FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
Date of Report (Date of earliest event reported) March 30, 1999.
DCI Telecommunications, Inc.
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(Exact name of registrant as specified in its charter)
Colorado 2-96976-D 84-1155041
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
611 Access Road, Stratford, CT 06497
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(Address of principal executive offices)
Registrant's telephone number, including area code:(203) 380-0910
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(Former name or former address, if changed since last report.)
Item 2. Acquisition or Disposition of Assets
On March 30, 1999, DCI Telecommunications sold all of the
outstanding shares of common stock of its subsidiary CyberFax,
Inc. to Carlyle Corporation, a Nevada corporation. DCI received a
$5,000,000 promissory note from Carlyle that matures in one year,
and bears interest at nine percent, paid and compounded
quarterly. Interest payments will be made in shares of Carlyle
stock, initially valued at $3 per share. If Carlyle becomes
publicly traded, they will be revalued at the average closing
price for the first thirteen weeks of trading. In the event
Carlyle does become publicly traded prior to the note maturity,
DCI has the right to demand payment in full, such payments to be
made in Carlyle shares valued at the thirteen week average
described above.
Under a Collateral and Security Agreement, Carlyle has pledged
all the stock of CyberFax that is held by an escrow agent.
There was no material relationship between Carlyle, its
affiliates, officers, directors and DCI or its affiliates,
officers or directors.
Item 7. Financial Statements and Exhibits
Exhibit A: Agreement and Plan of Reorganization by and among
Carlyle Corporation, CyberFax, Inc. and DCI
Telecommunications, Inc.
Exhibit B: Amendment to Agreement and Plan of Reorganization
Exhibit C: Collateral Assignment and Security Agreement
Exhibit D: Escrow Agreement
Exhibit E: Stock Assignment Separate From Certificate
Exhibit F: Promissory Note
Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("the Agreement"),
dated as of March 30, 1999, is entered into by and among CARLYLE
CORP., a Nevada corporation ("CARLYLE"); CYBERFAX, INC., a Canada
Corporation ("CYBERFAX"); and DCI Telecommunications ("DCI"), the
sole shareholder of CYBERFAX, with reference to the following:
A. CARLYLE is a Nevada corporation organized on April 14,
1995. CARLYLE has authorized common stock of 24 million shares,
$0.001 par value, of which 128,000 shares are outstanding, and
one million shares of preferred stock, $0.001 par value, of which
35,000 shares are outstanding.
B. CYBERFAX is a Canadian corporation organized on April
20, 1996. CYBERFAX has authorized common stock of_______ shares,
no par value, of which 659,367 shares are outstanding, all of
which are owned by DCI.
C. The respective boards of directors of CARLYLE, CYBERFAX
and DCI have deemed it advisable and in the best interests of
CARLYLE, CYBERFAX and DCI that CYBERFAX be acquired by CARLYLE
pursuant to the terms and conditions set forth in this Agreement.
D. The parties desire the transaction to qualify as a tax-
free reorganization under Section 368 (a)(1)(B) of the Internal
Revenue Code of 1986, as amended.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
THE ACQUISITION
1.01 At the Closing, a total of 659,367 common shares, which
represents 100% of the outstanding shares of CYBERFAX, shall be
acquired by CARLYLE from DCI in exchange for CARLYLE's promissory
note (the "Note") payable to DCI in the principal amount of $5
million payable as follows:
i. The Note shall bear interest at the rate of nine percent a
year, compounded quarterly.
ii. Interest shall be paid quarterly (i.e., every 90 days
following the date of Closing, and each such date shall be known
herein as an "Interest Payment Date") in shares of common stock
of CARLYLE. Shares of common stock of CARLYLE devoted to the
payment of interest on or principal of the Note shall be known as
"Payment Shares." The number of Payment Shares DCI is to receive
under the Note on each Interest Payment Date shall be calculated
as follows: It initially shall be assumed that a Payment Share is
worth $3. However, at such time as a market for CARLYLE'S common
stock commences on the OTC Bulletin Board or Nasdaq, the worth of
a Payment Share shall be recalculated to be the average closing
trade price of CARLYLE'S common stock over the first 13 trading
weeks, and an adjustment shall be made in the number of Payment
Shares DCI received prior to this recalculation.
iii. The Note shall be due and payable in full on the first
anniversary of the Closing.
iv. In the event CARLYLE becomes a publicly traded company prior
to the maturity of the Note, DCI shall have the right at any time
after the effective date that CARLYLE became a publicly traded
company to demand payment in full. If DCI exercises this right,
CARLYLE shall pay the balance due under the Note in Payment
Shares, the worth of a Payment Share being determined as set
forth in Section 1.01 (ii) above. If on the date the Note
matures CARLYLE has become a publicly traded company, CARLYLE may
elect to pay off the Note with Payment Shares, valued as set
forth in Section 1.01 (ii) above, rather than with money.
v. Until the Note is paid in full, CARLYLE cannot sell
substantially all its assets or cause a controlling majority of
its shares of common stock to be sold in a private transaction
without DCI's prior written consent.
vi. As security for the payment of the Note, CARLYLE shall
pledge the CYBERFAX stock to DCI by executing the Collateral
Assignment and Security Agreement attached hereto as Schedule
1.01 (vi).
vii. At the request of DCI, CARLYLE will register for resale, one
time, all or part of the Payment Shares.
1.02 At the Closing, DCI will deliver certificates for the
outstanding shares of CYBERFAX, duly endorsed so as to make
CARLYLE the sole holder thereof, free and clear of all claims and
encumbrances.
ARTICLE 2
THE CLOSING
2.01 The consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place on or before
March 31, 1999 in the offices of Alfano & Baroff, Professional
Association, 814 Elm Street, Manchester, New Hampshire, or at
such other place or date and time as may be agreed to in writing
by the parties hereto.
ARTICLE 3
REPRESENTATION AND WARRANTIES OF CARLYLE
CARLYLE and its officers and directors hereby represent and
warrant to DCI and CYBERFAX as follows:
3.01 Organization, Standing and Power. CARLYLE is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada with all requisite
corporate power to enter into this Agreement and to carry out the
transactions contemplated herein. CARLYLE has taken all actions
required of CARLYLE by applicable law, its articles of
incorporation, its by-laws or otherwise to authorize the
execution and delivery of this Agreement and will take all
actions necessary to carry out the transactions contemplated
herein.
3.03 Qualification. CARLYLE is not qualified and is not
licensed as a foreign corporation in any jurisdiction.
3.04 Capitalization of CARLYLE. The authorized capital
stock of CARLYLE consists of 24 million shares of Common Stock,
$0.001 par value, of which there are 128,000 shares issued and
outstanding, and one million shares of Preferred Stock, $0.001
par value, of which there are 35,000 shares issued and
outstanding, all of which shares were duly authorized, validly
issued and fully paid and non assessable. There are no preemptive
rights with respect to the CARLYLE stock. There are no
outstanding options or warrants to purchase shares of common
stock of CARLYLE.
3.05 Brokers and Finders. CARLYLE shall be solely responsible
for payment to any broker or finder retained by CARLYLE for any
brokerage fees, commissions or finders' fees in connection with
the transactions contemplated herein.
3.06 Bank of Montreal Line of Credit. CARLYLE
acknowledges that CYBERFAX is the obligor under a line of credit
with the Bank of Montreal in the maximum amount of $625,000.
CARLYLE expressly acknowledges the existence of a covenant in the
line of credit giving the bank various rights against CYBERFAX
upon a change in the control of CYBERFAX including, but not
limited to, the right to demand payment in full of the line of
credit or to refuse to make further advances. CARLYLE expressly
assumes all risks associated with the line of credit and agrees
to hold DCI harmless from and against any liability, claim or
damage arising out of the consummation of the transaction
represented by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
CYBERFAX AND DCI
CYBERFAX and DCI hereby represent and warrant to CARLYLE as
follows:
4.01 CYBERFAX shall deliver to CARLYLE, on or before
Closing, the following:
(a) Financial Statements. Audited financial
statements of CYBERFAX for the fiscal year ended March 31, 1998
and unaudited interim financial statements for the period ended
December 31, 1998. (Schedule A).
