Exhibit 4.12
AGREEMENT
AGREEMENT dated this 23rd day of March, 1999, by and among Trans Global
Services, Inc., a Delaware corporation ("Trans Global"), Arc Networks, Inc., a
Delaware corporation ("Arc"), Consolidated Technology Group Ltd., a New York
corporation ("Consolidated"), Technology Acquisitions Ltd., a Bermuda
corporation ("TA"), and Gemini II, Inc., a Delaware corporation ("Gemini"),
Trans Global, Arc, Consolidated, TA and Gemini being referred to collectively as
the "Parties" and each, individually, as a "Party."
W I T N E S S E T H:
WHEREAS, Trans Global is the holder of Arc's 10% installment promissory
note due August 31, 2003 in the principal amount of $1,216,673 (the "Arc Note"),
which is payable to the order of Trans Global; and
WHEREAS, the Arc Note is guaranteed by Consolidated pursuant to a
guarantee dated September 18, 1998 (the "Consolidated Guarantee"); and
WHEREAS, Trans Global and Consolidated are parties to a Subordination
Agreement dated September 18, 1998 (the "Subordination Agreement"); and
WHEREAS, pursuant to a certain stock purchase agreement dated the date of
this Agreement by and among Arc, Consolidated, SIS Capital Corp., a Delaware
corporation and wholly-owned subsidiary of Consolidated ("SISC"), and TA (the
"Purchase Agreement"), SISC is selling to TA approximately 67% of the
outstanding common stock of Arc, which represents all of the shares of the
common stock of Arc which are owned by SISC, such sale being referred to as the
"Arc Stock Sale" and
WHEREAS, following or contemporaneously with the completion of the Arc
Stock Sale, a wholly-owned subsidiary of Gemini is to merge with and into Arc,
which merger is referred to as the "Arc Merger"; and
WHEREAS, following the completion of the Arc Merger, Gemini intends to
file a registration statement with respect to a proposed public offering of its
common stock, par value $.0001 per share ("Gemini Common Stock"); and
WHEREAS, by the terms of the Arc Note, the full principal amount of the
Arc Note, together with accrued interest, becomes immediately due and payable
upon the occurrence of certain events, which include the Arc Stock Sale and the
Arc Merger; and
WHEREAS, Arc, Consolidated, TA and Gemini have requested that Trans
Global agree that the Arc Note not become immediately due and payable upon
either the Arc Stock Sale or the Arc Merger; and
WHEREAS, Trans Global is willing to agree that neither the consummation
of the Arc Stock Sale nor the Arc Merger will result in the Arc Note becoming
immediately due and payable, on and subject to the terms of this Agreement; and
WHEREAS, each of the Parties believes that the execution of this
Agreement and the performance of its terms is in the best interest of such
Party;
WHEREFORE, the Parties do hereby agree as follows.
1. (a) Trans Global hereby waives the provision of the Arc Note
that provides that the Arc Note becomes payable in full upon the occurrence of
either the Arc Stock Sale or the Arc Merger.
(b) The waiver granted by Trans Global pursuant to Paragraph
1(a):
(i) is subject to the execution of this Agreement by
Arc, Consolidated, TA and Gemini and the performance by TA and Gemini of all of
their obligations to be performed contemporaneously with or prior to the
execution of this Agreement;
(ii) is subject to the execution by TA and Gemini of the
Purchaser Guarantee, as hereinafter defined; and
(iii) relates only to the Arc Stock Sale and the Arc
Merger and shall not be deemed to relate in any manner to any other Sale
Transaction, as defined in the Arc Note, or any other transaction set forth in
Paragraph 6(b) of this Agreement.
2. Consolidated hereby confirms that (a) the Consolidated Guarantee
is in full force and effect on the date of this Agreement, and (b) none of the
obligations of Consolidated pursuant to the Consolidated Guarantee will be
affected in any manner by the execution of this Agreement or the performance of
any of the terms of this Agreement, including, but not limited to, the waiver by
Trans Global pursuant to Paragraph 1 of this Agreement.
3. The Subordination Agreement is hereby terminated and of no force
and effect.
4. (a) Trans Global hereby agrees that it will accept shares of
Gemini's Series A Preferred Stock in exchange for the cancellation of the Arc
Note and the Consolidated Guarantee at the time Gemini receives the proceeds
from its initial public offering, as hereinafter defined, if the closing with
respect to Gemini's initial public offering shall have occurred by December 31,
1999, and, if, on the closing date of such initial public offering:
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(i) Arc shall not be in default of its obligations
pursuant to the Note, including its obligations to pay the principal and
interest and to comply with all of its other obligations pursuant to the Note
and this Agreement, and there shall have occurred no event which, with the
passage of time of the giving of notice by Trans Global or any other person,
would result in an event of default as set forth in Paragraph 4 of the Arc Note.
