EXHIBIT 2.3
STOCK PURCHASE AND EXCHANGE AGREEMENT
STOCK PURCHASE AND EXCHANGE AGREEMENT, dated as of October 1, 1999 by
and among, Valhalla Securities, Inc., a New York corporation ("Valhalla"),
XxxxxxXxxXxxxxxxxx.xxx, Inc., a Delaware corporation ("GLBN"), Xxxxxx Xxxxxxxx
("Xxxxxxxx"), Xxxxxx Xxxxxxxxxx ("Xxxxxxxxxx") (each of Uslander and Xxxxxxxxxx,
a "Valhalla Principal" and collectively, the "Valhalla Principals").
WHEREAS, GLBN desires to purchase, and Valhalla desires to sell, an
amount of capital stock equal to 50% of the issued and outstanding capital stock
of Valhalla on a fully-diluted basis in exchange for cash; and
WHEREAS, GLBN and the Valhalla Principals desire to exchange capital
stock of GLBN for an additional 16.67% of the issued and outstanding capital
stock of Valhalla on a fully-diluted basis, after giving effect to the purchase
described in the preceding recital;
NOW, THEREFORE, in consideration of the mutual agreements,
representations and warranties herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
ISSUANCE AND TRANSFER OF STOCK
1.1 ISSUANCE OF VALHALLA COMMON STOCK.
(a) Valhalla hereby issues and sells to GLBN and GLBN hereby
purchases from Valhalla 100 (one hundred) shares (the "Valhalla Shares") of
common stock, without par value, of Valhalla ("Valhalla Common Stock"). The
purchase price for the Valhalla Shares is ninety thousand dollars ($90,000.00)
(the "Valhalla Purchase Price").
(b) GLBN hereby acknowledges receipt of a certificate dated
October 1, 1999, registered in the name of GLBN, representing the Valhalla
Shares and Valhalla hereby acknowledges receipt of the Valhalla Purchase Price.
1.2 EXCHANGE OF VALHALLA COMMON STOCK FOR GLBN COMMON STOCK.
(a) Uslander hereby sells, assigns, transfers, conveys and
delivers to GLBN all right, title and interest in and to fifty (50) shares of
Valhalla Common Stock free and clear of any Encumbrances (as defined in Section
2.12 hereof) and GLBN hereby issues and sells in exchange therefor twelve
thousand five hundred (12,500) shares of common stock, par value $0.001 per
share, of GLBN ("GLBN Common Stock") free and clear of any Encumbrances.
(b) Xxxxxxxxxx hereby sells, assigns, transfers, conveys and
delivers to GLBN all right, title and interest in and to fifty (50) shares of
Valhalla Common Stock free and clear of any Encumbrances and GLBN hereby issues
and sells in exchange therefor twelve thousand five hundred (12,500) shares of
GLBN Common Stock free and clear of any Encumbrances. The shares of Valhalla
Common Stock transferred to GLBN by the Valhalla Principals shall sometimes be
referred to herein as the "Valhalla Principal Shares." The shares of GLBN Common
Stock issued by GLBN to the Valhalla Principals shall sometimes be referred to
herein as the "GLBN Shares."
(c) GLBN hereby agrees to send irrevocable instructions to its
transfer agent for the issuance to Uslander and Xxxxxxxxxx of certificates, one
registered in each of their respective names representing the respective number
of the GLBN Shares issued thereto and to deliver such certificates to each of
Uslander and Xxxxxxxxxx. GLBN hereby acknowledges receipt from the Valhalla
Principals of a certificate dated October 1, 1999, registered in GLBN's name
representing the Valhalla Principal Shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF VALHALLA
Valhalla represents and warrants to GLBN as follows:
2.1 ORGANIZATION; POWER AND AUTHORITY; QUALIFICATIONS. Valhalla is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation and has all requisite corporate power and
corporate authority to own, lease and operate its properties, to carry on its
business as presently conducted and as presently proposed to be conducted and to
carry out the transactions contemplated by this Agreement. Each Valhalla
Principal has the full and absolute power and capacity to enter into this
Agreement and to carry out the transactions contemplated by this Agreement.
Valhalla is qualified to transact business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the property owned
or leased or the nature of the activities conducted by it makes such
qualification necessary or the failure to so qualify would have a material
adverse effect on Valhalla.
2.2 AUTHORIZATION; NO CONFLICTS. The execution, delivery and
performance by Valhalla of this Agreement have been duly authorized by all
requisite corporate action by Valhalla, and this Agreement constitutes a valid
and binding obligation of Valhalla, enforceable against Valhalla in accordance
with its terms. This Agreement has been duty executed and delivered by the
Valhalla Principals and this Agreement constitutes a valid and binding
obligation of each Valhalla Principal, enforceable against each Valhalla
Principal in accordance with its terms. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof by Valhalla and the Valhalla
Principals, as applicable, and the issuance, sale and delivery of the Valhalla
Shares and the Valhalla Principal Shares will not (a) violate any provision of
law, statute, rule or regulation, or any ruling, writ, injunction, order,
judgment or decree of any court, administrative agency or other governmental or
self-regulatory body applicable to Valhalla, any Valhalla Principal or any of
their respective properties or assets or (b) conflict with or result in any
breach of any of the terms, conditions or provisions of, or constitute (with due
notice or
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lapse of time, or both) a default (or give rise to any right of termination,
cancellation or acceleration) or result in the creation of any Encumbrance upon
any of the properties or assets of Valhalla or any Valhalla Principal under the
Valhalla Certificate of Incorporation or Bylaws, or any note, indenture,
mortgage, lease agreement or other contract, agreement or instrument to which
Valhalla or any Valhalla Principal is a party or by which any of them or any of
their respective properties is bound or affected.