(b) Property. An accurate list and description of all
property, real or personal, owned by CYBERFAX of a value equal to
or greater than $1,000.00. (Schedule B).
(c) Liens and Liabilities. A complete and accurate
list of all material liens, encumbrances, easements, security
interests or similar interests in or on any of the assets listed
on Schedule A. (Schedule C). A complete and accurate list of
all debts, liabilities and obligations of CYBERFAX incurred or
owing as of the date of this Agreement. (Schedule C.1).
(d) Leases and Contracts. A complete and accurate
list describing all material terms of each lease (whether of real
or personal property) and each contract, promissory note,
mortgage, license, franchise, or other written agreement to which
CYBERFAX is a party which involves or can reasonably be expected
to involve aggregate future payments or receipts by CYBERFAX
(whether by the terms of such lease, contract, promissory note,
license, franchise or other written agreement or as a result of a
guarantee of the payment of or indemnity against the failure to
pay same) of $1,000.00 or more annually during the twelve-month
period ended December 31, 1998, or any consecutive twelve-month
period thereafter, except any of said instruments which terminate
or are cancelable without penalty during such twelve-month
period. (Schedule D).
(e) Loan Agreements. Complete and accurate copies of
all loan agreements and other documents with respect to
obligations of CYBERFAX for the repayment of borrowed money.
(Schedule E).
(f) Consents Required. A complete list of all
agreements wherein consent to the transaction herein contemplated
is required to avoid a default hereunder; or where notice of such
transaction is required at or subsequent to closing, or where
consent to an acquisition, consolidation, or sale of all or
substantially all of the assets is required to avoid a default
thereunder. (Schedule F).
(g) Articles and Bylaws. Complete and accurate copies
of the Certificate and Articles of Incorporation and Bylaws of
CYBERFAX together with all amendments thereto to the date hereof.
(Schedule G).
(h) Shareholders. A complete list of all persons or
entities holding capital stock of CYBERFAX or any rights to
subscribe for, acquire, or receive shares of the capital stock of
CYBERFAX (whether warrants, calls, options, or conversion
rights), including copies of all stock option plans whether
qualified or non qualified, and other similar agreements.
(Schedule H).
(i). Officers and Directors. A complete and current
list of all officers and Directors of CYBERFAX. (Schedule I).
(j) Salary Schedule. A complete and accurate list (in
all material respects) of the names and the current salary rate
for each present employee of CYBERFAX who received $10,000 or
more in aggregate compensation from CYBERFAX whether in salary,
bonus or otherwise, during the year 1998, or who is presently
scheduled to receive from CYBERFAX a salary in excess of $10,000
during the year ending December 31, 1999, including in each case
the amount of compensation received or scheduled to be received,
and a schedule of the hourly rates of all other employees listed
according to departments. (Schedule J).
(k) Litigation. A complete and accurate list (in all
material respects) of all material civil, criminal,
administrative, arbitration or other such proceedings or
investigations (including without limitations unfair labor
practice matters, labor organization activities, environmental
matters and civil rights violations) pending or, to the knowledge
of CYBERFAX threatened, which may materially and adversely affect
CYBERFAX. (Schedule K).
(l) Tax Returns. Accurate copies of all Federal and
State tax returns for CYBERFAX, if any. (Schedule L).
(m) Agency Reports. Copies of all material reports or
filings (and a list of the categories of reports or filings made
on a regular basis) made by CYBERFAX under ERISA, EEOC, FDA and
all other governmental agencies (federal, state or local).
(Schedule M).
(n) Banks. A true and complete list (in all material
respects), as of the date of this Agreement, showing (1) the name
of each bank in which CYBERFAX has an account or safe deposit
box, and (2) the names and addresses of all signatories.
(Schedule N).
(o) Jurisdictions Where Qualified. A list of all
jurisdictions wherein CYBERFAX is qualified to do business and is
in good standing. (Schedule O).
(p) Subsidiaries. A complete list of all subsidiaries
of CYBERFAX. (Schedule P). The term "Subsidiary" or
"Subsidiaries" shall include corporations, unincorporated
associations, partnerships, joint ventures, or similar entities
in which CYBERFAX has an interest, direct or indirect.
(q) Union Matters. An accurate list and description
(in all material respects) of all union contracts and collective
bargaining agreements of CYBERFAX, if any. (Schedule Q).
(r) Employee and Consultant Contracts. A complete and
accurate list of all employee and consultant contracts which
CYBERFAX may have, other than those listed in the schedule on
Union Matters. (Schedule R).
(s) Employee Benefit Plans. Complete and accurate
copies of all salary, stock option, bonus, incentive
compensation, deferred compensation, profit sharing, retirement,
pension, group insurance, disability, death benefit or other
benefit plans, trust agreements or arrangements of CYBERFAX in
effect on the date hereof or to become effective after the date
thereof, together with copies of any determination letters issued
by the Internal Revenue Service with respect thereto. (Schedule
S).
(t) Insurance Policies. A complete and accurate list
(in all material respects) and description of all material
insurance policies naming CYBERFAX as an insured or beneficiary
or as a loss payable payee or for which CYBERFAX has paid all or
part of the premium in force on the date hereof, specifying any
notice or other information possessed by CYBERFAX regarding
possible claims thereunder, cancellation thereof or premium
increases thereon, including any policies now in effect naming
CYBERFAX as beneficiary covering the business activities of
CYBERFAX. (Schedule T).
(u) Licenses and Permits. A complete list of all
licenses, permits and other authorizations of CYBERFAX.
(Schedule V).
4.02 Organization, Standing and Power. CYBERFAX is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Canada with all requisite
corporate power to own or lease its properties and carry on its
businesses as is now being conducted.
4.03 Qualification. CYBERFAX is qualified and is licensed
as a foreign corporation in the State of Canada.
4.04 Capitalization of CYBERFAX. The authorized capital
stock of CYBERFAX consists of ______ shares of Common Stock, no
par value, of which 659,367 shares are issued to DCI, the sole
shareholder of CYBERFAX, which shares were duly authorized,
validly issued and fully paid and non assessable. There are no
preemptive rights with respect to the CYBERFAX stock.
4.05 Authority. The execution and delivery of this
Agreement and consummation of the transactions contemplated
herein have been duly authorized by all necessary corporate
action, including but not limited to duly and validly authorized
action and approval by the Board of Directors, on the part of
CYBERFAX and DCI. This Agreement constitutes the valid and
binding obligation of CYBERFAX and DCI enforceable against them
in availability of the remedy of specific performance. This
Agreement has been duly executed by CYBERFAX and DCI and the
execution and transactions contemplated by this Agreement shall
not result in any breach of any terms or provisions of CYBERFAX's
Certificate and Articles of Incorporation or Bylaws or of any
other agreement, court order or instrument to which CYBERFAX is a
party or bound by.
4.06 Absence of Undisclosed Liabilities. CYBERFAX has no
material liabilities of any nature, whether fixed, absolute,
contingent or accrued, which are not reflected on the financial
statements set forth in Schedule A nor otherwise disclosed in
this Agreement or any of the Schedules or Exhibits attached
hereto.
4.07 Absence of Changes. Since December 31, 1998, there has
not been any material adverse change in the condition (financial
or other wise), assets, liabilities, earnings or business of
CYBERFAX, except for changes resulting from completion of those
transactions described in Section 5.01.
4.08 Tax Matters. All taxes and other assessments and
levies which CYBERFAX is required by law to withhold or to
collect have been duly withheld and collected, and have been paid
over to the proper government authorities or are held by CYBERFAX
in separate bank accounts for such payment or are represented by
depository receipts, and all such withholdings and collections
and all other payments due in connection therewith (including,
without limitation, employment taxes, both the employees' and
employer's share) have been paid over to the government or placed
in a separate and segregated bank account for such purpose.
