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EXHIBIT (a)(1)(B)
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT UNDER
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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GLOBALNET XXXXXXXXX.XXX, INC.
(Name of Subject Company)
GLOBALNET XXXXXXXXX.XXX, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.001
CLASS A COMMON STOCK, PAR VALUE $0.001
(Title of Class of Securities)
37937R
(CUSIP Number of Class of Securities)
0000 X. XXXXXXXX XXXX XXXX
XXXXX 000
XXXX XXXXX, XX 00000
(Name, address and telephone number of person authorized
to receive notice and communications on behalf of the person(s) filing
statement)
Copy to:
XXXX X. X'XXXXXX, ESQ.
MILBANK, XXXXX, XXXXXX & XXXXXX LLP
0 XXXXX XXXXXXXXX XXXXX
XXX XXXX, XXX XXXX 00000
(000) 000-0000
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ITEM 1. SUBJECT COMPANY INFORMATION.
The name of the subject company is GlobalNet Xxxxxxxxx.xxx, Inc., a
Delaware corporation ("GlobalNet" or the "Company"), and the address of the
principal executive offices of GlobalNet is 0000 X. Xxxxxxxx Xxxx Xxxx, Xxxxx
000, Xxxx Xxxxx, XX 00000. The telephone number for GlobalNet's principal
executive offices is 000-000-0000. The title of the class of equity securities
to which this Solicitation/Recommendation Statement on Schedule 14D-9 (this
"Statement") relates is GlobalNet's common stock, par value $.001 per share (the
"Common Shares"), and GlobalNet's Class A common stock, par value $.001 per
share (the "Class A Common Shares" together with the Common Shares, the
"Shares") together with the associated rights (the "Common Rights") to purchase
Series A Junior Participating Preferred Stock (the "Series A Junior Preferred
Stock") and the associated rights (the "Class A Common Rights", together with
the Common Rights, the "Rights") to purchase Series B Junior Participating
Preferred Stock (the "Series B Junior Preferred Stock") issued pursuant to that
certain Rights Agreement, dated July 19, 2001, between GlobalNet and The Bank of
New York (as amended from time to time, the "Rights Agreement"). Unless the
context otherwise requires, all references to Shares include the Rights, and all
references to the Rights include the benefits that may inure to the holders of
the Rights pursuant to the Rights Agreement.
There were 21,574,958 Common Shares and 34,225,000 Class A Common Shares
outstanding on July 19, 2001.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) The name and address of GlobalNet, which is the person filing this
statement, are set forth in Item 1 above.
(b) This Statement relates to a tender offer by GlobalNet Acquisitions
Inc., a Delaware corporation ("Acquisitions" or the "Purchaser") and a wholly
owned subsidiary of New Media SPARK plc, a company organized under the laws of
England and Wales ("SPARK" or "Parent"), under which Acquisitions is offering to
purchase all of the Common Shares at a price of $0.36 per share (the "Common
Offer Price"), net to the seller in cash, and all of the Class A Common Shares
at a price of $0.036 per share (the "Class A Offer Price", together with the
Common Offer Price, the "Offer Price") net to the Seller in cash, upon the terms
and subject to the conditions set forth in Schedule TO (as defined below)
(which, as amended or supplemented from time to time, together constitute the
"Offer"). None of SPARK, Acquisitions or any of their affiliates are affiliated
with GlobalNet. The Offer is described in a Tender Offer Statement on Schedule
TO (including the exhibits thereto, as amended or supplemented from time to
time, the "Schedule TO"), filed by SPARK and Acquisitions with the Securities
and Exchange Commission on July 25, 2001.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of June 15, 2001, as amended July 17, 2001 (the "Merger Agreement"), by and
among SPARK, Acquisitions and GlobalNet. The Merger Agreement provides, among
other things, that following the completion of the Offer and the satisfaction or
waiver of the other conditions set forth in the Merger Agreement and in
accordance with the applicable provisions of the Delaware General Corporation
Law (the "DGCL"), Acquisitions will be merged with and into GlobalNet (the
"Merger"). Following the completion of the Merger, GlobalNet will be an
indirect, wholly owned subsidiary of SPARK. At the effective time of the Merger
(the "Effective Time"), each Share (other than shares owned by SPARK, any of its
subsidiaries (including Acquisitions), GlobalNet (as treasury stock), and Shares
held by stockholders who properly demand appraisal and comply with provisions of
Section 262 of the DGCL relating to dissenters' rights of appraisal) will be
converted into the right to receive the Offer Price (the "Merger
Consideration"). A copy of the Merger Agreement has been filed as an exhibit to
the Schedule TO, which is being mailed to stockholders together with this
Statement, and is incorporated herein by reference.
As set forth in the Schedule TO, the principal executive offices of SPARK
are located at 00 Xxxxxxxxxx Xxxxxx, Xxxxxx X0X 0XX, Xxxxxx Xxxxxxx,
x00.000.000.0000.
All information contained or incorporated by reference in this Statement
concerning SPARK or Acquisitions, including but not limited to information with
respect to the respective directors and executive officers of SPARK and
Acquisitions or actions or events with respect to any of them, was provided by
SPARK or
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Acquisitions, respectively, and GlobalNet takes no responsibility for such
information. Information contained in the Offer and this Statement with respect
to GlobalNet and its advisors has been provided by GlobalNet.
ITEM 3. PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
Certain contracts, agreements, arrangements or understandings between
GlobalNet or its affiliates and certain of its directors and executive officers
are described in the GlobalNet Proxy Statement, dated May 25, 2001 (the "Proxy
Statement") under the headings "Executive Compensation," "Summary Compensation
Table," and "Option Grants In Last Fiscal Year". Such portions of the Proxy
Statement are incorporated herein by reference. Except as described below or
incorporated herein by reference, to the best knowledge of GlobalNet as of the
date hereof, there are no material contracts, agreements, arrangements or
understandings or any actual or potential conflicts of interest, between
GlobalNet, or its affiliates, and (i) its executive officers, directors or
affiliates or (ii) SPARK, Acquisitions, or their executive officers, directors
or affiliates.
THE MERGER AGREEMENT. The following is a summary of the material
provisions of the Merger Agreement, a copy of which is filed as an exhibit to
the Schedule TO. The summary is qualified in its entirety by reference to the
Merger Agreement, which is incorporated by reference herein.
THE OFFER. The Merger Agreement provides for the making of the Offer. The
obligation of Acquisitions to accept for payment and pay for Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum Condition
(as defined herein) and certain other conditions that are set forth in the
Merger Agreement.
THE MERGER. The Merger Agreement provides that, following the satisfaction
or waiver of the conditions described below under "-- Conditions to the Merger",
the Purchaser will be merged with and into the Company, with the Company being
the surviving corporation (the "Surviving Corporation"), and each issued Share
(other than Shares owned by Parent, the Purchaser or the Company or any wholly
owned subsidiary of Parent or by stockholders, if any, who are entitled to and
who properly exercise appraisal rights under the DGCL) will be converted into
the right to receive $0.36 and $0.036 per Common Share and Class A Share,
respectively, in cash, without interest thereon.
