6 and the opportunity provided herein to handle the claim
itself.
(d) PAYMENT. All indemnification hereunder shall be effected
upon demand by payment of cash or delivery of a cashier's check in the amount of
the indemnification liability.
8. NOTICES. All notices, reports and other communications to Tel-Com or
the Sellers hereunder shall be in writing, shall refer specifically to this
Agreement and shall be hand delivered or sent by facsimile transmission or by
registered mail or certified mail, return receipt requested, postage prepaid, in
each case to the respective persons and addresses specified below (or to such
other persons or addresses as may be specified in writing to the other party):
If to Tel-Com, to: Tel-Com Wireless Cable TV Corporation
3957 N.E. 163rd Street
North Miami Beach, Florida 33160
Attn: Melvin Rosen, President
Fax No.: (305) 919-8154
If to the Sellers, to: IBC Partners
3957 N.E. 163rd Street
North Miami Beach, Florida 33160
Fax No.: (305) 945-9974
Melvin Rosen
3957 N.E. 163rd Street
North Miami Beach, Florida 33160
Fax No.: (305) 919-8154
Ivana Trump
10 East 64th Street
New York, New York 10021
Fax No.: (212) 832-6657
with a copy to:
Gary Lyman, Esq.
Lyman & Landy, LLP
405 Park Avenue, Suite 1703
New York, NY 10022
Any notice or communication given in conformity with this section shall
be deemed to be effective when received by the addressee if delivered by hand or
overnight courier or by facsimile (with confirmed receipt), and three days after
mailing, if mailed.
13
9. NO IMPLIED WAIVERS; RIGHTS CUMULATIVE. No failure on the part of any
of the parties to this Agreement to exercise and no delay in exercising any
right, power, remedy or privilege under this Agreement or provided by statute or
at law or in equity or otherwise, including, without limitation, the right or
power to terminate this Agreement, shall impair, prejudice or constitute a
waiver of any such right, power, remedy or privilege or be construed as a waiver
of any breach of this Agreement or as an acquiescence therein, nor shall any
single or partial exercise of any such right, power, remedy or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power, remedy or privilege.
10. MISCELLANEOUS.
(a) FURTHER ASSURANCES. At any time, and from time to time,
each party will execute such additional instruments and take such action as may
be reasonably requested by any other party to confirm or perfect title to any
property transferred hereunder or otherwise to carry out the intent and purposes
of this Agreement.
(b) COSTS AND EXPENSES. Each party hereto agrees to pay its or
his own costs and expenses incurred in negotiating this Agreement and
consummating the transactions described herein.
(c) ENTIRE AGREEMENT. This Agreement, including all schedules
and exhibits thereto, constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof. It supersedes all prior
negotiations, letters and understandings relating to the subject matter hereof.
(d) AMENDMENT. This Agreement may not be amended, supplemented
or modified in whole or in part except by an instrument in writing signed by all
parties hereto.
(e) ASSIGNMENT. This Agreement may not be assigned by any
party hereto without the prior written consent of the other party.
(f) HEADINGS. The section and subsection headings in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(g) PRONOUNS. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
context may require.
(h) CONSTRUCTION. The parties hereto and their respective
legal counsel participated in the preparation of this Agreement; therefore, this
Agreement shall be construed neither against nor in favor of any of the parties
hereto, but rather in accordance with the fair meaning thereof.
(i) SURVIVAL. The representations, warranties, and
indemnification obligations of the parties hereunder shall survive the
consummation of the transactions contemplated by this Agreement.
14
(j) SEVERABILITY. The invalidity, illegality or
unenforceability of any provision or provisions of this Agreement will not
affect any other provision of this Agreement, which will remain in full force
and effect, nor will the invalidity, illegality or unenforceability of a portion
of any provision of this Agreement affect the balance of such provision. In the
event that any one or more of the provisions contained in this Agreement or any
portion thereof shall for any reason be held to be invalid, illegal or
unenforceable in any respect, this Agreement shall be reformed, construed and
enforced as if such invalid, illegal or unenforceable provision had never been
contained herein.
(k) REMEDIES. The parties hereto acknowledge and agree that
any party's remedy at law for a breach or threatened breach of any of the
provisions of this Agreement would be inadequate and such breach or threatened
breach shall be per se deemed as causing irreparable harm to such party.
Therefore, in the event of such breach or threatened breach, the parties hereto
agree that, in addition to any available remedy at law, including but not
limited to monetary damages, an aggrieved party, without posting any bond, shall
be entitled to obtain, and the offending party agrees not to oppose the
aggrieved party's request for, equitable relief in the form of specific
enforcement, a temporary restraining order, a temporary or permanent injunction,
or any other equitable remedy that may then be available to the aggrieved party.
(l) BINDING NATURE. This Agreement will be binding upon and
will inure to the benefit of any heir or heirs, successor or successors of the
parties hereto.
(m) NO THIRD-PARTY BENEFICIARIES. No person shall be deemed to
possess any third-party beneficiary right pursuant to this Agreement. It is the
intent of the parties hereto that no direct benefit to any third party is
intended or implied by the execution of this Agreement.
(n) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
[Signatures on following page.]
15
IN WITNESS WHEREOF, the parties hereto, individually or through their
duly authorized officers, have executed this Agreement as of the date first
written above.
TEL-COM:
TEL-COM WIRELESS CABLE TV
CORPORATION, a Florida corporation
By: /S/ MELVIN ROSEN
---------------------------------------
Name: Melvin Rosen
Title: President
SELLERS:
IBC PARTNERS, a Florida partnership
By: /S/ ERIC LEFKOWITZ
---------------------------------------
Name: Eric Lefkowitz
By: /S/ IVAN ROTHSTEIN
---------------------------------------
Name: Ivan Rothstein
MELVIN ROSEN
/S/ MELVIN ROSEN
-------------------------------------------
IVANA TRUMP
/S/ IVANA TRUMP
-------------------------------------------
16
EXHIBIT "A"
INITIAL SHARES PERFORMANCE SHARES
Melvin Rosen 216,667 433,333
Ivana Trump 35,000 65,000
IBC Partners 83,333 166,667
--------- -------
Totals: 335,000 665,000
17
Dates Referenced Herein and Documents Incorporated by Reference
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