There are no known deficiencies in income taxes for any periods
and further, the representations and warranties as to the absence
of undisclosed liabilities contained in Section 4.06 includes any
and all tax liabilities of whatsoever kind or nature (including,
without limitation, all federal, state, local and foreign income,
profit, franchise, sales, use and property taxes) due or to
become due, incurred in respect of or measured by CYBERFAX income
or business prior to the Closing Date.
4.09 Options, Warrants, etc. Except as otherwise described
in Schedule H, there are no outstanding options, warrants, calls,
commitments or agreements of any character to which CYBERFAX and
DCI are a party or by which CYBERFAX and DCI are bound, or are a
party, calling for the issuance of shares of capital stock of
CYBERFAX or any securities representing the right to purchase or
otherwise receive any such capital stock of CYBERFAX.
4.10 Title to Assets. Except for liens set forth in
Schedule C, CYBERFAX is the sole and unconditional owner of, with
good and marketable title to, all the assets listed in the
schedules as owned by them and all other property and assets are
free and clear of all mortgages, liens, pledges, charges or
encumbrances of any nature whatsoever.
4.11 Agreements in Force and Effect. Except as set forth in
Schedules D and E, all material contracts, agreements, plans,
promissory notes, mortgages, leases, policies, licenses,
franchises or similar instruments to which CYBERFAX is a party
are valid and in full force and effect on the date hereof, and
CYBERFAX has not breached any material provision of, and is not
in default in any material respect under the terms of, any such
contract, agreement, plan, promissory note, mortgage, lease,
policy, license, franchise or similar instrument which breach or
default would have a material adverse effect upon the business,
operations or financial condition of CYBERFAX.
4.12 Legal Proceedings, Etc. Except as set forth in
Schedule K, there are no civil, criminal, administrative,
arbitration or other such proceedings or investigations pending
or, to the knowledge of either CYBERFAX or DCI, threatened, in
which, individually or in the aggregate, an adverse determination
would materially and adversely affect CYBERFAX or the properties,
business or income of CYBERFAX. CYBERFAX has substantially
complied with, and is not in default in any material respect
under, any laws, ordinances, requirements, regulations or orders
applicable to its businesses.
4.13 Governmental Regulation. To the knowledge of CYBERFAX
and DCI and except as set forth in Schedule K, CYBERFAX is not in
violation of or in default with respect to any applicable law or
any applicable rule, regulation, order, writ or decree of any
court or any governmental commission, board, bureau, agency or
instrumentality, or delinquent with respect to any report
required to be filed with any governmental commission, board,
bureau, agency or instrumentality which violation or default
could have a material adverse effect upon the business,
operations or financial condition of CYBERFAX.
4.14 Brokers and Finders. CYBERFAX shall be solely
responsible for payment to any broker or finder retained by
CYBERFAX for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated herein.
4.15 Accuracy of Information. No representation or warranty by
CYBERFAX or DCI contained in this Agreement and no statement
contained in any certificate or other instrument delivered or to
be delivered to CARLYLE pursuant hereto or in connection with the
transactions contemplated hereby (including without limitation
all Schedules and exhibits hereto) contains or will contain any
untrue statement of material fact or omits or will omit to state
any material fact necessary in order to make the statements
contained herein or therein not misleading.
4.16 Subsidiaries. Except as listed in Schedule P, CYBERFAX
does not have any other subsidiaries or own capital stock
representing ten percent (10%) or more of the issued and
outstanding stock of any other corporation.
4.17 Consents. Except as listed in Schedule F, no consent
or approval of, or registration, qualification or filing with,
any governmental authority or other person is required to be
obtained or accomplished by CYBERFAX or DCI in connection with
the consummation of the transactions contemplated hereby.
4.18 Improper Payments. No person acting on behalf of
CYBERFAX has made any payment or otherwise transmitted anything
of value, directly or indirectly, to (a) any official or any
government or agency or political subdivision thereof for the
purpose of influencing any decision affecting the business of
CYBERFAX (b) any customer, supplier of competitor of CYBERFAX, or
employee of such customer, supplier or competitor, for the
purposes of obtaining or retaining business for CYBERFAX, or (c)
any political party or any candidate for elective political
office nor has any fund or other asset of CYBERFAX been
maintained that was not fully and accurately recorded on the
books of account of CYBERFAX.
4.19 Copies of Documents. CYBERFAX has made available for
inspection and copying by CARLYLE and its duly authorized
representatives, and will continue to do so at all times, true
and correct copies of all documents which it has filed with
governmental agencies which are material to the terms and
conditions contained in this Agreement. Furthermore, all filings
by CYBERFAX with governmental agencies, including but not limited
to the Internal Revenue Service, have contained information which
is true and correct in all material respects and did not contain
any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made therein not
misleading or which could have any material adverse effect upon
the financial condition or operations of CYBERFAX or adversely
effect the objectives of this Agreement.
4.20 Investment Intent of DCI. DCI represents and warrants
to CARLYLE that the shares of CARLYLE being acquired pursuant to
this Agreement are being acquired for its own account and for
investment and not with a view to the public resale of such
shares and further acknowledges that the shares being issued have
not been registered under the Securities Act and are "restricted
securities" as that term is defined in Rule 144 promulgated under
the Securities Act and must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption
from such registration is available.
ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO THE
EFFECTIVE TIME OF THE ACQUISITION
5.01 Conduct and Transactions of CYBERFAX. During the
period from the date hereof to the date of Closing, CYBERFAX
shall conduct the operations of CYBERFAX in the ordinary course
of business. CYBERFAX shall not during such period, except in
the ordinary course of business, without the prior written
consent of CARLYLE:
(a) Sell, dispose of or encumber any of the properties
or assets of CYBERFAX;
(b) Declare or pay any dividends on shares of its
capital stock or make any other distribution of assets to the
holders thereof;
(c) Issue, reissue or sell, or issue options or rights
to subscribe to, or enter into any contract or commitment to
issue, reissue or sell, any shares of its capital stock or
acquire or agree to acquire any shares of its capital stock;
(d) Except as otherwise contemplated and required by
this Agreement, amend its Articles of Incorporation or merge or
consolidate with or into any other corporation or sell all or
substantially all of its assets or change in any manner the
rights of its capital stock or other securities;
(e) Pay or incur any obligation or liability, direct
or contingent other than to extinguish liabilities revealed on
its financial statements provided hereto;
(f) Incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise become responsible for
obligations of any other party, or make loans or advances to any
other party;
(g) Make any material change in its insurance
coverage;
(h) Increase in any manner the compensation, direct or
indirect, of any of its officers or executive employees; except
in accordance with existing employment contracts;
(i) Enter into any agreement or make any commitment to
any labor union or organization;
(j) Make any material capital expenditures.
(k) Allow any of the foregoing actions to be taken by
any subsidiary of CYBERFAX.
ARTICLE 6
RIGHTS OF INSPECTION
6.01 During the period from the date of this Agreement to
the date of Closing of the acquisition, DCI and CYBERFAX agree to
use their best efforts to give CARLYLE, including its
representatives and agents, full access to the premises, books
and records of CYBERFAX, and to furnish CARLYLE with such
financial and operating data and other information including, but
not limited to, copies of all legal documents and instruments
referred to on any schedule or exhibit hereto, with respect to
the business and properties of CYBERFAX, as CARLYLE should from
time to time request; provided, however, if there are any such
investigations: (1) they shall be conducted in such manner as not
to unreasonably interfere with the operation of the business of
the other parties and (2) such right of inspection shall not
affect in any way whatsoever any of the representations or
warranties given by the respective parties hereunder. In the
event of termination of this Agreement, CARLYLE will return to
CYBERFAX all documents, work papers and other materials obtained
from it in connection with the transactions contemplated hereby,
and will take such other steps necessary to protect the
confidentiality of such material.
ARTICLE 7
CONDITIONS TO CLOSING
7.01 Conditions to Obligations of DCI and CYBERFAX. The
obligation of DCI and CYBERFAX to perform this Agreement is
subject to CARLYLE's performing its Closing obligations, unless
waived in writing by DCI.
