Exhibit 2.10 [EXECUTION COPY]
THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF COMMON STOCK OF
TIGER TELEMATICS, INC. TO, OR THE SOLICITATION OF AN OFFER TO PURCHASE SHARES OF
COMMON STOCK OF TIGER TELEMATICS, INC. BY, ANY PERSON IN ANY COUNTRY OR
JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS UNLAWFUL OR ANY PERSON
THAT DOES NOT QUALIFY AS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501 OF
REGULATION D PROMULGATED UNDER THE SECURITIES ACT.
STOCK PURCHASE AGREEMENT
BY AND AMONG
TIGER TELEMATICS, INC.,
GLOBICOM, INC.
AND
CERTAIN LISTED STOCKHOLDERS OF
GLOBICOM, INC.
Dated as of September 2, 2005
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I PURCHASE AND SALE OF SHARES..........................................2
1.1 TRANSFER OF SHARES...........................................2
1.2 PURCHASE PRICE...............................................2
1.3 PAYMENT AT CLOSING...........................................2
1.4 DELIVERY OF SHARES...........................................3
1.5 AFFILIATE-OWNED ASSETS.......................................3
1.6 FURTHER ASSURANCES...........................................3
ARTICLE II THE CLOSING.........................................................3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.................4
3.1 TITLE TO THE SHARES..........................................4
3.2 ORGANIZATION AND POWER.......................................4
3.3 AUTHORITY; AUTHORIZATION, EXECUTION AND DELIVERY;
ENFORCEABILITY; NO CONFLICT.................................4
3.4 CONSENTS.....................................................5
3.5 BROKERS......................................................5
3.6 INVESTMENT REPRESENTATIONS...................................5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER GROUP..................6
4.1 ORGANIZATION, POWER, AUTHORITY AND GOOD STANDING.............6
4.2 AUTHORITY; AUTHORIZATION, EXECUTION AND DELIVERY;
ENFORCEABILITY; NO CONFLICT.................................7
4.3 CONSENTS.....................................................8
4.4 CAPITALIZATION...............................................8
4.5 SUBSIDIARIES; INVESTMENTS....................................8
4.6 FINANCIAL INFORMATION........................................9
4.7 ABSENCE OF UNDISCLOSED LIABILITIES..........................10
4.8 ABSENCE OF CHANGES..........................................10
4.9 TAX MATTERS.................................................11
4.10 TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS..13
4.11 REAL PROPERTY - OWNED OR LEASED.............................13
4.12 INTELLECTUAL PROPERTY.......................................14
4.13 AGREEMENTS, NO DEFAULTS, ETC................................15
4.14 LITIGATION, ETC.............................................17
4.15 COMPLIANCE WITH LAWS........................................17
4.16 INSURANCE...................................................18
4.17 LABOR RELATIONS; EMPLOYEES..................................18
4.18 ERISA COMPLIANCE............................................20
4.19 ENVIRONMENTAL MATTERS.......................................22
4.20 BROKERS.....................................................23
4.21 RELATED PARTY TRANSACTIONS..................................23
4.22 ACCOUNTS AND NOTES RECEIVABLE...............................24
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4.23 BANK ACCOUNTS; POWERS OF ATTORNEY...........................24
4.24 SUPPLIERS AND VENDORS.......................................24
4.25 CUSTOMERS...................................................25
4.26 CONFLICTS OF INTEREST.......................................25
4.27 DISCLOSURE..................................................25
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.....................25
5.1 ORGANIZATION; CORPORATE AUTHORITY...........................25
5.2 AUTHORITY; AUTHORIZATION; EXECUTION AND DELIVERY;
ENFORCEABILITY; NO CONFLICT................................26
5.3 CONSENTS....................................................26
5.4 BROKERS.....................................................27
ARTICLE VI COVENANTS AND AGREEMENTS...........................................27
6.1 ACCESS TO RECORDS AND PROPERTIES............................27
6.2 CONDUCT OF THE BUSINESS.....................................27
6.3 EFFORTS TO CONSUMMATE.......................................28
6.4 NEGOTIATION WITH OTHERS.....................................28
6.5 NOTICE OF PROSPECTIVE BREACH................................29
6.6 PUBLIC ANNOUNCEMENTS........................................29
6.7 EXCHANGE PROCEEDS...........................................29
6.8 NON-COMPETITION COVENANT....................................29
6.9 DISCLOSURE OF INFORMATION...................................30
6.10 USE OF PROPRIETARY NAME.....................................32
6.11 SUPPLEMENTS TO SCHEDULES....................................32
ARTICLE VII CLOSING OBLIGATIONS...............................................32
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS......................32
7.2 CONDITIONS TO OBLIGATIONS OF THE PURCHASER..................33
7.3 CONDITIONS TO OBLIGATIONS OF THE SELLER GROUP...............35
ARTICLE VIII INDEMNIFICATION..................................................36
8.1 GENERALLY...................................................36
8.2 ASSERTION OF CLAIMS.........................................37
8.3 NOTICE AND DEFENSE OF THIRD PARTY CLAIMS....................37
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES..................38
8.5 LIMITATIONS ON INDEMNIFICATION..............................39
8.6 SATISFACTION OF INDEMNIFICATION OBLIGATIONS.................39
ARTICLE IX TERMINATION; EFFECT OF TERMINATION.................................39
9.1 TERMINATION.................................................39
9.2 EFFECT OF TERMINATION.......................................40
ARTICLE X MISCELLANEOUS PROVISIONS............................................41
10.1 AMENDMENT...................................................41
10.2 ENTIRE AGREEMENT............................................41
10.3 SEVERABILITY................................................41
10.4 BENEFITS OF AGREEMENT.......................................41
10.5 EXPENSES; SALES AND TRANSFER TAXES..........................41
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10.6 REMEDIES....................................................42
10.7 NOTICES.....................................................42
10.8 COUNTERPARTS AND FACSIMILE EXECUTION........................43
10.9 GOVERNING LAW..............................................43
10.10 JURISDICTION AND VENUE......................................43
10.11 MUTUAL CONTRIBUTION.........................................44
10.12 NO THIRD PARTY BENEFICIARIES................................44
10.13 INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND
WARRANTIES.................................................44
10.14 INTERPRETATION; CONSTRUCTION................................44
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ANNEXES, SCHEDULES AND EXHIBITS
Annexes
-------
Annex I Stockholders
Annex II Certain Definitions
Schedules
---------
Schedule 1.3 - Stockholder Percentages for Allocation of
Purchase Price
Schedule 3.4 - Stockholder Consents
Schedule 4.1 - Foreign Qualifications for the Company and
Its Subsidiaries
Schedule 4.3 - Company Consents
Schedule 4.4(a) - Capitalization of the Company and Its Subsidiaries
Schedule 4.4(b) - Options, Warrants, Voting Agreements, etc.
Schedule 4.5 - Subsidiaries and Investments
Schedule 4.6(a) - Financial Statements
Schedule 4.6(c) - Accounts Payable and Accounts Receivable
Schedule 4.7 - Undisclosed Liabilities
Schedule 4.8 - Absence of Changes
Schedule 4.9(a) - Tax Matters
Schedule 4.9(c) - Taxing Authority Notifications
Schedule 4.10(a) - Encumbrances
Schedule 4.10(b) - Tangible Personal Property
Schedule 4.11(a) - Real Property
Schedule 4.11(b) - Real Property Proceedings, Notices and Exceptions
Schedule 4.12(a) - Intellectual Property Rights
Schedule 4.12(b) - Actions to Protect Intellectual Property Rights
Schedule 4.13(a) - Material Contracts
Schedule 4.13(d) - Funded Indebtedness
Schedule 4.14(a) - Litigation, Etc.
Schedule 4.14(b) - Resolved Litigation
Schedule 4.15 - Compliance with Laws
Schedule 4.16(a) - Insurance Policies
Schedule 4.16(b) - Insurance Claims, Etc.
Schedule 4.17(a) - Directors, Officers and Key Employees
Schedule 4.17(b) - Number of Employees, Independent Contractors, etc.
Schedule 4.17(c) - Labor Relations
Schedule 4.17(e) - Labor Proceedings
Schedule 4.17(f) - Joint Employer Matters
Schedule 4.17(g) - Independent Contractor Agreements
Schedule 4.18(a) - Employee Benefit Plans
Schedule 4.18(b) - ERISA Compliance
Schedule 4.19(a) - Environmental Laws - Violations
Schedule 4.19(b) - Environmental Compliance - Previously Owned Properties
Schedule 4.21(a) - Related Party Transactions
Schedule 4.21(b) - Distributions
Schedule 4.22 - Accounts and Notes Receivable
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Schedule 4.23 - Bank Accounts; Powers of Attorney
Schedule 4.24 - Suppliers and Vendors
Schedule 4.25 - Customers
Schedule 5.1 - Foreign Qualifications for the Purchaser
Schedule 5.3 - Purchaser Consents
Exhibits
--------
Exhibit A - Form of Escrow Agreement
Exhibit B - Form of General Release
Exhibit C - Form of Employment Agreement with Xxxx Xxxxxxx
Exhibit D - Form of Employment Agreement with Xxxx Xxxxxxxxx
Exhibit E - Form of Employment Agreement with Xxx Xxxxx
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INDEX OF DEFINED TERMS
The following capitalized terms, which may be used in more
than one Section or other location of this Agreement, are defined in the
following Sections or other locations:
Section or
Term other Location
---- --------------
Acquisition Proposal Annex II
Affiliate Annex II
Affiliate-Owned Asset 1.5
Agreement 10.14
Annual Balance Sheet 4.6(a)(i)
Annual Balance Sheet Date 4.6(a)(i)
Annual Financial Statements 4.6(a)(i)
Best Knowledge 10.14
Business Preamble
Business Day Annex II
Capital Lease Annex II
Cash Portion 1.2
Charter Documents Annex II
Closing Article II
Closing Date Article II
COBRA 4.18(b)(viii)
Code 4.9(a)
Commission Annex II
Company Caption
Company Employee Plans 4.18(a)
Competing Business 6.8(b)
Confidential Information 6.9(a)
Contract Annex II
Control Annex II
Covered Properties 4.19(b)
Employee Benefit Plan Annex II
Encumbrances Annex II
Environmental, Health and Safety Laws Annex II
Escrow Agreement 1.3
Exchange Proceeds 6.7
Exclusivity Period 6.4(a)
ERISA Annex II
ERISA Affiliate Annex II
Excluded Seller Representations 8.4
Financial Statements 4.6(a)(iii)
Funded Indebtedness Annex II
GAAP Annex II
General Release 7.2(h)(i)
Xxxxxxx Employment Agreement 7.2(h)(ii)
Governmental Entity Annex II
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Section or
Term other Location
---- --------------
Guaranty Annex II
HIPAA 4.18(b)(viii)
Income Taxes Annex II
Indemnified Persons Annex II
Indemnifying Persons Annex II
Intellectual Property Rights Annex II
Interim Balance Sheets 4.6(a)(ii)
Interim Financial Statements 4.6(a)(ii)
Latest Balance Sheet 4.6(a)(iii)
Latest Balance Sheet Date 4.6(a)(iii)
Latest Financial Statements 4.6(a)(iii)
Law Annex II
Leased Property 4.11(a)
Letter of Intent 10.2
Liability Annex II
Licensed Requisite Rights 4.12(a)(i)
Litigation Expense Annex II
Losses Annex II
Market Price Annex II
Material Adverse Change 4.8(i)
Material Contracts 4.13(b)
NASDAQ Annex II
Options Preamble
Orders Annex II
Owned Requisite Rights 4.12(a)(i)
Permits Annex II
Permitted Encumbrances Annex II
Person Annex II
Possible Transaction 6.4
Proceeding Annex II
Purchase Price 1.2
Purchaser Caption
Purchaser Indemnified Persons Annex II
Purchaser Indemnifying Persons Annex II
Purchaser Losses Annex II
Related Documents 7.2(h)
Representatives 6.9(a)
Requisite Rights 4.12(a)(i)
Restrictive Period 6.8(a)
Xxxxxxxxx Employment Agreement 7.2(h)(iii)
Second Cash Payment 1.2
Securities Annex II
Securities Act Annex II
vii
Section or
Term other Location
---- --------------
Securities Exchange Act Annex II
Seller Group Caption
Seller Indemnified Persons Annex II
Seller Indemnifying Persons Annex II
Seller Losses Annex II
Shares Preamble
Xxxxx Employment Agreement 7.2(h)(iv)
Stock Preamble
Stockholders Caption
Subsidiary Annex II
Survival Date 8.4(a)
Tax Return Annex II
Taxes Annex II
TGTL Shares Annex II
TGTL Shares Portion 1.2
Third Party 4.17(f)
Third Party Claim 8.3
viii
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT dated as of September 2, 2005, is by and
among TIGER TELEMATICS, INC., a Delaware corporation (the "Purchaser"),
GLOBICOM, INC., a Texas corporation (the "Company"), and those stockholders of
the Company listed on Annex I attached to this Agreement (collectively, the
"Stockholders"; and the Stockholders and the Company are collectively referred
to as the "Seller Group"). Certain capitalized terms used in this Agreement are
defined on Annex II attached to this Agreement.
PREAMBLE
The Company, together with its Subsidiaries, is engaged in the business
(collectively, the "Business") of providing wireless data communication services
to a broad range of end users across multiple wireless networks.
The Company presently has approximately twenty-nine (29) Persons that
own all of the issued and outstanding shares of the common stock, no par value
per share, of the Company (collectively, the "Stock") and/or options, warrants,
convertible loans or other rights for the purchase of shares of capital stock or
convertible securities of the Company (collectively, the "Options")1. In order
to comply with applicable exemptions from the registration requirements of the
Securities Act, qualification under applicable state securities laws and
compliance under other applicable Laws, the Purchaser has agreed to initially
purchase only those issued and outstanding shares of Stock that, immediately
prior to the Closing Date, were owned by an "accredited investor" as defined in
Rule 501 of Regulation D promulgated under the Securities Act. Upon the
completion and filing of all reports required to be filed by the Purchaser
pursuant to the Securities Exchange Act and the availability of an exemption
from the registration requirements of the Securities Act, qualification under
applicable state securities laws and compliance under other applicable Laws, the
Purchaser shall offer to acquire, on the same terms and conditions as provided
for herein, the remaining issued and outstanding shares of Stock that are owned
by any Person.
The Stockholders represent all of the Company's stockholders that are
"accredited investors" as defined in Rule 501 of Regulation D promulgated under
the Securities Act. The Stockholders are the legal owners of 6,861,476 issued
and outstanding shares of Stock, which amount represents 84.41% of the issued
and outstanding shares of Stock, on a fully diluted basis, as if all outstanding
options, warrants, convertible loans or other rights for the purchase of shares
of capital stock or convertible securities of the Company had been fully
exercised immediately prior to such issuance (and the resulting securities fully
converted into shares of Stock, if so convertible) as of such date. The shares
of Stock owned by the Stockholders are collectively referred to as the "Shares."
The Stockholders desire to sell to the Purchaser, and the Purchaser desires to
purchase from the Stockholders, all of the Shares, on the terms and subject to
the conditions contained in this Agreement.
ACCORDINGLY, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
___________________
1 All Options must be canceled or exercised prior to the Closing.
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ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Transfer of Shares.
On the terms and subject to the conditions contained in this Agreement,
at the Closing, the Stockholders shall sell, transfer, convey and assign to the
Purchaser, and the Purchaser shall purchase and acquire from the Stockholders,
all of the Shares, free and clear of all Encumbrances.
1.2 Purchase Price.
The aggregate consideration to be paid by the Purchaser for all of the
Stock shall consist of the sum of the following (such sum being called the
"Purchase Price"):
(i) $200,000 (the "Cash Portion") payable to the Company
in cash; plus
(ii) $120,000 (the "Second Cash Payment") payable to the
Company in cash within forty-five (45) days after the Company and
Cingular Wireless enter into a Master Cingular GSM/GPRS Wireless Data
Reseller Agreement, on terms and conditions acceptable to Purchaser;
plus
(iii) an aggregate total of 138,462 newly issued TGTL
Shares (the "TGTL Shares Portion"), which TGTL Shares shall be prorated
and issued to the Stockholders in accordance with the percentages set
forth on Schedule 1.3.
Notwithstanding anything in this Agreement to the contrary, the Purchase Price
is based on the acquisition of 100% of the issued and outstanding capital stock
of the Company, on a fully diluted basis, as if all outstanding options,
warrants, convertible loans or other rights for the purchase of shares of
capital stock or convertible securities of the Company had been fully exercised
immediately prior to such issuance (and the resulting securities fully converted
into shares of Stock, if so convertible) as of such date. In the event the
Purchaser acquires less than 100% of the issued and outstanding capital stock of
the Company, on a fully diluted basis, the Purchase Price shall be prorated
based on the actual percentage of shares of Stock, on a fully diluted basis,
that are actually sold and transferred to Purchaser.
1.3 Payment of the Purchase Price.
(a) At the Closing, the Purchaser shall pay or deliver the
Purchase Price as follows:
(i) the Cash Portion shall be paid to the Company, by
wire transfer of immediately available funds to the account designated
to the Company, and used to satisfy and pay all Funded Indebtedness of
the Company; and
(ii) the TGTL Shares Portion shall be delivered and placed
in escrow for a period of twelve (12) months following the Closing
pursuant to the terms of an Escrow Agreement substantially in the form
of Exhibit A (the "Escrow Agreement"), which shall satisfy Purchaser's
obligation to issue TGTL Shares to the Stockholders pursuant to Section
2
1.2(ii) of this Agreement. Upon releasing the TGTL Shares Portion from
escrow, the remaining balance of the TGTL Shares Portion shall be
delivered to each Stockholder in accordance with the percentages set
forth on Schedule 1.3, in the form of a stock certificate, duly
executed and issued by the Purchaser, representing such Stockholder's
pro rata portion of the remaining balance of the TGTL Shares Portion.
(b) Within forty-five (45) days after the Company and Cingular
Wireless enter into a Master Cingular GSM/GPRS Wireless Data Reseller Agreement,
on terms and conditions acceptable to Purchaser, Purchaser shall pay the Second
Cash Payment to the Company, by wire transfer of immediately available funds to
the account designated to the Company, which Second Cash Payment shall be used
by the Company to satisfy and pay all Funded Indebtedness of the Company.
1.4 Delivery of Shares.
At the Closing, in consideration of the Purchaser's delivery of the
Purchase Price pursuant to Section 1.3(a), (a) the Stockholders shall deliver to
the Company the certificate or certificates representing the Shares, duly
endorsed for transfer to the Purchaser or accompanied by duly executed stock
powers transferring the Shares to the Purchaser, in each case sufficient in form
and substance to convey to the Purchaser good title to all of the Shares, free
and clear of all Encumbrances, and (b) the Company shall deliver to the
Purchaser a certificate registered in the name of the Purchaser representing the
Shares.
1.5 Affiliate-Owned Assets.
To the extent that any asset, property, interest in property or right
relating to, or used or held for use by the Company or any of its Subsidiaries
in the conduct of the Business is owned by a Stockholder or any of his, her or
its Affiliates or by any other Affiliate of the Company or its Subsidiaries,
such asset, property, interest in property or right shall be deemed to be an
"Affiliate-Owned Asset" for purposes of this Agreement.
1.6 Further Assurances.
The Stockholders shall, at any time after the Closing, upon the request
of the Purchaser, do, execute, acknowledge and deliver, and cause to be done,
executed, acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney and other assurances as may be
required to transfer, convey, grant and confirm to and vest in the Purchaser
good title to (i) the Shares and (ii) the Affiliate-Owned Assets, in each case
free and clear of all Encumbrances.
ARTICLE II
THE CLOSING
On the terms and subject to the conditions contained in this Agreement,
the closing (the "Closing") of the transactions contemplated by this Agreement
shall take place at the offices of Xxxxx Xxxxxx & Xxxxx, counsel for the
Company, at the address set forth in Section 10.7, on September 2, 2005, or such
other place or later date as shall be mutually agreed upon by the parties,
provided that all of the conditions set forth in Article VII have been satisfied
or waived (other than those conditions which by their terms are intended to be
satisfied at the Closing). The date on which the Closing occurs shall be
referred to as the "Closing Date."
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ARTICLE III
REPRESENTATIONS AND WARRANTIES of THE STOCKHOLDERS
Each Stockholder hereby, severally as to himself, herself or itself
only and not jointly with or as to any of the other Stockholders, represents and
warrants to the Purchaser as of the date hereof as follows:
3.1 Title to the Shares.
Such Stockholder (i) is the lawful owner, of record and beneficially,
of the number of Shares set forth opposite his, her or its name on Annex I, and
(ii) has good and marketable title to such Shares, free and clear of any and all
Encumbrances whatsoever and with no restriction on the voting rights and other
incidents of record and beneficial ownership pertaining thereto. Such
Stockholder is not the subject of any bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar Proceeding affecting
creditors' rights and remedies generally. Except for this Agreement, there are
no Contracts or other understandings or arrangements between such Stockholder
and any other Person (including any of the other Stockholders, the Company, or
any of the Company's Subsidiaries) with respect to the acquisition, disposition,
transfer, registration or voting of, or any other matters in any way pertaining
or relating to, any of the capital stock or other securities of the Company
(including the Shares owned by such Stockholder). Such Stockholder does not have
any right whatsoever to receive or acquire any additional shares of capital
stock or other securities of the Company or any of its Subsidiaries.
3.2 Organization and Power.
If applicable, such Stockholder is a corporation, limited liability
company, partnership or trust duly organized or formed, validly existing, and in
good standing under the Laws of the jurisdiction of its incorporation or
formation and has all requisite power and authority (corporate, partnership or
otherwise) to own, lease and operate its assets and properties and to carry on
its business as presently conducted. If applicable, the Purchaser has been
furnished with true, correct and complete copies of the such Stockholder's
Charter Documents, in each case as amended and in effect on and as of the date
this representation is being made and is deemed made hereunder.
3.3 Authority; Authorization, Execution and Delivery; Enforceability; No
Conflict.
(a) Such Stockholder has the full and absolute legal right,
capacity, power and authority (if applicable, corporate or partnership or
otherwise) to execute, deliver and perform his, her or its obligations under
this Agreement and each Related Document to which he, she or it is or will be a
party, and to consummate the transactions contemplated hereby and thereby. If
applicable, such Stockholder's execution and delivery of this Agreement and each
Related Document to which he, she or it is or will be a party, and the
performance by such Stockholder of his, her or its obligations hereunder and
thereunder, have been duly and validly authorized by all requisite action on the
part of such Stockholder (including its board of directors and all committees
thereof and its stockholders). This Agreement and each Related Document to which
such Stockholder is or will be a party has been, or upon the execution hereof
and thereof will be, duly and validly executed and delivered by such
Stockholder, and this Agreement and each such Related Document is, or upon the
execution hereof and thereof will be, duly and validly executed and delivered by
4
such Stockholder and constitutes, or upon such Stockholder's execution and
delivery hereof and thereof, will constitute, a valid and binding obligation of
such Stockholder, enforceable against him, her or it in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar Laws affecting creditors'
rights and remedies generally, and, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding at law or
in equity).
(b) Neither the execution and delivery by such Stockholder of, nor
the performance of his, her or its obligations under, this Agreement or any of
the Related Documents to which he, she or it is or will be a party, nor the
consummation by such Stockholder of the transactions contemplated hereby or
thereby, nor the compliance by such Stockholder with any of the provisions
hereof or thereof, will (i) conflict with, or result in any violation of, or
cause a default (with or without notice or lapse of time or both) under, any
provision of the Company's or any of its Subsidiaries' Charter Documents, or, if
applicable, such Stockholder's Charter Documents, (ii) conflict with, or result
in any violation of, or cause a default (with or without notice or lapse of time
or both) under, or give rise to any right of termination, amendment,
cancellation or acceleration of any obligations contained in, or the loss of any
benefit under, any term, condition or provision of any provision of any Contract
to which such Stockholder, the Company or any of the Company's Subsidiaries is a
party or by which such Stockholder, the Company, any of the Company's
Subsidiaries, or any of his, her, its, or their assets or properties are or may
be bound, (iii) violate any Law applicable to such Stockholder, the Company, or
any of the Company's Subsidiaries, or (iv) result in an Encumbrance on or
against any assets, rights or properties of such Stockholder, the Company, or
any of the Company's Subsidiaries, or on or against any capital stock or other
securities of the Company or any of its Subsidiaries, or give rise to any claim
against the Company, any of the Company's Subsidiaries or the Purchaser.
3.4 Consents.
Except as set forth on Schedule 3.4, no Permit, authorization, consent
or approval of or by, or any notification of or filing with, any Person
(governmental or private) is required for, as a result of, or in connection with
the execution, delivery and performance by such Stockholder of this Agreement or
any of the Related Documents to which such Stockholder is or will be a party or
the consummation of the transactions contemplated hereby or thereby.
3.5 Brokers.
Such Stockholder has not employed any broker or finder or incurred any
Liability for any brokerage fees, commissions or finders' fees or similar
compensation or transaction based payments in connection with the transactions
contemplated by this Agreement or any of the Related Documents.
3.6 Investment Representations.
(a) The Stockholder is an "accredited investor" as defined in Rule
501 of Regulation D promulgated under the Securities Act.
(b) The Stockholder acknowledges and agrees that the TGTL Shares
issued to the Stockholder are to be held by the Stockholder solely for his, her
or its own account for investment purposes only and not for resale, subdivision,
transfer, assignment, pledge or other disposition. The Stockholder does not have
any present plan or intention to sell, subdivide, transfer, assign, pledge or
otherwise dispose of any part of the TGTL Shares issued to the Stockholder or to
enter into any Contract or other undertaking or arrangement with respect
thereto.
5
(c) The Stockholder has such knowledge and experience in financial
and business matters that the Stockholder is capable of evaluating the merits
and risks of an investment in the TGTL Shares and the Stockholder can bear the
economic risk of such investment. The Stockholder acknowledges and agrees that
the Purchaser has made available to the Stockholder and its attorneys and other
representatives all agreements, documents, records and books that the
Stockholder has requested relating to its investment in the TGTL Shares. The
Stockholder further acknowledges and agrees that it has had an opportunity to
ask questions of, and to receive answers from, individuals acting on behalf of
the Purchaser concerning the Purchaser and the terms and conditions of the
Stockholder's investment in the TGTL Shares hereunder, and answers have been
provided to all of such questions to the full satisfaction of the Stockholder.
(d) The Stockholder has relied only upon such advice as may have
been received from tax, accounting, legal and financial advisors. The
Stockholder has not received any assurances or representations from any Person
associated with the Purchaser or its Affiliates as to the benefits, economic,
tax or otherwise, likely to result from its investment in the TGTL Shares.
(e) The Stockholder understands that there are substantial
restrictions on the transferability of the TGTL Shares, that there will be no
public market for the TGTL Shares, and, accordingly, the Stockholder will need
to bear the economic risk of its investment for an indefinite period of time and
will not be readily able to liquidate its investment in case of emergency.
(f) The Stockholder understands that the TGTL Shares are
restricted securities under the Securities Act and that they may not be resold,
subdivided, transferred, assigned, pledged or otherwise disposed of unless they
are first registered under the federal securities Laws or unless an exemption
from such registration is available.
(g) The Stockholder understands that the Purchaser has no
obligation or intention to register the TGTL Shares.
(h) The Stockholder is not a Person that is, or would cause the
Purchaser to be, disqualified pursuant to Rule 262 promulgated under the
Securities Act.
(i) The Stockholder understands that the Purchaser is relying on
the representations and warranties set forth in this Section 3.6 in issuing the
TGTL Shares to the Stockholder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE SELLER GROUP
Each member of the Seller Group hereby jointly and severally represents
and warrants to the Purchaser as of the date hereof as follows:
4.1 Organization, Power, Authority and Good Standing.
The Company and each of its Subsidiaries are corporations duly
organized, validly existing and in good standing under the respective Laws of
the jurisdiction of their incorporation and have all requisite power and
authority (corporate or otherwise) to own, lease and operate their respective
assets and properties and to carry on their respective businesses (all of which
collectively comprise the Business) as presently conducted and as presently
proposed to be conducted. The Company and each of its Subsidiaries are duly
6
qualified and in good standing to transact business as a foreign Person in those
jurisdictions set forth on Schedule 4.1, which jurisdictions constitute all of
the jurisdictions in which the character of the property owned, leased or
operated by the Company or such Subsidiaries or the nature of the business or
activities conducted by the Company or such Subsidiaries makes such
qualification necessary. The Purchaser has been furnished with true, correct and
complete copies of the Charter Documents of the Company and each of its
Subsidiaries, in each case as amended and in effect on and as of the date this
representation is being made and is deemed made hereunder. Except as set forth
on Schedule 4.1, neither the Company nor any of its Subsidiaries has (i) engaged
in any business or activity other than the Business, or (ii) used any trade name
or assumed name or other corporate name at any time.
4.2 Authority; Authorization, Execution and Delivery; Enforceability; No
Conflict.