2.3 AUTHORIZATION AND TITLE OF VALHALLA COMMON STOCK. The
authorization, issuance, sale and delivery of the Valhalla Shares has been duly
authorized by all requisite corporate action of Valhalla, and when issued, the
Valhalla Shares will be validly issued and outstanding, fully paid and
nonassessable, and not subject to preemptive or any other similar rights of the
stockholders of Valhalla or others. Upon delivery of the Valhalla Principal
Shares to GLBN, GLBN will acquire all right, title and interest in and to the
Valhalla Principal Shares free and clear of any Encumbrances. The terms,
designations, powers, preferences and relative, participating, optional and
other special rights, and the qualifications, limitations and restrictions of
Valhalla Common Stock are as stated in Valhalla's Certificate of Incorporation.
Upon delivery of the Valhalla Shares and the Valhalla Principal Shares, GLBN
will own 66.67% of the outstanding capital stock of Valhalla after giving effect
to the exercise, exchange or conversion of all outstanding securities, rights,
options, warrants, exercisable or exchangeable for, or convertible into,
directly or indirectly capital stock of Valhalla, free and clear of any
Encumbrances.
2.4 NO CONSENT OR APPROVAL REQUIRED. Except for the consent of the
National Association of Securities Dealers, Inc. (the "NASD"), no consent of any
person and no consent, approval or authorization of, or declaration to or filing
with, any governmental or regulatory authority is required for the valid
authorization, execution and delivery by Valhalla or any Valhalla Principal of
this Agreement or for the consummation of the transactions contemplated hereby
or for the valid authorization, issuance and delivery of the Valhalla Shares or
the Valhalla Principal Shares.
2.5 SECURITIES LAW MATTERS. The Valhalla Principals are acquiring the
GLBN Shares for their own respective accounts, for investment and not with a
view to the distribution thereof within the meaning of the Securities Act of
1933, as amended (the "Securities Act"). Each of the Valhalla Principals
understands that the resale of the GLBN Shares (i) have not been registered
under the Securities Act, by reason of their issuance by GLBN in a transaction
exempt from the registration requirements of the Securities Act and (ii) must be
held by the Valhalla Principals indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from registration.
The Valhalla Principals each further understands that, with respect to the GLBN
Shares, the exemption from registration afforded by Rule 144 (the provisions of
which are known to each Valhalla Principal) promulgated under the Securities Act
depends on the satisfaction of various conditions, and that, if applicable, Rule
144 may only afford the basis for sales of the GLBN Shares only in limited
amounts. Each Valhalla Principal agrees that GLBN may place a legend on the
certificates delivered hereunder stating that the GLBN Shares have not been
registered under the Securities Act, and, therefore cannot be offered, sold or
transferred unless they are registered under the Securities Act or an exemption
from such registration is available, and that GLBN may place stop transfer
orders on the transfer books of GLBN with respect to the GLBN Shares.
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2.6 CAPITALIZATION.
(a) The authorized capital stock of Valhalla immediately upon
the consummation of the transactions contemplated hereby shall consist of five
hundred (500) shares of Valhalla Common Stock of which (i) 300 shares shall have
been validly issued and outstanding, fully paid and nonassessable, and (ii) no
shares shall have been duty reserved for issuance for any purpose.
(b) Schedule 2.6 hereto contains, giving effect to the
transactions contemplated hereof, a list of (i) all holders of capital stock of
Valhalla, including the number of shares of capital stock held by each such
holder, and (ii) all outstanding warrants, options, agreements, convertible
securities or other commitments pursuant to which Valhalla is or may become
obligated to issue any shares of the capital stock or other securities of
Valhalla. Such list provides the names of all persons entitled to receive such
shares or other securities and the shares of capital stock or other securities
required to be issued thereunder. Except as set forth on Schedule 2.6 or as
contemplated herein, there are no preemptive or similar rights to purchase or
otherwise acquire shares of capital stock of Valhalla pursuant to any provision
of law, Valhalla's Certificate of Incorporation or Bylaws or any agreement to
which Valhalla is a party; and there is, and immediately upon the consummation
of the transactions contemplated hereby, there will be, no agreement,
restriction or encumbrance (such as a right of first refusal, right of first
offer, proxy, voting trust, voting agreement, etc.) with respect to the sale or
voting of any shares of capital stock of Valhalla (whether outstanding or
issuable upon conversion or exercise of outstanding securities), except as
contemplated hereby. All shares of capital stock and other securities issued by
Valhalla have been issued in transactions exempt from registration under the
Securities Act.
2.7 EQUITY INVESTMENTS. Valhalla has not had, nor does it presently
have, any subsidiaries, nor has it owned, nor does it presently own, any capital
stock or other proprietary interest, directly or indirectly, in any corporation,
association, trust, partnership, joint venture or other entity.
2.8 NO DEFAULTS OR VIOLATIONS. Valhalla is not in default under any
order, writ, injunction or decree of any court or any Federal, state, municipal
or other domestic or foreign governmental department, commission, board, bureau,
agency or instrumentality. Valhalla is not in violation of the terms of its
Certificate of Incorporation or its Bylaws. There exists no condition, event or
act which constitutes, or which after notice, lapse of time or both, would
constitute, a default or result in a violation, as the case may be, under any of
the foregoing.
2.9 FINANCIAL INFORMATION.
(a) Schedule 2.9(a) hereto contains the following information
(collectively, the "Financial Statements"):
(i) the audited balance sheets of Valhalla as of
December 31, 1998, and the related statements of operations, stockholders'
equity and cash flows (including the notes thereto) for the fiscal year then
ended; and
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(ii) the unaudited balance sheets of Valhalla (the
"Interim Balance Sheets") as of August 31, 1999 (the "Interim Balance Sheet
Date"), and the related unaudited statements of operations and cash flows for
the eight-month period then ended (collectively, the "Interim Financial
Statements"), prepared by Valhalla.
