Exhibit 99.2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER dated as of May 23, 2003
("Agreement"), among XXXXXXXX.XXX, INC., a Delaware corporation ("Globe"), DPT
ACQUISITION, INC., a Florida corporation ("Merger Sub"), DIRECT PARTNER TELECOM,
INC., a Florida corporation ("Company") and the shareholders of the Company
listed on the signature page hereto (collectively, "Company Shareholders"). The
Globe, Merger Sub, the Company and the Company Shareholders are individually
referred to herein as a "Party" and are collectively referred to herein as the
"Parties." The Globe and Merger Sub are sometimes referred to herein
collectively as the "Globe Parties."
RECITALS:
The Parties intend for the Globe to acquire the Company by means of the
merger of Merger Sub with and into the Company, upon the terms and subject to
the conditions set forth herein.
For federal income tax purposes, it is intended that the Merger will
qualify as reorganization under Section 368(a) of the Code.
NOW, THEREFORE, in consideration of the premises and mutual promises
herein made, and in consideration of the representations, warranties, covenants
and agreements herein contained, and intending to be legally bound hereby, the
Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. The following terms shall, when used in this
Agreement, have the following meanings:
"Affiliate" means, with respect to any Person: (i) any Person directly
or indirectly owning, controlling, or holding with power to vote 10% or more of
the outstanding voting securities of such other Person (other than passive or
institutional investors); (ii) any Person 10% or more of whose outstanding
voting securities are directly or indirectly owned, controlled, or held with
power to vote, by such other Person; (iii) any Person directly or indirectly
controlling, controlled by, or under common control with such other Person; and
(iv) any officer, director or partner of such other Person. "Control" for the
foregoing purposes shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting interests,
by contract or otherwise.
"Globe Common Stock" means the common shares of the Globe.
"Globe Securities Filings" means the Globe's Annual Report on Form 10K,
its quarterly reports, and all other reports filed with the Commission prior to
the Effective Time.
"Business Day" means any day other than Saturday, Sunday or a day on
which banking institutions in Ft. Lauderdale, Florida, are required or
authorized to be closed.
"Change of Control" means any of the following events:
(i) The acquisition (other than from the Globe) by
any "Person" of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of thirty
percent (30%) or more of the combined voting power of the
Globe's then outstanding voting securities other than by
Xxxxxxx Xxxx and/or Xxxxxx Xxxxxxxx or either or their
respective Affiliates; or
(ii) Approval by the stockholders of the Globe of (a)
a merger or consolidation involving the Globe if the
stockholders of the Globe, immediately before such merger or
consolidation do not, as a result of such merger or
consolidation, own, directly or indirectly, more than fifty
percent (50%) of the combined voting power of the then
outstanding voting securities of the corporation resulting
from such merger or consolidation or (b) a complete
liquidation or dissolution of the Globe or an agreement for
the sale or other disposition of all or substantially all of
the assets of the Globe. For purposes of (iii)(b), it shall
not be a Change of Control in the event the Globe elects to
sell all or substantially all of its (or its subsidiaries)
assets relating to Computer Games Print Magazine, Computer
Games On-Line and/or Chips and Bits, Inc. businesses.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Collateral Documents" mean the Exhibits and any other documents,
instruments and certificates to be executed and delivered by the Parties
hereunder or thereunder.
"Commission" means the Securities and Exchange Commission or any
Regulatory Authority that succeeds to its functions.
"Company Assets" means all properties, assets, privileges, powers,
rights, interests and claims of every type and description (tangible and
intangible) that are owned, leased, licensed, held, used or useful in the
Company business and in which the Company has any right, title or interest or in
which the Company acquires any right, title or interest on or before the Closing
Date, wherever located, whether known or unknown, and whether or not now or on
the Closing Date on the books and records of the Company, but excluding any of
the foregoing, if any, transferred prior to the Closing pursuant to this
Agreement or any Collateral Documents.
"Company Common Stock" means the common shares of the Company.
"Company Disclosure Statement" means the disclosure statement delivered
by the Company to the Globe concurrently with the execution of this Agreement,
as supplemented pursuant to Section 6.4.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
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"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Indebtedness" means with respect to any Person means any obligation of
such Person for borrowed money, but in any event shall include (a) any
obligation or liabilities incurred for all or any part of the purchase price of
property or other assets or for the cost of property or other assets constructed
or of improvements thereto, other than accounts payable included in current
liabilities and incurred in respect of property purchased in the ordinary course
of business, (whether or not such Person has assumed or become liable for the
payment of such obligation) (whether accrued, absolute, contingent, unliquidated
or otherwise, known or unknown, whether due or to become due), (b) the face
amount of all letters of credit issued for the account of such Person and all
drafts drawn thereunder, (c) obligations incurred for all or any part of the
purchase price of property or other assets or for the cost of property or other
assets constructed or of improvements thereto, other than accounts payable
included in current liabilities and incurred in respect of property purchased in
the ordinary course of business (whether or not such Person has assumed or
become liable for the payment of such obligation) secured by Liens, (d)
capitalized lease obligations, and (e) all guarantees of such Person.
"Legal Requirement" means any statute, ordinance, law, rule,
regulation, code, injunction, judgment, order, decree, ruling, or other
requirement enacted, adopted or applied by any Regulatory Authority, including
judicial decisions applying common law or interpreting any other Legal
Requirement.
"Losses" shall mean all damages, awards, judgments, assessments, fines,
sanctions, penalties, charges, costs, expenses, payments, diminutions in value
and other losses, however suffered or characterized, all interest thereon, all
costs and expenses of investigating any claim, lawsuit or arbitration and any
appeal therefrom, all actual attorneys', accountants' investment bankers' and
expert witness' fees incurred in connection therewith, whether or not such
claim, lawsuit or arbitration is ultimately defeated and, all amounts paid
incident to any compromise or settlement of any such claim, lawsuit or
arbitration.
"Liability" means any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or to
become due), including any liability for Taxes.
"Material Adverse Effect on the Company" means a material adverse
effect on (i) the Company Assets, Liabilities, properties, prospects or business
of the Company, (ii) the validity, binding effect or enforceability of this
Agreement or the Collateral Documents or (iii) the ability of the Company to
perform its obligations under this Agreement or the Collateral Documents;
provided, however, that none of the following shall constitute a Material
Adverse Effect on the Company: (i) general economic conditions, or (ii) any
changes generally affecting the industries in which the Company operates.
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"Material Adverse Effect on the Globe" means a material adverse effect
on (i) the assets, Liabilities, properties, prospects or business of the Globe,
(ii) the validity, binding effect or enforceability of this Agreement or the
Collateral Documents or (iii) the ability of the Globe or any of the Globe
Parties to perform its obligations under this Agreement and the Collateral
Documents; provided, however, that none of the following shall constitute a
Material Adverse Effect on the Globe: (i) general economic conditions, or (ii)
any changes generally affecting the industries in which the Globe operates.
"Merger Consideration" means (i) the cash consideration, (ii) Warrants,
(iii) Performance Warrants and (iv) the shares of the Globe Common Stock
deliverable by the Globe in exchange for Company Common Stock pursuant to
Articles II and III.
"Ordinary Course" with reference to a Person means the ordinary course
of business consistent with past practice of that Person and its Subsidiaries
(including with respect to quantity and frequency).
"Permit" means any license, permit, consent, approval, registration,
authorization, qualification or similar right granted by a Regulatory Authority.
"Permitted Liens" means (i) liens for Taxes not yet due and payable or
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves have been established; (ii) rights reserved to any
Governmental Authority to regulate the affected property; (iii) statutory liens
of banks and rights of set-off; (iv) as to leased assets, interests of the
lessors and sublessors thereof and liens affecting the interests of the lessors
and sublessors thereof; (v) inchoate materialmen's, mechanics', workmen's,
repairmen's or other like liens arising in the Ordinary Course; (vi) liens
incurred or deposits made in the Ordinary Course in connection with workers'
compensation and other types of social security; (vii) licenses of trademarks or
other intellectual property rights granted by the Company or the Globe, as the
case may be, in the Ordinary Course and not interfering in any material respect
with the Ordinary Course of the business of the Company or the Globe, as the
case may be; and (viii) as to real property, any encumbrance, adverse interest,
constructive or other trust, claim, attachment, exception to or defect in title
or other ownership interest (including, but not limited to, reservations, rights
of entry, rights of first refusal, possibilities of reverter, encroachments,
easement, rights-of-way, restrictive covenants, leases, and licenses) of any
kind, which otherwise constitutes an interest in or claim against property,
whether arising pursuant to any Legal Requirement, under any contract or
otherwise, that do not, individually or in the aggregate, materially and
adversely affect or impair the value or use thereof as it is currently being
used in the Ordinary Course.
"Person" means any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability company, Regulatory
Authority or other entity.
"Regulatory Authority" means: (i) the United States of America; (ii)
any state, commonwealth, territory or possession of the United States of America
and any political subdivision thereof (including counties, municipalities and
the like); (iii) Canada and any other foreign (as to the United States of
America) sovereign entity and any political subdivision thereof; or (iv) any
agency, authority or instrumentality of any of the foregoing, including any
court, tribunal, department, bureau, commission or board.
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"Representative" means any director, officer, employee, agent,
consultant, advisor or other representative of a Person, including legal
counsel, accountants and financial advisors.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Subsidiary" of a specified Person means (a) any Person if securities
having ordinary voting power (at the time in question and without regard to the
happening of any contingency) to elect a majority of the directors, trustees,
managers or other governing body of such Person are held or controlled by the
specified Person or a Subsidiary of the specified Person; (b) any Person in
which the specified Person and its Subsidiaries collectively hold a 50% or
greater equity interest; (c) any partnership or similar organization in which
the specified Person or Subsidiary of the specified Person is a general partner;
or (d) any Person the management of which is directly or indirectly controlled
by the specified Person and its Subsidiaries through the exercise of voting
power, by contract or otherwise.
"Tax" means any U.S. or Canadian federal, state, provincial, local or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental, customs duties,
capital, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, intangible property,
recording, occupancy, sales, use, transfer, registration, value added minimum,
estimated or other tax of any kind whatsoever, including any interest, additions
to tax, penalties, fees, deficiencies, assessments, additions or other charges
of any nature with respect thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund or
credit or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Treasury Regulations" means regulations promulgated by the U.S.
Treasury Department under the Code.