(a) The Company has all requisite power and authority (corporate
or otherwise) to execute, deliver and perform its obligations under this
Agreement and each Related Document to which it is or will be a party, and to
consummate the transactions contemplated hereby and thereby. The Company's
execution and delivery of this Agreement and each Related Document to which it
is or will be a party, and the performance by the Company of its obligations
hereunder and thereunder, have been duly and validly authorized by all requisite
action on the part of the Company (including its board of directors and all
committees thereof and its stockholders). This Agreement and each Related
Document to which the Company is or will be a party has been, or upon the
Company's execution hereof and thereof will be, duly and validly executed and
delivered by the Company and constitutes, or upon the Company's execution and
delivery hereof and thereof will constitute, a valid and binding obligation of
the Company, enforceable against the Company in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws affecting creditors' rights and
remedies generally, and, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(b) Neither the execution and delivery by the Company and the
Stockholders of, nor the performance of their respective obligations under, this
Agreement or any of the Related Documents, as applicable, nor the consummation
by the Company and the Stockholders of the transactions contemplated hereby or
thereby, nor the compliance by the Company and the Stockholders with any of the
provisions hereof and thereof, will (i) conflict with, or result in any
violation of, or cause a default (with or without notice or lapse of time or
both) under, any provision of the Company's or any of its Subsidiaries' Charter
Documents, (ii) conflict with, or result in any violation of, or cause a default
(with or without notice or lapse of time or both) under, or give rise to any
right of termination, amendment, cancellation or acceleration of any obligations
contained in, or the loss of any benefit under, any term, condition or provision
of any provision of any Contract to which the Company or any of its Subsidiaries
is a party, or by which the Company or any of its Subsidiaries or any of their
respective assets or properties are or may be bound, (iii) violate any Law
applicable to the Company or any of its Subsidiaries, or (iv) result in an
Encumbrance on or against any assets, rights or properties of the Company or any
of its Subsidiaries, or on or against any capital stock or other securities of
the Company or any of its Subsidiaries, or give rise to any claim against the
Company, any of the Company's Subsidiaries or the Purchaser.
7
4.3 Consents.
Except as set forth on Schedule 4.3, no Permit, authorization, consent
or approval of or by, or notification of or filing with, any Person
(governmental or otherwise) is required for, as a result of, or in connection
with the execution, delivery and performance by the Company of this Agreement or
any of the Related Documents to which it is or will be a party or the
consummation of the transactions contemplated hereby or thereby.
4.4 Capitalization.
(a) The authorized capital stock of the Company and each of its
Subsidiaries is set forth on Schedule 4.4(a), which schedule also sets forth the
total number of outstanding shares of the Company and each of its Subsidiaries.
All such outstanding shares disclosed on Schedule 4.4(a) are duly and validly
issued and outstanding, fully paid and non-assessable, with no personal
Liability attached to the ownership thereof, and are held of record and
beneficially by the Persons, and in the respective amounts, set forth on
Schedule 4.4(a), without Encumbrance.
(b) There are no outstanding securities that are convertible into,
exchangeable for, or carrying the right to acquire, any equity securities of the
Company or any of its Subsidiaries, or subscriptions, warrants, options, calls,
puts, convertible securities, registration or other rights, arrangements or
commitments obligating the Company or any of its Subsidiaries to issue, sell,
register, purchase or redeem any of its respective securities or any ownership
interest or rights therein. Except as set forth on Schedule 4.4(b), there are no
Contracts, commitments, arrangements, understandings or restrictions to which
any Stockholder, or any other Person is bound relating in any way to any shares
of capital stock or other securities of the Company or any of its Subsidiaries,
including voting trusts or other similar agreements or understandings with
respect to the voting of the Company's or any of its Subsidiaries' capital stock
or other securities. There are no stock appreciation rights, phantom stock
rights, or similar rights or arrangements outstanding with respect to the
Company or any of its Subsidiaries.
(c) All securities issued by the Company or any of its
Subsidiaries have been issued in transactions exempt from registration under the
Securities Act and all applicable state securities or "blue sky" Laws, and
neither the Company nor any of its Subsidiaries has violated the Securities Act
or any applicable state securities or "blue sky" Laws in connection with the
issuance of any such securities.
(d) The Stockholders represent all of the Company's stockholders
that are "accredited investors" as defined in Rule 501 of Regulation D
promulgated under the Securities Act. The Stockholders are the legal owners of
6,861,476 issued and outstanding shares of Stock, which amount represents 84.40%
of the issued and outstanding shares of Stock, on a fully diluted basis, as if
all outstanding options, warrants, convertible loans or other rights for the
purchase of shares of capital stock or convertible securities of the Company had
been fully exercised immediately prior to such issuance (and the resulting
securities fully converted into shares of Stock, if so convertible) as of such
date.
4.5 Subsidiaries; Investments.
Except as set forth on Schedule 4.5, neither the Company nor any of its
Subsidiaries owns or holds, directly or indirectly, any equity interest in or
debt obligation of (excluding accounts receivable arising in the ordinary course
of business, consistent with past practice) any other Person.
8
4.6 Financial Information.
(a) Schedule 4.6(a) contains true, correct and complete copies of
the following:
(i) the unaudited consolidated balance sheets of the
Company and its Subsidiaries as of December 31, 2004 (the "Annual
Balance Sheet"; and such date being referred to as the "Annual Balance
Sheet Date"), December 31, 2003, and December 31, 2002, and the related
unaudited consolidated statements of income, stockholders' equity and
cash flows of the Company and its Subsidiaries for the fiscal years
then ended, including any footnotes and schedules thereto (all of the
foregoing, including the Annual Balance Sheet being collectively
referred to as the "Annual Financial Statements");
(ii) the unaudited consolidated balance sheets of the
Company and its Subsidiaries as of January 31, 2005, and each
subsequent month then ended through the Closing Date (collectively, the
"Interim Balance Sheets"), and the unaudited consolidated statements of
income, stockholders' equity and cash flows of the Company and its
Subsidiaries for the one-month period then ended, and each subsequent
monthly period then ended through the Closing Date, including any and
all footnotes and schedules thereto (all of the foregoing, including
the Interim Balance Sheets, being collectively referred to as the
"Interim Financial Statements"); and
(iii) the unaudited consolidated balance sheet of the
Company and its Subsidiaries as of December 31, 2004 (the "Latest
Balance Sheet"; and such date being referred to as the "Latest Balance
Sheet Date"), and the unaudited consolidated statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries
for the twelve-month period then ended, including any and all footnotes
and schedules thereto (all of the foregoing, including the Latest
Balance Sheet, being collectively referred to as the "Latest Financial
Statements"; and the Annual Financial Statements, the Interim Financial
Statements and the Latest Financial Statements being collectively
referred to as the "Financial Statements").
(b) The Financial Statements (i) are true, correct and complete,
(ii) fairly present the consolidated financial position of the Company and each
of its Subsidiaries as of the dates indicated and the consolidated results of
operations of the Company and each of its Subsidiaries for the periods
indicated, (iii) have been prepared in accordance with GAAP (to the extent GAAP
has been correctly applied) consistently applied throughout the periods covered
thereby (subject to the absence of footnotes and schedules that may be required
by GAAP and, in the case of the Interim Financial Statements, normal year-end
adjustments that are not material individually or in the aggregate), and (iv)
are in accordance with the books and records of the Company and each of its
Subsidiaries, which books and records are true, correct and complete and have
been maintained in a manner consistent with historical practice.
(c) Schedule 4.6(c) contains a true, correct and complete summary
of all accounts payable, accrued expenses and accounts receivable of the Company
and each of its Subsidiaries as of the most recent practicable date prior to the
date hereof, which schedule sets forth the name of the account debtor (in the
case of accounts receivable) or account creditor (in the case of accounts
payable) and the amount owed by such account debtor or owing to such account
creditor (identifying the portion of such amount that is current, thirty (30)
days past due, sixty (60) days past due, ninety (90) days past due, and more
than ninety (90) days past due).
9
4.7 Absence of Undisclosed Liabilities.
Except as set forth on Schedule 4.7, neither the Company nor any of its
Subsidiaries has any Liability except (i) to the extent expressly reflected or
reserved against on the Latest Balance Sheet, (ii) Liabilities under Contracts
(other than any Liability arising from any breach or violation thereof or
default thereunder), and (iii) Liabilities incurred in the ordinary course of
business, consistent with past practice, since the Latest Balance Sheet Date
(other than any such Liability arising from any breach or violation of, or
default under, any Contract, or arising from any breach of warranty, tort,
infringement, or violation of any Law or any Proceeding). There are no loss
contingencies (as such term is used in Statement of Financial Accounting
Standards No. 5 issued by the Financial Accounting Standards Board in March
1975) of or affecting the Company or any of its Subsidiaries that are not
adequately provided for or disclosed on the Latest Balance Sheet or in the
footnotes or schedules thereto. Neither the Company nor any of its Subsidiaries
has, either expressly or by operation of Law, assumed or undertaken any
Liability of any other Person, including any obligation for corrective or
remedial action relating to Environmental, Health and Safety Laws.
4.8 Absence of Changes.
Since the Latest Balance Sheet Date, except as set forth on Schedule
4.8, the Company and each of its Subsidiaries have been operated in the ordinary
course of business, consistent with past practice, and there has not been:
(i) any event or condition that has resulted in or could
reasonably be expected to result in an adverse change in the business,
operations, assets, condition (financial or otherwise), operating
results, liabilities, relations with employees, customers, suppliers or
prospects of the Company or any of its Subsidiaries, or any casualty
loss or damage to the assets or properties of the Company or any of its
Subsidiaries, whether or not covered by insurance (a "Material Adverse
Change");
(ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital
stock or other securities of the Company or any of its Subsidiaries, or
any direct or indirect redemption, purchase or other acquisition of any
capital stock or other securities of the Company or any of its
Subsidiaries, or any other payments of any nature directly or
indirectly to or for the benefit of any Stockholder or any Affiliate of
the Company (whether or not on or with respect to any shares of capital
stock or other securities of the Company or any of its Subsidiaries
owned by such Stockholder or Affiliate), other than salaries and
benefits paid in the ordinary course of business, consistent with past
practice;
(iii) any general uniform increase in the compensation of
employees (including any increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment) of the Company or any of
its Subsidiaries, or any increase in or prepayment of any such
compensation payable to or to become payable to any director, officer
or key employee;
(iv) any acquisition or disposition of assets or
properties owned by the Company or any of its Subsidiaries, other than
the sale or other disposition of inventories for fair value in the
ordinary course of business, consistent with past practice;
10
(v) any agreement or commitment on the part of the
Company or any of its Subsidiaries to merge, amalgamate or consolidate
with or into, or otherwise acquire, any other Person or division
thereof;
(vi) any change in depreciation or amortization policies
or rates previously adopted, any change in income or expense
recognition or bad debt reserve, write-down or write-off policies
previously adopted, any write-up or write-down of inventory or other
assets or any other change in other accounting or in Tax reporting or
methods or practices followed by the Company or any of its
Subsidiaries;
(vii) any change in the manner in which products or
services of the Company or any of its Subsidiaries are marketed
(including any change in prices), any change in the manner in which the
Company or any of its Subsidiaries extends discounts or credit to
customers, or any change in the manner or terms by which the Company or
any of its Subsidiaries collects accounts receivable;
(viii) any failure by the Company or any of its Subsidiaries
to make scheduled capital expenditures or investments, or any failure
to pay trade accounts payable or any other Liability of the Company or
any of its Subsidiaries when due; or
(ix) any Contract or other understanding or arrangement
(other than this Agreement and the Related Documents), whether in
writing or otherwise, to take any of the actions specified in the
foregoing clauses (i) through (viii).
4.9 Tax Matters.
(a) Except as set forth on Schedule 4.9(a), the Company, each of
its Subsidiaries, and each other Person included in any consolidated or combined
Tax Return and part of an affiliated group, within the meaning of Section 1504
of the Internal Revenue Code of 1986, as amended (the "Code"), of which the
Company or any of its Subsidiaries is or has been a member:
(i) has timely paid or caused to be paid all Taxes
required to be paid by it through the date hereof and as of the Closing
Date (including any Taxes shown due on any Tax Return);
(ii) has filed or caused to be filed in a timely and
proper manner (within any applicable extension periods) all Tax Returns
required to be filed by it with the appropriate Governmental Entities
in all jurisdictions in which such Tax Returns are required to be
filed; and
(iii) has not requested or caused to be requested any
extension of time within which to file any Tax Return, which Tax Return
has not since been filed.
(b) The Company has previously delivered to the Purchaser true,
correct and complete copies of all Tax Returns filed by or on behalf of the
Company and each of its Subsidiaries for all completed Tax years of the Company
or such Subsidiary that remain open for audit or review by the relevant Taxing
authority. All such Tax Returns were true, correct and complete.
(c) Except as set forth in Schedule 4.9(c):
11
(i) neither the Company nor any of its Subsidiaries has
been notified by the Internal Revenue Service or any other Taxing
authority that any issues have been raised (and no such issues are
currently pending) by the Internal Revenue Service or any other Taxing
authority in connection with any Tax Return of the Company or any of
its Subsidiaries, there are no pending Tax audits with respect to the
Company or any of its Subsidiaries, and no waivers of statutes of
limitations related to Taxes have been given or requested with respect
to the Company or any of its Subsidiaries;
(ii) full and adequate provision has been made (A) on the
Latest Balance Sheet for all Taxes payable by the Company and each of
its Subsidiaries for all periods ending on or prior to the Latest
Balance Sheet Date, and (B) on the books and records of the Company and
each of its Subsidiaries for all Taxes payable by the Company and such
Subsidiaries for all periods beginning on or after the Latest Balance
Sheet Date;
(iii) neither the Company nor any of its Subsidiaries has
incurred any Tax Liability from and after the Latest Balance Sheet Date
other than Taxes incurred in the ordinary course of business,
consistent with past practice;
(iv) neither the Company nor any of its Subsidiaries (A)
is, or has made an election to be treated as, a "consenting
corporation" under Section 341(f) of the Code, or (B) is, or has been,
a "personal holding company" within the meaning of Section 542 of the
Code;
(v) the Company and each of its Subsidiaries have
complied in all respects with all applicable Laws relating to the
collection or withholding of Taxes (including sales Taxes and the
withholding of Taxes from the wages of employees);
(vi) neither the Company nor any of its Subsidiaries is,
or has ever been, a party to any Tax sharing, indemnity of similar
agreement with any Person;
(vii) neither the Company nor any of its Subsidiaries has
incurred any Liability to make or possibly make any payments, either
alone or in conjunction with any other payments, that:
(A) are not deductible under, or would otherwise
constitute a "parachute payment" within the meaning of,
Section 280G of the Code (or any corresponding provision of
domestic or foreign income Tax Law); or
(B) are or may be subject to the imposition of
an excise Tax under Section 4999 of the Code;
(viii) neither the Company nor any of its Subsidiaries has
agreed to, or is required to, make any adjustments or changes either
on, before or after the Closing Date, to its accounting methods
pursuant to Section 481 of the Code, and the Internal Revenue Service
has not proposed any such adjustments or changes in the accounting
methods of the Company or any such Subsidiary;
(ix) no claim has ever been made by any Taxing authority
in a jurisdiction in which the Company or any of it Subsidiaries does
not file Tax Returns that the Company or any such Subsidiary is, or may
be subject to, taxation by that jurisdiction; and
12
(x) neither the Company, nor any of its Subsidiaries nor
any Stockholder is a foreign Person within the meaning of Section
1.1445-2(b) of the rules and regulations promulgated under Section 1445
of the Code.
4.10 Title to Assets, Properties and Rights and Related Matters.
(a) The Company and each of its Subsidiaries, as applicable, have
good and marketable title (or a valid leasehold interest) to all of the assets,
properties and interests in properties, real, personal or mixed, reflected on
the Latest Balance Sheet or acquired after the Latest Balance Sheet Date (except
for assets or properties sold or otherwise disposed of since the Latest Balance
Sheet Date in the ordinary course of business, consistent with past practice,
and accounts receivable and notes receivable paid in full subsequent to the
Latest Balance Sheet Date in the ordinary course of business, consistent with
past practice), free and clear of all Encumbrances, of any kind or character,
except for those Encumbrances set forth on Schedule 4.10(a) and Permitted
Encumbrances. Such assets are in good operating condition and repair (normal
wear and tear excepted), are sufficient to operate the Business as presently
conducted and as presently proposed to be conducted, are suitable for the uses
for which they are used in the Business, and are not subject to any condition
that materially interferes with the economic value or use thereof. With respect
to any leased assets, such assets are in such condition as to permit the
surrender thereof to the lessors thereunder on the date hereof without any cost
or expense for repair or restoration as if the related leases were terminated or
expired on the date hereof in the ordinary course of business, consistent with
past practice.
(b) Schedule 4.10(b) contains a true, correct and complete list of
all tangible personal property owned by the Company and each of its Subsidiaries
as of the Closing Date. Except for any inventory, supplies, equipment, tractors,
trailers and automobiles in transit in the ordinary course of business,
consistent with past practice, all tangible personal property listed on Schedule
4.10(b) is located on the Company's or its Subsidiaries' premises listed on
Schedule 4.11(a).
4.11 Real Property - Owned or Leased.
(a) Schedule 4.11(a) contains a list and brief description of all
of the real property owned, leased, subleased or otherwise occupied by the
Company or any of its Subsidiaries. The description of each parcel of real
property subject to one or more leases (the "Leased Property") includes the
names of the lessor and the lessee and the basic terms thereof. The lease rate
charged to the Company or any of its Subsidiaries, as applicable, for each
parcel of Leased Property that is leased by the Company or any of its
Subsidiaries, as applicable, from a Stockholder or from an Affiliate of the
Company or any of its Subsidiaries is not greater than the fair market value
rental that would be obtained by the Company or any such Subsidiary in an arms'
length transaction with a Person that is not an Affiliate. The real property
listed on Schedule 4.11(a) constitutes all real property used or occupied by the
Company or any of its Subsidiaries in connection with the Business.
(b) With respect to the real property listed on Schedule 4.11(a),
except as set forth on Schedule 4.11(b):
(i) no portion of the real property is subject to any
pending condemnation or other Proceeding, and, to the best knowledge of
the Seller Group, there is no threatened condemnation or other
Proceeding with respect thereto;
13
(ii) the physical condition of the real property is
sufficient to permit the continued conduct of the Business as presently
conducted and as presently proposed to be conducted, subject to the
provision of usual and customary maintenance and repairs performed in
the ordinary course of business, consistent with past practice, with
respect to similar properties of like age and construction;
(iii) the Company and its Subsidiaries, as applicable,
indicated on Schedule 4.11(b) are the fee owners of the real property
or the owners and holders of all the leasehold estates purported to be
granted by the leases associated with the Leased Property, as
applicable;
(iv) there are no Contracts to which the Company, any of
its Subsidiaries, or any of their respective Affiliates is a party,
granting to any party or parties the right of use or occupancy of any
portion of the real property;
(v) there are no parties (other than the Company and its
Subsidiaries) in possession of any portion of the real property; and
(vi) no notice of any increase in the assessed valuation
of any portion of the real property and no notice of any contemplated
special assessment with respect to any portion of the real property has
been received by the Company or any of its Subsidiaries, and, to the
best knowledge of the Seller Group, there is no threatened increase in
assessed valuation or threatened special assessment pertaining to any
portion of the real property.
4.12 Intellectual Property.
(a) Except as set forth on Schedule 4.12(a):
(i) the Company and each of its Subsidiaries, as
applicable, own, have the right to use, sell, license and dispose of,
and have the right to bring actions for the infringement of, all
Intellectual Property Rights used in, necessary for, or required for
the conduct of the Business as presently conducted and as presently
proposed to be conducted (collectively, the "Owned Requisite Rights"),
other than those Intellectual Property Rights for which the Company or
any such Subsidiary has a valid license, all of which are listed on
Schedule 4.12(a) (collectively, the "Licensed Requisite Rights"; and
together with the Owned Requisite Rights, the "Requisite Rights"), and
such rights to use, sell, license, dispose of and bring actions are
exclusive with respect to the Owned Requisite Rights;
(ii) neither the Company nor any of its Subsidiaries has
granted any Person the right to use any of the Owned Requisite Rights;
(iii) there exists no default, or any event which upon the
giving of notice or the passage of time, or both, would give rise to a
claim of a default by the Company or any of its Subsidiaries under the
licenses granting the Company and/or any of its Subsidiaries the
Licensed Requisite Rights;
(iv) the Company and each of its Subsidiaries have taken
all commercially reasonable and practicable steps designed to safeguard
and maintain (A) the secrecy and confidentiality of the Company's and
its Subsidiaries' Confidential Information, and (B) the proprietary
14
rights of the Company and each of its Subsidiaries in all of the
Requisite Rights;
(v) neither the Company nor any of its Subsidiaries has
interfered with, infringed upon, misappropriated or otherwise come into
conflict with any Intellectual Property Rights of any Person or
committed any acts of unfair competition or received from any Person in
the past five years any notice, charge, complaint, claim or assertion
thereof, and no such charge, complaint, claim or assertion is impliedly
threatened by an offer to license from another Person; and
(vi) neither the Company nor any of its Subsidiaries has
sent to any Person in the past five years, or otherwise communicated to
any Person, any notice, charge, complaint, claim or other assertion of
any present, impending or threatened interference with, infringement
upon, misappropriation of, or other conflict with any Intellectual
Property Rights of the Company or any of its Subsidiaries by such other
Person or any acts of unfair competition by such other Person, nor, to
the best knowledge of the Seller Group, is any such interference,
infringement, misappropriation, conflict or act of unfair competition
occurring or threatened.
(b) Schedule 4.12(b) contains a true, correct and complete list of
all applications, filings and other formal actions made or taken pursuant to any
Laws by the Company and/or any of its Subsidiaries to perfect or protect their
respective interests in their respective Intellectual Property Rights.
4.13 Agreements, No Defaults, Etc.
(a) Schedule 4.13(a) contains a true, correct and complete list
and a brief description of all Contracts to which the Company or any of its
Subsidiaries is a party and (x) that were entered into or made outside the
ordinary course of business, consistent with past practice, or (y) that were
entered into or made in the ordinary course of business, consistent with past
practice, and are described in clauses (i) through (xiii) of the next sentence
of this Section 4.13. Except as set forth on Schedule 4.13(a), neither the
Company nor any of its Subsidiaries is a party to any of the following
Contracts:
(i) distributorship, dealer, sales, advertising, agency,
manufacturer's representative, or any other Contract relating to the
payment of a commission;
(ii) any Contract relating to the employment of any
officer, employee or consultant or any other type of Contract or other
understanding or arrangement with any officer, employee or consultant,
including any Contract or other understanding or arrangement relating
to severance payments;
(iii) any indenture, mortgage, promissory note, loan
agreement, pledge agreement, guaranty or conditional sale or other
Contract relating to the borrowing of money, a line of credit or a
Capital Lease;
(iv) any Contract for charitable contributions in excess
of $5,000 individually or $10,000 in the aggregate;
(v) any Contract for capital expenditures in excess of
$10,000 individually or $50,000 in the aggregate;
15
(vi) any Contract for the sale of any assets, properties
or rights other than the sale of services or products in the ordinary
course of business, consistent with past practice;
(vii) any Contract pursuant to which the Company or any of
its Subsidiaries is a lessee of or holds or operates any machinery,
equipment, motor vehicles, office furniture, fixtures, products,
merchandise or other personal property owned by any other Person in
excess of $10,000 individually or $50,000 in the aggregate;
(viii) any Contract relating to the lending or investing of
funds;
(ix) any Contract relating to any form of intangible
property, including any Intellectual Property Rights;
(x) any Contract that restricts the Company or any of its
Subsidiaries from engaging in any aspect of the Business or any other
business anywhere in the world;
(xi) any Contract or group of related Contracts with the
same Person or group of Affiliated Persons (excluding purchase orders
entered into in the ordinary course of business, consistent with past
practice, that are to be completed within three months of entering into
such purchase orders) for the purchase or sale of products or services
under which the undelivered or unperformed balance or portion thereof
(including the aggregate undelivered or unperformed balance or portion
under any such Contracts between the same Person and the Company or any
of its Subsidiaries) has a selling price in excess of $50,000;
(xii) any Contract for the acquisition or disposition of a
Person or a division of a Person made within the preceding five years
(whether or not such acquisition or disposition was consummated); or
(xiii) any other Contract material to the Business.
(b) The Contracts disclosed on Schedule 4.4(b), the leases (and
any other Contracts) disclosed on Schedule 4.11(a), the licenses (and any other
Contracts) disclosed on Schedule 4.12(a), the insurance policies (and any other
Contracts) disclosed on Schedule 4.16(a), the Company Employee Plans (and any
other Contracts) disclosed on Schedule 4.18(a), and the Contracts disclosed on
Schedule 4.21 are incorporated by reference onto Schedule 4.13. The Contracts
disclosed on Schedule 4.13, together with the Contracts incorporated by
reference onto Schedule 4.13, are collectively referred to as the "Material
Contracts."
(c) All Material Contracts (i) are in full force and effect, (ii)
constitute legal, valid and binding obligations of the Company and/or its
Subsidiaries that are parties thereto and, to the best knowledge of the Seller
Group, the other parties thereto, and (iii) are enforceable in accordance with
their terms against the Company and/or its Subsidiaries that are parties thereto
and, to the best knowledge of the Seller Group, the other parties thereto, in
each case subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity). The Company and each of its Subsidiaries have performed all of the
respective obligations required to be performed by them to date pursuant to the
terms of the Material Contracts, and there exists no default, or any event which
upon the giving of notice or the passage of time, or both, would give rise to a
16
claim of a default in the performance by the Company or any of its Subsidiaries
or, to the best knowledge of the Seller Group, any other party to any of the
Material Contracts of their respective obligations thereunder. The Purchaser has
been furnished with true, correct and complete copies of all written Material
Contracts and Schedule 4.13(a) (including Contracts incorporated by reference
thereon) contains true, correct and complete descriptions of all oral Contracts
listed on Schedule 4.13(a) (including Contracts incorporated by reference
thereon).
(d) Schedule 4.13(d) contains a true, correct and complete list of
all Funded Indebtedness of the Company and each of its Subsidiaries, in each
case showing the aggregate principal amount thereof (and the aggregate amount of
any undrawn commitments with respect thereto), the name of the lender, and the
name of the respective borrower and any other Person that directly or indirectly
guaranteed such Funded Indebtedness.
4.14 Litigation, Etc.
(a) Except as disclosed on Schedule 4.14(a), there are no (i)
Proceedings pending or, to the best knowledge of the Seller Group, threatened
against the Company or any of its Subsidiaries, whether at law or in equity,
civil or criminal in nature, or before or by any Governmental Entity or
arbitrator, nor, to the best knowledge of the Seller Group, does there exist any
basis therefor, or (ii) Orders of any Governmental Entity or arbitrator with
respect to, involving or against the Company or any of its Subsidiaries. The
Company and each of its Subsidiaries have delivered to the Purchaser all
material documents and correspondence relating to the matters disclosed on
Schedule 4.14(a).
(b) Schedule 4.14(b) lists each matter described in Section
4.14(a) that (i) resulted in any criminal sanctions against the Company or any
of its Subsidiaries, or (ii) was in existence within the last five years and
resulted in payments in excess of $10,000 by the Company or any of its
Subsidiaries (whether as a result of a judgment, civil fine, settlement or
otherwise).
4.15 Compliance with Laws.
The Company and each of its Subsidiaries (a) have complied with, and
are in compliance with, all Laws, Orders and Permits applicable to them and the
Business, and (b) have all Permits used or necessary in the conduct of the
Business. All of the Permits referred to in the preceding sentence are listed on
Schedule 4.15 and are in full force and effect. No violations with respect to
any of the Permits listed on Schedule 4.15 have occurred or are or have been
recorded, and no Proceeding is pending or, to the best knowledge of the Seller
Group, threatened to revoke or limit any such Permits. No investigation or
review by any Governmental Entity with respect to the Company or any of its
Subsidiaries is pending or, to the best knowledge of the Seller Group,
threatened, nor has any Governmental Entity notified the Company or any of its
Subsidiaries of its intention to conduct the same. To the best knowledge of the
Seller Group, there is no proposed change in any applicable Law that would
require the Company or any of its Subsidiaries to obtain any Permit not listed
on Schedule 4.15 in order to conduct the Business as presently conducted and as
presently proposed to be conducted. Neither the Company nor any of its
Subsidiaries has received any opinion or memorandum or legal advice from legal
counsel to the effect that it is exposed, from a legal standpoint, to any
Liability or disadvantage that may be material to its business, financial
condition, operations, property or affairs. No member of the Seller Group is
17
aware of any proposed Law that would prohibit or restrict the Company or any of
its Subsidiaries from, or otherwise materially and adversely affect the Company
or any of its Subsidiaries in, conducting the Business in any jurisdiction in
which the Company or any such Subsidiary is presently conducting business or is
presently proposing to conduct business.
4.16 Insurance.
(a) Schedule 4.16(a) contains a true, correct and complete list of
all policies of liability (including "tail"), theft, fidelity, life, fire,
product liability, cargo, workers' compensation, health and other forms of
insurance held by or on behalf of the Company or any of its Subsidiaries
(specifying the insurer, amount of coverage, basis of coverage (i.e.,
"occurrence" or "claims made"), type of insurance, policy number and any pending
claims thereunder). All such coverages have been maintained at all times during
the course of the operation of the Business. The Company and each of its
Subsidiaries is insured against all risks usually insured against by Persons
conducting similar businesses and operating similar properties in the localities
where the Business is conducted and the properties of the Company and its
Subsidiaries are located, under policies of such types and in such amounts as
are customarily carried by such Persons.
(b) Except as set forth on Schedule 4.16(b), with respect to each
policy of insurance listed on Schedule 4.16(a): (i) all premiums with respect
thereto are currently paid and are not subject to adjustment, (ii) neither the
Company nor any of its Subsidiaries is in default in any respect with respect to
its respective obligations under such policy, (iii) to the best knowledge of the
Seller Group, no basis exists that would give any insurer under any such policy
the right to cancel or unilaterally reduce or limit the stated coverages
contained in such policy, (iv) there are no outstanding claims currently pending
under such policy that could be expected to cause an increase in the insurance
rates of the Company or any of its Subsidiaries, and no facts or circumstances
exist that might be expected to relieve the insurer under such policy of its
obligations to satisfy in full any claim thereunder, and (v) neither the Company
nor any of its Subsidiaries has received any notice that any such policy has
been or shall be canceled or terminated or will not be renewed on substantially
the same terms as are now in effect or that the premium on such policy shall be
increased on the renewal thereof.
