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STOCK PURCHASE AGREEMENT
Between
GENERAL BUSINESS MACHINES CORPORATION ("GBM")
("Seller")
And
CONVERGENCE COMMUNICATIONS, INC. ("CCI")
("Purchaser")
Dated As Of The 15th Of December, 1999
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TABLE OF CONTENTS
RECITALS 2
TERMS AND CONDITIONS...........................................................3
ARTICLE I DEFINITIONS.........................................................3
1.1 Certain Definitions..........................................3
1.2 Terms Generally.............................................11
ARTICLE II THE TRANSACTIONS..................................................11
2.1 Closing.....................................................11
2.2 Sale And Purchase Of Shares.................................12
2.3 Purchase Price..............................................12
2.4 Payment of the Purchase Price...............................12
2.5 Closing Obligations.........................................14
2.6 Conditions to Closing Obligations...........................18
2.7 Effects of Non-Closing......................................20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF GBM............................21
3.1 Organization and Good Standing..............................21
3.2 Authority; No Breach or Default.............................21
3.3 Capital Stock...............................................23
3.4 Equity Interests............................................25
3.5 No Undisclosed Liabilities..................................25
3.6 Books and Records...........................................25
3.7 GBnet Financial Statements..................................26
3.8 No Material Adverse Effect..................................26
3.9 Taxes.......................................................27
3.10 Title to Properties; Encumbrances...........................27
3.11 Permits.....................................................27
3.12 Compliance with Applicable Laws.............................28
3.13 No Litigation...............................................28
3.14 Material Contracts..........................................29
3.15 Business as Usual...........................................30
3.16 Intellectual Property.......................................30
3.17 Employees...................................................31
3.18 Disclosures.................................................31
3.19 Brokers or Finders..........................................32
3.20 Year 2000 Compliance........................................32
3.21 Related Party Transactions or Claims........................32
3.22 Environmental Laws and Regulations..........................32
3.23 Bankruptcy..................................................33
3.24 Insurance...................................................33
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CCI.............................33
4.1 Organization and Good Standing..............................33
4.2 Authority...................................................33
4.3 Investment Representation...................................35
4.4 Certain Proceedings.........................................35
4.5 Brokers or Finders..........................................36
4.6 CCI Financial Statements....................................36
4.7 Litigation; Decrees.........................................36
4.8 Undisclosed Liabilities.....................................36
4.9 Absence of Changes or Events................................37
4.10 Compliance with Applicable Laws.............................37
4.11 Permits, Licenses and Authorizations........................37
4.12 Disclosure..................................................38
ARTICLE V AFFIRMATIVE COVENANTS..............................................38
5.1 CCI's Affirmative Covenants.................................38
5.2 GBM's Affirmative Covenants.................................40
5.3 Further Assurances..........................................42
ARTICLE VI NEGATIVE COVENANTS................................................42
ARTICLE VII INDEMNIFICATION..................................................44
7.1 Indemnification and Payment of Damages by GBM...............44
7.2 Indemnification and Payment of Damages by CCI...............45
7.3 Time Limitations............................................45
7.4 Limitations on Amount.......................................46
7.5 Procedure For Indemnification: Third Party Claims...........47
7.6 Procedure for Indemnification: Other Claims.................49
7.7 Payment of Indemnification..................................49
ARTICLE VIII TERMINATION.....................................................49
8.1 Termination Events..........................................49
8.2 Effect of Termination.......................................50
8.3 Survival of Certain Provisions..............................50
ARTICLE IX GENERAL PROVISIONS................................................50
9.1 Notices.....................................................50
9.2 Entire Agreement............................................52
9.3 Covenants Against Unfair Competition........................53
9.4 Survival of Representations, Warranties, and Covenants......55
9.5 Assignment..................................................55
9.6 No Third-Party Beneficiaries................................56
9.7 Expenses....................................................56
9.8 Applicable Law..............................................56
9.9 Waivers; Amendments.........................................57
9.10 Waiver of Jury Trial........................................57
9.11 Severability................................................58
9.12 Counterparts................................................58
9.13 Headings....................................................58
9.14 Conciliation of Disputes....................................58
9.15 Jurisdiction; Consent to Service of Process.................59
9.16 Confidentiality; Publicity..................................61
9.17 Consequential Damages.......................................61
9.18 Time Of Essence.............................................61
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of the 15th
day of December, 1999, by and between the following parties:
GENERAL BUSINESS MACHINES CORPORATION,
an international business company organized and existing under the laws of
the British Virgin Islands ("GBM"),
with business address at
GBM Building, Paseo Colon, San Xxxx, Costa Rica
(hereinafter referred to as "GBM" or the "SELLER");
And
CONVERGENCE COMMUNICATIONS, INC.
a corporation organized under the laws of
the State of Nevada, United States of America ("CCI"),
having its principal place of business at
000 Xxxx 000 Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, XX
00000, U.S.A.
and Florida offices at 0000 Xxxxx Xxxx., Xxxxx 000,
Xxxxxxxx Xxxxx, XX 00000, X.X.X.
(hereinafter referred to as "CCI" or "PURCHASER");
GBM AND CCI may, collectively, be referred to hereinafter, as the "Parties",
and, individually, as a "Party".
RECITALS
WHEREAS, CCI is a provider of communications services in several
Central and South American countries and is the holder, through its subsidiaries
and affiliates in this region, of country-wide concessions for subscriber cable
television, domestic and international public telephony, data transmission
services, value added telecommunications services, and a variety of services for
access and uses of the Internet; and
WHEREAS, CCI has expertise in telecommunications and transmission of
data, and it is committed to developing new, and enhancing its presently owned,
wireless and fiber optic networks with the leading technology available in the
market; and
WHEREAS, GBM is the exclusive general distributor of IBM products and
services in the countries of Belize, Guatemala, Honduras, El Salvador,
Nicaragua, Costa Rica and Panama, as well as in the Dominican Republic and Haiti
(the "Region"); and
WHEREAS, GBM, as a complementary line of business, is also engaged in
providing data networking services through its wholly owned subsidiary, GBnet
Corporation, an international business company organized and existing under the
laws of the British Virgin Islands ("GBnet"), to a wide base of customers in the
countries of Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, Panama,
and the Dominican Republic (the "GBnet Region"); and
WHEREAS, CCI desires to purchase from GBM and GBM desires to sell to
CCI all of the outstanding shares of capital stock of GBnet, subject to the
terms and conditions of this Agreement and the "Ancillary Agreements" referred
to herein; and
WHEREAS, each of the Parties wishes to engage with the other Party in a
mutually beneficial business relationship through the marketing to its own
customers of the other Party's products and services; and, to that end, each of
the Parties is willing to negotiate in good faith the terms and conditions of
certain Supplementary Agreements, as such term is defined hereinafter.
NOW, THEREFORE, in consideration of the above-mentioned premises and
mutual promises herein made, and in consideration of the representation and
covenants herein contained, the Parties agree as follows:
Terms and conditions
ARTICLE I. DEFINITIONS
1.01 Certain Definitions.
In this Agreement, the following terms shall have the meanings specified below:
(1) "Agreement" shall mean this Stock Purchase Agreement, its exhibits and
schedules.
(2) "Affiliate" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control
with the Person specified.
(3) "Ancillary Agreements" shall mean the Promissory Notes and the Pledge
Agreement, in the form attached hereto as Exhibits A and B, respectively.
(4) "Beneficial Owner", a Person shall be deemed the "beneficial owner" of, and
shall be deemed to "beneficially own", any securities which such Person or
any of its Affiliates (a) beneficially owns, directly or indirectly, (b)
has the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of any right of conversion or exchange,
warrant, option or otherwise or, (c) which are beneficially owned, directly
or indirectly, by any other Person with which such Person or any of such
Person's Affiliates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any such securities.
(5) "CCI's Financial Statements" shall have the meaning set forth in Section
4.06 hereof.
(6) "Closing" shall mean the consummation of the Contemplated Transactions by
the Parties.
(7) "Closing Date" shall mean December 15, 1999.
(8) "Commercialization Agreement" means that certain agreement between the
Parties, dated as of the Closing Date, in the form attached as Exhibit C
hereto.
(9) "Confidential Information" shall have the same meaning as in the Non
Disclosure and Confidentiality Agreement referred to in Section 9.16,
hereof, copy of which is attached hereto as Exhibit 1.
(10) "Consolidated Annualized Cash Flow" shall mean the seasonably adjusted, by
a mutually acceptable procedure, Consolidated Operating Cash flow of any
Person for the most recently ended fiscal quarter multiplied by four (4).
(11) "Consolidated Cash Flow" shall mean the consolidated earnings of any Person
before interest, taxes, depreciations and amortizations.
(12) "Consolidated Net Income" shall mean, for any period for which the amount
thereof is to be determined, the Consolidated Net Income after income taxes
of any Person for such period determined in accordance with GAAP but, in
any event, not including in net income any of the following: (a) any
extraordinary items, including, without limitation, any gain or loss
attributable to the sale, conversation or other disposition of capital
assets other than in the ordinary course of business (b) any gains
resulting from the write-up of assets, (c) any proceeds of any life
insurance policy, (d) a reversal of any reserve, except to the extend that
provision for such reserve is made during such period, and (e) any other
extraordinary or nonrecurring items of earnings of any such Person for such
period.
(13) "Contemplated Transactions" shall mean all of the transactions contemplated
by this Agreement, including:
(a) the sale by GBM to CCI and the purchase by CCI from GBM of all of the
GBnet Shares, on the terms and subject to the conditions of this
Agreement; and
(b) entering into the Supplementary Agreements by CCI and GBM.
(14) "Control" (including, with its correlative meanings, "controlled by" and
"under common control with") shall mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies of a
Person (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise).
(15) "Deferred Portion" of the Purchase Price shall have the meaning set forth
in Section 2.04(b) hereof.
(16) "Dollars" or "" or "USD" shall mean the lawful currency of the United
States of America.
(17) "Employees to be Retained" shall have the meaning set forth in Section 3.17
hereof.
(18) "Equipment Purchase Agreement" shall mean that certain agreement between
the Parties,hereto, dated as of the Closing Date, in the form attached
hereto as Exhibit D (19) "Financial Statements" shall have the meaning set
forth in Section 3.07 hereto.
(20) "First Note" shall have the meaning set forth in Section 2.04(b) hereof.
(21) "Fourth Note" shall have the meaning set forth in Section 2.04(b), hereof.
(22) "GAAP" shall mean United States generally accepted accounting principles,
as published from time to time by the Financial Accounting Standards Board
(as such principles are applied in the United States as of the date of the
financial statement or other document with respect to which the term is
used), consistently applied.
(23) "GBM Business" shall mean the distribution, sale and lease of computer
products (hardware and software), and related products and services for
which GBM has distribution or other rights in any and all of the countries
within the Region.