(ii) Gemini shall have issued the Series A Preferred
Stock to Trans Global in exchange for the cancellation of the Arc Note and the
Consolidated Guarantee, as provided in Paragraph 7 of this Agreement.
(iii) The consolidated net tangible book value of Gemini,
determined in accordance with generally accepted accounting principals, shall be
not less than six million dollars ($6,000,000).
(b) An "initial public offering" shall mean a firm commitment
underwritten initial public offering pursuant to a effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act").
The date on which the registration statement relating to Gemini's initial public
offering is declared effective by the Securities and Exchange Commission (the
"Commission") is referred to as the "IPO Date."
(c) Upon the cancellation of the Arc Note, whether pursuant to
Paragraph 4(a) of this Agreement or otherwise, the Consolidated Guarantee will
automatically terminate and be of no further force and effect, and Trans Global
shall return the Consolidated Guarantee to Consolidated.
(d) Trans Global shall give Consolidated prompt notice of any
event which results in the cancellation of the Arc Note.
5. TA and Gemini will, contemporaneously with the execution of this
Agreement:
(a) Execute their joint and several guarantee (the "Purchaser
Guarantee") of the obligation of Arc pursuant to the Arc Note in the form of
Exhibit A to this Agreement.
(b) File or cause to be filed a certificate of designation (the
"Certificate of Designation") setting forth the rights, preferences and
privileges of the holders of the Series A 10% Convertible Redeemable Preferred
Stock, par value $.0001 per share ("Series A Preferred Stock"), in the form of
Exhibit B to this Agreement.
6. The terms of the Arc Note are hereby modified as follows:
(a) Arc shall continue to make payments of principal and
interest on the Arc Note at the times set forth in the Arc Note, subject to the
further provisions of this Paragraph 6.
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(b) The principal and interest on the Arc Note shall become
immediately due and payable as follows:
(i) The sale by TA or Gemini of all or substantially all
of its business and assets in one transaction or in a series of related
transactions, regardless of whether the transaction is structured as a merger,
consolidation, sale of assets, sale of stock or assets of its subsidiary, sale
and leaseback or other transaction whereby substantially all of the business and
assets of TA or Gemini is conveyed to another person or entity, except that this
Paragraph 6(b)(i) shall not apply to the Arc Merger.
(ii) The merger of TA or Gemini with another entity where
TA or Gemini is the surviving entity if, as a result of the merger, the
stockholders of TA or Gemini, as the case may be, prior to the merger (other
than persons who became stockholders in anticipation of or in connection with
the merger) own less than fifty percent (50%) of the outstanding capital stock,
either in terms of number of shares or value of shares, upon the effectiveness
of the merger.
(iii) The sale by stockholders of their capital stock in
TA or Gemini in a transaction or a series of related transactions which results
in the transfer of at least fifty percent (50%) of the outstanding capital
stock; provided, however, that following a public offering by Arc or Gemini of
its securities, sales by the public stockholders shall not be an event described
in this Paragraph 6(b)(iii) unless such transfers are made in response to a
tender offer or similar transaction.
(iv) The failure by Gemini to complete an initial public
offering by 5:30 P.M., New York City time, on December 31, 1999.
(v) Any breach by TA or Gemini of its obligations
pursuant to this Agreement if such breach is not cured within thirty (30) days
after notice of such breach is given to TA or Gemini, as the case may be, and
Consolidated.
(vi) The occurrence of any event (other than the Arc
Stock Sale and the Arc Merger) which, pursuant to the terms of the Arc Note,
gives the holder of the Arc Note the right to demand that the principal of and
interest on the Arc Note become immediately due and payable.
7. At the closing of Gemini's initial public offering, Gemini shall
issue to Trans Global one share of Series A Preferred Stock for each one dollar
($1.00) of principal on the Arc Note which is outstanding on the date of such
closing and pay to Trans Global the accrued interest on the Arc Note to the date
the Series A Preferred Stock is issued, and Trans Global shall deliver the
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Arc Note to Arc for cancellation. The holders of the Series A Preferred
Stock will have the rights, preferences and privileges set forth in the
Certificate of Designation. Except for the issuance of Series A Preferred
Stock pursuant to this Agreement, Gemini shall not issue any additional
shares of Series A Preferred Stock except for transfers of the shares of
Series A Preferred Stock issued to Trans Global pursuant to this Agreement.