(a) Representations and Warranties. The
representations and warranties of CARLYLE set forth in Article 3
hereof shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing as though made
on and as of the Closing, except as otherwise permitted by this
Agreement.
(b) Corporate Action. There are minutes, certified
copies of corporate resolutions and/or other documentary evidence
satisfactory to counsel for DCI that CARLYLE has submitted this
Agreement and any other documents required hereby to such parties
for approval as provided by applicable law.
(c) Statutory Requirements. All statutory
requirements for the valid consummation by CARLYLE of the
transactions contemplated by this Agreement shall have been
fulfilled.
7.02 Conditions to Obligations of CARLYLE. The obligation
of CARLYLE to perform this Agreement is subject to the
satisfaction of the following conditions on or before the Closing
unless waived in writing by CARLYLE.
(a) Representations and Warranties. There shall be no
information disclosed in the schedules delivered by CYBERFAX,
which in the opinion of CARLYLE, would materially adversely
affect the proposed transaction and intent of the parties as set
forth in this Agreement. The representations and warranties of
CYBERFAX and DCI et forth in Article 4 hereof shall be true and
correct in all material respects as of the date of this Agreement
and as of the Closing as though made on and as of the Closing,
except as otherwise permitted by this Agreement.
(b) Performance of Obligations. CYBERFAX shall have
in all material respects performed any actions contemplated by
this Agreement prior to or on the Closing and CYBERFAX shall have
complied in all respects with the course of conduct required by
this Agreement.
(c) Corporate Action. There has been delivered to
CARLYLE minutes, certified copies of corporate resolutions and/or
other documentary evidence satisfactory to counsel for CARLYLE
that DCI has submitted this Agreement and any other documents
required hereby to such parties for approval as provided by
applicable law.
(d) Consents. Any consents necessary for or approval
of any party listed on any Schedule delivered by CYBERFAX, whose
consent or approval is required pursuant thereto, shall have been
obtained.
(e) Financial Statements. CARLYLE shall have been
furnished with an interim unaudited financial statement of
CYBERFAX for the period from the date of its last audited
financial statements to the last day of the month preceding the
month of the Closing. Such financial statements shall fairly
present the financial position of CYBERFAX as of its date.
(f) Statutory Requirements. All statutory
requirements for the valid consummation by CYBERFAX of the
transactions contemplated by this Agreement shall have been
fulfilled.
(g) Governmental Approval. All authorizations,
consents, approvals, permits and orders of all federal and state
governmental agencies required to be obtained by CYBERFAX for
consummation of the transactions contemplated by this Agreement
shall have been obtained.
(h) Employment Agreements. Existing CYBERFAX
employment agreements will have been delivered to counsel for
CARLYLE.
(i) Changes in Financial Condition of CYBERFAX. There
shall not have occurred any material adverse change in the
financial condition or in the operations of the business of
CYBERFAX, except expenditures in furtherance of this Agreement.
(j) Absence of Pending Litigation. CYBERFAX is not
engaged in or threatened with any suit, action, or legal,
administrative or other proceedings or governmental
investigations pertaining to this Agreement or the consummation
of the transactions contemplated hereunder.
ARTICLE 8
MATTERS SUBSEQUENT TO CLOSING
8.01 Covenant of Further Assurance. The parties covenant
and agree that they shall, from time to time, execute and deliver
or cause to be executed and delivered all such further
instruments of conveyance, transfer, assignments, receipts and
other instruments, and shall take or cause to be taken such
further or other actions as the other party or parties to this
Agreement may reasonably deem necessary in order to carry out the
purposes and intent of this Agreement.
ARTICLE 9
NATURE AND SURVIVAL OF REPRESENTATIONS
9.01 All statements contained in any written certificate,
schedule, exhibit or other written instrument delivered by any
party pursuant hereto, or otherwise adopted by said party by its
written approval, or in connection with the transactions
contemplated hereby, shall be deemed representations and
warranties by said party, as the case may be. All
representations, warranties and agreements made by either party
shall survive for the period of the applicable statute of
limitations and until the discovery of any claim, loss, liability
or other matter based on fraud, if longer.
ARTICLE 10
TERMINATION OF AGREEMENT AND ABANDONMENT OF REORGANIZATION
10.1 Termination. Anything herein to the contrary
notwithstanding, this Agreement and any agreement executed as
required hereunder and the acquisition contemplated hereby may be
terminated at any time before the closing date as follows:
(a) By mutual written consent of the Boards of
Directors of CARLYLE and DCI.
(b) By the Board of Directors of CARLYLE if any of the
conditions set forth in Section 7.02 shall not have been
satisfied.
(c) By the Board of Directors of DCI if any of the
conditions set forth in Section 7.01 shall not have been
satisfied.
10.02 Termination of Obligations and Waiver of
Conditions; Payment of Expenses. In the event this Agreement and
the acquisition are terminated and abandoned pursuant to this
Article 10 hereof, this Agreement shall become void and of no
force and effect and there shall be no liability on the part of
any of the parties hereto, or their respective directors,
officers, shareholders or controlling persons to each other.
Each party hereto will pay all costs and expenses incident to its
negotiation and preparation of this Agreement and any of the
documents evidencing the transactions contemplated hereby,
including fees, expenses and disbursements of counsel.
ARTICLE 11
THE CLOSING
11.01 Exchange of Shares. At the Closing, (1) CARLYLE
shall deliver to DCI its Note and the executed Collateral
Assignment and Security Agreement, in the form attached hereto as
Schedule 1.01 (vi), and (2) DCI shall deliver to CARLYLE stock
certificates, properly endorsed and with signatures guaranteed by
a bank, assigning to CARLYLE all the issued and outstanding
shares of capital stock of CYBERFAX.
11.02 Restrictions on Shares Issued to CARLYLE. Due to
the fact that CARLYLE will receive shares of CYBERFAX common
stock which have not been registered under the 1933 Act by virtue
of the exemption provided in Section 4(2) of such Act, those
shares of CARLYLE will contain the following legend:
The shares represented by this certificate
have not been registered under the Securities
Act of 1933. The shares have been acquired
for investment and may not be sold or offered
for sale in the absence of an effective
Registration Statement for the shares under
the Securities Act of 1933 or an opinion of
counsel to the Corporation that such
registration is not required.
ARTICLE 12
MISCELLANEOUS
12.01 Construction. This Agreement shall be construed
and enforced in accordance with the laws of the State of
Connecticut excluding the conflicts of laws.
12.02 Notices. All notices necessary or appropriate
under this Agreement shall be effective when personally delivered
or deposited in the United States mail, postage prepaid,
certified or registered, return receipt requested, and addressed
to the parties last known address which addresses are currently
as follows:
If to "CARLYLE"
CARLYLE CORP.
Elliot R. Pearson, Secretary
One E. Camelback Road, Suite 680
Phoenix, AZ 85102-1651
With copies to:
Thomas J. Kenan
Fuller Tubb Pomeroy & Stokes
100 N. Broadway, Suite 3300
Oklahoma City, OK 73102
If to "CYBERFAX" or "DCI":
Joseph J. Murphy, President
DCI Telecommunications, Inc.
611 Access Road
Stratford, CT 06615
With copies to:
Paul J. Alfano, Esq.
Alfano & Baroff, Professional Association
814 Elm street
Manchester, NH 03101
12.03 Amendment and Waiver. The parties hereby may, by
mutual agreement in writing signed by each party, amend this
Agreement in any respect. Any term or provision of this
Agreement may be waived in writing at any time by the party which
is entitled to the benefits thereof, such waiver right shall
include, but not be limited to, the right of either party to:
(a) Extend the time for the performance of any of the
obligations of the other;
(b) Waive any inaccuracies of representations by the
other contained in this Agreement or in any document delivered
pursuant hereto;
(c) Waive compliance by the other with any of the
covenants contained in this Agreement, and performance of any
obligations by the other; and
(d) Waive the fulfillment of any condition that is
precedent to the performance by the other party of any of its
obligations under this Agreement. Any writing on the part of a
party relating to such amendment, extension or waiver as provided
in this Section 12.03 shall be valid if authorized or ratified by
the Board of Directors of such party.