ARTICLE II
BASIC TRANSACTION
2.1 Merger; Surviving Corporation. In accordance with and subject to
the provisions of this Agreement and the Florida Business Corporation Act
("FBCA"), at the Effective Time, the Merger Sub shall be merged with and into
the Company ("Merger"), and the Company shall be the surviving corporation in
the Merger (hereinafter sometimes called the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of Florida. At the
Effective Time, the separate existence of the Merger Sub shall cease. All
properties, franchises and rights belonging to the Company and Merger Sub, by
virtue of the Merger and without further act or deed, shall be vested in the
Surviving Corporation, which shall thenceforth be responsible for all the
liabilities and obligations of each of Merger Sub and the Company.
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2.2 Articles of Incorporation. The Company's articles of incorporation,
as in effect at the Effective Time, shall be in full force and effect as the
certificate of incorporation of the Surviving Corporation until altered or
amended as provided therein or by law.
2.3 By-Laws. The Company's by-laws, as in effect at the Effective Time,
shall be the by-laws of the Surviving Corporation until altered, amended or
repealed as provided therein.
2.4 Directors and Officers. The directors of the Company (the "Company
Directors") prior to the Effective Time shall resign as of the Closing. The
members of the board of directors of the Surviving Corporation shall, be
reconstituted post Closing by the sole shareholder of the Surviving Corporation,
who shall serve thereafter in accordance with the certificate of incorporation
and by-laws of the Surviving Corporation and the FBCA. The officers of the
Company prior to the Effective Time ("Company Officers") shall resign as of the
Closing. The officers of the Surviving Corporation shall, be reconstituted post
Closing by the new board of directors, and shall thereafter serve at the
pleasure of the board of directors of the Surviving Corporation and the Globe.
2.5 Effective Time. The Merger shall become effective at the time and
date that the articles of merger ("Articles of Merger"), in form and substance
acceptable to the Parties, is accepted for filing by the Department of State of
the State of Florida in accordance with the provisions of Section 607.1105 of
the FBCA. The Articles of Merger shall be executed by the Merger Sub and the
Company and delivered to the Department of State of the State of Florida for
filing on the Closing Date. The date and time when the Merger becomes effective
are referred to herein as the "Effective Time."
2.6 Merger Consideration; Conversion and Cancellation of Securities;
Registration.
(a) Conversion of Company Capital Stock. At the Effective Time of the
Merger, all of the issued and outstanding shares of the common stock of the
Company outstanding immediately before the Effective Time, shall be converted,
by virtue of the Merger and without any further action on the part of the
holders thereof, into an aggregate number of One Million Three Hundred
Seventy-Five Thousand (1,375,000) shares of the Globe Common Stock ("Merger
Shares"). The Merger Shares will be unregistered, will constitute restricted
securities within the meaning of the Securities Act and will contain restrictive
legends prohibiting the transfer of such shares other than in compliance with
applicable federal and state securities laws. Subject to providing the Globe
with acceptable representations for a private sale under applicable federal and
state securities laws, the Globe specifically agrees and consents to any
transfer of Merger Shares among the Company Shareholders occurring within thirty
(30) days of Closing. The allocation of the (i) Merger Shares, (ii) Cash and
(iii) Note shall (but for the application of cash consideration to Company
Shareholder debt) be pro rata among the Company Shareholders and shall be as set
forth on Section 2.6 of the Company Disclosure Schedule to be delivered to the
Globe at least one business day prior to the Closing. The Company Shareholders
shall have demand registration rights with respect to the Merger Shares pursuant
to the terms of Section 2.12-2.17 herein.
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(b) Treasury Shares, Etc. Each share of Company Common Stock held in
the treasury of the Company immediately before the Effective Time shall be
cancelled and extinguished, and nothing shall be issued or paid in respect
thereof.
(c) Conversion of Merger Sub Stock. At the Effective Time of the
Merger, each of the issued and outstanding shares of the Merger Sub common stock
outstanding immediately before the Effective Time shall be converted, by virtue
of the Merger and without any further action on the part of the holders thereof,
into one (1) share of the Company Common Stock.
2.7 Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further registration
of transfers of shares of Company Common Stock thereafter on the records of the
Company.
2.8 Closing. The closing of the transactions contemplated by this
Agreement and the Collateral Documents ("Closing") shall take place at the
offices of the Globe, 000 Xxxx Xxxxxxx Xxxx, Xxxxx 0000, Xx. Xxxxxxxxxx, XX
00000, or at such other location as the parties may agree, at 10:00 a.m.,
Eastern Time, on a Business Day specified by the Globe on at least two business
days notice to the Company that may be on, but shall not be more than five
Business Days after, all conditions precedent to the Closing have been satisfied
or waived, or on such other date and at such other time as the Parties may
agree, provided that all such conditions precedent have been satisfied or
waived. The date on which the Closing actually occurs is referred to herein as
the "Closing Date."
2.9 Treatment of Certain Outstanding Derivative Securities. All rights
to acquire any shares of the Company Common Stock shall be either converted into
shares of the Company Common Stock, exercised prior to the Closing Date or
extinguished. Any such derivative securities not so converted or exercised shall
be terminated without liability to the Globe or the Surviving Corporation.
2.10 Intentionally Omitted.
2.11 Warrants. At the Closing, the Globe shall issue to the Company
Shareholders warrants to purchase Five Hundred Thousand (500,000) shares of
Globe Common Stock at a strike price of seventy two cents cents ($.72)
("Warrants"). The Warrants shall be issued to the Company Shareholders pursuant
to the term of the Warrant Agreement attached hereto as Exhibit "B." The Company
Shareholders shall have demand registration rights with respect to the Warrants
pursuant to the terms of Section 2.12-2.18 herein.
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2.12 Demand Registration; Limitations. At any time after the one year
anniversary of the closing of this Agreement, the holders (the "Holders") of a
majority of the shares of Globe Common Stock issued under this Agreement or
issuable upon exercise of the Warrants shall be entitled to deliver written
notice to the Globe demanding the registration of all Registerable Securities
(as hereinafter defined) or such lesser number as the Holders may elect. Upon
the written request of such Holders, the Globe shall use commercially reasonable
efforts to cause to be registered under the Securities Act all of such
Registerable Securities. The Holders whom elect to participate in the
registration are called "Participating Holders." The term "Registerable
Securities" shall mean shares of the Globe Common Stock issued pursuant to this
Agreement and all shares of Globe Common Stock issuable upon exercise of the
Warrants, including the Performance Warrants, together with any shares of Globe
Common Stock issued or issuable by way of a stock dividend or stock split or in
connection with any recapitilization, merger, consolidation or other
reorganization. The Holders of the Registerable Securities may exercise the
rights described in this Section 2.12 a total of one time. Notwithstanding any
demand by the Holders hereunder, the Globe shall not be required to effect any
such registration, and may delay any such registration, at anytime during which:
(i) the Globe has pending, or reasonably anticipates filing within forty five
(45) days of receipt of a demand for registration hereunder, its own
registration statement for the public offering of shares of Common Stock by the
Globe; provided that the Registrable Securities are included in such
registration statement (ii) has pending, or has received a notice of demand
registration relating to, a registration statement for the offer and sale of
Common Stock by selling shareholders pursuant to other registration rights
granted by the Globe, whether or not outstanding prior to the date hereof; or
(iii) the Globe's Board of Directors determines, in its good faith discretion,
that such registration may have a material adverse effect on the Globe or its
plans or prospects; provided that, in any of such events, the Holders shall
continue to have a demand right and the Globe shall promptly notify the Holders
of the foregoing and provide the Holders with an estimate of when they may
exercise such demand registration again; and provided further that solely in the
event of clause (iii) above, (x) the Globe's ability to delay such registration
shall be limited to durations of not longer than ninety (90) days and (y) the
Globe shall not delay more than once during any twelve month period.
2.13 Furnish Information. It shall be a condition precedent to the
obligations of the Globe to take any action pursuant to this Agreement with
respect to the Registrable Securities that each of the Participating Holders
furnish to the Globe such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of the Registrable Securities.
2.14 Expenses of Registration. The Globe shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to Section
2.12 for the Holders, including without limitation all registration, filing and
qualification fees, printers' and accounting fees relating or apportionable
thereto but excluding the fees and disbursements of counsel to the Participating
Holders. The Participating Holders shall be responsible for payment of any
underwriter's or broker's fee or commission with respect to the sale of their
Registerable Securities.
2.15 Registration Procedures. Whenever the Holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Globe shall use commercially reasonable efforts to effect
the registration and the sale of such Registrable Securities in accordance with
the intended method of disposition thereof, and in furtherance hereof, the Globe
shall as expeditiously as possible:
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(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use
commercially reasonable efforts to cause such registration statement to become
and remain effective; provided, that before filing a registration statement or
prospectus or any amendments or supplements thereto, the Globe shall furnish to
the counsel selected by the Participating Holders copies of all such documents
proposed to be filed, which documents shall be subject to the review and comment
of such counsel;
(b) notify each Participating Holder of the effectiveness of each
registration statement filed hereunder and prepare and file with the Securities
and Exchange Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective for a period of not less than 180
days and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(c) furnish to each Participating Holder such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents as
such seller may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Holder;
(d) use commercially reasonable efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any Participating Holder reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such Holder (provided that the Globe shall not
be required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subsection, (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general service
of process in any such jurisdiction);
(e) notify each Participating Holder, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading, and, at the
request of any such seller or by its own initiative, the Globe shall prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus shall not contain
an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading;
(f) furnish to each Participating Holder a signed counterpart,
addressed to such Participating Holder, of (i) an opinion of counsel for the
Globe, dated the effective date of the registration statement, and (ii) a
"comfort" letter signed by the independent public accountants who have certified
the Globe's financial statements included in the registration statement,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and (in the case of the comfort
letter, with respect to events subsequent to the date of the financial
statements), as are customarily covered (at the time of such registration) in
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opinions of issuer's counsel and in comfort letters delivered to the
underwriters in underwritten public offerings of securities. If and to the
extent that any registration relates to an underwritten public offering, such
opinion and comfort letter shall be sufficient if it is in the form acceptable
to the managing underwriter thereof.
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
Participating Holders of a majority of the Registrable Securities being sold or
the underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities;
(i) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Stock included in such registration statement for sale in any
jurisdiction, the Globe shall use commercially reasonable efforts promptly to
obtain the withdrawal of such order.
2.16 Selection of Underwriter. The holders of a majority of the
Registrable Securities initially requesting registration hereunder shall have
the right to select the investment banker(s) and manager(s) to administer the
offering, subject to the Globe's approval which shall not be unreasonably
withheld or delayed.