8. Consolidated and Arc, severally and not jointly, represent and
warrant to Trans Global that:
(a) Such Party is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
(b) Such Party has full power and authority to enter into this
Agreement and the Escrow Agreement, as hereinafter defined, and to carry out the
transactions provided for in this Agreement and the Escrow Agreement, and this
Agreement and the Escrow Agreement constitute the legal, valid and binding
obligations of such Party, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, or similar laws from time to time in effect which affect
creditors' rights generally, and by legal and equitable limitations on the
enforceability of specific remedies, and that no representation is made as to
the enforceability of the indemnification provisions contained in Paragraph 11
of this Agreement. All necessary corporate action required to be taken by such
Party for the consummation of the transactions contemplated by this Agreement
has been duly and validly taken.
(c) No consent, approval or agreement of any person, party,
court, governmental authority or entity is required to be obtained by such Party
in connection with the execution and performance by Consolidated or Arc of this
Agreement or the Escrow Agreement.
9. (a) TA and Gemini hereby jointly and severally represent and
warrant to Trans Global that:
(i) TA and Gemini are corporations duly organized,
validly existing and in good standing under the laws of Bermuda and the State of
Delaware, respectively.
(ii) TA and Gemini have full power and authority to enter
into this Agreement, the Escrow Agreement and the Purchaser Guarantee, and to
carry out the transactions provided for in this Agreement, the Escrow Agreement
and the Purchaser Guarantee, and this Agreement, the Escrow Agreement and the
Purchaser Guarantee constitute the legal, valid and binding obligations of TA
and Gemini, enforceable in accordance with their respective
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terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, or similar laws from time to time in effect which
affect creditors' rights generally, and by legal and equitable limitations on
the enforceability of specific remedies, and that no representation is made
as to the enforceability of the indemnification provisions contained in
Paragraph 11 of this Agreement. All necessary corporate action required to be
taken by TA and Gemini for the consummation of the transactions contemplated
by this Agreement has been duly and validly taken.
(iii) No consent, approval or agreement of any person,
party, court, governmental authority or entity is required to be obtained by TA
or Gemini in connection with the execution and performance by TA or Gemini of
this Agreement, the Escrow Agreement or the Purchaser Guarantee.
(iv) The execution and filing of the Certificate of
Designation has been approved by all necessary corporate action.
(v) The Series A Preferred Stock to be issued
pursuant to this Agreement has been duly and validly authorized and, when
issued pursuant to this Agreement, will be validly issued, fully paid and
non-assessable and subject to no rights or claims of any third party. The
shares of Gemini Common Stock issuable upon conversion of the Series A
Preferred Stock (the "Conversion Shares") are duly and validly authorized
and, when issued upon conversion of the Series A Preferred Stock, will be
validly issued, fully paid and non-assessable and subject to no rights or
claims of any third party.
(b) TA and Gemini jointly and severally covenant and agree
that, without the prior written consent of Consolidated, they will not take or
permit to be taken any action described in Paragraphs 6(b)(i), (ii) or (iii) of
this Agreement.
10. (a) Trans Global represents and warrants to Consolidated, Arc,
TA and Gemini that:
(i) Trans Global is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
(ii) Trans Global owns the Arc Note.
(iii) Trans Global has full power and authority to
enter into this Agreement and the Escrow Agreement and to carry out the
transactions provided for in this Agreement, and this Agreement and the
Escrow Agreement constitute, the legal, valid and binding obligations of
Trans Global, enforceable in accordance with their respective terms, except
as enforceability may
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be limited by applicable bankruptcy, insolvency, moratorium, or similar laws
from time to time in effect which affect creditors' rights generally, and by
legal and equitable limitations on the enforceability of specific remedies, and
that no representation is made as to the enforceability of the indemnification
provisions contained in Paragraph 11 of this Agreement. All necessary corporate
action required to be taken by Trans Global for the consummation of the
transactions contemplated by this Agreement has been duly and validly taken.
(iv) No consent, approval or agreement of any person,
party, court, governmental authority or entity is required to be obtained by
Trans Global in connection with the execution and performance by Trans Global of
this Agreement or the Escrow Agreement.
