MERGER AGREEMENT
Agreement made the 24th day of May, 2001, by and among
XxxxxxxXxxxxx.xxx, Inc., a Delaware corporation (the "Company"), XX.xxx
Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the
Company ("Merger Sub"); Global Technology Marketing International, Inc., a
Delaware corporation ("TargitMail") d/b/a XxxxxxXxxx.xxx Inc.
RECITALS
WHEREAS, the parties intend that, subject to the terms and conditions
hereinafter set forth, Merger Sub will merge with and into TargitMail in a
reverse triangular merger (the "Merger"), with TargitMail to be the surviving
corporation of the Merger, all pursuant to the terms and conditions of this
Agreement and the applicable provisions of the Delaware General Corporation Law
(the "DGCL"). The Merger is intended to be treated as a tax-free reorganization
pursuant to the provisions of Section 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended (the "Code"), by virtue of the provisions of Section
368(a)(2)(E) of the Code; and
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
ARTICLE I
INCORPORATION OF RECITALS
All of the recitals set forth above are incorporated herein by
reference.
ARTICLE II
DEFINITIONS
The following terms, as used herein, have the following meanings:
2.1 "Affiliate" of a Person means a Person, who directly or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, such person.
2.2 "Agreement" has the meaning set forth in the introductory
paragraph.
2.3 "Citizens Note" means the note issued pursuant to the Loan
Agreement.
2.4 "Closing" has the meaning set forth in Section 3.10.
2.5 "Closing Date" has the meaning set forth in Section 3.10.
2.6 "Common Stock" means the voting common stock of the Company.
2.7 "Company" means XxxxxxxXxxxxx.xxx, Inc.
2.8 "Conversion Shares" means the shares of Common Stock issuable upon
conversion of the Notes.
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2.9 "Effective Time" means the time indicated in the Articles of Merger
when the merger pursuant hereto shall become effective for corporate law
purposes.
2.10 "Environmental Permits" means federal, state and local
governmental liens, permits and other authorizations and approvals, whether
foreign or domestic, which relate to the business of a Person as it may be
affected by the environment, or to public health and safety, or worker health
and safety, as they may be affected by the environment.
2.11 "ERISA" means the Employment Retirement Income Security Act of
1974, as amended.
2.12 "Guarantors" shall mean Xxxxxxxxx and Xxxxxx.
2.13 "Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended.
2.14 "Intellectual Property" has the meaning set forth in Section 4.13.
2.15 "Leases" and "Lease" have the meanings set forth in Section 4.12.
2.16 "Licenses and Permits" has the meaning set forth in Section 4.6.
2.17 "Loan Agreement" means that certain loan agreement between
Citizens Bank New Hampshire, as lender, and TargitMail, as borrower, dated July
6, 2000.
2.18 "Material Contract" means each contract, agreement or commitment
of a Person other than Leases:
(a) upon which any substantial part of such Person's business
is dependent or which, if breached, could reasonably be expected to affect,
materially and adversely, the earnings, assets, financial condition or
operations of the business of such Person;
(b) which provides for aggregate future payments of more than
$10,000, except for purchase orders or sale orders arising in the ordinary and
usual course of business, in which case they are listed only if any party
thereto is obligated to make payments pursuant thereto aggregating more than
$20,000;
(c) which extends for more than one year from the date hereof
and is not cancelable by either party on 30 days' notice;
(d) which provides for the sale, after the date hereof and
other than in the ordinary course of business, of any of its assets;
(e) which relates to the employment, retirement or termination
of the services of any officer of former officer; or
(f) which contains covenants pursuant to which any other
Person has agreed not to compete with any business conducted by such Person or
not to disclose to other information concerning such Person.
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Collectively, the material contracts of such Person are referred to as
"Material Contracts."
2.19 "Note" means the convertible notes of the Company issued at the
Effective Time as payment of the merger consideration.
2.20 "Pension Plans" means all employee benefit plans and programs
including, without limitation, all retirement, savings and other pension plans.
2.21 "Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
governmental or political subdivision or an agency of instrumentality thereof.
2.22 "Real Property" means all of the real property, together with the
fixtures and other improvements located thereon and the appurtenances thereto,
owned by a Person.
2.23 "Securities Act" means the Securities Act of 1933, as amended.
2.24 "TargitMail Financial Statements" has the meaning set forth in
Section 4.8.
2.25 "TargitMail Stock" means all of the capital stock of TargitMail
issued and outstanding on the Closing Date.
2.26 "TargitMail Stockholders" means Xxxxxx Xxxxx ("Xxxxx"); Xxxxx X.
Xxxxxxxxx, Trustee of the Xxxxx X. Xxxxxxxxx Revocable Trust of 1998 u/d/t dated
April 14, 1998 ("Xxxxxxxxx"); Xxxx X. Xxxxxx ("Xxxxxx") and L. Xxxxxx Xxxxxxxxx
("Xxxxxxxxx").
2.27 "Tax" or "Taxes" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Internal Revenue Code section 59A), customs duties, capital stock, franchise
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
2.28 "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
2.29 "Welfare Plans" means all health, severance, insurance, disability
and other employee welfare plans.
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ARTICLE III
MERGER
3.1 Merger. On the terms and subject to the conditions contained in
this Agreement, at the Effective Time, the Acquisition Sub shall be merged with
and into TargitMail and the separate corporate existence of Acquisition Sub
shall thereupon cease. TargitMail shall be the surviving corporation in the
Merger and shall be a wholly-owned subsidiary of the Company. The separate
corporate existence of the Company, with all its rights, privileges, powers and
franchises, shall continue unaffected by the Merger. The Merger shall have the
effects specified in the DGCL. From and after the Effective Time, TargitMail is
sometimes referred to herein as the "Surviving Corporation."
3.2 Certificate of Merger. On the Closing Date, the parties hereto
shall cause the Certificate of Merger (the "Articles of Merger"), meeting the
requirements of Section 251 of the DGCL, to be properly executed and filed in
accordance with the DGCL. The Merger shall be effective, for corporate law
purposes, at the Effective Time.
3.3 Closing. The closing of the purchase and sale contemplated herein
(the "Closing") shall take place at the offices of the Company, 0000 X. Xxxxxxxx
Xxxx Xxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000, on or about May 23, 2001 (the
"Closing Date"), or at another time or location mutually agreeable to the
parties, but not later than May 31, 2001, which latter time shall be of the
essence.
3.4 Officers. The officers of the Surviving Corporation at the
Effective Time shall be as follows:
President - Xxxx Xxxxxxxx
Secretary-Xxxxxxx Xxxxxx
Such persons will hold office until their successors are duly elected or
appointed and qualify in the manner provided in the Articles of Incorporation or
Bylaws of the Company or as otherwise provided by law, or until their earlier
death, resignation or removal.
3.5 TargitMail Options. At Closing, each outstanding option for the
purchase of TargitMail Common Stock shall be cancelled and options for the
purchase of the Company's Common Stock shall be issued in accordance with
Schedule 3.5 to this Agreement.
3.6 Directors. The directors of the Surviving Corporation at the
Effective Time shall be as follows:
Xxxx Xxxxxxxx
C. Xxxxxxxx Xxxxxxxx
Xxxxxx Xxxxxxx
The directors of the Surviving Corporation will serve until their
successors are duly elected or appointed and qualified in the manner provided in
the Articles of Incorporation or Bylaws of the Company or as otherwise provided
by law, or until their earlier death, resignation or removal.
3.7 Articles of Incorporation; Bylaws. The Articles of Incorporation of
the TargitMail in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation. The Bylaws of TargitMail
in effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation.
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3.8 Conversion of TargitMail Shares. At Closing there shall be
(i)2,870,000 shares of Common Stock of TargitMail issued and outstanding, and
(ii) 5,000,000 shares of Series A Preferred Stock of TargitMail issued and
outstanding. At the Effective Time, as a result of the Merger, each issued and
outstanding share of Series A Preferred Stock of TargitMail shall be converted
into $.08 principal amount of Notes and the Common Stock shall not receive any
consideration.