(b) Except as set forth on Schedule 2.9(b) hereto, the
Financial Statements (i) are true, correct and complete, (ii) are in accordance
with the books and records of Valhalla, (iii) present fairly the financial
condition and results of operations of Valhalla, as of the date and for the
periods indicated and (iv) have been prepared in accordance with generally
accepted accounting principles consistently applied (except as set forth in the
notes thereto and subject, in the case of the Interim Financial Statements, to
normal year-end audit adjustments, which adjustments shall not be material
individually or in the aggregate).
2.10 ABSENCE OF UNDISCLOSED LIABILITIES. As of the Interim Balance
Sheet Date, (a) Valhalla has not had any material liability (whether matured or
unmatured, fixed or contingent) which was not provided for, or disclosed in, the
Interim Balance Sheers and (b) all liability reserves established by Valhalla
and set forth in the Interim Balance Sheets are adequate for all such
liabilities at the applicable date thereof. There are no loss contingencies (as
such term is used in Statement of Financial Accounting Standards No. 5 issued by
the Financial Accounting Standards Board in March 1975) which are not adequately
provided for in the Interim Balance Sheets as required by said Statement No. 5.
2.11 ABSENCE OF CHANGES. Since the Interim Balance Sheet Date there has
not been (a) any material adverse change in the financial condition, results of
operations, assets, liabilities or business of Valhalla, (b) any borrowing or
agreement to borrow any funds or any liability or obligation of any nature
whatsoever (contingent or otherwise) incurred by Valhalla, other than current
liabilities or obligations incurred in the ordinary course of business, (c) any
asset or property of Valhalla made subject to an Encumbrance of any kind, (d)
any waiver of any valuable right of Valhalla, or the cancellation of any debt or
claim held by Valhalla, (e) any payment of dividends on, or other distributions
with respect to, or any direct or indirect redemption or acquisition of, any
shares of the capital stock of Valhalla, or any agreement or commitment
therefor, (f) any issuance of any stock, bond or other security of Valhalla or
any agreement or commitment therefor (including, without limitation, options,
warrants or rights or agreements or commitments to purchase such securities or
grant such options, warrants or rights), except as may be disclosed on Schedule
2.6, (g) any mortgage, pledge, sale, assignment or transfer of any tangible or
intangible assets of Valhalla, except, with respect to tangible assets, in the
ordinary course of business, (h) any loan by Valhalla to any officer, director,
employee, consultant or stockholder of Valhalla, or any agreement or commitment
therefor, (i) any damage, destruction or loss (whether or not covered by
insurance) affecting the business, assets, properties, operations or condition,
financial or otherwise, or results of operations of Valhalla, (i) any
extraordinary increase, direct or indirect, in the compensation paid or payable
to any officer, director, employee, consultant or agent of Valhalla or (k) any
change in the accounting methods, practices or policies followed by Valhalla or
any change in depreciation or amortization policies or rates theretofore
adopted.
2.12 TITLE TO ASSETS, PROPERTIES AND RIGHTS. Valhalla has good and
marketable title to all properties, interests in properties and assets, real,
personal and mixed, tangible or
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intangible, used in the conduct of its business, free and dear of all mortgages,
judgments, claims, liens, security interests, pledges, escrows, charges or other
encumbrances of any kind or character whatsoever, whether or not related to
credit or the borrowing of money ("Encumbrances").
2.13 INTELLECTUAL PROPERTY RIGHTS. Schedule 2.13 hereto sets forth each
copyright, trademark, service xxxx, tradename or patent owned by Valhalla or in
which Valhalla asserts proprietary rights, and each Federal state or foreign
registration thereof or application relating to the registration thereof.
2.14 EMPLOYMENT OF OFFICERS, EMPLOYEES AND CONSULTANTS. No third party
has asserted or, to the Best Knowledge of Valhalla, may assert any valid claim
against Valhalla or any of the Designated Persons (as defined below) with
respect to (a) the continued employment by, or association with, Valhalla of any
of the present officers or employees of or consultants to Valhalla
(collectively, the "Designated Persons") or (b) the use, in connection with any
business presently conducted by Valhalla or any of the Designated Persons, of
any information which Valhalla or any of the Designated Persons would be
prohibited from using under any prior agreements or arrangements or any legal
considerations applicable to unfair competition, trade secrets or proprietary
information.
2.15 ERISA PLANS AND CONTRACTS.
(a) For purposes of this Agreement, the term "Employee Plan"
means each employee bonus, retirement, pension, profit sharing, stock option,
stock appreciation, stock purchase, incentive, deferred compensation,
hospitalization, medical, dental, vision', life and other health and disability
(whether provided by insurance or otherwise), severance, termination and other
plan, program, arrangement, policy or payroll practice providing employee
benefits, including, without limitation, each "employee benefit plan" as defined
in Section (3) of the Employee Retirement Income Security Act of 1974, as
amended to the date hereof ("ERISA"), and including plans which have been frozen
or terminated during the five-year period ending on the date of this Agreement,
in each instance maintained by Valhalla or to which Valhalla contributes or has
contributed and under which any person presently employed by Valhalla (an
"Employee") or formerly so employed by Valhalla (a "Former Employee")
participates or had accrued any rights or under which Valhalla is liable in
respect of an Employee or Former Employee. The terms "Employee" and "Former
Employee" will include, where applicable, the beneficiaries and dependents of an
Employee or Former Employee. Schedule 2.15 hereto lists or describes all
Employee Plans.