(b) Trans Global agrees that, as long as the Consolidated
Guarantee shall remain in effect, it will not, without the written consent of
Consolidated, amend the terms of the Arc Note in a manner which would (i)
increase the interest rate, (ii) accelerate the payment schedule, (iii) reduce
the time for any notice or cure, (iv) create any other event of default or other
event which, by its terms, would result in the acceleration of the principal
amount of the Arc Note; provided, however, that this Paragraph 10(b) shall not
apply to any accelerated payment terms resulting from or following a default
under the Arc Note or an event which, with the passage of time of the giving of
notice, would result in a default under the Arc Note. In the event that Trans
Global fails to comply with its obligations pursuant to this Paragraph 10(b),
the Consolidated Guarantee shall become void, and Trans Global shall have no
rights thereunder, except to the extent of any obligations which may have
accrued under the Consolidated Guarantee prior to the date of such failure.
(c) Trans Global shall give Consolidated prompt notice of any
amendment to the Arc Note.
(d) Trans Global confirms that, as of the date of this
Agreement, Arc is not in default under the Arc Note.
11. (a) At any time during the period commencing on the IPO Date
ending on the Registration Termination Date, as hereinafter defined, Gemini
shall advise Trans Global or any Transferees, as hereinafter defined (Trans
Global and its Transferees being referred to herein collectively as the
"holders" and each as a "holder"), by written notice at least two (2) weeks
prior to the filing of any registration statement (other than a registration
statement on a Form S-8 or S-4 or any subsequent form relating to employee
benefit plans and mergers or acquisitions) under the Securities Act covering
securities of Gemini and will, upon the request of any holder, include in
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any such registration statement such information as may be required to permit
a public offering of any or all of such holder's Registrable Securities, as
hereinafter defined; provided, however, that Gemini shall not be required to
include any Registrable Securities in a registration statement relating
solely to an offering by Gemini of securities for its own account if the
managing underwriter requests in writing that Gemini exclude the Registrable
Securities, provided that all other proposed selling stockholders, if any,
are treated in the same manner as the holder. In the event that the managing
underwriter shall permit the inclusion in any such registration statement of
a limited number of securities for sale by selling stockholders, to the
extent that the managing underwriter permits any such shares to be included
in the registration statement, Gemini shall include securities to be sold by
all persons (other than officers and directors of Gemini or its affiliates)
exercising piggyback or similar registration rights, on a proportional basis,
based on the number of shares of Gemini Common Stock which each such person
proposes to include in the registration statement. If requested by the
managing underwriter in writing, the holder will agree not to sell any of the
Registrable Securities included in such registration statement without the
consent of such managing underwriter during such period, not to exceed six
months, following the effective date of the registration statement, as the
managing underwriter may request (the "lock-up period"), and Gemini shall not
be required to include Registrable Securities in such registration statement
unless the holder agrees to such lock-up. Notwithstanding the foregoing, in
no event shall the holder be required to agree to a lock-up period longer
than any other selling stockholder whose shares are included in such
registration statement or any other underwritten registration statement being
filed at or about the same time as such registration statement. Gemini shall
keep such registration statement current until the earlier of the date the
Registrable Securities included in the registration statement shall have been
sold or the Registration Termination Date. It shall be a condition to
Gemini's obligation to include any holder's Registrable Securities in a
registration statement pursuant to this Paragraph 11(a) or to file a
registration statement pursuant to Paragraph 11(b) of this Agreement that the
holder provide Gemini in writing with such information as Gemini may
reasonably request concerning the holder and the holder's proposed plan of
distribution and any other information requested by the Commission, the
National Association of Securities Dealers, Inc., NASD Regulation, Inc., any
stock exchange or market on which the Gemini Common Stock is traded and any
state securities commission. Gemini shall advise the holder in writing of the
extent to which a managing underwriter will permit the inclusion of shares of
Gemini Common Stock in a registration statement and shall provide the holder
with a copy of
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any requests by the managing underwriter relating to the inclusion of any
Registrable Securities in a registration statement.