12.04 Remedies not Exclusive. No remedy conferred by
any of the specific provisions of this Agreement is intended to
be exclusive of any other remedy, and each and every remedy shall
be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity
or by statute or otherwise. The election of any one or more
remedies by a party shall not constitute a waiver of the right to
pursue other available remedies.
12.05 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
12.06 Benefit. This Agreement shall be binding upon,
and inure to the benefit of, the respective successors and
assigns of CARLYLE and DCI.
12.07 Entire Agreement. This Agreement and the
Schedules and Exhibits attached hereto, represent the entire
agreement of the undersigned regarding the subject matter hereof,
and supersedes all prior written or oral understandings or
agreements between the parties.
12.08 Each Party to Bear its Own Expense. CARLYLE and
DCI shall each bear its own respective expenses incurred in
connection with the negotiation, execution, closing, and
performance of this Agreement, including counsel fees and
accountant fees.
12.09 Captions and Section Headings. Captions and
section headings used herein are for convenience only and shall
not control or affect the meaning or construction of any
provisions of this Agreement.
Executed as of the date first written above.
CARLYLE CORP. DCI COMMUNICATIONS, INC.
By: /s/ Suzy Frost By: /s/ Joseph J. Murphy
--------------------- ------------------------
Suzy Frost , President Joseph J. Murphy, President
EXHIBIT B
AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION dated as
of this March 30, 1999 between DCI Telecommunications, Inc., a
Colorado corporation with an address of 611 Access Road,
Stratford, CT 06615 ("DCI") and Carlyle Corp., a Nevada
corporation with an address of One E. Camelback Road, Phoenix, AZ
85102 ("Carlyle").
W I T N E S S E T H:
WHEREAS, DCI and Carlyle have entered into that certain
Agreement and Plan of Reorganization (the "Agreement") dated on
or about the date hereof whereby DCI agreed to sell to Carlyle
one hundred percent (100%) of the issued and outstanding shares
of stock in CyberFax, Inc. ("Cyberfax");
WHEREAS, the parties desire to amend the Agreement;
NOW, THEREFORE, in consideration of their continuing rights
and obligations under the Agreement, as amended, the parties
agree as follows:
1. Paragraph 3.06 ("Bank of Montreal") of the Agreement is
deleted in its entirely and replaced with the following:
3.06 Bank of Montreal Line of Credit. CARLYLE
acknowledges that CYBERFAX is the obligor under a certain
line of credit with the Bank of Montreal in the maximum
amount of $625,000.00 (Canadian). CARLYLE expressly
acknowledges the existence of a covenant in said line of
credit giving the bank various rights against CYBERFAX upon
a change in the control of Company including, but not
limited to, the right to demand payment in full of the line
of credit or to refuse to make further advances. CARLYLE
expressly assumes all risks associated with said line of
credit and agrees to hold DCI harmless from and against any
liability, claim or damage arising out of the consummation
of the transaction represented by this Agreement.
The parties also acknowledge the outstanding balance of
the line of credit is approximately $200,000.00 (Canadian)
and that DCI has previously agreed to guarantee the line of
credit. In other words, the extent of DCI's exposure under
the line of credit currently is approximately $200,000.00
(Canadian). Should an additional sum be advanced under the
line of credit such that the entire outstanding balance of
the line of credit does not exceed $400,000.00 (Canadian),
DCI agrees to guarantee that amount if full. In other
words, DCI agrees to guarantee up to $400,000.00 (Canadian)
of the line of credit. CYBERFAX and CARLYLE jointly and
severally agree to hold DCI harmless from and against any
liability, claim or damage arising out of the said line of
credit. CYBERFAX and CARLYLE also shall be jointly and
severally liable to DCI to the extent of any sums expended
by DCI in satisfaction of its guarantee of the said line of
credit. The provisions of this paragraph shall survive the
Closing.
2. Paragraph 1.02 of the Agreement is deleted in its entirety
and replaced with the following:
1.02 At the Closing, DCI will deliver certificates for
the outstanding shares of CYBERFAX, duly endorsed so as to
make CARLYLE the sole holder thereof, free and clear of all
claims and encumbrances but subject to the rights of DCI
under the Note and Collateral Assignment and Security
Agreement described in this Article 1.
3. Carlyle agrees to permit DCI to be an authorized,
nonexclusive distributor of Cyberfax products following
Closing in the following geographic areas: Spain, United
Kingdom and Denmark. The parties shall work in good faith
following the Closing (as defined in the Agreement) to agree
to such other terms of said distributorship arrangement as
they deem advisable.
Except as expressly modified hereby, all other terms,
defined terms and conditions of the Agreement shall continue in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment
to Agreement and Plan of Reorganization as of the date first
stated above.
DCI Telecommunications, Inc.
/s/Larry Shatsoff By: /s/ Joseph J. Murphy
- ------------------ ------------------------
Witness Name: Joseph J. Murphy
Title: President
Carlyle Corp.
/s/ Michael Miller By: /s/ Elliott R. Pearson
- ------------------ -------------------------
Witness Name: Elliott R. Pearson
Title:Secretary
EXHIBIT C
COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT (the
"Agreement") dated as of this 30th of March, 1999, by Carlyle
Corp., a Nevada Corporation, of One E. Cambelback Rd, Phoenix, AZ
85102 (collectively (if more than one), the "Pledgor") and DCI
Telecommunications, Inc., a Colorado corporation with an address
of 611 Access Road, Stratford, CT 06615 (the "Secured Party").
W I T N E S S E T H
WHEREAS, the Pledgor has agreed to execute a certain
Promissory Note in the original principal amount of $5,000,000.00
to Secured Party (the "Note") of even date; and
WHEREAS, Pledgor owns the authorized, issued and outstanding
capital stock of Cyberfax, Inc., a Canadian corporation (the
"Company"); and
WHEREAS, as a condition precedent to Secured Party accepting
the Note and as security for the payment and performance of the
Note, Pledgor is executing and delivering this Agreement to grant
the security interest hereinafter described;
NOW, THEREFORE, in consideration of the foregoing and of the
following mutual promises, it is hereby agreed as follows:
1. The Pledgor hereby pledges to the Secured Party, the
shares of capital stock of the Company (the "Pledged Stock")
listed in Schedule A attached hereto together with stock powers
executed in blank (the Pledged Stock and any additional
securities or collateral pledged hereunder are sometimes herein
referred to collectively as the "Pledged Collateral"), and the
Pledgor hereby grants to the Secured Party, a security interest
in all of the Pledged Collateral as security for the due and
punctual payment and performance of the following obligations and
liabilities (herein called the "Secured Obligations"):
a. Principal of and premium, if any, and interest on
the Note;
b. Obligations of the Pledgor to the Secured Party
under this Agreement, including the payment of any sums
together with interest and other charges, advanced by
the Secured Party to protect, enforce or insure the
validity of this Agreement; and
c. Any and all other obligations of the Pledgor to the
Secured Party under the Note or under any agreement or
instrument relating thereto;
2. The Pledgor covenants that the Pledged Collateral is
duly and validly pledged with the Secured Party in
accordance with law and the Pledgor warrants and will defend
the Secured Party's right, title, special property and
security interest in and to the Pledged Collateral against
the claims and demands of all persons whomsoever. The
Pledgor represents and warrants to the Secured Party that
the Pledgor has good title to all the Pledged Collateral,
free and clear of all claims, mortgages, pledges, liens,
security interests and other encumbrances of every nature
whatsoever. The Pledgor further represents and warrants
that all of the Pledged Collateral has been duly and validly
issued and is fully paid and nonassessable.
3. The Pledgor hereby covenants and agrees that he will
not sell, convey or otherwise dispose of any of the Pledged
Collateral, nor will he create, incur or permit to exist any
pledge, mortgage, lien, charge, encumbrance or any security
interest whatsoever with respect to any of the Pledged
Collateral or the proceeds thereof other than to the extent,
if any, permitted in the Note.