VOTE REQUIRED TO APPROVE MERGER. The DGCL requires, among other things,
that the Merger Agreement must be approved by the holders of a majority of the
shares entitled to vote thereon. Other than the Shares, there are no shares of
any class of the Company's stock outstanding. Consequently, the Company will
call and hold a meeting of its stockholders promptly following the consummation
of the Offer for the purposes of voting upon the approval of the Merger
Agreement. At such meeting all Shares then owned by Parent or the Purchaser will
be voted in favor of the approval of the Merger Agreement. If the Purchaser
acquires -- through the Offer, the Merger Agreement or otherwise -- voting power
with respect to at least a majority of the total voting power of the Company
(which would be the case if the Minimum Tender Condition were satisfied and the
Purchaser were to accept for payment Shares tendered pursuant to the Offer), it
would have sufficient voting power to effect the Merger even if no other
stockholders of the Company vote in favor of the Merger. If the Purchaser
acquires Shares representing at least 90% of the total combined voting power of
the Company pursuant to the Offer or otherwise (including pursuant to the Stock
Option Agreement described below) the Purchaser would be able to effect the
Merger pursuant to the "short-form" merger provisions of Section 253 of the
DGCL, without any action by any other stockholder of the Company. In such event,
the Purchaser intends to effect the Merger as promptly as practicable following
the purchase of Shares in the Offer. The Company and the Purchaser entered into
a Stock Option Agreement, dated as of July 17, 2001 (the "Stock Option
Agreement") pursuant to which the Purchaser is entitled to purchase Common
Shares, at a price of $0.36 per share, so that the Purchaser, following the
purchase of Shares under the Offer, shall then own Shares representing 90.1% of
the total combined voting power of the Company calculated on a fully-diluted
basis; provided that the maximum number of Common Shares which may be purchased
under the Stock Option Agreement shall not exceed an amount of Common Shares
which in the aggregate possess 10% of the total combined voting power of the
Company after giving effect to such exercise.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver of certain conditions, including the following: (a) the
holders of at least a majority of the total voting power of the Company shall
have approved the Merger
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Agreement at a meeting of the Company's Stockholders (the "Company Stockholders
Approval") and the stockholders of Parent have approved the Merger Agreement and
the transactions contemplated thereby (the "Parent Stockholders Approval"); (b)
any waiting period (and any extension thereof) applicable to the Merger under
the HSR Act shall have been terminated or shall have expired; (c) no court of
competent jurisdiction or other competent government, court, tribunal,
arbitrator, authority, agency, commission, stock exchange, self-regulatory
organization, official or other instrumentality of the United States, any
foreign country, supranational organization or any domestic or foreign state,
county, city or other political subdivision, including, without limitation, the
Commission, the Internal Revenue Service, the Commodities Futures Trading
Commission, the NASDR, the National Futures Association, the UK Listing
Authority or the Financial Services Authority (a "Governmental or Regulatory
Authority") shall have enacted, issued, promulgated, enforced or entered any law
or order (whether temporary, preliminary or permanent) which is then in effect
and has the effect of making illegal or otherwise restricting, preventing or
prohibiting consummation of the Merger (a "Restraint") or the other transactions
contemplated by this Agreement; (d) the Company shall have disposed of Xxxxxx
Xxxx without any liability to the Company and; (e) the Purchaser shall have
previously accepted for payment and paid for the Shares pursuant to the Offer.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be
terminated, and the Offer and the Merger may be abandoned, at any time prior to
the effective time of the Merger (the "Effective Time"):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (A) as of the result of the failure of any of the conditions
set forth under Section 14, the Offer shall have terminated or
expired in accordance with its terms without the Purchaser having
purchased any Shares pursuant to the Offer or (B) the Purchaser
shall not have accepted for payment any Shares pursuant to the
Offer prior to the Outside Date; provided, however, that this
right to terminate the Merger Agreement is not available to any
party whose failure to perform any of its obligations under the
Merger Agreement results in the failure of the Offer to be
consummated by such time;
(ii) if the Company Stockholders Approval is not obtained by reason of
the failure to obtain the requisite vote upon a vote held at a
meeting of such stockholders, or any adjournment thereof, called
therefor, provided that the Company shall have no right to
terminate the Merger Agreement if such failure is due to delay or
default on the part of the Company;
(iii) if there has been a material breach of any representation,
warranty, covenant or agreement set forth in the Merger
Agreement, on the part of the non-terminating party which breach
has not been cured within thirty (30) days following receipt by
the non-terminating party of notice of such breach from the
terminating party;
(iv) if any Restraint having any of the effects set forth in clause (c)
under "-- Conditions to the Merger" shall have become final and
nonappealable; or
(v) if the Parent Stockholders Approval shall not be obtained by
reason of the failure to obtain the requisite vote upon a vote
held at a meeting of such stockholders, or any adjournment
thereof, called therefor, unless such failure is due to delay or
default on the part of Parent.
(c) by the Company if the Board of Directors of the Company shall have
determined in good faith, based upon the advice of nationally recognized outside
legal counsel, that failure to terminate the Merger Agreement is reasonably
likely to result in the Board of Directors breaching its fiduciary duties to
stockholders under applicable law by reason of the pendency of an unsolicited,
bona fide proposal for a Superior Company Transaction (as defined below), but
only if the Company and its subsidiaries and other representatives of the
Company shall have complied with their obligations pursuant to the provisions
under "-- No Solicitation" below; provided, however, that this right to
terminate shall not apply unless 96 hours shall have elapsed after delivery to
Parent of a written notice of such determination by such Board of Directors;
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(d) by Parent:
(i) if the Board of Directors of the Company or any committee thereof
shall have (x) failed to recommend or withdrawn or modified in a
manner adverse to Parent its approval or recommendation of the
Merger Agreement and the Merger, (y) recommended or taken no
position with respect to a proposal for a Company Alternative
Transaction (as defined below) or (z) following the announcement
or making of a proposal for a Company Alternative Transaction,
failed to reconfirm its recommendation of the Merger Agreement and
the Merger within 96 hours following a written request for such
reconfirmation by Parent; or
(ii) there shall have occurred the entry by a court having
jurisdiction in the premises of (x) a decree or order for relief
in respect of the Company or any subsidiary in an involuntary
case or proceeding under any applicable federal or state or
foreign bankruptcy, insolvency, reorganization or other similar
law or (y) a decree or order adjudging the Company or any
subsidiary a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment
or composition of or in respect of the Company or any subsidiary
under any applicable federal or state or foreign law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any
subsidiary or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs; or
(iii) the liabilities of the Company and its subsidiaries (as
determined by Parent in accordance with the Company's
restructuring and downsizing plan contained in the Merger
Agreement and included as Schedule II to this Offer to Purchase)
exceed at any time the immediately available cash (which is not
reserved) of the Company and its subsidiaries.
NO SOLICITATION. Prior to the Effective Time, the Company agrees:
(i) that neither it nor any of its subsidiaries or other affiliates
shall, and they shall use their reasonable best efforts to cause
their respective representatives not to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including, without
limitation, any proposal or offer to the Company's stockholders) with
respect to a merger, consolidation or other business combination
including the Company or any of its subsidiaries or investments in
any of Synaptic Systems Limited, a company formed under the laws of
England and Wales, Stock Academy Limited, a company formed under the
laws of England and Wales (formerly GlobalNet Xxxxxx.xxx Limited),
and XxxxxxxxxXxxx.xxx Services Limited, a company formed under the
laws of England and Wales ("Investments"), or any acquisition or
similar transaction (including, without limitation, a tender or
exchange offer) involving the purchase of all or any significant
portion of the assets of the Company and its subsidiaries taken as a
whole or 15% or more of the outstanding Shares (any such transaction,
other than the transactions contemplated by the Merger Agreement,
being hereinafter referred to as a "Company Alternative
Transaction"), or engage in any negotiations concerning (v) provide
any confidential information or data to (w) have any discussions with
any person relating to, (x) enter into any contract agreement,
understanding or arrangement relating to, (y) consummate or (z)
otherwise facilitate any effort or attempt to make or implement, a
Company Alternative Transaction;
(ii) that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any person
with respect to any of the foregoing, and it will take the necessary
steps to inform such person with respect to any of the foregoing;
and
(iii) that it will notify Parent immediately if any such inquiries,
proposals or offers are received by, any such information is
requested from, or any such negotiations or discussions are sought
to be initiated or continued with it by any person.
