Exhibit 10.53
FINAL MERGER AGREEMENT
PEN INTERCONNECT, INC./ THE AUTOMATIC ANSWER, INC.
October 23, 2001
This final merger agreement between Pen Interconnect, Inc (Pen) and The
Automatic Answer, (tAA) is being consummated by both parties this 23rd day of
October 2001. This agreement is in reference to "The Agreement to Acquire
Shares", (definitive agreement) signed by both parties on April 13th, 2001.
Whereas Pen is a public Utah company and tAA is a private California company and
both parties have completed their respective due-diligence reviews with positive
results and the representations and warranties brought up in the definitive
agreement having been met as defined below, it is now time for both parties who
are in agreement to complete the merger.
CONSIDERATION
There were two options for completing the merger, the greater of: (1) Pen
was to issue 67% of its stock to tAA in exchange for 100% of their stock, or (2)
$10 million of common stock using the average closing market price from the 20
days prior to the Closing. Item (2) was the greater of the two and the average
price of the stock was $0.0245/share. This divided into $10 mil is equal to
408,163,265 shares, which are to be issued to tAA and will be unregistered
unless otherwise noted.
However, because Pen only has 500 million shares available, it has been agreed
that the tAA preferred shareholders and most of the debt holders will each
receive new classes of Pen Preferred shares (C & D) with a conversion rate as
defined in the schedule "Distribution of PENC Shares to tAA". Both classes of
Pen Preferred shares (C & D) will have demand registration rights upon their
conversion. The Pen Preferred shares Class C may not be converted to common
shares for a period of at least 3 months. The Pen Preferred shares Class D may
not be converted to common shares for a period of at least 12 months. Pen will
commence immediately, upon receipt of the tAA shareholder list, to cause the new
▇▇▇▇▇▇ common shares to be issued by its transfer agent. Before the transfer
agent issues a new share to a particular shareholder, the respective tAA issued
share, or representation thereof, must be collected.
It is also agreed that there will be an early limited registration of certain
shares as defined in the schedule "Distribution of PENC Shares to tAA" based on
prior agreements as defined in the definitive agreement.
Pen's present preferred shareholders, warrant holders and option holders will be
allowed to keep their interests in those vehicles and allowed to convert to
common shares and a timely registration of such shares will be provided when
ever they desire as long as there are unissued shares available.
▇▇▇▇▇ Benz will be issued up to 50 million shares for his work in providing the
initial financing to the two companies and providing the ongoing financing
package. The board must review the agreement and the past financing and
assistance provided by ▇▇▇▇▇ to insure that the shares to be issued are in
accordance with every one's understanding. His shares will also be under rule
144, i.e. not registered.
The board will need to cause a reverse split of the shares within 120 days to
allow for the preferred shareholders to convert their shares to common shares.
It is understood that if the average share price for the next 60 days falls
below the $0.0245/ share price, then additional shares will be issued to the
previous tAA common shareholders, preferred shareholders, and debt holders, to
cause the $10 million price to be upheld. Furthermore, should the shares
distributed to tAA fall below 67% of the total issued Pen shares due to any of
Pen's present conversion instruments (including, but not limited to preferred
shareholders, warrant holders, option holders, and debentures) converting to
common shares, then additional shares will be issued to the previous tAA common
shareholders only (not the preferred shareholders or debt holders) to cause the
67% distribution to be upheld.
CLOSING
By definition in the definitive agreement this closing, although being completed
on the 23rd of the month, will be effective as of the 30th of September 2001.
For accounting purposes it will be deemed consummated as of 11:59 PM on the
effective date. The closing will be consummated by the exchange of completed
signature pages.
TAA confirms that it has provided the items as defined in item 2.2, a-d as
defined in the definitive agreement and as per the attached schedule.
Pen confirms that it has provided the items as defined in item 2.3, a-e as
defined in the definitive agreement and as per the attached schedule.
REPRESENTATIONS AND WARRANTS
Pen represents that it has provided the information as requested in item
3.1 through 3.16 as attached in a separate schedule.
TAA represents that it has provided the information as requested in item 4.1
through 4.7 as attached in a separate schedule.
COVENANTS
Pen and tAA confirm that they have abided by the established covenants and
agreements per the attached schedules.
CONDITIONS PRECEDENT TO OBLIGATIONS OF TAA AND PEN
The obligations of tAA to consummate the transactions contemplated in this
agreement have been fulfilled except as noted in attached exhibits.
The obligations of Pen to consummate the transactions contemplated in this
agreement have been fulfilled except as noted in the attached exhibits.
MISCELLANEOUS
This is the entire agreement, which also includes the definitive agreement as
referenced hereinabove. The laws of the state of California will govern this
agreement.
The Automatic Answer, Inc. (tAA)
By: /s/ ▇▇▇▇▇ ▇▇▇
Its: CEO Chairman
Dated: ________________________
Pen Interconnect Inc. (Pen)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Its: CEO
Dated: ________________________