2.17 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Article II:
(a) The Globe will indemnify and hold harmless the Participating
Holders, the partners or officers, directors and shareholders of the
Participating Holders, legal counsel and accountants for the Participating
Holders, against any losses, claims, damages or liabilities (joint or several)
to which they may become subject under the Securities Act, the Exchange Act or
any state securities laws, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any Violation or alleged Violation by the Globe
of the Securities Act, the Exchange Act, any state securities laws or any rule
or regulation promulgated under the Securities Act, the Exchange Act or any
state securities laws. The Globe will reimburse each Participating Holder for
any legal or other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection
2.17(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Globe (which consent shall not be unreasonably withheld), nor shall the
Globe be liable for any such loss, claim, damage, liability or action to the
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extent that it arises out of or is based upon a Violation that occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Participating Holder; provided
further, however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit a Participating Holder,
from whom the person asserting any such losses, claims, damages or liabilities
purchased shares in the offering, if a copy of the prospectus (as then amended
or supplemented if the Globe shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Participating Holder to
such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the shares to such person, and if the
prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage or liability.
(b) Each Participating Holder will indemnify and hold harmless the
Globe, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Globe within the
meaning of the Securities Act, legal counsel and accountants for the Globe and
any underwriter, against any losses, claims, damages or liabilities (joint or
several) to which any of the foregoing persons may become subject under the
Securities Act, the Exchange Act or any state securities laws, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Participating Holder expressly for use in
connection with such registration; and such Participating Holder will reimburse
any person intended to be indemnified pursuant to this subsection, for any legal
or other expenses reasonably incurred by such person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection
2.17(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of such Participating Holder (which consent shall not be unreasonably withheld).
(c) Promptly after receipt by an indemnified party under this Section
2.17 of notice of the commencement of any action (including any action by a
governmental authority), such indemnified party (the "Indemnified Party") will,
if a claim in respect thereof is to be made against any indemnifying party (the
"Indemnifying Party") under this Section 2.17, deliver to the Indemnifying Party
a written notice of the commencement thereof and the Indemnifying Party shall
have the right to participate in, and, to the extent the Indemnifying Party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an Indemnified Party (together with all other indemnified parties
that may be represented without conflict by one counsel) shall have the right to
retain one separate counsel, with the fees and expenses to be paid by the
Indemnifying Party, if representation of such Indemnified Party by the counsel
retained by the Indemnifying Party would be inappropriate due to actual or
potential differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding. No Indemnifying Party shall,
without the consent of the Indemnified Party, consent to entry of any judgment
or enter into any settlement of any such action which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a complete and full release from all liability in respect
of such claim or litigation. No Indemnified Party shall consent to entry of any
judgment or enter into any settlement of any such action the defense of which
has been assumed by an Indemnifying Party without the consent of such
Indemnifying Party.
11
(d) If the indemnification provided for in this Section 2.17 is held by
a court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage or expense, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding anything to the contrary in this Section
2.17, no indemnifyng party shall be required, pursuant to this Section 2.17, to
contribute any amount in excess of the net proceeds received by such
indemnifying party from the sale of securities in the offering to which the
losses, claims, damages, liabilities or expenses of the indemnified party
relate.
2.18 Successor Registration Rights. The Parties acknowledge that the
Globe intends to raise additional capital through a private sale of preferred
stock, Globe Common Stock or other securities convertible into Globe Common
Stock ("Private Placement"). In the event the Globe should close a Private
Placement within the next six (6) months for at least One Million Dollars
($1,000,000) that includes, registration, piggy-back and/or co-sale rights, then
notwithstanding Sections 2.12 through 2.17, the Company Shareholders shall
instead receive identical rights to (excepting any difference in the type of
Registerable Securities), and on parity with, the rights granted in such Private
Placement in lieu of the rights set forth in such sections.
ARTICLE III
PERFORMANCE BASED BONUS
3.1 PERFORMANCE BASED BONUS.
(a) Company Projections/ Performance Based Bonus. The Company projects
that its revenues and earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the periods relating to 2003, 2004 and 2005,
respectively described below, shall be:
(i) Revenues: Eight Million Two Hundred Thousand Dollars
($8,200,000) and EBITDA: One Million Two Hundred
Thousand Dollars ($1,200,000) for the calendar the
period beginning January 1 2003 and ending March 31,
2004 ("2003 Estimate");
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(ii) Revenues: Eighteen Million Dollars ($18,000,000) and
EBITDA: Two Million Eight Hundred Thousand Dollars
($2,800,000) for the period beginning April 1, 2004
and ending March 31, 2005 ("2004 Estimate"); and
(iii) Revenues: Thirty Million Dollars ($30,000,000) and
EBITDA: Four Million Eight Hundred Thousand Dollars
($4,800,000) for the period beginning April 1, 2005
and ending March 31, 2006 ("2005 Estimate" and
collectively with (i) and (ii) "Estimates").
Based upon the Estimates, the Globe agrees at Closing, to issue Two
Million Seven Hundred Fifty Thousand (2,750,000) warrants (on the same terms and
conditions as the Warrants and pursuant to the Warrant Agreement attached hereto
as Exhibit "A")("Performance Warrants") to be issued pro rata to the Company
Shareholders based upon their respective stock ownership in the Company
immediately prior to the Closing of the Merger, if applicable, as follows:
(i) Upon the filing of the the Globe's 10-Q or 10-QSB for the
quarter ended March 31, 2004, 500,000 Performance Warrants shall be release to
the Company Shareholders if the 2003 Estimate was achieved;
(ii) Upon the filing of the the Globe's 10-Q or 10-QSB for the
quarter ended March 31, 2005, 750,000 Performance Warrants shall be release to
the Company Shareholders if the 2004 Estimate was achieved; and
(iii) Upon the filing of the the Globe's 10-Q or 10-QSB for
the quarter ended March 31, 2006, 1,500,000 Performance Warrants shall be
release to the Company Shareholders if the 2005 Estimate was achieved.
.
(b) Adjustments to Estimates. Upon filing of the applicable Globe's
10-Q or 10-QSB as stated above (which shall be completed in accordance with GAAP
and as determined by the Globe pursuant to its normal financial reporting
procedures consistent with the Globe's Securities Filings applicable to such
time periods ), the actual results of the Company shall be determined ("2003
Actual, 2004 Actual and/or 2005 Actual"). In determining the total amount of
Performance Warrants due to the Company Shareholders for time period, if any,
the number of Performance Warrants shall be reduced as follows:
(i) In the event the 2003, 2004 and/or 2005 Actual is
less than the 2003, 2004 and/or 2005 Estimate, then
the number of Performance Warrants otherwise due to
the Company Shareholders for 2003, 2004 and/or 2005
shall be reduced as follows: (a) if the 2003, 2004
and/or 2005 Actual is eighty-five percent (85%) or
more of the 2003, 2004 and/or 2005 Estimate, the
number of Performance Warrants due to Company
Shareholders shall be reduced proportionally by the
13
amount that the 2003, 2004 and/or 2005 Actual was
less than the 2003, 2004 and/or 2005 Estimate. In the
event the 2003, 2004 and/or 2005 Actual is less than
eighty-five percent (85%) of the 2003, 2004 and/or
2005 Estimate, as the case may be, then Company
Shareholders shall not receive any Performance
Warrants for that particular time period.
(ii) It is expressly understood and agreed by the Parties
hereto that in the event of a Change of Control of
the Globe during 2003, 2004 and/or 2005, all
remaining unearned Performance Warrants shall be
deemed earned and shall be distributed to the Company
Shareholders. Provided, however that such provision
shall only apply prospectively and shall not apply to
any of the applicable three time periods preceding
the Change of Control. For example, if a Change of
Control occurred June 2004 and the Performance
Warrants for the period ended March 31, 2004 were not
satisfied, then the Performance Warrants related to
such period ended March r 31, 2004 would continue to
be unearned. Until the occurrence of a Change of
Control or attainment of the applicable performance
criteria, all Performance Warrants shall be held in
escrow by the Globe. In the event any Performance
Warrants are not earned then they shall be deemed
null and void.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company, and each Company Shareholder, jointly and severally,
represent and warrant to the Globe and Merger Sub that the statements contained
in this Article IV are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout Article IV, except in the case of representations and warranties
stated to be made as of the date of this Agreement or as of another date.
4.1 Organization and Qualification. The Company is a corporation duly
organized and validly existing under the laws of the State of Florida. The
Company has no Subsidiaries. The Company has all requisite power and authority
to own, lease, license and use the Company Assets as they are currently owned,
leased, licenses and used and to conduct its business as it is currently
conducted. The Company is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the character of the properties
owned, leased or used by it or the nature of the activities conducted by it make
such qualification or license necessary, except any such jurisdiction where the
failure to be so qualified or licensed would not have a Material Adverse Effect
on the Company or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents or the ability of
the Company to perform its obligations under this Agreement or any of the
Collateral Documents.
14
4.2 Capitalization.
(a) The authorized, issued and outstanding capital stock and other
ownership interests of the Company, including all outstanding or authorized
options, warrants, purchase rights, preemptive rights or other contracts or
commitments that could require the Company to issue, sell, or otherwise cause to
become outstanding any of its capital stock or other ownership interests
(collectively "Options") are fully and accurately described in Section 4.2(a) of
the Company Disclosure Statement, which Statement shall be updated as of the
Closing. The Company Shareholders own all of the issued and outstanding
securities of the Company, in the amounts set for in Section 2.6 of the Company
Disclosure Statement, free and clear of any liens or encumbrances.
(b) All of the issued and outstanding shares of Company Common Stock
have been duly authorized and are validly issued and outstanding, fully paid and
nonassessable and have been issued in compliance with applicable securities laws
and other applicable Legal Requirements or transfer restrictions under
applicable securities laws.
4.3 Authority and Validity. The Company, and each Shareholder, has all
requisite corporate power to execute and deliver, to perform its obligations
under, and to consummate the transactions contemplated by, this Agreement and
the Collateral Documents. The execution and delivery by the Company of, the
performance by the Company of its obligations under, and the consummation by the
Company of the transactions contemplated by, this Agreement have been duly
authorized by all requisite action of the Company and each Shareholder. This
Agreement has been duly executed and delivered by the Company and (assuming due
execution and delivery by the Globe Parties) is the legal, valid, and binding
obligation of the Company, enforceable against it in accordance with its terms.
Upon the execution and delivery of the Collateral Documents by each Person
(other than the Globe Parties) that is required by this Agreement to execute, or
that does execute, this Agreement or any of the Collateral Documents, and
assuming due execution and delivery thereof by the Globe Parties, the Collateral
Documents will be the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms.