3.9 Shares Restricted. The Notes and the Conversion Shares shall be
"restricted" shares within the meaning of Securities and Exchange Commission
Rule 144 promulgated under the Securities Act of 1933, as amended (the "Act"),
and accordingly the certificate or certificates representing such shares shall
bear a legend substantially in the form of Section 6.5 restricting their
transfer.
3.10 No Representation of Value. TargitMail and the TargitMail
Stockholders each hereby confirms that neither the Company nor any officer,
director or shareholder of the Company, or any agent of or professional employed
by either of them, has made any representation to TargitMail or any of the
TargitMail Stockholders as to the present or future value of the Company's
Common Stock or any other securities of the Company, nor has the Company or any
such person made any representation with respect to the ability of the
TargitMail Stockholders to sell all or any part of the Notes and/or Conversion
Shares at any price, nor that an active or liquid trading market in the
Company's Common Stock will develop or continue in the future. Further,
TargitMail and the TargitMail Stockholders each hereby confirms its or their
understanding that the future bid or asking price of the Company's Common Stock
may not bear any relationship to the net tangible book value, of the Company's
Common Stock and, further, may be unrelated to any other generally accepted
method of valuation of the Company's shares.
3.11 Deliveries at Closing by TargitMail. At Closing, TargitMail an/or
the TargitMail Stockholders shall deliver to the Company:
(a) the stock books, stock ledgers, minute books and seals of TargitMail;
(b) a current certificate of good standing for TargitMail issued by the New
Hampshire and Delaware Secretaries of State;
(c) a balance sheet (including schedules of cash on hand and accounts
receivable and payable) dated as of Closing in a form satisfactory to
the Company;
(d) written consents to the assumption of TargitMail's real estate lease
and other Material Contracts that may be required;
(e) originals of all Material Contracts;
(f) certificates representing all outstanding shares of TargitMail stock;
(g) such state tax clearances as the Company may request;
(h) certificate executed by the Secretary of TargitMail certifying (i) that
attached are true, correct, and complete copies of TargitMail's
certificate of incorporation; (ii) that attached are true, correct, and
complete copies of the resolutions adopted by the board of directors of
TargitMail authorizing the Merger and that such resolutions have not
been amended, repealed or otherwise modified; and (iii) as to the
signatures and incumbency of all offices executing this Agreement on
behalf of TargitMail; and
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(i) all other items required to be delivered by TargitMail or TargitMail
Stockholders to the Company at or prior to Closing under this Agreement
as reasonably requested by the Company.
At Closing TargitMail's existing option holders shall deliver their
option agreements to the Company in exchange for options issuable to them by the
Company in accordance with Section 3.5.
3.12 Deliveries at Closing by the Company.
At Closing, the Company shall deliver to TargitMail, or its
shareholders and Guarantors, as appropriate:
(a) The Company's Notes issued in the names of the TargitMail
Stockholders individually;
(b) Executed stock option agreements for the purchase of the Company's
Common Stock for existing holders of options for the purchase of TargitMail
stock;
(c) A current Certificate of Good Standing for the Company issued by
the Secretaries of State of Florida and Delaware;
(e) Certificate executed by the Secretary of the Company certifying (i)
that attached are true, correct and complete copies of the Company's certificate
of incorporation; and (ii) as to the signatures and incumbency of all officers
executing this Agreement on behalf of such entity;
(f) Certificate executed by the Secretary of Acquisition Sub certifying
that attached are true, correct and complete copies of the resolutions adopted
by the board of directors of Acquisition Sub authorizing the Merger and that
such resolutions have not been amended, repealed, otherwise modified; and
(g) All other items required to be delivered by the Company to
TargitMail or the TargitMail shareholders at or prior to closing under this
Agreement, as reasonably requested by TargitMail.
3.12 Warrants. Xxxxxxxxx and Xxxxxx, being the holders of the
TargitMail Preferred Stock, will be issued Warrants to purchase up to 10% of the
Company's common stock, outstanding immediately following any acquisitions that
may occur within 30 days of the Closing Date and the $2 million private
placement, for an aggregate exercise price of $2,000,000. The actual number of
shares and exercise price will be computed subsequent to such events. The
warrants will expire 12 months from the closing date of any such acquisition,
and if no closing occurs, then June 30, 2002.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TARGITMAIL
TargitMail represents and warrants the following:
4.1 Organization, Qualification. TargitMail is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
has corporate power and authority to own all of its properties and assets and to
carry on its business as it is presently being conducted. TargitMail is duly
qualified and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary except in those jurisdictions where the
failure to be duly qualified and in good standing would not have a material
adverse effect on TargitMail or the business conducted by it. TargitMail has
heretofore delivered to the Company complete and correct copies of the Articles
of Incorporation and Bylaws of TargitMail, as currently in effect, and of its
authority to do business in those states where such qualification is necessary.
4.2 Capitalization of TargitMail. The authorized capital stock of
TargitMail consists of 15,000,000 shares divided into two classes (i) 10,000,000
shares of Common Stock, the par value of which is $.001 per share, of which, as
of the date hereof, 2,870,000 shares are validly issued and outstanding, fully
paid and nonassessable, and were not issued in violation of any preemptive
rights; and (ii) 5,000,000 shares of Series A Preferred Stock, the par value of
which is $.001 per share, of which 5,000,000 shares are validly issued and
outstanding, fully paid and nonassessable, and were not issued in violation of
any preemptive rights. TargitMail warrants that there are no outstanding options
and/or warrants for the purchase of TargitMail's Common Stock other than set
forth on Schedule 4.2.
4.3 Consents and Approvals. Except as set forth in Schedule 4.3, there
is no requirement (i) applicable for TargitMail to make any filing with, or to
obtain any permit, authorization, consent or approval of, any public body as a
condition to the consummation of the Merger nor (ii) that any party to any
Material Contract of TargitMail, or any license or permit for the use of
Intellectual Property of TargitMail or loan agreement to which TargitMail is a
party or by which it is or was bound, consent to the execution of this Agreement
by TargitMail or to the consummation of the Merger.
4.4 Non-Contravention. Except as set forth in Schedule 4.4, the
execution and delivery by TargitMail of this Agreement do not, and the
consummation of the Merger will not, (i) violate or result in a breach of any
provision of the Certificate of Incorporation or Bylaws of TargitMail, (ii)
result in a default (or give rise to any right of termination, cancellation or
acceleration) under the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, agreement, lease or other instrument or obligation
to which TargitMail is a party or by which the Company or the business conducted
by it may be bound, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to TargitMail or to the business
conducted by TargitMail, excluding from the foregoing clauses (ii) and (iii)
such defaults and violations as would not have a material adverse effect on
TargitMail .
4.5 Name. TargitMail has the right to use the name XxxxxxXxxx.xxx.
4.6 Licenses and Permits. The term "Licenses and Permits" as used
herein means federal, state and local governmental licenses, permits, approvals
and authorizations, whether foreign or domestic, other than Environmental
Permits. TargitMail has all of the Licenses and Permits required to conduct its
business as it is presently being conducted, all of which are in full force and
effect. No written notice of a violation of any such License or Permit has been
received by TargitMail, or, to the knowledge of TargitMail, threatened, and no
proceeding is pending or, to the knowledge of TargitMail, threatened, to revoke
or limit any of them. TargitMail has no reason to believe that any of its
Licenses and Permits in effect on the date hereof will not be renewed or can not
be assumed by the Company at or after Closing without material interruption in
the Company's ability to lawfully carry on the business of TargitMail after
Closing.
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4.7 Compliance with Laws. To the best of TargitMail's knowledge
TargitMail has operated its business in compliance with all laws, regulations,
orders, policies, guidelines, judgments or decrees of any federal, state, local
or foreign court or governmental authority applicable to it or its business
including, without limitation, those related to antitrust and trade matters,
civil rights, zoning and building codes, public health and safety, worker health
and safety and labor and nondiscrimination, the failure to comply with which
could reasonably be expected to affect, materially and adversely, the earnings,
assets, financial condition or operations of TargitMail. Except as is disclosed
in Schedule 4.7, TargitMail has not received any notice alleging non-compliance
with any of the aforementioned laws, regulations, policies, guidelines, orders,
judgments or decrees.
