EXECUTION COPY
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this 'Agreement) is made and
entered into as of May 20, 2003, by and among GlobalNet Systems, Inc., a
Florida corporation ("Acquiror"), GlobalNet, Inc., a Nevada corporation (the
'Company'), and The Titan Corporation, a Delaware corporation ("Titan"), the
sole stockholder of the Company. Certain capitalized terms used in this
Agreement are defined in Exhibit A.
RECITALS
WHEREAS, Acquiror desires to acquire the Company;
WHEREAS, Titan owns all of the issued and outstanding shares of
Common Stock, no par value, of the Company (`Company Common Stock");
WHEREAS, As of April 26, 2003, the Company has issued and sold to
Titan a promissory note in the amount of approximately $15.8 million, net of
intercompany obligations due by Titan to the Company (the 'Company
Indebtedness");
WHEREAS, Titan desires to sell and Acquiror desires to purchase
all of the issued and outstanding shares of Company Common Stock in
consideration of the release of certain guarantees provided by Titan to the
Company, all on the terms and conditions hereinafter set forth; and
WHEREAS, in further consideration of such sale and release, Titan
desires to sell to Growth Enterprise Fund, S.A., a Panamanian corporation
('GEF"), the sole stockholder of Acquiror, the Company Indebtedness.
NOW, THEREFORE, in consideration for the mutual premises and the
representations, warranties, covenants and agreements contained herein, the
parties to this Agreement, intending to be legally bound, hereby agree as
follows:
SECTION 1. SALE AND PURCHASE OF STOCK
1.1 Sale and Purchase of Stock.
On the basis of the representations, warranties, covenants and
agreements contained herein, and subject to the terms and conditions of this
Agreement, Titan agrees (a) to sell to Acquiror and Acquiror agrees to purchase
from Titan at the Closing, all of the issued and outstanding Company Common
Stock, and any and all options, warrants, and other rights Titan may possess to
acquire any capital stock of the Company, whether conferred by contract, by
statute, or by the Articles of Incorporation or By-Laws of the Company, free and
clear of all Encumbrances and (b) to assign the Company Indebtedness to
Acquiror.
1.2 Release of Guarantees.
For and in consideration of the conveyances described herein,
Acquiror agrees to cause Titan to be released (the 'Release") from the
outstanding guarantees and/or surety obligations set forth in Exhibit B
attached hereto (the `Titan Guarantees"), to the extent of the amount listed
next to such Titan Guarantee on Exhibit B at the Initial Closing, if
applicable, or the Closing. Titan shall not materially increase the amount of
the Titan Guarantees set forth in Exhibit B without the written consent of
Acquiror.
1.3 Transfer and Contribution of Company Indebtedness.
At the Initial Closing, if applicable, or the Closing, Titan
shall sell, transfer, assign and convey the Company Indebtedness to GEF, the
sole stockholder of Acquiror, pursuant to the Assignment and Assumption
Agreement attached hereto as Exhibit F.
1.4 Delivery of Release and Transaction Expenses.
The Release shall be delivered by Acquiror at the Initial
Closing, if applicable, or the Closing, to Titan in accordance with the terms of
Section 1.5. The reimbursement of Titan's Transaction Expenses provided for in
Section 9.3 shall be delivered by Acquiror at the Closing to Titan by wire
transfer of immediately available funds to an account which shall be identified
by Titan at least two (2) business days prior to the Closing Date. In the event
that there shall occur the Initial Closing, the reimbursement of Nine Hundred
Thousand Dollars ($900,000) of Titan's Transaction Expenses provided for in
Section 9.3 shall be delivered by Acquiror at the Initial Closing and the
remainder of such Transaction Expenses shall be delivered by Acquiror at the
Closing to Titan by wire transfer of immediately available funds to an account
which shall be identified by Titan at least two (2) business days prior to the
Initial Closing Date or the Closing Date, as applicable.
1.5 Terms of the Release.
The Release may, at the option of Acquiror, be provided in the
form of any of the following, or any combination thereof: (a) an irrevocable
release executed directly by the applicable creditor or supplier of the Company
(the `Company Creditor"), in form and content reasonably acceptable to Titan;
(b) the satisfaction in full of the obligations underlying the Titan Guarantees,
with evidence of such satisfaction being provided to Titan in form and content
reasonably acceptable to Titan; or (c) a stand-by irrevocable letter of credit
or bond established by Acquiror to secure the satisfaction in full of the
obligations underlying the Titan Guarantees in form and content, and made by a
bank or surety, reasonably acceptable to Titan, together with a payment
agreement in form and content reasonably acceptable to Titan between Acquiror
and Titan which will govern Acquirer's obligations to satisfy all claims under
any Titan Guarantee or the ability of Titan to draw on such letter of credit,
provided, however, that the amounts of all such letters of credit and bonds
shall not be required to exceed Eleven Million Dollars ($11,000,000) in the
aggregate.
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Acquiror shall be responsible for all costs and expenses of obtaining the
Release, including, without limitation, any legal costs or fees of Acquiror
associated with negotiating with the Company Creditor or payment of the
obligations underlying the Titan Guarantees or any costs or expenses to obtain
the stand-by letter of credit and bonds. Acquiror shall be permitted to
negotiate directly with the applicable Company Creditor to obtain the Release of
the applicable Titan Guarantee; provided, furtherr however in the event Acquiror
issues a letter of credit pursuant to (c) above, Acquiror (x) shall not permit
the amount of the Titan Guarantee to exceed the amount of such letter of credit
at any time, (y) shall not, and shall not permit the Company, to amend, modify,
otherwise alter the Titan Guarantee in any way or otherwise enter into a new
agreement with the other party (or any affiliate thereof) of the Titan
Guarantee, and (z) shall use its best efforts to satisfy the obligations of the
Titan Guarantee and terminate such Titan Guarantee. For the avoidance of doubt,
in the event Acquiror obtains a letter of credit to satisfy Titan's obligations
under the Titan Guarantee of the MCI contract identified on Exhibit B. Acquiror
shall not permit the obligations of the Company to exceed the amount of such
letter of credit at any time and shall not be permitted to enter into a new
contract with MCI until such contract is satisfied in full and the agreement is
terminated. The parties agree that Acquiror shall use its commercially
reasonable efforts to obtain an irrevocable release of the Titan Guarantee to
MCI.
1.6 Net Cash Deficit.
At least five (5) business days prior to the Closing Date, Titan
shall deliver, or caused to be delivered, to Acquiror a good faith estimate of
the cash deficit of the Company for the month ended June 30, 2003 (the `Net Cash
Deficit), with reasonable supporting documentation. Acquiror shall pay to Titan
an amount of the Net Cash Deficit up to Two Hundred Thousand Dollars ($200,000)
at the Closing.
SECTION 2. ADDITIONAL UNDERTAKINGS AND COVENANTS 2.1 Access and Investigation.
During the period from the date of this Agreement through the
Initial Closing, if applicable, or the Closing Date, unless this Agreement shall
be terminated in accordance with Section 9.1 (the 'Pre-Closing Period"), subject
to applicable antitrust laws and regulations relating to the exchange of
information, each of Titan and the Acquired Companies shall cause each of their
respective Representatives to: (a) provide Acquiror and its Representatives with
reasonable access during normal business hours to its personnel and assets and
to all existing books, records, Tax Returns, work papers and other documents and
information relating to the Acquired Companies; and (b) provide Acquiror and its
Representatives with such copies of the existing books, records, Tax Returns,
work papers and other documents and information relating to the Acquired
Companies, and with such additional financial, operating and other data and
information regarding the Acquired Companies, in each case, as the Acquiror may
reasonably request. Each party will use and hold any such information which is
not public in confidence in accordance with that certain
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Proprietary Information Agreement regarding confidential information, dated
March 19, 2003, by and among an affiliate of Acquiror and Titan Wireless, Inc.,
a subsidiary of Titan, attached hereto as Exhibit C (the `Proprietary
Information Agreement').
2.2 Public Announcement.
Acquiror, Company and Titan shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to the transactions contemplated hereunder and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by Legal Requirements or any listing agreement with, or the
rules of a national securities exchange or any U.S. inter-dealer quotation
system of a registered national securities association.
2.3 Section 338(h)(10) Election.
At Titan's option, Company and Acquiror will join with Titan in
making an election under Section 338(h)(10) of the Code (and any corresponding
elections under state, local, or foreign tax law) (collectively a `Section
338(h)(10) Election') with respect to the purchase and sale of Company Common
Stock hereunder. Titan and Acquiror agree to allocate the purchase price under
this Agreement and the respective liabilities of the Company among the
respective assets of the Company in accordance with Code Section 338 and the
Treasury Regulations thereunder (and any comparable provisions of state and
local law, as appropriate) (the `Allocation"). Titan and Acquiror shall jointly
determine the Allocation and prepare a completed set of IRS Forms 8023 and 8883
(and any comparable forms required to be filed under state Tax law) and any
additional data or materials required to be attached to Forms 8023 and 8883
pursuant to the Treasury Regulations promulgated under Section 338 of the Code.
Titan and Acquiror shall execute IRS Forms 8023 and 8883 (and any comparable
forms required to be filed under state Tax law) at the Closing. Each of Titan
and Acquiror shall use its commercially reasonable efforts prior to and
following the Closing to cause the purchase and sale of the Company Common Stock
hereunder to meet requirements of Section 338(h)(10) of the Code and shall take
no action inconsistent with the Section 338(h)(10) Election. Acquiror shall take
no action during the Pre-Closing Period or after Closing which would invalidate
the Section 338(h)(10) Election.