4.4 No Breach or Violation. Subject to obtaining the consents,
approvals, authorizations, and orders of and giving notices to Governmental
Authorities and Persons identified in Section 4.4 of the Company Disclosure
Statement, the execution, delivery and performance by the Company and each
Company Shareholder of this Agreement and the Collateral Documents to which it
or they are a party, and the consummation of the transactions contemplated
hereby and thereby in accordance with the terms and conditions hereof and
thereof, do not and will not conflict with, constitute a violation or breach of,
constitute a default or give rise to any right of termination or acceleration of
any right or obligation of the Company or any Company Shareholder under, or
result in the creation or imposition of any encumbrance upon the Company, the
Company Assets or the Company Common Stock by reason of the terms of (i) the
articles of incorporation, by-laws or other charter or organizational document
of the Company, (ii) any material contract, agreement, lease, indenture or other
instrument to which the Company or any Company Shareholder is a party or by or
to which the Company or any Company Shareholder or its property may be bound or
subject and a violation of which would result in a Material Adverse Effect on
the Company (a "Material Company Contract"), (iii) any order, judgment,
injunction, award or decree of any arbitrator or Regulatory Authority or any
statute, law, rule or regulation applicable to the Company or any Company
Shareholder or (iv) any Permit of the Company, which in the case of (ii), (iii)
or (iv) above would have a Material Adverse Effect on the Company or on the
validity, binding effect or enforceability of this Agreement or the Collateral
Documents or the ability of the Company or any Company Shareholder to perform
its obligations under this Agreement or any of the Collateral Documents.
15
4.5 Consents and Approvals. Except for requirements described in
Section 4.5 of the Company Disclosure Statement, no consent, approval,
authorization or order of, registration or filing with, or notice to, any
Regulatory Authority or any other Person is necessary to be obtained, made or
given by the Company in connection with the execution, delivery and performance
by the Company of this Agreement or any Collateral Document or for the
consummation by the Company of the transactions contemplated hereby or thereby,
except to the extent the failure to obtain any such consent, approval,
authorization or order or to make any such registration or filing would not have
a Material Adverse Effect on the Company or a material adverse effect on the
validity, binding effect or enforceability of this Agreement or the Collateral
Documents or the ability of the Company to perform its obligations under this
Agreement or any of the Collateral Documents.
4.6 Title to Assets. With respect to all assets and properties of the
Company,
(a) The Company does not own any real property. Section 4.6 of the
Company Disclosure Statement includes an accurate and complete description of
(i) all real property leased by the Company (identifying the lessee and the
lessor and describing the term and the payment terms) and (ii) each place of
business of the Company. The Company has good title to the material Company
Assets, free and clear of any and all encumbrances, except (A) the matters
described in Section 4.6 of the Company Disclosure Statement (all of which will
have been discharged at or before the Closing unless otherwise indicated in
Section 4.6 of the Company Disclosure Statement) and (B) Permitted Liens.
(b) Except as provided in Section 4.6 of the Company Disclosure
Statement, no Person has any right to acquire, directly or indirectly, any
interest in any of the material Company Assets, and there is no agreement to
which the Company or any of its Affiliates is a party or is otherwise bound
relating to the foregoing.
4.7 Compliance with Legal Requirements. Except as described in Section
4.7 of the Company Disclosure Statement, the Company has operated the Company
business in compliance with all Legal Requirements applicable to the Company
except to the extent the failure to operate in compliance with all Legal
Requirements would not have a Material Adverse Effect on the Company. Except as
described in Section 4.7 of the Company Disclosure Statement, no action, suit,
proceeding, hearing or investigation has been commenced or, to the Company's
knowledge, threatened, and no charge, complaint, claim, demand or notice has
been filed, against the Company alleging any failure to so comply.
4.8 Financial and Other Information.
The Company has provided the Globe with (a) an unaudited balance sheet
of the Company as of December 31, 2002 and unaudited statement of operations and
cash flow for the year then ended; and (b) unaudited balance sheet of the
Company as of March 31, 2003 ("Most Recent Balance Sheet") and the related
statements of operations and cash flows for the period then ended. All such
financial statements (including the notes thereto) ("Company Financial
Statements") have, but for the non-accrual of the $31,000 liability to CopperCom
as identified in Section 4.16 of the Company Disclosure Statement, been prepared
16
in accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated in the notes thereto) and present
fairly in all material respects the financial condition of the Company and its
results of operations as of the dates and for the periods indicated (except as
may be indicated in the notes thereto), subject in the case of the interim
unaudited financial statements only to normal year-end adjustments (none of
which will be material in amount) and the omission of footnotes.
4.9 Legal Proceedings. There are no outstanding judgments or orders
against or otherwise affecting or related to the Company or the Company Assets;
there is no action, suit, complaint, proceeding or investigation, judicial,
administrative or otherwise, that is pending or, to the Company's and each
Company Shareholder's respective knowledge, threatened against the Company.
4.10 Taxes. The Company has duly and timely filed in proper form all
Tax Returns for all Taxes required to be filed with the appropriate Regulatory
Authority. All Taxes due and payable by the Company (or claimed to be due and
payable) have been paid (regardless whether Tax Returns relating to such Taxes
have been duly and timely filed or, if filed, regardless whether such Tax
Returns are deficient), except such amounts as (i) are not in the aggregate
material or (ii) are being contested diligently and in good faith by appropriate
proceedings and for which there are adequate reserves in the Company Financial
Statements. The Company has furnished to the Globe true and correct copies of
all income Tax Returns filed by it in the past two years, all of which are
accurate and complete in all material respects. Except as set forth in Section
4.10 of the Company Disclosure Statement, there are no pending Tax audits,
claims or proceedings relating to the Company, the Company Assets or income
therefrom. The Company has not agreed to any waiver or extension of any statute
of limitations relating to any Tax. The Company has no outstanding power of
attorney authorizing any Person to act on its behalf in connection with any Tax
or Tax Return. The Company has no outstanding closing agreement, request for a
ruling or determination, request for a change in method of accounting, subpoena
or request for information with or by any Regulatory Authority with respect to
any Tax or Tax return.
4.11 Material Company Contracts. Section 4.11 of the Company Disclosure
Schedule sets forth a true and complete list of all Material Company Contracts.
Except as set forth in Section 4.11 of the Company Disclosure Statement:
(a) Each Material Company Contract is legal, valid, binding,
enforceable and in full force and effect;
(b) Subject to obtaining any consent disclosed in Section 4.5 of the
Company Disclosure Schedule, the transactions contemplated by this Agreement
will not prevent the Material Company Contract from continuing to be legal,
valid, binding, enforceable and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby; and
17
(c) Neither the Company, nor to the knowledge of the Company, any other
party thereto, is in material breach or default, and no event has occurred which
with notice or lapse of time would constitute a material breach or default, or
permit termination, modification or acceleration, under the Material Company
Contract.
(d) No Material Contract included or incorporates any provision, the
effect of which may be to enlarge or accelerate any of the obligations of the
Company or to give additional rights to any other party thereto, or will
terminate, lapse, or in any other way be affected, by reason of the transactions
contemplated by this Agreement.
4.12 Books and Records. The books and records of the Company accurately
and fairly represent the Company business and its results of operations in all
material respects.
4.13 Insurance. Section 4.13 of the Company Disclosure Statement lists
the policies of theft, fire, liability, worker's compensation, life, property
and casualty, directors' officers' and other insurance owned or held by the
Company and the basis on which such policies provide coverage (i.e., an
occurrence or claims-made basis).
4.14 Brokers or Finders. No broker or finder has acted directly or
indirectly for the Company or any of its Affiliates in connection with the
transactions contemplated by this Agreement, and neither the Company nor any of
its Affiliates has incurred any obligation to pay any brokerage or finder's fee
or other commission in connection with the transaction contemplated by this
Agreement.
4.15 Absence of Certain Changes. Since the date of the most Recent
Balance Sheet, there has not been:
(a) any (i) acquisition (by purchase, lease as lessee, license as
licensee, or otherwise) or disposition (by sale, lease as lessor, license as
licensor, or otherwise) by the Company of any material Company Assets, or (ii)
other transaction by, or any agreement or commitment on the part of, the
Company, other than those in the ordinary course of business that have not
caused and will not cause, either in any case in the aggregate, a Material
Adverse Effect on the Company;
(b) any material change in the condition (financial or otherwise),
properties, assets, liabilities, investments, revenues, expenses, income,
operations, business or prospects of the Company, or in any of its relationships
with any suppliers, customers, or other third parties with whom it has
financial, commercial, or other business relationships;
(c) any transaction by the Company with any of its Affiliates, other
than the payment of compensation and reimbursement of reasonable employee travel
and other business expenses in accordance with existing employment arrangements
and usual past practices;
(d) any damage, destruction, or loss affecting its properties or
assets, whether or not covered by insurance;
18
(e) any declaration, setting aside, or payment of any dividend or any
other distribution (in cash, stock, and/or property or otherwise) in respect of
any shares of the capital stock or other securities of the Company;
(f) any issuance of any shares of Company Common Stock or other
securities of the Company, or any direct or indirect redemption, purchase, or
other acquisition by the Company of any shares of its capital stock or other
securities;
(g) any change in the officer, directors, key employees or independent
contractors of the Company;
(h) any labor trouble or claim or unfair labor practices involving the
Company, any increase in the compensation or other benefits payable or to become
payable by the Company to any of its Affiliates, or to any of the respective
officers, employees, or independent contractors of the Company, or any bonus
payments or arrangements make to or with any of such officers, employees, or
independent contractors;
(i) any forgiveness or cancellation of any debt or claim by the Company
or any waiver by the Company or any right of material value, other than
compromises of accounts receivable in the ordinary course of business;
(j) any incurrence or any payment, discharge, or satisfaction by the
Company of any other Indebtedness or any material obligations or material
liabilities, whether absolute, accrued, contingent, or otherwise (including,
liabilities, as guarantor or otherwise, with respect to obligations of others),
other than current liabilities to persons other than Affiliates of the Company
incurred since the date of such balance sheet in the ordinary course of
business;
(k) any incurrence, discharge, or satisfaction of any encumbrance on
any of the Company Assets or on any of the Company Common Stock;
(l) any change in the financial or tax accounting principles,
practices, or methods of the Company; or
(m) any agreement, understanding, or commitment by or on behalf of the
Company, or by or on behalf of its respective Affiliates, directors, officers,
employees, agents, or representatives, whether in writing or otherwise, to do or
permit any of the things referred to in this Section 4.15.