4.8 Financial Statements. TargitMail has previously furnished to the
Company true and complete copies of unaudited financial statements of TargitMail
for the twelve months ended December 31, 2000 and the three months ended March
31, 2001 (collectively called the "TargitMail Financial Statements"). The
TargitMail Financial Statements fairly represent the financial position of
TargitMail as of such dates and the results of its operations and changes in
financial position for such periods. TargitMail has also furnished to the
Company a statement of cash on hand, accounts receivable and accounts payable
dated no earlier than December 31, 2000, which statement TargitMail represents
is a true and complete accounting of the matters to which it pertains, as of the
date reflected therein. TargitMail has previously furnished to the Company true
and complete copies of TargitMail's federal income tax return for the calendar
years ended December 31, 1999 and 2000.
4.9 Litigation. Except as set forth in Schedule 4.9, there are no
actions, suits, claims, investigations or proceedings (legal, administrative or
arbitrative) pending or, to the knowledge of TargitMail, threatened, against
TargitMail, whether at law or in equity and whether civil or criminal in nature,
before any federal, state, municipal or other court, arbitrator, governmental
department, commission, agency or instrumentality, domestic or foreign, nor are
there any judgments, decrees or orders of any such court, arbitrator,
governmental department, commission, agency or instrumentality outstanding
against TargitMail which have, or if adversely determined could reasonably be
expected to have, a material adverse effect on the earnings, assets, financial
condition or operations of the business conducted by TargitMail, or which seek
specifically to prevent, restrict or delay consummation of the Merger or
fulfillment of any of the other conditions of this Agreement.
4.10 No Undisclosed Liabilities. Except as set forth in Schedule 4.10,
TargitMail does not have any material liabilities or obligations, whether
absolute, accrued, contingent or otherwise, including, without limitation, any
uninsured liabilities which were not accrued or reserved against in the
TargitMail Financial Statements other than those incurred in the ordinary course
of business or which in the aggregate do not or cannot reasonably be expected to
have a material adverse effect upon the earnings, assets, financial condition or
operations of TargitMail.
4.11 Title to Properties. TargitMail does not own any Real Property.
TargitMail has good title to all of the personal property, tangible and
intangible, owned by it, free and clear of any liens, charges, pledges, security
interest or other encumbrances other than those reflected in Schedule 4.11.
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4.12 Leases. Schedule 4.12 sets forth a complete and correct list of
each agreement to lease into which TargitMail has entered, whether as a lessor
or lessee, which relates to either real or personal property, other than monthly
leases of personal property which may be canceled upon not more than 60 days
notice or require the payment of not more than $100 per month. The agreements
listed in Schedule 4.12 are referred to herein as the "Leases" (each, a
"Lease"). Except as set forth in Schedule 4.12, TargitMail has not breached any
Lease and in no event has occurred which, with the giving of notice or the
passage of time or both, would cause a default under, or permit the termination,
modification or acceleration of any such Lease by any party thereto. Complete
copies of all of the Leases have been delivered to the Company.
4.13 Intellectual Property. Schedule 4.13 sets forth a schedule of
TargitMail' s Intellectual Property. The term "Intellectual Property" as used
herein means the rights of the owner thereof in all trade names, trademarks and
service marks, patents, patent rights, copyrights, whether domestic or foreign,
(as well as applications, registrations or certificates for any of the
foregoing), inventions, trade secrets, proprietary processes, software and other
industrial and intellectual property rights. TargitMail owns or is licensed or
otherwise has the right to use all of the Intellectual Property that is being
used in its business as it is presently being conducted. There is no claim,
suit, action or proceeding, pending or, to the knowledge of TargitMail,
threatened, against TargitMail asserting that its use of any Intellectual
Property infringes the rights of any third party or otherwise contesting
TargitMail's rights with respect to any Intellectual Property, and no third
party is known to TargitMail to be infringing upon the rights of TargitMail in
the Intellectual Property of TargitMail. All patents, registrations and
certificates issued by any governmental agency relating to the Intellectual
Property of TargitMail are valid and subsisting and have been properly
maintained.
4.14 Material Contracts. Schedule 4.14 sets forth a complete and
correct list of each Material Contract of TargitMail. Except as set forth in
Schedule 4.14, all of the Material Contracts of TargitMail are in full force and
effect and to the knowledge of TargitMail there has not occurred, with respect
to any such Material Contract, any default or event of default, which, with or
without due notice of with the lapse of time, or both, would constitute a
default or event of default on the part of TargitMail or, to the knowledge of
TargitMail, any other party thereto. Complete copies of all the Material
Contracts of TargitMail have been delivered to the Company.
4.15 Condition of Tangible Assets. The tangible personal property that
belongs to TargitMail shall be operable on the Closing Date. In all other
respects, such property shall be accepted by the Company in "as is, where is"
condition.
4.16 Insurance. Schedule 4.16 sets forth TargitMail's insurance
policies, copies of which have already been delivered to the Company.
4.17 Labor Matters. There are no collective bargaining agreements
covering employees of TargitMail. There are no controversies pending or, to the
knowledge of TargitMail, threatened between TargitMail and any of its employees
which affect, or can reasonably be expected to affect, materially and adversely,
its earnings, assets, financial condition or operations of the business
conducted by TargitMail, or relate to any specific effort to prevent, restrict
or delay consummation of the Merger.
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4.18 Employee Benefit Plans.
(a) Schedule 4.18 sets forth TargitMail's Pension Plans, Welfare Plans
or other employee benefit plans that are maintained by TargitMail with respect
to its employees, copies of which have already been delivered to the Company. At
time of Closing, all such plans shall be in effect.
(b) TargitMail has not incurred any material liability to the PBGC
under Section 4001, et seq. of ERISA and no condition exists that could
reasonably be expected to cause TargitMail to incur any such liability. Any
premium payable to the PBGC has been paid when due.
4.19 Tax Matters.
(a) The provisions made for taxes in the TargitMail Financial
Statements are sufficient for the payment of all Taxes of TargitMail, whether or
not disputed, which are properly accruable. There are no agreements by
TargitMail for the extension of time, or waiver of any statute of limitations,
for the assessment of any taxes, and all taxes due and payable by TargitMail on
or before the date of this Agreement have been paid or provided for, and are not
delinquent, except a otherwise provided in Schedule 4.19.
(b) TargitMail has filed all Tax Returns that it is required to have
filed. All such Tax Returns were correct and complete in all respects. No claim
has ever been made by an authority in a jurisdiction where TargitMail does not
file Tax Returns that it is or may be subject to taxation by that jurisdiction.
There are no liens on any of the assets of TargitMail that arose in connection
with any failure (or alleged failure) to pay any Tax.
(c) TargitMail has withheld and paid all Taxes required to have been
withheld and paid through March 31, 2001, in connection with the amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party.
(d) TargitMail does not expect any authority to assess any additional
Taxes for any period for which Tax Returns have been filed. Except as set forth
in Schedule 4.19, there is no dispute or claim concerning any Tax liability of
TargitMail either claimed or raised by any authority in writing. TargitMail has
delivered to the Company correct and complete copies of all federal income Tax
Returns, examination reports, and statements of deficiencies assessed against or
agreed to by TargitMail since its incorporation.
4.20 Finders. No broker, finder or investment banker is entitled to any
fee or commission from TargitMail for services rendered on behalf of TargitMail
in connection with the transactions contemplated by this Agreement, except as
otherwise provided in Schedule 4.20.