(24) "GBnet" shall mean GBnet Corporation, an international business company
organized and existing under the laws of the British Virgin Islands
("GBnet"), which is a wholly owned subsidiary of GBM.
(25) "GBnet Customers" shall have the meaning set forth in Schedule 3.14(b).
(26) "GBnet Region" shall have the meaning set forth in the fourth Recital
hereof.
(27) "GBnet Shares" shall mean all of the shares of common stock of GBnet
outstanding as of the date hereof.
(28) "GBnet Subsidiaries" shall mean the wholly owned subsidiaries of GBnet, as
they exist as of the date hereof in the countries within the GBnet Region,
whether fully incorporated or in the process of being incorporated, as set
forth in Schedule 3.04 hereto.
(29) "Governmental Authority" shall mean any court, administrative agency or
commission or other governmental body or instrumentality, domestic or
foreign, of competent jurisdiction.
(30) "Governmental Authorization" shall mean any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise
made available by or under the authority of any Governmental Authority.
(31) "Indebtedness" of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits
or advances of any kind, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of
such Person upon which interest charges are customarily paid, (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person, (e) all
obligations of such Person issued or assumed as the deferred purchase price
of property or services, (f) all Indebtedness of others secured by (or
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed,
(g) all guarantees by such Person of Indebtedness of others, (h) all
capital lease obligations of such Person, (i) all obligations of such
Person in respect of interest rate protection agreements, foreign currency
exchange agreements or other interest or exchange rate hedging arrangements
and (j) all obligations of such Person as an account party in respect of
letters of credit and bankers' acceptances. The Indebtedness of any Person
shall include the Indebtedness of any partnership in which such Person is a
general partner.
(32) "Intellectual property" shall have the meaning set forth in Section 3.16
hereof.
(33) "Interim Statements" shall have the meaning set forth in Section 3.07
hereof.
(34) "Lien" shall mean, with respect to any asset, (a) mortgage, deed of trust,
lien, pledge, charge, security interest, easement, covenant, right of way,
restriction, equity or encumbrance of any nature whatsoever in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such
asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
(35) "Xxxx" shall have the meaning set forth in Section 3.16.
(36) "Material Adverse Effect" shall mean (a) any change or effect that is
materially adverse to the business, properties, assets, condition
(financial or otherwise) or results of operations of CCI or GBnet, or (b) a
material impairment to the ability of CCI or GBnet, to perform its
respective obligations under this Agreement or any Ancillary Agreement, in
each case as amended from time to time.
(37) "Material Contracts" shall have the meaning set forth in Section 3.14
hereof.
(38) "Materiality" of any event, change or effect with respect to CCI or GBnet
means that any such event, change or effect is material to the business,
properties, assets, condition (financial or otherwise), or results of
operations of CCI or the Network.
(39) "Network" shall mean GBnet together with the GBnet Subsidiaries.
(40) "Network Management Agreement" shall mean that certain operating agreement
between the Parties, dated as of the Closing Date, in the form attached
hereto as Exhibit E.
(41) "Permits" shall have the meaning set forth in Section 3.11 hereof.
(42) "Person" shall mean any individual, firm, corporation, limited liability
company, partnership, trust, joint venture, Governmental Authority or other
entity, and shall include any successor (by merger or otherwise) of such
entity.
(43) "Pledge Agreement" shall mean that Pledge Agreement dated as of the Closing
Date, between CCI, GBnet and GBM, in the form attached hereto as Exhibit B.
(44) "Pledged Shares" shall have the meaning set forth in Section 2.04(b)
hereto.
(45) "Pro-Forma Consolidated Debt Service" shall mean, at any time of
determination, the sum (calculated without duplication on a consolidated
basis) of (a) all payments of principal of Indebtedness (including any
Indebtedness proposed to be incurred and excluding any Indebtedness
proposed to be paid at such time) of any Person scheduled to be made during
the period of twelve (12) calendar months beginning with such date of
determination, plus (b) the amount of interest to be paid (assuming for
such purpose that adjustable and floating interest rates remain at the rate
in effect on such date) on Indebtedness (including any Indebtedness
proposed to be incurred and excluding any Indebtedness proposed to be paid
at such time) of any Person during such twelve (12) calendar month period.
(46) "Promissory Notes" shall mean four (4) Promissory Notes in the form
attached hereto as Exhibit A, to be executed and delivered by CCI to GBIVI
at the Closing dated as of the Closing Date, payable to GBM on the dates
and for the amounts set forth in Section 2.04(b) hereof.
(47) "Region" shall have the meaning set forth in the third Recital hereof.
(48) "Second Note" shall have the meaning set forth in Section 2.04(b) hereof.
(49) "Shares" shall mean the GBnet Shares.
(50) "Subsidiaries' Stock" shall mean all of the outstanding shares of common
stock of each and all of the GBnet Subsidiaries.
(51) "Subsidiary" shall mean, with respect to any Person, any other Person (a)
more than 50% of whose outstanding shares or securities (representing the
right to vote for the election of directors or other managing authority)
are, or (b) which does not have outstanding shares or securities (as may be
the case in a partnership, limited liability company, joint venture or
unincorporated association), but more than 50% of whose ownership interest
representing the right to make decisions for such other Person is, now or
hereafter, owned or controlled, directly or indirectly, by such Person, but
such other Person shall be deemed to be a Subsidiary only so long as such
ownership or control exists.
(52) "Supplementary Agreements" shall mean, collectively, the Commercialization
Agreement, the Equipment Purchase Agreement and the Network Management
Agreement, the terms and conditions of which have been negotiated by the
Parties to their respective full satisfaction.
(53) "Tax" or "Taxes" shall mean all local and foreign taxes, assessments and
other governmental charges, and levies including, without limitation, (a)
taxes based upon or measured by gross receipts, income, profits, sales, use
or occupation, and (b) value added, ad valorem, transfer, franchise,
withholding, payroll, employment, excise, or property taxes, together with
(c) all interest, penalties and additions imposed with respect to such
amounts and (d) any obligations under any agreements or arrangements with
any other Person with respect to such amounts.
(54) "Terminated Employees" shall have the meaning set forth in Section 3.17
hereof.
(55) "Third Note" shall have the meaning set forth in Section 2.04(b) hereof.
(56) "Total Indebtedness" shall mean the sum of all Indebtedness of any Person,
determined on a consolidated basis, but excluding all intercompany
Indebtedness.
(57) "Transaction Documents" shall mean this Agreement, the Ancillary
Agreements, the Supplementary Agreements, and any other agreements,
instruments and documents required to be delivered hereunder in connection
with the Contemplated Transactions.
(58) "U.S.A." or "U.S." shall mean the United States of America.
1.02. Terms Generally.
The definitions in Section 1.01, above, shall apply equally to both the singular
and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation". All references herein to Sections,
Paragraphs, Exhibits and Schedules shall be deemed references to Sections and
Paragraphs of, and Exhibits and Schedules to, this Agreement, unless the context
shall otherwise require. Except as otherwise expressly provided herein, all
terms of an accounting or financial nature shall be construed in accordance with
GAAP, as in effect from time to time.
ARTICLE II. THE TRANSACTIONS
2.01. Closing.
The, Parties will conduct a closing of the Contemplated Transactions (the
"Closing"), on and subject to the terms and conditions of this Agreement. The
Closing will take place at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx Xxxxx, Xxxxx, Xxxxxxx
00000, U.S.A., at 5:00 P.M. on December 15, 1999 (the "Closing Date" or at such
later time and date as may be mutually agreed upon in writing by the Parties.
2.02. Sale And Purchase Of Shares.
Out of a total of fifty thousand (50,000) authorized shares of common stock of
GBnet, and one thousand (1,000) outstanding Shares, GBM is the sole owner of all
of the one thousand (1,000) GBnet Shares which represent the totality of the
outstanding capital stock of GBnet, and GBM, through its sole ownership of
GBnet, is also, indirectly, the sole owner of any and all of the Subsidiaries'
Stock.
Subject to the terms and conditions of this Agreement, at the Closing, SELLER
will sell and transfer the GBnet Shares to PURCHASER, and PURCHASER will
purchase the GBnet Shares from SELLER, whereby PURCHASER shall acquire all of
the outstanding capital stock of GBnet, and indirectly all of the Subsidiaries'
Stock.
2.03. Purchase Price.
The total purchase price ("Purchase Price")
for all of the GBnet Shares shall be the amount of THIRTEEN MILLION DOLLARS
(USD13,000,000), and shall be paid by CCI to GBM in lawful currency of the U.S.
as provided in Section 2.04, hereinbelow.
2.4. Payment of the Purchase Price.
The Purchase Price shall be paid by CCI to GBM as follows:
(a) Up Front Payment. At the Closing, CCI shall pay to GBM the amount of FOUR
MILLION U.S. DOLLARS (USD4,000.000) by wire transfer of immediately
available funds to GBM's account with BAC FLORIDA BANK, Miami, Florida,
U.S.A., as provided in Section 2.05(a)(i), hereinbelow.
(b) Deferred Payment. CCI shall pay the NINE MILLION U.S. DOLLARS
(USD9,000,000) remaining balance of the Purchase Price (the "Deferred
Portion") in FOUR (4) annual installments, with accrued interest on the
outstanding balance of the Deferred Portion from the Closing Date to the
date of actual payment computed at a rate equal to 10.75% per annum. Such
annual installments shall be evidenced by four (4) Promissory Notes, all
dated as of the Closing Date and payable to GBM on the dates and for the
amounts of principal and accrued interest on the outstanding balance set
forth in the following payment Schedule, which Promissory Notes shall be
duly executed by CCI and delivered to GBM at the Closing as set forth in
Section 2.05(a)(ii):
Promissory Notes Date of Payment Amount of Payment
(Includes principal amount plus accrued interest on
outstanding balance of Deferred Portion)
----------------------- ---------------------------- ------------------------------------------------------------
First Note December 14th, 2000 on or TWO MILLION FOUR HUNDRED SIXTY EIGHT THOUSAND U.S. DOLLARS
before 12 Noon. (USD 2,468,000).
Second Note December 14th, 2001 on or TWO MILLION THREE HUNDRED SIX THOUSAND U.S. DOLLARS
before 12 Noon. (USD2,306,000).
----------------------- ---------------------------- ------------------------------------------------------------
Third Note December 14th, 2002 on or THREE MILLION ONE HUNDRED FORTY FIVE THOUSAND U.S. DOLLARS
before 12 Noon. (USD3,145,000).
Fourth Note December 14th, 2003 on or THREE MILLION EIGHT HUNDRED SEVENTY SIX THOUSAND U.S.
before 12 Noon. DOLLARS (USD3,876,000).
