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AmeriCom USA, Inc.
0000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxxx XX 00000
(000) 000-0000
July 2, 1999
Xxxxx Xxxxx, President
Digicities Inc.
0000 Xxxxx Xxxx Xxxx.,
Xxxxx Xxxxxx, XX 00000
Re: Memorandum of Understanding
Dear Xxxxx:
This letter sets forth the basic terms that we have discussed and upon
which we have reached a general understanding as to how AmeriCom USA, Inc.
("AUSA"), a Delaware Reporting Public Corporation, will enter into a mutually
agreed upon definitive agreement (the "Agreement") to purchase all of the issued
and outstanding shares of common stock of Digicities, Inc., a California
corporation ("DC" and the "DC Stock"). The Closing Date shall occur not later
than, one day prior to the merger between AUSA and Telespace, Ltd. ("TS") a
Delaware Non-Reporting Listed Public Company. Closing shall be in any event not
later than September 30, 1999. The basic terms and conditions of this
transaction (the "Transaction") shall be as follows:
A. Acquisition of DC Stock. AUSA shall exchange 3,500,000 shares of its
common stock (the "AUSA Stock") for all issued and outstanding shares
of DC's Stock and all outstanding stock options, whether vested,
exercised or otherwise. Subsequent to the completion of the
Transaction, DC shall remain a fully operating, wholly owned
subsidiary of AUSA.
B. Acquisition Condition. This Transaction is conditioned on AUSA's being
satisfied through due diligence performed by its legal counsel and its
outside accounting firm confirming that the information presented by
DC to AUSA in support of this Transaction is substantially as
represented by DC.
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C. Definitive Agreement. It is anticipated that the Agreement shall
contain provisions (in addition to the AUSA-DC Stock exchange
provision) as the parties shall mutually agree, including but not
limited to the following:
1. Liabilities and Assets. All assets of DC shall remain the
property of DC. All liabilities of DC shall remain the
obligations of DC as a wholly owned subsidiary of AUSA.
2. Employment. All current employees of DC (including any contract
employees) shall continue to be employed by DC. The employees
shall be entitled to the benefits of the AUSA plans in effect for
the duration of their employment. In addition AUSA shall allocate
1,500,000 shares of its employee stock option plan under a 3 year
vesting schedule. The distribution of these shares to DC
employees shall be in accordance with a direction to be provided
by DC to AUSA on Closing.
3. Executives of DC
(a) President of DC. Xxxxx Xxxxx shall remain as President of DC
and shall receive an annual salary commensurate with and
similar treatment as all other senior executives, and be
entitled to the same incentive plans that are established
from time to time for key employees of AUSA. In addition
Xxxxx Xxxxx shall remain a director of DC and shall be an
officer of AUSA and elected as a member of the Executive
Committee of AUSA.
(b) Vice-President of DC. Xxxx Xxxx shall remain as
Vice-President of DC and shall receive an annual salary
commensurate with and similar treatment as all other senior
executives, and be entitled to the same incentive plans that
are established from time to time for key employees of AUSA.
In addition Xxxx Xxxx shall remain a director of DC.
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(c) Vice-President of DC and shall receive an annual salary
commensurate with and similar treatment as all other senior
executives, and be entitled to the same incentive plans that
are established from time to time for key employees of AUSA.
4. DC Attorney Fees. AUSA agrees to pay DC's attorney's fees to a
maximum of $10,000 provided that DC's shareholders agree to pay
any fees in excess of $10,000.
5. AUSA is a reporting company. TS is a non-reporting company,
listed on the NASD OTC BB. TS has entered into an agreement with
AUSA wherein TS has agreed to exchange its stock for all of the
outstanding stock in AUSA in a share exchange or merger which is
exempt from registration under Section 3(a)(10) of the Securities
Act of 1933, and which is qualified with the California
Department of Corporations pursuant to Section 25120 of the
California Corporations Code and a fairness hearing will be held
pursuant to Section 25142 of the California Corporations Code. At
the conclusion of the hearing and the issuance of the permit, all
shares of pre merger shareholders will be free trading on the
OTCBB. At the conclusion of the merger the surviving company will
be TS which will do an immediate name change to Americom USA,
Inc. and now be a reporting, listed, public company.