4.17 Labor Relations; Employees.
(a) Schedule 4.17(a) sets forth a list of all directors, officers
and key employees of the Company and each of its Subsidiaries as of the date
hereof, together with their respective titles (if any) and positions held, their
current compensation (including salary, wages, bonuses and commissions), and the
respective dates on which they commenced employment. To the extent any such
employee is on a leave of absence, Schedule 4.17(a) indicates the nature of such
leave of absence and such employee's anticipated date of return to active
employment. No officer or key employee listed on Schedule 4.17(a) has given the
Company or any of its Subsidiaries notice, and, to the best knowledge of the
Seller Group, no officer or key employee listed on Schedule 4.17(a) has any
plans or intends to terminate his or her employment with the Company or such
Subsidiary. No former officer or key employee has left the service of the
Company or any of its Subsidiaries within the last six months.
(b) Schedule 4.17(b) sets forth the aggregate number of employees,
other non-supervisory personnel, independent contractors and owner/operators
that work for the Company or any of its Subsidiaries, specifying in the case of
the Company and each such Subsidiary the number that belong to a union or are
otherwise covered by an employment agreement or a collective bargaining
agreement, identified by terminal location or facility.
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(c) Except as set forth on Schedule 4.17(c), (i) the Company and
each of its Subsidiaries generally enjoy good relations with all of their
respective employees, and there is no labor strike, dispute or grievance, or
work slowdown or stoppage actually pending or, to the best knowledge of the
Seller Group, threatened against or involving the Company or any of its
Subsidiaries, and (ii) neither the Company nor any of its Subsidiaries is a
party to or bound by any collective bargaining agreement, union Contract or
similar agreement, no such Contract or agreement is currently being negotiated
by the Company or any of its Subsidiaries, no labor union has taken any action
with respect to organizing the employees of the Company or any of its
Subsidiaries, and no representation question exists with respect to any such
employees.
(d) The Company, each of its Subsidiaries, and each of their
respective ERISA Affiliates have complied in all respects with all Laws relating
to the hiring and retention of all employees, leased employees and independent
contractors relating to wages, hours, Company Employee Plans, workers'
compensation, unemployment, equal opportunity, collective bargaining, and the
payment of social security and other Taxes.
(e) Schedule 4.17(e) sets forth a true, correct and complete list
of any and all unfair labor practice charges or other Proceedings before the
National Labor Relations Board, Equal Opportunity Employment Commission charges,
employment discrimination lawsuits, wrongful discharge lawsuits, Occupational
Safety and Health Administration citations and litigation, wage and hour charges
and litigation, and employment related litigation that are presently pending, or
to the best knowledge of the Seller Group, threatened at law or in equity,
involving the Company or any of its Subsidiaries. Schedule 4.17(e) also sets
forth a true, correct and complete list of those charges, lawsuits, citations,
litigation and Proceedings falling within the above categories that have been
settled or otherwise disposed of within the previous two years.
(f) Except as set forth in Schedule 4.17(f), neither the Company
nor any of its Subsidiaries is a joint employer or alter ego, as construed under
the National Labor Relations Act, as amended, with or of any of its suppliers,
distributors, customers or other Persons with which it has any Contract or other
understanding or arrangement, including any owner/operator with whom the Company
or any of its Subsidiaries has a Contract or other understanding or arrangement,
or any other Person with which the Company or any of its Subsidiaries has a
leasing arrangement (collectively referred to for the purposes of this Section
4.17(f) as "Third Parties"), and no Third Parties are alter egos of the Company
or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries (i)
exercises management power or authority over the operations or personnel of any
Third Party, (ii) supervises the employees of any Third Party, or (iii) is
responsible for, or has the authority to establish, implement or effectively
recommend the labor relations or employment policies or actions, including
wages, hours, working conditions or any terms of employment, for any employee of
any Third Party. There is no interchange of personnel, no common boards of
directors and no common officers, managers or employees between the Company or
any of its Subsidiaries and any Third Party. Neither the Company or any of its
Subsidiaries provides any administrative services for any Third Party that are
not required by Law or that are not provided in a bona fide, arms-length
transaction at fair market value. Any administrative services provided by the
Company or any of its Subsidiaries for any Third Party have been detailed on
Schedule 4.17(f).
(g) Except as set forth on Schedule 4.17(g), the Company's and
each of its Subsidiaries' Contracts and other understandings with
owner/operators and independent contractors establish a bona fide arrangement
where such individuals are independent contractors to, and are not employees of,
the Company or any of its Subsidiaries, and there are not any disputes, claims,
19
charges or allegations pending or, to the best knowledge of the Seller Group,
threatened at law or in equity before any Governmental Entity that challenges
the independent contractor nature of such Contract or other understanding or
arrangement.
4.18 ERISA Compliance.
(a) Schedule 4.18(a) contains a true, correct and complete list of
all Employee Benefit Plans of the Company and each of its Subsidiaries
(collectively, the "Company Employee Plans"), (i) that cover any current or
former employees, contract employees, independent contractors or consultants of
or to the Company or any of its Subsidiaries or any spouses, family members or
beneficiaries thereof (A) that are maintained, sponsored or contributed to by
the Company or any of its Subsidiaries or (B) with respect to which the Company
or any of its Subsidiaries is obligated to contribute or has any Liability, or
(ii) with respect to which the Company or any of its Subsidiaries has any
Liability on account of the maintenance or sponsorship thereof or contribution
thereto by any present or former ERISA Affiliate of the Company or any of its
Subsidiaries.
(b) Except as set forth on Schedule 4.18(b), with respect to each
Company Employee Plan:
(i) such Company Employee Plan has been established,
maintained, operated and administered in accordance with its terms and
in compliance with ERISA, the Code, and all other applicable Laws
(including with respect to reporting and disclosure);
(ii) all required, declared or discretionary (consistent
with past practice) payments, premiums, contributions, reimbursements
or accruals for all periods ending prior to or as of the date hereof
have been made or properly accrued on the Latest Balance Sheet, or with
respect to accruals properly made after the Latest Balance Sheet Date,
on the books and records of the Company or its Subsidiaries and all
amounts withheld from employees have been timely deposited into the
appropriate trust or account;
(iii) there is no unfunded Liability relating to such
Company Employee Plan that is not reflected on the Latest Balance
Sheet, or with respect to accruals properly made after the Latest
Balance Sheet Date, on the books and records of the Company or its
Subsidiaries;
(iv) neither the Company, any of its Subsidiaries, any of
their respective ERISA Affiliates, nor any other "disqualified person"
or "party in interest" (as such terms are defined in Section 4975 of
the Code and Section 3(14) of ERISA, respectively) with respect to such
Company Employee Plan, has breached the fiduciary rules of ERISA or
engaged in a prohibited transaction that could subject any of the
foregoing Persons to any Tax or penalty imposed under Section 4975 of
the Code or Section 502(i), Section 502(j) or Section 502(l) of ERISA;
(v) no Proceeding (other than routine claims for
benefits) is pending or, to the best knowledge of the Seller Group,
threatened against or relating to such Company Employee Plan or any
fiduciary thereof, and there is, to the best knowledge of the Seller
Group, no basis for any such Proceeding against any such Company
Employee Plan;
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(vi) each Company Employee Plan, if intended to be
"qualified" within the meaning of Section 401(a) of the Code, has been
determined by the Internal Revenue Service to be so qualified and the
related trusts are exempt from Tax under Section 501(a) of the Code,
and nothing has occurred that has or reasonably could be expected to
adversely affect such qualification or exemption;
(vii) except as may be required under Laws of general
application, no Company Employee Plan obligates the Company or any of
its Subsidiaries to provide any employee or former employee, or their
spouses, family members or beneficiaries, any post-employment or
post-retirement health or life insurance, accident or other
"welfare-type" benefits;
(viii) each such Company Employee Plan that is subject to
the requirements of the Consolidated Omnibus Budget Reconciliation of
1985, as amended ("COBRA"), and the Health Insurance Portability and
Accountability Act, as amended ("HIPAA"), has been maintained in
compliance with COBRA and HIPAA, including all notice requirements, and
no Tax payable on account of Section 4980B or any other section of the
Code has been or is expected to be incurred;
(ix) neither the Company, any of its Subsidiaries, nor any
of their respective ERISA Affiliates is or has ever maintained or been
obligated to contribute to a Multi-employer Plan (as defined in Section
3(37) of ERISA), a Multiple Employer Plan (as defined in Section 413 of
the Code), or a Defined Benefit Pension Plan (as defined in Section
3(35) of ERISA);
(x) no benefit payable or that may become payable by the
Company, any of its Subsidiaries or any or their respective ERISA
Affiliates pursuant to such Company Employee Plan will constitute an
"excess parachute payment" within the meaning of Section 280G of the
Code, which is or may be subject to the imposition of a Tax under
Section 4999 of the Code or that would not be deductible by reason of
Section 280G of the Code;
(xi) each such Company Employee Plan that is intended to
meet the requirements of Section 125 of the Code meets such
requirements and each program of benefits for which employee
contributions are provided pursuant to elections made under such
Company Employee Plan meets the requirements of the Code applicable
thereto;
(xii) there has not been any act or omission by the
Company, any of its Subsidiaries, or any of their respective ERISA
Affiliates that has given rise to or could give rise to any fines,
penalties or related charges under ERISA or the Code for which the
Company, any of its Subsidiaries or any of their respective ERISA
Affiliates could be liable;
(xiii) all reporting and disclosure obligations imposed
under ERISA and the Code have been satisfied with respect to each
Company Employee Plan;
(xiv) neither the Company nor any of its Subsidiaries has
made or agreed to make, nor are they required to make (in order to
bring any Company Employee Plan into compliance with ERISA or the Code)
any changes in benefits that would materially increase the costs of
maintaining any Company Employee Plan;
21
(xv) there has not been any act or omission by the Company
or any of its Subsidiaries, or any of their respective ERISA
Affiliates, that has given rise to or could give rise to any fines,
penalties or related charges under ERISA or the Code for which the
Company or any of its Subsidiaries, or any of their respective ERISA
Affiliates, could be liable;
(xvi) the Company and each of its Subsidiaries, as
applicable, have timely deposited and transmitted all amounts withheld
from employees for contributions or premium payments for each Company
Employee Plan into the appropriate trusts or accounts; and
(xvii) each Company Employee Plan that allows loans to plan
participants has been operated in accordance with its terms, the plan's
written loan policy and all applicable laws. In addition, all
outstanding loans from such Company Employee Plans are current as of
the Closing Date, and there are no loans in default.
(c) The Purchaser has been provided with true, correct and
complete copies, to the extent applicable, of all documents pursuant to which
each Company Employee Plan is maintained and administered, the two most recent
annual reports (Form 5500 and attachments) and financial statements therefor,
all governmental rulings, determinations and opinions (and pending requests
therefor), and, if any Company Employee Plan provides post-employment or
post-retirement health and life insurance, accident or other "welfare-type"
benefits, the most recent valuation of the present and future obligations under
such Company Employee Plan. The foregoing documents accurately reflect all of
the terms of such Company Employee Plan (including any agreement or provision
that would limit the ability of the Company or any of its Subsidiaries to make
any prospective amendments or to terminate such Company Employee Plan).
4.19 Environmental Matters.
(a) Except as set forth on Schedule 4.19(a), neither the Company,
any of its Subsidiaries, or any of their respective Affiliates has received any
written or oral notice, report or other information (i) regarding any actual or
alleged violation of any Environmental, Health and Safety Laws, or any
Liabilities, including any investigatory, remedial or corrective obligations,
relating to (A) the Company, any of its Subsidiaries, any of their respective
Affiliates, or any of their respective predecessors, (B) the Business, or (C)
any of the Company's or any of its Subsidiaries' currently or formerly owned or
leased properties or operations, or (ii) that the Company or any of its
Subsidiaries is potentially responsible under any Environmental, Health and
Safety Laws for response costs, corrective action or natural resource damages,
as those terms are defined under the Environmental, Health and Safety Laws, at
any location.
(b) Schedule 4.19(b) sets forth a true, correct and complete list
of all properties and facilities previously owned, leased or operated by the
Company, any of its Subsidiaries, or any of their respective predecessors at any
time (together with the Leased Properties, the "Covered Properties"). There has
been no release, discharge, spill or disposal of any substance at any of the
Covered Properties so as to give rise to any Liability of the Company or any of
its Subsidiaries under any Environmental, Health and Safety Laws. Except as set
forth on Schedule 4.19(b), there is not now, nor has there ever been, any
asbestos-containing material in any form or condition, underground storage tank,
above-ground storage tank, landfill, waste pile, surface impoundment, disposal
area, or article or equipment containing polychlorinated biphenyls on or at any
of the Covered Properties.
22
(c) Neither the Company, any of its Subsidiaries, any of their
respective Affiliates, nor any of their respective predecessors has treated,
stored, disposed of, arranged for or permitted the disposal of, transported,
handled or released any substance, or owned or operated any property or facility
(and no such property or facility is contaminated by any such substance) in a
manner that has given or would give rise to Liability pursuant to any
Environmental, Health and Safety Laws, including any Liability for response
costs, corrective action costs, personal injury, property damage, natural
resources damage or attorney fees, or any investigative, corrective or remedial
obligations pursuant to any Environmental, Health and Safety Laws.
(d) No facts, events or conditions relating to the past or present
operations of the Company, any of its Subsidiaries, any of their respective
Affiliates, any of their respective predecessors, or any of the Covered
Properties will prevent, hinder or limit continued compliance by the Company or
any of its Subsidiaries with any Environmental, Health and Safety Laws, or give
rise to any investigative, corrective or remedial obligations pursuant to any
Environmental, Health and Safety Laws, or give rise to any other Liability
pursuant to any Environmental, Health and Safety Laws, including any relating to
on-site or off-site releases or threatened releases of materials, substances or
wastes, personal injury, property damage or natural resources damage.
(e) Neither this Agreement nor the consummation of the
transactions contemplated by this Agreement or any of the Related Documents will
result in any obligations for site investigation or cleanup, or notification to
or consent of any Governmental Entity or other third party, pursuant to any of
the so-called "transaction-triggered" or "responsible property transfer"
Environmental, Health and Safety Laws.
(f) The Company and each of its Subsidiaries have provided the
Purchaser with true, correct and complete copies of all reports and studies
within the possession or control of the Company and its Subsidiaries with
respect to past and present environmental conditions or events at any of the
Covered Properties (all of which are listed on Schedule 4.19(b)), and, to the
best knowledge of the Seller Group, there are no other environmental reports or
studies with respect thereto.
4.20 Brokers.
Neither the Company nor any of its Subsidiaries has employed any broker
or finder or incurred any Liability for any brokerage fees, commissions or
finders' fees or similar compensation or transaction based payments in
connection with the transactions contemplated by this Agreement or any of the
Related Documents, other than Xxxxxxx and Associates.
4.21 Related Party Transactions.
(a) Except as set forth on Schedule 4.21(a), and except for
compensation to bona fide employees of the Company or any of its Subsidiaries
for services rendered in the ordinary course of business, consistent with past
practice, no current or former Affiliate of the Company or any of its
Subsidiaries or any "Associate" (as defined in the rules promulgated under the
Securities Exchange Act) of any thereof, is now, or has been during the last
five fiscal years, (i) party to any transaction or Contract with the Company or
any of its Subsidiaries (including any Contract or other understanding or
arrangement providing for the furnishing of services by, or the rental of real
or personal property from, or otherwise requiring payments to, any such
23
Affiliate or Associate), or (ii) the direct or indirect owner of an interest in
any Person that is a present or potential competitor, supplier or customer of
the Company or any of its Subsidiaries (other than non-affiliated holdings in
publicly held companies). Except as set forth on Schedule 4.21(a), neither the
Company nor any of its Subsidiaries is a guarantor or otherwise liable for any
actual or potential Liability of its Affiliates or their Associates. Except as
set forth on Schedule 4.21(a), neither the Company nor any of its Subsidiaries
(x) owns or operates any vehicles, boats, aircraft, apartments or other
residential or recreational properties or facilities for executive,
administrative or sales purposes, or (y) owns or pays for any social club
memberships, whether or not for the benefit of the Company, any of its
Subsidiaries, and/or any of their respective executives.
(b) Schedule 4.21(b), sets forth a true, correct and complete list
of all distributions, dividends, redemptions or repurchases, of or with respect
to the capital stock of the Company (as set forth on Schedule 4.21(b)), made by
the Company during the Company's current fiscal year.
4.22 Accounts and Notes Receivable.
Except as set forth on Schedule 4.22, and except for allowances for
doubtful accounts reflected on the Latest Balance Sheet, all accounts receivable
and notes receivable owing to the Company or any of its Subsidiaries as of the
date hereof constitute, and as of the Closing shall constitute, valid and
enforceable claims arising from bona fide transactions in the ordinary course of
business, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity), and, to the best knowledge of the Seller Group, there are no asserted
claims, refusals to pay or other rights of set-off against any thereof. Except
as set forth on Schedule 4.22 (including those items categorized as "legal" on
such Schedule), there is (i) no account debtor or note debtor that is delinquent
by more than thirty (30) days for payments due from such account debtor or note
debtor in excess of $10,000 in the aggregate, (ii) no account debtor or note
debtor that has refused, or, to the best knowledge of the Seller Group,
threatened to refuse, to pay its obligations to the Company or its Subsidiaries,
as the case may be, for any reason, or has otherwise made a claim of set-off or
similar claim (other than in amounts not in excess of $5,000 per account debtor
or note debtor, or $10,000 in the aggregate), and (iii) to the best knowledge of
the Seller Group, no account debtor or note debtor that owes the Company or any
of its Subsidiaries amounts in excess of $10,000 in the aggregate is insolvent
or bankrupt.
4.23 Bank Accounts; Powers of Attorney.
Schedule 4.23 sets forth a true and complete list of (i) all bank
accounts and safe deposit boxes of the Company and each of its Subsidiaries and
all Persons who are signatories thereunder or who have access thereto, and (ii)
the names of all Persons holding general or special powers of attorney from the
Company or any of its Subsidiaries and a summary of the terms thereof (excluding
ministerial powers of attorney granted to representatives of the Company or any
of its Subsidiaries that are terminable at will).
4.24 Suppliers and Vendors.
Except as set forth on Schedule 4.24, no material supplier or vendor to
the Company or any of its Subsidiaries has canceled or otherwise terminated, or,
to the best knowledge of the Seller Group, threatened to cancel or otherwise
terminate, its relationship with the Company or any of its Subsidiaries or has
24
decreased, limited or otherwise modified, or, to the best knowledge of the
Seller Group, threatened to decrease, limit or otherwise modify, the services,
supplies or materials it provides to the Company or any of its Subsidiaries.
4.25 Customers.
Except as set forth on Schedule 4.25, no customer of the Company or any
of its Subsidiaries to which more than $50,000 of annual sales were attributable
during any of the preceding three fiscal years has notified the Company or any
of its Subsidiaries that it intends, or, to the best knowledge of the Seller
Group, has threatened, to terminate or materially curtail its relationship and
dealings with the Company or any of its Subsidiaries.
4.26 Conflicts of Interest.
Neither the Company, any of its Subsidiaries, any Stockholder, nor any
officer, employee, agent or other Person acting on their behalf has, directly or
indirectly, given or agreed to give, any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business,
consistent with past practice) to any customer, supplier, employee or agent of a
customer or supplier, or official or employee of any Governmental Entity or
other Person who was, is, or may be in a position to help or hinder the Business
(or assist in connection with any actual or proposed transaction) that (i) might
subject the Company or any of its Subsidiaries to any damage or penalty in any
Proceeding, (ii) if not given in the past, would have resulted in a Material
Adverse Change, or (iii) if not continued in the future, reasonably could be
expected to result in a Material Adverse Change. There is not now, and there has
never been, any employment by the Company or any of its Subsidiaries of, or
beneficial ownership in the Company or any of its Subsidiaries by, any
governmental or political official in any jurisdiction in which the Company or
any of its Subsidiaries has conducted, presently is conducting, or presently is
proposing to conduct business.
4.27 Disclosure.
Neither this Agreement, including the Schedules, Annexes, attachments
and Exhibits hereto, nor any other written material delivered by or on behalf of
the Company, any of its Subsidiaries, or any Stockholder to the Purchaser or any
of its representatives, contains any untrue statement of a material fact or
omits a material fact necessary to make the statements contained herein or
therein, taken as a whole, in light of the circumstances in which they were
made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to each member of the Seller
Group as of the date hereof as follows:
5.1 Organization; Corporate Authority.
The Purchaser is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation and has
all requisite power and authority (corporate or otherwise) to own, lease and
operate its assets and properties and to carry on its business as presently
conducted and as presently proposed to be conducted. The Purchaser is duly
qualified and in good standing to transact business as a foreign Person in those
jurisdictions set forth on Schedule 5.1, which constitute all of the
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jurisdictions in which the character of the property owned, leased or operated
by the Purchaser or the nature of the business or activities conducted by the
Purchaser makes such qualification necessary. The Seller Group has been
furnished with true, correct and complete copies of the Purchaser's Charter
Documents, in each case as amended and in effect on the date this representation
is being made and is deemed made hereunder.
5.2 Authority; Authorization; Execution and Delivery; Enforceability; No
Conflict.
(a) The Purchaser has all requisite power and authority (corporate
and otherwise) to execute, deliver and perform its obligations under this
Agreement and each Related Document to which it is or will be a party and to
consummate the transactions contemplated hereby and thereby. The Purchaser's
execution and delivery of this Agreement and each Related Document to which it
is or will be a party, and the performance by the Purchaser of its obligations
hereunder and thereunder, have been duly and validly authorized by all requisite
action on the part of the Purchaser (including its board of directors and all
committees thereof and its stockholders). This Agreement and each Related
Document to which the Purchaser is or will be a party has been, or upon the
Purchaser's execution hereof and thereof will be, duly and validly executed and
delivered by the Purchaser and constitutes, or upon the Purchaser's execution
and delivery hereof and thereof will constitute, a valid and binding obligation
of the Purchaser, enforceable against the Purchaser in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar Laws affecting creditors'
rights and remedies generally, and, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding at law or
in equity).
(b) Neither the execution and delivery by the Purchaser of, and
performance of its obligations under, this Agreement or any of the Related
Documents to which it is or will be a party, nor the consummation by the
Purchaser of the transactions contemplated hereby or thereby, nor the compliance
by the Purchaser with any of the provisions hereof or thereof, will (i) conflict
with, or result in any violation of, or cause a default (with or without notice
or lapse of time or both) under, any provision of the Purchaser's Charter
Documents, (ii) conflict with, or result in any violation of, or cause a default
(with or without notice or lapse of time or both) under, or give rise to any
right of termination, amendment, cancellation or acceleration of any obligations
contained in, or the loss of any benefit under, any term, condition or provision
of any provision of any Contract to which the Purchaser is a party, or by which
the Purchaser or any of its assets or properties is or may be bound, (iii)
violate any Law applicable to the Purchaser, or (iv) result in an Encumbrance on
or against any assets, rights or properties of the Purchaser, or on or against
any capital stock or other securities of the Purchaser, or give rise to any
claim against the Company, any of the Company's Subsidiaries, or the Purchaser.
5.3 Consents.
Except as set forth on Schedule 5.3, no Permit, authorization, consent
or approval of or by, or notification of or filing with, any Person
(governmental or otherwise) is required for, as a result of, or in connection
with the execution, delivery and performance by the Purchaser of this Agreement
or any of the Related Documents to which it is or will be a party or the
consummation of the transactions contemplated hereby or thereby.
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5.4 Brokers.
The Purchaser has not employed any broker or finder or incurred any
Liability for any brokerage fees, commissions or finders' fees or similar
compensation or transaction based payments in connection with the transactions
contemplated by this Agreement or any of the Related Documents, other than
Xxxxxxx & Associates.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 Access to Records and Properties.
From and after the date hereof until the earlier of the Closing or
termination of this Agreement pursuant to Article IX, the Company and the
Shareholders will, and the Company will cause its management employees to,
afford the Purchaser and its attorneys, consultants, accountants and authorized
representatives full access, upon reasonable notice during normal business hours
and at other reasonable times, to all properties, books, contracts, commitments,
records, personnel, lenders and advisors of the Company in order to permit the
Purchaser to conduct a due diligence investigation of the Company, provided
that, notwithstanding any other provision of this paragraph, in no event will
the foregoing be undertaken in such a manner as would reasonably be expected to
interfere with, impair or impede in any material respect the business or
operations of the Company.
6.2 Conduct of the Business.
Except as set forth on Schedule 6.2, from and after the date hereof
until the earlier of the Closing or the termination of this Agreement pursuant
to Article IX, the Company and each of its Subsidiaries shall, and the
Stockholders shall cause the Company and each of its Subsidiaries to:
(i) conduct its business substantially as presently
conducted and only in the ordinary course of business, consistent with
past practice;
(ii) not undertake (or enter into any Contract or other
understanding or arrangement to undertake) any action, and use its
commercially reasonable efforts to avoid and prevent the occurrence of
any event, described in Section 4.8;
(iii) not enter into any transaction other than in the
ordinary course of business, consistent with past practice, any
transaction that is not at arms-length with Persons that are not
Affiliates, or any transaction with any Person that is an Affiliate;
(iv) not acquire or dispose of any assets other than in
the ordinary course of business, consistent with past practice;
(v) use commercially reasonable efforts to (A) maintain
its business, assets, relations with present employees, relations with
customers and suppliers, licenses and operations as an ongoing business
and preserve its goodwill, in accordance with past custom, and (B)
satisfy each of the closing conditions set forth in Article VII;
(vi) not issue or sell any shares of its capital stock,
not issue or sell any securities convertible into, exercisable or
exchangeable for, or options or warrants to purchase or rights to
subscribe for, any shares of its capital stock, and not enter into any
Contract or other understanding or arrangement to do any of the
foregoing;
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(vii) not declare or pay any dividend or distribution on or
with respect to its capital stock, not change the number of authorized
shares of its capital stock or reclassify, combine, split, subdivide,
or redeem or otherwise repurchase any of shares of its capital stock,
not issue, deliver, pledge or encumber any additional shares of its
capital stock or other securities equivalent to or exchangeable for
shares of its capital stock, and not enter into any Contract or other
understanding or arrangement to do any of the foregoing;
(viii) not take or omit to take any action that would result
in the representations and warranties contained in this Agreement and
the Related Documents being untrue on the Closing Date; and
(ix) not delay or postpone the payment of accounts payable
and other obligations and liabilities or accelerate the collection of
accounts receivable.
6.3 Efforts to Consummate.
Subject to the terms and conditions of this Agreement, each party shall
use commercially reasonable efforts to take or cause to be taken all actions and
do or cause to be done all things required under all applicable Laws, Orders and
Contracts in order to consummate the transactions contemplated hereby, including
(i) all commercially reasonable efforts to obtain or make from or with all
Persons all such consents, approvals, authorizations, waivers, notifications and
filings as are required to be obtained or made by such party under such Laws,
Orders and Contracts for the consummation of the transactions contemplated
hereby, and (ii) in the case of the Seller Group, all commercially reasonable
efforts to assist the Purchaser in replacing the Company's performance bonds and
guarantees. The Company and each of its Subsidiaries shall take all actions and
do all things, and the Stockholders shall cause the Company and each of its
Subsidiaries to take all actions and do all things, required to extinguish at or
prior to the Closing all Funded Indebtedness and to release any and all
Encumbrances on or affecting any of the Company's or any of the its
Subsidiaries' assets or properties, other than the Permitted Encumbrances.
6.4 Negotiation with Others.
(a) During the period (the "Exclusivity Period") commencing on
January 1, 2005, and ending on the first to occur of (a) the 120th day following
January 1, 2005, and (b) the termination of this Agreement pursuant to Section
9.1(i), the Company and the Stockholders will not, either directly or indirectly
through their respective representatives, submit, solicit, initiate, or discuss
any proposal or offer from or to any person other than the Purchaser, or engage
in any discussions that could lead to any proposal or offer from or to any
person other than the Purchaser, regarding any possible sale, acquisition,
reorganization, recapitalization, or other similar transaction involving the
Company or any of its subsidiaries (whether by way of stock sale, sale of all or
any material portion of assets, merger, consolidation or otherwise), or any
stock sale or issuance or debt and/or equity financing involving the Company or
any of its subsidiaries (each, a "Possible Transaction"), unless consented to in
writing by the Purchaser. If, during the Exclusivity Period, any of the
Stockholders (whether in an individual capacity or as an officer or
representative of the Company) is contacted by any other person or receives from
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any other person any written offer or proposal in connection with a Possible
Transaction, the Company will promptly notify the Purchaser thereof, including
any details and the identity of the person making any such offer or proposal and
a copy thereof. During the Exclusivity Period, the Company will, and the
Stockholders will cause the Company to, continue to operate its business in the
ordinary course, unless otherwise consented to by the Purchaser.
(b) The parties recognize and acknowledge that a breach of this
Section 6.4 will cause irreparable and material loss and damage to the
non-breaching party as to which it will not have an adequate remedy at law or in
equity. Accordingly, each party acknowledges and agrees that the issuance of an
injunction or other equitable remedy is an appropriate remedy for any such
breach.
6.5 Notice of Prospective Breach.
Each party shall promptly notify the other parties in writing upon the
occurrence, or the failure to occur, of any event, which occurrence or failure
to occur would be reasonably likely to cause (i) any representation or warranty
of such party that is contained in this Agreement or any Related Document to be
untrue or inaccurate in any respect at any time from the date of this Agreement
to the Closing as if such representation and warranty were made at such time, or
(ii) any failure of any party hereto to comply with or satisfy any covenant or
agreement to be complied with or satisfied by it under this Agreement or any
Related Document.