4.16 Indebtedness. Immediately after the Closing, except for debts
incurred in the ordinary course of business, the Company will have no
Indebtedness outstanding other than as set forth in Section 4.16 of the Company
Disclosure Statement. The Company is not in default with respect to any
outstanding Indebtedness or any instrument or agreement relating thereto.
4.17 Absence of Undisclosed Liabilities. Except to the extent reflected
or reserved against in the Most Recent Balance Sheet, or incurred after the date
of such balance sheet in the ordinary course of business other than in
connection with the transactions with Affiliates, the Company has no material
liabilities or obligations of any nature, whether accured, absolute, contingent,
or otherwise (including, liabilities as guarantor or otherwise with respect to
obligations of others) and whether due or to become due.
19
4.18 Potential Conflicts of Interest. Except as disclosed in Section
4.18 of the Company Disclosure Statement, neither the Company nor any of its
respective officer, directors, employees, or other Affiliates (i) is an officer,
director, employee, or consultant of, any person that is a competitor, lessor,
lessee, customer, or supplier of the Company, (ii) owns, directly or indirectly,
any interest in any tangible or intangible property used in or necessary to the
business of the Company or (iii) has any cause of action or other claim
whatsoever against the Company or owes any amount to the Company, except for
claims in the ordinary course of business, such as for accrued vacation pay,
accrued benefits under employee benefit plans, and similar matters and
agreements.
4.19 Employees. Section 4.19 of the Company Disclosure Statement
contains an accurate and complete list setting forth the name and current annual
salary and other compensation payable by the Company to each employee of the
Company.
4.20 Accounts and Notes Receivable. Section 4.20 of the Company
Disclosure Statement sets forth a list of all accounts and notes receivable of
the Company as of the Closing Date. To the best knowledge of the Company, all
such accounts and notes receivable are (a) valid, genuine and subsisting, (b)
arise out of bona fide sales and delivery of goods, performance of services or
other business transactions and (c) subject to no defenses, set-offs,
counterclaims, security interests or other encumbrances except to the extent of
a provision for reserves (which reserves have been determined based upon actual
prior experience and are consistent with past practices).
4.21 Employee Benefit Plans. Except as set forth in Section 4.21 of the
Company Disclosure Statement, the Company has no employee benefit plans, as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, or any other pension, bonus, deferred compensation, stock bonus,
stock purchase, post-retirement medical, hospitalization, health and other
employee benefit plan, program or arrangement, whether formal or informal, under
which the Company has any obligation or liability, or under which any employee
or former employee of the Company has any rights or benefits.
4.22 Investment. Each of the Company Shareholders:
(a) understands that none of the Merger Shares, Warrants, if and to the
entent earned Performance Warrants and/or shares of Globe Common Stock
underlying the Warrants or Performance Warrants have been, and subject only to
Article II herein may not be, registered under the Securities Act, or under any
state securities laws, and are being offered and sold in reliance upon federal
and state exemptions for transactions not involving any public offering;
(b) is acquiring the Merger Shares, Warrants, if and to the entent
earned Performance Warrants and/or shares of Globe Common Stock underlying the
Warrants or Performance Warrants solely for his or her or its own account for
investment purposes, and not with a view to the distribution thereof;
20
(c) is a sophisticated investor with knowledge and experience in
business and financial matters;
(d) has reviewed the Globe Securities Filings and has and the
opportunity to obtain additional information as desired in order to evaluate the
merits and the risks inherent in holding the Merger Shares;
(e) is able to bear the economic risk and lack of liquidity inherent in
holding the Merger Shares, Warrants, if and to the entent earned Performance
Warrants and/or shares of Globe Common Stock underlying the Warrants or
Performance Warrants;
(f) is an Accredited Investor; and
(g) is a resident of the state of Florida.
4.23 Tax Free Reorganization. Each Company Shareholder acknowledges and
agrees that, except for the Cash consideration, (including the Note), the
transactions contemplated by this Agreement are intended to constitute a
tax-free reorganization under Section 368(a) of the Code. Each Company
Shareholder has no present intention of taking any acts which would jeopardize
the tax-free treatment of this transaction and shall, among other things, take
those actions necessary to effect the tax-free reorganization including those
actions required by Treas. Reg. Section 1.368-3(a). Each Company Shareholder has
sought and obtained his, her or its own advisor as to the tax consequences of
the merger and the investment in the Merger Shares, Warrants and Performance
Warrants. Each Company Shareholder acknowledges that the Globe makes no
representations with respect to the tax consequences of the transactions
contemplated by the Agreement.
4.24 Intellectual Property.
(a) Section 4.24 of the Company Disclosure Statement lists all patents,
patent applications, mask works, trademarks, trade names, service marks, logos,
registered copyrights, database rights and licenses used in or necessary to the
Company's businesses as now being conducted (collectively, and together with any
technology, know-how, trade secrets, processes, formulas, techniques, and
unregistered copyrights used in or necessary to the Company's business,
"Intellectual Property"). Section 4.24 of the Company Disclosure Statement lists
all Intellectual Property owned by or licensed to the Company indicating, as to
each entry, (i) whether such Intellectual Property is exclusively or
non-exclusively owned by or licensed to the Company and (ii) the terms of any
royalty payments required to be made by the Company. No intellectual property
rights, privileges, licenses, contracts, or other agreements, instruments, or
evidences of interests (other than the Intellectual Property listed on Schedule
4.24) are necessary to or used in the conduct of its business as presently
conducted.
21
(b) Licenses; Infringement by Others. To the best of the Company's
knowledge, none of the Intellectual Property is being infringed by others, or is
subject to any outstanding order, decree, judgment, or stipulation. No
litigation (or other proceedings in or before any court or other governmental,
adjudicatory, arbitral, or administrative body) relating to the Intellectual
Property is pending, or to the Company's knowledge, threatened, nor, to the best
knowledge of the Company's, is there any basis for any such litigation or
proceeding.
(c) Infringement by the Company; Violations. To the best knowledge of
the Company: (i) neither the Company nor any of its employees has infringed or
made unlawful use of, or is infringing or making unlawful use of, any
proprietary or confidential information of any person, including any former
employer of any past or present employee or consultant of the Company; and (ii)
the activities of the Company's employees in connection with their employment do
not violate any agreements or arrangements that any such employees or
consultants have with any former employer or any other person. No litigation (or
other proceedings in or before any court or other governmental, adjudicatory,
arbitral, or administrative body) charging the Company with infringement or
unlawful use of any patent, trademark, copyright, or other proprietary right is
pending, or to the best knowledge of the Company, threatened; nor is there any
basis for any such litigation or proceeding.
4.25 Disclosure. To the best knowledge of the Company and each Company
Shareholder, no representation or warranty of the Company in this Agreement or
in the Collateral Documents and no statement in any certificate furnished or to
be furnished by the Company pursuant to this Agreement contained, contains or
will contain on the date such agreement or certificate was or is delivered, or
on the Closing Date, any untrue statement of a material fact, or omitted, omits
or will omit on such date to state any material fact necessary in order to make
the statements made, in light of the circumstances under which they were made,
not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE GLOBE AND MERGER SUB
Each of the Globe and Merger Sub, jointly and severally, represent and
warrant to the Company that the statements contained in this Article V are
correct and complete as of the date of this Agreement and, except as provided in
Article V, will be correct and complete as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article V, except in the case of representations and
warranties stated to be made as of the date of this Agreement or as of another
date).
5.1 Organization and Qualification. Each of the Globe and Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of Delaware and Florida, respectively, and each is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or formation. Each of the Globe and Merger Sub has all requisite
power and authority to own, lease and use its assets as they are currently
owned, leased and used and to conduct its business as it is currently conducted.
Each of the Globe and Merger Sub is duly qualified or licensed to do business in
and is in good standing in each jurisdiction in which the character of the
properties owned, leased or used by it or the nature of the activities conducted
by it makes such qualification necessary any such jurisdiction where the failure
to be so qualified or licensed and in good standing would not have a Material
Adverse Effect on the Globe or Merger Sub or a material adverse effect on the
validity, binding effect or enforceability of this Agreement or the Collateral
Documents or the ability of any of the Globe Parties to perform its obligations
under this Agreement or any of the Collateral Documents.
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5.2 Capitalization. All of the issued and outstanding shares of the
Globe Common Stock and the common stock of Merger Sub have been duly authorized
and are validly issued and outstanding, fully paid and nonassessable (with
respect to Subsidiaries that are corporations) and have been issued in
compliance with applicable securities laws and other applicable Legal
Requirements. The Merger Shares, when issued, will have been duly authorized,
validly issued and outstanding, fully paid and nonassessable and, will have been
issued in compliance with applicable securities laws and other applicable Legal
Requirements.
5.3 Authority and Validity. Each Globe Party has all requisite power to
execute and deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Collateral Documents. The
execution and delivery by each Globe Party of, the performance by each Globe
Party of its respective obligations under, and the consummation by the Globe
Parties of the transactions contemplated by, this Agreement and the Collateral
Documents have been duly authorized by all requisite action of each Globe Party.
This Agreement has been duly executed and delivered by each of the Globe Parties
and (assuming due execution and delivery by the Company and each Company
Shareholder) is the legal, valid and binding obligation of each Globe Party,
enforceable against each of them in accordance with its terms. Upon the
execution and delivery by each of the Globe Parties of the Collateral Documents
to which each of them is a party, and assuming due execution and delivery
thereof by the other parties thereto, the Collateral Documents will be the
legal, valid and binding obligations of each such Person, as the case may be,
enforceable against each of them in accordance with their respective terms.