However, the Company is not prohibited from furnishing information to or
entering into discussions or negotiations with any person with sufficient
financial resources to consummate the applicable proposed Company
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Alternative Transaction that makes a bona fide unsolicited written proposal not
subject to any financing condition for a Company Alternative Transaction if, and
only to the extent that:
(i) the Board of Directors of the Company concludes in good faith that
such proposal if consummated is reasonably likely to result in a
Superior Company Transaction (as defined below), and that such
Company Alternative Transaction is reasonably likely to be
consummated;
(ii) the Board of Directors of the Company, based upon the advice of
nationally recognized outside counsel, determines in good faith that
the failure to so act is reasonably likely to result in the Board of
Directors breaching its fiduciary duties to shareholders imposed by
law;
(iii) the Company shall have entered into a confidentiality agreement with
such person in customary form;
(iv) prior to furnishing such information to, or entering into discussions
or negotiations with, such person, the Company provides written
notice to Parent to the effect that it is furnishing information to,
or entering into discussions or negotiations with, such person, which
notice shall identify such person and the proposed terms of such
Company Alternative Transaction in reasonable detail; and
(v) the Company keeps Parent informed of the status and all material
information with respect to any such discussions or negotiations; and
provided; that the foregoing shall not (x) permit the Company to terminate the
Merger Agreement (except in accordance with the provisions of the Merger
Agreement described under "-- Termination of the Merger Agreement" above), (y)
permit the Company to enter into any agreement with respect to a Company
Alternative Transaction for so long as the Merger Agreement remains in effect
(other than a confidentiality agreement under the circumstances described
above), or (z) affect any other obligation of the Company under the Merger
Agreement.
The Company is also not prevented from complying, to the extent required,
with Rule 14e-2 under the Exchange Act with regard to any proposal relating to a
Company Alternative Transaction.
"Superior Company Transaction" is defined in the Merger Agreement to mean
any Company Alternative Transaction which:
(i) relates to 50% of the outstanding Shares or all or substantially all
of its and its subsidiaries' assets taken as a whole;
(ii) is not conditioned on the receipt of financing;
(iii) is made by a person who the Board of Directors of the Company has
reasonably concluded in good faith will have adequate financial
resources to, and will not encounter significant regulatory
obstacles in order to, consummate such Company Alternative
Transaction; and
(iv) is on terms that the Board of Directors of the Company determines in
its good faith judgment, taking into account all relevant factors,
(including the advice of a financial advisor of nationally-recognized
reputation and all the terms and conditions of the Company
Alternative Transaction, including any break-up fees, expense
reimbursement provisions and conditions to consummation) are more
favorable and provide greater value to all of the Company's
stockholders than the Merger Agreement and the Merger taken as a
whole.
The Merger Agreement provides that the Company will advise Parent
immediately that a Superior Company Transaction or a Company Alternative
Transaction is received. Prior to furnishing such information to, or entering
into discussions or negotiations with, such person, the Company must provide
written notice to Parent to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person, which notice shall
identify such person and the proposed terms of such Company Alternative
Transaction in reasonable detail, and that the Company will keep Parent informed
of the status and all material information with respect to any such discussions
or negotiations.
FEES AND EXPENSES. On June 15, 2001, pursuant to the Merger Agreement, the
Company paid to Parent an arrangement and structuring fee, as compensation for
financial, structuring and general advisory services
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rendered by Parent and its affiliates prior to the Merger Agreement, of
1,370,332 shares in EO plc. At the election of Parent the Company has agreed to
transfer 6,692,321 ordinary shares of Parent in exchange for the EO shares.
Except as described above, all fees and expenses incurred in connection
with the preparation, execution and performance of the merger agreement and the
consummation of the merger will be paid by the party incurring such fees and
expenses.
TERMINATION FEE. If the Merger Agreement is terminated by Parent or the
Company:
(i) by mutual written agreement of the parties;
(ii) due to a material breach of a representation, warranty covenant or
agreement which has not been cured for 30 days;
(iii) as a result of a Governmental of Regulatory Authority having issued
an order making illegal or otherwise restricting, preventing or
prohibiting the Merger and such order shall have become final and
non-appealable;
(iv) because Parent Stockholders Approval shall not have been obtained,
unless such is due to delay or default of the Parent; or
(v) due to the existence of a Deficit Condition in an amount less than $2
million,
and in each case the Company shall not have breached any representation,
warranty or covenant in the Merger Agreement then, Parent has agreed to pay the
Company a termination fee equal to, at Parent's election, either (a) 1,370,333
shares of EO plc or (b) 6,692,321 ordinary shares of Parent.
Further, if in the absence of any public announcement of a proposal for a
Company Alternative Transaction either Parent or the Company shall have
terminated the Merger Agreement pursuant to the provisions described in either
clause (b)(i) or (b)(ii) under "-- Termination of the Merger Agreement" and,
within two (2) months after any termination described above, the Company or any
of its subsidiaries shall not either have entered into a binding agreement
providing for the consummation of, or have consummated a Company Alternative
Transaction, then, in any of such cases, the Parent shall pay the Company a
termination fee equal to at Parent's election, either (a) 1,370,333 shares of EO
plc or (b) 6,692,321 ordinary shares of Parent.
In the event the Merger Agreement is terminated, no provision of the Merger
Agreement survives, except for the provisions relating to termination, brokers'
expenses, liabilities relating to pre-termination breaches and miscellaneous
provisions of general application.
CONDUCT OF BUSINESS. The Merger Agreement provides that, except as
expressly contemplated or permitted by the agreement, or to the extent that
Parent shall otherwise previously consent in writing, at all times from and
after the date of the Merger Agreement until the Effective Time, the Company and
each of its subsidiaries shall conduct their respective businesses only in, and
none of the Company, and such subsidiaries shall take any action except in, the
ordinary course consistent with past practice.