6.6 Public Announcements.
From and after the date hereof until the earlier of the Closing or the
termination of this Agreement pursuant to Article IX, each member of the Seller
Group, each of the Company's Subsidiaries, and the Purchaser agree that, except
(i) as otherwise required by Law, (ii) for disclosure to his, her or its
respective directors, officers, employees, financial advisors, financing
sources, legal counsel, independent certified public accountants or other
agents, advisors or representatives on a need-to-know basis and with whom such
party has a confidential relationship, and (iii) in the case of the Purchaser,
in connection with its compliance with the disclosure requirements under federal
and state securities Laws, he, she or it will not issue any reports, statements
or releases, in each case pertaining to this Agreement or any Related Document
to which he, she or it is a party or the transactions contemplated hereby or
thereby, without the prior written consent of the Company and the Purchaser,
which consent shall not unreasonably be withheld or delayed.
6.7 Exchange Proceeds.
If, between the date hereof and the Closing, the Company or any of its
Subsidiaries receives any proceeds in consideration for the exchange of any of
its assets, whether from the sale of any such assets, from insurance proceeds
payable on account of any loss or casualty to such assets, any proceeds from the
taking of such assets pursuant to the power of eminent domain, or any other
proceeds from whatever source relating to the disposition of such assets (the
"Exchange Proceeds"), the Company and/or its Subsidiaries shall, and each of the
Stockholders shall cause the Company and/or such Subsidiary to, promptly notify
the Purchaser of such receipt of such Exchange Proceeds and shall consult with
the Purchaser with respect to the application of any such Exchange Proceeds.
6.8 Non-Competition Covenant.
(a) Each Stockholder acknowledges and agrees that as a mutual
condition to the respective obligations of the parties at the Closing, and as a
material inducement to the Purchaser to enter into and perform its obligations
hereunder and in consideration of the payments and other consideration to be
29
received by the Stockholders under this Agreement and the Related Documents,
such Stockholder shall not, without the prior written consent of the Purchaser,
at any time during the period beginning on the Closing Date and ending on the
fifth anniversary thereof (the "Restrictive Period"), (i) directly or indirectly
engage in, represent in any way, or be connected with, any Competing Business
(as defined below), whether such engagement shall be as a director, an officer,
an owner, an employee, a partner, an Affiliate or other participant in such
Competing Business, (ii) assist others in engaging in any Competing Business in
the manner described in clause (i) above, (iii) induce any employees of the
Purchaser or any of its Subsidiaries or other Affiliates, or any employees of
the Company or any of its Subsidiaries, at any time during the Restrictive
Period to terminate their employment with the Purchaser or any of its
Subsidiaries or other Affiliates, or to terminate their employment with the
Company or any of its Subsidiaries, or to engage in any Competing Business, or
(iv) induce any customer, vendor or agent or any other Person with which the
Purchaser or any or its Subsidiaries or other Affiliates, or with which the
Company or any of its Subsidiaries, has a business relationship, contractual or
otherwise, at any time during the Restrictive Period to terminate or alter such
business relationship. This covenant is considered an integral part of this
Agreement.
(b) As used herein, the term "Competing Business" means (i) any
business conducted in (A) any county in the State of Texas, and (B) every other
state, province, or other political subdivision of the United States, Canada,
Mexico, Japan, China, South America or Europe that is engaged in the business of
providing wireless data communications of GSM networks to serve mobile gaming
subscribers, or (ii) any business described in the foregoing clause (i) if such
business or the services or products provided or sold by it are competitive,
directly or indirectly, with the Business on the date hereof or on the Closing
Date (or with respect to which there are fixed plans on the date hereof or on
the Closing Date for the provision or sale of the same by the Business).
(c) If, at the time of enforcement of this Section 6.8, a court
holds that the restrictions stated herein are unreasonable under the
circumstances then existing, the parties agree that the maximum period, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or geographical area. Additionally, with respect to
each county in the State of Texas, the covenant not to compete set forth in
Section 6.8(a) is intended as a separate covenant with respect thereto. If any
one of such covenants is declared invalid for any reason, such determination
shall not affect the validity of the remainder of the covenants. The other
covenants set forth in Section 6.8(a) shall remain in effect as if the provision
had been executed without the invalid covenants. The parties hereto hereby
declare that they intend that the remaining covenants of the provision continue
to be effective without any covenants that have been declared invalid. The
parties hereto acknowledge that money damages would be an inadequate remedy for
any breach of this Section 6.8. Therefore, in the event of a breach or
threatened breach of this Section 6.8, the Purchaser and/or its successors or
assigns may, in addition to other rights and remedies existing in its or their
favor, apply to any court of competent jurisdiction for specific performance
and/or injunctive relief in order to enforce or prevent any violations of the
provisions of this Section 6.8 (without posting a bond or other security).
6.9 Disclosure of Information.
(a) As used in this Agreement, the term "Confidential Information"
means, with respect to any Person, all information (whether written or oral)
furnished (whether before or after the date hereof) by such Person or its
owners, members, partners, directors, officers, employees, Affiliates,
representatives (including its financial advisors, attorneys and accountants) or
30
agents (collectively, "Representatives") to any other Person or its
Representatives, and all analyses, compilations, forecasts, studies or other
documents prepared by such other Person or its Representatives in connection
with the transactions contemplated by this Agreement that contain or reflect any
such information; provided, however, that the term "Confidential Information"
shall not include information that (i) is or becomes publicly available other
than as a result of a disclosure by any Person or its Representatives in
violation of this Agreement, or (ii) is or becomes available to such other
Person on a non-confidential basis from a source that is not prohibited from
disclosing such information by any legal, contractual or fiduciary obligation;
provided further, however, that for purposes of this Section 6.9, from and after
the Closing, Confidential Information of the Company or any of its Subsidiaries
shall be deemed Confidential Information of the Purchaser and shall, as of such
time, no longer be deemed Confidential Information of the Company or such
Subsidiaries, as applicable.
(b) The Purchaser will keep all Confidential Information of the
Company and each of its Subsidiaries confidential and will not (except as
required by applicable Law, regulation or legal process) without the prior
written consent of the Company or such Subsidiary, as applicable, disclose any
of such Confidential Information in any manner whatsoever, directly or
indirectly, and will not use any Confidential Information of the Company or any
of its Subsidiaries except for the purposes contemplated by this Agreement;
provided, however, that the Purchaser may reveal Confidential Information of the
Company or any of its Subsidiaries to its Representatives (i) who need to know
such Confidential Information for the purposes contemplated by this Agreement
and (ii) who are informed by the Purchaser of the confidential nature of the
Confidential Information. In the event that the Purchaser or any of its
Representatives is requested pursuant to, or required by, applicable Law,
regulation or legal process to disclose any Confidential Information of the
Company or any of its Subsidiaries, the Purchaser will notify the Company or
such Subsidiary, as applicable, promptly so that it may seek a protective order
or other appropriate remedy or, in its sole and absolute discretion, waive
compliance with the terms of this Section 6.9(b). In any event, the Purchaser
will furnish only that portion of the Confidential Information of the Company
any its Subsidiaries that it is advised by counsel is legally required and will
exercise all commercially reasonable efforts to obtain reliable assurance, to
the extent it is possible to obtain the same, that confidential treatment will
be afforded to such Confidential Information.
(c) The Company and each of the Stockholders will keep all
Confidential Information of the Purchaser confidential and will not (except as
required by applicable Law, regulation or legal process), without the prior
written consent of the Purchaser, disclose any of such Confidential Information
in any manner whatsoever, directly or indirectly, and will not use any
Confidential Information of the Purchaser except for the purposes contemplated
by this Agreement; provided, however, that the Company and the Stockholders may
reveal Confidential Information of the Purchaser to his, her or its
Representatives (i) who need to know such Confidential Information for the
purposes contemplated by this Agreement and (ii) who are informed by the Company
or such Stockholder of the confidential nature of the Confidential Information.
In the event that the Company, any Stockholder or any of their respective
Representatives is requested pursuant to, or required by, applicable Law,
regulation or legal process to disclose any Confidential Information of the
Purchaser, the Company or such Stockholder will notify the Purchaser promptly so
that it may seek a protective order or other appropriate remedy or, in its sole
and absolute discretion, waive compliance with the terms of this Section 6.9(c).
In any event, the Company or such Stockholder will furnish only that portion of
31
the Confidential Information of the Purchaser that he, she or it is advised by
counsel is legally required and will exercise all commercially reasonable
efforts to obtain reliable assurance, to the extent it is possible to obtain the
same, that confidential treatment will be afforded to such Confidential
Information.
(d) Each of the parties hereto recognizes and acknowledges that a
breach of his, her or its covenants in Section 6.9(b) or Section 6.9(c), as the
case may be, will cause irreparable and material loss and damage to the other
parties, the amount of which cannot be determined readily and as to which such
other parties will not have an adequate remedy at law or in damages.
Accordingly, in addition to any remedy such other parties may have in damages by
an action at law, such other parties shall be entitled to the issuance of an
injunction restraining any such breach or threatened breach or any other remedy
at law or in equity for any such breach.
6.10 Use of Proprietary Name.
From and after the Closing, no Stockholder shall use the name "Globicom
Wireless" or any derivation thereof for any purpose.
6.11 Supplements to Schedules.
Prior to the Closing, the Company and each of the Stockholders shall
promptly supplement or amend any Schedule with respect to any matter arising
after the date of this Agreement that, if existing or occurring on the date of
this Agreement, would have been required to be set forth or described in such
Schedule. No supplement or amendment of a Schedule made pursuant to this Section
6.11 shall be deemed to constitute a cure of any breach of any representation or
warranty made by the Company or such Stockholder pursuant to this Agreement
unless consented to in writing by the Purchaser, which consent may be withheld
by the Purchaser in its sole and absolute discretion for any reason. For
purposes of the rights and obligations of the parties hereunder, upon the
occurrence of the Closing, any such supplemental or amended disclosure consented
to in writing by the Purchaser as aforesaid shall be deemed to have been
disclosed as of the date of this Agreement.
ARTICLE VII
CLOSING OBLIGATIONS
7.1 Conditions to Each Party's Obligations.
The respective obligations of the parties to consummate the
transactions contemplated hereby are subject to the satisfaction prior to the
Closing Date of the following conditions, unless waived (to the extent such
conditions can be waived) by the Company or the Purchaser, as applicable:
(a) Approvals. All authorizations, consents, Orders or approvals
of, or declarations or filings with, or expiration of waiting periods imposed
by, any Governmental Entity necessary for the consummation of the transactions
contemplated hereby shall have been obtained or made.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction, or other Order issued by any court or
Governmental Entity of competent jurisdiction, nor other legal restraint or
prohibition preventing the consummation of the transactions contemplated hereby,
shall be in effect.
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(c) Actions and Statutes. No action, suit or proceeding shall have
been taken or threatened, and no statute, rule, regulation or Order shall have
been enacted, promulgated, issued or deemed applicable to the transactions
contemplated by this Agreement or any of the Related Documents by any
Governmental Entity that would (i) make the consummation of the transactions
contemplated hereby or thereby illegal or substantially delay the consummation
of any material aspect of the transactions contemplated hereby or thereby, or
(ii) render any party unable to consummate the transactions contemplated hereby
or thereby.
7.2 Conditions to Obligations of the Purchaser.
The obligations of the Purchaser to consummate the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions, unless waived (to the extent such conditions can be waived) by the
Purchaser:
(a) Accuracy of Representations and Warranties. All
representations and warranties made by the Company and the Stockholders in this
Agreement and each of the Related Documents shall be true and correct in all
material respects at and as of the Closing Date with the same effect as if such
representations and warranties had been made at and as of the Closing Date
(provided, however, that to the extent a representation is already limited to
matters characterized as "material," it shall be correct in all respects), and
the Purchaser shall have received a certificate to that effect signed by a
principal executive officer of the Company and each Stockholder.
(b) Performance of Obligations of the Company and the
Stockholders. The Company and each of the Stockholders shall have performed in
all material respects all obligations and covenants required to be performed by
each of them under this Agreement and each of the Related Documents prior to or
as of the Closing Date, and the Purchaser shall have received a certificate to
that effect signed by a principal executive officer of the Company and each
Stockholder.
(c) Authorization. All action necessary to authorize the
execution, delivery and performance of this Agreement and each of the Related
Documents by the Company and each of the Stockholders and the consummation of
the transactions contemplated hereby and thereby, including the requisite
shareholder approvals, shall have been duly and validly taken by the Company and
each of the Stockholders, and the Company and each of the Stockholders shall
have the full power and right to consummate the transactions contemplated hereby
and thereby on the terms provided herein and therein.
(d) Financial Statements. The Purchaser shall have (i) received a
true, correct and complete copy of the Interim Balance Sheets and Interim
Financial Statements for each month ending after December 31, 2004, up to the
Closing Date and (ii) received, or received confirmation from the Company and
the Company's auditors that Purchaser will receive within sixty (60) days
following the Closing, audited financial statements of the Company as of and for
the years ended December 31, 2003, and December 31, 2004, in form and substance
acceptable to Purchaser in its sole discretion
(e) Consents and Approvals. The Seller Group shall deliver to the
Purchaser duly executed copies of all consents and approvals required for or in
connection with (i) the execution and delivery by the Company and each
Stockholder of this Agreement and each of the Related Documents to which each of
them is a party, and the consummation of the transactions contemplated hereby
and thereby, in form and substance reasonably satisfactory to the Purchaser and
33
its counsel, and (ii) the continued conduct of the Business as previously
conducted (including any consent identified on Schedule 4.3), in form and
substance reasonably satisfactory to the Purchaser and its counsel.
(f) Absence of Material Adverse Change. Since the Latest Balance
Sheet Date, there shall have been no Material Adverse Change in the business of
the Company or any of its Subsidiaries.
(g) Delivery of the Shares. The Purchaser shall have received all
of the Shares in accordance with Section 1.4.
(h) Related Documents. The Seller Group shall cause each of the
following documents (each, a "Related Document," and collectively, the "Related
Documents") to be executed and/or delivered by the parties thereto at the
Closing:
(i) General Release. Each of the Stockholders shall enter
into a General Release in favor of the Company and each of its
Subsidiaries substantially in the form of Exhibit B attached hereto
(the "General Release");
(ii) Xxxxxxx Employment Agreement. Xxxx Xxxxxxx shall
execute and deliver an employment agreement with the Company
substantially in the form of Exhibit C attached hereto (the "Xxxxxxx
Employment Agreement");
(iii) Xxxxxxxxx Employment Agreement. Xxxx Xxxxxxxxx shall
execute and deliver an employment agreement with the Company
substantially in the form of Exhibit D attached hereto (the "Xxxxxxxxx
Employment Agreement"); and
(iv) Xxxxx Employment Agreement. Xxx Xxxxx shall execute
and deliver an employment agreement with the Company substantially in
the form of Exhibit E attached hereto (the "Xxxxx Employment
Agreement").
(i) Seller Certificates. The Seller Group shall cause each of the
following certificates to be executed and/or delivered, as the case may be, by
the Person who or which is the subject thereof:
(i) a certificate of the secretary of the Company, dated
as of the Closing Date, certifying (A) that true, correct and complete
copies of the Company's Charter Documents as in effect on the Closing
Date are attached thereto, (B) as to the incumbency and genuineness of
the signatures of each officer of the Company executing this Agreement
and the Related Documents on behalf of the Company; and (C) the
genuineness of the resolutions (attached thereto) of the board of
directors or similar governing body of the Company and the Stockholders
authorizing the execution, delivery and performance of this Agreement
and the Related Documents to which the Company is a party and the
consummation of the transactions contemplated hereby and thereby;
(ii) a certificate of the secretary of each of the
Company's Subsidiaries, dated as of the Closing Date, certifying that
true and complete copies of such Subsidiary's Charter Documents as in
effect on the Closing Date are attached thereto;
(iii) certificates dated within ten (10) days of the
Closing Date of the secretaries of state of the states in which the
34
Company and each of its Subsidiaries is organized and qualified to do
business, certifying as to the good standing and non-delinquent Tax
status of such Person; and
(iv) certificates of each Stockholder and a principal
executive officer of the Company, each dated as of the Closing Date,
certifying that such Stockholder and the Company, as applicable, are
not foreign persons within the meaning of Section 1445 of the Code.
(j) Due Diligence. Purchaser shall have completed, to Purchaser's
sole and absolute satisfaction, Purchaser's due diligence investigation of the
Company, including legal, business, financial and accounting due diligence of
the Company and its business, assets and properties, financial condition and
results of operations.
(k) Securities Law Compliance. Purchaser shall have received
investment representation certificates from each of the Stockholders, in form
and substance satisfactory to Purchaser. The transactions contemplated by this
Agreement and the issuance of TGTL Shares to the Stockholders shall comply, to
Purchaser's sole and absolute satisfaction, with applicable Law, including,
without limitation, the availability and compliance with applicable exemptions
from the registration requirements of the Securities Act and applicable state
securities laws.
7.3 Conditions to Obligations of the Seller Group.
The obligations of the Seller Group to consummate the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions, unless waived (to the extent such conditions can be waived) by the
Seller Group:
(a) Accuracy of Representations and Warranties. All
representations and warranties made by the Purchaser in this Agreement and each
of the Related Documents shall be true and correct in all material respects at
and as of the Closing Date with the same effect as if such representations and
warranties had been made at and as of the Closing Date, and the Seller Group
shall have received a certificate to that effect signed by a principal executive
officer of the Purchaser.
(b) Performance of Obligations of the Purchaser. The Purchaser
shall have performed in all material respects all obligations and covenants
required to be performed by it under this Agreement and each of the Related
Documents prior to or as of the Closing Date, and the Seller Group shall have
received a certificate to that effect signed by a principal executive officer of
the Purchaser.
(c) Authorization. All action necessary to authorize the
execution, delivery and performance of this Agreement and each of the Related
Documents by the Purchaser and the consummation of the transactions contemplated
hereby and thereby, including the requisite shareholder approvals, shall have
been duly and validly taken by the Purchaser, and the Purchaser shall have the
full power and right to consummate the transactions contemplated hereby and
thereby on the terms provided herein and therein.
(d) Consents and Approvals. The Purchaser shall deliver to the
Seller Group duly executed copies of all consents and approvals required for or
in connection with the execution and delivery by the Purchaser of this Agreement
and each of the Related Documents to which it is a party, and the consummation
of the transactions contemplated hereby and thereby, in form and substance
reasonably satisfactory to the Seller Group.
35
(e) Related Documents. The Purchaser shall cause each of the
Related Documents to which the Purchaser is a party to be executed and/or
delivered by the Purchaser at the Closing.
(f) Purchaser Certificates. The Purchaser shall cause each of the
following certificates to be executed and/or delivered, as the case may be, by
the Person who or which is the subject thereof:
(i) a certificate of the secretary of the Purchaser,
dated as of the Closing Date, certifying (A) that true, correct and
complete copies of the Purchaser's Charter Documents as in effect on
the Closing Date are attached thereto, (B) as to the incumbency and
genuineness of the signatures of each officer of the Purchaser
executing this Agreement and the Related Documents on behalf of the
Purchaser; and (C) the genuineness of the resolutions (attached
thereto) of the board of directors or similar governing body of the
Purchaser authorizing the execution, delivery and performance of this
Agreement and the Related Documents to which the Purchaser is a party
and the consummation of the transactions contemplated hereby and
thereby; and
(ii) certificates dated within ten (10) days of the
Closing Date of the secretaries of state of the states in which the
Purchaser is organized, certifying as to the good standing and
non-delinquent Tax status of the Purchaser.
ARTICLE VIII
INDEMNIFICATION
8.1 Generally.
(a) Subject to the further provisions of this Article VIII, the
Seller Indemnifying Persons, jointly and severally, shall indemnify the
Purchaser Indemnified Persons for, and hold each of them harmless from and
against, any and all Purchaser Losses arising from or in connection with any of
the following:
(i) the untruth, inaccuracy or breach of any
representation or warranty of the Company contained in this Agreement
or any Related Document or in any certificate delivered by the Company
or any of the Company's Subsidiaries in connection herewith or
therewith at or before the Closing (or any facts or circumstances
constituting any such untruth, inaccuracy or breach);
(ii) the breach of any covenant or agreement of the
Company contained in this Agreement or any Related Document and
(iii) all obligations, liabilities, indebtedness, claims,
damages, expenses and Losses, contingent or otherwise, irrespective of
whether or not such item was disclosed to Purchaser in a Schedule or
otherwise, in any manner caused by, resulting from, or relating to the
operation or ownership of the Company and its business, that existed,
arose or accrued prior to and including the Closing Date, including
without limitation any federal, state or local taxes of the Company,
any such taxes that are payable as a result of the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby and claims under or in respect of any environmental
law, any payables or indebtedness or any contract, agreement or
obligation of the Company.
36
(b) Subject to the further terms of this Article VIII, each
Stockholder shall, severally and not jointly, indemnify the Purchaser
Indemnified Persons for, and hold each of them harmless from and against, any
and all Purchaser Losses arising from or in connection with any of the
following:
(i) the untruth, inaccuracy or breach of any
representation or warranty of such Stockholder contained in Article III
of this Agreement or any Related Document or in any certificate
delivered by such Stockholder (in his, her or its capacity as a
stockholder of the Company) in connection herewith or therewith at or
before the Closing (or any facts or circumstances constituting any such
untruth, inaccuracy or breach);
(ii) the breach of any covenant or agreement of such
Stockholder contained in this Agreement or any Related Document.
(c) Subject to the further terms of this Article VIII, the
Purchaser shall indemnify the Seller Indemnified Persons for, and hold each of
them harmless from and against, any and all Seller Losses arising from or in
connection with any of the following:
(i) the untruth, inaccuracy or breach of any
representation or warranty of Purchaser contained in this Agreement or
any Related Document or in any certificate delivered by the Purchaser
in connection herewith or therewith at or before the Closing (or any
facts or circumstances constituting any such untruth, inaccuracy or
breach); and
(ii) the breach of any covenant or agreement of the
Purchaser contained in this Agreement or any Related Document.
8.2 Assertion of Claims.
No claim for indemnification shall be brought under Section 8.1 for a
breach of a representation or warranty unless the Indemnified Persons, or any of
them, at any time prior to the applicable Survival Date, give the Indemnifying
Persons (a) written notice of the existence of any such claim, specifying the
nature and basis of such claim and the amount thereof, to the extent known, or
(b) written notice pursuant to Section 8.3 of any Third Party Claim, the
existence of which might give rise to such a claim for indemnification. Upon the
giving of such written notice as aforesaid, the Indemnified Persons, or any of
them, shall have the right to commence legal proceedings subsequent to the
Survival Date for the enforcement of their rights under Section 8.1.
8.3 Notice and Defense of Third Party Claims.
The obligations and liabilities of an Indemnifying Person with respect
to Losses resulting from the assertion of liability by third parties (each, a
"Third Party Claim") shall be subject to the following terms and conditions:
(a) The Indemnified Persons shall give prompt written notice to
the Indemnifying Persons of any Third Party Claim that might give rise to any
Loss by the Indemnified Persons, stating the nature and basis of such Third
Party Claim, and the amount thereof to the extent known; provided, however, that
no delay on the part of the Indemnified Persons in notifying any Indemnifying
Persons shall relieve the Indemnifying Persons from any liability or obligation
hereunder unless (and then solely to the extent that) the Indemnifying Person
37
thereby is prejudiced by the delay. Such notice shall be accompanied by copies
of all relevant documentation with respect to such Third Party Claim, including
any summons, complaint or other pleading that may have been served, any written
demand or any other document or instrument.
(b) If the Indemnifying Persons acknowledge in a writing delivered
to the Indemnified Persons that such Third Party Claim is properly subject to
their indemnification obligations hereunder, and the Indemnifying Persons
demonstrate to the Indemnified Persons' reasonable satisfaction that the
Indemnifying Persons have the financial resources to meet such indemnification
obligations, then the Indemnifying Persons shall have the right to assume the
defense of any Third Party Claim at their own expense and by their own counsel,
which counsel shall be reasonably satisfactory to the Indemnified Persons;
provided, however, that the Indemnifying Persons shall not have the right to
assume the defense of any Third Party Claim, notwithstanding the giving of such
written acknowledgment, if (i) the Indemnified Persons have been advised by
counsel that there are one or more legal or equitable defenses available to them
that are different from or in addition to those available to the Indemnifying
Persons, and, in the reasonable opinion of the Indemnified Persons, counsel for
the Indemnifying Persons could not adequately represent the interests of the
Indemnified Persons because such interests could be in conflict with those of
the Indemnifying Persons, (ii) such action or proceeding involves, or could have
a material effect on, any matter beyond the scope of the indemnification
obligation of the Indemnifying Persons, or (iii) the Indemnifying Persons have
not assumed the defense of the Third Party Claim in a timely fashion.
(c) If the Indemnifying Persons assume the defense of a Third
Party Claim (under circumstances in which the proviso to Section 8.3(b) is not
applicable), the Indemnifying Persons shall not be responsible for any legal or
other defense costs subsequently incurred by the Indemnified Persons in
connection with the defense thereof. If the Indemnifying Persons do not exercise
their right to assume the defense of a Third Party Claim by giving the written
acknowledgment referred to in Section 8.3(b), or are otherwise restricted from
so assuming by the proviso to Section 8.3(b), the Indemnifying Persons
nevertheless shall be entitled to participate in such defense with their own
counsel and at their own expense. If the defense of a Third Party Claim is
assumed by the Indemnified Persons pursuant to clause (i) or clause (ii) of the
proviso to Section 8.3(b), the Indemnified Persons shall not be entitled to
settle such Third Party Claim without the prior written consent of the
Indemnifying Persons, which consent shall not be unreasonably withheld or
delayed.
(d) If the Indemnifying Persons exercise their right to assume the
defense of a Third Party Claim, (i) the Indemnified Persons shall be entitled to
participate in such defense with their own counsel at their own expense, and
(ii) the Indemnifying Persons shall not make any settlement of any claims
without the prior written consent of the Indemnified Persons, which consent
shall not be unreasonably withheld or delayed.
8.4 Survival of Representations and Warranties.
(a) Subject to the further provisions of this Section 8.4, the
representations and warranties of the Seller Group contained in Article IV or in
any certificate or other writing delivered in connection with this Agreement
shall survive the Closing, and shall expire and be of no further force or effect
on September 1, 2006; provided, however, that the representations and warranties
contained in Article III, Section 4.1, Section 4.2, Section 4.3, Section 4.4,
Section 4.5, Section 4.10 and Section 4.20 shall survive the Closing
38
indefinitely and the representations and warranties contained in Section 4.9 and
Section 4.18 shall survive the Closing until ninety (90) days after the
expiration of the applicable statutes of limitations for claims applicable to
the matters covered thereby (the "Excluded Seller Representations"). Subject to
the further provisions of this Section 8.4, the representations and warranties
of the Stockholders contained in Article III or in any certificate or other
writing delivered in connection with this Agreement and the representations and
warranties of the Purchaser contained in Article V or in any certificate or
other writing delivered in connection with this Agreement shall survive the
Closing indefinitely. The covenants and other agreements of the Seller Group and
the Purchaser contained in this Agreement shall survive the Closing until they
are performed in full or otherwise expire or are terminated by their terms. For
convenience of reference, the date upon which any representation or warranty
contained herein shall terminate, if any, is referred to as the "Survival Date."
(b) From and after the Closing, no Stockholder shall have any
recourse against the Company for any breach of any representation, warranty,
covenant or agreement of the Company set forth in this Agreement or in any
certificate or other writing delivered by the Company in connection with this
Agreement.
8.5 Limitation on Indemnification.
From and after the Closing the sum of all Losses incurred by the
Purchaser Indemnified Persons (or any member thereof) pursuant to which
indemnification is payable by the Stockholder pursuant to Section 8.1(a)(i)
shall be satisfied and any recovery may be made only against any TGTL Shares
held pursuant to the Escrow Agreement and not against any of the other assets or
property of the Stockholder; provided, however, that in no event shall the
limitations set forth in this Section 8.5 apply with respect to (i) the Excluded
Seller Representations, (ii) any willful or knowing breach of such
representations or warranties or any fraudulent or intentional acts or
intentional misrepresentations of any member of the Seller Group or (iii) any
other Losses incurred by the Purchaser Indemnified Persons (or any member
thereof) pursuant to which indemnification is payable by the Stockholders or any
other Person pursuant to this Agreement or otherwise.
8.6 Satisfaction of Indemnification Obligations.
The obligations of the Seller Indemnifying Persons to indemnify the
Purchaser Indemnified Persons for Purchaser Losses (incurred as a result of the
indemnification events set forth in Section 8.1(a) and Section 8.1(b)) shall be
paid as follows: (a) in the case of an indemnification event pursuant to Section
8.1(a), by the Seller Indemnifying Persons and (b) in the case of an
indemnification event pursuant to Section 8.1(b), solely by the Seller
Indemnifying Person or Seller Indemnifying Persons, as the case may be, who
caused such indemnification event, in each case by forfeiting for no
consideration, that number of TGTL Shares, to the extent then outstanding,
having a Market Price (as determined at the time of such forfeiture by the Board
of Directors of the Purchaser) equal to the amount of the Purchaser Losses.