4. In case, but only as long as, there shall exist an
Event of Default (as hereinafter defined), but subject to
the provisions of the Uniform Commercial Code or other
applicable law, the Secured Party may cause all or any of
the Pledged Collateral to be transferred into its name or
into the name of its nominee or nominees. So long as there
shall exist no Event of Default (as hereinafter defined),
the Pledgor shall be entitled to exercise as it deems fit,
but in a manner not inconsistent with the terms hereof or of
the Secured Obligations, the voting power with respect to
the Pledged Collateral.
5. In case, upon the dissolution, winding up,
liquidation or reorganization of any of the Company whether
in bankruptcy, insolvency or receivership proceedings or
upon an assignment for the benefit of creditors or any other
marshalling of the assets and liabilities of any Company,
any sum shall be paid or any property shall be distributed
upon or with respect to any of the Pledged Collateral, such
sum shall be paid over to the Secured Party, to be held as
collateral security for the Secured Obligations. In case
any stock dividend shall be declared on any of the Pledged
Collateral, or any share of stock or fraction thereof shall
be issued pursuant to any stock split involving any of the
Pledged Collateral, of any distribution of capital
(excluding cash dividends) shall be made on any of the
Pledged Collateral, or any property shall be distributed
upon or with respect to the Pledged Collateral pursuant to
recapitalization or reclassification of the capital of
either Company, the shares or other property so distributed
shall be delivered to the Secured Party to be held as
collateral security for the Secured Obligations.
6. In case, but only as long as, there shall exist an
Event of Default (as hereinafter defined), the Secured Party
shall be entitled to exercise the voting power with respect
to the Pledged Collateral, to receive and retain, as
collateral security for the Secured Obligations, any and all
dividends or other distributions at any time and from time
to time declared or made upon any of the Pledged Collateral,
and to exercise any and all rights of payment, conversion,
exchange, subscription or any other rights, privileges or
options pertaining to the Pledged Collateral as if it were
the absolute owner thereof, including without limitation,
the right to exchange, at its discretion, any and all of the
Pledged Collateral upon the merger, consolidation,
reorganization, recapitalization or other readjustment of
either Company or, upon the exercise of any such right,
privilege or option pertaining to the Pledged Collateral,
and in connection therewith, to deposit and deliver any and
all of the Pledged Collateral with any committee,
depository, transfer agent, registrar or other designation
agency upon such terms and conditions as the Secured Party
may determine, all without liability except to account for
property actually received, but the Secured Party shall have
no duty to exercise any of the aforesaid rights, privileges
of options and shall not be responsible for any failure to
do so or delay in so doing.
7. If any Event of Default as defined in the Note or in
Pledgor's obligations hereunder (an "Event of Default"),
shall occur, then upon the occurrence of any such Event of
Default, the Secured Party shall have all of the rights and
remedies of a secured party under the Uniform Commercial
Code or other applicable law and shall have the right at any
time or times thereafter to sell, resell, assign and deliver
all or any of the Pledged Collateral in one or more parcels
at any exchange or broker's board or at public or private
sale. The Secured Party will give the Pledgor at least ten
(10) days' prior written notice by registered or certified
mail at the address of the Pledgor specified in the Preamble
hereof or as otherwise supplied to the Secured Party in
writing, of the time and place of any public sale thereof or
of the time after which any private sale or any other
intended disposition thereof is to be made. Any such notice
shall be deemed to meet any requirement hereunder or under
any applicable law (including the Uniform Commercial Code)
that reasonable notification be given of the time and place
of such sale or other disposition. Such notice may be given
without any demand of performance or other demand, all such
demands being hereby expressly waived by the Pledgor. All
such sales shall be at such commercially reasonable price or
prices as the Secured party shall deem best and either for
cash or on credit or for future delivery (without assuming
any responsibility for credit risk). At any such sale or
sales, the Secured Party may purchase any or all of the
Pledged Collateral to be sold thereat upon such terms as the
Secured Party may deem best. Upon any such sale or sales
the Pledged Collateral so purchased shall be held by the
purchaser absolutely free from any claims or rights of
whatsoever kind or nature, including any equity of
redemption and any similar rights, all such equity of
redemption and any similar rights being hereby expressly
waived and released by the Pledgor. In the event any
consent, approval or authorization of any governmental
agency will be necessary to effectuate any such sale or
sales, the Pledgor shall execute, and hereby agree to cause
the Company to execute, all such applications or other
instruments as may be required. The proceeds of any such
sale or sales, together with any additional collateral
security at the time received and held hereunder, shall be
received and applied: first, to the payment of all costs
and expenses of such sale, including reasonable attorneys'
fees; second, to the payment of the Secured Obligations in
such order of priority as the Secured Party shall determine;
and any surplus thereafter remaining shall be paid to the
Pledgor or to whomever may be legally entitled thereto
(including, if applicable, any subordinated creditor of the
Pledgor).
The Pledgor recognizes that the Secured Party may be
unable to effect a public sale of all or a part of the
Pledged Collateral by reason of certain prohibitions
contained in the Securities Act of 1933, but may be
compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree,
among other things, to acquire such Pledged Collateral for
their own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor agrees that
private sales to be made may be at prices and upon other
terms less favorable to the seller than if the Pledged
Collateral were sold at public sales, and that the Secured
Party shall have no obligation to delay sale of the Pledged
Collateral for the period of time necessary to permit the
Pledged Collateral to be registered for public sale under
the Securities Act of 1933. The Pledgor agrees that private
sales made under the foregoing circumstances shall be deemed
to have been made in a commercially reasonable manner.
8. No course of dealing between the Pledgor and the
Secured Party nor any failure to exercise, nor any delay in
exercising, on the part of the Secured Party, any right,
power of privilege hereunder or under any of the Secured
Obligations, shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein provided
and provided under any of the Secured Obligations are
cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law, including, without
limitation, the rights and remedies of a secured party under
the Uniform Commercial Code.
9. Upon the occurrence and continuation of any Event of
Default, the Secured Party may, but without obligation to do
so, demand, sue for and/or collect any money or property at
any time due, payable or receivable, to which it may be
entitled hereunder, on account of or in exchange for any of
the Pledged Collateral.
10. Upon the occurrence and continuation of any Event
of Default, the Secured Party shall have the right, for and
in the name, place and stead of the Pledgor, to execute
endorsements, assignments, or other instruments of
conveyance or transfer with respect to all or any of the
Pledged Collateral.
11. In the event of a sale of assignment by the Secured
Party of all or any of the Secured Obligations held by it,
the Secured Party may assign or transfer its rights and
interest under this Agreement in whole or in part to the
purchaser or purchasers of such Secured Obligations,
whereupon such purchaser or purchasers shall become vested
with all of the powers and rights given to the Secured Party
hereunder, and the Secured Party shall thereafter be forever
released and fully discharged from any liability or
responsibility hereunder with respect to the rights and
interest so assigned.
12. Beyond the exercise of reasonable care to assure
the safe custody of the Pledged Collateral while held
hereunder, the Secured Party shall have no duty or liability
to collect any sums due in respect thereof or to protect or
preserve rights pertaining thereto, and shall be relieved of
all responsibility for the Pledged Collateral upon
surrendering the same to the Pledgor.
13. Except as otherwise provided herein, notice to or
demand upon the Pledgor or the Secured Party shall be deemed
to have been sufficiently given or served for all purposes
thereof if mailed, postage prepaid to the parties at the
addresses set forth herein or to such other address as the
party to whom such notice is directed may have designated in
writing to the other parties hereto.