2.4 Exclusivity.
During the Pre-Closing Period, Acquiror acknowledges that Titan
and the Acquired Companies, and their respective officers, directors, employees,
or advisors retained by Titan or the Acquired Companies shall be permitted to
solicit, directly or indirectly, any inquiries or proposals for the acquisition
of any of the capital stock, assets or business of the Company from, or furnish
information relating to the foregoing to, or engage in negotiations or
discussions relating to the foregoing with, or accept any proposal relating to
the foregoing from, any corporation, partnership, person or other entity or
group. The parties acknowledge Titan and Acquired Companies may enter into any
such acquisition and terminate this Agreement pursuant to Section 9.1(0, without
any liability whatsoever to Acquiror, GEF or any of
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their respective affiliates. For the avoidance of doubt, the parties acknowledge
that Section 4 (Exclusive Dealing) of the letter agreement between Growth
Enterprise Fund, S.A. to Titan dated April 4, 2003 is automatically terminated
upon the execution of this Agreement pursuant to such letter agreement's terms,
and Titan shall be specifically authorized to negotiate with other parties
regarding the sale of the Company to other parties.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as specifically set forth in the Company Disclosure
Schedule delivered by the Company to Acquiror prior to the execution and
delivery of this Agreement (the "Company Disclosure Schedule') and referenced in
the Company Disclosure Schedule, the Company hereby represents and warrants to
Acquiror that the following statements of the Company are true and correct as of
the date of this Agreement:
3.1 Due Organization; Subsidiaries.
Each of the Acquired Companies (as defmed below) is an entity
duly organized, validly existing and in good standing under the Legal
Requirements of the jurisdiction of its incorporation or formation. Each of the
Acquired Companies has all necessary power and authority to (a) conduct its
business in the manner in which its business is currently being conducted; and
(b) to own and use its assets in the manner in which its assets are currently
owned and used. Each of the Acquired Companies is qualified to do business as a
foreign corporation or limited liability company, and is in good standing, under
the Legal Requirements of all jurisdictions where the nature of its of business
or the ownership by it of property therein requires such qualification, except
where the failure to be so qualified would not have a Material Adverse Effect on
the Acquired Companies (taken as a whole). The Company has made available to
Acquiror accurate and complete copies of the certificate or articles of
incorporation, bylaws and other charter or organizational documents of each of
the Acquired Companies, including all amendments thereto (collectively, the
"Company Organization Documents'). The Company has no Subsidiaries, except for
the corporations identified in Schedule 3.1 of the Company Disclosure Schedule.
(The Company and each of its Subsidiaries identified in Schedule 3.1 of the
Company Disclosure Schedule are collectively referred to herein as the "Acquired
Companies"). None of the Acquired Companies has any equity interest or similar
interest in, or any interest convertible into or exchangeable or exercisable for
any equity or similar interest in, any Entity, other than (i) the Company's
interest in its Subsidiaries identified in Schedule 3.1 of the Company
Disclosure Schedule, or (ii) any interest in any publicly traded company held
solely for investment and comprising less than five percent of the outstanding
capital stock of such company.
3.2 Authority; Binding Nature of Agreement.
The Company has all requisite corporate power and authority to
enter into this Agreement. Assuming the due authorization, execution and
delivery by the other signatories hereto, this Agreement constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its
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terms, subject to (a) Legal Requirements of general application relating to
bankruptcy, insolvency and the relief of debtors, and (b) rules of law governing
specific performance, injunctive relief and other equitable remedies.
3.3 Capitalization.
(a) The authorized capital stock of the Company consists of
25,000 shares of Company Common Stock. As of the date hereof, 100 shares of
Company Common Stock have been issued and are outstanding. All of the
outstanding shares of Company Common Stock have been duly authorized and validly
issued, and are fully paid and non-assessable. There are no shares of Company
Common Stock held by any of the Company's Subsidiaries. None of the outstanding
shares of Company Common Stock is entitled or subject to any preemptive right,
right of participation, right of maintenance or any similar right or subject to
any right of first refusal in favor of the Company. There is no Contract to
which the Company is a party and, to the Company's knowledge, there is no
Contract between other Persons, relating to the voting or registration of, or
restricting any Person from purchasing, selling, pledging or otherwise disposing
of (or granting any option or similar right with respect to), any shares of
Company Common Stock. None of the Acquired Companies is under any obligation, or
is bound by any Contract pursuant to which it may become obligated, to
repurchase, redeem or otherwise acquire any outstanding shares of Company Common
Stock.
(b) There is no: (i) outstanding subscription, option, call,
warrant or right (whether or not currently exercisable) to acquire any shares of
the capital stock or any membership interest, as applicable, or other securities
of any of the Acquired Companies; (ii) outstanding security, instrument or
obligation that is or may become convertible into or exchangeable for any shares
of the capital stock or any membership interest, as applicable, or other
securities of any of the Acquired Companies; (ii) rights agreement, stockholder
rights plan (or similar plan commonly referred to as a `poison pill") or
Contract under which any of the Acquired Companies are or may become obligated
to sell or otherwise issue any shares of its capital stock or any membership
interest, as applicable, or any other securities; or (iv) condition or
circumstance that may give rise to or provide a basis for the assertion of a
claim by any Person to the effect that such Person is entitled to acquire or
receive any shares of capital stock or any membership interest, as applicable,
or other securities of any of the Acquired Companies (items (i) through (iv)
above, collectively, "Company Stock Rights').
(c) All outstanding shares of Company Common Stock and all
outstanding shares of capital stock of each Subsidiary of the Company have been
issued and granted in compliance with all applicable securities laws and other
applicable Legal Requirements. All of the outstanding shares of capital stock of
each of the Company's Subsidiaries have been duly authorized and are validly
issued, are fully paid and nonassessable and are owned beneficially and of
record by the Company, free and clear of any Encumbrances.
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3.4 Financial Statements.
The Company has delivered to Acquiror. (i) audited consolidated
balance sheet of the Acquired Companies as of December 31, 2001, and the related
audited consolidated statement of operations, changes in stockholder's equity,
and cash flows for the year then ended, together with a report thereon by KPMG,
LLP, the Company's independent public accountants; (ii) unaudited balance sheet
of the Acquired Companies as of December 31, 2002, and the related unaudited
consolidated statement of operations, changes in stockholder's equity, and cash
flows for the year then ended ("Company Unaudited 2002 Financial Statements');
and (ii) an unaudited consolidated balance sheet of the Acquired Companies as of
April 26, 2003 (the "Company Balance Sheet") and the related unaudited
consolidated statement of operations, cash flows and stockholders' equity for
the four (4) months then ended. The audited and unaudited financial statements
described in this Section 3.4 (the "Company Financial Statements"): (i) were
prepared in accordance with United States generally accepted accounting
principles ('GAAP') applied in the disclosure schedule on a consistent basis
throughout the periods covered (except as may be indicated in the notes to such
financial statements or subject, in the case of unaudited statements, to the
absence of footnotes), and (ii) fairly presented (subject, in the case of the
unaudited interim financial statements, to the absence of notes to such
financial statements) in all material respects the consolidated financial
position of the Company and its subsidiaries as of the respective dates thereof
and the consolidated results of operations and cash flows of the Company and its
subsidiaries for the periods covered thereby.
3.5 Absence of Changes.
Except for the Subsidiary Conversion or as otherwise contemplated
by this Agreement with respect to the Pre-Closing Period, since the dated of the
Company Balance Sheet to the date hereof:
(a) each of the Acquired Companies has operated its respective
business in the ordinary course and consistent with past practices;
(b) none of the Acquired Companies has (i) declared, accrued, set
aside or paid any dividend or made any other distribution in respect of any
shares of capital stock; (ii) repurchased, redeemed or otherwise reacquired any
shares of capital stock or other securities; (iii) made any material Tax
election; (iv) commenced or settled any Legal Proceeding; or (v) entered into or
consummated any transactions with any affiliate which is not a wholly-owned
subsidiary;
(c) none of the Acquired Companies has (i) sold or otherwise
disposed of, or acquired, leased, licensed, waived or relinquished any material
right or other material asset to, from or for the benefit of, any other Person
except for rights or other assets sold, disposed of, acquired, leased, licensed,
waived or relinquished in the ordinary course of business and consistent with
past practice; (ii) mortgaged, pledged or subjected to any lien any of their
respective property, business or assets, except for purchase money or similar
security interests granted in connection with liabilities arising under any
credit or loan agreement between Titan and the Acquired Companies and their
lenders and; the purchase of equipment or supplies in the
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ordinary course of business in an amount not exceeding $100,000 in the
aggregate; (iii) entered into or amended any lease of real property or material
personal property (whether as lessor or lessee); or (iv) canceled or compromised
any debt or claim other than accounts payable in the ordinary course of business
consistent with past practice;
(d) none of the Acquired Companies has become liable in respect
of any guarantee or has incurred or otherwise become liable in respect of any
indebtedness for borrowed money in excess of $100,000, individually or in the
aggregate other than Company Indebtedness;
(e) none of the Acquired Companies has (i) amended or waived any
of its material rights under, or permitted the acceleration of vesting under,
any provision of any of the Company Benefit Plans (as described in Section
3.111; (ii) established or adopted any Company Benefit Plan; (iii) caused or
permitted any Company Benefit Plan to be amended in any material respect, except
as otherwise required by law or as a condition of receiving a favorable letter
from the Internal Revenue Service; or (iv) paid any bonus or made any
profit-sharing or similar payment to, or materially increased the amount of the
wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers, employees, consultants
or agents other than amendments to employment agreements of senior executives
previously disclosed to Acquiror,
(f) there has been no work slowdown, stoppage or strike involving
the Acquired Companies or any material change in any of their respective
personnel or the terms and conditions of the employment of such personnel;
(g) none of the Acquired Companies has made any change in (i)
their respective methods of accounting or accounting practices, except as
required by GAAP, or (ii) their respective pricing policies or payment or credit
practices or failed to pay any creditor any amount owed to such creditor when
due or granted any extensions or credit other than in the ordinary course of
business consistent with past practice and other than the extension of the MCI
payables;
(h) none of the Acquired Companies has terminated or closed any
material facility, business or operation;
(i) none of the Acquired Companies has made any material loan,
advance or capital contributions to, or any other investment in, any Person;
6) none of the Acquired Companies has written up or written down
any of its respective material assets;
(k) there has been no uninsured loss, destruction or damage to
any material item of property of the Acquired Companies, which has had or could
reasonably be expected to have a Material Adverse Effect on the Acquired
Companies (taken as a whole); and
(1) none of the Acquired Companies has entered into any
contractual obligation to do any of the things referred to in this Section 3.5.
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3.6 Proprietary Assets.
To the Company's knowledge: (a) the operation of the business of
each Acquired Company as currently conducted does not infringe upon any patent,
copyright, or trade secret right of any other Person in any material respect,
and no Acquired Company has received any written claim from any Person to such
effect, (b) each Acquired Company owns, is licensed or otherwise has the right
to use all the Proprietary Assets material to the conduct of such Acquired
Company's bum as currently conducted, and (c) no other Person is infringing on
the Proprietary Assets owned by the Acquired Companies that are material to the
conduct of the Acquired Companies' business as currently conducted.