5.4 No Breach or Violation. Subject to obtaining the consents,
approvals, authorizations, and orders of and making the registrations or filings
with or giving notices to Regulatory Authorities and/or Persons, the execution,
delivery and performance by the Globe Parties of this Agreement and the
Collateral Documents to which each is a party, and the consummation of the
transactions contemplated hereby and thereby in accordance with the terms and
conditions hereof and thereof, do not and will not conflict with, constitute a
violation or breach of, constitute a default or give rise to any right of
termination or acceleration of any right or obligation of any Globe Party under,
or result in the creation or imposition of any Encumbrance upon the property of
the Globe or Merger Sub by reason of the terms of (i) the articles of
incorporation, certificate of incorporation, by-laws or other charter or
organizational document of any Globe Party, (ii) any material contract,
agreement, lease, indenture or other instrument to which any Globe Party is a
party or by or to which any Globe Party or its property may be bound or subject
(a "Material Globe Contract"), (iii) any order, judgment, injunction, award or
decree of any arbitrator or Regulatory Authority or any statute, law, rule or
regulation applicable to any Globe Party or (iv) any Permit of the Globe or
Merger Sub, which in the case of (ii), (iii) or (iv) above would have a Material
Adverse Effect on the Globe or Merger Sub or a material adverse effect on the
validity, binding effect or enforceability of this Agreement or the Collateral
Documents or the ability of any Globe Party to perform its obligations under
this Agreement or any of the Collateral Documents
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5.5 Consents and Approvals. No consent, approval, authorization or
order of, registration or filing with, or notice to, any Regulatory Authority or
any other Person is necessary to be obtained, made or given by any Globe Party
in connection with the execution, delivery and performance by them of this
Agreement or any Collateral Document or for the consummation by them of the
transactions contemplated hereby or thereby, except to the extent the failure to
obtain such consent, approval, authorization or order or to make any such
registration or filing would not have a Material Adverse Effect on any Globe
Party or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents or the ability of
any of the Globe Parties to perform its obligations under this Agreement or any
of the Collateral Documents.
5.6 Compliance with Legal Requirements. The Globe has operated in
compliance with all Legal Requirements applicable to the Globe and its
Subsidiaries, except to the extent the failure to operate in compliance with all
Legal Requirements would not have a Material Adverse Effect on the Globe or a
material adverse effect on the validity, binding effect or enforceability of
this Agreement or the Collateral Documents. No action, suit, proceeding, hearing
or investigation has been commenced or, to the Globe's knowledge, threatened,
and no charge, complaint, claim, demand or notice has been filed against the
Globe alleging any failure to so comply.
5.7 Financial and Other Information.
(a) The Globe has timely filed all required reports, schedules, forms,
statements and other documents (the "Filings") with the Securities and Exchange
Commission. Each of Globe's Filings complies as to form in all material respects
with the Securities Act, or the Exchange Act, as the case may be, and the rules
and regulations of the SEC promulgated thereunder applicable to such Filings and
none of the Filings contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) The historical financial statements (including the notes thereto)
("Globe Financial Statements") contained (or incorporated by reference) in the
Globe Securities Filings have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except as may be
indicated in the notes thereto), and present fairly the financial condition of
the Globe and its results of operations as of the dates and for the periods
indicated, subject in the case of the interim unaudited financial statements
only to normal year-end adjustments (none of which will be material in amount)
and the omission of footnotes.
5.8 Undisclosed Liabilities. As of the Closing Date, all material
liabilities of the Globe have been disclosed in the Globe Securities Filings,
except those disclosed on Schedule 5.8 or those liabilities incurred in the
ordinary course of business.
5.9 Legal Proceedings. Except as set forth in the Globe Securities
Filings filed through the date hereof, (i) there are no claims, actions, suits,
arbitrations, investigations or proceedings pending or involving or, to the
knowledge of the Globe or Merger Sub, threatened against either of them before
or by any court or governmental or non-governmental department, commission,
board, bureau, agency or instrumentality, or any other Person, (ii) there are no
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outstanding judgments or orders against or otherwise affecting or related to
either the Globe or Merger Sub, or its respective business or assets; (iii)
there is no valid basis for any claim, action, suit, arbitration, proceeding or
investigation before or by any Person and (iv) there is no action, suit,
complaint, proceeding or investigation, judicial, administrative or otherwise,
that is pending or, to the best knowledge of any Globe Party, threatened that,
if adversely determined, would have a Material Adverse Effect on the Globe or
Merger Sub would substantially delay any of the transactions contemplated
hereunder, or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents.
5.10 Taxes. The Globe has duly and timely filed in proper form all Tax
Returns for all Taxes required to be filed with the appropriate Regulatory
Authority. All Taxes due and payable by the Globe (or claimed to be due and
payable) have been paid (regardless whether Tax Returns relating to such Taxes
have been duly and timely filed or, if filed, regardless whether such Tax
Returns are deficient). The Globe has furnished to the Company true and correct
copies of all income Tax Returns filed by it in the past three years, all of
which are accurate and complete in all material respects. There are no pending
Tax audits, claims or proceedings relating to the Globe it business or assets.
Neither the Globe nor any of its Subsidiaries has agreed to any waiver or
extension of any statute of limitations relating to any Tax. The Globe has no
outstanding power of attorney authorizing any Person to act on its behalf in
connection with any Tax or Tax Return. The Globe has no outstanding closing
agreement, request for a ruling or determination, request for a change in method
of accounting, subpoena or request for information with or by any Regulatory
Authority with respect to any Tax or Tax Return.
5.11 No Orders. No order suspending the sale or ceasing the trading of
the Globe Common Stock has been issued by any court, securities commission or
regulatory authority in Canada or the United States, and no proceedings for such
purpose are pending or, to the knowledge of the Globe, after reasonable inquiry,
threatened.
5.12 Brokers or Finders. No broker or finder has acted directly or
indirectly for the Globe, any Globe Party or any of their Affiliates in
connection with the transactions contemplated by this Agreement, and neither the
Globe, any Globe Party nor any of their Affiliates has incurred any obligation
to pay any brokerage or finder's fee or other commission in connection with the
transaction contemplated by this Agreement.
5.13 Disclosure. No representation or warranty of the Globe in this
Agreement or in the Collateral Documents and no statement in any certificate
furnished or to be furnished by the Globe pursuant to this Agreement contained,
contains or will contain on the date such agreement or certificate was or is
delivered, or on the Closing Date, any untrue statement of a material fact, or
omitted, omits or will omit on such date to state any material fact necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleading.
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ARTICLE VI
PRE-CLOSING COVENANTS OF THE COMPANY
Between the date of this Agreement and the Closing Date:
6.1 Additional Information. The Company shall provide to the Globe and
its Representatives such financial, operating and other documents, data and
information relating to the Company and the Company Assets and Liabilities of
the Company, as the Globe or its Representatives may reasonably request.
6.2 Continuity and Maintenance of Operations.
(a) Unless the Company shall have obtained the prior written consent of
the Globe the Company shall not: (i) declare or pay any dividends or make any
other distributions to the Company Shareholders; (ii) redeem or repurchase any
securities, (iii) issue additional shares of Company Common Stock (except
pursuant to options, warrants and convertible debt outstanding on the date
hereof, (iv) make any loans other than in the Ordinary Course,(v) incur any
additional Indebtedness, (vi) make any capital expenditure other than in the
ordinary course of business or (vii) enter into any agreement to do any of the
foregoing.
(b) The Company shall not take, and shall use commercially reasonable
efforts not to omit to take, any action that would cause any of its
representations or warranties in this Agreement or the Collateral Documents to
be untrue in any material respect as of the Closing Date, nor take or omit to
take any action that would cause it to be in breach in any material respect of
any of the covenants made by it in this Agreement or the Collateral Documents.
(c) The Company shall not take and actions to reduce its working
capital except for reductions that occur in the ordinary course of business.
6.3 Consents and Approvals. As soon as practicable after execution of
this Agreement, the Company shall use commercially reasonable efforts to obtain
any necessary consent, approval, authorization or order of, make any
registration or filing with or give any notice to, any Regulatory Authority or
Person (other then the Company Shareholders, each of whom has voted in favor of
the Merger) as is required to be obtained, made or given by the Company to
consummate the transactions contemplated by this Agreement and the Collateral
Documents, without giving rise to any prepayment, penalty or premium, and all of
the authorizations, consents, approvals, actions, filings or notices set forth
in Section 4.5 of the Company Disclosure Statement.
6.4 Company Disclosure Statement. The Company shall, from time to time
prior to Closing, supplement the Company Disclosure Statement with additional
information that, if existing or known to it on the date of delivery of the
Company Disclosure Statement to the Globe Parties, would have been required to
be included therein.
ARTICLE VII
PRE-CLOSING COVENANTS OF THE GLOBE PARTIES
Between the date of this Agreement and the Closing Date,
7.1 Consents and Approvals. As soon as practicable after execution of
this Agreement, the Globe Parties shall use their commercially reasonable
efforts to obtain any necessary consent, approval, authorization or order of,
make any registration or filing with or give notice to, any Regulatory Authority
or Person as is required to be obtained, made or given by any of the Globe
Parties to consummate the transactions contemplated by this Agreement and the
Collateral Documents.
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7.2 Notification of Certain Matters. The Globe shall promptly notify
the Company of any fact, event, circumstance or action known to it that is
reasonably likely to cause any Globe Party to be unable to perform any of its
covenants contained herein or any condition not to be satisfied, or that, if
known on the date of this Agreement, would have been required to be disclosed to
the Company pursuant to this Agreement or the existence or occurrence of which
would cause any of the Globe Parties' representations or warranties under this
Agreement not to be correct and/or complete.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE GLOBE PARTIES
All obligations of the Globe Parties under this Agreement shall be
subject to the fulfillment at or prior to Closing of each of the following
conditions, it being understood that the Globe Parties may, in their sole
discretion, to the extent permitted by applicable Legal Requirements, waive any
or all of such conditions in whole or in part.
8.1 Accuracy of Representations. All representations and warranties of
the Company and/or the Company Shareholders contained in this Agreement, the
Collateral Documents and any certificate delivered by any of them at or prior to
Closing shall be, true and correct in all material respects on and as of the
Closing Date with the same effect as if made on and as of the Closing Date,
except for representations and warranties expressly stated to be made as of the
date of this Agreement or as of another date other than the Closing Date and
except for changes contemplated or permitted by this Agreement. The Company
shall have delivered to the Globe and Merger Sub a certificate dated the Closing
Date to the foregoing effect.
8.2 Covenants. The Company and the Company Shareholders shall, in all
material respects, have performed and complied with each of the covenants,
obligations and agreements contained in this Agreement and the Collateral
Documents that are to be performed or complied with by them at or prior to
Closing. The Company shall have delivered to the Globe and Merger Sub a
certificate dated the Closing Date to the foregoing effect.
8.3 Consents and Approvals.
(a) All consents, approvals, authorizations and orders required to be
obtained from, and all registrations, filings and notices required to be made
with or given to, any Regulatory Authority or Person shall have been duly
obtained, made or given, as the case may be, and shall be in full force and
effect, and any waiting period required by applicable law or any Regulatory
Authority in connection with such transactions shall have expired or have been
earlier terminated, unless the failure to obtain, make or give any such consent,
approval, authorization, order, registration, filing or notice, or to allow any
such waiting period to expire or terminate would not have a Material Adverse
Effect on the Company or a material adverse effect on the validity, binding
effect or enforceability of this Agreement or the Collateral Documents or the
ability of the Company to perform its obligations under this Agreement or any of
the Collateral Documents. The Company shall provide evidence to the Globe that
is has applied for transfer of its Federal Communications Commission 214
license.