14. The Pledgor hereby waives notice of acceptance of
this Agreement as well as presentment, demand, payment,
notice of dishonor or protest and all other notices of any
kind in connection with any of the Secured Obligations. In
addition, the Secured Party may release, supersede, exchange
or modify any other collateral security it may from time to
time hold and release, surrender or modify the liability of
any third party without giving notice hereunder to the
Pledgor. The Secured Party shall be under no duty first to
exhaust its rights against any such collateral security or
any such third party before realizing on the Pledged
Collateral. Such modifications, changes, renewals, releases
or other actions shall in no way affect the Pledgor's
obligation hereunder. The Pledgor further waives any right
it may have under the constitution of the State of New
Hampshire (or under the constitution of any other state in
which any of the Pledged Collateral may be located), or
under the Constitution of the United States of America, to
notice except as required hereby or to a judicial hearing
prior to the exercise of any right or remedy provided by
this Agreement to the Secured Party and Waives its right, if
any, to set aside or invalidate any sale duly consummated in
accordance with Section 7 hereof on the grounds (if such be
the case) that if the sale was consummated without a prior
judicial hearing. The Pledgor's waivers under this Section
14 have been made voluntarily, intelligently and knowingly
and after the Pledgor has been apprised and counseled by its
attorney as to the nature thereof and its possible
alternative rights.
15. The Pledgor acknowledges that in connection with
any exercise by the Secured Party of its rights hereunder it
may be necessary to obtain the prior consent or approval of
certain governmental authorities. Upon the exercise by the
Secured Party of any power, right, provision or remedy
pursuant to this Agreement which requires any consent,
approval, registration, qualification or authorization of
any governmental authority, the Pledgor will, or will cause
the Company to, execute and deliver all applications,
certificates, instruments and other documents and papers
that the Secured Party may be required to obtain for such
governmental consent, approval, registration, qualification
or authorization.
16. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective
successors and assigns, and the term "Secured Party" shall
be deemed to include any other holder or holders of any of
the Secured Obligations. Where the context so permits or
requires, terms defined herein in the singular number shall
mean the plural, and in the plural number, the singular.
This Agreement may be executed in any number of counterparts
and by the different parties on separate counterparts, each
of which, when so executed and delivered, shall be an
original and all of which shall together constitute one and
the same agreement.
17. The Pledged Stock shall be held by Alfano &
Baroff, Professional Association as escrow agent pursuant to
a separate Escrow Agreement to be executed by the parties.
Also, Pledgor shall execute the blank Stock Assignment
Separate From Certificate attached hereto as Schedule B.
18. This Agreement shall be construed in accordance
with and governed by the laws of the State of Connecticut.
The Pledgor, to the extent that he may lawfully do so,
hereby consents to service of process, and to be sued, in
the State of Connecticut and consents to the jurisdiction of
the courts of the State of Connecticut and the United States
District Court for the District of Connecticut, as well as
to the jurisdiction of all courts from which an appeal may
be taken from such courts, for the purpose of any suit,
action or other proceeding arising out of any of his
obligations hereunder or with respect to the transactions
contemplated hereby, and expressly waives any and all
objections he may have to venue in any such courts.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
Carlyle Corp.
/s/ Michael Miller By: /s/ Elliott R. Pearson
- ------------------ --------------------------
Witness Its duly authorized Secretary
DCI Telecommunications, Inc.
/s/ Larry Shatsoff By: /s/ Joseph J. Murphy
- ------------------ ------------------------
Witness Its duly authorized President & CEO
SCHEDULE A
List of Stock
Stock Certificate #'s A-05, G-01 of Cyberfax, Inc., representing
one hundred percent (100%) of the issued and outstanding stock
in Cyberfax, Inc.
SCHEDULE B
Stock Assignment Separate From Certificate
See Exhibit E
EXHIBIT D
Escrow Agreement
ESCROW AGREEMENT entered into as of March 30, 1999 by and
between Carlyle Corp., a Nevada corporation, of One E. Camelback
Rd, Phoenix, AZ 85102 ("Carlyle"), DCI Telecommunications, Inc.,
a Colorado corporation at 611 Access Road, Stratford, CT 06615
("DCI"), and ALFANO & BAROFF, PROFESSIONAL ASSOCIATION, a New
Hampshire professional corporation with an address of 814 Elm
Street, Manchester, New Hampshire 03101 ("Escrow Agent").
Carlyle and DCI shall be collectively referred to herein as the
"Transaction Parties. "
WHEREAS, Carlyle has executed that certain Promissory Note
in the original principal amount of $5,000,000.00 (the "Note")
and Collateral Assignment and Security Agreement on or about the
date hereof pursuant to which Carlyle agreed to pledge all of the
issued and outstanding shares of stock of Cyberfax, Inc. to DCI;
WHEREAS, the Collateral Assignment and Security Agreement
calls for the said stock of Cyberfax, Inc. to be held by Escrow
Agent pursuant to the terms of the Promissory Note and Collateral
Assignment and Security Agreement;
NOW, THEREFORE, in consideration of the mutual rights,
benefits and obligations set forth in the Promissory Note,
Collateral Assignment and Security Agreement and this Escrow
Agreement, the parties agree as follows:
1. Delivery of Shares. Simultaneously with the execution of
this Escrow Agreement, DCI and Carlyle shall deliver to
Escrow Agent one hundred perecent (100%) of the issued and
outstanding shares of stock of Cyberfax, Inc. to be held by
Escrow Agent in accordance with the terms of this Escrow
Agreement (the "Escrowed Stock").
2. Escrow Period. The term of this Escrow Agreement (the
"Escrow Period") shall commence on the date of this Escrow
Agreement and terminate on the thirtieth (30th) day
following the first anniversary of the Promissory Note.
3. Duty to Pay Taxes and Charges. Carlyle agrees to pay all
taxes, charges, liens and assessments against the Escrowed
Stock, failing which shall also be considered an Event of
Default, giving DCI the right to exercise the powers set
forth in the previous paragraph.
4. Notice of Default. Simultaneously with the delivery by DCI
to Carlyle of notice (in accordance with the terms of the
Promissory Note and Collateral Assignment and Security
Agreement) that an Event of Default has occurred for which
DCI intends to exercise its rights under the Collateral
Assignment and Security Agreement ("Notice of Default"), DCI
shall deliver a copy of the Notice of Default to Escrow
Agent. After receipt of the Notice of Default, Escrow Agent
shall promptly deliver to DCI or its nominee such number of
shares of the Escrowed Stock as shall correspond to the
dollar amount of the claim or claims set forth in the Notice
of Default. By signing below, Carlyle appoints Escrow Agent
its attorney-in-fact to execute all documents necessary to
carry out the transfer of the Escrowed Stock in accordance
with this Escrow Agreement. Where Escrow Agent receives a
statement or certification from DCI pursuant to this Escrow
Agreement, Escrow Agent may rely exclusively on the
statement or certification and shall not be obligated to
inquire further with Carlyle or any other party as to the
truthfulness of the statements contained therein.
5. Release of Escrowed Stock Where No Notice of Default. Where
Escrow Agent does not receive a Notice of Default from DCI
within the Escrow Period, or to the extent shares have not
been released to DCI after settlement or resolution of any
claims made with the Escrowed Stock, Escrow Agent shall
promptly transfer the remaining Escrowed Stock to Carlyle.
6. Additional Escrow Agent Powers. If any demand is made upon
Escrow Agent concerning this Escrow Agreement, Escrow Agent
may, at its election:
A. hold the Escrowed Stock until an action shall be
brought in a court of competent jurisdiction to
determine the rights of the Transaction Parties; or
B. interplead the Transaction Parties and deposit the
Escrowed Stock with any Court of competent
jurisdiction.
7. Fees and Expenses; Indemnification. The Transaction Parties
shall jointly and severally bear all costs incurred by
Escrow Agent in performing its duties hereunder. The
Transaction Parties jointly and severally agree to indemnify
and save harmless Escrow Agent from and against all costs,
damages, attorneys' fees, expenses and liabilities which
Escrow Agent may incur or sustain in connection with this
Agreement, or any court or other legal action arising
therefrom, and will pay the same upon demand.
8. Communications. All notices, requests, demands, consents
and other communications hereunder shall be in writing and
shall be deemed to have been duly given if personally
delivered, telecopied or sent by certified mail, postage
prepaid, return receipt requested, as follows:
If to DCI: DCI Telecommunications, Inc.