3.7 Contracts.
(a) For purposes of this Agreement, each of the following shall
be deemed to constitute a 'Company Material Contract':
(i) any Acquired Company Contract relating to the
employment of any employee, and any Contract pursuant to
which any of the Acquired Companies is or may become obligated to make any
severance, termination, bonus or relocation payment or any other payment (other
than payments in respect of Xxxx) in excess of $100,000, to any current or
former employee or director,
(ii) any Acquired Company Contract relating to the
acquisition, transfer, development, sharing or license of any
material Proprietary Asset (except for any Acquired Company Contract pursuant to
which (A) any material Proprietary Asset is licensed to the Acquired Companies
under any third party software license generally available for sale to the
public, or (B) any material Proprietary Asset is licensed by any of the Acquired
Companies to any Person on a non-exclusive basis);
(iii) any Acquired Company Contract which provides for
indemnification of any officer, director or
employee;
(iv) any Acquired Company Contract creating or relating to
any partnership or joint venture or any sharing of
revenues, profits, losses, costs or liabilities;
(v) any Acquired Company Contract that involves the
payment or expenditure of $100,000 or more in any 12-month period or more
than $200,000 in the aggregate that may not be terminated by the applicable
Acquired Company (without penalty) within sixty (60) days after the delivery of
a termination notice by the applicable Acquired Company;
(vi) any Acquired Company Contract contemplating or
involving (A) the payment or delivery of cash or other
consideration in an amount or having a value in excess of $100,000 in the
aggregate, or (B) the performance of services having a value in excess of
$100,000 in the aggregate;
(vii) any Acquired Company Contract imposing any
restriction on the right or ability of any Acquired Company
to (A) compete with any other Person,
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(B) acquire any material product or other material asset or any
services from any other Person, sell any material product or other material
asset to or perform any services for any other Person or transact business or
deal in any other manner with any other Person, or (C) develop or distribute any
material technology; and
(viii) any other Acquired Company Contract, if a breach of
such Acquired Company Contract could reasonably be expected to have a Material
Adverse Effect on the Acquired Companies (taken as a whole).
(b) Each Company Material Contract is valid and in full force and
effect, and is enforceable in accordance with its terms against the Company, and
to the Company's knowledge, the other parties thereto.
(c) None of the Acquired Companies has violated or breached, or
committed any material default under, any Company Material Contract. To the
Company's knowledge, no other Person has violated or breached, or committed any
material default under, any Company Material Contract.
(d) No event has occurred, and no circumstance or condition
exists, that (with or without notice or lapse of time) could reasonably be
expected: (II) to the Company's knowledge, result in a material violation or
breach of any provision of any Company Material Contract by any of the Acquired
Companies; (ii) to the Company's knowledge, give any Person the right to declare
a material default or exercise any material remedy under any Company Material
Contract; (iii) to the Company's knowledge, give any Person the right to receive
or require a material rebate, chargeback, penalty or change in delivery schedule
under any Company Material Contract; (iv) to the Company's knowledge, give any
Person the right to accelerate the maturity or performance of any Company
Material Contract; or (v) to the Company's knowledge, give any Person the right
to cancel or terminate, or modify in any material respect, any Company Material
Contract.
(e) None of the Acquired Companies is a guarantor or otherwise
liable for any liability or obligation (including indebtedness) of any other
Person other than any of the Acquired Companies other than guarantees which will
be released at the Initial Closing.
(f) Schedule 3.7 of the Company Disclosure Schedule provides a
list of all Company Material Contracts (including all amendments thereto). The
Company has provided or made available to Acquiror a copy of each Company
Material Contract (including all amendments thereto) listed in Schedule 3.7 of
the Company Disclosure Schedule.
(g) To the Company's knowledge, there has been no dispute,
controversy or arrangement with any vendor, except as set forth in Schedule
3.7(g) of the Company Disclosure Schedule.
3.8 Liabilities.
None of the Acquired Companies has any accrued, contingent or
other liabilities of any nature, either matured or unmatured (whether or not
required to be
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reflected in financial statements prepared in accordance with GAAP and whether
due or to become due), except for. (a) liabilities that are reflected in the
`liabilities" column of the Company Financial Statements, (b) liabilities that
have been incurred by the Acquired Companies since April 26, 2003 in the
ordinary course of business and consistent with past practices, and (c)
liabilities that have been incurred in connection with the Subsidiary
Conversion, except where any such liabilities would not have a Material Adverse
Effect on the Acquired Companies.
3.9 Compliance with Legal Requirements.
Each of the Acquired Companies is in compliance in all material
respects with all applicable Legal Requirements. None of the Acquired Companies
has received any written notice or, to the Company's knowledge, other
communication from any Governmental Body regarding any actual or possible
violation of, or failure to comply with, any Legal Requirement.
3.10 Tax Matters.
(a) The Acquired Companies have paid or reserved for all material
Taxes, due and payable by any of them for or with respect to all periods up to
and including the date hereof (without regard to whether or not such Taxes are
or were disputed), whether or not shown on any Tax Return.
(b) Each of the Acquired Companies has filed on a timely basis
all material Tax Returns that it was required to file except for Tax Returns for
the year which includes the Closing Date. All such Tax Returns were accurate and
complete in all material respects. No claim that has not been resolved has ever
been made by an authority in a jurisdiction where the Acquired Companies do not
file Tax Returns that any one of them is or may be subject to taxation by that
jurisdiction. None of the Acquired Companies has given any currently effective
waiver of any statute of limitations in respect of Taxes or agreed to any
currently effective extension of time with respect to a Tax assessment or
deficiency. There are no security interests on any of the assets of any of the
Acquired Companies that arose in connection with any failure (or alleged
failure) to pay any Tax (other than with respect to Taxes not yet due and
payable).
(c) The Acquired Companies have withheld and paid all material
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party except for such withholding or payments to be made at or after
Closing.
(d) None of the Acquired Companies is aware of any facts or
circumstances which could give rise to a reasonable expectation that any
Governmental Body may assess any additional material Taxes for any period for
which Tax Returns have been filed. There is no dispute or claim concerning any
liability for material Taxes of the Acquired Companies either (a) claimed or
raised by any Governmental Body in writing or (b) as to which such Acquired
Company has knowledge based upon personal contact with any agent of such
authority. None of the Acquired Companies is a party to any Tax allocation or
sharing agreement. Schedule
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3. 10(d) to the Disclosure Schedule sets forth a complete and accurate list of
Tax Returns filed by or on behalf of the Acquired Companies with any
Governmental Body with respect to the taxable periods of the Acquired Companies
ended on or after December 31, 1997 (the 'Company Tax Returns"); indicates those
Company Tax Returns that have been audited; and indicates those Company Tax
Returns that currently are the subject of an audit.
3.11 Benefit Plans.
(a) Schedule 3.11 (a) of the Company Disclosure Schedule rests
all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) any other material
employee benefit plan, program, or arrangement, and any material employment
agreements of the Company (all such plans, programs, arrangements or agreements
as described in this Section 3.11 shall be collectively referred to as the
`Company Benefit Play '). The Company has made available to Acquiror true and
complete copies of each Company Benefit Plan and all related trust agreements,
insurance and other contracts, summary plan descriptions, the most recent annual
report on Form 5500 Red with respect to each Company Benefit Plan required to
make such a filing, and the most recent favorable determination letters issued
for each Company Benefit Plan and related trust which is intended to be
qualified under Section 401(a) of the Code.
(b) None of the Company Benefit Plans promises or provides
retiree medical or other retiree welfare benefits to any person (other than
continuation coverage to the extent required by law, whether pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985 or otherwise), and none
of the Company Benefit Plans is a "Multiemployer Plan' (as defined in Section
3(37) of ERISA or a `Multiple Employer Welfare Arrangement' (as defined in
Section 3(40) of ERSA); to the knowledge of the Company, all Company Benefit
Plans have been established and maintained in accordance with their terms and
have been operated in compliance in all respects with all applicable
requirements of ERISA and the Code, except where failure to comply would not
have material adverse effect on the financial condition of the Company, and all
contributions required to be made or reserved, as appropriate, with respect to
any Company Benefit Plan pursuant to the terms of the Company Benefit Plan have
been made or reserved on or before their due dates (including any extensions
thereof).
(c) No Company Benefit Plan is subject to Section 412 of the
Code or Title IV of ERISA.
(d) No Company Benefit Plan is an employee stock ownership
plan (within the meaning of Section 4975(e)(7) of the Code).
(e) To the knowledge of Company, there are no actions, suits, or
hearings, or investigations controversies pending or threatened with respect to
any Company Benefit Plan, except where such action, suit, hearing, or
investigation would not have a material adverse effect on the financial
condition of the Company.
(f) No Company Benefit Plan is a Voluntary Employees' Beneficiary
Association ("VEBA") within the meaning of Section 501(c)(9) of the Code.
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3.12 Environmental Matters.
(a) To the knowledge of the Company, each of the Acquired
Companies is in compliance in all material respects with all applicable
Environmental Laws except for such failures to comply that would not reasonably
be expected to have a Material Adverse Effect on the Acquired Companies (taken
as a whole). None of the Acquired Companies has received any notice or other
written communication from a Governmental Body that alleges that any of the
Acquired Companies is not in compliance with any Environmental Law, and, to the
Company's knowledge, there are no circumstances that may prevent or interfere
with the compliance by any of the Acquired Companies with any Environmental Law
in the future. To the Company's knowledge, no current or prior owner of any
property leased or controlled by any of the Acquired Companies has received any
notice or other communication (in writing or otherwise), whether from a
Governmental Body, that alleges that such current or prior owner or any of the
Acquired Companies is not in compliance with any Environmental Law.
(b) For purposes of this Section 3.12:
(i) 'Environmental Lad shall mean any foreign, federal,
state or local statute, law, rule, regulation,
ordinance, treaty, code, policy or rule of common law now or from time to time
in effect and in each case as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to the environment, natural resources, health,
safety or Hazardous Materials, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended; the Resource
Conservation and Recovery Act, as amended; the Hazardous Materials
Transportation Act, as amended; the Clean Water Act, as amended; the Toxic
Substances Control Act, as amended; the Clean Air Act, as amended; the Safe
Drinking Water Act, as amended; the Atomic Energy Act, as amended; the Federal
Insecticide, Fungicide and Rodenticide Act, as amended; and the Occupational
Safety and Health Act, as amended; and
(ii) 'Hazardous Materials' shall mean (A) petroleum or
petroleum products (including crude oil or any fraction
thereof, natural gas, natural gas liquids, liquefied natural gas, or synthetic
gas usable for fuel, or any mixture thereof), polychlorinated biphenyls (PCBs),
asbestos or asbestos containing materials, urea formaldehyde foam insulation,
and radon gas; (B) any substance defined as or included in the definition of
"hazardous substance,' `hazardous waste,* "hazardous material,' "extremely
hazardous waste," "restricted hazardous waste,' "waste,' `special waste,' 'toxic
substance,' `toxic pollutant,* "contaminant' or "pollutant," or words of similar
import, under any applicable Environmental Law (as defined above); (C)
infectious materials and other regulated medical wastes; (D) any substance which
is toxic, explosive, corrosive, flammable, radioactive, carcinogenic, mutagenic
or otherwise hazardous and is or becomes regulated by any governmental agency;
and (E) any other substance, material or waste the presence of which requires
investigation or remediation under any Environmental Law.