ARTICLE IX
TERMINATION; EFFECT OF TERMINATION
9.1 Termination.
This Agreement may be terminated at any time prior to the Closing by:
(i) the mutual consent of the Purchaser and the Company;
39
(ii) the Purchaser, if there has been a breach by any
member of the Seller Group of any representation, warranty, covenant or
agreement set forth in this Agreement that such breaching party fails
to cure within ten (10) Business Days after notice thereof is given by
the Purchaser (except no cure period shall be provided for any such
breach that by its nature cannot be cured);
(iii) the Company, if there has been a breach by the
Purchaser of any representation, warranty, covenant or agreement set
forth in this Agreement that the Purchaser fails to cure within ten
(10) Business Days after notice thereof is given by the Company (except
no cure period shall be provided for any such breach that by its nature
cannot be cured);
(iv) the Purchaser, if the conditions set forth in Section
7.1 or Section 7.2 have not been satisfied or waived by the Purchaser
by June 17, 2005;
(v) the Company, if the conditions set forth in Section
7.1 or Section 7.3 have not been satisfied or waived by the Company by
June 17, 2005; or
(vi) the Purchaser or the Company if any permanent
injunction or other Order of a court or other competent Governmental
Entity preventing the Closing shall have become final, binding and
non-appealable;
provided, however, that neither the Purchaser nor the Company shall be entitled
to terminate this Agreement pursuant to clause (iv) or clause (v) of this
Section 9.1, respectively, if such party's breach (or, with respect to such
termination by the Company, any Stockholder's breach) of this Agreement has
prevented the satisfaction of any such condition. Any termination pursuant to
clause (i) of this Section 9.1 shall be effected by a written instrument signed
by the Purchaser and the Company, and any termination pursuant to this Section
9.1 (other than a termination pursuant to clause (i) of this Section 9.1) shall
be effected by written notice from the party or parties so terminating to the
other parties hereto, which notice shall specify the Section of this Agreement
pursuant to which this Agreement is being terminated.
9.2 Effect of Termination.
In the event of the termination of this Agreement pursuant to Section
9.1, this Agreement shall be of no further force or effect, except for Section
6.4, Section 6.9, this Section 9.2 and Article X, each of which shall survive
the termination of this Agreement; provided, however, that the Liability of any
party for any breach by such party of the representations, warranties, covenants
or agreements of such party set forth in this Agreement occurring prior to the
termination of this Agreement shall survive the termination of this Agreement,
and, in the event of any action for breach of contract in the event of a
termination of this Agreement, the prevailing party shall be reimbursed by the
other party to such action for all fees, costs and expenses relating to such
action incurred by the prevailing party, including the fees, costs and expenses
of attorneys, accountants and other professional advisers, and including those
incurred in the investigation of any such breach and in enforcing the terms of
this Section 9.2.
40
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Amendment.
This Agreement may not be altered or otherwise amended except pursuant
to an instrument in writing signed by each party, except that any party may
waive any obligation owed to it by another party under this Agreement. No waiver
by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
10.2 Entire Agreement.
This Agreement and the other agreements and documents referenced herein
(including the Schedules, Annexes and Exhibits (in their executed form) attached
hereto) and any other document or agreement contemporaneously entered into with
this Agreement contain all of the agreements among the parties hereto with
respect to the transactions contemplated hereby and supersede all prior
agreements or understandings among the parties with respect thereto (including
the Letter of Intent dated January 12, 2005, by and between the Company and the
Purchaser).
10.3 Severability.
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the Laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
10.4 Benefits of Agreement.
All of the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as expressly provided herein, this Agreement shall not
confer any rights or remedies upon any Person other than the foregoing. Anything
contained herein to the contrary notwithstanding, (a) this Agreement shall not
be assignable by any member of the Seller Group without the express written
consent of the Purchaser and (b) the Purchaser may, without the consent of any
other party hereto, assign any or all of its rights and interests hereunder to
one or more of its Affiliates and designate one or more of its Affiliates to
perform its obligations hereunder.
10.5 Expenses; Sales and Transfer Taxes.
Except as otherwise provided in this Agreement, the Purchaser on the
one hand and the Seller Group on the other hand shall each bear their own
expenses incurred in connection with this Agreement and the Related Documents
41
(including the legal, accounting and due diligence fees, costs and expenses
incurred by such party and the audit fees incurred by the Company) and shall
each pay their own sales, use, gains and excise Taxes and all registration or
transfer taxes that may be payable in connection with or arising as a result of
the consummation of the transaction contemplated by this Agreement and the
Related Documents, other than amounts due to Xxxxxxx & Associates, which shall
be paid by [_____________].
10.6 Remedies.
The parties each shall have and retain all rights and remedies existing
in their favor under this Agreement, at law or in equity, including rights to
bring actions for specific performance, injunctive and other equitable relief
(including the remedy of rescission) to enforce or prevent a breach or violation
of any provision of this Agreement, and all such rights and remedies shall, to
the extent permitted by applicable Law, be cumulative and a party's pursuit of
any such right or remedy shall not preclude such party from exercising or
pursuing any other available right or remedy.
10.7 Notices.
All notices or other communications pursuant to this Agreement shall be
in writing and shall be deemed to be sufficient if delivered personally,
telecopied, sent by nationally-recognized, overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(i) if to the Company, to:
Globicom, Inc.
0000 X. X'Xxxxxx, Xxxxx X00
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxx, President and CEO
Telephone No.: (000) 000-0000
Facsimile No.:
---------------------------
(ii) if to the Purchaser, to:
Tiger Telematics, Inc.
00000 Xxxxxxxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Telephone No.:(000) 000-0000
Facsimile No.:(000) 000-0000
with a copy to:
Xxxxx Xxxxxx & Xxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxx, Xx., Esq.
Telephone No.:(000) 000-0000
Facsimile No.:(000) 000-0000
42
All such notices and other communications shall be deemed to have been given and
received (i) in the case of personal delivery, on the date of such delivery,
(ii) in the case of delivery by telecopy, on the date of such delivery, (iii) in
the case of delivery by nationally-recognized, overnight courier, on the
Business Day following dispatch, and (iv) in the case of mailing, on the third
Business Day following such mailing.
10.8 Counterparts and Facsimile Execution.
This Agreement may be executed in two or more counterparts, and each
such counterpart shall be deemed to be an original instrument. All such
counterparts shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered (by facsimile or otherwise) to the other parties, it being
understood that all parties need not sign the same counterpart. Any counterpart
or other signature hereupon delivered by facsimile shall be deemed for all
purposes as constituting good and valid execution and delivery of this Agreement
by such party.
10.9 Governing Law.
(a) THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE DOMESTIC LAWS OF THE STATE OF FLORIDA, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF FLORIDA,
OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF FLORIDA TO BE APPLIED.
(b) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH THAT APPLICABLE LAWS, EVIDENTIARY RULES AND
JUDICIAL PROCEDURES APPLY OR THAT APPLICABLE LAWS AND ARBITRATION RULES IN CASES
IN WHICH THE PARTIES HAVE EXPRESSLY AGREED TO SUBMIT ANY SUCH DISPUTES TO
BINDING ARBITRATION APPLY, THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY
A JUDGE APPLYING SUCH APPLICABLE LAWS, EVIDENTIARY RULES AND JUDICIAL
PROCEDURES, OR BY AN ARBITRATOR APPLYING APPLICABLE LAWS AND ARBITRATION RULES
IN SUCH CASES WHERE THEY HAVE EXPRESSLY AGREED TO BINDING ARBITRATION.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS RELATED HERETO. THE PARTIES
HERETO AGREE THAT ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT SHALL BE RESOLVED EXCLUSIVELY BY STATE OR FEDERAL
COURTS LOCATED IN THE CITY OF JACKSONVILLE, FLORIDA, AND ANY APPELLATE COURT
FROM ANY THEREOF.
10.10 Jurisdiction and Venue.
(a) Each of the parties hereto hereby irrevocably and
unconditionally submits, for himself, herself or itself and his, her or its
43
property, to the exclusive jurisdiction of any Florida state court or federal
court of the United States of America sitting in Jacksonville, Florida, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, any of the Related Documents or the transactions
contemplated hereunder or thereunder or for recognition or enforcement of any
judgment relating thereto, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such Florida state court or, to
the extent permitted by law, in any such federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(b) Each of the parties hereto hereby irrevocably and
unconditionally waives, to the fullest extent he, she or it may legally and
effectively do so, any objection that he, she or it may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of or relating
to this Agreement, any of the Related Documents or the transactions contemplated
hereunder or thereunder in any Florida state or federal court of the United
States of America sitting in Jacksonville, Florida. Each of the parties hereto
hereby irrevocably waives, to the fullest extent he, she or it may legally and
effectively do so, the defense of an inconvenient forum to the maintenance of
such suit, action or proceeding in any such court.
(c) Each of the parties hereto hereby agree that the mailing by
certified or registered mail, return receipt requested, of any process required
by any such court shall constitute valid and lawful service of process against
them, without the necessity for service by any other means provided by law.
10.11 Mutual Contribution.
The parties to this Agreement and their respective counsel have
contributed mutually to the drafting of this Agreement. Consequently, no
provision of this Agreement shall be construed against any party on the ground
that a party drafted the provision or caused it to be drafted.
10.12 No Third Party Beneficiaries.
Except as expressly provided in this Agreement, this Agreement shall
not confer any rights or remedies upon any Person other than the parties hereto
and their respective successors and permitted assigns.
10.13 Independence of Covenants and Representations and Warranties.
All covenants hereunder shall be given independent effect so that if a
certain action or condition constitutes a default under a certain covenant, the
fact that such action or condition is permitted by another covenant shall not
affect the occurrence of such default, unless expressly permitted under an
exception to such initial covenant. In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached shall not affect the incorrectness of or a breach
of a representation and warranty hereunder.
10.14 Interpretation; Construction.
The term "Agreement" means this Stock Purchase Agreement together with
all Schedules, Annexes and Exhibits hereto, as the same may from time to time be
amended, modified, supplemented or restated in accordance with the terms hereof.
44
Certain capitalized terms used and not otherwise defined elsewhere in this
Agreement have the meanings given to them in Annex II attached hereto. In this
Agreement, the term "best knowledge" of any Person means (i) the actual
knowledge of such Person, and (ii) that knowledge that should have been acquired
by such Person after making such due inquiry and exercising such due diligence
as a prudent businessperson would have made or exercised in the management of
his or her business affairs, including due inquiry of those directors, officers,
key employees and professional advisors (including attorneys, accountants and
consultants) of such Person who could reasonably be expected to have actual
knowledge of the matters in question. For purposes of the preceding sentence,
the knowledge, both actual and constructive, of each Stockholder and each other
director, officer and key employee of the Company and its Subsidiaries shall be
imputed to each member of the Seller Group. The use in this Agreement of the
word "including" means "including, without limitation." The words "herein,"
"hereof," "hereunder," "hereby," "hereto," "hereinafter," and other words of
similar import refer to this Agreement as a whole, including the Schedules,
Annexes and Exhibits, as the same may from time to time be amended, modified,
supplemented or restated, and not to any particular article, section,
subsection, paragraph, subparagraph or clause contained in this Agreement. All
references to articles, sections, subsections, paragraphs, subparagraphs,
clauses, Schedules, Annexes and Exhibits mean such provisions of this Agreement
and the Schedules, Annexes and Exhibits attached to this Agreement, except where
otherwise stated. The title of and the article, section and paragraph headings
in this Agreement are for convenience of reference only and shall not govern or
affect the interpretation of any of the terms or provisions of this Agreement.
The use herein of the masculine, feminine or neuter forms also shall denote the
other forms, as in each case the context may require. Where specific language is
used to clarify by example a general statement contained herein, such specific
language shall not be deemed to modify, limit or restrict in any manner the
construction of the general statement to which it relates. The language used in
this Agreement has been chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.
Accounting terms used but not otherwise defined herein shall have the meanings
given to them under GAAP. Unless expressly provided otherwise, the measure of a
period of one month or year for purposes of this Agreement shall be that date of
the following month or year corresponding to the starting date, provided that if
no corresponding date exists, the measure shall be that date of the following
month or year corresponding to the next day following the starting date. For
example, one month following February 18 is March 18, and one month following
March 31 is May 1.
* * * * *
45
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the date first written above.
Purchaser: Stockholders
--------- ------------
TIGER TELEMATICS, INC. _______________________________________
Xxxx X. Xxxxxxx
By:________________________________
Xxxxxxx Xxxxxxxxx, CEO _______________________________________
Xxxxxxx Xxxxxxxxx
_______________________________________
Xxxxx Xxxxxx
Company:
------- _______________________________________
Xxxxxx X. Xxxxxxx
GLOBICOM, INC.
_______________________________________
Xxxxxxx Xxxxxxxxx
By:________________________________
Xxxx Xxxxxxx, President and CEO _______________________________________
Xxxxx & Xxxx Xxxx
_______________________________________
Xxxxx & Xxxxxxx Xxxxx
_______________________________________
Xxxxx Xxxxx
_______________________________________
Xxxx Xxxxxx
_______________________________________
Xxx Xxxxx
_______________________________________
Xxxxx Xxxx
_______________________________________
Marcus and Xxxxx Xxxxx
_______________________________________
Carsten Holmdie
PMT Research, Inc.
By:_______________________________
Name:_____________________________
Title:____________________________
Xxxxxxxxx Marital Trust
By:_______________________________
Name:_____________________________
Title:____________________________
46
ANNEX I
Stockholders
------------
Name and Address Number of Globicom Shares
---------------- -------------------------
Xxxx X. Xxxxxxx 2,800,000
000 Xxxxxxx Xx.
Xxxxxxx, XX 00000
Xxxxxxx Xxxxxxxxx 1,500,000
0000 Xxxxx Xxxxx
Xxxxxx, XX 00000
Xxxxx Xxxxxx 1,395,109
000 X. Xxx Xxxxxx
Xxxxxx, XX 00000
PMT Research, Inc., c/o Xxx Xxxxxxxxx 447,408
000 Xxxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx 225,454
000 X. Xxxxxxx Xxxxx Xxxx-Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Xxxxxxx Xxxxxxxxx 100,000
0000 Xxxxxxx Xxxx Xxxxx 000
Xxxxxx, XX 00000
Xxxxx & Xxxx Xxxx 94,062
0000 Xxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxxxxx Marital Trust 72,443
0000 Xxxxxxx Xxxx Xxxxx 000
Xxxxxx, XX 00000
Xxxxx & Xxxxxxx Xxxxx 60,000
00 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxxx Xxxxx 50,000
0000 Xxxxxxxxxxxxx
Xxxxxxxxx, XX 00000
Xxxx Xxxxxx 40,000
0000 X. Xxxxxxxx Xxxx Xxx. X
Xxxxxxxxxx, XX 00000
Xxx Xxxxx 32,000
0000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxx Xxxx 25,000
0000 Xxxxxxxx Xx.
Xxxxx, XX 00000
Marcus and Xxxxx Xxxxx 10,000
0000 Xxxxxxx Xx.
Xxxxxx Xxxxx, XX 00000
Carsten Holmdie 10,000
0000 Xxxxxxx Xx.
Xxxxx, XX 00000
47
ANNEX II
Certain Definitions
-------------------
"Acquisition Proposal" means any offer, proposal or indication
of interest in (i) the direct or indirect acquisition or sale of all or any
material part of the Company or any of its Subsidiaries (whether by stock sale
or asset sale), (ii) a merger, consolidation or other similar business
combination, or a reorganization, recapitalization or other similar transaction,
directly or indirectly involving the Company or any of its Subsidiaries, (iii)
the direct or indirect acquisition of any capital stock or other securities of
the Company or any of its Subsidiaries, or (iv) any stock sale or issuance or
debt and/or equity financing directly or indirectly involving the Company or any
of its Subsidiaries.
"Affiliate" means, with respect to any Person, (i) a partner,
member, owner, shareholder, trustee, director or officer of such Person or of
any Person identified in clause (iii) below, (ii) a spouse, parent, sibling or
descendant of such Person (or spouse, parent, sibling or descendant of any
partner, member, owner, shareholder, trustee, director or officer of such Person
or of any Person identified in clause (iii) below), and (iii) any other Person
that, directly or indirectly through one or more intermediaries, Controls, is
Controlled by or is under common Control with such Person.
"Business Day" means any day that is not a Saturday, Sunday or
a day on which banking institutions in New York, New York are authorized or
required to be closed.
"Capital Lease" means any obligation to pay rent or other
amounts under any lease of (or other arrangement conveying the right to use)
assets or properties, whether real, personal or mixed, which obligations are
required to be classified and accounted for as capital leases on a balance sheet
of such Person as of such date computed in accordance with GAAP.
"Charter Documents" means, (i) as to any corporation, the
articles, certificate or memorandum of incorporation or association of such
corporation, the by-laws of such corporation, and each other instrument or other
document governing such corporation's existence and internal affairs, (ii) as to
any limited partnership, the certificate of limited partnership of such
partnership, the agreement of limited partnership of such partnership, and each
other instrument or other document governing such partnership's existence and
internal affairs, (iii) as to any limited liability company, the articles,
certificate or memorandum of organization of such limited liability company, the
operating agreement of such limited liability company, and each other instrument
or other document governing such limited liability company's existence and
internal affairs, and (iv) as to any trust, the agreement or other instrument
creating such trust and any and all other documents, instruments and
certificates granting (and limiting) the powers and authorities of such trust
and the trustee(s) thereof and governing the activities and operations of such
trust and the trustee(s) thereof, in each case in clauses (i) through (iv)
above, as amended and restated and in effect at the time in question.
"Commission" means the Securities and Exchange Commission, or
any Governmental Entity succeeding to the functions thereof.
"Contract" means any loan or credit agreement, note, bond,
mortgage, indenture, license, lease, sublease, grant of easement, right of way,
purchase order, sale order, service order, or other contract, agreement,
commitment, instrument, permit, concession, franchise or license, whether
written or oral.
"Control" means, with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by Contract or otherwise.
"Employee Benefit Plan" means (i) any qualified or
non-qualified Employee Pension Benefit Plan (as defined in Section 3(2) of
ERISA), including any Multi-employer Plan (as defined in Section 3(37) of
ERISA), Multiple Employer Plan (as defined in Section 413 of the Code), or
Defined Benefit Pension Plan (as defined in Section 3(35) of ERISA), (ii) any
Employee Welfare Benefit Plan (as defined in Section 3(1) of ERISA), or (iii)
any employee benefit, fringe benefit, compensation, severance, incentive, bonus,
profit-sharing, stock option, stock purchase or other plan, program or
arrangement, whether or not subject to ERISA and whether or not funded.
"Encumbrances" means and includes security interests,
mortgages, liens, pledges, charges, easements, reservations, restrictions,
48
rights of way, servitudes, options, rights of first refusal, community property
interests, equitable interests, restrictions of any kind and all other
encumbrances, whether or not relating to the extension of credit or the
borrowing of money.
"Environmental, Health and Safety Laws" means all Laws,
Permits, Orders, Contracts and common law relating to or addressing pollution or
protection of the environment, public health and safety, or employee health and
safety, including all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, in each case as amended and in effect from time
to time.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor legislation thereto, and the rules and
regulations promulgated thereunder, all as the same shall be in effect from time
to time.
"ERISA Affiliate" means, with respect to any Person, any other
Person that is a member of a "controlled group of corporations" with, or is
under "common control" with, or is a member of the same "affiliated service
group" with such Person as defined in Section 414(b), 414(c), 414(m) or 414(o)
of the Code.
"Funded Indebtedness" means, without duplication, the
aggregate amount (including the current portions thereof) of all (i)
indebtedness for money borrowed by the Company or any of its Subsidiaries from
other Persons (including any prepayment and similar penalties) and purchase
money indebtedness (other than accounts payable in the ordinary course of
business, consistent with past practice); (ii) indebtedness of the type
described in clause (i) above guaranteed, directly or indirectly, in any manner
by the Company or any of its Subsidiaries or in effect guaranteed, directly or
indirectly, in any manner by the Company or any of its Subsidiaries through a
Contract or other understanding or arrangement, contingent or otherwise, to
supply funds to, or in any other manner invest in, the debtor, or to purchase
indebtedness, or to purchase and pay for property if not delivered or pay for
services if not performed, primarily for the purpose of enabling the debtor to
make payment of the indebtedness or to assure the owners of the indebtedness
against loss (any such Contract or other understanding or arrangement being
referred to as a "Guaranty") (but the term "Guaranty" shall exclude endorsements
of checks and other instruments in the ordinary course or business, consistent
with past practice); (iii) all indebtedness of the type described in clause (i)
above secured by any Encumbrance upon assets or properties owned by the Company
or any of its Subsidiaries even though the Company or any such Subsidiary has
not in any manner become liable for the payment of such indebtedness; (iv)
Capital Leases, and (v) all interest expense and other charges accrued but
unpaid, and all prepayment penalties and premiums, on or relating to any of such
indebtedness. Funded Indebtedness of the Company and each of its Subsidiaries as
of the date hereof is set forth on Schedule 4.13(d).
"GAAP" means generally accepted accounting principles in the
United States, as promulgated by the American Institute of Certified Public
Accountants, consistently applied.
"Governmental Entity" means any domestic or foreign government
or political subdivision thereof, whether on a federal, state, provincial or
local level and whether legislative, executive, judicial in nature, including
any agency, authority, board, bureau, commission, court, department or other
instrumentality thereof.
"Guaranty" has the meaning given to it in the definition of
Funded Indebtedness.
"Income Taxes" means all income Taxes (including any Tax on or
based upon net income, gross income, income as specially defined, earnings,
profits or selected items of income, earnings or profits (including state Taxes
imposed on subchapter S corporations)).
"Indemnified Persons" means and includes the Seller
Indemnified Persons and/or the Purchaser Indemnified Persons, as the case may
be.
"Indemnifying Persons" means and includes the Seller
Indemnifying Persons and/or the Purchaser Indemnifying Persons, as the case may
be.
"Intellectual Property Rights" means all intellectual property
rights, including patents, patent applications, trademarks, trademark
applications, trade names, service marks, service xxxx applications, trade
dress, logos and designs, and the goodwill connected with the foregoing,
49
copyrights and copyright applications, know-how, trade secrets, proprietary
processes and formulae, confidential information, franchises, licenses,
inventions, instructions, marketing materials and all documentation and media
constituting, describing or relating to the foregoing, including manuals,
memoranda and records.
"Law" means any applicable domestic or foreign law, statute,
treaty, rule, directive, regulation, ordinance or similar provision having the
force or effect of law, whether on a federal, state, provincial or local level
(including all Environmental, Health and Safety Laws), or any applicable Order
of any Governmental Entity.
"Liability" means any actual or potential liability or
obligation, whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, or liquidated or unliquidated, and whether due
or to become due, regardless of when asserted.
"Litigation Expense" means any out-of-pocket expenses incurred
in connection with investigating, defending or asserting any claim, legal or
administrative action, suit or Proceeding incident to any matter indemnified
against hereunder, including court filing fees, court costs, arbitration fees or
costs, witness fees, and fees and disbursements of outside legal counsel,
investigators, expert witnesses, accountants and other professionals.
"Losses" means any and all losses (including a diminution in
the value of the Company's capital stock), claims, shortages, damages, expenses
(including reasonable attorneys' and accountants' and other professionals' fees
and Litigation Expenses), assessments, Taxes (including interest and penalties
thereon), and insurance premium increases arising from or in connection with any
such matter that is the subject of indemnification under Article VIII, as
reduced by (i) the amount actually recovered under insurance policies (net of
deductibles and incidental expenses resulting therefrom), and (ii) Tax benefits
actually realized under Tax Laws in respect of such Losses, net of all
reasonable costs and expenses of recovering any such Tax benefits. For purposes
of determining Tax benefits actually realized, there shall be included only
those Tax benefits resulting from such Loss that are actually realized before
the taxable year in which a payment for a Loss is received and Tax benefits
resulting from such Loss that are actually realized in the taxable year in which
a payment for a Loss is received, as increased by (x) the amount of any Taxes
payable on such indemnification payment and (y) the amount of any Taxes payable
on the payment referred to in clause (x) hereof.
"Market Price" of any security means the average of the
closing prices of such security's sales on all securities exchanges on which
such security may at the time be listed, or, if there has been no sales on any
such exchange on any day, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such
security is not quoted in the NASDAQ System, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 15 trading
days consisting of the day as of which "Market Price" is being determined and
the 14 consecutive business days prior to such day.
"NASDAQ" means the National Association of Securities Dealers,
Inc. Automated Quotation System.
"Orders" means judgments, writs, decrees, compliance
agreements, injunctions or judicial or administrative orders and determinations
of any Governmental Entity or arbitrator.
"Permits" means all permits, licenses, authorizations,
registrations, franchises, approvals, consents, certificates, variances and
similar rights obtained, or required to be obtained, from a Governmental Entity.
"Permitted Encumbrances" means (i) Encumbrances for Taxes not
yet due and payable or being contested in good faith by appropriate Proceedings
and for which there are adequate reserves on the books, (ii) workers' or
unemployment compensation liens arising in the ordinary course of business, and
(iii) mechanic's, materialman's, supplier's, vendor's or similar liens arising
in the ordinary course of business, consistent with past practice, securing
amounts that are not delinquent.
"Person" shall be construed as broadly as possible and shall
include an individual or natural person, a partnership (including a limited
liability partnership), a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, a business, a Governmental Entity, and any other entity.
50
"Proceeding" means any action, suit, investigation or
proceeding before any Governmental Entity or arbitrator.
"Purchaser Indemnified Persons" means and includes the
Purchaser and its Affiliates (including, following the Closing, the Company),
their respective successors and assigns, and the respective officers, directors
and controlling parties of each of the foregoing; provided, however, that any
such Person who was, prior to the Closing Date, an officer, director, employee,
Affiliate, successor or assign of the Company or any of its Subsidiaries, or a
Stockholder, shall not in such capacity, be a Purchaser Indemnified Person with
respect to a breach of this Agreement or any Related Document based on facts or
circumstances occurring, or actions taken by such Person, at or prior to the
Closing.
"Purchaser Indemnifying Persons" means the Purchaser and its
successors.
"Purchaser Losses" means any and all Losses sustained,
suffered or incurred by any Purchaser Indemnified Person arising from or in
connection with any matter that is the subject of indemnification under Article
VIII.
"Securities" means "securities" as defined in Section 2(1) of
the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.
"Securities Exchange Act" means the United States Securities
Exchange Act of 1934, as amended, or any successor federal statute, and the
rules and regulations of the Commission promulgated thereunder, all as the same
shall be in effect from time to time.
"Seller Indemnified Persons" means and includes either (i) if
the Closing does not occur, the Company, each of the Company's Subsidiaries,
each Stockholder, and their respective Affiliates, directors, officers, personal
representatives, estates, heirs, successors and permitted assigns or (ii) if the
Closing occurs, each Stockholder and his personal representatives, estate,
heirs, successors and permitted assigns.
"Seller Indemnifying Persons" means and includes either (i) if
the Closing does not occur, the Company, each of the Company's Subsidiaries,
each Stockholder, and their respective personal representatives, estates, heirs,
successors and permitted assigns, or (ii) if the Closing occurs, each
Stockholder and his personal representative, estate, heirs, successors and
permitted assigns.
"Seller Losses" means any and all Losses sustained, suffered
or incurred by any Seller Indemnified Person arising from or in connection with
any matter that is the subject of indemnification under Article VIII.
"Subsidiary" means, with respect to any Person, any other
Person (i) whose Securities having a majority of the general voting power in
electing the board of directors or equivalent governing body of such Person
(excluding Securities entitled to vote only upon the failure to pay dividends
thereon or the occurrence of other contingencies) are, at the time as of which
any determination is being made, owned by such Person either directly or
indirectly through one or more other entities constituting Subsidiaries, or (ii)
a fifty percent (50%) interest in the profits or capital of whom is, at the time
as of which any determination is being made, owned by such Person either
directly or indirectly through one or more other entities constituting
Subsidiaries.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Taxes" means, with respect to any Person, (i) all Income
Taxes and all gross receipts, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property or windfall profits taxes, alternative or add-on minimum
taxes, customs duties and other taxes, fees, assessments or charges of any kind
whatsoever, together with all interest and penalties, additions to tax, and
other additional amounts imposed by any taxing authority (domestic or foreign)
on such Person, and (ii) any liability for the payment of any amount of the type
described in the foregoing clause (i) as a result of (A) being a "transferee"
(within the meaning of Section 6901 of the Code or any other applicable Law) of
another Person, (B) being a member of an affiliated, combined or consolidated
group, or (C) a Contract or other understanding or arrangement.
51
"TGTL Shares" means, restricted shares of common stock, .001
Dollar par value per share, of Purchaser, issued as "restricted securities"
within the meaning of the Securities Act and represented by stock certificates
bearing the following legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. WITHOUT SUCH
REGISTRATIONS, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED, EXCEPT UPON DELIVERY TO THE COMPANY OF AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATIONS ARE NOT
REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE COMPANY TO THE EFFECT THAT
ANY SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS
AMENDED, APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED
THEREUNDER."
52
EXHIBIT A
---------
Form of Escrow Agreement
ESCROW AGREEMENT
This ESCROW AGREEMENT dated as of June ____, 2005, is by and among
TIGER TELEMATICS, INC, a Delaware corporation ("Purchaser"), the individual
stockholders of Globicom, Inc., a Texas corporation, set forth on Schedule A
attached hereto (collectively, the "Stockholders"), and Xxxxx Xxxxxx & Xxxxx,
P.A., as escrow agent ("Escrow Agent").
Preliminary Statement. Pursuant to that certain Stock Purchase
Agreement dated as of June 17, 2005 (the "Agreement"), Purchaser acquired from
the Stockholders a total of 6,861,476 issued and outstanding shares of common
stock of Globicom, Inc., a Texas corporation ("Globicom"). In accordance with
Article 1 of the Agreement, Purchaser has agreed to place an aggregate total of
138,462 TGTL Shares, registered in the names of the Stockholders in accordance
with Schedule A attached hereto (the "Escrow Stock"), into escrow on the terms
set forth herein. The Escrow Stock represents the TGTL Shares Portion of the
Purchase Price paid by Purchaser to Stockholders pursuant to the terms of the
Agreement. The purpose of this Escrow Agreement is to establish the escrow
arrangements for the Escrow Stock and to set forth the agreements among
Purchaser, each Stockholder and Escrow Agent with respect thereto.