Pursuant to this Section 2.04 (b), as collateral for and to secure the full and
timely payment of the Deferred Portion of the Purchase Price and the performance
of CCI's obligations under the Ancillary Agreements, (1) the PURCHASER shall
pledge to GBM all of the GBnet Shares PURCHASER will acquire at the Closing,
which will be held by GBM pursuant to the Pledge Agreement in the form attached
hereto as Exhibit B; and (2) the PURCHASER shall further cause GBnet to pledge
to GBM all of the stock of each of the GBnet Subsidiaries, which shall also be
held by GBIVI pursuant to the Pledge Agreement. The GBnet Shares and the
Subsidiaries' Stock are hereby defined, collectively, as the "Pledged Shares".
Upon timely payment by CCI to GBM of the full amount of each Promissory Note, as
set forth above, and provided CCI is not otherwise in default of its obligations
under the Ancillary Agreements, GBM shall release to CCI such number of Pledged
Shares as is directly proportional to the ratio of the amount paid to the
Deferred Portion of the Purchase Price. GBM shall promptly deliver such released
Pledged Shares to CCI; provided, however, that GBM shall be entitled to retain
at all times no less than fifty one percent (51 %) of the originally Pledged
Shares until payment in full by the PURCHASER to GBM of the totality of the
Purchase Price.
(c) Prepayment. In the event that CCI elects to prepay the full amount of any
Promissory Note prior to its maturity date, GBM shall reimburse CCI
simultaneously with such prepayment the portion of the stated principal
amount of such Promissory Note that corresponds to unearned interest based
on the implicit original principal amount and interest rate as set out in
Section 2.04(b) hereof.
2.05. Closing Obligations.
At the Closing, the Parties shall deliver the following, subject to the
satisfaction or waiver by the appropriate Party of the conditions to Closing set
out in Section 2.06 below:
(a) CCI shall deliver to GBM:
-------------------------
(i) The amount of FOUR MILLION U.S. DOLLARS (USD4,000,000), as the Upfront
Payment pursuant to Section 2.04(a), by wire transfer of immediately
available funds to BAC FLORIDA BANK, Miami, Florida, ABA Number
000000000. with immediate advice to Xx. Xxxx X. Xxxxxx, EVP and
Comptroller, before 5:OO PM, Eastern Standard Time, on December 19,
1999, for the benefit of GBM, account number 00000000.
(ii) Four (4) Promissory Notes, duly executed by PURCHASER, as set forth in
Section 2.04(b), above, which Promissory Notes shall be delivered to
GBM in New York City, New York, at such place and to such Person or
Persons as GBM shall indicate in writing to CCI.
(iii)The Pledge Agreement, duly executed by CCI and GBnet, covering all of
the Pledged Shares, pursuant to Section 2.04(b).
(iv) Stock certificates representing the Pledged Shares, issued in CCI's
and GBnet's names, as applicable, representing the totality of the
Pledged Shares, duly endorsed to GBM by CCI and GBnet.
(v) Certificate of GBnet's corporate secretary, duly executed, certifying
that the pledge of all of the Pledged Shares to GBM has been duly
authorized and will be properly annotated in the share records of
GBnet and each of the GBnet Subsidiaries.
(vi) The Commercialization Agreement duly executed by CCI. (vii) The
Network Services Agreement, duly executed by CCI. (viii) The Equipment
Purchase Agreement, duly executed by CCI. (ix) A certificate of good
standing for CCI. (x) A certificate executed by CCI representing and
warranting to GBM that the representations and warranties of the
PURCHASER in this Agreement were accurate in all respects as of the
date of this Agreement and are accurate in all material respects as of
the Closing Date as if made on the Closing Date.
(xi) A corporate resolution of CCI evidencing its corporate power,
authority and right to enter into the Contemplated Transactions and to
execute the Transaction Documents, and that all necessary actions to
duly execute and deliver this Agreement, such other agreements and
Transaction Documents have been duly taken.
(xii)A Legal Opinion from Xxxxxxx, Xxxxx & Xxxxxxx, Nevada Counsel to CCI,
as to corporate existence, organization and good standing of CCI.
(xiii) A Legal opinion from Akerman, Senterfitt & Xxxxxx, P.A., Florida
Counsel to CCI, as to due execution, validity and enforceability of
the Agreement and each of the Ancillary Agreements by CCI.
(xiv)Such other instruments or documents as may be reasonably necessary or
appropriate to carry out the Contemplated Transactions.
(b) GBM shall deliver to CCI:
-------------------------
(i) Certificates representing the GBnet Shares, duly endorsed to the
PURCHASER, and the certificates of the Subsidiaries' Stock either
issued to GBnet or endorsed to it, free and clear of all liens and
encumbrances, other than those Liens that will be arising from the
Transaction Documents.
(ii) GBnet Secretary Certificate, dated as of the Closing Date, evidencing
that the GBnet Shares are the only outstanding shares of GBnet as of
the Closing Date, and that the share records of GBnet have been
properly annotated so as to evidence the transfer of ownership of the
GBnet Shares from GBM to CCI.
(iii)Secretary Certificate of each of the GBnet Subsidiaries, dated as of
the Closing Date, evidencing that the shares of stock of the
respective GBnet Subsidiary forming part of the Subsidiaries' Stock
are the only outstanding shares of such GBnet Subsidiary as of the
Closing Date.
(iv) The Pledge Agreement duly executed by GBM.
(v) The Commercialization Agreement duly executed by GBM.
(vi) The Network Services Agreement, duly executed by GBM.
(vii) The Equipment Purchase Agreement, duly executed by GBM.
(viii) A certificate of good standing for GBM.
(ix) A certificate of good standing for GBnet.
(x) A certificate executed by GBM representing and warranting to PURCHASER
that the representations and warranties of GBM in this Agreement were
accurate in all respects as of the date of this Agreement and are
accurate in all material respects as of the Closing Date as if made on
the Closing Date.
(xi) A corporate resolution of GBM evidencing its corporate power,
authority and right to enter into the Contemplated Transactions and to
execute the Transaction Documents, and that all necessary actions to
duly execute and deliver this Agreement, such other agreements and
Transaction Documents have been duly taken.
(xii)The resignations of each of the Persons who, immediately prior to
Closing, are directors and officers of GBnet, and directors of the
GBnet Subsidiaries, which resignations shall become effective upon
Closing.
(xiii) A Legal Opinion from McW Xxxxxx & Co., BVI Counsel to GBM, as to
corporate existence, organization and good standing of GBM and GBnet.
(xiv)A Legal Opinion from Steel Xxxxxx & Xxxxx LLP, Florida Counsel to GBM
as to due execution, validity and enforceability of this Agreement and
the Pledge Agreement by GBM.
(xv) Such other instruments or documents as may be reasonably necessary or
appropriate to carry out the Contemplated Transactions.
2.6. Conditions to Closing Obligations.
---------------------------------
(a) Conditions to Obligations of CCI at Closing:
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The obligation of CCI to purchase the GBnet Shares from GBM, and to
consummate or cause to be consummated the other Contemplated Transactions,
and to take the other actions required to be taken by PURCHASER at Closing
as set forth in Section 2.05(a) hereinabove, is subject to the
satisfaction, at or prior to Closing, of each of the following conditions,
any of which may be waived by CCI:
(i) GBM shall, subject to PURCHASER's full compliance with Section
2.05(a), consummate or cause to be consummated the transactions
contemplated in Section 2.05(b) to be performed at the Closing;
(ii) The representations and warranties of GBM set forth in ARTICLE III
hereof shall have been true and correct as of the date of this
Agreement and shall be true and correct in all material respects at
and as of the Closing Date as if made on the Closing Date; and
(iii)No court or Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any law, statute, ordinance, rule,
regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) that continues in effect and
restrains, enjoins or otherwise prohibits consummation of the
transactions to be performed at the Closing.
(b) Conditions to Obligations of GBM at Closing:
-------------------------------------------
The obligation of GBM to sell the GBnet Shares to CCI, and to consummate or
cause to be consummated the other Contemplated Transactions, and to take
the other actions required to be taken by GBM at Closing as set forth in
Section 2.05(b) hereinabove, is subject to the satisfaction, at or prior to
Closing, of each of the following conditions, any of which may be waived by
GBM:
(i) CCI shall consummate or cause to be consummated, subject to GBM's full
compliance with Section 2.05(b) above, the transactions contemplated
in Section 2.05(a) hereof to be performed at the Closing;
(ii) The representations and warrantees of CCI set forth in ARTICLE IV
hereof shall have been true and correct as of the date of this
Agreement and shall be true and correct in all material respects at
and as of the Closing Date as if made on the Closing Date; and
(iii)No court or Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any law, statute, ordinance, rule,
regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) that continues in effect and
restrains, enjoins or otherwise prohibits consummation of the
transactions to be performed at the Closing.
2.07. Effects of Non-Closing.
Subject to the provisions of ARTICLE VIII, herein, failure to consummate the
purchase and sale provided for in this Agreement on the date and time and at the
place determined pursuant to Section 2.01, or at such later time and date as may
be mutually agreed upon in writing by the Parties, will result in the
termination of this Agreement and will relieve CCI and GBM of their respective
obligations under this Agreement (other than responsibility for any breach prior
to or in connection with such termination).
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF GBM
GBM represents and warrants to PURCHASER, as of the date hereof and as of the
Closing Date as follows:
3.01. Organization and Good Standing.
GBM is a corporation duly organized, validly existing and in good standing under
the laws of the British Virgin Islands and has all requisite corporate power and
authority to own and operate its properties and to carry on its business as
conducted as of the date hereof. GBnet is a corporation duly organized, validly
existing and in good standing under the laws of the British Virgin Islands and
has all requisite corporate power and authority to own and operate its
properties and to carry on its business as conducted as of the date hereof. Each
GBnet Subsidiary in the GBnet Region has been duly organized in accordance with
the laws of the country in which such GBnet Subsidiary operates, and has the
requisite power and authority to conduct its business as presently conducted,
and is in good standing under the laws of its jurisdiction where such
qualification is required.
3.2. Authority; No Breach or Default.
GBM has all requisite, corporate power and authority to enter into this
Agreement, the Ancillary Agreements and the Supplementary Agreements and to
consummate the transactions contemplated herein and therein, as applicable. The
execution and delivery by GBM of this Agreement, the Ancillary Agreements and
the Supplementary Agreements and the consummation of the transactions
contemplated herein and therein, as applicable, have been duly authorized by all
necessary corporate action on the part of GBM. This Agreement, the Ancillary
Agreements and the Supplementary Agreements, as applicable, will, upon
execution, constitute the legal, valid and binding obligations of GBM,
enforceable against GBM in accordance with their terms, except as such terms may
be limited by bankruptcy, insolvency, moratorium, reorganization and other laws
of general application affecting the enforcement of creditors' rights generally
and by the availability of equitable remedies.