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3.13 Legal Proceedings; Orders.
There is no pending Legal Proceeding and, to the Company's
knowledge, no Person has threatened to commence any Legal Proceeding, that
involves any of the Acquired Companies or any of the assets owned or used by any
of the Acquired Companies; and there is no Order, writ, injunction, judgment or
decree to which any of the Acquired Companies, or any of the material assets
owned or used by any of the Acquired Companies, is subject, except for any of
the foregoing that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Acquired Companies (taken as a
whole).
3.14 Non-Contravention; Consents.
(a) Neither the execution, delivery or performance by the Company
of this Agreement nor the consummation of the transactions contemplated by this
Agreement, will directly or indirectly (with or without notice or lapse of time)
(1) conflict with or violate any of the provisions of the Company's articles of
incorporation or bylaws or any resolution adopted by the stockholders or the
board of directors; (ii) conflict with or violate any Legal Requirement or any
Order, writ, injunction, judgment or decree to which any of the Acquired
Companies, or any of the material assets owned or used by any of the Acquired
Companies, is subject; or (iii) contravene, conflict with or result in a
violation or breach of, or result in a default under, any provision of any
contract or agreement to which the Company or any Acquired Company is bound;
except in the case of clause (i), (ii) and (iii) where any such conflict,
violation or breach would not have a Material Adverse Effect on the Acquired
Companies (taken as a whole).
(b) None of the Acquired Companies was, is or will be required to
make any filing with or give any notice to, or obtain any Consent from, any
Governmental Body in connection with (i) the execution, delivery or performance
of this Agreement, or (ii) the consummation of any of the transactions
contemplated by this Agreement except in the case of clauses (i) and (ii), where
the failure to obtain any Consent would not, individually or in the aggregate,
have a Material Adverse Effect on the Acquired Companies (taken as a whole).
3.15 Financial Advisor.
Other than Xxxxxx Xxxxxx Xxxxxxxx no broker, finder or investment
banker claiming through the Company or Titan is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
any Acquired Company.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF TITAN
Except as specifically set forth in the Titan Disclosure Schedule
delivered by Titan to Acquiror prior to the execution and delivery of this
Agreement (the `Titan Disclosure Schedule") and referenced in the Titan
Disclosure Schedule, Titan hereby represents and warrants to Acquiror as
follows:
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4.1 Title to Common Stock.
Titan is the lawful owner of all of the issued and outstanding
shares of Company Common Stock. On the Closing Date Titan will have, good,
valid and marketable title, free and clear of all Encumbrances, to the Company
Common Stock, with full right and lawful authority to sell and transfer the
shares to Acquirer pursuant to this Agreement.
4.2 Authority; Binding Nature of Agreement.
Titan has requisite corporate power and authority to enter into
and to perform its obligations under this Agreement. Assuming the due
authorization, execution and delivery by the other signatories hereto, this
Agreement constitutes the legal, valid and binding obligation of Titan,
enforceable against Titan in accordance with its terms, subject to (a) Legal
Requirements of general application relating to bankruptcy, insolvency and the
relief of debtors, and (b) rules of law governing specific performance,
injunctive relief and other equitable remedies.
4.3 Non-Contravention; Consents.
(a) Neither the execution, delivery or performance by Titan of
this Agreement nor the consummation of the transactions contemplated by this
Agreement, will directly or indirectly (with or without notice or lapse of
time) (I) conflict with or violate any of the provisions of Titan's certificate
of incorporation or bylaws or any resolution adopted by the stockholders or the
board of directors; (ii) conflict with or violate any Legal Requirement or any
Order, writ, injunction, judgment or decree to which Titan is subject; or (iii)
contravene, conflict with or result in a violation or breach of, or result in a
default under, any provision of any contract or agreement to which Titan is
bound; except in the case of clause (i), (ii) and (iii) where any such
conflict, violation or breach would not have a Material Adverse Effect on the
Acquired Companies (taken as a whole).
(b) Except as may be required by the HSR Act and applicable
competition laws of any foreign country, none of the Acquired Companies was, is
or will be required to make any filing with or give any notice to, or obtain
any Consent from, any Governmental Body in connection with (i) the execution,
delivery or performance of this Agreement, or (ii) the consummation of any of
the transactions contemplated by this Agreement except in the case of clauses
(i) and (ii), where the failure to obtain any Consent would not, individually
or in the aggregate, have a Material Adverse Effect on the Acquired Companies
(taken as a whole).
SECTION 5. REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Except as disclosed in the Acquiror Disclosure Schedule delivered
by Acquiror to the Company and Titan prior to the execution and delivery of this
Agreement (the "Acquiror Disclosure Schedule") and referenced in the Acquiror
Disclosure Schedule, Acquiror represents and warrants to the Company and Titan
as
follows:
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5.1 Due Organization; Subsidiaries.
Acquiror is a corporation duly organized, validly existing and in
good standing under the Legal Requirements of the State of Florida. Acquiror has
all necessary corporate power and authority to conduct its business in the
manner in which its business is currently being conducted and to own and use its
assets in the manner in which its assets are currently owned and used. Acquiror
is qualified to do business as a foreign corporation, and is in good standing,
under the Legal Requirements of all jurisdictions where the nature of its
business requires such qualification and where the failure to be so qualified
would have a Material Adverse Effect on Acquiror's ability to consummate the
transactions contemplated hereby.
5.2 Authority; Binding Nature of Agreement.
Acquiror has all requisite corporate power and authority to enter
into and to perform its obligations under this Agreement. Assuming the due
authorization, execution and delivery by the other signatories hereto, this
Agreement constitutes the legal, valid and binding obligation of each of
Acquiror, enforceable against Acquiror in accordance with its terms, subject to
(a) Legal Requirements of general application relating to bankruptcy, insolvency
and the relief of debtors, and (b) rules of law governing specific performance,
injunctive relief and other equitable remedies
5.3 Non-Contravention; Consents.
(a) Neither the execution, delivery or performance by the
Acquiror of this Agreement nor the consummation of the transactions contemplated
by this Agreement, will directly or indirectly (with or without notice or lapse
of time) conflict with or violate any of the provisions of the Acquiror's
organization documents or any resolution adopted by the stockholders or the
Board of Directors; (ii) conflict with or violate any Legal Requirement or any
Order, writ, injunction, judgment or decree to which the Acquiror, or any of the
material assets owned or used by the Acquirer, is subject; or (iii) contravene,
conflict with or result in a violation or breach of, or result in a default
under, any provision of any contract or agreement to which Acquiror is bound;
except in the case of clause (i), (ii) and (iii) where any such conflict,
violation or breach would not have a Material Adverse Effect on Acquiror's
ability to consummate the transactions contemplated hereby.
(b) Acquiror was not, is not or will not be required to make any
filing with or give any notice to, or obtain any Consent from, any Governmental
Body in connection with (i) the execution, delivery or performance of this
Agreement, or (ii) the consummation of any of the transactions contemplated by
this Agreement except in the case of clauses (i) and (ii), where the failure to
obtain any Consent would not, individually or in the aggregate, have a Material
Adverse Effect on Acquiror's ability to consummate the transactions contemplated
hereby.
5.4 Compliance with Legal Requirements.
Acquiror is in compliance in all material respects with all
applicable Legal Requirements necessary in order to conduct the business and
operations of the
16
Company as presently conducted and to own, use and maintain its assets. Acquiror
has not received any written notice or, to Acquiror's knowledge, other
communication from any Governmental Body regarding any actual or possible
violation of, or failure to comply with, any Legal Requirement.
5.5 Governmental Authorizations.
Acquiror holds all Governmental Authorizations necessary to
enable them to conduct the business of the Company in the manner in which such
business is currently being conducted. All such Governmental Authorizations are
valid and in full force and effect. Acquiror is, and at all times has been, in
compliance in all material respects with the terms and requirements of such
Governmental Authorizations. Acquiror has not received any notice or other
communication from any Governmental Body regarding (a) any actual or possible
violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (bj any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization (except where any such violation, failure,
revocation, withdrawal, suspension, cancellation, termination or modification
would not have a Material Adverse Effect on Acquiror's ability to consummate the
transactions contemplated hereby).
5.6 No Outside Reliance.
Acquiror has not relied or is relying on any statement,
representation or warranty not made in this Agreement, any schedule hereto or
any certificate to be delivered to Acquiror at the Initial Closing or the
Closing, as applicable, pursuant to this Agreement. Acquiror is not relying on
any projections or other predictions contained or referred to in the schedules
or other materials that have been or may hereafter be provided to Acquiror or
any of its affiliates, agents or representatives, and Company and Titan make no
representations or warranties with respect to any such projections or other
predictions.
5.7 Interpretation of Certain Provisions.
Acquiror has not relied or is not relying on the specification of
any dollar amount in any representation or warranty made in this Agreement or
any schedule hereto to indicate that such amounts, or higher or lower amounts,
are or are not material, and agrees not to assert in any dispute or controversy
between the parties hereto that specification of such amount indicates or is
evidence as to whether or not any obligation, item or matter is not material for
purposes of this Agreement and the transactions contemplated hereby.
5.8 Availability of Funds.
As of the Initial Closing or the Closing, as applicable, Acquiror
shall have sufficient funds available to enable Acquiror to consummate the
transactions contemplated hereby.
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5.9 Financial Advisor.
Other than Vaupen Financial Advisors, LLC, no broker, finder "
investment banker claiming through Acquiror is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Acquiror.
5.10 Tax Matters.
Acquiror is a `purchasing corporation' within the meaning of
Section 338(h)(10) of the Code and Acquiror has no plan or intention to
liquidate, merge Acquiror into another entity, or otherwise take any action that
would cause Acquiror to not be treated as the `purchasing corporation' for
purposes of the Section 338(h)(10) Election. Acquiror has no plan or intent to
elect to treat GlobaWet International LLC as an 'association' or take any other
action that would cause GlobalNet International LLC to not be treated as
'disregarded' pursuant to Treasury Regulation ss. 301.7701-3(b)(1). Assuming the
consummation of the transactions contemplated herein, including the transactions
set forth in Section 1.3 the Company will be a wholly owned subsidiary of
Acquiror.