ACCORDINGLY, the parties hereto agree as follows:
Section 1. Terms. All terms used herein without definition that are
defined in the Agreement shall have the same meanings herein as they have in the
Agreement.
Section 2. Escrow Agent. Each Stockholder and Purchaser hereby appoint
and designate Escrow Agent to act as the Escrow Agent for the purposes set forth
herein, and Escrow Agent hereby accepts such appointment and designation.
Section 3. Deposit of Stock Certificate. Escrow Agent hereby
acknowledges receipt from Purchaser of the Escrow Stock.
Section 4. Escrow Agent's Duties. Stockholder and Purchaser hereby
authorize Escrow Agent to hold and disburse the Escrow Stock on the terms set
forth in this Escrow Agreement and in accordance with the terms of the
Agreement. Escrow Agent undertakes to perform only such duties as are expressly
set forth herein, and there shall be no implied duties or obligations imposed
upon Escrow Agent.
Section 5. Disbursement of Escrow Stock. Upon receipt of written
instructions signed by Purchaser, Escrow Agent shall be authorized to disburse
the Escrow Stock in accordance with such instructions.
Purchaser and each Stockholder acknowledge and agree that shares of the Escrow
Stock may be used to satisfy Purchaser Losses incurred by any Purchaser
Indemnified Persons pursuant to which indemnification is payable by the
Stockholders pursuant to Article 8 of the Agreement or otherwise. The
obligations of the Seller Indemnifying Persons to indemnify the Purchaser
Indemnified Persons for Purchaser Losses shall be paid by forfeiting for no
consideration, that number of TGTL Shares, to the extent then outstanding,
having a Market Price (as determined at the time of such forfeiture by the Board
of Directors of the Purchaser) equal to the amount of the Purchaser Losses. Each
Stockholder acknowledges and agrees that Purchaser may cancel that number of
TGTL Shares that were forfeited to satisfy Purchaser Losses and Purchaser shall
cause Purchaser's transfer books to reflect that such shares of TGTL Stock have
been canceled. After the Purchaser's transfer books have been so modified, the
Stockholder shall not be considered to own any forfeited shares of TGTL Stock
and shall have no rights as a stockholder of the Purchaser to the extent of the
shares of TGTL Stock so canceled. Each Stockholder hereby appoints the secretary
of the Purchaser as his, her or its agent and attorney-in-fact for the purpose
of executing and delivering any and all documents necessary to effect the
provisions of this Section 5, and any cancellation by such agent and
attorney-in-fact shall be a cancellation of all of the Stockholder's right,
title and interest in and to the TGTL Stock so cancelled. This power of attorney
is coupled with an interest and shall not expire upon the death or incapacity of
a Stockholder, nor may this power of attorney be terminated by a Stockholder as
long as this Agreement remains in effect.
Purchaser and Stockholder acknowledge and agree that in the event Purchaser
notifies Escrow Agent that a Purchaser Indemnified Person has made a claim for
indemnification pursuant to Article 8 of the Agreement specifying the amount of
53
such claim and the number of shares of Escrow Stock required to satisfy such
claim based on the then current Market Price (the "Reserve Stock"), Escrow Agent
shall not disburse or distribute any of the Reserve Stock until Escrow Agent
receives written instructions from Purchaser directing Escrow Agent on the
proper disbursement or cancellation of the Reserve Stock or as directed by a
court of competent jurisdiction. Purchaser and Stockholder acknowledge and agree
that the Reserve Stock will be reserved and withheld from shares of Escrow Stock
that would otherwise be distributed to Stockholder pursuant to the Agreement.
Section 6. Nature of Escrow Obligations. The duties of Escrow Agent
hereunder are purely ministerial in nature, and it shall not be liable for any
error of judgment, fact or law, or any act done or omitted to be done, except
for its own gross negligence or willful misconduct. Its determination as to
whether an event or condition has occurred, or been met or satisfied, or as to
whether a provision of this Escrow Agreement has been complied with, or as to
whether sufficient evidence of the event or condition or compliance with the
provision has been furnished to it, shall not subject it to any claim, liability
or obligation whatsoever, even if it shall be found that such determination was
improper or incorrect, provided only that Escrow Agent shall not have been
guilty of gross negligence or willful misconduct in making such determination.
Escrow Agent shall not be responsible for the genuineness or validity of any
document or item deposited with it or any notice or instruction given to it,
other than to follow faithfully the instructions contained herein, and it shall
be protected fully in acting in accordance with any written instruction or
instrument given to it hereunder and believed by it to have been signed by the
proper parties.
Section 7. Conflicting Notices. If at any time Escrow Agent shall
receive conflicting notices, claims, demands or instructions with respect to the
Escrow Stock, or if for any other reason it shall be unable in good faith to
determine the party entitled to receive the Escrow Stock, Escrow Agent may
refuse to take any action and may retain the Escrow Stock in its possession
until it shall have received instructions in writing concurred in by all parties
in interest, or until directed by an arbitration award or a final order or
judgment of a court of competent jurisdiction, whereupon it shall make such
disposition in accordance with such instructions or such award, order or
judgment. If Escrow Agent is unable to determine in good faith the party
entitled to receive the Escrow Stock, Escrow Agent may commence an arbitration
proceeding in Jacksonville, Florida, in accordance with the Rules of the
American Arbitration Association then in effect, and all parties agree that any
dispute in determining the entitlement to the Escrow Stock or any other dispute
under this Escrow Agreement shall be determined exclusively by arbitration in
Jacksonville, Florida, and the determination of the arbitration panel shall be
binding on Purchaser, Stockholder, and Escrow Agent. The costs of the
arbitration proceeding shall be borne equally between Purchaser and Stockholder.
Section 8. Resignation of Escrow Agent. Escrow Agent may resign at any
time upon giving the parties hereto fifteen (15) days' notice to that effect. In
such event the successor escrow agent shall be such person, firm or corporation
as shall be selected by Purchaser. Escrow Agent's resignation shall not be
effective until a successor escrow agent agrees to act hereunder; provided
however, in the event no successor escrow agent is appointed and acting within
fifteen (15) days after such notice, Escrow Agent may deposit the Escrow Stock
at any time thereafter into the registry of a court of competent jurisdiction.
Upon the delivery of the Escrow Stock to a successor escrow agent or into the
registry of such court, Escrow Agent shall be released and discharged from any
further liability or obligation hereunder.
Section 9. Indemnification of Escrow Agent. From and at all times after
the date of this Escrow Agreement, Purchaser and each Stockholder, jointly and
severally, shall, to the fullest extent permitted by law, defend, indemnify and
hold harmless, Escrow Agent and each director, officer, employee, attorney,
agent and affiliate of Escrow Agent (collectively, the "Indemnified Parties")
against any and all actions, claims (whether or not valid), losses, damages,
liabilities, costs and expenses of any kind or nature whatsoever (including
without limitation reasonable attorneys' fees, costs and expenses) incurred by
or asserted against any of the Indemnified Parties from and after the date
hereof, whether direct, indirect or consequential, as a result of or arising
from or in any way relating to any claim, demand, suit, action or proceeding
(including any inquiry or investigation) by any person, whether threatened or
initiated, arising from or in connection with the negotiation, preparation,
execution, performance or failure of performance of this Escrow Agreement or any
transactions contemplated herein, whether or not any such Indemnified Party is a
party to any such action, proceeding, suit or the target of any such inquiry or
investigation; provided, however, that no Indemnified Party shall have the right
to be indemnified hereunder for any liability finally determined by a court of
competent jurisdiction, subject to no further appeal, to have resulted solely
from the gross negligence or willful misconduct of such Indemnified Party. Each
Indemnified Party shall, in its sole discretion, have the right to select and
employ separate counsel with respect to any action or claim brought or asserted
against it, and the reasonable fees of such counsel shall be paid upon demand by
the Purchaser and Stockholder jointly and severally. The obligations of
Purchaser and Stockholder under this Section 9 shall survive any termination of
this Escrow Agreement and the resignation or removal of Escrow Agent.
54
Section 10. Notices. Any notices or other communications to Stockholder
or Purchaser shall be personally delivered, sent by certified or registered
mail, return receipt requested, by Federal Express or similar service that
records delivery, or by facsimile transmission combined with any of the
foregoing methods of notice, to the addresses set forth below, or to such other
address as Stockholder or Purchaser may designate, from time to time, by written
notice to the other.
If to Stockholder:
To the address listed on Schedule A attached hereto.
If to Purchaser:
Tiger Telematics, Inc.
00000 Xxxxxxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Escrow Agent, to:
Xxxxx Xxxxxx & Xxxxx
1800 First Union National Bank Tower
000 Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxx, Xx., Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Section 11. Entire Agreement. This Escrow Agreement contains the entire
agreement among the parties with respect to the subject matter hereof. This
Escrow Agreement may not be amended, supplemented or discharged, and no
provision hereof may be modified or waived, except expressly by an instrument in
writing signed by all of the parties hereto. No waiver of any provision hereof
by any party shall be deemed a continuing waiver of any matter by such party.
Section 12. Severability. If any term, covenant or condition of this
Escrow Agreement or the application thereof to any person or circumstance shall,
to any extent, be invalid or unenforceable, the remainder of this Escrow
Agreement or the application of such term, covenant or condition to persons or
circumstances, other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term, covenant or condition of this
Escrow Agreement shall be valid and be enforced to the fullest extent permitted
by law.
Section 13. Construction. This Escrow Agreement shall be governed by
and construed in accordance with the laws of the State of Florida. The parties
acknowledge and agree that they have been represented by counsel and that they
have participated in the drafting of this Escrow Agreement. Accordingly, the
parties agree that the language, terms and conditions in this Escrow Agreement
are not to be construed in any way against or in favor of any party hereto by
reason of the responsibilities of the parties in connection with the preparation
of this Escrow Agreement.
Section 14. Assignments. Except as provided in Section 8 hereof, this
Escrow Agreement may not be assigned by any party hereto without the prior
written consent of the other parties, and any purported assignment (including,
without limitation, any such action pursuant to any action of any federal, state
or other governmental agency) without such consent shall be void.
55
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Escrow
Agreement as of the day and year first above written.
TIGER TELEMATICS, INC.
By:__________________________________
Xxxxxxx X. Xxxxxxxxx, CEO
STOCKHOLDER
_____________________________________
Print Name:__________________________
XXXXX XXXXXX & XXXXX, P.A.
By:__________________________________
A Shareholder
56
SCHEDULE A
----------
Name and Address Number of TGTL Shares
---------------- ---------------------
Xxxx X. Xxxxxxx 47,686
000 Xxxxxxx Xx.
Xxxxxxx, XX 00000
Xxxxxxx Xxxxxxxxx 25,560
0000 Xxxxx Xxxxx
Xxxxxx, XX 00000
Xxxxx Xxxxxx 23,760
000 X. Xxx Xxxxxx
Xxxxxx, XX 00000
PMT Research, Inc., c/o Xxx Xxxxxxxxx 7,615
000 Xxxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx 3,835
000 X. Xxxxxxx Xxxxx Xxxx-Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Xxxxxxx Xxxxxxxxx 1,703
0000 Xxxxxxx Xxxx Xxxxx 000
Xxxxxx, XX 00000
Xxxxx & Xxxx Xxxx 1,606
0000 Xxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxxxxx Marital Trust 1,232
0000 Xxxxxxx Xxxx Xxxxx 000
Xxxxxx, XX 00000
Xxxxx & Xxxxxxx Xxxxx 1,025
00 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxxx Xxxxx 858
0000 Xxxxxxxxxxxxx
Xxxxxxxxx, XX 00000
Xxxx Xxxxxx 678
0000 X. Xxxxxxxx Xxxx Xxx. X
Xxxxxxxxxx, XX 00000
Xxx Xxxxx 540
0000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxx Xxxx 429
0000 Xxxxxxxx Xx.
Xxxxx, XX 00000
Marcus and Xxxxx Xxxxx 166
0000 Xxxxxxx Xx.
Xxxxxx Xxxxx, XX 00000
Carsten Holmdie 166
0000 Xxxxxxx Xx.
Xxxxx, XX 00000
57
EXHIBIT C
---------
Form of Employment Agreement with Xxxx Xxxxxxx
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement"), dated as of June 17,
2005, is by and between GLOBICOM INC., a Texas corporation (the "Company"), and
XXXX X. XXXXXXX (the "Employee").
PREAMBLE
The Company and the Employee are entering into this Agreement to set
forth the terms of the Employee's employment with the Company.
ACCORDINGLY, in consideration of the mutual representations,
warranties, covenants and agreements set forth in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Company and the Employee, the Company and the Employee
hereby agree as follows:
Section 1. Duties. On the terms and subject to the conditions contained
in this Agreement, the Employee will be employed by the Company as President and
General Manager. The Employee shall perform such duties and services on behalf
of the Company and its subsidiaries and other affiliates consistent with such
position as may reasonably be assigned to the Employee from time to time by the
Board of Directors of the Company (the "Board") or the more senior officers of
the Company.
Section 2. Term. Unless sooner terminated in accordance with the
applicable provisions of this Agreement, the Employee's employment hereunder
shall be for the period (including any extensions thereof, the "Employment
Period") commencing on the date hereof (the "Commencement Date") and initially
ending on the first anniversary of the date hereof. Subject to the applicable
provisions of this Agreement regarding earlier termination, the Employment
Period shall be extended automatically one day prior to each anniversary of the
Commencement Date, beginning with the first anniversary thereof, in each case
for an additional period of one year.
Section 3. Time to be Devoted to Employment; Place of Performance.
During the Employment Period, the Employee shall devote all of the Employee's
working energies, efforts, interest, abilities and time exclusively to the
business and affairs of the Company and its subsidiaries and other affiliates.
The Employee shall not engage in any other business or activity that, in the
reasonable judgment of the Board, would conflict or interfere with the
performance of the Employee's duties as set forth herein, whether or not such
activity is pursued for gain, profit or other pecuniary advantage. The Employee
shall perform his duties and conduct his business at the principal Employee
offices of the Company, except for required travel on the Company's business.
Section 4. Base Salary; Bonus; Benefits.
(a) During the Employment Period, the Company (or any of
its subsidiaries or other affiliates) shall pay the Employee an annual base
salary (the "Base Salary") of Ninety Thousand Dollars ($90,000.00), payable in
such installments (but not less often than monthly) as is generally the policy
of the Company from time to time with respect to the payment of regular
compensation to its executive officers. During the Employment Period, the
Employee will be entitled to (i) no less than two (2) weeks vacation per
calendar year occurring during the Employment Period, which shall accrue and be
taken in accordance with the Company's policy in effect from time to time, and
(ii) such other benefits as may be made available from time to time to other
executive officers of the Company generally, including, without limitation,
participation in such health, life and disability insurance programs and
retirement or savings plans, if any, as the Company may from time to time
maintain in effect, subject to the Company's rights from time to time to amend,
modify, change or terminate in any respect any of its employee benefit plans,
policies, programs or benefits.
(b) In addition to the Base Salary and benefits set forth
in 10.14(a), during the Employment Period the Employee will be eligible to
receive an equity incentive bonus based on the earn out schedule attached hereto
as Schedule A, as determined by the Board in its sole discretion, with respect
to each calendar year occurring during the Employment Period, commencing with
calendar year 2005. Anything contained in this Agreement to the contrary
notwithstanding, if the Employee's employment with the Company is terminated for
any reason, neither the Company nor any of its subsidiaries or other affiliates
shall be obligated to pay the Employee any bonus with respect to the calendar
year of the Company in which such termination occurred or thereafter.
58
(c) All references herein to compensation to be paid to
the Employee are to the gross amounts thereof that may be due hereunder. The
Company shall have the right to deduct therefrom all sums that may be required
to be deducted or withheld under any provision of law (including, without
limitation, social security payments, income tax withholding, and any other
deduction required by law) as in effect at all relevant times during the term of
this Agreement.
Section 5. Reimbursement of Expenses. During the Employment Period, the
Company shall reimburse the Employee in accordance with the Company's policy for
all reasonable and necessary traveling expenses and other disbursements incurred
by the Employee for or on behalf of the Company in connection with the
performance of the Employee's duties hereunder upon presentation of appropriate
receipts or other documentation therefor, in accordance with all applicable
policies of the Company.
Section 6. Termination. The Company may terminate the Employee's
employment hereunder at any time with or without "cause" by giving the Employee
written notice of such termination, which termination shall be effective as of
the date set forth in such notice, provided that such date shall not be earlier
than the date of such notice.
Section 7. Effect of Termination. Upon the effective date of
termination of the Employee's employment under this Agreement, neither the
Employee nor the Employee's beneficiaries or estate shall have any further
rights under this Agreement or any claims against the Company or any of its
subsidiaries or other affiliates arising out of this Agreement, except the right
to receive, within thirty (30) days after the effective date of such termination
(or such earlier period as may be required by applicable law):
(i) the unpaid portion of the Base Salary
provided for in Section 4, computed on a per diem basis to the
effective date of such termination; and
(ii) reimbursement for any expenses for which the
Employee shall not have theretofore been reimbursed, as provided in
Section 5.
Section 8. Disclosure of Information; Non-competition.
(d) From and after the date hereof, the Employee shall
not at any time use or disclose, divulge, furnish, or make accessible to any
person or entity (other than any officer, director, employee, affiliate or
representative of the Company), except as required in connection with the
performance of the Employee's duties under and in compliance with this Agreement
and as required by law and judicial process (after giving the Company reasonably
timely notice of the receipt of any such legal or judicial requirement), any
Confidential Information (as defined in Section 8(e)) heretofore acquired or
acquired during the Employment Period for any reason or purpose whatsoever, nor
shall the Employee make use of any of the Confidential Information for the
Employee's own purposes or for the benefit of any person or entity except the
Company or any of its subsidiaries or other affiliates.
(e) For purposes of this Agreement, "Confidential
Information" means (i) the Intellectual Property Rights (as defined in 10.14(f))
of the Company and its subsidiaries and other affiliates, and (ii) all other
knowledge and information of a proprietary or confidential nature relating to
the Company or any of its subsidiaries or other affiliates, or the business or
assets of the Company or any of its subsidiaries or other affiliates, including,
without limitation, books, records, agent and independent contractor lists and
related information, customer lists and related information, vendor lists and
related information, supplier lists and related information, distribution
channels, pricing information, cost information, marketing plans, strategies,
forecasts, financial statements, budgets and projections, other than (A)
information that is generally available to the public on the date hereof, or
that becomes generally available to the public after the date hereof without
action by the Employee, or (B) information that the Employee receives from a
third party who does not have any independent obligation to the Company to keep
such information confidential.
(f) For purposes of this Agreement, the term
"Intellectual Property Rights" means all industrial and intellectual property
rights, including, without limitation, patents, patent applications, letters
patent, patent rights, trademarks, trademark applications, trade names, service
marks, service xxxx applications, copyrights, copyright applications, know-how,
certificates of public convenience and necessity, franchises, licenses, trade
secrets, proprietary processes and formulae, inventions, discoveries,
improvements, ideas, development tools, marketing materials, instructions,
confidential information, trade dress, logos and designs, and all documentation
and media constituting, describing or relating to the foregoing.
59
(g) The Employee shall not during the Employment Period
and the period commencing on the effective date of the termination of his
employment with the Company and its subsidiaries and other affiliates for any
reason and ending on the second anniversary of the effective date of such
termination of employment (such periods together being called the
"Non-competition Period" herein) (i) in any geographic area where the Company or
any of its subsidiaries or other affiliates conducts business during the
Non-competition Period, engage in or participate in, directly or indirectly
(whether as an officer, director, employee, partner, consultant, holder of an
equity or debt investment, lender or in any other manner or capacity, including,
without limitation, by the rendering of services or advice to any person), or
lend his name (or any part or variant thereof) to, any Competing Business (as
defined in 10.14(h)); (ii) deal, directly or indirectly, in a competitive manner
with any customers doing business with the Company or any of its subsidiaries or
other affiliates during the Non-competition Period; (iii) solicit or employ any
officer, director or agent of the Company or any of its subsidiaries or other
affiliates to become an officer, director, or agent of the Employee, the
Employee's affiliates or anyone else; or (iv) engage in or participate in,
directly or indirectly, any business conducted under any name that shall be the
same as or similar to the name of the Company or any of its subsidiaries or
other affiliates or any trade name used by any of them. The Employee's ownership
for investment purposes only of less than two percent (2%) of the outstanding
shares of capital stock or class of debt securities of any corporation with one
or more classes of its capital stock listed on a national securities exchange or
actively traded in the over-the-counter market shall not constitute a breach of
the foregoing covenant. The Employee is entering into the foregoing covenant to
induce the Company to extend this Agreement to, and to enter into this Agreement
with, the Employee.
(h) For purposes of this Agreement, the term "Competing
Business" means any wireless data communication, telematics, handheld gaming,
software or other business that the Company or any of its subsidiaries or other
affiliates has engaged in at any time during the Employment Period in any city
or county in any state of the United States or Europe.
Section 9. Resignation. Upon the termination of Employee's employment
hereunder, Employee shall automatically be deemed to have resigned as an officer
and director of the Company, any subsidiary and any affiliate and as a fiduciary
of any benefit plan of any of the foregoing. The Employee shall execute any
further documentation of such resignation as is reasonably requested by the
Company.
Section 10. Entire Agreement; Amendment and Waiver. This Agreement
contains the entire agreement between the Employee and the Company with respect
to the subject matter hereof and supersedes any and all prior and
contemporaneous agreements and understandings between the Employee and the
Company or any predecessor of the Company or any of their respective
subsidiaries or other affiliates regarding the subject matter hereof. No waiver,
amendment or modification of any provision of this Agreement shall be effective
unless in writing and signed by the Employee and the Company. The waiver by
either party of a breach of any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any subsequent breach by such
other party.
Section 11. Notices.
(i) All notices or other communications pursuant to this
Agreement shall be in writing and shall be deemed to be sufficient if delivered
personally, telecopied, sent by nationally-recognized, overnight courier, or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(i) if to the Company, to it at:
______________________________
______________________________
Attention: __________________
Telecopier: (___) ____________
Telephone: (___) ____________
(ii) if to the Employee, to him at his last known
address contained in the records of the Company.
(b) All such notices and other communications shall be
deemed to have been given and received (i) in the case of personal delivery, on
the date of such delivery, (ii) in the case of delivery by telecopy, on the date
60
of such delivery (if sent on a business day, and if not sent on a business day,
then on the next business day after the date sent), (iii) in the case of
delivery by nationally-recognized, overnight courier, on the next business day
following dispatch, and (iv) in the case of mailing, on the third business day
following such mailing.
Section 12. Headings. The section headings in this Agreement are for
convenience only and shall not control or affect the meaning of any provision of
this Agreement.
Section 13. Severability. It is the desire and intent of the parties
that the provisions of this Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, in the event that any provision of
this Agreement would be held in any jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction. Notwithstanding the foregoing, if such provision could be more
narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 14. Remedies. The Employee acknowledges and understands that
the provisions of this Agreement are of a special and unique nature, the loss of
which cannot be adequately compensated for in damages by an action at law, and
thus, the breach or threatened breach of the provisions of this Agreement would
cause the Company irreparable harm. The Employee further acknowledges that the
covenants contained in Section 8 and Section 9 are independent covenants and in
the event of a breach of any of the covenants contained in Section 8 or Section
9, the Company shall be entitled to immediate relief enjoining such violations
in any court or before any judicial body having jurisdiction over such a claim.
All remedies hereunder are cumulative, are in addition to any other remedies
provided for by law and may, to the extent permitted by law, be exercised
concurrently or separately, and the exercise of any one remedy shall not be
deemed to be an election of such remedy or to preclude the exercise of any other
remedy.
Section 15. Representation. The Employee hereby represents and warrants
to the Company that (i) the execution, delivery and performance of this
Agreement by the Employee does not breach, violate or cause a default under any
agreement, contract or instrument to which the Employee is a party or any
judgment, order or decree to which the Employee is subject, and (ii) the
Employee is not a party to or bound by any employment agreement, consulting
agreement, non-compete agreement, confidentiality agreement or similar agreement
with any other person or entity.
Section 16. Benefits of Agreement; Assignment. The terms and provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, assigns, representatives, heirs and
estates, as applicable. This Agreement shall not be assignable by any party
hereto without the prior written consent of the other party hereto, except that
the Company may assign this Agreement or its rights hereunder to a direct or
indirect wholly-owned subsidiary of the Company or to any person or entity
succeeding to all or any substantial portion of their respective businesses.
Section 17. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic 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.
Section 18. Mutual Waiver of Jury Trial. THE PARTIES WISH THAT
APPLICABLE LAWS APPLY TO THE RESOLUTION OF ANY DISPUTES ARISING UNDER THIS
AGREEMENT AND THE SUBJECT MATTER HEREOF, AND THAT THEIR DISPUTES BE RESOLVED BY
AN EXPERIENCED PERSON APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND APPLICABLE LAWS, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
Section 19. Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
61
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
effective as of the date first written above.
THE COMPANY:
-----------
GLOBICOM, INC.
By:______________________________
Name:____________________________
Title:___________________________
THE EMPLOYEE:
------------
_________________________________
Name: Xxxx X. Xxxxxxx
62
EXHIBIT A
---------
Equity Incentive Bonus
Xxxx X. Xxxxxxx
2005 (Year 1): 8,437.5 shares of common stock if the Globicom network is
up-and-running 120 days from the closing date of the initial stock purchase
transaction with Tiger Telematics, Inc. The Globicom network must support Tiger
Telematics' Gizmondo unit. An additional 8,437.5 shares of common stock if the
Company achieves Gross Profit of $330,000 for the twelve month period beginning
with the first full month immediately following the closing date of the initial
stock purchase transaction with Tiger Telematics, Inc.
120 day network up and running = 8,437.5 shares.
Year 1 $330,000 Gross Profit = 8,437.5 shares
Year 1 Total Share Earning Target = 16,875 shares
2006 (Year 2): 8,437.5 shares of common stock if the Company achieves Operating
Income at the Globicom business unit of at least $1,350,000 for the twelve month
period beginning with the first full month one year from the closing date of the
initial stock purchase transaction with Tiger Telematics, Inc.
Year 2 $1,350,000 Operating Income = 8,437.5 shares
Year 2 Total Share Earning Target = 8,437.5 shares
2007 (Year 3): 8,437.5 shares of common stock if the Company achieves Operating
Income at the Globicom business unit of at least $3,650,000 for the twelve month
period beginning with the first full month two years from the closing date of
the initial stock purchase transaction with Tiger Telematics, Inc.
Year 3 $3,650,000 = 8,437.5 shares
Year 3 Total Share Earning Target = 8,437.5
AGGREGATE TOTAL SHARES = 33,750
The Equity Incentive Bonus under this Agreement will become fully vested and
immediately exercisable upon the occurrence of a "Change of Control."
A Change of Control means the occurrence of any of the following: (i) the
acquisition (other than from the Company directly) by any "person" group or
entity within the meaning of Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934) of beneficial ownership of more than fifty (50%) percent of the
outstanding voting stock of the Company; (ii) the stockholders of the Company
approve a merger, reorganization or consolidation of the Company, whereby the
stockholders of the Company immediately prior to such approval do not,
immediately after consummation of such reorganization, merger or consolidation,
own more than 50% of the outstanding voting stock of the surviving entity; or
(iii) a liquidation or dissolution of the Company, or the sale of all or
substantially all of the Company's assets.
In the event of a stock split or stock dividend by the Company, an appropriate
adjustment will be made in the number of shares subject to the Equity Incentive
Bonus, as determined by the Company's Board of Directors.
63
EXHIBIT D
---------
Form of Employment Agreement with Xxxx Xxxxxxxxx
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement"), dated as of June ____,
2005, is by and between GLOBICOM INC., a Texas corporation (the "Company"), and
XXXXXXX XXXXXXXXX (the "Employee").
PREAMBLE
The Company and the Employee are entering into this Agreement to set
forth the terms of the Employee's employment with the Company.
ACCORDINGLY, in consideration of the mutual representations,
warranties, covenants and agreements set forth in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Company and the Employee, the Company and the Employee
hereby agree as follows:
Section 1. Duties. On the terms and subject to the conditions contained
in this Agreement, the Employee will be employed by the Company as Vice
President-Operations. The Employee shall perform such duties and services on
behalf of the Company and its subsidiaries and other affiliates consistent with
such position as may reasonably be assigned to the Employee from time to time by
the Board of Directors of the Company (the "Board") or the more senior officers
of the Company.
Section 2. Term. Unless sooner terminated in accordance with the
applicable provisions of this Agreement, the Employee's employment hereunder
shall be for the period (including any extensions thereof, the "Employment
Period") commencing on the date hereof (the "Commencement Date") and initially
ending on the first anniversary of the date hereof. Subject to the applicable
provisions of this Agreement regarding earlier termination, the Employment
Period shall be extended automatically one day prior to each anniversary of the
Commencement Date, beginning with the first anniversary thereof, in each case
for an additional period of one year.
Section 3. Time to be Devoted to Employment; Place of Performance.
During the Employment Period, the Employee shall devote all of the Employee's
working energies, efforts, interest, abilities and time exclusively to the
business and affairs of the Company and its subsidiaries and other affiliates.
The Employee shall not engage in any other business or activity that, in the
reasonable judgment of the Board, would conflict or interfere with the
performance of the Employee's duties as set forth herein, whether or not such
activity is pursued for gain, profit or other pecuniary advantage. The Employee
shall perform his duties and conduct his business at the principal Employee
offices of the Company, except for required travel on the Company's business.
Section 4. Base Salary; Bonus; Benefits.