4.21 Full Disclosure. None of the representations and warranties of
TargitMail which are made in Article IV of this Agreement contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
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4.22 Insider Interests. Except as listed in Schedule 4.22 no officer,
director, or Affiliate of TargitMail (i) has any agreement with TargitMail, or
(ii) has any interest, direct or indirect, in any property, real or personal,
tangible or intangible, including, without limitation, Intellectual Property,
used in or pertaining to the business of TargitMail, except as a stockholder or
employee of TargitMail, or (iii) directly or indirectly owns any interest in or
controls or is an employee, agent, member, principal, officer, director, or
partner of, or participant in, or consultant to any corporation, partnership,
limited liability company, sole proprietorship, limited partnership, joint
venture, association, or other entity which is a competitor, supplier or
customer, of TargitMail.
4.23 Insider Transactions. Schedule 4.23 sets forth a correct and
complete statement of (a) the amounts and other essential terms of indebtedness
or other obligations, liabilities or commitments (contingent or otherwise) of
TargitMail to or from any past or present officer, director, employee, partner
or stockholder thereof or any person related to, controlled by or under common
control of any of the foregoing and (b) all transactions, together with their
essential terms, between such persons and TargitMail.
4.24 Books and Records. The books of account and other financial and
corporate records of TargitMail are in all material respects complete and
correct, are maintained in accordance with good business practices, and are
accurately reflected in the TargitMail Financial Statements. The minute books of
TargitMail as previously made or to be made available to the Company contained
accurate records of all meetings.
4.25 Bank and Safe Deposit Arrangements. Schedule 4.25 sets forth a
correct and complete list of each bank account and safe deposit box maintained
by TargitMail, and the names of all persons authorized to deal with such
accounts and safe deposit boxes.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND ACQUISITION SUB
The Company represents and warrants as of the date of execution of this
Agreement and as of Closing as follows:
5.1 Organization, Qualification. The Company and Acquisition Sub each
is a corporation duly organized, validly existing and in good standing under the
laws of Delaware and has corporate power and authority to own all of its
properties and assets and to carry on its business as it is presently being
conducted. The Company is duly qualified and in good standing to do business in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary except
in those jurisdictions where the failure to be duly qualified and in good
standing would not have a material adverse effect on the Company or the business
conducted by it. Acquisition Sub has been formed for the sole purpose of
effecting the Merger and, except as contemplated by this Agreement, Acquisition
Sub has not conducted any business activities and does not have any material
liabilities or obligations. The Company has delivered to TargitMail complete and
correct copies of its Certificate of Incorporation and Bylaws as currently in
effect.
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5.2 Capitalization of the Company.
(a) The authorized capital stock of the Company consists of (i)
100,000,000 shares of Common Stock, $.001 par value, of which 51,276,271 shares
will issued and outstanding on the Closing Date, and (ii) 10,000,000 shares of
preferred stock $.001 par value, none of which are issued or outstanding.
(b) The Company has outstanding $60,000 of convertible notes, which are
convertible into 6,000,000 shares of Common Stock.
(c) Other than the foregoing, there are no options, warrants,
convertible debt or other rights to acquire any equity interest in the Company,
whether upon exchange for or conversion of other securities or otherwise,
outstanding, nor shall any be granted prior to the Effective Time. The Company
will promptly notify TargitMail if the above information in this Section 5.2
changes prior to Closing.
5.3 Consents and Approvals. There is no requirement applicable for the
Company to make any filing with, or to obtain any permit, authorization, consent
or approval of, any public body as a condition to the consummation of the
Merger, nor is there any requirement that any party to any Material Contract of
the Company, or any license or permit for the use of Intellectual Property of
the Company or loan agreement to which the Company is a party, or by which it is
bound, consent to the execution of this Agreement by the Company or the
consummation of the Merger.
5.4 Non-Contravention. The execution and delivery by the Company of
this Agreement does not, and the consummation of the Merger will not, (i)
violate or result in a breach of any provision of the Certificate of
Incorporation or Bylaws of the Company, (ii) result in a default (or give rise
to any right of termination, cancellation or acceleration) under the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which the Company is a
party or by which the Company or the business conducted by it may be bound, or
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or to the business conducted by the Company, excluding
from the foregoing clauses (ii) and (iii) such defaults and violations as would
not have a material adverse effect on the Company.
5.5 Corporate Authority and Resolutions. The Boards of Directors of the
Company and Acquisition Sub each have adopted resolutions authorizing the
execution of this Agreement by each entity as of the date hereof and shall adopt
such additional resolutions as may be necessary authorizing the execution of
documents and Closing by the Company and/or Acquisition Sub, as the case may be,
as contemplated by this Agreement.
5.6 Validity of Securities to be Issued. The Notes and the Conversion
Shares have been duly authorized as required under all applicable laws and, upon
conversion the Notes pursuant to the terms of such Notes, will be validly
issued, fully paid and non-assessable, and not subject to any preemptive rights.
5.7 Current Information. The Company has previously delivered to
TargitMail and its shareholders (a) true and complete copies of the Company's
audited financial statements for the fiscal year ended December 31, 2000; and
(b) certain other non-public information relating to the business and affairs of
the Company, which information, should it be available, the Company will
12
continue to furnish to TargitMail until the Closing. The Company has also
advised TargitMail that the Company is subject to the periodic reporting filing
requirements of the Securities Exchange Act of 1934 and that its filed reports
may be found on the Commission's website at xxx.xxx.xxx or may be obtained
directly from the Company. The financial information with respect to the Company
included in its audited and unaudited financial statements described in this
Section 5.7 fairly represents the financial condition of the Company for the
periods for which such financial statements were prepared.
5.8 Authorizations of Transactions; Securities Compliance. The Notes
are, and the issuance of the Conversion Shares will be, exempt from registration
under the Securities Act pursuant to Section 4(2) thereof, and shall have been
exempt or registered or qualified under the securities or blue sky laws of all
those states that may require it for issuance at Closing.
5.9 No Registration Rights. There is no agreement granting or providing
for registration rights with respect to the shares to be delivered to TargitMail
shareholders pursuant to this Agreement.
5.10 No Brokers or Commissions. Other than MCG Partners, the Company
has not engaged any broker, finder or similar individual in connection with the
Merger.
5.11 Binding Agreement. The execution, delivery and performance by the
Company and Acquisition Sub of this Agreement and the other instruments
contemplated by this Agreement have been duly authorized by all necessary
corporate action of the Company and Acquisition Sub, as the case may be. This
Agreement has been duly executed and delivered to TargitMail by the Company and
Acquisition Sub and constitutes the legal, valid and binding agreement of each
of the Company and Acquisition Sub enforceable in accordance with its terms.
5.12 No Violation. The execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions contemplated
hereby will not, with or without the giving of notice or the lapse of time or
both, violate, contravene or conflict with or result in a breach of or
constitute a default under (i) any writ, order, judgment or decree of any court
arbitrator or governmental agency applicable to the Company, (ii) the
Certificate of Incorporation or Bylaws of the Company; (iii) any contract, lease
or other agreement to which the Company is a party or by which the Company is
bound; or (iv) to the best knowledge of the Company, any law, rule or regulation
applicable to the Company.
5.13 Litigation. There are no actions, suits, claims, investigations or
proceedings (legal, administrative or arbitrative) pending or, to the knowledge
of the Company, threatened, against the Company, whether at law or in equity and
whether civil or criminal in nature, before any federal, state, municipal or
other court, arbitrator, governmental department, commission, agency or
instrumentality, domestic or foreign, nor are there any judgments, decrees or
orders of any such court, arbitrator, governmental department, commission,
agency or instrumentality outstanding against the Company which have, or if
adversely determined could reasonably be expected to have, a material adverse
effect on the earnings, assets, financial condition or operations of the
business conducted by the Company, or which seek specifically to prevent,
restrict or delay consummation of the sale of the Merger or fulfillment of any
of the other conditions of this Agreement.