Neither the execution and delivery of this Agreement or any other Transaction
Documents to which GBM is a party, nor the performance of its obligations
hereunder or thereunder, will
(i) violate any applicable law to which GBnet or any of the GBnet Subsidiaries
is subject or by
(ii) which it or its properties or assets are bound or affected, or any
provision of the charter or organizational document of GBnet or any of the
GBnet Subsidiaries, or
(iii)require of any material consent, approval or authorization of, or
declaration or filing with, or notice to any Governmental Authority in the
Region or to any Person; or
(iv) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any Material
Contract to which GBnet or any of the GBnet Subsidiaries is a party or by
which GBnet or any of the GBnet Subsidiaries or their property may be
bound, except as otherwise disclosed in Schedule 3.02, hereto, or
(v) give any Person the right to prevent, delay, or otherwise interfere with
any of the Contemplated Transactions pursuant to:
(1) any provision of GBnet's or any of the GBnet Subsidiaries'
organizational documents;
(2) any resolution adopted by the board of directors or the stockholders
of GBnet or any of the GBnet Subsidiaries;
(3) any legal requirement or order to which GBnet or any of the GBnet
Subsidiaries may be subject; or
(vi) with respect to the approval by the directors of GBM of the transactions
contemplated by the Transaction Documents to which GBM is a party,
constitute a violation by any director of GBM of any fiduciary duty that
such director owes to GBM or to a third party, as a consequence of which
GBnet or any of the GBnet Subsidiaries is obligated to indemnify such
director, or
(vii)to the extent of GBM's knowledge, give rise to any claims, against GBnet
or any of the GBnet Subsidiaries, or
(viii) result in the creation of any Lien (other than as created by the
Transaction Documents) on any assets of GBnet or any of the GBnet
Subsidiaries.
3.03 Capital Stock.
-------------
(a) Shareholding.
GBM is the sole owner of all of the GBnet Shares, and they represent the
totality of the outstanding capital stock of GBnet. All of the GBnet Shares have
been duly authorized, validly issued, fully paid and non-assessable, free from
Liens and were not issued in violation of any preemptive rights. GBM is both the
lawful beneficial owner and holder of record of the GBnet Shares and has the
full right, power and authority to sell, convey, transfer and/or deliver the
GBnet Shares to CCI GBnet is the sole owner of all of the Subsidiaries' Stock,
which Subsidiaries' Stock represents the totality of the outstanding capital
stock of the GBnet Subsidiaries. The Subsidiaries' Stock is as of the Closing
Date, duly authorized, validly issued, fully paid and non-assessable, free from
Liens and was not issued in violation of any preemptive rights. GBnet is both
the lawful beneficial owner and holder of record of the Subsidiaries Stock. GBM
and GBnet have complied with all laws and regulations in connection with the
issuance of the GBnet Shares and the Subsidiaries' Stock.
Neither GBnet nor any of the GBnet Subsidiaries is a party or subject to any
agreement or understanding, and there is no agreement or understanding between
any Person, that affects or relates to the voting or giving of written consents
with respect to any security or the voting by a director of GBnet or any of the
GBnet Subsidiaries. (b) Outstanding Securities and Commitment: There are no
outstanding warrants, options, rights, securities, agreements, subscriptions or
other commitments pursuant to which GBnet and/or any of the GBnet Subsidiaries
may become obligated to issue, deliver or sell any additional capital shares of
GBnet and/or of any GBnet Subsidiaries, or to issue, grant, extend or enter into
any such warrants, options, rights, securities, agreements, subscriptions or
other commitments. There are no outstanding options, rights, securities,
agreements or other commitments pursuant to which GBnet and/or the GBnet
Subsidiaries are or may become obligated to redeem, repurchase or otherwise
acquire or retire any of the GBnet Shares or the Subsidiaries Stock
3.4 Equity Interests.
GBnet has no subsidiaries, other than the GBnet Subsidiaries listed in Schedule
3.04 hereto. The GBnet Subsidiaries have no subsidiaries.
3.5 No Undisclosed Liabilities.
GBnet does not and the GBnet Subsidiaries do not have any material liabilities
or obligations which may have a Material Adverse Effect on its business not
reflected in its Financial Statements, or in the notes thereto, or not otherwise
disclosed in this Agreement, except for liabilities and obligations incurred in
the ordinary course of business consistent with past practice since the date of
such Financial Statements up to the date of this Agreement.
3.6 Books and Records.
Except as otherwise set forth in any Exhibit or Schedule to this Agreement, the
books of account, articles of incorporation and By-laws (or other organizational
documents) as amended to date, stock ledgers and minute books of GBnet and each
of the GBnet Subsidiaries, all of which have been provided to CCI, are complete
and correct in all material respects and have been maintained in accordance with
sound business practices. The minute books of GBnet in all material respects
contain accurate and complete records of all meetings held and corporate action
taken by the stockholders and the Boards of Directors of GBnet. The minute books
of the GBnet Subsidiaries in all material respects contain accurate and complete
records of all meetings hold and corporate action taken, if any, by the
stockholders and the Boards of Directors of the GBnet Subsidiaries.
3.7 GBnet Financial Statements.
GBM has delivered to CCI (a) Consolidated financial statements of GBnet and its
Subsidiaries compiled by GBM's independent accountants from GBM's audited
consolidated financial statements as of December 31, 1998, and (b) unaudited
balance sheets and income and expense statements of GBnet and its Subsidiaries
as of November 30, 1999, certified by GBnet's chief financial officer (the
"Interim Statements") (the financial statements in (a) and Interim Statements in
(b) are referred to hereinafter, collectively, as the "Financial Statements").
Except as set forth or reflected in such Financial Statements, such Financial
Statements fairly present the financial condition and the results of operations
of GBnet and the GBnet Subsidiaries as of the respective dates of and for the
periods referred to in such Financial Statements, all in accordance with GAAP
consistently applied. The Financial Statements are attached hereto as Exhibit F.
Except as otherwise provided therein, the Financial Statements are based on and
consistent with the books and records of GBnet and the GBnet Subsidiaries,
fairly represent the financial conditions, assets, liabilities and equity of
such companies and their results of operations, are correct and complete in all
material respects and have been prepared in accordance with GAAP, applied on a
consistent basis.
3.8 No Material Adverse Effect.
Since the date of the Financial Statements, there has been no Material Adverse
Effect in the financial conditions or the operations of GBnet or the GBnet
Subsidiaries, which may interfere with their ability to perform their respective
obligations under the Transaction Documents, except as reflected therein. Since
the date of the Financial Statements, GBnet and the GBnet Subsidiaries have not
declared or paid or made, or agreed to declare or pay or make, to their
respective shareholders any dividends or other distributions in cash or
property, except within the normal range of annual dividends paid or
distributions made by comparable firms in the ordinary course of business.
3.9 Taxes.
GBnet and all the GBnet Subsidiaries have (i) duly filed all tax reports and
returns required to be filed by any of them in accordance with applicable law
and all such reports and returns are true, complete and accurate in all material
respects; (ii) duly paid all taxes and other charges due by it to the
appropriate taxing authorities, including, without limitation, those due in
respect of properties, income, sales, or payrolls of any of them; (iii) the
reserves for taxes reflected in the Financial Statements are adequate in
conformity with GAAP; (iv) there are no tax Liens upon any property or rights of
GBnet or the GBnet Subsidiaries; (v) there are no material liabilities (other
than as such are set forth in the Financial Statements) for taxes; and (vi)
there are no extensions or claims or audits or investigations pending with
regard to GBnet or the GBnet Subsidiaries tax liabilities. Neither GBnet nor any
of the GBnet Subsidiaries are currently subject to any tax audit or has been
notified by any Governmental Authority that it will be subject to any tax audit.
3.10 Title to Properties; Encumbrances.
GBnet and/or the GBnet Subsidiaries have good title to all of the assets
(personal, tangible or intangible) that GBnet and/or the GBnet Subsidiaries
purport to own, as reflected in the books and records of GBnet, and/or the GBnet
Subsidiaries, including the Financial Statements. Except as otherwise disclosed
in the Financial Statements, the GBnet Assets are free and clear of all Liens.
3.11 Permits.
GBnet and/or the GBnet Subsidiaries possess all the permits and other
authorizations, governmental or otherwise (collectively, the "Permits") required
under applicable law to operate the GBnet Network and business as presently
conducted, and to exercise the rights granted thereby, as set forth in Schedule
3.11 hereto. All such Permits are valid and in full force and effect as of the
date of this Agreement. To GBM's knowledge, no proceeding is pending or
threatened to revoke or amend any such Permits as of the date hereof.
3.12 Compliance with Applicable Laws.
GBnet and the GBnet Subsidiaries have operated and, as of the date hereof are
operating, their business in compliance in all material respects with all
applicable laws. Neither GBnet nor any GBnet Subsidiary is in violation of, or
in default under, any term of its organizational documents or of any judgment,
decree, writ, statute, governmental rule or regulation applicable to GBnet or
any GBnet Subsidiary or to which they or any of them is bound, except to the
extent that such violations or defaults would not (i) affect the validity or
enforceability of any Transaction Document, or (ii) have any material adverse
effect in the assets, liabilities, business, financial condition, result of
operations or prospects of GBnet, or any of the GBnet Subsidiaries as these
exist as of the date of this Agreement.
3.13 No Litigation.
Except as disclosed in Schedule 3.13 hereto or in the Financial Statements or
notes thereto, there is no suit, claim, action, proceeding or investigation
pending, outstanding or threatened which, either in any case or in the
aggregate, might result in a Material Adverse Effect, or in any impairment of
the right or ability of GBnet or any GBnet Subsidiary to carry on its respective
businesses as now conducted, or in any liability on the part of GBnet or any
GBnet Subsidiary, either individually or taken as a whole and none which
questions the validity of this Agreement or any Transaction Document or any
action taken or to be taken in connection herewith. None of GBnet or any GBnet
Subsidiary is a party or subject to the provisions of any order, injunction,
judgement or decree of any court or government agency or instrumentality which
might adversely affect their respective businesses; and there is no action suit,
proceeding or investigation by GBnet or any GBnet Subsidiary currently pending
or which GBnet or any GBnet Subsidiary intends to initiate which may reasonably
be expected to materially adversely affect their respective businesses.