Without limiting the generality of the foregoing, (a) the Company and its
subsidiaries shall comply in all material respects with all laws and orders of
all Governmental or Regulatory Authorities applicable to them, (b) the Company
shall continue to pursue and implement the restructuring and downsizing plan
attached as Schedule II to this Offer to Purchase, and (c) the Company shall
not, nor shall it permit any of its subsidiaries to, except as approved by
Parent in writing, such consent not to be unreasonably withheld or delayed, or
as otherwise expressly provided for in the Merger Agreement, or as required, at
Parent's request, to cancel outstanding employee stock options:
(i) amend or propose to amend its certificate or articles of
incorporation or bylaws (or other comparable corporate charter
documents);
(ii) (w) declare, set aside or pay any dividends on or make other
distributions in respect of any of its capital stock (x) split,
combine, reclassify or take similar action with respect to any of
its capital stock or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, (y) adopt a plan of complete or
partial liquidation or
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resolutions providing for or authorizing such liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization or (z) directly or indirectly redeem, repurchase or
otherwise acquire any shares of its capital stock or any option with
respect thereto;
(iii) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any option
with respect thereto (other than (y) the issuance of Common Shares
pursuant to options outstanding on the date of the Merger Agreement
and in accordance with their present terms, and (z) the issuance by
a wholly-owned subsidiary of its capital stock to its parent
corporation or to another wholly-owned subsidiary of its parent
corporation);
(iv) modify or amend any right of any holder of outstanding shares of
capital stock or options with respect thereto;
(v) acquire (by merging or consolidating with, or by purchasing any
equity interest in or assets (with a fair market value of $10,000
individually or in the aggregate) of, or by any other manner) any
business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or
agree to acquire any such assets;
(vi) sell, lease, grant any security interest in or otherwise dispose of
or encumber any of its material assets or properties or any shares of
capital stock or equity or other interests in any subsidiaries or
investments;
(vii) except to the extent required by applicable law, (x) permit any
material change in (A) any pricing, marketing, purchasing,
investment, accounting, financial reporting, inventory, credit,
allowance or tax practice or policy or (B) any method of calculating
any bad debt, contingency or other reserve for accounting, financial
reporting or tax purposes, or (y) make any material tax election or
settle or compromise any material income tax liability with any
Governmental or Regulatory Authority;
(viii) (x) incur (which shall be deemed to include entering into credit
agreements, lines of credit or similar arrangements until borrowings
are made under such arrangements) any indebtedness for borrowed
money or guarantee any such indebtedness or (y) voluntarily
purchase, cancel, prepay or otherwise provide for a complete or
partial discharge in advance of a scheduled repayment date with
respect to, or waive any right under, any indebtedness for borrowed
money other than in the ordinary course of its business consistent
with past practice;
(ix) enter into, adopt, amend in any material respect (except as may be
required by applicable law) or terminate any Company plan or, as the
case may be, or other agreement, arrangement, plan or policy between
such party or one of its subsidiaries and one or more of its
directors, officers or employees, or, increase in any manner the
compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any agreement, arrangement, plan
or policy in effect as of the date hereof;
(x) enter into any note, bond, mortgage, security agreement, indenture,
license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind (a "Contract") or
amend or modify any existing Contract, or engage in any new
transaction with (a) any person not an affiliate of the Company which
such Contract obligates the Company to expend $5,000 or more
individually or $15,000 in the aggregate and (b) any affiliate of the
Company or any of its subsidiaries;
(xi) make any capital expenditures or commitments for additions to plant,
property or equipment constituting capital assets;
(xii) make any material change in the lines of business in which it
participates or is engaged other than pursuant to the restructuring
and downsizing plan attached as Schedule II to this Offer to
Purchase; or
(xiii) enter into any Contract, commitment or arrangement to do or engage
in any of the foregoing.
The Merger Agreement was amended to permit the Company to enter into the
Rights Agreement. The Merger Agreement provides that, for so long as the Merger
Agreement remains in effect, the Company may not amend the Rights Agreement
without the prior written consent of Parent.
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REGULATORY AND OTHER APPROVALS. Subject to the terms and conditions of the
Merger Agreement, each of the Company and Parent will proceed diligently and in
good faith to, as promptly as practicable to:
(i) obtain all consents, approvals or actions of, make all filings with
and give all notices to Governmental or Regulatory Authorities or any
other public or private third parties required of Parent, the Company
or any of their subsidiaries to consummate the Merger and the other
matters contemplated hereby; and
(ii) provide such other information and communications to such
Governmental or Regulatory Authorities or other public or private
third parties as the other party or such Governmental or Regulatory
Authorities or other public or private third parties may request in
connection therewith. In addition to and not in limitation of the
foregoing, each of the parties, as applicable, will (x) take
promptly all actions necessary to make any filings required of
Parent and the Company or their affiliates under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
("HSR Act"), (y) comply at the earliest practicable date with any
request for additional information received by such party or its
affiliates from the Federal Trade Commission (the "FTC") or the
Antitrust Division of the Department of Justice (the "Antitrust
Division") pursuant to the HSR Act, and (z) cooperate with the other
party in connection with such party's filings under the HSR Act and
in connection with resolving any investigation or other inquiry
concerning the Merger or the other matters contemplated by the
Merger Agreement commenced by either the FTC or the Antitrust
Division or state attorneys general; provided, however, that nothing
in the Merger Agreement shall obligate Parent to agree to hold
separate, sell or otherwise dispose of any subsidiary or Investment
of Parent or of the Company or any assets or properties thereof.
STOCK OPTIONS. At the effective time of the Merger, each outstanding
option to purchase shares of the Company's common stock under the Company stock
option plan will be terminated; provided however that any holder of such options
will have the right immediately prior to the Merger to exercise such option, in
whole or in part, whether or not applicable vesting requirements have been
satisfied. Each option, warrant or right to acquire securities of the Company if
unexercised following the Merger shall cease to represent a right to acquire
securities of the Company.
DIRECTOR AND OFFICER INSURANCE AND INDEMNIFICATION. Until the fifth
anniversary of the Effective Time and for so long thereafter as any claim for
indemnification asserted on or prior to such date has not been fully
adjudicated, the Surviving Corporation and Parent shall indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, a director or officer of the
Company or any of its subsidiaries (the "Indemnified Parties") against:
(i) all losses, claims, damages, costs and expenses (including reasonable
attorneys' fees), liabilities, judgments and settlement amounts that
are paid or incurred in connection with any claim, action, suit,
proceeding or investigation (whether civil, criminal, administrative
or investigative and whether asserted or claimed prior to, at or
after the Effective Time) that is based on, or arises out of, the
fact that such Indemnified Party is or was a director or officer of
the Company or any of its subsidiaries and relates to or arises out
of any action or omission occurring at or prior to the Effective Time
("Indemnified Liabilities"); and
(ii) all Indemnified Liabilities based on, or arising out of, or
pertaining to the Merger Agreement or the transactions contemplated
by the Merger Agreement, in each case to the full extent a
corporation is permitted under applicable law to indemnify its own
directors or officers, as the case may be; provided that the
Surviving Corporation and Parent shall not be liable for any
settlement of any claim effected without its written consent, which
consent shall not be unreasonably withheld; and provided, further,
that the Surviving Corporation and Parent shall not be liable for
any Indemnified Liabilities which occur as a result of the gross
negligence or willful misconduct of any Indemnified Party.