5.14 Compliance with Laws; Regulatory Matters. The Company is in
compliance in all material respects with all laws, rules and regulations, all
orders, directives and supervisory letters of, and all agreements, memoranda of
understanding or similar arrangements with, regulatory authorities and all other
13
legal requirements applicable to the Company or the Company's businesses; and
the Company is not subject to any order, directive or supervisory letter of, or
agreement, memorandum or understanding or similar arrangement (including board
resolutions adopted at the request of regulatory authority) with, any regulatory
authority restricting its operations or, restricting it from taking any action
or requiring that certain actions be taken, and the Company has no knowledge
that any such order, directive, supervisory letter, agreement, memorandum or
understanding or similar arrangement is threatened, contemplated or under
consideration by any regulatory authority.
ARTICLE VI
INVESTMENT REPRESENTATIONS
TargitMail has informed each preferred TargitMail Shareholder, as
follows:
6.1 No Representations as to Profit or Loss. No representation or
warranty of any kind has been made by the Company or its officers, directors,
shareholders or agents to any TargitMail Stockholder with respect to the profit
or loss that may be realized, if any, as a result of the Merger or the
acquisition of the Company's securities, nor as to any other matter except as
expressly set forth in this Agreement.
6.2 Shares Not Registered. Each TargitMail Stockholder understands that
the Notes and the Conversion Shares have not been registered under the
Securities Act nor under the securities laws of any state in reliance on
exemptions therefrom for non-public offerings, and further understand that the
Notes and the Conversion shares have not been approved or disapproved by the
Securities and Exchange Commission, nor has any state securities administrator
or agency passed on the accuracy or adequacy of any written information provided
by the Company.
6.3 Investment Intent. The TargitMail Stockholder is acquiring the
shares in the Company for their own account for investment purposes only and not
with a view to the sale or other distribution thereof, in whole or in part.
6.4 Legend. The Notes and the Conversion Shares shall have the
following restrictive legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933 and are "restricted securities" as that
term is defined in Rule 144 under the Act. The securities may not be sold
or offered for sale except pursuant to an effective registration statement
under the Securities Act of 1933 or an opinion of counsel for the
corporation that registration is not required under such Act.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Conduct of Business by TargitMail and the Company.
(a) TargitMail warrants and represents that from the date hereof until
the Closing, TargitMail will (a) conduct its business only in the ordinary and
usual course and in a manner consistent with past practices, (b) maintain in
good repair, at its expense, all of its properties, and (c) use its best efforts
to preserve its relationship with suppliers, customers, dealers and others
14
having business relationships with TargitMail. TargitMail will notify the
Company of any emergency or material change in the normal conduct of the
business or operations of TargitMail, the threat of or initiation of any
material litigation against TargitMail, and the initiation of any investigation
of TargitMail by any party, whether private or governmental.
(b) The Company warrants and represents that from the date hereof until
the Closing, the Company will (a) conduct its business only in the ordinary and
usual course and in a manner consistent with past practices, (b) maintain in
good repair, at its expense, all of its properties, and (c) use its best efforts
to preserve its relationship with suppliers, customers, dealers and others
having business relationships with the Company. The Company will notify
TargitMail of any emergency or material change in the normal conduct of the
business or operations of the Company, the threat or initiation of any material
litigation against the Company, and the initiation of any investigation of the
Company by any party, whether private or governmental.
7.2 Investigation of Business and Properties; Additional Data. From the
date hereof until the Closing, TargitMail and the Company shall each afford the
other and their attorneys, accountants, financial advisors and other
representatives complete access at all reasonable times to their offices, and to
their officers, employees, properties, contracts, and books and records. In
addition, TargitMail and the Company shall furnish to each other such financial,
operating and additional data as they may reasonably request concerning the
business, operations, properties and personnel of either of them.
7.3 Efforts to Consummate. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate, as promptly as practicable,
the transactions contemplated hereby, including, but not limited to, the
obtaining of all necessary consents, waivers, authorizations, orders and
approvals of third parties, whether private or governmental, required of it to
enable it to comply with the conditions precedent to consummating the
transactions contemplated by this Agreement. Each party agrees to cooperate
fully with the other party in assisting it to comply with this Section.
Notwithstanding the foregoing, neither party shall be required to initiate any
litigation, make any substantial payment or incur any material economic burden,
except for a payment otherwise required of it, to obtain any consent, waiver,
authorization, order or approval, and if, despite such efforts, either party is
unable to obtain any consent, wavier, authorization, order of approval the other
party may terminate this Agreement and shall have no liability therefor.
7.4 Further Assurances. The parties will use reasonable efforts to
implement the provisions of this Agreement, and for such purpose, the parties
will, at the request of any other party, at or after the closing, without
further consideration, promptly execute and deliver, or cause to be executed and
delivered, such additional documents as any other party may reasonably deem
necessary or desirable to implement any provision of this Agreement.
7.5 Expenses. Whether or not the Merger is consummated all expenses
incurred in connection with this Agreement and the transactions contemplated
hereby will be paid by the party incurring such expenses.
15
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The following are certain conditions precedent to the obligation of the
Company to consummate the Merger, which conditions must be fulfilled (or waived
in writing by the Company) on or before the Closing Date.
8.1 Accuracy of Representations and Warranties. The representations and
warranties of TargitMail herein contained shall be true on and as of Closing
with the same force and effect as though made on and as of Closing, except as
affected by transactions contemplated hereby and except to the extent that such
representations and warranties were made as of a specified date and as to such
representations and warranties the same shall have been true as of the specified
date.
8.2 Assumption of Citizens Note. The Citizens Note shall have been
assumed by Xxxxxxxxx and Xxxxxx with the consent of Citizens Bank.
8.3 Absence of Default. No condition or event which constitutes an
event of default hereunder by TargitMail or which, after notice and lapse of
time, or both, would constitute an event of default hereunder by TargitMail
shall have occurred and be continuing.
8.4 Absence of Material Damage to or Expropriation of Property. Between
the date of this Agreement and the Closing, there shall not have occurred (1)
any material casualty to any facility, property, equipment or inventory owned or
leased by TargitMail, or (2) any material condemnation, seizure, expropriation
or liquidation by any governmental authority or any officer or instrumentality
thereof of facilities, property, equipment or inventory owned or leased by
TargitMail.
8.5 Absence of Liens. There will have been no liens recorded after the
execution of this Agreement but prior to Closing with respect to any personal,
real or mixed property owned by TargitMail.
8.6 Actions, Proceedings, Etc. All actions, proceedings, instruments
and documents required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related legal matters shall have
been satisfactory to and approved by counsel for the Company in the exercise of
reasonable discretion, and such counsel shall have been furnished with such
certified copies of actions and proceedings and such other instruments and
documents as they shall have reasonably requested.
8.7 Satisfaction with Respect to Financial Condition and Performance.
The Company must be satisfied that each and every representation made by
TargitMail regarding the Financial Statements and the financial condition of
TargitMail shall be true, complete and accurate in all material respects as of
Closing. Without limiting the foregoing, the Company must be satisfied that: (i)
the TargitMail Financial Statements shall have been prepared on an accrual basis
of accounting, consistent with prior years; and (ii) except as specifically
disclosed in the Financial Statements, there has been no distribution to
shareholders or others or bonuses made to employees.
8.8 Continuity of Business Relationships. The Company shall be
satisfied that TargitMail's customer, vendor, financial institution(s),
insurance carrier and employee relations are satisfactory at Closing.
16
8.10 Delivery of Certificates. The TargitMail Stockholders shall have
delivered the TargitMail Stock and all other documents required to be delivered
pursuant to Section 3.12. TargitMail shall provide to the Company all the
necessary consents to this Agreement and the Merger that the Company may
reasonably require.
ARTICLE IX
CONDITIONS PRECEDENT TO THE TARGITMAIL STOCKHOLDER'S OBLIGATIONS
The following are certain conditions precedent to the TargitMail's
obligation to consummate the Merger, which conditions must be fulfilled (or
waived in writing by TargitMail) on or before the Closing Date.
9.1 Accuracy of Representations and Warranties. The representations and
warranties of the Company herein contained shall be true on and as of Closing
with the same force and effect as though made on and as of Closing, except as
affected by transactions contemplated hereby and except to the extent that such
representations and warranties were made as of a specified date and as to such
representations and warranties the same shall have been true as of the specified
date.