(b) If the Registrable Securities shall not have been
registered pursuant to Paragraph 11(a) of this Agreement during the twelve month
period commencing on the IPO Date, then, if Trans Global or any other holder(s)
who own 25% of the Series A Preferred Stock issued pursuant to this Agreement
shall give notice (the "Registration Notice") to Gemini at any time during the
period commencing twelve months after the IPO Date and ending on the
Registration Termination Date, that such holders contemplate the sale of all or
any portion of the Registrable Securities under such circumstances that a public
distribution (within the meaning of the Securities Act) of such Registrable
Securities will be involved, then Gemini shall, within forty five (45) days
after receipt of the Registration Notice, time being of the essence, file a
registration statement pursuant to the Securities Act, to the end that all
Registrable Securities may be sold publicly under the Securities Act, and Gemini
will use its best efforts to cause such registration statement to become
effective. If the Registration Notice is not signed by all holders of the
Registrable Securities, Gemini shall, within five days of its receipt of the
Registration Notice, give notice to the other holders and, if they so request,
include their Registrable Securities in the registration statement. Gemini
shall keep such registration statement current and effective until the all of
the Conversion Shares shall have been sold pursuant to the registration
statement or until the Registration Termination Date. The holders shall be
entitled to only one (1) demand registration right pursuant to this Paragraph
11(b), except that, in the event that such registration statement is filed and
is either withdrawn or does not become effective (other than upon the written
request of all of the holders whose Registrable Securities are to be included in
such registration statement), then the holders shall not be deemed to have
exercised the demand registration right pursuant to this Paragraph 11(b).
(c) The following provisions shall also be applicable to this
Paragraph 11:
(i) As used in this Paragraph 11, the following terms
shall have the meanings set forth below:
(A) "Registration Termination Date" shall mean
the date on which Trans Global or its Transferees may sell all of the Conversion
Shares that they then own or would own on conversion of the Series A Preferred
Stock pursuant to Paragraph (k) of Rule 144 ("Rule 144") of the Commission
pursuant to the Securities Act.
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(B) "Registrable Securities" shall mean (I) the
shares of Series A Preferred Stock issued to Trans Global pursuant to this
Agreement and held by Trans Global and its Transferees and (II) the Conversion
Shares issued or issuable upon conversion of such shares of Series A Preferred
Stock. Trans Global understands that there will not be a public market in the
Series A Preferred Stock.
(C) "Transferees" shall mean (I) the persons or
entities to whom or to which Trans Global or its transferees shall have
transferred any Registrable Securities in a transaction exempt from the
registration requirements of the Securities Act, other than Rule 144 or any
subsequent similar rule.
(ii) Gemini shall bear the entire cost and expense of any
registration of securities pursuant to Paragraphs 11(a) and (b) of this
Agreement. Any holder whose Registrable Securities are included in any
registration statement pursuant to this Paragraph 11 shall, however, bear the
fees of his or its own counsel and accountants and any transfer taxes or
underwriting or brokers' discounts or commissions applicable to the Registrable
Securities sold by him or it pursuant thereto.
(iii) Following the effective date of a registration
statement which includes Registrable Securities pursuant to Paragraph 11(a) or
(b) of this Agreement, Gemini shall, upon the request of any holder, forthwith
supply the holder with such number of prospectuses meeting the requirements of
the Securities Act as shall be reasonably requested by the holder to permit the
holder to make a public distribution of all the registered Registrable
Securities from time to time offered or sold by the holder, provided that the
holder shall from time to time furnish Gemini with such appropriate information
(relating to the intentions of the holder) in connection therewith as Gemini
shall request in writing as provided in said Paragraphs 11(a) and (b). Gemini
shall also use its best efforts to qualify the registered shares for sale in
such states as the securities being sold by Gemini and other selling
stockholders, if any, are otherwise being registered or qualified and, in such
other states as the holder shall reasonably request; provided, however, that
Gemini shall not, for any such purpose, be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not, but
for the requirements of this Paragraph 11(c)(iii), be obligated to be so
qualified, to subject itself to taxation in such jurisdiction or to consent to
general service of process in any such jurisdiction.
(iv) Gemini shall prepare and file with the Commission
such amendments and supplements to such registration statement and any
prospectus used pursuant this Paragraph
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11 as may be necessary to keep such registration statement current and
effective during the period when the holder may sell Registrable Securities
pursuant to the registration statement. Gemini will notify each holder whose
Registrable Securities are subject to the registration statement at such time
as, for any reason, the prospectus relating to the sale of the Registrable
Securities is no longer current and effective, and the holder shall not sell
any Registrable Securities pursuant to such registration statement until such
time as the holder is advised by Gemini that the registration statement is
current and effective. In no event shall Gemini be required to keep any
registration statement which includes the Registrable Securities current and
effective subsequent to the Registration Termination Date.