Subject to the provisions of the Merger Agreement, the Company will pay an
Indemnified Party's expenses in advance of the final disposition provided that
the claiming party provides an undertaking to repay such advanced expenses
should it be determined that such person is not entitled to such
indemnification, and retains counsel reasonably satisfactory to the Company. The
Company shall use all commercially reasonable efforts to
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assist in the defense of any such matter. The liability and obligation of Parent
to provide such indemnification is limited to the realizable net value upon
disposition (as determined by an actual transaction or by an independent
accountant selected by Parent) of any asset transferred from the Company or a
subsidiary of the Company to Parent or any of its subsidiaries or to any third
party if the consideration therefore is received by or transferred to Parent or
any of its subsidiaries, subsequent to the Merger. For five years after the
Effective Time of the Merger, Parent will maintain in effect the policies of
directors' and officers' liability insurance maintained by the Company provided
that Parent and the Company are not obligated to spend more than 150% of the
insurance premiums paid by the Company for such directors' and officers'
liability insurance following the second anniversary of the Merger.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties, including representations relating to
corporate existence and power; subsidiaries; capitalization; corporate
authorizations; government authorizations; Commission filings; absence of
undisclosed liabilities; accuracy of certain disclosures; absence of certain
changes; litigation; compliance with laws; environmental matters; employment
matters; ERISA compliance; taxes; stockholder voting requirements; state
takeover statutes; opinion of the Company's financial advisor; intellectual
property; contracts; assets; insurance; affiliate arrangements; vote required
for approval of the Merger; ownership of Parent equity; bankruptcy; internal
controls; Investment Company Act; and NASD matters.
Certain representations and warranties in the Merger Agreement made by the
Company and Parent are qualified by concepts of "material," "materially
adverse," and "material adverse effect," which are defined to mean any event,
change or effect that is material or materially adverse, as the case may be, to
the business, assets, liabilities, condition (financial or otherwise), results
of operations of such entity (or of such group of entities taken as a whole),
provided, that, in the case of the Company and its subsidiaries, any event,
change or effect that is reasonably likely to have a material adverse effect on
the Company's or its subsidiaries' ownership of, or exercise of ownership rights
in, any Investment shall be a "material adverse effect"; provided, further, that
in no event shall actions, in and of themselves, taken pursuant to or in
furtherance of the restructuring and downsizing plan attached as Schedule II to
this Offer to Purchase shall be deemed to constitute a "material adverse effect"
in the case of the Company and its subsidiaries.
AMENDMENT, EXTENSION AND WAIVER. The respective boards of Parent, the
Company and Purchaser may amend the Merger Agreement by written agreement at any
time prior to, or after, stockholder approval of the Merger Agreement, but after
such adoption and approval, only to the extent permitted by applicable law. At
any time prior to the Effective Time of the Merger, to the extent legally
allowed, Parent, the Company and Purchaser may:
(i) extend the time for performance of any of the obligations or other
acts of the other parties to the Merger Agreement;
(ii) waive any inaccuracies in the representations and warranties
contained in the Merger Agreement or in any document delivered in
connection with the Merger Agreement; and
(iii) waive compliance with any of the agreements or conditions contained
in the Merger Agreement.
Extensions or waivers must be in writing and signed by the party granting
the extension or waiver.
The foregoing summary of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, a copy of which is filed as Exhibit (d)(1)
to the Schedule TO. The Merger Agreement should be read in its entirety for a
more complete description of the matters summarized above.
SEVERANCE ARRANGEMENTS. GlobalNet has provision for severance with 5
executives. The Merger Agreement triggered the change of control provisions in
three executives' severance agreement. Pursuant to these agreements, Mr. X.
Xxxxxx Xxxxxxx and Xx. Xxx X. Xxxxxx were each paid an amount of $750,000 and
Mr. Xxxxxxx Xxxxx was paid an amount of $405,000.
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ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation. The GlobalNet Board, at a meeting held on June 15,
2001, (i) adopted, approved and declared advisable the Merger Agreement and
approved the transactions contemplated thereby, including the Merger, (ii)
determined that the Merger was fair to, and in the best interests of, the
holders of Shares and determined to recommend that holders of Shares approve and
adopt the Merger Agreement. At a Board meeting held on July 17, 2001, the Board
(iii) adopted, approved and declared advisable the amendment to the Merger
Agreement and approved the transactions contemplated thereby, including the
Offer, (iv) determined that the Offer was fair to, and in the best interests of,
holders of Shares, and (v) determined to recommend that holders of Shares accept
the Offer and tender their Shares pursuant to the Offer and approve and adopt
the Merger Agreement, as amended. THE BOARD RECOMMENDS THE ACCEPTANCE OF THE
OFFER BY THE STOCKHOLDERS OF GLOBALNET. See "-- Reasons for the Recommendation"
for a discussion of the factors considered by the Board in making its
recommendation. A copy of a letter to stockholders communicating the Board's
recommendation is filed as Exhibit 2 hereto and is incorporated herein by
reference.
(b) Background to the Offer; Reasons for the Recommendation.
During the Spring of 2001, GlobalNet contacted several entities to
determine whether there was any interest on the part of these entities in
pursuing a business combination with GlobalNet. These contacts were initiated by
GlobalNet management, at the direction of the GlobalNet Board, in light of the
continuing difficult market conditions in GlobalNet's lines of business and
GlobalNet's worsening cash position. Xxxxxxx Xxxxxxxxx, Chief Executive Officer
of SPARK and, at that time, a member of GlobalNet's Board, was one of the
persons contacted.
In May 2001, Xx. Xxxxxxxxx met with the other members of the GlobalNet
Board to propose a possible business combination between GlobalNet and SPARK.
Xx. Xxxxxxxxx, acting in his capacity as Chief Executive Officer of SPARK,
outlined the proposal to the GlobalNet Board. After Xx. Xxxxxxxxx delivered the
proposal, the meeting between Xx. Xxxxxxxxx and the GlobalNet Board ended.
On May 25, 2001, Xxxx Xxxxxx, director of SPARK, sent a letter to the
GlobalNet Board confirming SPARK's interest in commencing negotiations to enter
into a merger agreement with GlobalNet. Xx. Xxxxxx'x letter set forth, in broad
terms, certain proposed parameters of a transaction.
On May 31, 2001, the GlobalNet Board convened to discuss the terms of the
proposal set forth in Xx. Xxxxxx'x letter of May 25, 2001. After discussion
among the GlobalNet Board members, it was determined that GlobalNet would make a
counterproposal to SPARK.
On May 31, 2001, GlobalNet and SPARK entered into a confidentiality
agreement relating to the discussions among their management and advisors.
On June 1, 2001, X. Xxxxxx Xxxxxxx, on behalf of the GlobalNet Board, sent
a letter to Xx. Xxxxxx outlining GlobalNet's position regarding certain terms
relating to a proposed business combination.
On June 11, 2001, GlobalNet's Board, with the exception of Xx. Xxxxxxxxx,
convened to discuss the SPARK proposal as well as the two alternative proposals.
Xx. Xxxxxxx and Xxxxxxx, Tweed, Xxxxxx & XxXxxx, LLP, GlobalNet's legal counsel,
informed the GlobalNet Board of the terms of each proposal and answered various
questions from the Board about each proposal. Extensive discussions by the
GlobalNet Board members then followed regarding the strengths and weaknesses of
each offer. Following these discussions, GlobalNet's Board determined to pursue
negotiations with SPARK and authorized management to enter into negotiations
with SPARK.
On June 11, 2001, GlobalNet received a first draft of a proposed merger
agreement from SPARK. GlobalNet discussed this first draft with its legal
counsel. On June 12, 2001, after further discussions between GlobalNet and its
legal counsel, GlobalNet and its legal advisors conducted a conference call with
SPARK and its legal counsel to discuss certain issues relating to SPARK's draft
merger agreement.
On June 12, 2001, an informal conference call of GlobalNet's Board was
convened during which Xx. Xxxxxxx and GlobalNet's legal counsel updated the
members of GlobalNet's Board on the status of negotiations with SPARK.