(j) During the Employment Period, the Company (or any of
its subsidiaries or other affiliates) shall pay the Employee an annual base
salary (the "Base Salary") of Seventy-Eight Thousand Dollars ($78,000.00),
payable in such installments (but not less often than monthly) as is generally
the policy of the Company from time to time with respect to the payment of
regular compensation to its executive officers. During the Employment Period,
the Employee will be entitled to (i) no less than two (2) weeks vacation per
calendar year occurring during the Employment Period, which shall accrue and be
taken in accordance with the Company's policy in effect from time to time, and
(ii) such other benefits as may be made available from time to time to other
executive officers of the Company generally, including, without limitation,
participation in such health, life and disability insurance programs and
retirement or savings plans, if any, as the Company may from time to time
maintain in effect, subject to the Company's rights from time to time to amend,
modify, change or terminate in any respect any of its employee benefit plans,
policies, programs or benefits.
(k) In addition to the Base Salary and benefits set forth
in 10.14(a), during the Employment Period the Employee will be eligible to
receive an equity incentive bonus based on the earn out schedule attached hereto
as Schedule A, as determined by the Board in its sole discretion, with respect
to each calendar year occurring during the Employment Period, commencing with
calendar year 2005. Anything contained in this Agreement to the contrary
notwithstanding, if the Employee's employment with the Company is terminated for
64
any reason, neither the Company nor any of its subsidiaries or other affiliates
shall be obligated to pay the Employee any bonus with respect to the calendar
year of the Company in which such termination occurred or thereafter.
(l) All references herein to compensation to be paid to
the Employee are to the gross amounts thereof that may be due hereunder. The
Company shall have the right to deduct therefrom all sums that may be required
to be deducted or withheld under any provision of law (including, without
limitation, social security payments, income tax withholding, and any other
deduction required by law) as in effect at all relevant times during the term of
this Agreement.
Section 5. Reimbursement of Expenses. During the Employment Period, the
Company shall reimburse the Employee in accordance with the Company's policy for
all reasonable and necessary traveling expenses and other disbursements incurred
by the Employee for or on behalf of the Company in connection with the
performance of the Employee's duties hereunder upon presentation of appropriate
receipts or other documentation therefor, in accordance with all applicable
policies of the Company.
Section 6. Termination. The Company may terminate the Employee's
employment hereunder at any time with or without "cause" by giving the Employee
written notice of such termination, which termination shall be effective as of
the date set forth in such notice, provided that such date shall not be earlier
than the date of such notice.
Section 7. Effect of Termination. Upon the effective date of
termination of the Employee's employment under this Agreement, neither the
Employee nor the Employee's beneficiaries or estate shall have any further
rights under this Agreement or any claims against the Company or any of its
subsidiaries or other affiliates arising out of this Agreement, except the right
to receive, within thirty (30) days after the effective date of such termination
(or such earlier period as may be required by applicable law):
(i) the unpaid portion of the Base Salary
provided for in Section 4, computed on a per diem basis to the
effective date of such termination; and
(ii) reimbursement for any expenses for which the
Employee shall not have theretofore been reimbursed, as provided in
Section 5.
Section 8. Disclosure of Information; Non-competition.
(m) From and after the date hereof, the Employee shall
not at any time use or disclose, divulge, furnish, or make accessible to any
person or entity (other than any officer, director, employee, affiliate or
representative of the Company), except as required in connection with the
performance of the Employee's duties under and in compliance with this Agreement
and as required by law and judicial process (after giving the Company reasonably
timely notice of the receipt of any such legal or judicial requirement), any
Confidential Information (as defined in Section 8(e)) heretofore acquired or
acquired during the Employment Period for any reason or purpose whatsoever, nor
shall the Employee make use of any of the Confidential Information for the
Employee's own purposes or for the benefit of any person or entity except the
Company or any of its subsidiaries or other affiliates.
(n) For purposes of this Agreement, "Confidential
Information" means (i) the Intellectual Property Rights (as defined in 10.14(f))
of the Company and its subsidiaries and other affiliates, and (ii) all other
knowledge and information of a proprietary or confidential nature relating to
the Company or any of its subsidiaries or other affiliates, or the business or
assets of the Company or any of its subsidiaries or other affiliates, including,
without limitation, books, records, agent and independent contractor lists and
related information, customer lists and related information, vendor lists and
related information, supplier lists and related information, distribution
channels, pricing information, cost information, marketing plans, strategies,
forecasts, financial statements, budgets and projections, other than (A)
information that is generally available to the public on the date hereof, or
that becomes generally available to the public after the date hereof without
action by the Employee, or (B) information that the Employee receives from a
third party who does not have any independent obligation to the Company to keep
such information confidential.
(o) For purposes of this Agreement, the term
"Intellectual Property Rights" means all industrial and intellectual property
rights, including, without limitation, patents, patent applications, letters
patent, patent rights, trademarks, trademark applications, trade names, service
marks, service xxxx applications, copyrights, copyright applications, know-how,
65
certificates of public convenience and necessity, franchises, licenses, trade
secrets, proprietary processes and formulae, inventions, discoveries,
improvements, ideas, development tools, marketing materials, instructions,
confidential information, trade dress, logos and designs, and all documentation
and media constituting, describing or relating to the foregoing.
(p) The Employee shall not during the Employment Period
and the period commencing on the effective date of the termination of his
employment with the Company and its subsidiaries and other affiliates for any
reason and ending on the second anniversary of the effective date of such
termination of employment (such periods together being called the
"Non-competition Period" herein) (i) in any geographic area where the Company or
any of its subsidiaries or other affiliates conducts business during the
Non-competition Period, engage in or participate in, directly or indirectly
(whether as an officer, director, employee, partner, consultant, holder of an
equity or debt investment, lender or in any other manner or capacity, including,
without limitation, by the rendering of services or advice to any person), or
lend his name (or any part or variant thereof) to, any Competing Business (as
defined in 10.14(h)); (ii) deal, directly or indirectly, in a competitive manner
with any customers doing business with the Company or any of its subsidiaries or
other affiliates during the Non-competition Period; (iii) solicit or employ any
officer, director or agent of the Company or any of its subsidiaries or other
affiliates to become an officer, director, or agent of the Employee, the
Employee's affiliates or anyone else; or (iv) engage in or participate in,
directly or indirectly, any business conducted under any name that shall be the
same as or similar to the name of the Company or any of its subsidiaries or
other affiliates or any trade name used by any of them. The Employee's ownership
for investment purposes only of less than two percent (2%) of the outstanding
shares of capital stock or class of debt securities of any corporation with one
or more classes of its capital stock listed on a national securities exchange or
actively traded in the over-the-counter market shall not constitute a breach of
the foregoing covenant. The Employee is entering into the foregoing covenant to
induce the Company to extend this Agreement to, and to enter into this Agreement
with, the Employee.
(q) For purposes of this Agreement, the term "Competing
Business" means any wireless data communication, telematics, handheld gaming,
software or other business that the Company or any of its subsidiaries or other
affiliates has engaged in at any time during the Employment Period in any city
or county in any state of the United States or Europe.
Section 9. Resignation. Upon the termination of Employee's employment
hereunder, Employee shall automatically be deemed to have resigned as an officer
and director of the Company, any subsidiary and any affiliate and as a fiduciary
of any benefit plan of any of the foregoing. The Employee shall execute any
further documentation of such resignation as is reasonably requested by the
Company.
Section 10. Entire Agreement; Amendment and Waiver. This Agreement
contains the entire agreement between the Employee and the Company with respect
to the subject matter hereof and supersedes any and all prior and
contemporaneous agreements and understandings between the Employee and the
Company or any predecessor of the Company or any of their respective
subsidiaries or other affiliates regarding the subject matter hereof. No waiver,
amendment or modification of any provision of this Agreement shall be effective
unless in writing and signed by the Employee and the Company. The waiver by
either party of a breach of any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any subsequent breach by such
other party.
Section 11. Notices.
(r) All notices or other communications pursuant to this
Agreement shall be in writing and shall be deemed to be sufficient if delivered
personally, telecopied, sent by nationally-recognized, overnight courier, or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(i) if to the Company, to it at:
_______________________________
_______________________________
Attention: ___________________
Telecopier: (___) _____________
Telephone: (___) _____________
(ii) if to the Employee, to him at his last known
address contained in the records of the Company.
66
(c) All such notices and other communications shall be
deemed to have been given and received (i) in the case of personal delivery, on
the date of such delivery, (ii) in the case of delivery by telecopy, on the date
of such delivery (if sent on a business day, and if not sent on a business day,
then on the next business day after the date sent), (iii) in the case of
delivery by nationally-recognized, overnight courier, on the next business day
following dispatch, and (iv) in the case of mailing, on the third business day
following such mailing.
Section 12. Headings. The section headings in this Agreement are for
convenience only and shall not control or affect the meaning of any provision of
this Agreement.
Section 13. Severability. It is the desire and intent of the parties
that the provisions of this Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, in the event that any provision of
this Agreement would be held in any jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction. Notwithstanding the foregoing, if such provision could be more
narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 14. Remedies. The Employee acknowledges and understands that
the provisions of this Agreement are of a special and unique nature, the loss of
which cannot be adequately compensated for in damages by an action at law, and
thus, the breach or threatened breach of the provisions of this Agreement would
cause the Company irreparable harm. The Employee further acknowledges that the
covenants contained in Section 8 and Section 9 are independent covenants and in
the event of a breach of any of the covenants contained in Section 8 or Section
9, the Company shall be entitled to immediate relief enjoining such violations
in any court or before any judicial body having jurisdiction over such a claim.
All remedies hereunder are cumulative, are in addition to any other remedies
provided for by law and may, to the extent permitted by law, be exercised
concurrently or separately, and the exercise of any one remedy shall not be
deemed to be an election of such remedy or to preclude the exercise of any other
remedy.
Section 15. Representation. The Employee hereby represents and warrants
to the Company that (i) the execution, delivery and performance of this
Agreement by the Employee does not breach, violate or cause a default under any
agreement, contract or instrument to which the Employee is a party or any
judgment, order or decree to which the Employee is subject, and (ii) the
Employee is not a party to or bound by any employment agreement, consulting
agreement, non-compete agreement, confidentiality agreement or similar agreement
with any other person or entity.
Section 16. Benefits of Agreement; Assignment. The terms and provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, assigns, representatives, heirs and
estates, as applicable. This Agreement shall not be assignable by any party
hereto without the prior written consent of the other party hereto, except that
the Company may assign this Agreement or its rights hereunder to a direct or
indirect wholly-owned subsidiary of the Company or to any person or entity
succeeding to all or any substantial portion of their respective businesses.
Section 17. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic 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.
Section 18. Mutual Waiver of Jury Trial. THE PARTIES WISH THAT
APPLICABLE LAWS APPLY TO THE RESOLUTION OF ANY DISPUTES ARISING UNDER THIS
AGREEMENT AND THE SUBJECT MATTER HEREOF, AND THAT THEIR DISPUTES BE RESOLVED BY
AN EXPERIENCED PERSON APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND APPLICABLE LAWS, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
67
Section 19. Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
* * * * * *
68
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
effective as of the date first written above.
THE COMPANY:
-----------
GLOBICOM, INC.
By:______________________________
Name:____________________________
Title:___________________________
THE EMPLOYEE:
------------
_________________________________
Name: Xxxxxxx Xxxxxxxxx
69
EXHIBIT A
---------
Equity Incentive Bonus
Xxxxxxx Xxxxxxxxx
2005 (Year 1): 5,625 shares of common stock if the Globicom network is
up-and-running 120 days from the closing date of the initial stock purchase
transaction with Tiger Telematics, Inc. The Globicom network must support Tiger
Telematics' Gizmondo unit. An additional 5,625 shares of common stock if the
Company achieves Gross Profit of $330,000 for the twelve month period beginning
with the first full month immediately following the closing date of the initial
stock purchase transaction with Tiger Telematics, Inc.
120 day network up and running = 5,625 shares.
Year 1 $330,000 Gross Profit = 5,625 shares
Year 1 Total Share Earning Target = 11,250 shares
2006 (Year 2): 5,625 shares of common stock if the Company achieves Operating
Income at the Globicom business unit of at least $1,350,000 for the twelve month
period beginning with the first full month one year from the closing date of the
initial stock purchase transaction with Tiger Telematics, Inc.
Year 2 $1,350,000 Operating Income = 5,625 shares
Year 2 Total Share Earning Target = 5,625 shares
2007 (Year 3): 5,625 shares of common stock if the Company achieves Operating
Income at the Globicom business unit of at least $3,650,000 for the twelve month
period beginning with the first full month two years from the closing date of
the initial stock purchase transaction with Tiger Telematics, Inc.
Year 3 $3,650,000 = 5,625 shares
Year 3 Total Share Earning Target = 5,625
AGGREGATE TOTAL SHARES = 22,500
The Equity Incentive Bonus under this Agreement will become fully vested and
immediately exercisable upon the occurrence of a "Change of Control."
A Change of Control means the occurrence of any of the following: (i) the
acquisition (other than from the Company directly) by any "person" group or
entity within the meaning of Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934) of beneficial ownership of more than fifty (50%) percent of the
outstanding voting stock of the Company; (ii) the stockholders of the Company
approve a merger, reorganization or consolidation of the Company, whereby the
stockholders of the Company immediately prior to such approval do not,
immediately after consummation of such reorganization, merger or consolidation,
own more than 50% of the outstanding voting stock of the surviving entity; or
(iii) a liquidation or dissolution of the Company, or the sale of all or
substantially all of the Company's assets.
In the event of a stock split or stock dividend by the Company, an appropriate
adjustment will be made in the number of shares subject to the Equity Incentive
Bonus, as determined by the Company's Board of Directors.
70
EXHIBIT E
---------
Form of Employment Agreement with Xxx Xxxxx
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement"), dated as of June____,
2005, is by and between GLOBICOM INC., a Texas corporation (the "Company"), and
XXXXXX X. XXXXX (the "Employee").
PREAMBLE
The Company and the Employee are entering into this Agreement to set
forth the terms of the Employee's employment with the Company.
ACCORDINGLY, in consideration of the mutual representations,
warranties, covenants and agreements set forth in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Company and the Employee, the Company and the Employee
hereby agree as follows:
Section 1. Duties. On the terms and subject to the conditions contained
in this Agreement, the Employee will be employed by the Company as Vice
President-Network Services. The Employee shall perform such duties and services
on behalf of the Company and its subsidiaries and other affiliates consistent
with such position as may reasonably be assigned to the Employee from time to
time by the Board of Directors of the Company (the "Board") or the more senior
officers of the Company.
Section 2. Term. Unless sooner terminated in accordance with the
applicable provisions of this Agreement, the Employee's employment hereunder
shall be for the period (including any extensions thereof, the "Employment
Period") commencing on the date hereof (the "Commencement Date") and initially
ending on the first anniversary of the date hereof. Subject to the applicable
provisions of this Agreement regarding earlier termination, the Employment
Period shall be extended automatically one day prior to each anniversary of the
Commencement Date, beginning with the first anniversary thereof, in each case
for an additional period of one year.
Section 3. Time to be Devoted to Employment; Place of Performance.
During the Employment Period, the Employee shall devote all of the Employee's
working energies, efforts, interest, abilities and time exclusively to the
business and affairs of the Company and its subsidiaries and other affiliates.
The Employee shall not engage in any other business or activity that, in the
reasonable judgment of the Board, would conflict or interfere with the
performance of the Employee's duties as set forth herein, whether or not such
activity is pursued for gain, profit or other pecuniary advantage. The Employee
shall perform his duties and conduct his business at the principal Employee
offices of the Company, except for required travel on the Company's business.
Section 4. Base Salary; Bonus; Benefits.
(s) During the Employment Period, the Company (or any of
its subsidiaries or other affiliates) shall pay the Employee an annual base
salary (the "Base Salary") of Seventy-Two Thousand Dollars ($72,000.00), payable
in such installments (but not less often than monthly) as is generally the
policy of the Company from time to time with respect to the payment of regular
compensation to its executive officers. During the Employment Period, the
Employee will be entitled to (i) no less than two (2) weeks vacation per
calendar year occurring during the Employment Period, which shall accrue and be
taken in accordance with the Company's policy in effect from time to time, and
(ii) such other benefits as may be made available from time to time to other
executive officers of the Company generally, including, without limitation,
participation in such health, life and disability insurance programs and
retirement or savings plans, if any, as the Company may from time to time
maintain in effect, subject to the Company's rights from time to time to amend,
modify, change or terminate in any respect any of its employee benefit plans,
policies, programs or benefits.
(t) In addition to the Base Salary and benefits set forth
in 10.14(a), during the Employment Period the Employee will be eligible to
receive an equity incentive bonus based on the earn out schedule attached hereto
as Schedule A, as determined by the Board in its sole discretion, with respect
to each calendar year occurring during the Employment Period, commencing with
calendar year 2005. Anything contained in this Agreement to the contrary
notwithstanding, if the Employee's employment with the Company is terminated for
any reason, neither the Company nor any of its subsidiaries or other affiliates
shall be obligated to pay the Employee any bonus with respect to the calendar
year of the Company in which such termination occurred or thereafter.
71
(u) All references herein to compensation to be paid to
the Employee are to the gross amounts thereof that may be due hereunder. The
Company shall have the right to deduct therefrom all sums that may be required
to be deducted or withheld under any provision of law (including, without
limitation, social security payments, income tax withholding, and any other
deduction required by law) as in effect at all relevant times during the term of
this Agreement.
Section 5. Reimbursement of Expenses. During the Employment Period, the
Company shall reimburse the Employee in accordance with the Company's policy for
all reasonable and necessary traveling expenses and other disbursements incurred
by the Employee for or on behalf of the Company in connection with the
performance of the Employee's duties hereunder upon presentation of appropriate
receipts or other documentation therefor, in accordance with all applicable
policies of the Company.
Section 6. Termination. The Company may terminate the Employee's
employment hereunder at any time with or without "cause" by giving the Employee
written notice of such termination, which termination shall be effective as of
the date set forth in such notice, provided that such date shall not be earlier
than the date of such notice.
Section 7. Effect of Termination. Upon the effective date of
termination of the Employee's employment under this Agreement, neither the
Employee nor the Employee's beneficiaries or estate shall have any further
rights under this Agreement or any claims against the Company or any of its
subsidiaries or other affiliates arising out of this Agreement, except the right
to receive, within thirty (30) days after the effective date of such termination
(or such earlier period as may be required by applicable law):
(i) the unpaid portion of the Base Salary
provided for in Section 4, computed on a per diem basis to the
effective date of such termination; and
(ii) reimbursement for any expenses for which the
Employee shall not have theretofore been reimbursed, as provided in
Section 5.
Section 8. Disclosure of Information; Non-competition.
(v) From and after the date hereof, the Employee shall
not at any time use or disclose, divulge, furnish, or make accessible to any
person or entity (other than any officer, director, employee, affiliate or
representative of the Company), except as required in connection with the
performance of the Employee's duties under and in compliance with this Agreement
and as required by law and judicial process (after giving the Company reasonably
timely notice of the receipt of any such legal or judicial requirement), any
Confidential Information (as defined in Section 8(e)) heretofore acquired or
acquired during the Employment Period for any reason or purpose whatsoever, nor
shall the Employee make use of any of the Confidential Information for the
Employee's own purposes or for the benefit of any person or entity except the
Company or any of its subsidiaries or other affiliates.
(w) For purposes of this Agreement, "Confidential
Information" means (i) the Intellectual Property Rights (as defined in 10.14(f))
of the Company and its subsidiaries and other affiliates, and (ii) all other
knowledge and information of a proprietary or confidential nature relating to
the Company or any of its subsidiaries or other affiliates, or the business or
assets of the Company or any of its subsidiaries or other affiliates, including,
without limitation, books, records, agent and independent contractor lists and
related information, customer lists and related information, vendor lists and
related information, supplier lists and related information, distribution
channels, pricing information, cost information, marketing plans, strategies,
forecasts, financial statements, budgets and projections, other than (A)
information that is generally available to the public on the date hereof, or
that becomes generally available to the public after the date hereof without
action by the Employee, or (B) information that the Employee receives from a
third party who does not have any independent obligation to the Company to keep
such information confidential.
(x) For purposes of this Agreement, the term
"Intellectual Property Rights" means all industrial and intellectual property
rights, including, without limitation, patents, patent applications, letters
patent, patent rights, trademarks, trademark applications, trade names, service
marks, service xxxx applications, copyrights, copyright applications, know-how,
certificates of public convenience and necessity, franchises, licenses, trade
secrets, proprietary processes and formulae, inventions, discoveries,
improvements, ideas, development tools, marketing materials, instructions,
confidential information, trade dress, logos and designs, and all documentation
and media constituting, describing or relating to the foregoing.
72
(y) The Employee shall not during the Employment Period
and the period commencing on the effective date of the termination of his
employment with the Company and its subsidiaries and other affiliates for any
reason and ending on the second anniversary of the effective date of such
termination of employment (such periods together being called the
"Non-competition Period" herein) (i) in any geographic area where the Company or
any of its subsidiaries or other affiliates conducts business during the
Non-competition Period, engage in or participate in, directly or indirectly
(whether as an officer, director, employee, partner, consultant, holder of an
equity or debt investment, lender or in any other manner or capacity, including,
without limitation, by the rendering of services or advice to any person), or
lend his name (or any part or variant thereof) to, any Competing Business (as
defined in 10.14(h)); (ii) deal, directly or indirectly, in a competitive manner
with any customers doing business with the Company or any of its subsidiaries or
other affiliates during the Non-competition Period; (iii) solicit or employ any
officer, director or agent of the Company or any of its subsidiaries or other
affiliates to become an officer, director, or agent of the Employee, the
Employee's affiliates or anyone else; or (iv) engage in or participate in,
directly or indirectly, any business conducted under any name that shall be the
same as or similar to the name of the Company or any of its subsidiaries or
other affiliates or any trade name used by any of them. The Employee's ownership
for investment purposes only of less than two percent (2%) of the outstanding
shares of capital stock or class of debt securities of any corporation with one
or more classes of its capital stock listed on a national securities exchange or
actively traded in the over-the-counter market shall not constitute a breach of
the foregoing covenant. The Employee is entering into the foregoing covenant to
induce the Company to extend this Agreement to, and to enter into this Agreement
with, the Employee.
(z) For purposes of this Agreement, the term "Competing
Business" means any wireless data communication, telematics, handheld gaming,
software or other business that the Company or any of its subsidiaries or other
affiliates has engaged in at any time during the Employment Period in any city
or county in any state of the United States or Europe.
Section 9. Resignation. Upon the termination of Employee's employment
hereunder, Employee shall automatically be deemed to have resigned as an officer
and director of the Company, any subsidiary and any affiliate and as a fiduciary
of any benefit plan of any of the foregoing. The Employee shall execute any
further documentation of such resignation as is reasonably requested by the
Company.
Section 10. Entire Agreement; Amendment and Waiver. This Agreement
contains the entire agreement between the Employee and the Company with respect
to the subject matter hereof and supersedes any and all prior and
contemporaneous agreements and understandings between the Employee and the
Company or any predecessor of the Company or any of their respective
subsidiaries or other affiliates regarding the subject matter hereof. No waiver,
amendment or modification of any provision of this Agreement shall be effective
unless in writing and signed by the Employee and the Company. The waiver by
either party of a breach of any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any subsequent breach by such
other party.
Section 11. Notices.
(aa) All notices or other communications pursuant to this
Agreement shall be in writing and shall be deemed to be sufficient if delivered
personally, telecopied, sent by nationally-recognized, overnight courier, or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(i) if to the Company, to it at:
_______________________________
_______________________________
Attention: ___________________
Telecopier: (___) _____________
Telephone: (___) _____________
(ii) if to the Employee, to him at his last known
address contained in the records of the Company.
(d) All such notices and other communications shall be
deemed to have been given and received (i) in the case of personal delivery, on
the date of such delivery, (ii) in the case of delivery by telecopy, on the date
of such delivery (if sent on a business day, and if not sent on a business day,
73
then on the next business day after the date sent), (iii) in the case of
delivery by nationally-recognized, overnight courier, on the next business day
following dispatch, and (iv) in the case of mailing, on the third business day
following such mailing.
Section 12. Headings. The section headings in this Agreement are for
convenience only and shall not control or affect the meaning of any provision of
this Agreement.
Section 13. Severability. It is the desire and intent of the parties
that the provisions of this Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, in the event that any provision of
this Agreement would be held in any jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction. Notwithstanding the foregoing, if such provision could be more
narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 14. Remedies. The Employee acknowledges and understands that
the provisions of this Agreement are of a special and unique nature, the loss of
which cannot be adequately compensated for in damages by an action at law, and
thus, the breach or threatened breach of the provisions of this Agreement would
cause the Company irreparable harm. The Employee further acknowledges that the
covenants contained in Section 8 and Section 9 are independent covenants and in
the event of a breach of any of the covenants contained in Section 8 or Section
9, the Company shall be entitled to immediate relief enjoining such violations
in any court or before any judicial body having jurisdiction over such a claim.
All remedies hereunder are cumulative, are in addition to any other remedies
provided for by law and may, to the extent permitted by law, be exercised
concurrently or separately, and the exercise of any one remedy shall not be
deemed to be an election of such remedy or to preclude the exercise of any other
remedy.
Section 15. Representation. The Employee hereby represents and warrants
to the Company that (i) the execution, delivery and performance of this
Agreement by the Employee does not breach, violate or cause a default under any
agreement, contract or instrument to which the Employee is a party or any
judgment, order or decree to which the Employee is subject, and (ii) the
Employee is not a party to or bound by any employment agreement, consulting
agreement, non-compete agreement, confidentiality agreement or similar agreement
with any other person or entity.
Section 16. Benefits of Agreement; Assignment. The terms and provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, assigns, representatives, heirs and
estates, as applicable. This Agreement shall not be assignable by any party
hereto without the prior written consent of the other party hereto, except that
the Company may assign this Agreement or its rights hereunder to a direct or
indirect wholly-owned subsidiary of the Company or to any person or entity
succeeding to all or any substantial portion of their respective businesses.
Section 17. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic 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.
Section 18. Mutual Waiver of Jury Trial. THE PARTIES WISH THAT
APPLICABLE LAWS APPLY TO THE RESOLUTION OF ANY DISPUTES ARISING UNDER THIS
AGREEMENT AND THE SUBJECT MATTER HEREOF, AND THAT THEIR DISPUTES BE RESOLVED BY
AN EXPERIENCED PERSON APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND APPLICABLE LAWS, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
Section 19. Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
74
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement effective as of the date first written above.
THE COMPANY:
-----------
GLOBICOM, INC.
By:______________________________
Name:____________________________
Title:___________________________
THE EMPLOYEE:
------------
_________________________________
Name: Xxxxxx X. Xxxxx
75
EXHIBIT A
---------
Equity Incentive Bonus
Xxxxxx X. Xxxxx
2005 (Year 1): 4,687.50 shares of common stock if the Globicom network is
up-and-running 120 days from the closing date of the initial stock purchase
transaction with Tiger Telematics, Inc. The Globicom network must support Tiger
Telematics' Gizmondo unit. An additional 4,687.50 shares of common stock if the
Company achieves Gross Profit of $330,000 for the twelve month period beginning
with the first full month immediately following the closing date of the initial
stock purchase transaction with Tiger Telematics, Inc.
120 day network up and running = 4,687.50 shares.
Year 1 $330,000 Gross Profit = 4,687.50 shares
Year 1 Total Share Earning Target = 9,375 shares
2006 (Year 2): 4,687.50 shares of common stock if the Company achieves Operating
Income at the Globicom business unit of at least $1,350,000 for the twelve month
period beginning with the first full month one year from the closing date of the
initial stock purchase transaction with Tiger Telematics, Inc.
Year 2 $1,350,000 Operating Income = 4,687.50 shares
Year 2 Total Share Earning Target = 4,687.50 shares
2007 (Year 3): 4,687.50 shares of common stock if the Company achieves Operating
Income at the Globicom business unit of at least $3,650,000 for the twelve month
period beginning with the first full month two years from the closing date of
the initial stock purchase transaction with Tiger Telematics, Inc.
Year 3 $3,650,000 = 4,687.50 shares
Year 3 Total Share Earning Target = 4,687.50
AGGREGATE TOTAL SHARES = 18,750
The Equity Incentive Bonus under this Agreement will become fully vested and
immediately exercisable upon the occurrence of a "Change of Control."
A Change of Control means the occurrence of any of the following: (i) the
acquisition (other than from the Company directly) by any "person" group or
entity within the meaning of Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934) of beneficial ownership of more than fifty (50%) percent of the
outstanding voting stock of the Company; (ii) the stockholders of the Company
approve a merger, reorganization or consolidation of the Company, whereby the
stockholders of the Company immediately prior to such approval do not,
immediately after consummation of such reorganization, merger or consolidation,
own more than 50% of the outstanding voting stock of the surviving entity; or
(iii) a liquidation or dissolution of the Company, or the sale of all or
substantially all of the Company's assets.
In the event of a stock split or stock dividend by the Company, an appropriate
adjustment will be made in the number of shares subject to the Equity Incentive
Bonus, as determined by the Company's Board of Directors.