(v) Gemini shall indemnify and hold harmless each
holder, its officers and directors, partners and members and each underwriter,
within the meaning of the Securities Act, who may purchase from or sell any
Registrable Securities for the holders and each person who controls any holder
and such underwriter within the meaning of the Securities Act, from and against
any and all losses, claims, damages and liabilities (collectively, "Losses")
caused by any untrue statement or alleged untrue statement of a material fact
contained in any registration statement under the Securities Act or any
prospectus included therein required to be filed or furnished by reason of this
Paragraph 11 or any application or other filing under any state securities law
or by any omission or alleged omissions to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, to which the holder or any such underwriter or control person or
other indemnified party may become subject under the Securities Act, the
Securities Exchange Act of 1934, as amended, or other Federal or state law, rule
or regulation, at common law or otherwise, except insofar as such Losses are
caused by any such untrue statement or alleged untrue statement or omission or
alleged omission which is based upon information furnished or required to be
furnished to Gemini by the holder or any such underwriter or other indemnified
party expressly for use therein, which indemnification shall include each
person, if any, who controls any such underwriter within the meaning of the
Securities Act; provided, however, that each holder and such underwriter shall
at the same time indemnify Gemini, its officers and directors, each underwriter
and each person, if any, who controls Gemini or such underwriter within the
meaning of the Securities Act and each other person whose securities are being
offered or sold pursuant to such registration statement (the "other holders")
and each person who controls the other holders within the meaning of the
Securities Act, from and against any and all Losses caused by any untrue
statement or alleged
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untrue statement of a material fact contained in any registration statement
or any prospectus filed or furnished by reason of this Paragraph 11 or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, insofar as such Losses are caused by any untrue statement or
alleged untrue statement or omission based upon information furnished to
Gemini in writing by the holder or such underwriter expressly for use
therein; provided, however, that the holder's liability to Gemini and such
underwriter or other indemnified party pursuant to this Paragraph 11(c)(v)
shall not exceed the gross sales price of all Registrable Securities sold by
the holder pursuant to such registration statement.
(vi) If any action or claim shall be brought or asserted
by a person or entity entitled to indemnification pursuant to Paragraph 11(c)(v)
of this Agreement (an "indemnified party") against Gemini or any underwriter
engaged by Gemini or any person controlling Gemini or such underwriter within
the meaning of the Securities Act or against the holder or any underwriter
engaged by the holder or any person controlling the holder or such underwriter,
within the meaning of the Securities Act in respect of which indemnity may be
sought pursuant to Paragraph 11(c)(v) of this Agreement (an "indemnifying
party"), the indemnified party shall promptly notify the indemnifying party in
writing of the basis for the claim of indemnification and provide the
indemnifying party with a copy of all legal papers or other notices or
communications served on it in connection therewith, and the indemnifying party
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to the indemnified party and the payment of all legal and other
expenses in connection therewith. The failure of the indemnified party to
notify the indemnifying party as provided in this Paragraph 11(c)(vi) will not
relieve the indemnifying party of any liability for indemnification which it may
have to the indemnified party pursuant to Paragraph 11(c)(v) of this Agreement
unless the failure to so notify the indemnifying party materially prejudices the
rights of the indemnifying party. The indemnified party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless (A) the employment thereof has been specifically
authorized by the indemnifying party in writing and the indemnifying party shall
have agreed in writing to pay such fees and expenses, or (B) the indemnifying
party has failed, either (I) with reasonable promptness, to assume the defense
and employ counsel as provided in this Paragraph 11(c)(vi), or (II) to appoint
counsel to act or otherwise respond to any claim or action prior to the date a
response is due, after giving effect to
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any extensions obtained by or on behalf of the indemnifying party, or (C) the
named parties to any such action (including any impleaded parties) include
both an indemnified party and an indemnifying party, and in the judgment of
the counsel for the indemnified party, it is advisable for the indemnified
party or controlling person to be represented by separate counsel because of
actual or potential conflicting interests between them (in which case the
indemnifying party shall not have the right to assume the defense of such
action on behalf of the indemnified party or such controlling person, it
being understood, however, that the indemnifying party shall, in connection
with any one such action or separate but substantially similar or related
actions arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys at any time in each jurisdiction for all indemnified parties
(whether pursuant to this Agreement or any other agreements granting
registration rights), which firm shall be designated in writing by all the
indemnified parties, except that if Trans Global is an indemnified party,
such counsel shall be designated by Trans Global). The indemnifying party
shall not be liable for any settlement of any such action effected by an
indemnified party without the written consent of the indemnifying party
(which shall not be withheld unreasonably in light of all factors of
importance to such indemnifying party and such indemnified party), but if
settled with such written consent, or if there be a final judgment or decree
for the plaintiff in any such action by a court of competent jurisdiction and
the time to appeal shall have expired or the last appeal shall have been
denied, the indemnifying party agrees to indemnify and hold harmless the
indemnified party from and against any Loss by reason of such settlement or
judgment.