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Between June 12 and June 14, 2001, GlobalNet, SPARK and their respective
advisors met in person and by telephone to discuss and negotiate changes to the
proposed terms of the acquisition. In particular, the parties discussed issues
including but not limited to, representations, warranties and covenants made by
GlobalNet as well as an appropriate termination fee arrangement. Xx. Xxxxxxxxx
resigned from the GlobalNet Board and Xx. Xxxxxxx resigned from the SPARK Board
on June 14, 2001.
On the morning of June 15, 2001, the GlobalNet Board participated in a
telephonic special meeting at which it considered the proposed financial terms
and conditions of the Merger Agreement. At that meeting, representatives of
Milbank Tweed reviewed the directors' fiduciary duties in considering the
proposed transaction with SPARK, and reviewed the principal terms and conditions
of the proposed Merger Agreement. Xxxxxxxx Xxxxx Xxxxxx & Xxxxx, ("Xxxxxxxx")
financial advisor to GlobalNet, discussed certain financial valuation matters
and provided its opinion to the Board that, as of the date of such opinion and
subject to the assumptions made, matters considered and limitations on the
review undertaken set forth in its written opinion, the consideration to be
received by the GlobalNet stockholders in the Merger was fair, from a financial
point of view, to such holders. The Board then discussed the information it had
received at this and other Board meetings, the drafts of the various documents
reviewed at the meeting and further discussed the terms and conditions of the
proposed business combination, the scope and history of negotiations between the
parties and the other matters described below under "Reasons for the
Recommendation." The Board then determined that the Merger Agreement was fair
to, and in the best interests of, the GlobalNet stockholders, unanimously
adopted, approved and declared advisable the Merger Agreement, the Merger, the
other transactions contemplated by the Merger Agreement and resolved to
recommend that the stockholders of GlobalNet approve the Merger Agreement.
On June 15, 2001, SPARK and GlobalNet issued a joint press release
announcing the merger.
The Merger Agreement approved by the Board at the June 15, 2001 meeting
called for the merger of Acquisitions with and into GlobalNet with each
outstanding share of GlobalNet Common Stock being exchanged for 1.88 SPARK
ordinary shares (.188 SPARK ordinary shares for each outstanding share of
GlobalNet Class A Common Stock), having a value, based upon the closing
mid-market price of SPARK's ordinary shares on AIM on June 14, 2001, of $.55 per
share of GlobalNet Common Stock ($.055 per share of GlobalNet Class A Common
Stock).
At a meeting held on July 11, 2001, the GlobalNet Board adopted a
Shareholder Rights Plan in response to public statements made by a Xx. Xxxxxxxxx
Xxxxxx and certain entities affiliated with Xx. Xxxxxx to the effect that he is
seeking to obtain "a controlling stake" in GlobalNet. On July 9, 2001 Xx. Xxxxxx
and his affiliated entities filed a Schedule 13D with the Securities and
Exchange Commission in which they purport to own, or have the right to acquire,
2,774,201 shares of GlobalNet Common Stock. The Board is not currently aware of
any specific offer by Xx. Xxxxxx or his affiliates to acquire a controlling
stake in GlobalNet. The Shareholder Rights Plan is designed to enhance the
Board's ability to protect shareholders against, among other things, unsolicited
attempts to acquire control of GlobalNet that do not offer an adequate price to
all shareholders or are otherwise not in the best interests of GlobalNet and its
shareholders.
On July 12, 2001, Xx. Xxxxxx contacted Xx. Xxxxxxx about possibly changing
the consideration to be offered in the Merger. Xx. Xxxxxx proposed a cash
transaction pursuant to which SPARK would offer $.36 per share for the Common
Stock and $.036 per share for the Class A Common Stock. Based upon the closing
price of the SPARK ordinary shares on July 11, 2001, the exchange ratio of 1.88
SPARK ordinary shares for each share of GlobalNet Common Stock (.188 SPARK
ordinary shares for each share of GlobalNet Class A Common Stock) called for by
the Merger Agreement indicated a value of approximately $.40 per share of
GlobalNet Common Stock ($.04 per share of GlobalNet Class A Common Stock).
On July 13, 2001, counsel to SPARK provided a draft amendment to the Merger
Agreement. In addition, counsel to SPARK provided a draft option agreement
pursuant to which Acquisitions would be entitled, following the purchase of
Shares pursuant to the Offer, to purchase up to 10% of the Common Shares
outstanding immediately after such purchase so that together with the shares of
Common Stock beneficially owned by Acquisitions, Acquisitions would beneficially
own 90.1% of the outstanding shares of Common Stock. Between July 12, 2001, and
July 16, 2001, representatives of SPARK, GlobalNet and their respective legal
advisors
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negotiated the provisions of the proposed amendment and option agreement,
including the obligation of SPARK and Acquisitions to make the Offer.
On the morning of July 17, 2001, three of the four members of the GlobalNet
Board (the fourth member, Xx. X. Xxxxxxx, was unavailable due to prior business
commitments) participated in a telephonic special meeting at which it considered
the proposed financial terms and conditions of the Offer and the amendment to
the Merger Agreement and the Option Agreement. At that meeting, Xxxxxxx Tweed
again reviewed the directors' fiduciary duties in considering the proposed
transaction and reviewed the principal terms and conditions of the proposed
transaction, including the principal terms and conditions of the proposed
amendment to the Merger Agreement and the Option Agreement. Houlihan further
updated and advised the Board on financial valuation matters and provided its
opinion to the Board that, as of the date of such opinion and subject to the
assumptions made, matters considered and limitations on the review undertaken
set forth in its written opinion, the $.36 in cash per share of Common Stock
($.036 per Class A Share) to be received by the stockholders in the Offer and
the Merger was fair, from a financial point of view, to such holders. The Board
then discussed the information it had received at this and other Board meetings,
the drafts of the various documents reviewed at the meeting and further
discussed the terms and conditions of the proposed transaction, the scope and
history of negotiations and the other matters described below under "Reasons for
the Recommendation." The Board then determined that the Offer and amendment to
the Merger Agreement were fair to, and in the best interests of the
stockholders, and the Board adopted, approved and declared advisable the
amendment to the Merger Agreement, the Offer, the Merger, the other transactions
contemplated by the Merger Agreement and resolved to recommend that the
stockholders of GlobalNet tender their Shares in the Offer. Although Xx. Xxxxxxx
did not attend this Board meeting, in previous and subsequent conversations with
Xx. Xxxxxxx, Xx. Xxxxxxx indicated his agreement with the actions taken by the
Board at the meeting.
Later on July 17, 2001, the amendment to the Merger Agreement and the
Option Agreement were executed by SPARK, Acquisitions and GlobalNet. On July 18,
2001, SPARK and GlobalNet issued a joint press release announcing the
transaction. On July 25, 2001, Acquisitions commenced the Offer. During the
Offer, SPARK and Acquisitions intend to have ongoing contacts with GlobalNet and
its directors, officers and stockholders.