76
Schedule 1.3
Stockholder Percentages for Allocation of Purchase Price
--------------------------------------------------------
STOCKHOLDER %
Xxxx X. Xxxxxxx 34.44%
Xxxxxxx Xxxxxxxxx 18.46%
Xxxxx Xxxxxx 17.16%
Xxx Xxxxxxxxx 5.50%
Xxxxx Xxxxxxxxx 5.28%
Xxxxxx X. Xxxxxxx 2.77%
Xxx Xxxxx 2.46%
Xxxxxxx X. Xxxxxxxxx 1.23%
Xxxxx & Xxxx Xxxx 1.16%
Xxxxxxxxx Marital Trust 0.89%
Xxxxx & Xxxxxxx Xxxxx 0.74%
Xxxxx Xxxxx 0.62%
Xxxx Xxxxxx 0.49%
Xxx Xxxxx 0.39%
Xxxxx Xxxx 0.31%
Xxx Xxxxxxxx 0.29%
Xxxxxx Xxxxxxx 3.21%
Xxxxx Xxxxxxxx Xxxxx 1.13%
Xxxxx X. Xxxxxx 0.92%
Xxxxxxxxxxx & Xxxxxx Xxxxxx 0.50%
Xxxxxxxx & Xxx Royal 0.41%
Xxxxx X. Xxxxxxxx 0.41%
Xxxx & Xxxxx Xxxxxxxx 0.37%
Xxxxxxx X. Xxxxxx 0.22%
Xxxxxxx X. Xxxxx 0.21%
Marcus & Xxxxx Xxxxx 0.12%
Carsten Holmdie 0.12%
Xxxx Xxxxxx 0.09%
Xxx Xxxxxxx 0.06%
Xxxxxxxx X. Xxxxx 0.04%
TOTAL 100.00%
These percentages represent fully-diluted ownership after conversion of
preferred shares with accumulated interest, creditor indebtedness with
accumulated interest, and warrants.
77
Schedule 3.4
Stockholder Consents
--------------------
Attached
78
Schedule 4.1
Foreign Qualifications for the Company and Its Subsidiaries
-----------------------------------------------------------
None
79
Schedule 4.3
Company Consents
----------------
Attached
80
Schedule 4.4(a)
Capitalization Table of the Company and It's Subsidiaries
---------------------------------------------------------
COMMON STOCK
Authorized 10,000,000 shares
No Par Value
Xxxx X. Xxxxxxx 2,800,000
Xxxxxxx Xxxxxxxxx 1,500,000
Xxxxx Xxxxxx 1,395,109
PMT Research Inc. 447,408
Xxxxx Xxxxxxxxx 428,968
Xxxxxx Xxxxxxx 261,228
Xxxxxx X. Xxxxxxx 225,454
Xxx Xxxxx 200,000
Xxxxxxx X. Xxxxxxxxx 100,000
Xxxxx & Xxxx Xxxx 94,062
Xxxxx Xxxxxxxx Xxxxx 92,213
Xxxxx X. Xxxxxx 75,000
Xxxxxxxxx Marital Trust 72,443
Xxxxx & Xxxxxxx Xxxxx 60,000
Xxxxx Xxxxx 50,000
Xxxxxxxxxxx & Xxxxxx Xxxxxx 40,359
Xxxx Xxxxxx 40,000
Xxxx & Xxx Royal 33,631
Xxxxx X. Xxxxxxxx 33,333
Xxx Xxxxx 32,000
Xxxx & Xxxxx Xxxxxxxx 30,000
Xxxxx Xxxx 25,000
Xxx Xxxxxxxx 23,498
Xxxxxxx X. Xxxxxx 17,500
Xxxxxxx X. Xxxxx 16,667
Marcus & Xxxxx Xxxxx 10,000
Carsten Holmdie 10,000
Xxxx Xxxxxx 7,000
Xxx Xxxxxxx 5,000
Xxxxxxxx X. Xxxxx 3,333
Issued and Outstanding 8,129,206
These shares represent fully-diluted ownership after conversion of preferred
shares with accumulated interest, creditor indebtedness with accumulated
interest, and warrants.
81
Schedule 4.4(b)
Options, Warrants, Voting Agreements, etc.
------------------------------------------
The Company has no options or warrants issued as of the closing date of this
agreement.
82
Schedule 4.5
Subsidiaries and Investments
----------------------------
The Company has no subsidiaries and investments as of the closing date of this
agreement.
83
Schedule 4.6(a)
Financial Statements
--------------------
Globicom, Inc.
Unaudited Income Statement
Jan - Dec Jan - Dec Jan - Dec Jan - Dec Jan - Dec Jan - Jul
00 01 02 03 04 05
--------- --------- --------- --------- --------- ---------
Income
Other Regular Income 0 1,200 7,235 26,718 0 0
Product Revenue 2,534 113,867 308,433 74,503 0 0
Subscription Revenue 738 62,752 173,256 228,422 21,262 0
--------- --------- --------- --------- --------- ---------
Total Income 3,272 177,819 488,924 329,643 21,262 0
Cost of Goods Sold
Cost of Goods Sold 2,431 94,650 291,968 61,563 0 0
Cost of Subscriptions 312 46,835 98,792 141,397 20,275 0
--------- --------- --------- --------- --------- ---------
Total COGS 2,743 141,485 390,760 202,960 20,275 0
--------- --------- --------- --------- --------- ---------
Gross Profit 529 36,334 98,164 126,683 987 0
Expense
Building Occupancy 4,393 45,859 51,145 44,284 4,978 9,912
Data Center Costs 30,892 24,527 27,454 12,970 765 0
Depreciation Expense 590 6,174 10,685 11,259 3,530 1,404
General & Administrative 19,244 78,235 103,675 58,902 20,464 459
Payroll Expenses 0 300,401 369,478 257,802 80,259 31,945
Sales & Marketing Expense 8,672 17,628 10,805 2,133 0 0
Software OEM Lic. Amort. 0 0 800 1,100 0 0
Taxes 0 2,521 3,660 -1,113 207 0
--------- --------- --------- --------- --------- ---------
Total Expense 63,791 475,345 577,702 387,337 110,203 43,720
--------- --------- --------- --------- --------- ---------
Net Ordinary Income -63,262 -439,011 -479,538 -260,654 -109,216 -43,720
Other Income/Expense
Interest Income 734 3,360 2,935 2,424 0 0
--------- --------- --------- --------- --------- ---------
Total Other Income 734 3,360 2,935 2,424 0 0
Other Expense
Interest Expense 2,438 9,417 37,061 70,806 71,234 5,963
--------- --------- --------- --------- --------- ---------
Total Other Expense 2,438 9,417 37,061 70,806 71,234 5,963
--------- --------- --------- --------- --------- ---------
Net Other Income -1,704 -6,057 -34,126 -68,383 -71,234 -5,963
--------- --------- --------- --------- --------- ---------
Net Income -64,966 -445,068 -513,664 -329,037 -180,449 -49,683
========= ========= ========= ========= ========= =========
84
Schedule 4.6(a)
Financial Statements
--------------------
Globicom, Inc.
Unaudited Balance Sheet
Dec 31, 00 Dec 31, 01 Dec 31, 02 Dec 31, 03 Dec 31, 04 Jul 31, 05
---------- ---------- ---------- ---------- ---------- ----------
ASSETS
Current Assets
Cash & Equivalents 144 3,256 43,239 9,892 1,816 1,816
Accounts Receivable 3,371 15,844 38,129 8,892 6,710 6,710
Other Current Assets 4,654 17,085 63,052 62,746 62,485 62,485
---------- ---------- ---------- ---------- ---------- ----------
Total Current Assets 8,169 36,185 144,420 81,530 71,012 71,012
Fixed Assets Net of Deprec 13,734 29,350 27,165 15,907 6,687 5,283
Total Other Assets 42,534 132,012 157,334 15,211 4,100 4,100
---------- ---------- ---------- ---------- ---------- ----------
TOTAL ASSETS 64,437 197,547 328,919 112,648 81,798 80,394
========== ========== ========== ========== ========== ==========
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable 23,195 72,612 88,157 113,719 128,.680 139,051
Other Current Liabilities 1,500 136,233 666,329 821,129 947,187 984,367
---------- ---------- ---------- ---------- ---------- ----------
Total Current Liabilities 24,695 208,845 754,486 934,849 1,075,867 1,123,418
Long Term Liabilities
Interest Payable 2,438 10,461 18,856 27,416 35,999 36,726
---------- ---------- ---------- ---------- ---------- ----------
Total Long Term Liabilities 2,438 10,461 18,856 27,416 35,999 36,726
---------- ---------- ---------- ---------- ---------- ----------
Total Liabilities 27,133 219,306 773,342 934,849 1,111,866 1,160,145
Equity
Capital Stock 102,270 488,275 579,275 503,105 503,108 503,108
Retained Earnings 0 -64,966 -510,035 -1,023,699 -1,352,726 -1,533,176
Net Income -64,966 -445,068 -513,664 -329,037 -180,449 -49,683
---------- ---------- ---------- ---------- ---------- ----------
Total Equity 37,304 -21,759 -444,424 -849,618 -1,030,067 -1,079,750
---------- ---------- ---------- ---------- ---------- ----------
TOTAL LIABILITIES & EQUITY 64,437 197,547 328,918 112,648 81,798 80,397
========== ========== ========== ========== ========== ==========
85
Schedule 4.6(a)
Financial Statements
--------------------
Globicom, Inc.
Unaudited Statement of Cashflows
Jan - Dec Jan - Dec Jan - Dec Jan - Dec Jan - Dec
00 01 02 03 04 Jan 05
--------- --------- --------- --------- --------- ---------
OPERATING ACTIVITIES
Net Income -64,966 -445,068 -513,664 -329,037 -180,449 -49,683
Adjustments to reconcile Net Income
to net cash provided by operations:
Accounts Receivable -3,371 -12,473 -22,285 29,238 2,182 --
Employee Advances -- -2,000 -3,200 4,940 260 --
Inventory Assets -- (12,558) (26,102) 25,391 -- --
Other Current Assets -4,654 2,127 -16,665 -30,025 -- --
Other Assets -42,534 2,387 -2,335 42,481 -- --
Accounts Payable 23,195 49,418 15,546 25,562 21,597 10,371
Other Current Liabilities 1,500 80,740 119,298 32,778 56,771 31,945
--------- --------- --------- --------- --------- ---------
Net cash provided by Operating Activities -90,830 -337,427 -449,407 -185,955 -99,639 -7,367
INVESTING ACTIVITIES
Fixed Assets Purchases -14,323 -21,790 -8,500 -- 36,029 --
Fixed Assets Purchases- A/D 591 6,174 10,685 11,258 -26,809 1,404
Other Assets -- -91,866 -22,987 99,642 11,111 --
--------- --------- --------- --------- --------- ---------
Net cash provided by Investing Activities -13,732 -107,482 -20,802 110,900 20,331 1,404
FINANCING ACTIVITIES
Loans from Stockholders -- 52,600 135,900 94,896 29,494 2,427
Short Term Borrowings -- 1,394 274,896 27,136 33,156 2,808
Interest Payable 2,438 8,023 8,395 8,560 8,583 727
Common Stock 15,270 366,005 91,000 (76,167) -- --
Preferred Stock 87,000 20,000 -- -- -- --
--------- --------- --------- --------- --------- ---------
Net cash provided by Financing Activities 104,708 448,022 510,191 54,425 71,233 5,963
Net cash increase for period 146 3,113 39,982 -33,347 -8,076 0
--------- --------- --------- --------- --------- ---------
Cash at beginning of period -- 144 3,257 43,239 9,892 1,816
--------- --------- --------- --------- --------- ---------
Cash at end of period 146 3,257 43,239 9,892 1,816 1,816
========= ========= ========= ========= ========= =========
86
Schedule 4.6(c)
Accounts Payable and Accounts Receivable
----------------------------------------
Accounts Payable as of
Jan. 30, 2005 1 - 30 31 - 60 61 - 90 > 90 TOTAL
------ --------- ----------- ------------- -------------
AT&T Wireless Services1 0.00 0.00 0.00 74,831.15 74,831.15
Xxxx Xxxxxxx 0.00 0.00 0.00 7,900.31 7,900.31
Xxx Xxxxx 0.00 0.00 0.00 7,012.43 7,012.43
T-Mobile Equipment Purchases 0.00 0.00 0.00 6,024.50 6,024.50
Verizon-CDPD2 0.00 0.00 0.00 5,780.46 5,780.46
Wireless Developer2 0.00 0.00 0.00 4,800.00 4,800.00
Motient2 0.00 0.00 0.00 3,354.92 3,354.92
Springbow Solutions2 0.00 0.00 0.00 3,187.88 3,187.88
Paradigm Suites 0.00 1,412.91 1,412.91 11,321.94 14,147.76
Global Wireless Data2 0.00 0.00 0.00 2,602.46 2,602.46
TXU Electric2 0.00 0.00 0.00 1,784.06 1,784.06
McDonald Sanders2 0.00 0.00 0.00 1,606.20 1,606.20
T-Mobile Wireless Service2 0.00 0.00 0.00 1,120.27 1,120.27
Buy & Save V2 0.00 0.00 0.00 902.50 902.50
A Xxxxxxxxx 0.00 0.00 0.00 861.76 861.76
Allegiance Telecom2 0.00 0.00 0.00 847.61 847.61
Verizon-1xRTT2 0.00 0.00 0.00 777.02 777.02
Miscellaneous Vendors2 0.00 0.00 0.00 2,463.69 2,463.69
------ --------- ----------- ------------- -------------
TOTALTRADE PAYABLES 0.00 1,412.91 1,412.91 137,638.24 140,464.06
Sales Tax Payable 0.00 0.00 0.00 1,542.90 1,542.90
Loans - Stockholders3 0.00 0.00 0.00 238,500.00 238,500.00
Loans -Stockholders-Interest3 0.00 0.00 0.00 76,817.48 76,817.48
Deferred Payroll 0.00 4,563.50 4,563.50 97,818 106,945
Payroll Liabilities 0.00 0.00 0.00 213,048.25 213,048.25
Short Term Borrowings3 0.00 0.00 0.00 273,387.81 273,387.81
Short Term Borrowings-Interest3 0.00 0.00 0.00 65,666.50 65,666.50
Preferred Interest Payable3 0.00 0.00 0.00 36,726.36 36,726.36
------ --------- ----------- ------------- -------------
TOTAL OTHER LIABILITIES 0.00 4,563.50 4,563.50 1,011,966.39 1,021,093.39
TOTAL PAYABLES 0.00 5,976.41 5,976.41 1,148,191.72 1,160,144.54
1 The Company is negotiating with AT&T for the application of credits for
transferring of CDPD customer base, for de-commissioning of CDPD network and
CDPD contract withdrawal.
2 The majority of these payable listed are pre-reorganization liabilities. The
Company believes that the majority of the over 90 trade payables have been
determined to be uncollectible by the vendor and do not require payment.
3 The Company will be converting the Loans-Stockholders,
Loans-Stockholders-Interest, Short Term Borrowings, Short Term
Borrowings-Interest, and Preferred Interest Payable will be converted to common
stock prior to closing.
87
Schedule 4.6(c)
Accounts Payable and Accounts Receivable
----------------------------------------
1 - 31 - 61 -
30 60 90 > 90 TOTAL
----- ------ ------ ---------- --------
City of Grapevine 0.00 0.00 0.00 2,187.45 2,187.45
Medstar 0.00 0.00 0.00 1,932.85 1,932.85
Hill Country Mobile Net 0.00 0.00 0.00 1,016.16 1,016.16
Xxxxxx County ESD#6 0.00 0.00 0.00 719.20 719.20
Transcore 0.00 0.00 0.00 324.48 324.48
Austin Commercial 0.00 0.00 0.00 322.91 322.91
Xxxx Xxxxxx 0.00 0.00 0.00 177.64 177.64
SUNTX 0.00 0.00 0.00 173.64 173.64
COI Inc. 0.00 0.00 0.00 159.80 159.80
Cordola Marble 0.00 0.00 0.00 119.90 119.90
Xxxxxx X. Xxxxxx 0.00 0.00 0.00 119.90 119.90
Trinity Industries 0.00 0.00 0.00 71.20 71.20
Xxxxxx Xxxxxx 0.00 0.00 0.00 59.95 59.95
Xxx Xxxxx 0.00 0.00 0.00 59.95 59.95
City of Southlake 0.00 0.00 0.00 39.95 39.95
NEC Solutions 0.00 0.00 0.00 1.00 1.00
Unapplied Credits 0.00 0.00 0.00 -776.42 -776.42
----- ------ ------ ---------- --------
TOTAL 0.00 0.00 0.00 6,709.56 6,709.56
===== ====== ====== ========== ========
The Company believes that these receivables may be uncollectible.
88
Schedule 4.7
Undisclosed Liabilities
-----------------------
The Company has no undisclosed liabilities as of the closing date of this
agreement.
89
Schedule 4.8
Absence of Changes
------------------
None
90
Schedule 4.9(a)
Tax Matters
-----------
The Company has the following tax liabilities as of the closing date of this
agreement. The Company has developed a plan of action to address these
liabilities utilizing the cash portion of the transaction in conjunction with a
structured settlement.
Payroll Tax Liabilities
-----------------------------------
95,031
Federal Withholding
Medicare Employee 10,465
Social Security Employee 44,746
Federal Unemployment 6,270
Medicare Company Paid 10,465
Social Security Company Paid 44,746
-----------
211,723
Total Payroll Tax Liabilities
City of Irving Property Taxes 1,202
Total Tax Liabilities 212,924
===========
The Company has the following estimated Net Operating Loss carry-forwards
reported on its Form 1120 U.S. Corporation Income Tax Returns:
NOL Carryover Year Amount
-------------------------------
2004 $ 112,744
2003 298,731
2002 504,446
2001 438,253
2000 63,865
----------------
Total NOL Carryover $ 1,418,039
Form 1120 U.S. Corporation Income Tax Returns for the following tax years are in
the due diligence binder:
Form 1120 - 2004
Form 1120 - 2003
Form 1120 - 2002
Form 1120 - 2001
Form 1120 - 2000
91
Schedule 4.9(c)
Taxing Authority Notifications
------------------------------
None
92
Schedule 4.10(a)
Encumbrances
------------
The Company has the following encumbrances as of the closing date of this
agreement. The Company has developed a plan of action to address these
encumbrances utilizing the cash portion of the transaction.
UCC Filing # 02-0030467840 - PMT Research Inc.
UCC Filing # 03-0007213349 - Voicestream Wireless Corp.
93
Schedule 4.10(b)
Tangible Personal Property
--------------------------
The Company has the following tangible personal property as of the closing date
of this agreement.
Data Center Equipment:
Compaq Proliant Rack Server
19" Secure Rack Cabinet w/ lock
Power Supply
(2) Compaq Proliant 6400R Servers w/
Quad Xeon 550Mhz Processors
Quad 18gb SCSI Hot Swap Drives
1Gb Fast RAM
1Mb Cache
Data Communications:
Cisco PIX Firewall
Cisco Catalyst 5500 Switch
(2) ADC Kentrox Data Smart T1 2 Port CSU/DSU
(2) ADC Kentrox Satelite 651 DSU
(2) Motorolla Power PC Vanguard Routers
(2) AT&T Paradyn 4 port CSU/DSU
3Com Total Control 440 ISP Switch
Administrative:
Gateway Department File Server G6-450
3 SCSI RAID
3 Dell P3 500Mhz Desktop PC's w/ 15' Displays
2 eMachines P3 65Mhz PC's
NEC LCD 1830 18' Flatpannel Display
NEC LX 750 Laptop
Konica Minolta Magicolor 2300DL Color Laser Printer
HP Scanjet 3970
HP Deskjet 750C
JetFax M900 Fax Machine
94
Schedule 4.11(a)
Real Property
-------------
The Company has no real property as of the closing date of this agreement.
The Company is renting office space on a month-to-month basis from Paradigm
Office Suites located at 000 X. Xxxxx Xxxx, Xxxxxx, Xxxxx 00000.
95
Schedule 4.11(b)
Real Property Proceedings, Notices and Exceptions
-------------------------------------------------
The Company has no real property proceedings, notices and encumbrances as of the
closing date of this agreement.
96
Schedule 4.12(a)
Intellectual Property Rights
----------------------------
The Company has intellectual property rights to the following:
Company logos and trademarks as described in the diligence binder.
97
Schedule 4.12(b)
Actions to Protect Intellectual Property Rights
-----------------------------------------------
The Company has no actions in progress to protect intellectual property rights
as of the closing date of this agreement.
98
Schedule 4.13(a)
Material Contracts
------------------
The Company has the following material contracts in effect as of the closing
date of this agreement. These agreements are located in the diligence binder.
ATT Wireless services contract for CDPD is terminated with ATT as the networked
has been decommissioned for new subscribers and will eventually be dismantled.
This network would have no material impact for the Purchaser.
ATT/Cingular Wireless
ATT Wireless Reseller Agreement for GPRS service is provided in the binder. ATT
Wireless (Now Cingular Wireless) will execute this agreement upon change in
control of Globicom Wireless under an agreement with the Purchaser. This
Agreement has been fully negotiated to support pricing schedules material to the
Purchaser users of the Purchaser's mobile gaming console.
The network interconnect APN from Globicom's network servers and data center to
Cingular data center are communicated in this agreement.
This wholesale agreement is appropriate for The Purchaser's users in the US and
is a core relationship for Globicom to provide managed services.
The economic responsibility and impact for this agreement is provided in the
forward moving financial model for The Purchaser that Globicom Wireless has
prepared and adopted for the Purchaser and subsidiaries. Additionally, the
addendum for automated subscriber activation from The Purchaser's public access
portal are provided in this section.
As this network is the appropriate wireless data network to deploy to support
The Purchaser, this agreement will have a material impact on the merger.
Cingular Wireless
Cingular Interactive Dealer Agreement to provide data communications for
blackberry is provided in the binder. This agreement has no material impact on
The Purchaser.
Motient - Reseller wholesale agreement for data services provided. This will
have no material impact for the Purchaser.
Sprint PCS - Dealer Agreement for services is provided. Sprint network protocol
is not compatible with the Purchaser and will have no material impact on this
transaction.
T-Mobile - National Premier Dealer Agreement is provided. While this agreement
is for GPRS services, it is not a wholesale relationship that will allow the
Purchaser to add private subscribers, xxxx company owned subscribers or create a
dedicated APN interconnect that is necessary to serve the Purchaser's users.
This agreement will be terminated.
Verizon Wireless - Dealer Agreement for services is provided. Verizon network
protocol is not compatible with the Purchaser and will have no material impact
on this transaction.
Technology
Hyperspace Communications supplier agreement to provide compression component
for Globicom WISPR platform is provided.
Software Incubators - licensing agreement for Globicom to re-brand and implement
browser bass for Globicom blackberry users is provided. This has no material
impact for the Purchaser
99
Web Messenger - Globicom license for Instant Messaging is provided. This has no
material impact for the Purchaser
Netseal - Re-branding agreement for MPN Mobile Private Network software is
provided. This will have no material impact for the Purchaser.
Rodopi Operating and Support Services- software licensing platform is provided
and will be used to xxxx the Purchaser's subscribers through pay-as-you-go and
user selected subscription products managed by the Company. This platform will
contain the API from the Purchaser's activation portal.
Employment Agreements
The company has employment agreements with the following employees copies of
which are included in the due diligence binder:
Xxxx X. Xxxxxxx
Xxxxxxx Xxxxxxxxx
Xxx Xxxxx
100
Schedule 4.13(d)
Funded Indebtedness
-------------------
The Company has the following funded indebtedness in effect as of January 31,
2005. The Company will be converting the Loans to Stockholders, Loans to
Stockholders-Interest, Short Term Borrowings, Short Term Borrowings-Interest,
Preferred Interest Payable, and Warrants will be converted to common stock prior
to closing.
Promissory Notes:
-----------------
Holder Date Principle Interest
------ ---- --------- --------
Xxxxxx Xxxxxxx 6/7/2001 $14,000 $4,093
Xxxxxx Xxxxxxx 9/12/2001 8,000 2,169
Xxxxxx Xxxxxxx 10/12/2001 8,000 2,116
Xxxxxx Xxxxxxx 12/5/2001 15,000 3,791
Xxxxxx Xxxxxxx 2/5/2002 4,500 1,076
Xxxxxx Xxxxxxx 5/9/2002 15,000 3,248
Xxxxxx Xxxxxxx 11/1/2002 17,000 3,063
Xxxxx Xxxxxx 9/28/2001 7,000 1,873
Xxxxx Xxxxxx 2/15/2001 50,000 14,808
Xxxxx Xxxxxx 6/30/2003 50,000 7,203
Convertible Notes:
------------------
Holder Date Principle Interest
------ ---- --------- --------
Xxxxxx X. Xxxxxxx 3/4/2002 $50,000 $33,377
Secured Notes with Warrants:
----------------------------
Holder Date Principle Interest Warrants
------ ---- --------- -------- --------
PMT Research, Inc. 6/7/2001 $78,383 $14,405 333,334
Xxxxx Xxxxxxxxx 9/12/2001 100,000 31,003 266,667
Xxxxxxxxx Marital Trust 10/12/2001 45,332 13,009 100,000
Xxxxxx X. Xxxxxxx 12/5/2001 50,000 7,249 50,000
101
Schedule 4.14(a)
Litigation, Etc.
----------------
The Company has the following litigation issues in effect as of the closing date
of this agreement.
City of Xxxxxx x. Globicom Wireless
Personal Property Tax due for 2003 $ 554.84
Penalty and Interest $ 144.26
Collection Fee $ 104.87
Personal Property Tax due for 2003 $ 364.90
Penalty and Interest $ 32.85
Total $ 1,201.72
The Company will address this liability with the cash proceeds.
102
Schedule 4.14(b)
Resolved Litigation
-------------------
The Company has the following resolved litigation issues as of the closing date
of this agreement.
PMT Research, Inc. v. Globicom Wireless
Agreed Order for Delivery of Garnished Funds and for release of
Garnishment Bond No. 03-02670 District Court of Dallas County, TX 44th
Judicial District
Agreement for Entry of Judgment and to Forgo Levy and Execution of
Judgment No. 00-00000-X Xxxxxxxx Xxxxx xx Xxxxxx Xxxxxx, XX 44th
Judicial District
PMT Research/Xxx Xxxxxxxxx has agreed to accept the debt conversion offer that
will convert his remaining outstanding principle, interest and warrants into
shares of the Company's common stock and subsequently to TGTL restricted stock.
103
Schedule 4.15
Compliance with Laws
--------------------
The Company has a plan of action to address compliance with the following issues
in effect as of the closing date of this agreement.
Form 1120 U.S. Corporation Income Tax Returns for the following tax years are
due and will be filed by February 22, 2005:
Form 1120 - 2004
Form 1120 - 2003
Form 1120 - 2002
Form 1120 - 2001
Form 1120 - 2000
Form 941 U.S. Corporation Income Tax Returns for the following tax years are due
and will be filed immediately after closing:
Form 000 - 0000
Xxxx 000 - 0000
Form 000 - 0000
Xxxx 000 - 0000
Form 941 - 2000
Texas State Franchise Tax Returns for the following tax years are due and will
be filed by February 22, 2005:
Texas Franchise Tax Return - 2004
Texas Franchise Tax Return - 2003
104
Schedule 4.16(a)
Insurance Policies
------------------
The Company has no insurance policies in effect as of the closing date of this
agreement.
105
Schedule 4.16(b)
Insurance Claims, Etc.
----------------------
The Company has no insurance claims as of the closing date of this agreement.
106
Schedule 4.17(a)
Directors, Officers and Key Employees.
--------------------------------------
The following individuals are on the Board of Directors of the Company as of the
closing date of this agreement.
Xxxx Xxxxxxx Xxxxxxx Chairman
Xxxxxxx Xxxxxxxxx Treasurer and Secretary
The following individuals are the Officers and Key Employees of the Company as
of the closing date of this agreement.
Xxxx Xxxxxxx Xxxxxxx President and Chief Executive Officer
Xxxxxxx Xxxxxxxxx Chief Financial Officer
Xxx Xxxxx Vice President
107
Schedule 4.17(b)
Number of Employees, Independent Contractors, etc.
--------------------------------------------------
The following individuals are the three employees of the Company as of the
closing date of this agreement.
Xxxx Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxxxx
Xxx Xxxxx
The Company has no independent contractors as of the closing date of this
agreement.
108
Schedule 4.17(c)
Labor Relations
---------------
The Company has no labor relations issues as of the closing date of this
agreement.
109
Schedule 4.17()
Labor Proceedings
-----------------
The Company has no labor proceedings as of the closing date of this agreement.
110
Schedule 4.17(f)
Joint Employee Matters
----------------------
The Company has no joint employee matters as of the closing date of this
agreement.
111
Schedule 4.17(g)
Independent Contractor Agreements
---------------------------------
The Company has no independent contractor agreements as of the closing date of
this agreement.
112
Schedule 4.18(a)
Employee Benefit Plans
----------------------
The Company has no employee benefit plans as of the closing date of this
agreement.
113
Schedule 4.18(b)
ERISA Compliance
----------------
The Company has no ERISA plans in effect as of the closing date of this
agreement.
114
Schedule 4.19(a)
Environmental Laws - Violations
-------------------------------
The Company has no environmental law violations as of the closing date of this
agreement.
115
Schedule 4.19(b)
Environmental Compliance -Previously Owned Properties
-----------------------------------------------------
The Company has no environmental compliance issues on previously owned or
inhabited property as of the closing date of this agreement.
116
Schedule 4.21(a)
Related Party Transactions
--------------------------
The Company has the following related party transactions as of the closing date
of this agreement.
117
Schedule 4.21(b)
Distributions
-------------
The Company has made the following distributions as of the closing date of this
agreement.
118
Schedule 4.22
Accounts and Notes Receivable
-----------------------------
The Company has no collectible accounts and notes receivable as of the closing
date of this agreement.
119
Schedule 4.23
Bank Accounts; Power of Attorney
--------------------------------
The Company has the following bank accounts as of the closing date of this
agreement.
The Company has no powers of attorney in effect as of the closing date of this
agreement.
120
Schedule 4.24
Suppliers and Vendors
---------------------
The Company has following key suppliers and vendors as of the closing date of
this agreement.
Cingular Wireless
Rodopi Software
121