9.2 Absence of Default. No condition or event which constitutes an
event of default hereunder by the Company or which, after notice and lapse of
time, or both, would constitute an event of default hereunder by the Company
shall have occurred and be continuing.
9.3 Absence of Material Damage to or Expropriation of Property. Between
the date of this Agreement and the Closing, there shall not have occurred (1)
any material casualty to any facility, property, equipment or inventory owned by
the Company, or (2) any material condemnation, seizure, expropriation or
liquidation by any governmental authority or any officer or instrumentality
thereof of facilities, property, equipment or inventory owned by the Company.
9.4 Actions, Proceedings, Etc. All actions, proceedings, instruments
and documents required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related legal matters shall have
been satisfactory to and approved by counsel for TargitMail, and such counsel
shall have been furnished with such certified copies of actions and proceedings
and such other instruments and documents as they shall have reasonably
requested.
9.5 Satisfaction with Respect to Financial Condition and Performance.
TargitMail must be satisfied that each and every representation made by the
Company regarding the financial condition of the Company shall be true, complete
and accurate in all material respects as of Closing.
9.6 Continuity of Business Relationships. TargitMail shall be satisfied
that the Company's customer, vendor, financial institution(s), insurance carrier
and employee relations are satisfactory at Closing.
9.7 Corporate Authority and Resolutions of the Company. The Company
shall have delivered to TargitMail resolutions of its Board of Directors
authorizing the Merger, the issuance of the Notes and the execution of this
Agreement.
9.8 Delivery of the Notes. The Company shall have delivered the Notes
to TargitMail.
17
ARTICLE X
INDEMNIFICATION
10.1 The Company's Right to Indemnification. The TargitMail Preferred
Stockholders undertake and agree, severally, to hold the Company harmless
against any and all losses, costs, liabilities, claims, obligations and
expenses, including reasonable attorneys' fees, incurred or suffered by the
Company arising from (i) the breach, misrepresentation or other violation of any
covenant, warranty or representation of or by TargitMail contained in this
Agreement, and (ii) all liabilities of TargitMail not disclosed in writing to
the Company prior to the execution of this Agreement. This indemnity provision
shall survive Closing for a period of one (1) year.
10.2 TargitMail's Right to Indemnification. The Company undertakes and
agrees to hold the TargitMail Stockholders harmless against any and all losses,
costs, liabilities, claims, obligations and expenses, including reasonable
attorneys' fees incurred or suffered by the TargitMail Stockholders arising from
the breach, misrepresentation or other violation of any covenant, warranty or
representation of or by the Company contained in this Agreement. This indemnity
provision shall survive Closing for a period of one (1) year.
10.3 Procedure. If any claim or proceeding covered by the foregoing
agreements to indemnify and hold harmless shall arise, the party who seeks
indemnification (the "Indemnified Party") shall give written notice thereof to
the other party (the "Indemnitor") promptly (but in no event more than ten (10)
days) after it learns of the existence of such claim or proceeding. Any claim
for indemnification hereunder shall be accompanied by evidence demonstrating the
Indemnified Party's right or possible right to indemnification, including a copy
of all supporting documents relevant thereto. The Indemnitor shall have the
right to employ counsel reasonably acceptable to the Indemnified Party to defend
against any such claim or proceeding, or to compromise, settle or otherwise
dispose of the same; provided, however, that no settlement or compromise shall
be effected without the consent of the Indemnified Party, which consent shall
not be unreasonably withheld, and provided further that in the event the
Indemnified Party does not consent to a bona fide offer of settlement made by a
third party and the settlement involves only the payment of money, then the
Indemnitor may, in lieu of payment of such settlement to such third party, pay
such amount to the Indemnified Party. After the payment to the Indemnified
Party, the Indemnitor shall have no further liability with respect to such claim
or proceeding and the Indemnified Party shall assume full responsibility to
defend the same. After notice from the Indemnitor to the Indemnified Party of
its election to assume the defense of such claim or proceeding, the Indemnitor
shall not be liable to the Indemnified Party under this paragraph for any legal
or other expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof; provided, however, that the Indemnified Party shall
have the right to employ counsel to represent it if, in the Indemnified Party's
reasonable judgment, it is advisable for the Indemnified Party to be represented
by separate counsel, and in that event the fees and expenses of such separate
counsel shall be paid by the Indemnified Party. The parties will fully cooperate
in any such action, making available to each other books or records for the
defense of any such claim or proceeding. If the Indemnitor fails to acknowledge
in writing its obligation to defend against or settle such claim or proceeding
18
within ten (10) days after receiving notice of the claim or proceeding from the
Indemnified Party (or such shorter time specified in the notice as the
circumstances of the matter may dictate), the Indemnified Party shall be free to
dispose of the matter, at the expense of the Indemnitor (but subject to the
Indemnitor's right subsequently to contest through appropriate proceedings its
obligation to provide indemnification), in any way which the Indemnified Party
deems in its best interest.
10.4 Limitations on Indemnification Rights. Other than the payment of
costs of defense in accordance with Section 10.3, indemnification shall be due
only to the extent of the loss or damage actually suffered (i.e., reduced by any
offsetting or related asset or service received and by any recovery from any
third party, such as an insurer), net after the amount equal to any reduction in
federal, state or local income, franchise or other taxes occasioned by such loss
or damage (even though the tax return by which such reduction would have been
realized is not yet due), but including an amount equal to any increase in
federal, state and local income, franchise or other taxes occasioned by the
indemnification payment and then only to the extent of the excess over the
Agreed De Minimis Amount (hereinafter defined). The Indemnitor shall be
subrogated to all rights of the Indemnified Party against any third party with
respect to any claim for which indemnification is paid. Notwithstanding the
foregoing, the Indemnitor shall not be liable to the Indemnified Party for any
individual misrepresentation, breach of warranty or violation of covenant where
the otherwise indemnifiable amount does not exceed $5,000 and, as regards all
such indemnifiable misrepresentations or breaches of warranty that do not exceed
$5,000, the Indemnitor shall not be liable except to the extent that the
aggregate amount thereof exceeds $5,000 (such sum being herein referred to as
the "Agreed De Minimis Amount").
ARTICLE XI
GENERAL PROVISIONS
11.1 Expenses. Each party shall pay its own expenses incident to the
negotiation and preparation of this Agreement and the transactions contemplated
hereby. All other recording costs for bills of sale and other instruments of
transfer, and all stamp, sales, use and transfer taxes in connection with the
purchase and sale of shares shall be paid by the transferring party.
11.2 Notices. All notices, requests, demands and other communications
pertaining to this Agreement shall be in writing and shall be deemed duly given
when delivered personally with a receipt, when delivered by an overnight courier
service or mailed by certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) To the Company: XxxxxxxXxxxxx.xxx, Inc.
0000 X. Xxxxxxxx Xxxx Xxxx Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
With a copy to: Xxxxxxx X. Xxxxxx, Esquire
0000 X. Xxxxxxxx Xxxx Xxxx Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
(b) To TargitMail : Global Technology Marketing International, Inc.
000 Xxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
19
With a copy to: Xxxx Xxxxx, Esq.
Xxxxxx & Xxxxx
00 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
and Xxxxxxxx X. Xxxxxxx, Esq.
Hill & Xxxxxx, P.C.
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
11.3 Certain Breaches. Neither party shall have any liability to the
other party with respect to a breach by a party of which the other party has
received written notice at or prior to Closing.
11.4 Prior Negotiations. This Agreement supersedes in all respects all
prior and contemporaneous oral and written negotiations, understandings and
agreements between the parties with respect to the subject matter hereof. All of
said prior and contemporaneous negotiations, understandings and agreements are
merged herein and superseded hereby.