(1) Reasons for the Recommendation. In making the determination and
recommendation described above with respect to the Merger Agreement and the
Merger the Board carefully considered a number of factors, including, without
limitation, the following:
-- the terms and conditions of the Merger Agreement;
-- the financial condition, results of operations, business and prospects
of GlobalNet;
-- the trading history of the Shares since GlobalNet's public offering in
December, 1999, and a comparison of that trading history with the stock
trading histories of other companies in the electronic financial
information and services industry and stock market indices that were
deemed relevant;
-- a comparison of the financial terms of the Merger with the financial
terms of certain other transactions in the electronic financial
information and services industry that were deemed relevant;
-- the current and prospective conditions and trends in the business
sectors in which GlobalNet competes and anticipated effects of those
conditions and trends on GlobalNet and its stockholders;
-- the likelihood of the consummation of the Merger and the conditions to
the consummation of the Merger;
-- the tax impact on GlobalNet's stockholders from their exchange of Shares
pursuant to the Merger;
-- the availability of, and the comparative risks and benefits to
GlobalNet's stockholders from, pursuing, other strategic alternatives to
maximize stockholder value;
-- the fact that the Merger Agreement, although prohibiting GlobalNet from
soliciting or engaging in negotiations concerning any Acquisition
Proposal, permits GlobalNet to furnish information concerning its
business and enter into discussions or negotiations with any third party
in response to a written Superior Proposal, as that term is defined in
the Merger Agreement;
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-- the Board's belief that, due to the collapse of the on-line financial
transaction market, GlobalNet's cost structure is out of line with its
expected revenues for the foreseeable future;
-- the fact that the Company's available cash is not sufficient to continue
to fund operations at historic levels;
-- the Board's belief that if GlobalNet simply carried out the
restructuring and wind-down of its operations as planned, given the time
required to implement it, most if not all of the Company's available
cash would be depleted, and the cash burn rate thereafter would only be
mitigated, not eliminated, resulting in GlobalNet running out of cash at
some point in the third quarter of 2001;
-- the Board's belief that, in a liquidation, GlobalNet would be required
to incur the same, if not greater, costs associated with shutting its
operations as called for in its current restructuring plan and that the
ability to conduct an orderly liquidation presumed that GlobalNet would
be in existence long enough to complete the liquidation; and
-- the fact that a large majority of GlobalNet's non-operational assets
consist of minority investments in other companies, substantially all of
which are "dot-com" companies with limited revenues and profits, if any;
that there is no public market for many of these investments; and that
the realizable value of these investments in the current economic
environment is likely to be substantially lower than their stated book
value, assuming a buyer could be found;
In making the determinations described above with respect to the amendment
to the Merger Agreement, the Offer and the transactions contemplated thereby,
the Board carefully considered the factors listed above, and a number of other
factors including, without limitation, the following:
-- the terms and conditions of the Offer and the timing and likelihood of
closing under the Offer;
-- the written opinion of Xxxxxxxx to the Board, dated as of July 17, 2001,
that, as of the date of the opinion, the $.36 and $.036 per share cash
consideration to be received by the holders of Shares in the Offer and
the Merger was fair, from a financial point of view, to such holders;
the full text of Houlihan's written opinion which sets forth the
assumptions made, matters considered and limitations on the review
undertaken is filed as Annex A hereto and is incorporated herein by
reference. Houlihan's opinion is addressed only to the Board, relates
only to the fairness, from a financial point of view, of the $.36 and
$.036 per share cash consideration, and does not constitute a
recommendation to any stockholder as to whether or not such stockholder
should tender shares in the Offer, how to vote with respect to the
Merger Agreement or as to any other matters relating to the Offer or the
Merger. STOCKHOLDERS ARE URGED TO READ THE OPINION OF HOULIHAN CAREFULLY
AND IN ITS ENTIRETY;
-- the representation of SPARK that it will have sufficient funds to
consummate the Offer and the Merger and the fact that the Offer is not
subject to a financing condition;
-- the fact that the Offer was for cash consideration rather than SPARK
ordinary shares, the value of which had continued to decline since
announcement of the transaction and remained subject to market
volatility;
-- the fact that a majority of GlobalNet stockholders are U.S. persons or
entities and the Board's belief that cash consideration would be
preferable to SPARK ordinary shares, which are listed and traded only on
the AIM market in London;
-- the Board's belief that the Offer can be consummated, and consideration
received by GlobalNet stockholders who tender their shares, in
approximately one month after commencement of the Offer, versus a three
to four month period before a share exchange transaction could be
consummated; and
-- the Board's belief that the Offer and the Merger with SPARK represents
the best alternative available to GlobalNet and its stockholders.
The foregoing discussion of the information and factors considered by the
Board is not intended to be exhaustive but includes material factors considered
by the Board in approving the Merger Agreement, the Offer,
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the Merger and the transactions contemplated thereby and in recommending that
stockholders of GlobalNet tender their Shares pursuant to the Offer. The Board
did not find it practicable to and did not quantify or otherwise assign relative
weights to the specific factors considered. In addition, individual members of
the Board may have given different weights to different factors.
(c) Intent to Tender. After reasonable inquiry, to the best of
GlobalNet's knowledge, each executive officer, director, affiliate and
subsidiary of GlobalNet currently intends, subject to compliance with applicable
law, including Section 16(b) of the Securities and Exchange Act of 1934, as
amended, to tender all Shares held of record or beneficially owned by such
person or entity to SPARK in the Offer.
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
GlobalNet has retained Houlihan to act as its exclusive financial advisor
in connection with the Offer and the Merger. Pursuant to the terms of this
engagement, GlobalNet has agreed to pay Houlihan for its financial advisory
services an aggregate fee of approximately $250,000, earned upon execution of
the Merger Agreement. GlobalNet has also agreed to reimburse Houlihan for
reasonable expenses incurred by Houlihan in performing its services, including
reasonable legal fees and expenses, and to indemnify Xxxxxxxx and related
parties against certain liabilities, including liabilities under the federal
securities laws, relating to or arising out of its engagement. In the ordinary
course of business, Xxxxxxxx and its successors and affiliates may actively
trade or hold the securities of GlobalNet and SPARK for their own accounts or
for the accounts of customers and, accordingly, may at any time hold a long or
short position in such securities.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
No transaction in the Shares has been effected during the past 60 days by
GlobalNet or, to the knowledge of GlobalNet, any of its executive officers,
directors, affiliates or subsidiaries.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(a) Except as set forth in this Statement, GlobalNet is not currently
undertaking or engaged in any negotiations in response to the Offer that relates
to (i) a tender offer or other acquisition of GlobalNet's securities by
GlobalNet, any subsidiary of GlobalNet or any other person; (ii) an
extraordinary transaction, such as a merger, reorganization or liquidation,
involving GlobalNet or any subsidiary of GlobalNet; (iii) a purchase, sale or
transfer of a material amount of assets of GlobalNet or any subsidiary of
GlobalNet; or (iv) any material change in the present dividend rate or policy,
or indebtedness or capitalization of GlobalNet.
(b) Except as set forth in this Statement, there are no transactions,
resolutions of the Board, agreements in principle, or signed contracts in
response to the Offer that relate to one or more of the events referred to in
the preceding paragraph.
ITEM 8. ADDITIONAL INFORMATION.
(a) Delaware General Corporation Law. As a Delaware corporation,
GlobalNet is subject to Section 203 of the DGCL (the "Delaware Takeover
Statute"). In general, the Delaware Takeover Statute prevents an "Interested
Stockholder" (generally defined as a person who beneficially owns 15% or more of
GlobalNet's outstanding voting stock or who is an affiliate or associate of
GlobalNet and has owned 15% or more of the outstanding voting stock of GlobalNet
at any time within the 3-year period immediately prior to becoming an Interested
Stockholder) from engaging in certain business combinations, including a merger,
with GlobalNet for a period of three years following the time such person became
an Interested Stockholder, unless, among other exceptions, before the time such
person became an Interested Stockholder, the Board either approved the business
combination or the transaction in which such person became an Interested
Stockholder. Accordingly, the Board approved the Merger Agreement, as described
in Item 4 above and, therefore, the restrictions of the Delaware Takeover
Statute are inapplicable to the Merger and the transactions contemplated under
the Merger Agreement.