(b) Except as otherwise disclosed on Schedule 2.15 hereto:
(i) Valhalla does not maintain or contribute to any
Employee Plan.
2.16 AGREEMENTS. Except as set forth on Schedule 2.16 hereto, Valhalla
is not a party to any material written or oral contract not made in the ordinary
course of business. To the Best Knowledge of Valhalla, all contracts and
agreements of Valhalla constitute the valid and binding obligations of the
respective parties thereto, enforceable in accordance with their terms, and
Valhalla is not or, to the Best Knowledge of Valhalla, any other party thereto
is in material
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default thereunder and there exists no condition, event or act which
constitutes, or which after notice, lapse of time or both, would constitute, a
material default thereunder by Valhalla or, to the Best Knowledge of Valhalla,
any other party thereto.
2.17 COMPLIANCE; LICENSES AND PERMITS. Valhalla has complied in all
material respects with all Federal, state, local, self regulatory or foreign
laws, ordinances, regulations, rules or orders applicable to the business of
Valhalla as presently or previously conducted. Valhalla has all Federal, state,
local, self regulatory and foreign governmental licenses and permits which are
required for the conduct of the business presently or previously conducted by
Valhalla, which licenses and permits are in full force and effect, and no
violations are outstanding or uncured with respect to any such licenses or
permits and no proceeding is pending or, to the Best Knowledge of Valhalla,
threatened which could revoke or limit any licenses of permits thereunder.
Valhalla (a) is in good standing with the NASD, the Securities Investors
Protection Corporation and every securities exchange and clearing organization
in which it is a member, (b) is duly registered with the Securities and Exchange
Commission as a broker-dealer under the Securities Exchange Act of 1934, and (c)
has not been the subject of any disciplinary proceeding or order of any
governmental agency or self-regulatory authority with respect to any of the
above memberships or registrations; and no such disciplinary proceeding or
investigation is pending or, to the Best Knowledge of Valhalla, contemplated.
None of Valhalla or any of its employees, including without limitation the
Valhalla Principals, has been permanently enjoined by the order, judgment, or
decree of any court or governmental authority from engaging in or continuing any
conduct or practice in connection with acting as a broker, dealer, underwriter,
or investment advisor or from continuing any conduct or practice in connection
with any such activity or in connection with the purchase or sale of any
security. All personnel required to be registered or qualified with any
governmental agencies or self-regulatory authorities are so registered or
qualified as are required to carry on their activities as presently conducted.
Valhalla does not know of any disciplinary proceeding or order of any such
governmental agency or self-regulatory authority with respect to any owner or
employee of Valhalla; and, to the Best Knowledge of Valhalla, no such
disciplinary proceeding or investigation is pending or contemplated. Valhalla
has filed all material reports and returns required by law, rule, regulation, or
policy of any governmental agency or self-regulatory authority or industry
association and has paid all dues, fees, or charges which are due or have been
assessed against it in respect of membership or registration with such agencies,
self-regulatory authorities, and associations. No claim has been asserted or
threatened nor is any claim or suit outstanding with respect to any customer's
securities accounts presently handled by Valhalla.
2.18 LABOR RELATIONS; EMPLOYEES. (a) Valhalla has twelve full-time
employees, including the Valhalla Principals as of the date hereof; (b) Valhalla
is not delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed by
them to the date hereof or amounts required to be reimbursed to such employees;
(c) there is no labor strike, dispute, slowdown or stoppage actually pending or
threatened against or involving Valhalla; and (d) neither any grievance nor any
arbitration proceeding arising out of or under any collective bargaining
agreement is, pending and no claim therefor has been asserted against Valhalla.
2.19 LITIGATION. There is no action, suit, customer claim, proceeding
or investigation at law or in equity or by or before any governmental
instrumentality or other agency now
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pending nor, to the Best Knowledge of Valhalla, threatened against, or affecting
the assets or properties of, Valhalla (including, without limitation, any
action, suit, claim, proceeding or litigation involving the claims contemplated
by Sections 2.13 and 2.14), nor, to the Best Knowledge of Valhalla, does there
exist any basis for any such action, suit, customer claim, proceeding or
investigation.
2.20 TAX MATTERS. (a) Valhalla has filed all state, local and foreign
tax returns, declarations of estimated tax, tax reports, information returns and
statements (collectively, the "Returns") required to be filed by it (other than
those for which extensions shall have been granted) relating to any Taxes (as
defined below) with respect to any income, properties or operations of Valhalla;
(b) as of the time of filing, the Returns were complete and correct and Valhalla
has paid all Taxes shown on the Returns to be due; (c) Valhalla is not
delinquent in the payment of any Taxes, nor has Valhalla requested any extension
of time within which to file any Return, which Return has not since been filed;
(d) there are no pending tax audits of any Returns of Valhalla; (e) no tax liens
have been filed and no deficiency or addition to Taxes, interest or penalties
for any Taxes with respect to any income, properties or operations of Valhalla
has been proposed, asserted or assessed in writing against Valhalla; (f)
Valhalla has not granted any extension of the statute of limitations applicable
to any Return or other Tax claim with respect to any income, properties or
operations of Valhalla; (g) Valhalla has not, during the five-year period
preceding the date hereof, been a personal holding company within the meaning of
Section 542 of the Code; and (h) Valhalla has not made any election under
Section 341(f) of the Code. As used in this Agreement, the term "Tax" shall mean
any of the Taxes and the term "Taxes" shall mean, with respect to any person or
entity, (i) all income taxes (including any tax on or based upon net income, or
gross income, or income as specially defined, or earnings, or profits, or
selected items of income, earnings or profits) and all gross receipts, sales,
use, ad valorem, transfer, franchise, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property or windfall profits
taxes, alternative or add-on minimum taxes, customs duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any taxing
authority (domestic or foreign) on such person or entity and (ii) any liability
for the payment of any amount of the type described in the immediately preceding
clause (iii) as a result of being a "transferee" (within the meaning of Section
6901 of the Code or any other applicable law) of another person or entity or a
member of an affiliated or combined group.