5.11 HSR Matters.
The ultimate parent entity (as the term "ultimate parent entity"
is defined in the HSR Act and its implementing regulations) of the Acquiror does
not directly and indirectly hold in excess of $20,000,000 of voting securities
of Titan and any entity controlled by Titan (as the term 'control' is defined in
the HSR Act and its implementing regulations) and will not hold at the time of
the Closing in excess of $20,000,000 of voting securities of Titan and any
entity controlled by Titan.
SECTION 6. ADDITIONAL COVENANTS OF THE PARTIES 6.1 Regulatory Approvals.
(a) Each of Titan and Acquiror shall use its commercially
reasonable efforts to file, as soon as practicable after the date of this
Agreement, all notices, reports and other documents required to be filed with
any Governmental Body with respect to the transactions contemplated by this
Agreement, and to submit promptly any additional information requested by any
such Governmental Body. Notwithstanding anything to the contrary in this Section
6.1, neither Titan, the Company nor any of their respective Subsidiaries shall
be required to take any action that could reasonably be expected to
substantially impair the overall benefits expected, as of the date hereof, to be
realized from the consummation of the transactions contemplated herewith.
(b) Within five (5) business days following the execution of this
Agreement, the Company and Acquiror shall jointly file an application with the
FCC requesting the consent of the FCC on FCC Form 214 to the transfer of control
of the FCC Licenses to Acquiror (the 'Application'). The Company and Acquirer
will
18
diligently take, or fully cooperate in the taking of, all necessary and proper
steps, and provide any additional information reasonably requested in order to
obtain promptly the requested consents and approvals of the applications by the
FCC; providedd however that none of the parties hereto shall have any obligation
to participate in any evidentiary hearing.
6.2 Indemnification of Officers and Directors.
(a) Acquiror will not permit the provisions with respect to
indemnification set forth in the articles of incorporation and bylaws (or
similar organizational documents) of any of the Acquired Companies on the date
of this Agreement to be amended, repealed, or otherwise modified for a period of
six (6) years after the Closing Date in any manner that would adversely affect
the rights thereunder of persons who at any time prior to the Closing Date were
identified as prospective indemnitees under any such documents in respect of
actions or omissions occurring at or prior to the Closing Date (including the
transactions contemplated by this Agreement), unless such modification is
required by applicable law.
(b) From and after the Initial Closing Date or the Closing Date,
as applicable, the Company shall indemnify, defend, and hold harmless the
present and former officers, directors, and employees of Company (the
'Indemnified Persons') against all losses, expenses, claims, damages,
liabilities, or amounts that are paid in settlement of, or otherwise in
connection with, any claim, action, suit, proceeding, or investigation (an
"Indemnity Claim'), based in whole or in part on the fact that such person is or
was such a director, officer, or employee and arising out of actions or
omissions occurring at or prior to the Closing Date, in each case to the fullest
extent permitted under Nevada Law (and shall pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified Person to
the fullest extent permitted under Nevada Law, upon receipt from the Indemnified
Person to whom expenses are advanced of the undertaking to repay such advances
contemplated by Nevada Law), provided the Indemnified Person has met the
applicable standard of conduct set forth in Section 78.751 of Nevada Law. The
Acquiror and the Company shall cause each of the Company's Subsidiaries,
directly or indirectly, to provide similar indemnification as set forth in this
Section 6.2 (including reimbursement rights) to such Subsidiaries' present and
former officers, directors and employees to the fullest extent permissible under
applicable law.
(c) Any Indemnified Person wishing to claim indemnification under
this Section 6.2, upon learning of any such Indemnity Claim, shall notify the
Company (although the failure so to notify the Company shall not relieve the
Company from any liability that the Company may have under this Section 6.2,
except to the extent such failure prejudices the Company), and shall deliver to
the Company the undertaking contemplated by Sections 78.750 and 78.751 of Nevada
Law. The Company shall have the right to assume the defense thereof and the
Company shall not be liable to such Indemnified Persons for any legal expenses
of other counsel or any other expenses subsequently incurred by such Indemnified
Persons in connection with the defense thereof, except that if the Company
elects not to assume such defense or there is a conflict of interest between the
Company and the Indemnified Persons, the Indemnified Persons may retain counsel
satisfactory to them and the Company shall pay all reasonable fees and expenses
of such counsel for the Indemnified Persons
19
promptly as statements therefore are received; provided, however, that (i) the
Company shall not, in connection with any one such action or proceeding or
separate but substantially similar actions or proceedings arising out of the
same general allegations, be liable for the fees and expenses of more than one
separate firm of attorneys at any time for all Indemnified Persons except to the
extent that local counsel, in addition to such parties' regular counsel, is
required in order to effectively defend against such action or proceeding, (ii)
the Indemnified Persons will cooperate in the defense of any such matter, and
(iii) the Company shall not be liable for any settlement effected without its
prior written consent; and provided, further, that the Company shall not have
any obligation hereunder to any Indemnified Person when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final, that the Indemnified Person is not entted to indemnification
under applicable law, the provisions of this Section 6.2, or otherwise. No
Indemnified Person shall consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff of a release from all liability in respect of such
claim for which such Indemnified Person would be entitled to indemnification
hereunder.
(d) This Section 6.2 is intended to be for the benefit of, and
shall be enforceable by, the Indemnified Persons referred to herein, and their
heirs and personal representatives and shall be binding on Acquiror and the
Company, and their respective successors and assigns. Notwithstanding the terms
of this Section 6.2 to the contrary, nothing in this Section 6.2 supersedes,
expands, or extinguishes any of the terms and obligations contained in the
indemnification agreements between the Company and certain of its directors and
officers.
6.3 Additional Agreements.
Each of Acquiror and the Company shall use its commercially
reasonable efforts to take, or cause to be taken, all actions necessary to
consummate the transactions contemplated by this Agreement. Without limiting the
generality of the foregoing each party to this Agreement (a) shall make all
filings (if any) and give all notices (if any) required to be made and given by
such party in connection with the transactions contemplated by this Agreement;
(b) shall use its commercially reasonable efforts to obtain each Consent (if
any) required to be obtained (pursuant to any applicable Legal Requirement or
Contract, or otherwise) by such party in connection with the transactions
contemplated by this Agreement; and (c) shall use its commercially reasonable
efforts to lift any restraint, injunction or other legal bar to the transactions
contemplated by this Agreement. The Company shall promptly deliver to Acquiror a
copy of each such filing made, each such notice given and each such Consent
obtained by it during the Pre-Closing Period.
6.4 Employee Matters.
To the extent any employee benefit plan, program, or policy of
the Acquiror or the Company, or their respective affiliates is made available to
any person who is an employee of the Company immediately prior to the Closing
Date: (a) service with the Company by any such employee prior to the Closing
Date shall be credited for purposes of vesting in retirement plans, vacation,
and severance benefits; and (b) with respect to any welfare benefit plans to
which such employees may become eligible,
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Acquiror shall cause such plans to waive all pre-existing condition exclusions
and waiting periods, other than limitations or waiting periods that have not
been satisfied under any welfare plan maintained by the Company for its
employees prior to the Closing Date.
6.5 Disclosure Schedules.
The inclusion of any fact or item on the Company Disclosure
Schedule, Titan Disclosure Schedule or Acquiror Disclosure Schedule, as the case
may be, referenced by a particular section in this Agreement shall, should the
existence of the fact or item or its contents, be relevant to any other section,
be deemed to be disclosed with respect to such other section whether or not an
explicit cross-reference appears in such schedule in which such item is
referenced that such item is relevant to such other section.
6.6 Ordinary Course of Business.
During the Pre-Closing Period, and except as otherwise agreed to
by the Acquiror in writing, the Acquired Companies shall (i) conduct their
respective operations according to their ordinary and usual course of business
consistent with past practice; (ii) preserve intact their business organization,
contracts and properties; (iii) use commercially reasonable efforts to keep
available the services of their officers and employees; and (iv) use
commercially reasonable efforts to maintain satisfactory relationships with
their employees, and the customers and vendors with which they do business.
Without limiting the generality of the foregoing, during the Pre-Closing Period,
none of the Acquired Companies shall do any of the following, except as
otherwise required by this Agreement or except as otherwise agreed to by the
Acquiror in writing:
(a) amend its Articles of Incorporation or Bylaws;
(b) authorize for issuance, issue or deliver any additional
shares of any of its capital stock of any class or securities convertible into
shares of its capital stock or issue or grant any right, option, warrant or
other commitment for the issuance of its shares of capital stock or such
securities;
(c) split, combine or reclassify any shares of its capital stock
or declare, set aside or pay any dividend (whether in cash, stock or property)
in respect of its capital stock or redeem or otherwise acquire any of its
capital stock;
(d) (Intentionally Omitted);
(e) sell or purchase marketable securities owned by it, if any,
except in the ordinary course of business;
(f) increase compensation and/or benefits for any of its
employees, consultants or officers, except for the increases and/or bonuses in
the ordinary course of business and consistent with historical adjustments;
21
(g) terminate or enter into any employment or consulting
contracts or any collective bargaining agreement;
(h) sell or dispose of or encumber any of its capital assets with
an aggregate value of $100,000 or more or make any capital expenditures in an
aggregate amount in excess of $100,000 or enter into, renew or extend any lease
of capital equipment or real estate involving payments in an aggregate amount in
excess of $100,000 for the term of the lease;
(i) create, amend, extend, renew, assume, incur or guarantee any
indebtedness either involving amounts in excess of $100,000, individually or in
the aggregate or not in the ordinary course of its business;
0) enter into any contract or commitment (including employment,
consulting and collective bargaining agreements) or engage in any transaction in
excess of $100,000 which is not in the usual and ordinary course of its business
or which is inconsistent with its past practices and which is not terminable at
will upon 30 days' notice without penalty of any kind;
(k) create any stock option or other stock based incentive plan;
(1) acquire any other business or interest therein;
(m) enter into, amend or terminate (other than by expiration) any
material Contract to which it is a party or by which its assets are bound;
(n) amend, supplement or otherwise alter, in any material
respect, any contracts or relationships with the existing customers or vendors,
except in the ordinary course of business;
(o) commence, compromise, settle, waive, approve or permit the
settlement of, any litigation, proceeding, hearing arbitration or other dispute
or claim involving amounts in controversy of more than $10,000;
(p) enter into any new agreement or engage in any new transaction
with any of its stockholders, directors, officers or affiliates, or any of the
stockholders, directors, officers or affiliates of any of the Company,
(q) make any change in its accounting practices or policies;
(r) fail to keep in full force and effect insurance covering such
Acquired Company and its assets comparable in amount and scope of coverage to
that which is now maintained;
(s) fail to comply with any laws and regulations applicable to
such Acquired Company, or to the conduct of its business, except to the extent
that the failure to comply with such laws or regulations would not have or be
reasonably expected to have a Material Adverse Effect on the Acquired Companies
(taken as a whole); or
22
t) enter into any contract or commitment to do any of the things
described in foregoing sections of this Section 6.6.