7. Conditions to Closing. AUSA. The obligation of AUSA to consummate
the Transaction contemplated herein shall be subject to the
satisfaction of the following conditions precedent:
(a) AUSA shall have conducted and completed a due diligence
review of DC's assets and business, including without
limitation, a legal and accounting analysis of issues deemed
relevant by AUSA, and AUSA shall be satisfied with the
results and information obtained from such review.
(b) No material adverse change shall have occurred in or with
respect to the assets or the business of DC since June 30,
1999.
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(c) AUSA and DC shall have received all material consents
necessary to consummate this Transaction.
(d) DC, by its president Xxxxx Xxxxx, does hereby warrant and
represent that he has received the necessary DC shareholder
consents to proceed with the completion of this Transaction,
subject to DC's board approval of the final Agreement.
DC. The obligation of DC to consummate the Transaction contemplated
herein shall be subject to the satisfaction of the following
conditions precedent:
(e) DC shall have conducted and completed a due diligence review
of AUSA assets and business, including without limitation, a
legal and accounting analysis of issues deemed relevant by
DC, and DC shall be satisfied with the results and
information obtained from such review.
(f) No material adverse change shall have occurred in or with
respect to the assets or the business of AUSA since June 30,
1999.
(g) AUSA and DC shall have received all material consents
necessary to consummate this Transaction.
(h) AUSA, by its president Xxxxxx Xxxxx, does hereby warrant and
represent that he has received the necessary AUSA Board
consent to proceed with the completion of this Transaction,
subject to AUSA's board approval of the final Agreement.
8. Books and Records. During the period between the date hereof and
the closing, DC shall provide AUSA and its agents,
representatives and advisors full access to all of the key
employees, as well as books and records and financial and other
information regarding the Stock and the business of DC.
9. No Material Change. After the date hereof, and until the date of
closing, DC shall not make any material capital expenditures over
$10,000 or management personnel changes with respect to its
business without first discussing such capital expenditures or
management changes with AUSA.
10. Confidentiality. AUSA and DC shall keep this Memorandum of
Understanding confidential and shall not disclose its existence
or contents to any third party other than their representatives,
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counsel, lenders, consultants and independent auditors and any
other parties as necessary to complete the Transaction
contemplated herein until such time as AUSA complies with its
disclosure requirements. For the duration of this Memorandum of
Understanding DC shall not (a) transfer or encumber the DC Stock
or any interest therein, or transfer or encumber any of the
assets of DC, or permit any such transfer or encumbrance by DC
other than in the ordinary course of business consistent with
past practice, and (b) take, or permit DC to take, any other
action that would be inconsistent with the consummation of the
Transaction contemplated herein, including but not limited to
investigating or negotiating the sale of DC Stock or any material
portion of the assets of DC with any third party for the duration
of this Memorandum of Understanding.
11. Transaction Documents. The initial drafts of the Stock Purchase
Agreement shall be prepared by AUSA's attorney for review by DC's
attorney.
12. Costs. Except as stated in Paragraph 4 above, DC and AUSA shall
each bear all of their own costs and expenses in connection with
the execution, delivery and performance of this Memorandum of
Understanding and the consummation of the Transaction
contemplated herein.
13. Miscellaneous.
(a) This Memorandum of Understanding may be executed in
counterparts, each of which shall be deemed an original, and
all of which together shall constitute one and the same.
(b) The parties contemplate with signed counterparts that this
Memorandum of Understanding shall be telecopied among the
parties hereto, with original copies being sent thereafter.
This Memorandum of Understanding shall be effective as soon
as the parties hereto have received either original or
telecopied signed counterparts hereof from the other, and
such telecopied signatures shall be deemed to be original
signatures for all purposes.
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If this letter accurately sets forth your understanding and agreement as to
the matters set forth herein, kindly execute a copy of this letter and deliver
it to AmeriComUSA on or before close of business July 5th, 1999.
Very truly yours,
AMERICOM USA, INC.
By: /s/ XXXXXX X. XXXXX
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Xxxxxx Xxxxx, President/CEO
ACCEPTED AND AGREED THIS
2nd day of July, 1999
DIGICITIES, INC.
By: /s/ XXXXX XXXXX
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Xxxxx Xxxxx, President