2.21 OFFEREES. Valhalla has not, during the past 12 months, offered any
Common Stock, or any security or securities of Valhalla, for sale to, or
solicited any offers to buy any of the foregoing from, or otherwise approached
or negotiated in respect thereof, with any person or persons other than GLBN and
a limited number of institutional or other sophisticated investors and other
than pursuant to employee stock option plans or agreements.
2.22 BROKERS. None of Valhalla, the Valhalla Principals or any of the
officers, directors, employees or stockholders of Valhalla has employed any
broker or finder in connection with the transactions contemplated by this
Agreement.
2.23 REGISTRATION RIGHTS. No person has any right to cause Valhalla to
effect the registration under the Securities Act of any shares of Valhalla
Common Stock or any other securities (including debt securities) of Valhalla.
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2.24 INSURANCE. All of the insurable properties of Valhalla are insured
for its benefit in amounts and against all risks that are normal and customary
for persons operating similar businesses and properties in the localities where
such businesses and properties are located under policies in effect and issued
by insurers of recognized responsibility.
2.25 DISCLOSURE. Neither this Agreement nor any other document,
certificate, instrument or statement furnished or made available to GLBN, or
GLBN by or on behalf of Valhalla in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein, viewed as a whole, not misleading.
2.26 DEFINITION OF "BEST KNOWLEDGE". As used herein, the term the "Best
Knowledge" shall mean and include (a) actual knowledge and (b) that knowledge
which a reasonable businessperson could have obtained in the management of his
or her business affairs after making due inquiry. In connection with the
foregoing, the knowledge (both actual and constructive) of any director or
officer of Valhalla shall be imputed to Valhalla.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GLBN
GLBN represents and warrants to Valhalla and the Valhalla Principals as
follows:
3.1 ORGANIZATION; POWER AND AUTHORITY. GLBN is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and corporate authority to own,
lease and operate its properties, to carry on its business as presently
conducted and as presently proposed to be conducted and to carry out the
transactions contemplated by this Agreement.
3.2 AUTHORIZATION; NO CONFLICTS. The execution, delivery and
performance by GLBN of this Agreement have been duly authorized by all requisite
corporate action by GLBN. This Agreement has been duly executed and delivered by
GLBN and this Agreement constitutes a valid and binding obligation of GLBN,
enforceable against GLBN in accordance with its terms. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby and thereby and compliance with the provisions thereof by
GLBN will not (a) violate any provision of law, statute, rule or regulation, or
any ruling, writ, injunction, order, judgment or decree of any court,
administrative agency or other governmental body applicable to GLBN or any of
its properties or assets or (b) conflict with or result in any breach of any of
the terms, conditions or provisions of, or constitute (with due notice or lapse
of time, or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or result in the creation of any
Encumbrance upon any of the properties or assets of GLBN under, its Certificate
of Incorporation or Bylaws, or any note, indenture, mortgage, lease agreement or
other contract, agreement or instrument to which GLBN is a party or by which its
properties is bound or affected.
3.3 AUTHORIZATION AND TITLE OF GLBN COMMON STOCK. The authorization,
issuance, sale and delivery of the GLBN Shares have been duly authorized by all
requisite
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corporate action of GLBN, and are validly issued and outstanding, fully paid and
nonassessable with no personal liability attaching to the ownership thereof, and
not subject to preemptive or any other similar rights of the stockholders of
GLBN or others. The terms, designations, powers, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations and restrictions, of the GLBN Common Stock are as stated in its
Certificate of Incorporation.
3.4 NO CONSENT OR APPROVAL REQUIRED. No consent of any person and no
consent, approval or authorization of, or declaration to or filing with, any
governmental or regulatory authority is required for the valid authorization,
execution and delivery by GLBN of this Agreement or for the consummation of the
transactions contemplated hereby.
3.5 SECURITIES LAW MATTERS. GLBN will be acquiring the shares of
Valhalla Common Stock to be purchased from Valhalla and the Valhalla Principals
for its own account, for investment and not with a view to the distribution
thereof within the meaning of the Securities Act. GLBN understands that the
resale of the shares of Valhalla Common Stock (i) have not been registered under
the Securities Act and (ii) must be held by GLBN indefinitely unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from registration. GLBN further understands that, with respect to the
Valhalla Common Stock to be acquired by it, the exemption from registration
afforded by Rule 144 (the provisions of which are known to GLBN) promulgated
under the Securities Act depends on the satisfaction of various conditions, and
that, if applicable, Rule 144 may only afford the basis for sales only in
limited amounts. GLBN agrees that Valhalla may place a legend on the
certificates delivered hereunder stating that the shares of Valhalla Common
Stock acquired thereby have not been registered under the Securities Act, and,
therefore cannot be offered, sold or transferred unless they are registered
under the Securities Act or an exemption from such registration is available,
and that Valhalla may place stop transfer orders on the transfer books of
Valhalla with respect to such shares of Valhalla Common Stock
3.6 NO BROKER. GLBN has not employed any broker or finder in connection
with the transactions contemplated by this Agreement.
ARTICLE IV
FURTHER ACTS
4.1 FURTHER ACTS. GLBN and Valhalla shall use their respective best
efforts to cooperate in the effort to obtain the approvals of the NASD to the
transactions contemplated hereby.