6.7 Tax Covenant.
Acquiror agrees that for a period of two years from the date of
the Closing, Acquiror shall not be a part of a merger, liquidation or
acquisition unless Acquiror survives the transaction described hereunder;
provided, however, Acquiror may be part of a merger, liquidation or acquisition
transaction in which Acquiror is not the surviving entity, if Acquiror obtains a
letter ruling from the Internal Revenue Service or a tax opinion is obtained
from tax advisors to Acquiror in form reasonably satisfactory to Titan, that
such merger, liquidation or acquisition should not invalidate the Section
338(h)(10) Election.
6.8 Management Agreement.
On the Initial Closing Date, Acquiror and Titan shall enter into
a management agreement in substantially the form attached hereto as Exhibit E
(the "Management Agreement"). The Management Agreement shall remain in effect
during the remainder of the term of this Agreement and shall terminate upon
termination of this Agreement or consummation of the acquisition of the Company
Common Stock by Acquiror hereunder. Notwithstanding anything to the contrary
contained in this Agreement or otherwise, Titan and the Company shall not be
deemed to have breached or failed to comply with any representations,
warranties, covenants, or agreements with respect to the Company or this
Agreement if such breach or failure is due or caused directly by any act,
omission or instruction of Acquiror under or in connection with any activities
or transactions by Acquiror in furtherance thereof or in connection therewith or
any actions of Titan or the Company in accordance with the terms of the
Management Agreement.
SECTION 7. CONDITIONS PRECEDENT
7.1 Conditions To Each Party's Obligation.
The respective obligations of Titan, the Company and Acquiror to
effect the Initial Closing, if applicable, and the Closing and the other
transactions contemplated herein are subject to the satisfaction or, to the
extent permitted by applicable Legal Requirements, the waiver by each party on
or prior to the Initial Closing Date or the Closing Date, as applicable, of each
of the following conditions:
(a) No Order. No judgment, injunction, Order or decree of any
Governmental Body shall be in effect which prohibits the consummation of the
transactions contemplated by this Agreement, and no statute, rule, regulation or
executive order shall have been enacted or promulgated, in each case, that would
prohibit the consummation of the transactions contemplated by this Agreement; it
being understood that the parties hereto shall use their commercially reasonable
23
efforts to have any such injunction, ruling, order, restraint or prohibition
(each, a 'Restraint") lifted and to oppose any action to impose a Restraint.
(b) Required Lender Consent. Titan shall have obtained the
consent of the Required Lenders (as such term is defined in the Titan Credit
Agreement) under the Titan Credit Agreement to the consummation of the
transactions hereunder. All Encumbrances on the assets of the Company by any
lender extending credit to Titan shall have been released to the reasonable
satisfaction of Acquiror.
(c) FCC Order. As a condition precedent to the obligation of the
parties hereto to consummate the Closing, but not the initial Closing, the FCC
Order shall have been issued.
7.2 Additional Conditions to Acquiror's Obligations.
The respective obligations of Acquiror to effect the Initial
Closing, if applicable, and the Closing and the other transactions contemplated
by this Agreement are subject to the satisfaction or, to the extent permitted by
applicable Legal Requirements, the waiver by Acquiror, on or prior to the
Initial ClosingDate or the Closing Date, as applicable, of each of the following
conditions:
(a) Representations and Warranties of Titan. The representations
and warranties of Titan contained in this Agreement shall be accurate in all
material respects on and as of the Initial Closing Date, if applicable, and the
Closing Date, except to the extent such representations and warranties speak as
of an earlier date, in which case such representations and warranties shall be
accurate as of such date in all material respects, and except to the extent that
the failure of such representations and warranties to be true and correct shall
not have had, or be reasonably expected to have a Material Adverse Effect on the
Acquired Companies (taken as a whole). Acquiror shall have received a
certificate of the chief executive officer or chief financial officer of Titan
to that effect.
(b) Representations and Warranties of the Company. The
representations and warranties of the Company contained in this Agreement shall
be accurate in all material respects on and as of the earlier of the initial
Closing Date or May 31, 2003, except to the extent such representations and
warranties speak as of an earlier date, in which case such representations and
warranties shall be accurate as of such date in all material respects, and
except to the extent that the failure of such representations and warranties to
be true and correct shall not have had, or be reasonably expected to have a
Material Adverse Effect on the Acquired Companies (taken as a whole). Acquiror
shall have received a certificate of the chief executive officer or chief
financial officer of the Company to that effect.
(c) Covenants and Agreements. The Company and Titan shall have
performed in all material respects the Company's or Titan's as the case may be,
covenants, obligations and agreements under the Agreement, except to the extent
that the failure of the Company or Titan to perform such covenants, obligations
and agreements shall not have had, or be reasonably expected to have a Material
Adverse Effect on the Acquired Companies (taken as a whole). Acquiror shall have
received a
24
certificate of the chief executive officer or chief financial officer of the
Company and Titan to that effect.
(d) Jlntentionallv Omittedl
(e) Closing Deliveries. Acquiror shall have received each of the
documents or items required to be delivered to Acquiror pursuant to Sections 8.2
and .33.
(f) Audited 2002 Financial Statements. The Company shall have
delivered to Acquiror the Company's audited consolidated balance sheet of the
Acquired Companies as of December 31, 2002, and the related consolidated
statement of operations, changes in stockholder's equity, and cash flows for the
period from March 22, 2002 (the date of acquisition by Titan) through December
31, 2002 (the "Audited 2002 Financial Statements"), together with a report
thereon by KPMG LLP, and the financial condition and results of operations for
the Acquired Companies on a consolidated basis shall not vary materially from
the Company Unaudited 2002 Financial Statements (subject to the matters set
forth in Section 3.4 of the Company Disclosure Schedule) and the Audited 2002
Financial Statements shall not be qualified by KPMG LLP, other than a `going
concern' qualification of the Company. Titan and the Company shall use
commercially reasonable efforts to deliver the Audited 2002 Financial Statements
to Acquiror on or before May 31, 2003.
7.3 Additional Conditions to the Company's and Titan's Obligations.
The obligations of the Company and Titan to effect the Initial
Closing, if applicable, and the Closing and the other transactions contemplated
hereby are subject to the satisfaction or, to the extent permitted by applicable
Legal Requirements, the waiver by the Company and Titan, on or prior to the
Initial Closing Date or the Closing Date, as applicable, of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Acquiror contained in this Agreement shall be accurate in all
material respects on and as of the Initial Closing Date, if applicable, and the
Closing Date; except to the extent such representations and warranties speak as
of an earlier date, in which case such representations and warranties shall be
accurate as of such date in all material respects, and except to the extent that
the failure of such representations and warranties to be true and correct shall
not have had, or be reasonably expected to have a Material Adverse Effect on
Acquiror's ability to consummate the transactions contemplated hereby. The
Company and Titan shall have received a certificate of the chief executive
officer or chief financial officer of Acquiror to that effect.
(b) Covenants and Agreements. Acquiror shall have performed in
all material respects its covenants, obligations or agreements under this
Agreement, except to the extent that the failure of Acquiror to perform such
covenants, obligations and agreements shall not have had, or reasonably be
expected to have, a Material Adverse Effect on Acquiror's ability to consummate
the transactions contemplated hereby. The Company and Titan shall have received
a certificate of the chief executive officer or chief financial officer of
Acquiror to that effect.
25
(c) Closing Deliveries. The Company and Titan shall have received
each of the documents or items required to be delivered to the Company and Titan
pursuant to Section 8.4.
SECTION 8. CLOSING
8.1 Closing of Sale and Purchase.
(a) Initial Closing. Subject to the terms and conditions of this
Agreement, the initial closing of this Agreement (the Initial Closing') will
take place within one (1) business day after June 30, 2003 or an earlier date
agreed to in writing
o the parties (the "Initial Closing Date'), if (i) the FCC Order shall not have
been granted and the Closing shall not have been consummated as of June 30,
2003, and (ii) the conditions set forth in Section 7 (other than Section 7.1(cll
of this Agreement, shall have been satisfied, or if permissible, waived. The
Initial Closing will take place at the offices of Xxxxx & Xxxxxxx L.L.P., 0000
Xxxxxxxxxx Xxxxx, Xxxxx 0000, XxXxxx, x 00000, unless another date or place is
agreed to in writing by the parties.
(b) Closing. Subject to the terms and conditions of this
Agreement, the closing of this Agreement (the 'Closing") will take place at
Titan's election on the second (2'") business day after the satisfaction of the
latest to occur or, if permissible, waiver of the conditions set forth in
Section 7 of this Agreement (the "Closing Date'), at the offices of Xxxxx &
Xxxxxxx L.L.P.,
0000 Xxxxxxxxxx Xxxxx, Xxxxx 0000, XxXxxx,
x 00000, unless another date or place is agreed to in writing by the parties;
provided, however, that the Closing shall not occur prior to one (1) business
day after June 30, 2003, unless another date is agreed to in writing by the
parties.
8.2 Deliveries by Titan.
At the Initial Closing, if applicable, and the Closing, Titan
shall deliver to the Acquiror the following:
(a) a certificate representing the shares of Company Common Stock
being sold to Acquiror pursuant to Section 1.1. duly endorsed in blank or with
duly executed stock powers attached (only with respect to the Closing);
(b) an executed Assignment and Assumption Agreement in the form
attached hereto as Exhibit F;
(c) the certificates required by Section 7.2(al and 7.2(c) and
(d) such other documents as Acquiror may reasonably request. 8.3
Deliveries by Company.
At the Initial Closing, if applicable, and the Closing, the
Company shall deliver to Acquiror the following:
26
(a) a certified copy of the resolutions adopted by the Boar.