3.14 Material Contracts.
Reference is made to (i) the GBnet Communications Transport Contracts set forth
in Schedule 3.14(a) hereto; and (ii) GBnet Customers Contracts, set forth in
Schedule 3.14.(b) hereto. The copies of such contracts (collectively, the
"Material Contracts") heretofore provided by GBM to CCI are incorrect and
complete copies of such Material Contracts. Neither GBnet nor any of the GBnet
Subsidiaries is a party to any contract (i) lending to or guaranteeing any
obligation for borrowed money of any insider or any affiliate, or (ii)
prohibiting or substantially restricting GBnet or any GBnet Subsidiary from
freely engaging in business as being conducted as of the Closing Date. To GBM's
knowledge, no event has occurred or circumstance exists as of the date hereof
that may contravene, conflict with, or result in a violation or breach of, or
give GBnet or other Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel, terminate,
or modify, any Material Contract. The Material Contracts are, as of the date
hereof, adequate for GBnet and each GBnet Subsidiary to carry out such part of
its business which is the subject matter of the Material Contracts as being
conducted as of the date of this Agreement. There are no Material Contracts or
contracts any one of which may generate annual revenues or expenses in excess of
USD1100,000, other than those disclosed in Schedules 3.14(a) and 3.14(b).
3.15 Business as Usual.
From the date of the Financial Statements to the date hereof, GBnet and the
GBnet Subsidiaries have conducted their business in the usual manner and GBnet
and the GBnet Subsidiaries have not taken any action out of the ordinary course
of business which may have a Material Adverse Effect.
3.16 Intellectual Property.
GBnet holds, directly or indirectly through the GBnet Subsidiaries, all rights
to the use of the service xxxx GBnet (the "Xxxx") throughout the GBnet Region,
and has taken steps toward the registration of said service Xxxx pursuant to the
laws of the countries comprised in the GBnet Region. The status of the
registration of the Xxxx in the Region as of the Closing Date is set out in
Schedule 3.16(a). GBnet also has legal rights to certain know-how, trade
secrets, proprietary computer software, databases and compilations and valid
lease interests in licenses (including licenses for use of computer software
programs) and other non-owned intellectual property used in the conduct of its
business (the "Intellectual Property"). Schedule 3.16(b) lists all licensing
agreements held by GBnet and the GBnet Subsidiaries other than such purchased
for less than THIRTY THOUSAND U.S. DOLLARS (US 30,000) business of GBnet and the
GBnet Subsidiaries, as presently conducted, and the conduct, use and
exploitation of the Intellectual Property does not infringe on or misappropriate
any rights held or asserted by any Person, and no Person is infringing on the
Intellectual Property; provided, that, the foregoing representations are given
to the best of GBM's knowledge as to all owned and non-owned Intellectual
Property. The Intellectual Property is adequate to conduct the business of GBnet
and of the GBnet Subsidiaries, as presently conducted. None of the Intellectual
Property has ever been declared by a court of competent jurisdiction, invalid or
unenforceable, or is the subject of any pending or, to GBM's knowledge,
threatened action for opposition, cancellation, declaration, infringement, or
invalidity, unenforceability or misappropriation or like claim, action or
proceeding.
3.17 Employees.
Except for the employees to be retained by GBnet or the GBnet Subsidiaries
pursuant to CCI's request which are listed in Schedule 3.17 hereto (the
"Employees to be Retained"), GBM, will have terminated, effective on or before
the Closing Date, the employment of all its employees (the "Terminated
Employees"), with appropriate settlements with and releases from them, and to
the extent applicable cancelled the benefit plans of all of them at GBM's own
expense. GBM will have also settled in full, as of the Closing Date, all
salaries, wages, fees, commissions, bonuses, vacations, leaves, insurance,
pension fund contributions, workmen's compensation or any other form of
employment compensation and fringe benefits due to the Employees to be Retained
and to the- Terminated Employees, as well as any claims and liabilities by
reason of their employment, including social security taxes or government levies
or assessments payable thereon by GBM as of the Closing Date. There are no
employment, collective bargaining agreements, or management agreements entered
into by GBnet or the GBnet Subsidiaries the effects of which shall extend beyond
the Closing Date.
3.18 Disclosures.
GBM has not knowingly failed to disclose to CCI any facts or documents material
to the condition (financial or otherwise), properties, assets, liabilities,
earnings, operations, or business of GBnet or the GBnet Subsidiaries. No
representation or warranty of GBM contained in this Agreement and no statement
contained in any document or certificate furnished by or on behalf of GBM to CCI
or any of its representatives contains any untrue statement of a material fact
or omits to state any material facts, except where such statement or omission
would not have a Material Adverse Effect.
3.19 Brokers or Finders.
GBM and its officers and agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders fees or agents' commissions or
other similar payment in connection with this Agreement and will indemnity and
hold W harmless from any such payment alleged to be due by or through CCI as a
result of the actions of GBM or its officers, employees or agents.
3.20 Year 2000 Compliance.
The network of hardware, software and microcode used by GBnet to conduct its
business as being conducted as of the date of this Agreement, is capable, as a
whole, of functioning before, on, or after December 31, 1999 without significant
loss of functionality or performance.
3.21 Related Party Transactions or Claims.
Except as disclosed in a confidential letter by GBIVI to W, no officer,
director, or stockholder of GBM, GBnet or the GBnet Subsidiaries or any
Affiliate thereof is directly or indirectly interested in any contract,
agreement, arrangement or transaction with GBnet or the GBnet Subsidiaries or
has any claim against GBnet or the GBnet Subsidiaries.
3.22 Environmental Laws and Regulations.
Except as disclosed in Schedule 3.22 hereto, (i) the business of GBnet and of
the GBnet Subsidiaries has been conducted in all material respects in compliance
with the environmental laws of the countries of the GBnet Region (ii) neither
GBnet nor the GBnet Subsidiaries have received any written notice under any such
environmental laws from any Governmental Authority revoking, canceling,
materially modifying or refusing to renew any permit, license or authorization
or providing written notice of violations of any such environmental laws.
3.23 Bankruptcy.
Neither GBnet nor any GBnet Subsidiary has filed any
voluntary petitions admitting its bankruptcy or requesting a reorganization, nor
have any petitions alleging insolvency been filed against GBnet or any GBnet
Subsidiary, nor have any of them been judicially declared to be bankrupt or
insolvent, nor are any of them insolvent or in the state of being liquidated or
dissolved.
3.24 Insurance.
GBnet's and the GBnet Subsidiaries! insurance coverage under GBM's global
policies are in full force and effect. Neither GBnet nor any GBnet Subsidiary is
in default thereunder and all claims thereunder have been correctly filed in a
due and timely manner.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF CCI
CCI hereby represents and warrants to GBM as of the date hereof and as of the
Closing Date as follows:
4.01 Organization and Good Standing.
CCI is a corporation duly organized, validly existing and in good standing under
the laws of the State of Nevada, United States of America. The execution and
delivery by CCI of this Agreement, the Ancillary Agreements and the
Supplementary Agreements and the consummation of the transactions contemplated
herein and therein have been duly authorized by all necessary corporate action
on the part of CCI.
4.02 Authority.
CCI has all requisite, corporate power and authority to
execute and deliver this Agreement, the Ancillary Agreements and the
Supplementary Agreements and other Transaction Documents, to consummate the
transactions contemplated herein and therein, and to perform its obligations
hereunder and thereunder. Upon the execution and delivery by CCI of this
Agreement, the Ancillary Agreements, the Supplementary Agreements or any other
agreements or documents hereunder, this Agreement, the Ancillary Agreements, the
Supplementary Agreements and any such other agreements and documents will
constitute the legal, valid, and binding obligations of CCI, enforceable against
CCI in accordance with their respective terms, except as such terms may be
limited by bankruptcy, insolvency, moratorium, reorganization and other laws of
general application affecting the enforcement of creditors' rights generally and
by the availability of equitable remedies. Neither the execution and delivery of
this Agreement, the Ancillary Agreements, the Supplementary Agreements or any
other agreements or documents required hereunder or thereunder to which CCI is a
party, nor the performance of its obligations hereunder or thereunder, will
(a) violate any applicable law to which CCI is subject or by which it or its
properties or assets are bound or affected or any provision of the charter
or other organizational documents of CCI, or
(b) give any Person the right to prevent, delay, or otherwise interfere with
any of the Contemplated Transactions pursuant to:
(i) any provision of CCI's organizational documents;
(ii) any resolution adopted by the board of directors or the stockholders
of CCI; or
(iii) any legal requirement or order to which CCI may be subject.
(c) result in the creation of any Lien (other than as created by the
Transaction Documents) on any of the assets of GBnet or the GBnet
Subsidiaries.
CCI is not and will not be required to obtain any material consent from any
Persons in connection with the execution and delivery of this Agreement, the
Ancillary Agreements, the Supplementary Agreements or any other agreements or
documents referred to herein, or the consummation or performance of any of the
Contemplated Transactions.
4.03 Investment Representation.
The PURCHASER acknowledges and agrees that the GBnet Shares are not registered
under the U.S. Securities Act of 1933, as amended (the "Act"). The PURCHASER is
acquiring the GBnet Shares, solely for its own account, for investment purposes,
and not with a view to, or for resale in connection with, any distribution
thereof, and the PURCHASER acknowledges and agrees that the certificates
representing the GBnet Shares shall bear a legend substantially to this effect.
The PURCHASER has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its acquisition
of the GBnet Shares.
The PURCHASER shall not sell, transfer, or otherwise dispose of any GBnet Shares
for as long as PURCHASER has not paid in full to GBM the Deferred Portion of the
Purchase Price. The foregoing notwithstanding, CCI may pledge or encumber any
Pledged Shares released by GBM pursuant to Section 2,04(b) hereof, in fine.
4.04 Certain Proceedings.
There is no pending proceeding that has been commenced against CCI and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To CCI's
knowledge, no such proceeding has been threatened.
4.5 Brokers or Finders.
CCI and its officers and agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement and will indemnify
and hold GBM harmless from any such payment alleged to be due by or through GBM
as a result of the actions of CCI or its officers, employees or agents.
4.6 CCI Financial Statements.
CCI has delivered to GBM its audited financial statements as of December 31,
1998 and its unaudited financial statements as of September 30, 1999 ("CCI's
Financial Statements"), attached hereto as Exhibit G, certified by CCI's Chief
Financial Officer as correct and complete, and in accordance with the books and
records of CCI, prepared in conformity with GAAP consistently applied and
representing fairly the financial condition of CCI as of the date thereof,
subject to normal year end adjustments.
4.7 Litigation; Decrees.
Except as provided in Schedule 4.07, there are no lawsuits, claims, arbitrations
or other proceedings or investigations pending or, to the best knowledge of CCI,
threatened by or against or affecting CCI or any of its properties or assets. To
the best knowledge of CCI, there is no basis for and, such lawsuit, claim,
arbitration or other proceeding or investigation. There is no outstanding
judgment, order or decree of any Governmental Authority or arbitrator applicable
to any of CCI or its properties, assets or business having, or which, insofar as
can be reasonably foreseen, in the future may have, a Material Adverse Effect on
CCI or on its business as conducted or as proposed to be conducted.