ARTICLE V
ADDITIONAL COVENANTS
5.1 OPTION TO PURCHASE GLBN COMMON STOCK.
(a) GRANT. GLBN hereby grants to each of Uslander and
Xxxxxxxxxx, a non- transferable option (the "Uslander and Xxxxxxxxxx Options")
exercisable only in whole for each
10
individual, to purchase twelve thousand five hundred (12,500) shares of GLBN
Common Stock (the "Option Shares") at an exercise price of $10.00 per share
(subject, in each case, with respect to both the number of shares as well as the
exercise price, to equitable adjustment for stock splits, stock dividends,
reorganizations and reclassifications, consolidations or any such similar
event). The exercise price shall be paid in United States dollars.
(b) EXERCISE PERIOD. The Uslander and Xxxxxxxxxx Options shall
be exercisable at any time from the date hereof until 5:00 P.M., New York City
time, on September 29, 2002.
(c) EXERCISE NOTICE. To exercise the Uslander and Xxxxxxxxxx
Options, Uslander and/or Xxxxxxxxxx, shall deliver to GLBN a notice (the
"Uslander and/or Xxxxxxxxxx Option Exercise Notice") to GLBN as provided herein
specifying a date, not less than ten nor more than thirty days from the date of
the Uslander and/or Xxxxxxxxxx Exercise Notice, on which the closing of the
Uslander and Xxxxxxxxxx, Options exercise will occur. Any and each closing of
the Uslander and Xxxxxxxxxx Options will be subject to requirements of
applicable securities laws.
5.2 EMPLOYMENT OF VALHALLA PRINCIPALS.
(a) Uslander will be employed by Valhalla as its President and
chief executive officer. Xxxxxxxxxx will be employed by Valhalla as its
treasurer and secretary. The Valhalla Principals will be responsible for all
day-to-day decisions relating to the operation of Valhalla's business (i.e.,
including the hiring and firing of all employees). Uslander and Xxxxxxxxxx will
devote such amount of their respective business time and attention to the
business and affairs of Valhalla as is reasonably required to fulfill their
respective executive positions. However, GLBN acknowledges that each of the
Valhalla Principals has other business interests, including a foreign exchange
trading business and hedge fund business, to which the said individuals have
substantial responsibilities which will continue following the date hereof. The
Valhalla Principals may continue to engage in other business ventures and
Valhalla will not have any right, title or interest in or to such outside
ventures or the income or other benefits derived therefrom or opportunities
related thereto. Each of the Valhalla Principals will be employed by Valhalla at
a compensation level which will be not less than $75,000 per year and will be
commensurate with their executive positions as determined annually by the Board
of Directors of Valhalla. Further, each of the Valhalla Principals will receive
and participate in all benefits offered to all other Valhalla employees and will
perform all of their duties principally from Valhalla's New York City office.
(b) If either of the Valhalla Principals are discharged
without cause, such Valhalla principal will have the right, exercisable in
writing (a "Sale Notice") within thirty (30) days of the date of the termination
of their employment, to cause GLBN to purchase the shares of Valhalla common
stock owned by said individual at a put price per share as calculated below. The
purchase price for the shares will be paid to the departed employee within
thirty (30) days after the put price has been determined.
(c) The put price per share will be determined by an appraisal
("Appraisal") made as expeditiously as possible following the mailing of the
Sale Notice. The Appraisal shall
11
be based on the fair market value of Valhalla on the date of the Sale Notice.
The Appraisal shall be made by a business valuation expert with expertise in
appraising the stock of comparable Companies. The parties shall mutually agree
upon such expert, preferably an investment bank and if unable to agree, the
parties agree to accept a valuation performed by any one of the largest five (5)
accounting firms in New York City at the time of the Appraisal. The cost of the
Appraisal shall be borne by Valhalla. The appraiser shall be directed to
consider all factors which the appraiser deems relevant, including, but not
limited to, Valhalla's financial condition, results of operations, its
prospects, industry conditions, prices at which comparable companies have been
valued or sold, the good will vested in Valhalla and so on. The purchase price
shall be determined without discount for lack of marketability, lack of control
or minority interest, and without premium for the possibility that the equity
interest being bought might represent a control position. The valuation shall be
predicated upon the assumption that the purchase and sale is an arm's length
transaction between willing participants. Any securities held by Valhalla shall
be valued at fair market value. The determination of the purchase price by the
appraiser shall be binding upon all parties.
5.3 CHANGE OF NAME. As soon as possible after the date hereof, Valhalla
shall file a Certificate of Amendment to its Certificate of Incorporation to
change its corporate name to GlobaNetSecurities Corp.
5.4 ADDITIONAL FUNDING OF VALHALLA. The Valhalla Principals and GLBN
shall contribute $500,000 in the aggregate as a capital contribution to be used
for business expansion purposes to benefit Valhalla. GLBN will (i) on the
signing of this Agreement, deposit $333,333.32 with Valhalla. Any capital
contribution from the respective Valhalla Principals shall, at their discretion,
be paid by deductions of 50% from the after tax portion of net salary, other
compensation and distributions other than commissions otherwise due to the
respective Valhalla Principals from Valhalla.
5.5 COMMISSIONS. Commencing on the date hereof, 70% of the brokerage
commissions earned from non on-line accounts by Valhalla shall be paid out by
Valhalla to any registered principal of Valhalla or GLBN, as the case may be,
that introduce the transaction from which the commission was derived.
5.6 DISTRIBUTION OF CAPITAL TO VALHALLA PRINCIPALS. Valhalla win
develop on or before December 31, 1999, a program to distribute to Uslander and
Xxxxxxxxxx in payments of equal amounts an amount in the aggregate equal to
$80,000, representing approximately two-thirds of the retained capital of
Valhalla on the date hereof prior to the payment of the purchase price for the
Valhalla Shares by GLBN hereunder- Such amounts shall be paid out of future
retained earnings.