Directors of the Company authorizing the transactions contemplated by this
Agreement;
(b) the certificate required by Section 7.2(b)and 7.2(cl:
(c) certificates of incumbency and specimen signatures of the
signatory officers of Company;
(d) good standing certificate of the Company as of a date not
more than five days prior to the Initial Closing Date, if applicable, or the
Closing Date issued by the Secretary of State of Nevada;
(e) the articles of incorporation, bylaws, minute books and stock
books of Company and all other books and records reasonably requested by
Acquiror; and
(f) such other documents as Acquiror may reasonably request. 8.4
Deliveries by Acquiror. At the Initial Closing, if applicable, and the Closing,
Acquiror shall deliver the following:
(a) by wire transfer to Titan the Transaction Expenses in the
amount and manner in Section 1.4
(b) the Release;
(c) an executed copy of the Assignment and Assumption Agreement
in the form attached hereto as Exhibit F;
(d) the certificates required by Section 7.3(a) and 7.3(b):
(e) a certified copy of the resolutions adopted by the Board of
Directors of Acquiror authorizing the transactions contemplated by this
Agreement;
(f) certificates of incumbency and specimen signatures of the
signatory officers of Acquiror;
(g) good standing certificate of Acquiror as of a date not more
than five days prior to the Initial Closing Date, if applicable, or the Closing
Date issued by the Secretary of State of the State of Florida;
(h) the certificate of incorporation and bylaws of Acquiror
certified by the Secretary of Acquiror as being correct and complete; and
27
(i) such other documents as the Company or Titan may reasonably
request.
SECTION 9. TERMINATION
9.1 Termination.
This Agreement may be terminated prior to the Closing Date:
(a) by mutual written consent of Acquiror, the Company and Titan;
(b) by Acquiror on the one hand, or the Company and Titan, on the
other hand, if the Closing shall not have been consummated by August 31, 2003
(the "Termination Date') (unless the failure to consummate the transactions
contemplated hereunder is attributable to a failure on the part of the party
seeking to terminate this Agreement to perform any material obligation required
to be performed by such party at or prior to the Termination Date);
(c) by Acquiror on the one hand, or the Company and Titan, en the
other hand, if a court of competent jurisdiction or other Governmental Body
shall have issued a final and nonappealable injunction, or shall have taken any
other action, having the effect of permanently restraining, enjoining or
otherwise prohibiting, the transactions contemplated hereunder; provided,
however, that the issuance of such final nonappealable injunction shall not be
attributable to the breach of this Agreement by the party seeking termination
pursuant to this Section 9.1(c);
(d) by Acquiror, on the one hand, or the Company and Titan, on
the other hand, in accordance with the terms and conditions of Section 10
(e) by Acquiror, if the Company delivers the 2002 Audited
Financial Statements pursuant to Section 7.2(0, and within three (3) business
days of the delivery of the 2002 Audited Financial Statements to Acquiror,
Acquiror provides a good faith notice to Titan in writing that the Company has
failed to satisfy the condition set forth in Section 7.2(fl; provided, however,
if Acquiror fails to provide such notice the Company and Titan shall be deemed
to have satisfied Section 7.2(k or
(f) by Titan or the Company, if Titan or the Company has entered
into a bona fide agreement with an unrelated third party to sell the capital
stock of the Company or the assets of the Company, it being understood that the
terms and conditions of such agreement shall be determined by Titan and the
Company in their sole discretion, including entering into terms or conditions
which may be more or less favorable to Titan or the Company than the terms or
conditions of this Agreement.
9.2 Effect of Termination.
(a) In the event this Agreement is terminated as provided in
Sections 9.1(a), 9.1fb1, 9.1 c 9.1(el or 9.1(fl, this Agreement shall be deemed
null, void and of no further force or effect, and the parties hereto shall be
released from all future obligations hereunder provided, however that the
obligations of Acquirer, the
28
Company and Titan set forth in the Proprietary Information Agreement, and
Section 9.3 (which relates to payment of certain expenses), shall survive such
termination and _ --the parties hereto shall have any and all remedies to
enforce such obligations provided at law or in equity or otherwise (including,
without limitation, specific performance).
(b) In the event this Agreement is terminated as provided in
Section 9.1(d), this Agreement shall be deemed null, void and of no further
force or effect, and the parties hereto shall be released from all future
obligations hereunder; providedd however, that the obligations of Acquiror, the
Company and Titan set forth in the Proprietary Information Agreement, Section 10
(which relates to remedies) and Section 9.3 (which relates to payment of certain
expenses), shall survive such termination and the parties hereto shall have any
and all remedies to enforce such obligations provided at law or in equity or
otherwise (including without limitation, specific performance).
9.3 Transaction Expenses.
(a) In the event the transactions contemplated hereunder are
consummated, Acquiror agrees to reimburse Titan at Closing all fees and expenses
incurred by Titan in connection with the consummation of the transactions
contemplated by this Agreement up to One Million Dollars ($1,000,000),
including, the portion of any retention bonuses which are due at or prior to
Closing (the "Transaction Expenses"). In the event the transactions contemplated
hereunder are not consummated, all fees and expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement shall be paid
by the party incurring such expenses.
(b) Notwithstanding anything in this Section 9.3 to the contrary,
(a) Acquiror shall pay all fees and expenses, and (b) Acquiror shall pay all
sales, use, documentary, stamp, gross receipts, legislation, transfer,
conveyance, excise, recording, license and other similar Taxes or fees
('Transfer Taxes"), if any, applicable to, imposed upon or arising out of the
transactions contemplated hereby whether now in effect or hereafter adopted and
regardless of which party such Transfer Tax is imposed. Each party agrees to
cooperate with such other party in the timely completion, execution and filing
of any documentation required by any (or all) or state Governmental Entity in
connection with the Transfer Taxes.
SECTION 10. DEFAULT; REMEDIES
10.1 Default by Acquiror.
If Acquiror shall default in the performance of its obligations
under this Agreement, or if, as a result of Acquiror's action or failure to act,
the conditions precedent to Company's or Titan's obligation to close specified
in Section 7.3 are not satisfied, and for such reason or reasons this Agreement
is not consummated, and provided that the Company or Titan shall not then be in
material default in the performance of the Company's or Titan's obligations
hereunder, the Company or Titan shall be entitled, by written notice to Acquiror
to terminate this Agreement and to (a)
29
Comment We are not be obligated to reimburse to pay Titan for any expenses
unless there is an actual Closing. Comment: If a transaction expense cannot be
identified by the Closing Date, we will not reimburse for it. We also want to
attach a schedule with the estimated expenses by category. receive the payment
of Four Hundred Thousand Dollars ($400,000) as full and liquidated damages
pursuant to this Agreement, or (b) to pursue any other remedies the Company or
Titan has at law or in equity or otherwise; providedd however. Acquiror shall
have a period of ten (10) business days after receipt of the Company's or
Titan's written termination notice to cure any such default and if Acquiror
cures such default within such ten (10) business day period, the Company or
Titan shall have no right to terminate this Agreement based on such default;
provided, further however that Acquiror shall have no right to such ten (10)
business day cure period with respect to any breach by Acquiror of its
obligation to consummate the Initial Closing on the Initial Closing Date or the
Closing on the Closing Date, as applicable.
10.2 Default by Company or Titan.
If Company or Titan shall default in the performance of the
Company's or Titan's obligations under this Agreement, or if, as a result of the
Company's or Titan's action or failure to act, the conditions precedent to
Acquiror's obligation to close specified in Section 7.2 are not satisfied, and
for such reason or reasons this Agreement is not consummated, and provided that
Acquiror shall not then be in default in the performance of Acquiror's
obligations hereunder, Acquiror shall be entitled, by written notice to Company
and Titan, to terminate this Agreement and to pursue any other remedies Acquiror
has at law or in equity or otherwise, provided. however Company and Titan shall
have a period of ten (10) business days after receipt of Acquiror's written
termination notice to cure any such default and if Company or Titan cures such
default within such ten (10) business day period, Acquiror shall have no right
to terminate this Agreement based on such default.
10.3 Specific Performance.
Acquiror, the Company and Titan agree that irreparable harm would
occur in the event any provision of this Agreement was not performed in
accordance with the terms hereof and that the parties shall be entitled to
respectful performance of the terms hereof, in addition to any other remedy at
law or in equity.
10.4 Liquidated Damages.
The parties hereto have provided for the amount of the liquidated
damages as a remedy for Titan after having considered carefully the anticipated
and actual xxxxx and losses that would be incurred if Acquiror default and thus
fail to perform their obligations under this Agreement, the difficulty of
ascertaining at this time the actual amount of damages, special and general,
that Titan will suffer in such event, and the inconvenience or nonfeasibility of
otherwise obtaining an adequate remedy in such event. In any situation hereunder
pursuant to which the liquidated damages shall be payable to Titan, Acquiror
agrees to waive any defense that there is an alternative adequate remedy
available to Titan and/or that payment of the liquidated damages to Titan would
constitute a penalty.
30
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES
11.1 Representations and Warranties.
The representations and warranties contained in Sections 4 and 5
of this Agreement shall continue until the Closing and thereafter shall survive
the Closing until the applicable statute of limitations or in accordance with
the terms of this Agreement. Notwithstanding anything herein to the contrary,
any representation or warranty which is the subject of a claim which is asserted
in writing prior to the expiration of the applicable period set forth above
shall survive solely with respect to such claim until the final resolution
thereof. None of the representations or warranties contained in Section 3 of
this Agreement shall survive the Closing Date. Unless a specified period for
performance is set forth in this Agreement (in which case such specified period
will control), the covenants and agreements in this Agreement will survive the
Initial Closing, if applicable, and the Closing and remain in effect
indefinitely.
11.2 Indemnification by Titan.
Anything in this Agreement to the contrary notwithstanding, Titan
hereby agrees, subject to Section 6.8 and 11.5, to indemnify, defend and hold
Acquiror harmless against all demands, losses, claims, actions or causes of
action, assessments, damages, liabilities, costs and expenses, including,
without limitation, interest, penalties and reasonable attorneys' fees and
disbursements (`Losses") resulting from, imposed upon or incurred by Acquiror,
as a result of any inaccuracy or breach of a representation or warranty set
forth in Section 4, or any nonfulfillment of any covenant of Titan subject to
the limitations set forth in Sections 6.8 and 11.5. Notwithstanding anything in
this Agreement to the contrary, Titan shall not be liable for any representation
or warranties of the Company or any nonfulfillment of any covenant of the
Company.