4.8 Undisclosed Liabilities.
CCI does not have any material liabilities or obligations of any nature which
may have a Material Adverse Effect on its business not reflected on CCI's
Financial Statements or in the notes thereto or not otherwise disclosed in this
Agreement, except for liabilities and obligations incurred in the ordinary
course of business consistent with past practice since the date of the CCI's
Financial Statements up to the date of this Agreement.
4.9 Absence of Changes or Events.
Since the date of the CCI's Financial Statements, there has been no Material
Adverse Effect in the financial condition or the operations of CCI, or which
interfere with its ability to perform its obligations under the Transaction
Documents, except as reflected therein. Since the date of the CCI's Financial
Statements, CCI has not declared or paid or made, or agreed to declare or pay or
make, to its shareholders any dividends or other distributions in cash or
property, except within the normal range of annual dividends paid or
distributions made by comparable firms in the ordinary course of business.
4.10 Compliance with Applicable Laws.
CCI, its properties, assets, operations and business are in compliance in all
material respects with all applicable statutes, laws, ordinances, rules and
regulations of any Governmental Authority and any filing requirements relating
thereto.
4.11 Permits, Licenses and Authorizations.
CCI has obtained or will promptly obtain after execution of this Agreement, and
prior to Closing, all permits, licenses and other authorizations which may be
required under applicable law with respect to the ownership of the GBnet Shares
and the Subsidiaries' Stock. CCI will fully comply in all material respects with
all terms and conditions of such permits, licenses and authorizations.
4.12 Disclosure.
CCI has not knowingly failed to disclose to GBM any facts material to the
condition (financial or otherwise), properties, assets, liabilities, earnings,
operations, or business of CCI. No representation or warranty of CCI contained
in this Agreement, and no statement contained in any document or certificate
furnished by or on behalf of CCI to GBM or any of its representatives pursuant
to the Ancillary Agreements, contains any untrue statement of a material fact or
omits to state any material fact.
ARTICLE V. AFFIRMATIVE COVENANTS
5.1 CCI's Affirmative Covenants.
CCI hereby covenants to GBM that from the Closing Date and consummation of the
Contemplated Transactions, and for as long as CCI has not paid to GBM any
portion of the Purchase Price, CCI shall .comply, and shall cause GBnet and each
of the GBnet Subsidiaries to comply, with the following covenants:
(a) Minimum Operational Standards. As long as any portion of the Purchase Price
remains outstanding, GBnet shall operate its business in accordance with,
at least, the Minimum Operational Standards set forth in Exhibit H, hereto,
which include, among others, availability, performance and reliability.
Material breach by CCI, GBnet or any of the GBnet Subsidiaries of any such
minimum operational standards shall constitute a material breach of this
Agreement.
(b) Conduct of the Network Business. As long as any portion of the Purchase
Price remains outstanding, CCI shall, and shall cause GBnet and each of the
GBnet Subsidiaries (i) to conduct the Network's business and operations
464a in a commercially reasonable manner; (ii) to preserve the goodwill of
the business; (iii) to maintain all of the GBnet assets and the GBnet
Subsidiaries' assets and other properties in customary repair, order and
condition; and (iv) to maintain insurance coverage thereon as is consistent
with sound industry practice. (c) Employees to Be Retained. Immediately
upon Closing, CCI will cause GBnet and each of the GBnet Subsidiaries to
offer new employment to all the Employees to be Retained, at salaries and
benefits comparable to those existing immediately prior to the Closing.
Furthermore, CCI will cause each of the GBnet Subsidiaries to maintain
employment of all these employees for a transition period of three hundred
sixty five days (365) beginning on the Closing Date, except in the event of
termination for reasonable cause or non-performance. Upon Closing, CCI,
GBnet and the GBnet Subsidiaries shall be solely responsible parties for
all employment relationships and obligations with respect to the Employees
to be Retained. CCI, GBnet and the GBnet Subsidiaries shall cause all
Employees to be Retained, as a condition of employment, to enter into
agreements, in form and substance satisfactory to GBM, relating to
noncompetition, nondisclosure of confidential information and non
assignment of trademarks and copyrights to CCI and/or GBnet.
(d) Performance of Obligations. GBnet and the GBnet Subsidiaries shall pay
their Indebtedness and other obligations to third parties promptly and in
accordance with their terms before they shall become delinquent or in
default or give rise to a Lien upon their income or profits or in respect
of their property or any part thereof which may impair their ability to
successfully conduct their business.
(e) Service Xxxx and Domain Name. CCI hereby acknowledges (i) that the "GBM"
service xxxx and the "xxx.xxx" registered domain name are both the sole and
exclusive property of GBM and over which GBM reserves all rights in
perpetuity; (ii) that GBM, as an act of forbearance, has agreed to allow
GBnet to use after the Closing the corporate name "XXX.XXX, S.A." to
designate the GBnet Subsidiary in the Dominican Republic for a transitional
period ending December 31, 2000; and (iii) that GBM has also agreed to
allow GBnet to use after the Closing the domain name xxx.xxx" as GBnet's
electronic address in the Internet for a period ending June 3091, 2000. CCI
hereby covenants that neither CCI nor GBnet or any of the GBnet
Subsidiaries, or any Person `which is an affiliate or subsidiary of any of
them, shall under any circumstances claim any rights to such property of
GBM. CCI further covenants to GBM that it shall cause GBnet and the GBnet
Subsidiaries to vacate the aforesaid service xxxx and domain name and cease
all use thereof within the terms set forth above.
5.2 GBM's Affirmative Covenants.
(a) Transition of Business. Following the Closing and the consummation of the
acquisition of GBnet by CCI, GBM will cause its own country Subsidiaries in
the GBnet Region (and its officers and employees):
(i) to provide reasonable assistance to CCI in making a smooth transition
of the GBnet business to CCI;
(ii) to provide assistance to GBnet in its efforts to obtain the renewal of
the service contract with the ALLEGRO organization in the Dominican
Republic; and
(iii)to abstain from any action intended to or that has the effect of
discouraging any lessor, licensor, GBnet customer, supplier or other
business associate of GBM or any of its subsidiaries from maintaining
or extending to GBnet and the GBnet Subsidiaries the same business
relationships extended to such companies before the Closing Date.
(b) Use of GBM Subsidiaries' Facilities. In order to facilitate relocation of
the Network equipment, which through the date hereof, has been located at
the GBIVI local Subsidiary's offices in the countries of the GBnet Region,
GBM will, for a period of one (1) year beginning on the Closing Date, allow
GBnet and the GBnet Subsidiaries to continue using for such purposes, at no
cost, the same space currently used for said purposes, subject to such
reasonable conditions as GBM deems necessary for the security and
confidentiality of the GBM Business. GBM will also provide administrative
support services (the "Administrative Support Services") to GBnet and the
GBnet Subsidiaries for a 6-month period, beginning on the Closing Date.
Such Administrative Support Services, will include services such as
invoicing and xxxxxxxx, secretarial services, telephone, electric power,
and similar, and will be billed to GBnet at GBM's cost on a monthly basis,
within the first ten (10) days of the month immediately subsequent to the
month in which the services were paid by GBM.
5.3 Further Assurances.
The Parties hereby agree to execute such other documents or comply with such
formalities after Closing as may be reasonably necessary to complete transfer of
the Subsidiaries' Stock to GBnet, including the issuance of the final
certificates therefor, replace the present directors and corporate officers and
to properly annotate the pledge of the Subsidiaries' Stock to GBM in the books
and records of the GBnet Subsidiaries.
ARTICLE VI. NEGATIVE COVENANTS
CCI covenants to and agrees with GBM that, from the Closing Date and so long as
any portion of the Purchase Price remains outstanding, unless GBM otherwise
consents, in advance, in writing:
6.1 CCI shall neither cause nor permit GBnet or any of the GBnet Subsidiaries
to:
(a) sell or transfer any GBnet Shares, or any of the GBnet Subsidiaries'
Stock, as applicable; or
(b) issue any new shares of stock of GBnet, in addition to the 1,000 GBnet
Shares outstanding as of the Closing Date, or issue any new shares of
stock in addition to the respective number of shares outstanding as of
the Closing Date and forming part of the Subsidiaries' Stock.
6.2 CCI shall neither cause nor permit GBnet to declare and pay any dividends
or make any other distributions, including redemptions and repurchase of
securities, until the totality of the outstanding balance of the Purchase
Price is paid in full to GBM.
6.3 Neither CCI, nor GBnet or any of the GBnet Subsidiaries shall (i) take any
action out of the ordinary course of business which may have a Material
Adverse Effect on the assets or liabilities of GBnet: or any of the GBnet
Subsidiaries, as existing as of the Closing Date, or the continuation of
services of the Network, as conducted as of the Closing Date; (ii) sell or
transfer in any way any of the Network's assets other than in the ordinary
course of business, unless GBnet or the GBnet Subsidiary involved receives
full value for it; or (iii) amend, or cause to amend, as applicable, the
charter or Bylaws, or other organizational documents, of GBnet or any of
the GBnet Subsidiaries.
6.4 CCI shall neither cause nor permit GBnet or any of the GBnet Subsidiaries
to incur, create, assume, guarantee or otherwise become liable for any
Indebtedness, unless, GBnet or the GBnet Subsidiary involved receives full
value therefor and immediately thereafter and after giving effect thereto,
the following conditions are satisfied:
(a) After the second anniversary of the Closing Date, the rate of
consolidated Total Indebtedness of GBnet to consolidated not worth
determined in accordance with GAAP of GBnet does not exceed 2.5: 1.
(b) The ratio of Consolidated Annualized Cash Flow to Pro-Forma
Consolidated Debt Service of GBnet is at least: (i) 0.5 : 1 for the
year 2001; and (ii) 0.8: 1 for the year 2002 and afterwards;
provided, that the conditions set forth in (b) above, shall be considered
satisfied if the Promissory Notes due and payable for the previous years
have been fully and timely paid, as provided in Section 2.04(b) hereof.
6.5 CCI shall neither cause nor permit GBnet or any of the GBnet Subsidiaries
to grant, create or assume any Lien on the property of GBnet or the
property of any of the GBnet Subsidiaries, unless:
(a) Such Lien relates to obligations incurred for a proper business
purpose of GBnet or of the GBnet Subsidiary; and
(b) GBnet or the involved GBnet Subsidiary thereby receives equivalent
value therefor; and
(c) Conditions 6.04(a) and (b) hereof are also satisfied.