5.7 VALHALLA BOARD OF DIRECTORS.
(a) The Valhalla Board will initially have four members. GLBN
shall cause two persons designated by the Valhalla Principals to be elected to
the Valhalla Board. If any of the Valhalla Principal's allocated designees have
not been selected or are unavailable to serve, GLBN shall notify the Valhalla
Principals of each meeting of the Valhalla Board and one individual for each
open designee slot may be selected by the Valhalla Principals to be permitted,
12
and shall be permitted, to attend all meetings of the Valhalla Board and GLBN
shall send to such individual all notices and other correspondence and
communications sent by GLBN to members of the Valhalla Board. Such individual(s)
shall be reimbursed for all out-of-pocket expenses incurred in connection with
his service on, or attendance of, as the case may be, meetings of the Valhalla
Board. Each Valhalla Principal recognizes and agrees that nothing in this
Section 5.7 shall prevent Valhalla or GLBN from fixing the total number of
members on the Valhalla Board at a number greater than four. The rights of the
Valhalla Principals under this Section 5.7 shall terminate at such time as the
Valhalla Principals own in the aggregate less than 10% of the capital stock of
Valhalla.
(b) Action by the Valhalla Board on the following matters with
respect to Valhalla shall only be taken pursuant to resolutions duly adopted by
a vote of the Valhalla Board in which one of the Valhalla Principal's designees,
if then serving on the Valhalla Board, votes in favor of the action:
(i) hiring or firing of any executive employee, other
than the firing of the Valhalla Principals for Cause (as hereinafter defined),
provided written notice of the Cause has first been provided to the Valhalla
Principal and a reasonable time to cure same has been provided;
(ii) compensation, benefits, and perks to all
executives and officers;
(iii) issuance of stock, bonds or other securities
including, options or warrants of Valhalla;
(iv) declaration and distribution of dividends;
(v) any agreement to repurchase or redeem shares of
capital stock of Valhalla;
(vi) any related party sale, purchase or transaction;
and
(vii) authorizing any transaction outside of the
ordinary course of Valhalla's business.
(c) At any time that a designee of the Valhalla Principals is
serving on the Valhalla Board, a quorum for any meeting of the Valhalla Board
shall not be established without the presence of at least one of the Valhalla
Principal's designees.
(d) Cause, as used above, shall mean (i) gross negligence or
willful misconduct, (ii) fraud; and (iii) conviction of a felony.
5.8 PIGGYBACK REGISTRATION RIGHTS.
(a) If GLBN proposes to register any of its securities under
the Securities Act (other than (i) in connection with a transaction contemplated
by Rule 145(a) promulgated under the Securities Act or (ii) pursuant to Form
X-0, X-0 or successor forms), GLBN will give written notice at least 20 days
prior to the filing of such registration statement, to the holder(s) of the
13
GLBN Shares and the Option Shares (collectively, the "Registration Rights
Securities") its intention to do so. Upon the written request of any holder of
the Registration Rights Securities given within 10 days after receipt of any
such notice of his desire to include any Registration Rights Securities in such
proposed registration statement, GLBN shall afford such holder(s) of the
Registration Rights Securities the opportunity, at GLBN's sole cost and expense,
to have any such Registration Rights Securities registered under such
registration statement; provided however, that GLBN shall not be required to
include in such registration statement (i) Registration Rights Securities if
they can be sold at the time of the initial filing of such registration
statement pursuant to Rule 144 under the Securities Act or (ii) Option Shares if
they have not been issued under the Uslander and Xxxxxxxxxx Options prior to
five days before the initial filing of such registration statement.
(b) In connection with any offering involving an underwriting
of shares of GLBN's capital stock, GLBN shall not be required to include any
Registration Rights Securities in such underwriting unless such holder accepts
the terms of the underwriting as agreed upon between GLBN and the underwriters
selected by it (or by other persons entitled to select the underwriters), and
then only in such quantity as the underwriters determine in their sole
discretion will not materially adversely affect the offering of securities by
GLBN. If the total amount of securities to be included in such offering will
materially adversely affect the offering (in the underwriters' sole discretion),
then GLBN shall only be required to include in the offering that number of
Registration Rights Securities that the underwriters determine in their sole
discretion will not materially adversely affect the offering. The securities so
included shall be apportioned pro rata among the holders according to the total
amount of Registration Rights Securities entitled to be included therein owned
by each holder or, in lieu thereof, in such other proportions as shall mutually
be agreed to by the holders.
(c) Notwithstanding the above, GLBN shall have the right at
any time after it shall have given written notice pursuant to this Section 5.8
(irrespective of whether a written request for inclusion of any such securities
shall have been made) to elect not to file any such proposed registration
statement, or to withdraw the same after the filing but prior to the effective
date thereof
ARTICLE VI
TERMINATION
6.1 TERMINATION. This Agreement may be terminated at any time by
written consent of each of Valhalla and GLBN.
ARTICLE VII
MISCELLANEOUS
7.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS, ETC. All
representations and warranties hereunder shall survive the date hereof until two
years from the date hereof; provided that the representations and warranties
contained in Sections 2.15 (ERISA Plans and Contracts), 2.17 (Compliance;
Licenses and Permits) and Section 2.20 (Tax Matters),
14
shall survive until 60 days after the expiration of the applicable statute of
limitations (including any extension thereof). Notwithstanding the foregoing, if
a notice of claim shall have been delivered before the aforementioned time
period has elapsed with respect to a breach of a representation or warranty,
such representation or warranty shall survive until such claim is resolved. All
statements contained in any certificate or other instrument delivered by
Valhalla or the Valhalla Principals pursuant to this Agreement or in connection
with the transactions contemplated by this Agreement shall constitute
representations and warranties by Valhalla and the Valhalla Principals under
this Agreement. All agreements contained herein shall survive indefinitely
until, by their respective terms, they are no longer operative.