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(b) This Agreement and the Merger shall have been approved by the
requisite vote of the Company's Shareholders in accordance with the FGCL and the
Company's Certificate of Incorporation and by-laws.
(c) The Globe and Merger Sub shall have been furnished with appropriate
evidence, reasonably satisfactory to it and its counsel, of the granting of such
consents, approvals, authorizations and orders, the making of such registrations
and filings and the giving of such notices referred to in subsections (a) and
(b).
8.4 Delivery of Documents. The Company shall have delivered, or caused
to be delivered, to the Globe and Merger Sub the following documents: (i)
resolutions of the board of directors and shareholders of the Company
authorizing the execution of this Agreement and the Collateral Documents to
which it is a party and the consummation of the transactions contemplated hereby
and thereby, (ii) all books and records of the Company; (iii) such other
documents and instruments as the Globe may reasonably request: (A) to evidence
the accuracy of the Company's representations and warranties under this
Agreement, the Collateral Documents and any documents, instruments or
certificates required to be delivered thereunder; (B) to evidence the
performance by the Company of, or the compliance by the Company with, any
covenant, obligation, condition and agreement to be performed or complied with
by the Company under this Agreement and the Collateral Documents; or (C) to
otherwise facilitate the consummation or performance of any of the transactions
contemplated by this Agreement and the Collateral Documents.
8.5 No Material Adverse Change. Since the date hereof, there shall have
been no material adverse change in the Company Assets or the financial condition
or operations of the Company, taken as a whole.
8.6 No Litigation. No action, suit or proceeding shall be pending or
threatened by or before any Regulatory Authority, and no Legal Requirement or
policy of any applicable regulatory authority, shall have been enacted,
promulgated or issued that would: (i) prohibit or adversely affect in any
material respect the Globe's or the Company's and its Subsidiaries' ownership or
operation of all or a material portion of the Company Assets or materially and
adversely affect the value of the Company Assets; (ii) materially restrict or
limit or otherwise condition the Globe's or the Surviving Corporation's and its
Subsidiaries' right to transfer and/or assign the Company Assets in the future;
(iii) compel the Globe or the Surviving Corporation or any of its Subsidiaries
to dispose of or hold separate all or a material portion of the Company Assets
as a result of any of the transactions contemplated by this Agreement and the
Collateral Documents; (iv) prevent or make illegal the consummation of any
transactions contemplated by this Agreement and the Collateral Documents; or (v)
cause any of the transactions contemplated by this Agreement and the Collateral
Documents to be rescinded following consummation.
8.7 Employment Agreement. Xx. Xxxxx X. Xxxxxxxx, Xx. shall have
executed and delivered the Employment Agreement in the form of Exhibit "C"
attached hereto.
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8.8 Assignment of Inventions and Confidentiality Agreements. Each
employee of the Company will sign at Closing an Assignment of Inventions and
Confidentiality Agreement in the form of Exhibit "D" attached hereto.
8.9 Joinder of Shareholders. All of the existing Shareholders of the
Company shall have executed this Agreement, or a counterpart thereof, and shall
have delivered at the Closing stock certificates of the Company Shares, duly
endorsed to the Globe.
8.10 Dissenting Shareholders. There shall be no dissenting shareholders
to the Merger or the transactions contemplated by this Agreement.
8.11 Derivative Security Holders. All derivative securities of the
Company shall be either exercised or terminated prior to Closing.
8.12 Resignations. The Company Shareholders shall have caused all of
the directors of the Company to resigned from the Board of Directors of the
Company as of the Closing Date.
8.13 Updated Company Disclosure Statement. In the event the Company or
the Company Shareholders update the Company Disclosure Statement, such
amendment(s) thereto shall be in form and substance reasonably satisfactory to
the Globe.
8.14 Other Documents. The Company shall have furnished the Globe with
such other and further documents and certificates, including certificate of the
Company's officers and others, as the Globe shall reasonably request to evidence
compliance with the conditions set forth in this Agreement.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
All obligations of the Company under this Agreement shall be subject to
the fulfillment at or prior to Closing of the following conditions, it being
understood that the Company may, in its sole discretion, to the extent permitted
by applicable Legal Requirements, waive any or all of such conditions in whole
or in part.
9.1 Accuracy of Representations. All representations and warranties of
the Globe Parties contained in this Agreement, the Collateral Documents and any
other document, instrument or certificate delivered by any of the Globe Parties
at or prior to the Closing shall be true and correct in all material respects on
and as of the Closing Date with the same effect as if made on and as of the
Closing Date, except for representations and warranties expressly stated to be
made as of the date of this Agreement or as of another date other than the
Closing Date and except for changes contemplated or permitted by this Agreement.
The Globe Parties shall have delivered to the Company a certificate dated the
Closing Date to the foregoing effect.
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9.2 Covenants. The Globe Parties shall, in all material respects, have
performed and complied with each obligation, agreement, covenant and condition
contained in this Agreement and the Collateral Documents and required by this
Agreement and the Collateral Documents to be performed or complied with by the
Globe Parties at or prior to Closing. The Globe Parties shall have delivered to
the Company a certificate dated the Closing Date to the foregoing effect.
9.3 Consents and Approvals.
(a) All consents, approvals, authorizations and orders required to be
obtained from, and all registrations, filings and notices required to be made
with or given to, any Regulatory Authority or shall have been duly obtained,
made or given, as the case may be, and shall be in full force and effect, and
any waiting period required by applicable law any Regulatory Authority in
connection with such transactions shall have expired or have been earlier
terminated, unless the failure to obtain, make or give any such consent,
approval, authorization, order, registration, filing or notice, or to allow any
such waiting period to expire or terminate would not have a Material Adverse
Effect on the Globe or a material adverse effect on the validity, binding effect
or enforceability of this Agreement or the Collateral Documents or the ability
of the Company or any of the Globe Parties to perform its obligations under this
Agreement or any of the Collateral Documents.
(b) The Company shall have been furnished with the appropriate
evidence, reasonably satisfactory to them and their counsel, of the granting of
such consents, approvals, authorizations and orders.
9.4 Delivery of Documents. The Globe Parties, as applicable, shall have
executed and delivered, or caused to be executed and delivered, to the Company
the following documents: (i) resolutions by the board of directors authorizing
the execution of this Agreement and the Collateral Documents and the
consummation of the transactions contemplated hereby, (ii) such other documents
and instruments as the Company may reasonably request: (A) to evidence the
accuracy of the representations and warranties of the Globe Parties under this
Agreement and the Collateral Documents and any documents, instruments or
certificates required to be delivered thereunder; (B) to evidence the
performance by the Globe Parties of, or the compliance by the Globe Parties
with, any covenant, obligation, condition and agreement to be performed or
complied with by the Globe Parties under this Agreement and the Collateral
Documents; or (C) to otherwise facilitate the consummation or performance of any
of the transactions contemplated by this Agreement and the Collateral Documents.
9.5 No Material Adverse Change. There shall have been no material
adverse change in the business, financial condition or operations of the Globe
and its Subsidiaries taken as a whole.
9.6 No Litigation. No action, suit or proceeding shall be pending or
threatened by or before any Regulatory Authority and no Legal Requirement shall
have been enacted, promulgated or issued or deemed applicable to any of the
transactions contemplated by this Agreement and the Collateral Documents that
would: (i) prevent consummation of any of the transactions contemplated by this
Agreement and the Collateral Documents; (ii) cause any of the transactions
contemplated by this Agreement and the Collateral Documents to be rescinded
following consummation; or (iii) have a Material Adverse Effect on the Globe.
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ARTICLE X
INDEMNIFICATION
10.1 Indemnification by the Company. The Company and/or the Company
Shareholders shall, jointly and severally, indemnify, defend and hold harmless
(i) the Globe and if subsequent to Closing the Company, (ii) each of Globe's
assigns and successors in interest to the Company Shares, and (iii) each of
their respective shareholders (excluding the Company Shareholders), members,
partners, directors, officers, managers, employees, agents, attorneys and
representatives, from and against any and all Losses which may be incurred or
suffered by any such party and which may arise out of or result from any breach
of any representation, warranty, covenant or agreement of the Company and/or the
Company Shareholders contained in this Agreement. Notwithstanding the foregoing,
the Globe shall have no claim for indemnification against the Company with
regard to any breach of a representation or warranty under this Agreement unless
and until the aggregate amount of such claims shall, in the aggregate, exceed
Fifty Thousand Dollars ($50,000), and, then, only to the extent of such excess.
It is understood and agreed that any investigation and/or due diligence
conducted by the Globe shall not affect its ability to (i) rely on the
representations made by the Company and/or the Company Shareholders in this
Agreement or (ii) in case of a breach of the same, redress such breach under
this Agreement.
10.2 Indemnification by the Globe and Merger Sub. The Globe and Merger
Sub, jointly and severally, shall indemnify, defend and hold harmless the
Company and its shareholders, members, partners, directors, officers, managers,
employees, agents, attorneys and representatives, from and against any and all
Losses which may be incurred or suffered by any such party and which may arise
out of or result from any breach of any representation, warranty, covenant or
agreement of the Globe or Merger Sub contained in this Agreement.
Notwithstanding the foregoing, neither the Company nor the Company Shareholders
shall have a claim for indemnification against the Globe or Merger Sub unless
and until the aggregate amount of such claims shall, in the aggregate, exceed
Fifty Thousand Dollars ($50,000), and, then, only to the extent of such excess.
10.3 Notice to Indemnifying Party. If any party (the "Indemnified
Party") receives notice of any claim or other commencement of any action or
proceeding with respect to which any other party (or parties) (the "Indemnifying
Party") is obligated to provide indemnification pursuant to Sections 10.1 or
10.2, the Indemnified Party shall promptly give the Indemnifying Party written
notice thereof, which notice shall specify in reasonable detail, if known, the
amount or an estimate of the amount of the liability arising therefrom and the
basis of the claim. Such notice shall be a condition precedent to any liability
of the Indemnifying Party for indemnification hereunder, but the failure of the
Indemnified Party to give prompt notice of a claim shall not adversely affect
the Indemnified Party's right to indemnification hereunder unless the defense of
that claim is materially prejudiced by such failure. The Indemnified Party shall
not settle or compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent of the Indemnifying
Party (which shall not be unreasonably withheld or delayed) unless suit shall
have been instituted against it and the Indemnifying Party shall not have taken
control of such suit after notification thereof as provided in Section 10.4.