ARTICLE VII. INDEMNIFICATION
7.1 Indemnification and Payment of Damages by GBM.
Subject to the provisions of Section 9.04, and to limitations set forth in
Sections 7.03 and 7.04 herein, GBM will indemnify and hold harmless CCI and its
Subsidiaries, Affiliates, directors, principals, agents, employees and
controlling persons (collectively, the "CCI Indemnities") for the amount of, any
loss, liability, claim, damage, expense (including costs of investigation and
defense and reasonable attorneys' fees) (collectively, "CCI Damages"), arising,
directly or indirectly, from or in connection with:
(a) any material breach of any representation or warranty made by GBM in
this Agreement or in any other certificate or document delivered by
GBM pursuant to this Agreement; and
(b) any material breach by GBM of any covenant or obligation of GBM under
this Agreement; and
(c) any liability of GBnet or any of the GBnet Subsidiaries not shown in
GBnet's Financial Statements, or in any Schedule hereto, other than
liabilities incurred since the date of such Financial Statements in
the ordinary course of business or arising in connection with or from
or after the Closing, except as may result from a breach or violation
thereof prior to the Closing; and
(d) any liability arising from third party claims against GBnet or the
GBnet Subsidiaries for breach of a Material Contract or any other
cause of action occurring or accruing prior to the Closing, except to
the extent that it may have been reserved in the Financial Statements
or disclosed in any Schedule; and
(e) any liability arising out of any claims by any GBM's shareholders on
account for or in connection with the sale of the GBnet Shares to CCI.
7.2 Indemnification and Payment of Damages by CCI.
CCI will indemnify and hold harmless GBM, its Subsidiaries, Affiliates,
directors, principals, agents, employees and controlling persons (collectively,
the "GBM Indemnities") for the amount of, any loss, liability, claim, damage,
expense (including costs of investigation and defense and reasonable attorneys'
fees) (collectively, "GBM Damages"), arising, directly or indirectly, from or in
connection with:
(a) any material breach of any representation or warranty made by CCI in
this Agreement or in any other certificate or document delivered by
CCI pursuant to this Agreement; and
(b) any material breach by CCI of any covenant or obligation of CCI in
this Agreement.
7.3 Time Limitations.
(a) If the Closing occurs, GBM will have no liability for indemnification,
or otherwise, with respect to any representation or warranty, other
than those in Sections 3.01, 3.02(first paragraph), 3.03, 3.05, 3.09,
3.10, 3.12 and 3.13, unless CCI notifies GBM of a claim specifying the
factual basis of that claim in reasonable detail to the extent then
known by CCI within four (4) years of the Closing Date.
(b) If the Closing occurs, CCI will have no liability for indemnification,
or otherwise, with respect to any representation or warranty, other
than those made by CCI in the Ancillary Agreements, unless GBM
notifies CCI of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by GBM within four (4)
years of the Closing Date.
7.4 Limitations on Amount.
(a) GBM and CCI will have no liability, for indemnification or otherwise,
with respect to the matters described in Section 7.01 and 7.02 until
the total of all Damages with respect to such matters exceeds THIRTY
THOUSAND UNITED STATES DOLLARS (USD30,000) (the "Threshold"); provided
that the foregoing limitation shall not apply to any amounts owed by
CCI to GBM under any of the Ancillary Agreements. CCI will use
reasonable efforts to provide notice to GBM of claims for CCI Damages,
and vice versa; provided, however, that failure to provide such notice
will not prejudice the claimant's rights hereunder. GBM shall not be
prejudiced by any failure to promptly dispute any claim for or notice
of CCI Damages, and vice versa.
(b) The aggregate liability of CCI and GBM (for indemnification or
otherwise) with respect to the matters described in Section 7.01 and
7.02 shall not exceed XXX XXXXXXX XXXXX XXXXXXX XXXXXXXX XXXXXX XXXXXX
DOLLARS (USD1,300,000) (the "ceiling"), for any reason whatsoever;
provided, however, that the foregoing limitation shall not apply to
any amounts owed by CCI to GBM under the Pledge Agreement and/or the
Promissory Notes.
(c) The amount limitations in Section 7.04(b) will not apply to CCI claims
for breach of representations and warranties in Sections 3.01,
3.02(first paragraph), 3.03, 3.05, 3.08, 3.09, 3.10, 3.12, 3.13, and
3.18.
(d) The amount limitations in Section 7.04(b) will not apply to GBM claims
for breach of representations and warranties in Sections 4.01, 4.02
(first paragraph), 4.03, 4.05, 4.06, 4.07, 4.08, 4.09 and 4.10, and
4.12.
7.5 Procedure For Indemnification: Third Party Claims.
(a) Promptly after receipt by an Indemnitee under Section 7.01 and 7.03,
of notice of the commencement of any proceeding against it by a third
party, such Indemnitee will, if a claim is to be made or
indemnification under any such Section, give notice to the
indemnifying party (the "Indemnitor") of the commencement of such
claim, but the failure to notify the Indemnitor will not relieve the
Indemnitor of any liability that it may have to any Indemnitee, except
to the extent that the Indemnitor demonstrates that the defense of
such action has been prejudiced by the Indemnitee's failure to give
such notice.
(b) If any proceeding referred to in this Section 7.05 is brought against
an Indemnitee and it gives notice to the Indemnitor of the
commencement of such proceeding, the Indemnitor will be entitled to
participate in such proceeding and, to the extent that it wishes to
assume the defense of such proceeding with counsel reasonably
satisfactory to the Indemnitee and, after notice from the Indemnitor
to the Indemnitee of its election to assume the defense of such
proceeding, the Indemnitor will not, as long as it diligently conducts
such defense, be liable to the Indemnitee under Section 7.05 for any
fees of other counsel or any other expenses with respect to the
defense of such proceeding, in each case subsequently incurred by the
Indemnitee in connection with the defense of such proceeding, other
than reasonable costs of investigation.
(c) If the Indemnitor assumes the defense of a proceeding,
(i) no compromise or settlement of such claims may be effected by the
Indemnitor without the Indemnitee's consent which shall not be
unreasonably withheld or untimely delayed, unless (a) there is no
finding or admission of any violation of legal requirements or
any violation of the rights of any Person and no effect on any
other claims that may be made against the Indemnitee, and (b) the
sole relief provided is monetary damages or other consideration
to be paid or satisfied in full by the Indemnitor; and
(ii) the Indemnitee will have no liability with respect to any
compromise or settlement of such claims effected without its
consent which shall not be unreasonably withheld or untimely
delayed.
(d) If notice is given to an Indemnitor of the commencement of any
proceeding and the Indemnitor does not, within ten (10) days after the
Indemnitee's notice is given, give notice to the Indemnitee of its
election to assume the defense of such proceeding, the Indemnitor will
be bound by any determination made in such proceeding or any
compromise or settlement effected by the Indemnitee.
7.6 Procedure for Indemnification: Other Claims.
A claim for indemnification for any matter not involving a third-party claim may
be asserted by written notice to the party from whom indemnification is sought
describing in reasonable detail the basis for such claim and presenting all
available documentation with respect thereto.
7.7 Payment of Indemnification.
Claims for indemnification under this ARTICLE VII shall be paid or otherwise
satisfied by the indemnitor within thirty (30) days after notice thereof is
given by the Indemnitee.
ARTICLE VIII. TERMINATION
8.1 Termination Events.
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned, but not later than the Closing Date:
(a) by mutual written consent of CCI and GBM;
(b) by CCI, in its sole discretion, if any of the representations or
warranties of GBM contained herein are not in all material respects
true, accurate and complete as of the applicable date, or if GBM
breaches any covenant or agreement contained herein;
(c) by GBM, in its sole discretion, if any of the representations or
warranties of CCI contained herein are not in all material respects
true, accurate and complete as of the applicable date, or if CCI
breaches any covenant or agreement contained herein;
(d) by either Party, if the Closing has not taken place on or before
December 15, 1999, unless: (a) the Parties mutually agree to extend
the deadline for Closing; or (b) the failure to consummate the Closing
on or prior to such date is solely due to such Party's fault.
8.2 Effect of Termination.
In the event of a termination of this Agreement pursuant to Section 8.01, above,
written notice thereof shall promptly be given to the other Party hereto and
this Agreement shall terminate and the transactions contemplated hereby shall be
abandoned without further action by the other Party hereto. Notwithstanding such
termination, each Party shall have the right to seek damages in the event of a
breach by the other party of its obligations under this Agreement.
8.3 Survival of Certain Provisions.
Notwithstanding anything to the contrary contained herein, the respective
obligations of the Parties pursuant to Sections 3.19, 4.04, 9.07 and 9.16,
hereof, shall survive the termination of this Agreement.
ARTICLE IX. GENERAL PROVISIONS
9.1 Notices.
Notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight international courier service,
air-mailed or sent by graphic scanning or other telegraphic communication
equipment available to both, the sending Party and the receiving Party, as
follows:
If to GBM:
GENERAL BUSINESS MACHINES CORPORATION ("GBM")
GBM Building, Paseo Colon
San Xxxx Xxxxx Rica
Attention: Xx. Xxxxxxx Xxxxxxx Sevilla, C.F.O.
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xx. Xxxxxxx Xxxx, General Counsel
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000, X.X.X.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to PURCHASER:
CONVERGENCE COMMUNICATIONS INCORPORATED ("CCI")
000 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxxx xx Xxxx 00000, X.X.X.
Attention: Xx. Xxxx X'Xxxxxxxx, Senior Vice-President
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xx. Xxxxxx Xxxxxx-Xxx
THE FONDELEC GROUP INC.
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000, X.X.X.
Tel: (000) 000-0000
Fax: (000) 000-0000
And to:
Xx. Xxxx Xxxxxx Xxxxxx
XXXXX, XXXXXX, XXXXXX & ASOCIADOS
Calle y Colonia Roma, No. 23
San Salvador, El Salvador
Tel: (000) 000-0000; 000-0000
Fax: (000) 000-0000
All notices and other communications given to either Party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telex, graphic scanning or other telegraphic communications equipment available
to both the sender and the receiver, or on the date five (5) Business Days after
dispatch by certified or registered mail if mailed, in each case delivered, sent
or mailed (properly addressed) to such Party as provided in this Section 9.01,
or in accordance with the latest unrevised direction from such Party given in
accordance with this Section.
9.2 Entire Agreement.
This Agreement, including its Exhibits and Schedules, and Ancillary Agreements
constitute the entire agreement between the Parties relative to the acquisition
of GBnet and supersedes any written or verbal, previous or contemporaneous
agreements between the Parties with respect to the acquisition of GBnet or the
transactions contemplated herein, which are hereby superseded by this Agreement,
its Exhibits and Schedules and Ancillary Agreements, including without
limitation that certain Heads of Agreement dated August 24, 1999, by and among
CCI, GBM and FondElec Group Inc.