7.2 INDEMNIFICATION.
(a) GLBN agrees to indemnify and hold harmless each of
Valhalla and the Valhalla Principals and their respective officers, directors,
partners, employees, agents and counsel (collectively, the Valhalla Indemnified
Persons"), from and against any and all losses, claims, damages, expenses or
liabilities, joint or several (and actions, proceedings, investigations,
inquiries, suits and litigation in respect thereof), whatsoever (including but
not limited to any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any such claim, action,
proceeding, investigation, inquiry, suit or litigation, commenced or threatened,
or any claim whatsoever), as such are incurred, to which the Valhalla
Indemnified Persons may become subject under any statute or at common law or
otherwise or under the laws of foreign countries, or arising out of or based
upon any material breach of any representation, warranty, covenant or agreement
of GLBN contained herein in, in any agreement contemplated to be executed in
connection with the transactions contemplated hereby or in any certificate made
by or on behalf of GLBN or any of its officers delivered pursuant hereto;
provided that the Valhalla Indemnified Persons shall first be entitled to claim
indemnification hereunder when claims arise for $15,000 or more (in which case
such persons shall be required to claim at least such amount).
(b) Valhalla shall indemnify and hold harmless GLBN and their
respective officers, directors, partners, employees, agents and counsel
(collectively, the "GLBN Indemnified Persons"), from and against any and all
losses, claims, damages, expenses or liabilities, joint or several (and actions,
proceedings, investigations, inquiries, suits and litigation in respect
thereof), whatsoever (including but not limited to any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any such claim, action, proceeding, investigation, inquiry, suit or litigation,
commenced or threatened, or any claim whatsoever), as such are incurred, to
which the GLBN Indemnified Persons may become subject under any statute or at
common law or otherwise or under the laws of foreign countries, or arising out
of or based upon any material breach of any representation, warranty, covenant
or agreement of Valhalla contained herein in, in any agreement contemplated to
be executed in connection with the transactions contemplated hereby or in any
certificate made by or on behalf of Valhalla or any of its officers delivered
pursuant hereto, provided that (i) the GLBN Indemnified Persons shall first be
entitled to claim indemnification hereunder when claims arise for $15,000 or
more (in which case such persons shall be required to claim at least such
amount) and (ii) the aggregate amount of all claims subject to indemnification
by the GLBN Indemnified Persons shall not exceed $250,000.
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(c) The sole and exclusive remedy of the parties hereto shall
be restricted to the indemnification rights set forth in this Section 7.2
7.3 ENTIRE AGREEMENT. This Agreement and the other writings referred to
herein or delivered pursuant hereto which form a part hereof contain the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior and contemporaneous arrangements or understandings with
respect thereto.
7.4 NOTICES. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or sent by telecopy, nationally
recognized overnight courier or first class registered or certified mail, return
receipt requested, postage prepaid, addressed to such party at the address set
forth below or such other address as may hereafter be designated in writing by
such party to the other parties:
(i) if to Valhalla or the Valhalla Principals, to:
Valhalla Securities, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxx
Facsimile:
with a copy to: Felman, Karesh, Major & Xxxxxxx LLP
Carnegie Hall Tower
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(ii) if to GLBN, to:
XxxxxXxxXxxxxxxxx.xxx, Inc.
0000 X. Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn. Xxxx Xxxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery or delivery by
telecopy, on the date of such
16
delivery, (b) in the case of dispatch by nationally-recognized overnight
courier, on the next business day following such dispatch and (c) in the case of
mailing, on the third business day after the posting thereof
7.5 AMENDMENT. The terms and provisions of this Agreement may not be
modified or amended, nor may any of the provisions hereof be waived, temporarily
or permanently, except pursuant to a written instrument executed by each of the
parties hereto.
7.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
7.7 HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
7.8 VALIDITY. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future law, and if the rights or
obligations of any party hereto under this Agreement will not be materially and
adversely affected thereby, (a) such provision will be fully severable, (b) this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, and (c) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom.
7.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly therein.
7.10 NO ASSIGNMENT; SUCCESSORS AND ASSIGNS. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, except for assignments and transfers by operation of law.
Subject to the preceding sentence, this Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
7.11 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall
confer any rights upon any person or entity that is not a party or permitted
assignee of a party to this Agreement, other than any person or entity entitled
to indemnity hereunder.
17
IN WITNESS WHEREOF, the parties hereto have caused this Master
Agreement to be executed by their respective duly authorized officers all as of
the day and year first above written.
XXXXXXXXXXXXXXXXXX.XXX, INC.
By: /S/
---------------------------------------
Name: Xxxx Xxxxxx
Title: Executive Vice President
VALHALLA SECURITIES, INC.
By: /S/
---------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: President
/S/
------------------------------------------
XXXXXX XXXXXXXX
/S/
------------------------------------------
XXXXXX XXXXXXXXXX
18
ATTACHMENTS
SCHEDULES
Schedule 2.6 - Capitalization
------------------------------------------------ ---------------------------------------------
NUMBER OF SHARES OF
HOLDER VALHALLA COMMON STOCK
------------------------------------------------ ---------------------------------------------
Xxxxxx Xxxxxxxx 50
------------------------------------------------ ---------------------------------------------
Xxxxxx Xxxxxxxxxx 50
------------------------------------------------ ---------------------------------------------
GLBN 200
------------------------------------------------ ---------------------------------------------
19