(vii) The making of any request for prospectuses hereunder
shall not impose on the holder any obligation to sell any Registrable
Securities.
(viii) Gemini's obligations pursuant to this Paragraph 11
shall be applicable to Trans Global and its Transferees.
(d) If either (i) any holders shall have exercised the demand
registration rights pursuant to Paragraph 11(b) of this Agreement and such
registration statement shall not have been declared effective within six months
after the date of the Registration Notice, or (ii) the Registrable Securities
shall have been registered pursuant to the Securities Act, but, for any reason,
the registration statement shall cease to be current and effective for a period
of more than thirty (30) days, then in either of such cases, any holder shall
have the right to require Gemini to redeem the Preferred Stock held by such
holder as set forth in the Certificate of Designation.
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12. Pursuant to the Purchase Agreement, this Agreement and the
Purchaser Guarantee will be held in escrow and will be delivered to Trans Global
and an executed copy of this Agreement shall be delivered to Consolidated, Arc
and TA at such times as the documents are released from escrow pursuant to a
Distribution Notice, as defined in the Escrow Agreement, all as provided in the
escrow agreement dated the date of this Agreement among Consolidated, SISC, Arc,
TA, Trans Global and Xxxxxx Xxxxxx Flattau & Klimpl, LLP, as escrow agent (the
"Escrow Agreement"). In the event that the Escrow Property, as defined in the
Escrow Agreement, is distributed pursuant to Paragraph 5 of the Escrow Agreement
as a result of a Termination Notice, as defined in the Escrow Agreement, or the
failure of Arc to obtain the New York Regulatory Consent, as defined in and
pursuant to the Purchase Agreement, this Agreement shall, automatically and
without any action on the part of any Party, terminate and be of no force and
effect and no party shall have any right or obligation pursuant to this
Agreement or the Purchaser Guarantee. Nothing in this Paragraph 12 shall be
construed to modify or affect in any manner the rights and obligations of Trans
Global and Arc under the Arc Note and the rights and obligations of Trans Global
and Consolidated under the Consolidated Guarantee during the period when this
Agreement is held in escrow.
13. Gemini agrees that prior to the issuance of the Series A Preferred
Stock pursuant to this Agreement, it will not modify or amend the Certificate of
Designation.
14. Contemporaneously with the execution of this Agreement, each Party
will deliver to the other Parties the certificate of the secretary of such Party
certifying as to (a) the incumbency of the officers of such Party and (b) the
adoption by the Board of Directors of resolutions approving the execution of
this Agreement and the performance of its terms.
15. (a) Except for the waiver granted in Paragraph 1 of this
Agreement and the provisions of Paragraph 6 of this Agreement, the Arc Note
shall remain in full force and effect.
(b) Nothing in this Agreement shall be construed to modify or
affect the rights of Consolidated, SISC and Trans Global pursuant to a certain
agreement dated February 25, 1999, by and among Consolidated, SISC and Trans
Global.
16. (a) This Agreement, including the Exhibits, which constitute
integral parts of this Agreement, constitutes the entire agreement of the
parties with respect to the subject matter thereof, superseding and terminating
any and all prior or contemporaneous oral and prior written agreements,
understandings or letters of intent between or among the parties with respect to
the subject matter of this Agreement. No part of this Agreement may be modified
or amended, nor
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may any right be waived, except by a written instrument which expressly
refers to this Agreement, states that it is a modification or amendment of
this Agreement or a waiver under this Agreement and is signed by the parties
to this Agreement, or, in the case of waiver, by the party granting the
waiver. No course of conduct or dealing or trade usage or custom and no
course of performance shall be relied on or referred to by any party to
contradict, explain or supplement any provision of this Agreement, it being
acknowledged by the parties to this Agreement that this Agreement is intended
to be, and is, the complete and exclusive statement of the agreement with
respect to its subject matter. Any waiver shall be limited to the express
terms thereof and shall not be construed as a waiver of any other provisions
or the same provisions at any other time or under any other circumstances.
(b) If any section, term or provision of this Agreement shall
to any extent be held or determined to be invalid or unenforceable, the
remaining sections, terms and provisions shall nevertheless continue in full
force and effect.