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10.4 Defense by Indemnifying Party. In connection with any claim giving
rise to indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a Person who is not a party to this Agreement, the Indemnifying
Party at its sole cost and expense may, upon written notice to the Indemnified
Party, assume the defense of any such claim or legal proceeding (i) if it
acknowledges to the Indemnified Party in writing its obligations to indemnify
the Indemnified Party with respect to all elements of such claim (subject to any
limitations on such liability contained in this Agreement) and (ii) if it
provides assurances, reasonably satisfactory to the Indemnified Party, that it
will be financially able to satisfy such claims in full if the same are decided
adversely. If the Indemnifying Party assumes the defense of any such claim or
legal proceeding, it may use counsel of its choice to prosecute such defense,
subject to the approval of such counsel by the Indemnified Party, which approval
shall not be unreasonably withheld or delayed. The Indemnified Party shall be
entitled to participate in (but not control) the defense of any such action,
with its counsel and at its own expense; provided, however, that if the
Indemnified Party, in its sole discretion, determines that there exists a
conflict of interest between the Indemnifying Party (or any constituent party
thereof) and the Indemnified Party, the Indemnified Party (or any constituent
party thereof) shall have the right to engage separate counsel, the reasonable
costs and expenses of which shall be paid by the Indemnified Party. If the
Indemnifying Party assumes the defense of any such claim or legal proceeding,
the Indemnifying Party shall take all steps necessary to pursue the resolution
thereof in a prompt and diligent manner. The Indemnifying Party shall be
entitled to consent to a settlement of, or the stipulation of any judgment
arising from, any such claim or legal proceeding, with the consent of the
Indemnified Party, which consent shall not be unreasonably withheld or delayed.
10.5 Survival of Representations and Covenants. Notwithstanding any
right of the Parties fully to investigate the affairs of any other Party and
notwithstanding any knowledge of facts determined or determinable by the Parties
pursuant to such investigation or right of investigation, the Parties shall have
the right to rely fully upon the representations, warranties, covenants and
agreements of any other Party contained in this Agreement. Each representation,
warranty, covenant and agreement of the Company, the Company Shareholders and/or
the Globe contained herein shall survive the execution and delivery of this
Agreement and the Closing and shall thereafter terminate and expire on the first
anniversary of the Closing Date unless, prior to such date, any Party has
delivered to any other Party a written notice of a claim with respect to such
representation, warranty, covenant or agreement.
10.6 Promissory Notes and Performance Warrants; Right of Set-Off.
Company Shareholders hereby agree that in addition to the Globe's right to take
any action or exercise any remedy available to it at law or in equity against
the Company and/or the Company Shareholders by appropriate legal proceedings,
any claims for indemnification by the Globe against the Company Stockholders
hereunder (including in the event the Company Shareholders should refuse or fail
to indemnify the Globe pursuant to this Agreement) may be satisfied by the Globe
by recourse against the Promissory Notes and Performance Warrants. Neither the
Promissory Notes and Performance Warrants nor anything contained in this
Agreement shall constitute a limitation on the Globe's rights hereunder or a
measure of liquidated damages and any member of the Globe may seek full
indemnification for all damages suffered and may pursue all rights and remedies
available to it, at law or in equity, against any party hereto, jointly with
other parties hereto or severally, without seeking recourse against any other
party and without exercising any right of setoff and without first seeking
recourse against the Promissory Notes and Performance Warrants or otherwise.
32
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time: (a) by mutual written agreement of the Globe and the Company
hereto duly authorized by action taken by or on behalf of their respective
Boards of Directors or (b) by either the Company or the Globe upon notification
to the non-terminating party by the terminating party:
(i) at any time after June 5th , 2003 if the Merger shall not
have been consummated on or prior to such date and such failure to
consummate the Merger is not caused by a material breach of this
Agreement by the terminating party;
(ii) if the terminating party is not in material breach of its
obligations under this Agreement and there has been a material breach
of any representation, warranty, covenant or agreement on the part of
the non-terminating party set forth in this Agreement; provided,
however, that if such breach is curable by the non-terminating party
and such cure is reasonably likely to be completed within ten (10)
days, then, for so long as the non-terminating party continues to use
commercially reasonable efforts to effect and cure, the terminating
party may not terminate pursuant to this Section; or
(iii) if any court of competent jurisdiction or other
competent Governmental or Regulatory Authority shall have issued an
order making illegal or otherwise permanently restricting, preventing
or otherwise prohibiting the Merger and such order shall have become
final and nonappealable.
11.2 Effect of Termination. If this Agreement is validly terminated by
either the Company or the Globe pursuant to Section 11.1, this Agreement will
forthwith become null and void, each party shall bear all costs and expenses
each party has incurred and there will be no liability or obligation on the part
of the parties hereto, except that nothing contained herein shall relieve any
party hereto from liability for willful breach of its representations,
warranties, covenants or agreements contained in this Agreement.
33
ARTICLE XII
MISCELLANEOUS
12.1 Parties Obligated and Benefited. This Agreement shall be binding
upon the Parties and their respective successors by operation of law and shall
inure solely to the benefit of the Parties and their respective successors by
operation of law, and no other Person shall be entitled to any of the benefits
conferred by this Agreement. Without the prior written consent of the other
Party, no Party may assign this Agreement or the Collateral Documents or any of
its rights or interests or delegate any of its duties under this Agreement or
the Collateral Documents.
12.2 Notices. Any notices and other communications required or
permitted hereunder shall be in writing and shall be effective upon delivery by
hand or upon receipt if sent by certified or registered mail (postage prepaid
and return receipt requested) or by a nationally recognized overnight courier
service (appropriately marked for overnight delivery) or upon transmission if
sent by telex or facsimile (with request for immediate confirmation of receipt
in a manner customary for communications of such respective type and with
physical delivery of the communication being made by one or the other means
specified in this Section as promptly as practicable thereafter). Notices shall
be addressed as follows:
If to the Globe or Merger Sub: 000 Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, CEO
With a copy to: Xxxxxxxx Xxxxxx, Esq.
Proskauer Rose LLP
0000 Xxxxxx Xxxx, Xxxxx 000 Xxxx
Xxxx Xxxxx, XX 00000
If to the Company: 0000 XX 0xx Xxx, Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Xx., CEO
With a copy to: Xxxxxxxx X. Xxxxx, Esq.
000 X. Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
If to the Company or the Company Shareholders after the
Closing Date to the address of the Company Shareholders
immediately prior to the Closing Date as appearing on the
records of the Globe.
Any Party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section.
12.3 Attorneys' Fees. In the event of any action or suit based upon or
arising out of any alleged breach by any Party of any representation, warranty,
covenant or agreement contained in this Agreement or the Collateral Documents,
the prevailing Party shall be entitled to recover reasonable attorneys' fees and
other costs of such action or suit from the other Party.
12.4 Headings. The Article and Section headings of this Agreement are
for convenience only and shall not constitute a part of this Agreement or in any
way affect the meaning or interpretation thereof.
34
12.5 Choice of Law. This Agreement and the rights of the Parties under
it shall be governed by and construed in all respects in accordance with the
laws of the State of Florida, without giving effect to any choice of law
provision or rule (whether of the State of Florida or any other jurisdiction
that would cause the application of the laws of any jurisdiction other than the
State of Florida).
12.6 Rights Cumulative. Subject to the limitations in Section 10.1, all
rights and remedies of each of the Parties under this Agreement shall be
cumulative, and the exercise of one or more rights or remedies shall not
preclude the exercise of any other right or remedy available under this
Agreement or applicable law.
12.7 Further Actions. The Parties shall execute and deliver to each
other, from time to time at or after Closing, for no additional consideration
and at no additional cost to the requesting party, such further assignments,
certificates, instruments, records, or other documents, assurances or things as
may be reasonably necessary to give full effect to this Agreement and to allow
each party fully to enjoy and exercise the rights accorded and acquired by it
under this Agreement.
12.8 Time of the Essence. Time is of the essence under this Agreement.
If the last day permitted for the giving of any notice or the performance of any
act required or permitted under this Agreement falls on a day which is not a
Business Day, the time for the giving of such notice or the performance of such
act shall be extended to the next succeeding Business Day.
12.9 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.
12.10 Entire Agreement. This Agreement (including the Exhibits, the
Company Disclosure Statement and any other documents, instruments and
certificates referred to herein, which are incorporated in and constitute a part
of this Agreement) contains the entire agreement of the Parties and supercedes
all prior agreements or negotiations between the parties including the Term
Sheet dated May 8, 2003.
12.11 Expenses. Each party will be responsible for payment of its
expenses in connection with the transactions contemplated by this Agreement.
12.12 Repayment of Certain Obligations. Immediately after the Closing,
the Globe shall repay the obligations due to Xxxxxxx X. Xxxxxxxx, Xxxxxx X.
Xxxxxxxx and/or their Affiliates by paying such persons an aggregate of Five
Hundred Thousand Dollars ($500,000) in immediately available funds and an
aggregate of One Hundred Thousand Dollars ($100,000) in the form of promissory
notes in the form attached hereto as Exhibit "A." Said amounts shall be divided
equally among Xxxxxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxxxx. In addition, Xxxxxxx
X. Xxxxxxxx and Xxxxxx X. Xxxxxxxx on behalf of themselves and/or their
Affiliates hereby agree that the foregoing payment of Six Hundred Thousand
Dollars ($600,0000) constitutes payment in full of all amounts and obligations
owing to any of them and/or their Affiliates.
35
IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement as of the day and year first above written.
XXXXXXXX.XXX, INC.
By
-------------------------------
Name
-----------------------------
Title
----------------------------
"GLOBE"
DPT MERGER SUB, INC.
By
-------------------------------
Name
-----------------------------
Title
----------------------------
"MERGER SUB"
DIRECT PARTNER TELECOM, INC.
By
------------------------------
Xxxxx X. Xxxxxxxx, Xx.
Chief Executive Officer
"COMPANY"
---------------------------------
Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxx, Xx.
---------------------------------
Xxxxx Xxxxxx
"COMPANY SHAREHOLDERS"
36
EXHIBIT A
PROMISSORY NOTE
37
EXHIBIT B
FORM OF WARRANT
38
EXHIBIT C
XXXXXXXX EMPLOYMENT AGREEMENT
39
EXHIBIT D
ASSIGNMENT OF INVENTIONS AND CONFIDENTIALITY AGREEMENTS
40