11.5 Entire Agreement; Amendment. This Agreement and the Exhibits to
this Agreement set forth the entire understanding between the parties in
connection with the transaction contemplated herein, there being no terms,
conditions, warranties or representations other than those contained herein,
referenced herein or provided for herein. Neither this Agreement nor any term or
provision hereof may be altered or amended in any manner except as an instrument
in writing signed by the party against whom the enforcement of any such change
is sought.
11.6 Exhibits. The Exhibits attached hereto or referred to herein are a
material part of this Agreement, as if set forth in full herein.
11.7 Severability. If any term of this Agreement is illegal or
enforceable at law or in equity, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby. Any illegal or unenforceable term shall be deemed to be void
and of no force and effect only to the minimum extent necessary to bring such
term within the provisions of any applicable law or laws and such term, as so
modified, and the balance of this Agreement shall then be fully enforceable.
11.8 Survival of Representations and Warranties. Unless otherwise
specifically noted herein, the several representations, warranties and covenants
of the parties contained herein shall survive the closing for a period of one
(1) year from the Closing Date. Thereafter neither party shall have any
liability to the other based upon any of the representations, warranties and
covenants set forth herein.
11.9 Waiver. Unless otherwise specifically agreed in writing to the
contrary: (i) the failure of any party at any time to require performance by
another party of any provision of this Agreement shall not affect such party's
right thereafter to enforce the same, (ii) no waiver by either party of any
default by the other shall be taken or held to be a waiver by such party of any
other preceding or subsequent default, and (iii) no extension of time granted by
any party for the performance of any obligation or act by the another party
shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
20
11.10 Number and Gender. Whenever the context so requires, words used
in the singular shall be construed to mean or include the plural and vice versa,
and pronouns of any gender shall be construed to mean or include any other
gender or genders.
11.11 Headings and Cross-References. The headings of this Agreement are
included for convenience of reference only, and shall in no way limit or affect
the meaning or interpretation of the specific provisions hereof. All
cross-references to paragraphs herein shall mean the paragraphs of this
Agreement unless otherwise stated or clearly required by the context. All
references to Exhibits herein shall mean the Exhibits to this Agreement. Words
such as "herein" and "hereof" shall be deemed to refer to this Agreement as a
whole and not to any particular provision of this Agreement unless otherwise
stated or clearly required by the context.
11.12 Choice of Laws. This Agreement is to be construed and governed by
the laws of the State of Florida, except for the choice of law rules utilized in
that jurisdiction.
11.13 Arbitration. Any dispute arising under or related to this
Agreement that the parties are unable to resolve by themselves shall be settled
by arbitration in Palm Beach County, Florida, by a panel of three arbitrators.
The parties shall each designate one disinterested arbitrator and the two
arbitrators so designated shall select the third arbitrator. The persons
selected as arbitrators need not be professional arbitrators, and persons such
as accountants, appraisers and bankers shall be acceptable. Before undertaking
to resolve the dispute, each arbitrator shall be duly sworn faithfully and
fairly to hear and examine the matters in controversy and to make a just award
according to the best of his or her understanding. The arbitration hearing shall
be conducted in accordance with the rules of the American Arbitration
Association. The written decision of a majority of the arbitrators shall be
final and binding on the parties. Costs and expenses of the arbitration
proceeding shall be assessed between the parties in a manner to be decided by a
majority of the arbitrators, and the assessment shall be set forth in the
decision and award of the arbitrators. No action at law or suit in equity based
upon any claim arising out of or relating to this Agreement shall be instituted
in any court by a party against another except an action to compel arbitration
pursuant to this paragraph, an action to enforce the award of the arbitration
panel rendered in accordance with this paragraph, or a suit for specific
performance as may be specifically provided herein.
11.14 Successors. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns.
11.15 Third Parties. Nothing in this Agreement, whether expressed or
implied, is intended to (i) confer any rights or remedies on any person other
than the parties and their respective successors and assigns, (ii) relieve or
discharge the obligation or liability of any third party, or (iii) or give any
third party any right of subrogation or action against any party hereto.
11.16 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were on the same
instrument. Each of the counterparts, when signed, shall be deemed to be an
original, and all of the signed counterparts together shall be deemed to be one
and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
21
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date and year first above written.
WITNESS/ATTEST: XXXXXXXXXXXXX.XXX, INC.,
a Delaware corporation
_____________________________ By: /s/ C. Xxxxxxxx Xxxxxxxx
---------------------------
C. Xxxxxxxx Xxxxxxxx, Vice Chairman
GLOBAL TECHNOLOGY MARKETING
INTERNATIONAL, INC., d/b/a XxxxxxXxxx.xxx
a Delaware corporation
_____________________________ By: /s/ Xxxxx Xxxxxxxxxx
-----------------------
Xxxxx Xxxxxxxxxx, Treasurer
XX.XXX ACQUISITION CORP.,
A Delaware corporation
____________________________ By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, President
THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER
ANY OTHER APPLICABLE SECURITIES LAWS. AS A RESULT, NO SALE OR TRANSFER OF THIS
NOTE OR SUCH SHARES OF COMMON STOCK MAY BE MADE EXCEPT IN COMPLIANCE WITH OR
PURSUANT TO AN EXEMPTION FROM SUCH LAWS.
XXXXXXXXXXXXX.XXX, INC.
5% Convertible Note
$400,000
XXXXXXXXXXXXX.XXX, INC. a Delaware corporation (the "Company"), having
its principal place of business at 0000 X. Xxxxxxxx Xxxx Xxxx, Xxxxx 000, Xxxx
Xxxxx, Xxxxxxx 00000, for value received, hereby promises to pay to
__________________. or permitted registered assigns ("Holder"), on June 30, 2002
(the "Maturity Date"), the principal sum (the "Principal Amount") of Four
Hundred Thousand Dollars ($400,000).
1. Interest. The Company shall pay interest on the outstanding Principal Amount
from the date hereof, at the rate of five percent (5%) per annum. All accrued
interest shall be payable on the Maturity Date. The Company shall also pay
interest on any overdue Principal Amount. All computations on interest shall be
made on the basis of a year of 360 days on the actual number of days any such
Principal Amount is outstanding. The Company shall have the option of paying the
interest in cash or shares ("Shares") of the Company's Common Stock ("Common
Stock"). If payment is made in Shares, then the number of shares shall be
computed based on the average of the last sale price for the 10 trading days
ending on the interest payment date. The Company may defer the issuance of such
interest shares until such time as the Note is converted or redeemed.
2. Transfer and Exchange.
2.1 No View Toward Distribution. The Holder represents and warrants that he has
acquired this Note for its own account for investment purposes and not with a
view toward the distribution of this Note or of the shares of Common Stock
issuable upon conversion of this Note.
2.2 Transfer of Restricted Securities. This Note and the shares of Common Stock
issuable upon the conversion hereof (collectively, "Restricted Securities") are
transferable only pursuant to (i) a public offering registered under the
Securities Act of 1933, as amended (the "Securities Act"), (ii) Rule 144
promulgated under the Securities Act (or any similar rule then in force) if such
rule is available, or (iii) any other legally available means of transfer.
3. Conversion.
3.1 Optional Conversion. The Holder may convert all or any part of the
outstanding principal amount of this Note plus all accrued but unpaid interest
due thereon (the "Note Amount") into 40% on an as-converted basis of the Shares
of Common Stock ("Common Stock") to be outstanding immediately prior to
conversion (the "Conversion Price"), assuming that the acquisition of Xxxxxxxx
Software, Inc. d/b/a First Xxx.xxx is completed.
3.2 Surrender of Note. The Holder shall surrender the Note to the Company
accompanied by a written conversion notice to the Company which sets forth the
amount of the Note to be converted and the name, with address, in which the
certificate for the Shares issuable on such conversion shall be issued.
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3.3 Delivery. Promptly after the receipt of such notice and the surrender of
this Note as aforesaid, the Company covenants to effect such conversion, and the
Company shall deliver to the Holder a certificate for the number of full shares
of Common Stock issuable upon the conversion of this Note (or specified portion
thereof). In the event an amount less than the total outstanding amount shall be
converted, the Company shall issue a new Note for the remaining amount of the
Note within ten (10) days after the date of conversion.