Under the DGCL, if Acquisitions acquires, pursuant to the Offer or
otherwise, at least 90% of the Shares, Acquisitions will be able to effect the
Merger after consummation of the Offer without a vote of GlobalNet's
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stockholders. However, if Acquisitions acquires 80% or more of the Shares
pursuant to the Offer or otherwise the Stock Option Agreement would allow
Acquisitions to acquire additional Common Shares up to 10% of the Common Shares
to bring Acquisitions' holdings above 90% of the Common Shares enabling
Acquisitions to effect the consummation of the Merger without a vote of
GlobalNet's remaining stockholders. Therefore, if Acquisitions does not acquire
at least 80.1% of the Shares pursuant to the Offer or otherwise and a vote of
GlobalNet's stockholders is required under Delaware law, a significantly longer
period of time will be required to effect the Merger.
(b) Confidentiality Agreement. SPARK has agreed, pursuant to a
Confidentiality Agreement, dated May 31, 2001, with GlobalNet, that it will keep
confidential all information concerning GlobalNet and its subsidiaries that
SPARK obtained in connection with its discussions with GlobalNet regarding
possible negotiated business arrangements.
(c) The Rights Agreement. Each Common Right issued pursuant to the Rights
Agreement entitles the registered holder thereof to purchase under some
circumstances one one-hundredth of a share of Series A Junior Preferred Stock at
an exercise price of $.75 per one one-hundredth of a share of Series A Junior
Preferred Stock, and each Class A Right issued pursuant to the Rights Agreement
entitles the registered Holder thereof to purchase one one-thousandth of a share
of Series B Junior Preferred Stock at an exercise price of $.075 per one
one-thousandth of a share of Series B Junior Preferred Stock, subject to
adjustment. Generally, the Rights become exercisable 10 days after the earlier
of (i) the first public announcement that a person or group (an "Acquiring
Person") has acquired beneficial ownership of 15% or more of the outstanding
Shares or (ii) the commencement of a tender offer or exchange offer the
consummation of which would result in that person becoming the beneficial owner
of 15% or more of the Shares (the earlier of such dates being the "Distribution
Date"). After any person becomes an Acquiring Person, each holder of each of the
Rights (other than the Acquiring Person) will thereafter have the right to
receive, in lieu of one one-hundredth of a share of Series A Junior Preferred
Stock and one one-thousandth of a share of Series B Junior Preferred Stock, such
number of Shares as shall equal the result obtained by multiplying an amount
equal to the then current purchase price by an amount equal to the number of one
one-hundredths of a share of Series A Junior Preferred Stock and one one-
thousandth of a share of Series B Junior Preferred Stock for which the Rights
were or would have been exercisable immediately prior to the first occurrence of
any such event whether or not the Rights were then exercisable, and dividing
that product by 50% of the current market price per Share determined as of the
date of such first occurrence. Upon the vote of the Board, the Rights may be
redeemed at a price of $.01 per Right at any time prior to July 11, 2011 or the
close of business on the 10th business day following the first date of public
announcement by GlobalNet or an Acquiring Person that an Acquiring Person has
become such.
The Rights Agreement provides, among other things that, (i) neither SPARK,
Acquisitions nor any of their respective Affiliates or Associates shall become
an Acquiring Person, either individually or collectively, (ii) no Distribution
Date, Stock Acquisition Date or Triggering Event (each, as defined in the Rights
Agreement) shall occur, (iii) no Rights shall separate from the Shares or
otherwise become exercisable, (iv) no holder of Rights or any other Person shall
have any legal or equitable rights, remedy or claim under this Agreement, and
(v) no exercise price adjustment shall be made, in each case solely by virtue of
(A) the announcement of the Offer, (B) the acquisition of Shares of GlobalNet
pursuant to the Offer, the Merger or the Merger Agreement, (C) the execution and
delivery of the Merger Agreement or (D) the consummation of the Offer, the
Merger or any of the other transactions set forth in the Merger Agreement.
(d) Other Filings. Both SPARK and GlobalNet conduct operations in a
number of foreign countries. Consequently, filings may have to be made with
other foreign governments under their pre-merger notification statutes. The
filing requirements of various nations are being analyzed by the parties, and,
where necessary, the parties intend to make such filings.
ITEM 9. EXHIBITS.
Exhibit 1. Portions from GlobalNet Xxxxxxxxx.xxx, Inc. Proxy Statement
(incorporated by reference to the GlobalNet's Proxy Statement on Form filed on
May 25, 2001, File No. 21443).
Exhibit 2. Letter to Stockholders of GlobalNet Xxxxxxxxx.xxx, Inc., dated
July 25, 2001.*
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Exhibit 3. Press Release of GlobalNet Xxxxxxxxx.xxx, Inc., dated July 18,
2001.*
Exhibit 4. The Offer to Purchase, dated July 25, 2001 (incorporated by
reference to and filed as Exhibit (a)(1)(A) to the SPARK Schedule TO filed on
July 25, 2001).
Exhibit 5. Form of Letter of Transmittal (incorporated by reference to
Exhibit (a)(1)(C) to the SPARK Schedule TO filed on July 25, 2001).
Exhibit 6. Agreement and Plan of Merger, dated June 15, 2001, by and among
New Media SPARK, GlobalNet Acquisitions Inc. and GlobalNet Xxxxxxxxx.xxx, Inc.
(incorporated by reference to Exhibit (d)(1) of the SPARK Schedule TO filed on
July 25, 2001).
Exhibit 7. First Amendment to Agreement and Plan of Merger, dated July 17,
2001, by and among New Media SPARK, GlobalNet Acquisitions Inc. and GlobalNet
Xxxxxxxxx.xxx, Inc. (incorporated by reference to Exhibit (d)(2) of the SPARK
Schedule TO filed on July 25, 2001).
Exhibit 8. Stock Option Agreement, dated July 17, 2001, by and between
GlobalNet Xxxxxxxxx.xxx, Inc. and GlobalNet Acquisitions Inc. (incorporated by
reference to Exhibit (d)(3) of the SPARK Schedule TO filed on July 25, 2001).
Exhibit 9. Form of Executive Severance Agreement for the Chief Executive
Officer.*
Exhibit 10. Form of Executive Severance Agreement for officers other than
the Chief Executive Officer.*
Exhibit 11. Rights Agreement, dated July 19, 2001 between GlobalNet
Xxxxxxxxx.xxx, Inc. and The Bank of New York, as rights agent (incorporated by
reference to the GlobalNet Form 8-A filed on July 19, 2001).
Annex A Fairness Opinion of Xxxxxxxx Xxxxx Xxxxxx & Xxxxx, dated as of
July 17, 2001.*
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* Filed herewith.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: July 25, 2001
GLOBALNET XXXXXXXXX.XXX, INC.
By: /s/ XXX X. XXXXXX
------------------------------------
Name: Xxx X. Xxxxxx
Title: Chief Operating Officer and
Corporate Secretary
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