611 Access Road
Stratford, CT 06615
with a copy to: Paul J. Alfano, Esquire
Alfano & Baroff,
Professional Association
814 Elm Street
Manchester, NH 03101
If to Carlyle: CARLYLE CORP.
Elliot R. Pearson, Secretary
One E. Camelback Road, Suite 680
Phoenix, AZ 85102-1651
With a copy to: Thomas J. Kenan
Fuller Tubb Pomeroy & Stokes
100 N. Broadway, Suite 3300
Oklahoma City, OK 73102
If to Escrow Agent: Paul J. Alfano, Esquire
Alfano & Baroff,
Professional Association
814 Elm Street
Manchester, NH 03101
9. Miscellaneous. This Escrow Agreement shall be construed in
accordance with the laws of the State of Connecticut. No
part of this Escrow Agreement shall be assignable or
otherwise subject to transfer by any party hereto. This
Escrow Agreement contains the entire agreement among the
parties relating to the matters described herein and all
prior or contemporary agreements, understandings, oral or
written, are merged herein. No amendment to this Escrow
Agreement shall be of effect unless in writing signed by all
parties hereto.
WITNESS our hands as of the day and year first above
written.
DCI Telecommunications, Inc
/s/ Larry Shatsoff By: /s/ Joseph J. Murphy
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Witness Name: Joseph J. Murphy
Title: President
Carlyle Corp.
/s/ Michael Miller By: /s/ Elliott R. Pearson
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Witness Name: Elliott R. Pearson
Title: Secretary
EXHIBIT E
Stock Assignment Separate From Certificate
The undersigned hereby assigns and transfers unto
_____________________, _________________________
(_________________) shares of stock in Cyberfax, Inc., a Canadian
corporation, and hereby irrevocably appoints Alfano & Baroff,
Professional Association, its successors or assigns, his/her/its
attorney-in-fact to transfer the said shares on the books of the
within-named corporation.
Dated this March 30, 1999.
Carlyle Corp.
/s/ Michael R. Miller By: /s/ Elliott R. Pearson
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Witness Name: Elliott R. Pearson
Title: Secretary
Exhibit F
PROMISSORY NOTE
$5,000,000.00
March 30, 1999
The undersigned Carlyle Corp., a Nevada Corporation, of
Phoenix, AZ ("Maker"), promises to pay to the order of DCI
Telecommunications, Inc., a Colorado corporation (the "Payee")
(the Payee and each subsequent transferee of this Note, whether
taking by negotiation or otherwise, are herein collectively
called the "Holder"), at 611 Access Road, Stratford, CT 06615 or
at such other place as the Holder may from time to time designate
in writing, the principal sum of Five Million Dollars
($5,000,000.00) plus interest at the rate of nine percent per
year, compounded quarterly from the date hereof on the principal
balance from time to time outstanding as hereinafter provided,
principal, interest and all other sums payable hereunder to be
paid as follows:
A. Interest shall be paid quarterly (i.e., every 90 days
following the date hereof, and each such date shall be
known herein as an "Interest Payment Date") in shares
of common stock of Maker. Shares of common stock of
Maker devoted to the payment of interest on or
principal of the Note shall be known as "Payment
Shares. " The number of Payment Shares Payee is to
receive under this Note on each Interest Payment Date
shall be calculated as follows: It initially shall be
assumed that a Payment Share is worth $3. However, at
such time as a market for Makers common stock commences
on the OTC Bulletin Board or Nasdaq, the worth of a
Payment Share shall be recalculated to be the average
closing trade price of Maker"s common stock over the
first 13 trading weeks, and an adjustment shall be made
in the number of Payment Shares Payee received prior to
this recalculation.
B. In the event Maker becomes a publicly traded company
prior to the maturity of the Note, Holder shall have
the right at any time after the effective date that
Maker became a publicly traded company to demand
payment in full. If Holder exercises this right, Maker
shall pay the balance due under the Note in Payment
Shares, the worth of a Payment Share being determined
as set forth in paragraph A, above. If on the date the
Note matures Maker has become a publicly traded
company, Maker may elect to pay off the Note with
Payment Shares, valued as set forth in paragraph A,
above, rather than with money.
Until the Note is paid in full, Maker cannot sell
substantially all its assets or cause a controlling
majority of its shares of common stock to be sold in a
private transaction without Holder's prior written
consent.
C. The Note shall be due and payable in full on the first
anniversary of the date hereof.
If any payment required under this Note is not paid within
five (5) days of when due, then Maker shall pay Payee the
additional sum of five percent (5%) of that month's payment.
Further, should any payment be more than ten (10) days past due,
the interest rate to be applied to the then-outstanding balance
of the loan shall be eighteen percent (18%) per annum for each
day all or part of said late payment or payments remains unpaid.
All payments on this Note shall be applied first to the pay
ment of any costs, fees or other charges incurred in connection
with the indebtedness evidenced hereby, next to the payment of
accrued interest and then to the reduction of the principal bal
ance.
This Note is secured by a Pledge Agreement (the "Pledge") of
even date herewith, executed by the Maker, in favor of the Payee,
as Pledgee, encumbering One Hundred percent (100%) of the
outstanding stock of Cyberfax, Inc., a Canada corporation (the
"Pledged Stock"). Maker may not further encumber the Pledged
Stock without Payee's prior written consent.
TIME IS OF THE ESSENCE OF THIS NOTE.
In the event any payment due hereunder is more than ten (10)
days late following written notice of same to Maker, or upon the
failure of Maker to honor any other obligation hereunder or under
the Pledge, this Note may, at the option of Payee, become
immediately due and payable in full, without further demand or
notice. Maker agrees to pay all costs of collection hereof,
including reasonable attorneys' fees.
Maker agrees not to transfer any of its obligations
hereunder to any other party without the prior written consent of
the Payee. Acceptance by the holder of any payment after any
default will not operate to extend the time of payment of any
amount then remaining unpaid or constitute a waiver of any rights
of the holder under this Note. No delay or omission on the part
of the Holder in exercising any right, privilege or remedy will
impair such right, privilege or remedy or be construed as a
waiver thereof or of any other right, privilege or remedy. All
rights and remedies of the Holder are cumulative and may be
exercised singularly or concurrently. Every party to this
instrument, whether as maker, endorser, surety or otherwise,
hereby waives presentment, demand, notice and protest of this
Note.
The Maker may prepay this Note, in part or in full, at any
time, without penalty. Maker, simultaneously with any such
prepayment, shall provide Holder with a written amortization
schedule through the date of the payment and for the remaining
term of this Note for Holder"s review and approval. All
prepayments shall be applied in the inverse order of maturity or,
at the option of the Holder, in the regular order of maturity.
Failure of the Holder to exercise any option hereunder shall
not constitute a waiver of the right to exercise the same in the
event of any subsequent default or in the event of continuance of
any existing default after demand for strict performance hereof.
The Maker, sureties, guarantors and endorsers hereof: (a)
agree to be jointly and severally bound, (b) severally waive any
homestead or exemption right against said debt, (c) severally
waive demand, diligence, presentment for payment, protest and
demand, and notice of extension, dishonor, protest, demand and
nonpayment of this Note, and (d) consent that the Holder may
extend the time of payment or otherwise modify the terms of
payment of any part or the whole of the debt evidenced by this
Note, at the request of any other person primarily liable hereon,
and such consent shall not alter nor diminish the liability of
any person.
This Note shall be binding upon the Maker and its successors
and assigns and shall inure to the benefit of the Payee, and any
subsequent Holders of this Note, and their respective successors
and assigns.
All notices required or permitted in connection with this
Note shall be given at the addresses above stated, or such other
place as the party to whom notice is be given so directs in
writing.
This Note shall be governed, construed and interpreted by,
and in accordance with, the laws of the State of Connecticut.
IN WITNESS WHEREOF, the Maker has executed this Promissory
Note as of the day and year first hereinbefore stated.
Carlyle Corp.
/s/ Michael Miller By: Elliott R. Pearson
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Witness Its duly authorized Secretary