3.4 Common Stock in Reserve. The Company shall at all times reserve and keep
available, free from preemptive rights, out of the Company's authorized but
unissued Common Stock, for the purpose of effecting the conversion of this Note,
the full number of Shares.
4. Conversion Price Adjustment.
The Conversion Price shall be subject to adjustment from time to time
as set forth in this Section 5.
4.1 Stock Dividends. In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in shares of Common
Stock, the Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying the
Conversion Price in effect immediately prior to such adjustment by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator of which shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
reduction to become effective immediately after the opening of business on the
date following the date fixed for such determination.
4.2 Subdivisions and Combinations. In case the outstanding shares of Common
Stock shall be subdivided into a greater number of shares, the Conversion Price
in effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced, and,
conversely, in the case where the outstanding shares of Common Stock shall be
combined into a smaller number of shares, the Conversion Price in effect at the
opening of business on the day following the day upon which such combination
becomes effective shall be proportionately increased.
4.3 Certain Other Dividends and Distributions. In case at any time or from time
to time the Company shall fix a record date for the purpose of determining the
holders of its Common Stock entitled to receive any dividend or other similar
distribution of
(a) cash, or
(b) any evidences of its indebtedness, any shares of its stock or any
other securities or property of any nature whatsoever, or
(c) any warrants or other rights to subscribe for or purchase any
evidence of its indebtedness, any shares of its stock or any other securities or
property of any nature whatsoever, then the Conversion Price in effect at the
opening of business on the day following the date fixed for such determination
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shall be adjusted by multiplying the Conversion Price in effect immediately
prior to such adjustment by a fraction (i) the numerator of which shall be the
fair value per share of Common Stock at the date of such determination minus the
portion applicable to one share of Common Stock of any cash so distributable and
the fair value (as determined in good faith by the Board of Directors of the
Company) of any and all evidences of indebtedness, shares of stock, other
securities or property or warrants or other subscription or purchase rights so
distributable, and (ii) the denominator of which shall be the fair value per
share of Common Stock at the date of such determination. A reclassification of
the Common Stock into shares of Common Stock and shares of any other class of
stock shall be deemed a distribution by the Company to the holders of its Common
Stock of such shares of such other class of stock within the meaning of this
Section 5 and, if the outstanding shares of Common Stock shall be changed into a
larger or smaller number of shares of Common Stock as a part of such
reclassification, shall be deemed a subdivision or combination, as the case may
be, of the outstanding shares of Common Stock within the meaning of Section 5.
4.4 Other Provisions Applicable to Adjustment Under This Section. The following
provisions shall be applicable to the making of adjustments of the Conversion
Price hereinbefore provided for in this Section:
(a) The adjustments required by this Section 5 shall be made whenever
and as often as any specified event requiring an adjustment shall occur, except
that no adjustment of the Conversion Price that would otherwise be required
shall be made except in the case of a subdivision or combination of shares of
the Common Stock, as provided for in Section 5 unless and until such adjustment
either by itself or with other adjustments not previously made adds to or
subtracts from the Conversion Price immediately prior to the making of such
adjustment at least $.02. Any adjustment representing a change of less than such
minimum amount (except as aforesaid) shall be carried forward and made as soon
as such adjustment, together with other adjustments required by this Section 5
and not previously made, would result in a minimum adjustment. For the purpose
of any adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(b) In computing adjustments under this Section, fractional interests
in Common Stock shall be taken into account to the nearest one-hundredth of a
share.
4.5 Changes in Common Stock, Consolidation, Merger or Sale. In case at any time
and from time to time the Company shall be a party to any transaction including,
without limitation, a merger or consolidation with or into another entity, a
sale of all or substantially all of the Company's assets to another entity, a
liquidation, or a recapitalization or reclassification of the Common Stock (each
such transaction being hereinafter referred to as a "Transaction"), and such
Transaction if effected in such a way that holders of Common Stock are entitled
to receive (either directly or upon subsequent liquidation) cash, stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition to such Transaction, lawful and adequate provision will be made
whereby the Holder of this Note will thereafter have the right to acquire and
receive in lieu of the shares of Common Stock immediately theretofore acquirable
and receivable upon the exchange of such holder's Note, such cash, shares of
stock, securities or assets as may be issuable or payable with respect to or in
exchange for the number of shares of Common Stock immediately theretofore
acquirable and receivable upon exchange of such Holder's Note had such
Transaction not taken place (subject to adjustments from and after the
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consummation of such Transaction as nearly equivalent as possible to the
adjustments provided for in this Section 5). The Company will not effect any
Transaction unless, prior to the consummation thereof, each person that may be
required to deliver any cash, securities or other property upon the exchange of
Notes as provided herein shall assume, by written instrument delivered to each
Holder of Notes, the obligation to deliver to such Holder such cash, securities
or other property as in accordance with the foregoing provisions such Holder may
be entitled to receive. The foregoing provisions of this Section 5 shall
similarly apply to successive mergers, consolidations, sales of assets,
liquidations, recapitalization and reclassifications.
4.6 Notice of Certain Actions. If, while this Note remains outstanding, the
Company shall propose to take any action that would require an adjustment
pursuant to this Section 5, then the Company shall cause to be mailed by
certified mail to the Holder, at least ten (10) days prior to the applicable
record date, a notice describing such action.
5. Events of Default; Remedies.
5.1 Events of Default; Acceleration. If any of the following conditions or
events ("Events of Default") shall occur (whether voluntary or involuntary or
arising by operation of law or otherwise):
(a) the Company shall default in the payment of any principal or
interest under this Note, or any other Note given in connection with the
transaction contemplated hereby;
(b) the Company (i) files, or consents by answer (or failure to
contest) or otherwise to the filing against it of, a petition for relief or
reorganization or arrangement of any other petition in bankruptcy, for
liquidation or dissolution or to take advantage of any present or future
bankruptcy or insolvency law of any jurisdiction, (ii) make an assignment for
the benefit of its creditors, (iii) seek or consent to the appointment of a
custodian, receiver, trustee, liquidator or other officer with similar powers of
itself or of any substantial part of its property, (iv) be adjudicated a
bankrupt or an insolvent or be liquidated or dissolved, or (v) take corporate
action for the purpose of any of the foregoing; then, the unpaid principal
amount of this Note, together with the interest accrued thereon as well as any
unpaid principal and accrued interest on any other Note given in connection
herewith and shall automatically become and be due and payable, without
presentment, demand, protest, notice or other requirements of any kind, all of
which are hereby expressly waived by the Company.
5.2 Remedies on Default. If any Event of Default shall have occurred and be
continuing for a period of twenty (20) days, the Holder of this Note may proceed
to protect and enforce the rights available to such Holder either by an action
at law, suit in equity or both, whether for the specific performance of any
agreement contained in this Note, or for an injunction against a violation of
any of the terms hereof, or in aid of the exercise of any power granted hereby
or by law or otherwise. The Company will pay the Holder all such further amounts
to cover the cost and expenses of collection including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
5.3 Remedies Not Waived. No course of dealing and no delay on the part of Holder
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice Holder's rights, powers or remedies.
5.4 Remedies Not Cumulative. No right, power or remedy conferred upon Holder
shall be exclusive of any other right, power or remedy referred to herein or now
or hereafter available at law, in equity, by statute or otherwise.
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6. Ranking. This Note and any other Note issued simultaneously to this Note in
the aggregate principal amount of $400,000 shall rank senior to all other
indebtedness of the Company, whether now outstanding or issued in the future.
7. Modification and Waiver.
The rights and obligations of the Company may not be modified or
waived, except in writing signed by the Company and the Holder.
8. Governing Law.
This Note shall be governed by and construed in accordance with the
substantive laws of the State of Florida without reference to its principles
governing conflicts of law.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Date: May 25, 2001
GOURMETMARKETCOM, INC.
By:
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Xxxx Xxxxxxxx, Chairman