(c) All notices or other communications required or permitted
by this Agreement shall be in writing signed by the party giving such notice,
and delivered personally against receipt thereof or sent by overnight courier,
mail or messenger against receipt thereof or sent by registered or certified
mail, return receipt requested, or by facsimile transmission or similar means of
communication if receipt is confirmed or if transmission of such notice is
confirmed by mail as provided in this Paragraph 16. Notices shall be deemed to
have been received on the date of personal delivery or telecopy or, if sent by
certified or registered mail, return receipt requested, shall be deemed to be
delivered on the fifth (5th) business day after the date of mailing, except that
notice of change in the person, address or facsimile number shall be effective
on actual receipt. Notices shall be addressed to the party for whom intended at
his or its address set forth below or to the attention of such other person or
such other address or facsimile number as a party shall have designated by
notice in writing to the other parties given in the manner provided by this
Paragraph 16(c):
if to Trans Global to:
Trans Global Services, Inc.
0000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx, President and CEO
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with a copy to:
Esanu Katsky Xxxxxx & Siger, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx P.C.
if to Arc, to:
Arc Networks, Inc.
0000 Xxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxxxx, President
with a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
if to Consolidated, to:
Consolidated Technology Group Ltd.
000 Xxxxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: Xx. Xxxxxxx Xxxxxxx, President
and
Consolidated Technology Group Ltd.
0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Chief Financial Officer
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
00 Xxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
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If to TA or Gemini, to:
Technology Acquisitions, Ltd.
c/o Benchmark Equity Group, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xx. Xxxxxxxxxxx X. Xxxxx
with a copy to:
De Xxxxxxx Xxxxxxxxxxx Xxxxx & Xxxxx
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xx Xxxxxxx, Esq.
(d) This Agreement shall be governed and construed in
accordance with the laws of the State of New York applicable to agreements
executed and to be performed wholly within such State, without regard to any
principles of conflicts of law. Each of the Parties hereby (i) irrevocably
consents and agrees that any legal or equitable action or proceeding arising
under or in connection with this Agreement shall be brought in the Federal or
state courts located in the County of New York or Suffolk in the State of New
York, (ii) by execution and delivery of this Agreement, irrevocably submits to
and accepts the jurisdiction of said courts, (iii) waives any defense that such
court is not a convenient forum, and (iv) consents to any service of process
made in the manner set forth in Paragraph 16(c) of this Agreement (other than by
telecopier), in addition to any other method of service permitted by law. In
any action brought pursuant to this Agreement based on an alleged breach of this
Agreement, the prevailing Party shall be entitled to reimbursement of all costs
incurred by it in connection therewith to the extent, if at all, awarded or
allowed by the court or other tribunal in which the action or proceeding has
been commenced; provided, however, that nothing in this Paragraph 16(d) shall be
construed to affect in any manner the provisions of Paragraphs 11(c)(v) and (vi)
of this Agreement.
(e) Each of the Parties to this Agreement shall be responsible
and liable for its own expenses incurred in connection with the preparation of
this Agreement and the consummation of the transactions contemplated by this
Agreement and related expenses, except as expressly provided in this Agreement.
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(f) Each Party to this Agreement is relying on his or its own
tax advisors as to the tax consequences of this Agreement and the transactions
contemplated by this Agreement, and no party is making any representations or
warranties of any kind as to such tax consequences to any other Party.
(g) No Party shall make a public announcement concerning this
Agreement without the consent of the other Parties except to the extent that
disclosure is required under applicable laws.
(h) This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and permitted assigns;
provided, however, that, except as expressly provided in this Agreement, no
Party may assign this Agreement or any of its rights under this Agreement
without the prior written consent of the other Parties.
(i) Each Party agrees, without cost or expense to any other
Party, to deliver or cause to be delivered such other documents and instruments
and to take such other action as may be reasonably requested by any other party
to this Agreement in order to carry out more fully the provisions of, and to
consummate the transaction contemplated by, this Agreement.
(j) This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
[Signatures on Next Page]
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IN WITNESS WHEREOF, the Parties have executed this Agreement on the date
first written above.
TRANS GLOBAL SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxx, President and CEO
CONSOLIDATED TECHNOLOGY GROUP LTD.
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------------
Xxxxxxx Xxxxxxx, President
ARC NETWORKS, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxxxxx, President and CEO
TECHNOLOGY ACQUISITIONS LTD.
By: /s/ Xxxxx XxXxxx
----------------------------------------
Name: Xxxxx XxXxxx
Title: Director
GEMINI II, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
Title: President
-19-