Each of the Parties hereto hereby acknowledges and agrees that each of them has
been advised by counsel during the course of negotiations and had significant
input in the development of this Agreement and this Agreement shall not,
therefore, be construed more strictly against any party responsible for its
drafting, nor shall this Agreement be interpreted as favoring any party with
regard to any preemption or rule requiring construction against the party
causing this Agreement to be drafted.
9.3 Covenants Against Unfair Competition.
(a) GBM Covenants to CCI. GBM agrees that for a continuous period of four
(4) years, beginning on the date hereof:
(i) will not, directly or indirectly, engage in any of the countries
of the GBnet Region in any business activity that directly
competes with the business of GBnet or the GBnet Subsidiaries as
it exists on the Closing Date, that is, the provision to third
parties of data transmission, telephone internet access, direct
broadcast satellite systems, point to point, or point to
multipoint, multichannel distribution systems, master antenna
television systems, community antenna, vareline or other type of
franchise hardwire or wireless cable television system which
provides voice, video or data services.
(ii) GBM shall not, directly or indirectly, for itself or on behalf of
or in conjunction with any Person: (a) Divert or attempt to
divert business or customers of GBnet or the GBnet Subsidiaries
by soliciting, negotiating or transacting any business which is
the same as or similar to the GBnet business with any customer of
GBnet or of the GBnet Subsidiaries; (b) Engage in any other acts
which directly or indirectly affect, circumvent, compromise or
undermine GBnet's relationship with any GBnet customer; (c)
Disclose to any competitor of GBnet the identity of any GBnet
customers.
(b) CCI's Covenants to GBM. CCI hereby agrees that for a continuous period
of four (4) years, beginning on the Closing Date, neither CCI, GBnet,
any of the GBnet Subsidiaries, or any Affiliates thereof:
(i) Shall, directly or indirectly, for itself or on behalf of or in
conjunction with any Person, engage in any of the countries of
the Region in any business activity that directly or indirectly
(a) competes with the GBM Business, as conducted by GBM, directly
or indirectly through the GBM Subsidiaries, as of the Closing
Date; divert or attempt to divert business or customers of GBM or
its Subsidiaries, by soliciting, negotiating or transacting any
business which is similar to the GBM business; (c) engage in any
other acts which directly or indirectly affect, circumvent,
compromise or undermine GBM's or its Subsidiaries' relationship
with any of its customers; (d) disclose to any competitor of GBM
the identity of any GBM customers.
(ii) Shall employ or offer employment to any person who, on the date
hereof or within the three (3) years immediately preceding the
date of execution of this Agreement, is or has been an employee,
officer or director of GBM, its Subsidiaries or Affiliates,
unless GBM express consents in writing to such employment, except
for the Employees to be Retained.
The Parties agree and acknowledge that the restrictions contained in this
Section are reasonable in scope and duration and are necessary to protect each
Party's rights. Each of the Parties agree and acknowledge that upon breach of
any provision of this Section by the other Party, the non-breaching Party shall
be entitled to injunctive relief, specific performance or other equitable
relief; provided, however, that, this shall in no way limit any other remedies
which the non-breaching Party may have in law or in contract, including, without
limitation, the right to seek monetary damages.
9.4 Survival of Representations, Warranties, and Covenants.
All covenants, agreements, representations and warranties made by CCI and GBM in
this Agreement, or in certificates or other documents, prepared or delivered in
connection with this Agreement, shall be considered to have been relied upon by
each of the Parties and shall survive the execution and delivery of this
Agreement or such certificate or other document for a period of four (4) years
from the date hereof, except as provided in Section 7.03 hereof.
9.5 Assignment.
This Agreement and the rights hereunder or under the Ancillary Agreements shall
not be assignable or transferable by either Party without the prior written
consent of the other Party hereto; provided that CCI's consent, written or
otherwise, will not be required for the transfer, assignment or endorsement of
the Promissory Notes or the Pledge Agreement by GBM.
9.6 No Third-Party Beneficiaries.
This Agreement is for the sole benefit of the Parties hereto and their permitted
assignees and nothing herein expressed or implied shall give or be construed to
give to any Person, other than the Parties hereto and such assignees, any legal
or equitable rights hereunder.
9.7 Expenses.
All costs and expenses incurred in connection with this Agreement, the Ancillary
Agreements and the Supplementary Agreements and the transactions contemplated
hereby and thereby, shall be paid by the Party incurring such costs or expenses.
All stamp and other transfer taxes which may be payable in respect of the
execution and delivery of this Agreement, the Ancillary Agreements or the
transfer of the GBnet Shares to CCI shall be borne by CCI, except for income
taxes or capital gain taxes which legally may be applicable to GBM. CCI further
agrees to indemnify GBM from and hold it harmless against any documentary taxes,
assessments or charges made by any Governmental Authority by reason of the
execution or delivery of this Agreement, the Ancillary Agreements or the
transfer of the GBnet Shares to CCI
The provisions of this Section 9.07 shall remain operative and in full force and
effect regardless of the consummation of the transactions contemplated herein or
in any Ancillary Agreement, or the invalidity or unenforceability of any term or
provision of this Agreement, any Ancillary Agreement or any other agreements
related hereto or thereto. All amounts due under this under this Section shall
be payable on written demand therefor.
9.8 Applicable Law. This Agreement, the Ancillary Agreements and any
other agreements and documents delivered by the Parties and related hereto or
thereto, shall be governed by and construed in accordance with the internal laws
of the State of Florida applicable to agreements made and to be performed
entirely within Florida, without regard to the conflicts of law principles of
such State.
9.9 Waivers; Amendments.
(a) No failure or delay by the Parties in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any
other or further exercise thereof or the exercise of any other right
or power.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing
entered into by CCI and GBM.
9.10 Waiver of Jury Trial.
EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT, ANY OF THE ANCILLARY AGREEMENTS, OR ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH. EACH PARTY HERETO
(1), CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (2), ACKNOWLEDGES
THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
9.11 Severability.
In the event any one or more of the provisions contained in this Agreement
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby. The Parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
9.12 Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall constitute an original but all of which when taken together shall
constitute but one contract, and shall become effective when one or more such
counterparts have been signed by each of the Parties and delivered to the other
Party.
9.13 Headings.
Section headings used herein are for convenience of reference only, are not part
of this Agreement, and are not to affect the construction of, or to be taken
into consideration in interpreting, this Agreement.
9.14 Conciliation of Disputes.
In the event there is a dispute under any of the Transaction Documents, other
than any of the Ancillary Agreements, the Parties will meet with one another and
diligently attempt to resolve their disagreements. If they are unable to do so,
then upon request of any Party to the dispute, they will conciliate the dispute,
utilizing a single conciliator pursuant to the ICC Rules of Optional
Conciliation in a proceeding to take place in Miami, Florida, and carried out in
the English language. If, after thirty (30) calendar days, the mediation is not
successful, then the Parties would be free to bring any action in law or in
equity they deemed appropriate to protect their interests. The provisions of
this Section shall not apply to any actions or proceedings for non-payment of
sums due, or otherwise, under the Ancillary Agreements.
9.15 Jurisdiction; Consent to Service of Process.
(a) Both of the Parties hereto, CCI and GBM, hereby irrevocably and
unconditionally submit, for themselves and their property, to the
jurisdiction of any court of the State of Florida sifting in
Miami-Dade County, Florida, or any Federal court of the United States
of America sifting in the Southern District of the State of Florida,
and any appellate court from any such court, in any suit, action or
proceeding arising out of or relating to this Agreement or any
Ancillary Agreement, or for recognition or enforcement of any
judgment, and each of the Parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such suit,
action or proceeding may be heard and determined in such State of
Florida court. or Federal court. It shall be a condition precedent to
each Party's right to bring any such suit, action or proceeding that
such suit, action or proceeding, in the first instance, be brought in
such State of Florida court or, to the extent permitted by law, in
such Federal court (unless such suit, action or proceeding is brought
solely to obtain discovery or to enforce a judgment), and if each of
such State of Florida court and such Federal court refuses to accept
jurisdiction with respect thereto, such suit, action or proceeding may
be brought in any other court of competent jurisdiction. No Party to
this Agreement may move to (1) transfer any such suit, action or
proceeding from such State of Florida court or any Federal court of
the United States of America sifting in the State of Florida, to
another jurisdiction, (2) consolidate any such suit, action or
proceeding brought in such State of Florida court or Federal court
with a suit, action or proceeding in another jurisdiction or (3)
dismiss any such suit or proceeding brought in such State of Florida
court or any Federal court of the United States of America sifting in
the State of Florida, for the purpose of bringing the same in another
jurisdiction. Each Party agrees that a final judgment in any such
suit, action or proceeding shall be conclusive and may be enforced in
any other jurisdiction by suit on the judgment or in any other manner
provided by law.
(b) CCI and GBM each hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection
which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to the Ancillary
Agreements in any State of Florida court sifting in Miami-Dade County,
Florida, or any Federal court sifting in the State of Florida. CCI and
GBIVI hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such
suit, action or proceeding in such court and further waives the right
to object, with respect to such suit, action or proceeding, that such
court does not have jurisdiction over such Party. (c) Each of the
Parties, CCI and GBM, hereby irrevocably consents to service of
process in the manner provided for notices in Section 9.01 hereof;
nothing in this Agreement will affect the right of either Party to
this Agreement to serve process in any other manner permitted by law.
9.16 Confidentiality; Publicity.
Each of the Parties agrees that their undertakings to preserve the
confidentiality of information, and to use such information only for the
specific purposes of this Agreement, as set out in that certain Non Disclosure
and Confidentiality Agreement between CCI and GBM, dated the 28th of January,
1999, attached hereto as Exhibit 1, shall continue in full force and effect and
apply to any and all information exchanged in furtherance of the acquisition of
GBnet and otherwise pursuant to this Agreement or any other agreements referred
to herein.
CCI and GBM agree that no public release, announcement or other form of
publicity concerning the transactions contemplated hereby, and under the
Ancillary Agreements or any other agreements referred to herein, shall be issued
by either Party, without the prior written consent of the other Party, except as
such release or announcement may be required by applicable local or foreign law,
rules or regulations of any Government Authority.
9.17 Consequential Damages.
Neither GBM nor CCI shall be liable to any Person for any consequential,
incidental, special or punitive damages arising out of or in connection with
this Agreement, the Ancillary Agreements or any other agreements referred to
herein.
9.18 Time Of Essence.
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
PURCHASER:
CONVERGENCE COMMUNICATIONS, INC. ("CCI")
A State of Nevada Corporation
By: /s/
Name: Xxxx X'Xxxxxxxx
Title: Sr. Vice President
Place: Miami, Florida, United States of America
GBM:
GENERAL BUSINESS MACHINES CORPORATION ("GBM")
A British Virgin Islands international business company.
By: /s/
Name: Xxxxxxx Xxxxxxxx
Title: President and C.E.O.
Place: Miami, Florida, United States of America