11.3 Indemnification by Acquiror.
Anything in this Agreement to the contrary notwithstanding,
Acquiror hereby agrees to indemnify, defend and hold Titan harmless against all
Losses resulting from, imposed upon or incurred by Titan, as a result of any
inaccuracy or breach of a representation or warranty, set forth in Section 5, or
any nonfulfillment of any covenant of Acquiror subject to the limitations set
forth in Section 11.5; provided, however, Acquiror's obligations to deliver the
Release and the Transaction Expenses shall not be subject to any limitation
whatsoever.
11.4 Procedure for Indemnification.
In the event, from time to time, any party (the "Claimant")
determines that it has suffered a Loss for which indemnification is available
pursuant to this Section 11, the following procedure shall be followed:
31
(a) The Claimant shall give written notice of any such claim (a
Yaas Notice") to the party from which the indemnification is claimed (the
'Indemnifying Party') specifying in reasonable detail the amount of the claimed
Loss (the "Las Amount").
(b) Within twenty (20) days after delivery of a Loss Notice, the
Indemnifying Party shall provide to the Claimant, a written response (a 'Respe e
Notice") in which the Indemnifying Party will (i) agree that indemnification of
the full Loss Amount is appropriate, (ii) agree that indemnification in an
amount equal to part, but not all, of the Loss Amount (the 'Agreed Amount") may
be made or (iii) contest making any indemnification hereunder. The Indemnifying
Party may contest any indemnification hereunder upon a good faith belief that
all or such portion of such Losses do not constitute a Loss for which the
Claimant is entitled to indemnification under this letter agreement. If no
Response Notice is delivered by the Indemnifying Party within such ten (10) day
period, the Indemnifying Party shall be deemed to have agreed that
indemnification of the full Loss Amount is appropriate.
(c) If the Indemnifying Party in the Response Notice agrees (or
is deemed to have agreed pursuant to clause (ii) above) that indemnification in
an amount equal to the Loss Amount is appropriate, then the Indemnifying Party
shall pay the Loss Amount within three (3) business days of the Response Notice_
(d) If the Indemnifying Party in the Response Notice contests all
or any part of the Loss Amount (the 'Contested Amount"), the Claimant and the
Indemnifying Party shall negotiate in good faith to resolve any such dispute. If
any such dispute involving claims of less than $1,000,000 cannot be resolved
within thirty (30) days after the receipt by Claimant of the Response Notice,
the Claimant and the Indemnifying Party shall submit the matter to the
Washington, D.C. office of the American Arbitration Association ('AAA") for
binding arbitration to be conducted in accordance with the AAA commercial
arbitration rules in effect at the time such matter is submitted. If any such
matter is submitted to the AAA as provided herein, (A) each of the Claimant and
the Indemnifying Party will furnish to AAA such work papers and other documents
and information as AAA may request and will be afforded the opportunity to
present to AAA any material relevant to the matter, (B) the determination by
AAA, as set forth in a notice delivered to the Claimant and the Indemnifying
Party by AAA, will be binding and conclusive on such parties.
(e) In connection with any such commercial arbitration, the
following rules also shall apply: (A) any party shall have the right to have
counsel represent such party at the arbitration hearing and in pre-arbitration
proceedings; (B) all parties shall be permitted to conduct discovery in
accordance with the Federal Rules of Civil Procedure; (C) the arbitrator(s)
shall have the authority to resolve any discovery disputes and to invoke an
action to cease further discovery; (D) each party to any arbitration proceeding
shall have the right to a written transcript made of the arbitration
proceedings; (E) each party shall have the right to file post-arbitration
briefs, which shall be considered by the arbitrator(s); and (F) each party shall
bear its own costs and expenses and attorney's fees in connection with such
arbitration.
32
(f) In the event of any disputes involving claims of $1,000,000
or more, either party shall have the right to bring such action in any state or
federal court of competent jurisdiction.
(g) The exercise of any such right by any Claimant in good faith,
whether or not ultimately determined to be justified, will not constitute a
breach of this Agreement. Neither the exercise of nor the failure to exercise
such right of reimbursement will constitute an election of remedies or limit any
Claimant in any manner in the enforcement of any other remedies available to any
Claimant except as otherwise expressly set forth in this Agreement.
11.5 Limitations on Indemnification.
Anything in the foregoing provisions to the contrary
notwithstanding, Titan shall not be liable for any amounts under Section 11.2
hereof unless and until the aggregate amount of Losses suffered by the Acquiror
from all claims for indemnification exceed Two Hundred Fifty Thousand Dollars
($250,000) (the 'Basket Amount"), in which case Titan shall be liable for the
full amount of Losses suffered by the Acquiror Indemnified Persons, including
the first Two Hundred Fifty Thousand Dollars ($250,000). Anything in the
foregoing provisions to the contrary notwithstanding, Acquiror shall not be
liable for any amounts under Section 11.3 hereof unless and until the aggregate
amount of Losses suffered by Titan from all claims for indemnification the
Basket Amount, in which case Acquiror shall be liable for the full amount of
Losses suffered by Titan, including the first Two Hundred Fifty Thousand Dollars
($250,000).
11.6. Third Party Claims.
The obligations and liabilities of Titan or Acquiror with respect
to their indemnities pursuant to this letter agreement, resulting from any claim
or other assertion of liability by any third party (`Third Party Claim') shall
be subject to the following terms and conditions:
(a) The Claimant must give the Indemnifying Party, notice of any
Third Party Claim which is asserted against, resulting to, imposed upon or
incurred by the Claimant and which may give rise to liability of the
Indemnifying Party pursuant to this letter agreement, stating (to the extent
known or reasonably anticipated) the nature and basis of such Third Party Claim
and the amount thereof; provided that the failure to give such notice shall not
affect the rights of the Claimant hereunder except to the extent (i) that the
Indemnifying Party shall have suffered actual damage by reason of such failure,
or (ii) such failure or delay materially adversely affects the ability of the
Indemnifying Party to defend, settle or compromise such Third Party Claim.
(b) Subject to Section 11.6(c), below, if the Indemnifying Party
assumes responsibility for Losses arising out of such Third Party Claim, then
the Indemnifying Party shall have the right to undertake, by counsel or other
representatives of its own choosing, the defense of such Third Party Claim at
the Indemnifying Party's risk and expense.
33
(c) In the event that (i) the Indemnifying Party shall elect not
to undertake such defense, (ii) within a reasonable time after notice from the
(3aimant of any such Third Party Claim, the Indemnifying Party shall fail to
undertake Is defend such Third Party Claim, or (iii) there is a reasonable
probability that such Tifad Party Claim may materially and adversely affect the
Claimant other than as a resul of money damages or other money payments, then
the Claimant (upon further'xxxxxx notice to the Indemnifying Party) shall have
the right to undertake the defense; compromise or settlement of such Third Party
Claim, by counsel or other representatives of its own choosing, on behalf of and
for the account and risk of the Indemnifying Party. In the event that the
Claimant undertakes the defense offa Third Party Claim under this Section 11.6,
the Indemnifying Party shall pay to the t3aimant, in addition to the other sums
required to be paid hereunder, the reasonable mats and expenses incurred by the
Claimant in connection with such defense, compromise or settlement as and when
such costs and expenses are so incurred.
(d) Anything in this Section 11.6 to the contrary
notwithstanding, neither the Claimant nor the Indemnifying Party shall, without
the other pa rtJ written consent (which consent shall not be unreasonably
withheld or delayc4, settle or compromise such Third Party Claim or consent to
entry of any judgment ch does not include as an unconditional term thereof the
giving by the claimant oc the plaintiff to the Claimant of a release from all
liability in respect of such Third Pkrty Claim in form and substance
satisfactory to the Claimant. In all cases where such release is granted, if a
firm written offer is made to settle any Third Party Claim, and the Indemnifying
Party proposes to accept such settlement and the Claimant refuses to consent to
such settlement then (i) the Indemnifying Party shall be excused from and the
Claimant shall be solely responsible for all further defense of such Third Party
Claim; (ii) the maximum liability of the Indemnifying Party relating to such
Thkd Party Claim shall be the amount of the proposed settlement if the amount
thereafter recovered from the Claimant on such Third Party Claim is greater than
the amount of the proposed settlement; and (iii) the Claimant shall pay all
attorney's fees and legal costs and expenses incurred after rejection of such
settlement by the Claimant but if the amount thereafter recovered by such Third
Party from the Claimant is lessthan the amount of the proposed settlement, the
Claimant shall be reimbursed by the Indemnifying Party for such attorney's fees
and legal costs and expenses up to the maximum amount equal to the difference
between the amount recovered by such Third Party and the amount of the proposed
settlement.
34
11.7. No Recourse Against Titan for Obligations of the Company.
Acquiror hereby irrevocably waives any and all right to recourse
against Titan with respect to any misrepresentation or breach of any
representation, warranty or indemnity, or noncompliance with any conditions or
covenants, given or made by the Company in this Agreement or any other
agreements and documents executed or to be executed by the parties thereto in
order to consummate the transactions contemplated by this Agreement.
SECTION 12. MISCELLANEOUS PROVISIONS 12.1 Amendment.
No amendment, modification or discharge of this Agreement shall
be valid or binding unless set forth in writing and duly executed by the party
or parties against whom enforcement of the amendment, modification or discharge
is sought.
12.2 Waiver.
(a) No failure on the part of any party to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
party in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No party shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
12.3 Entire Agreement; Counterparts.
This Agreement and the other agreements, instruments and
documents described herein constitute the entire agreement among the parties
hereto, and all other prior agreements and understandings, both written and
oral, among or between any of the parties with respect to the subject matter
hereof and thereof are no force and effect. This Agreement may be executed in
several counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same instrument.
12.4 Applicable Law; Jurisdiction.
This Agreement shall be governed by, and construed in accordance
with, the (internal procedural and substantive) laws of the State of New York,
applicable to
35
agreements and instruments executed and delivered wholly within such state and
without regard to such state's principles of conflicts of laws. In any action
between any of the parties arising out of or relating to this Agreement or any
of the transactions contemplated by this Agreement: (a) each of the parties
irrevocably and unconditionally consents and submits to the non-exclusive
jurisdiction and venue of any state court of competent jurisdiction located in
the Borough of Manhattan, City of New York or any United States District Court
located in the Borough of Manhattan, City of New York, and the applicable courts
of appeals therefrom; (b) if any such action is commenced in a state court,
then, subject to applicable law, no party shall object to the removal of such
action to any federal court located in the Borough of Manhattan, City of New
York; (c) each of the parties irrevocably waives the right to trial by jury; and
(d) each of the parties irrevocably consents to service of process by first
class certified mail, return receipt requested, postage prepaid, to the address
at which such party is to receive notice in accordance with Section 11.8.
12.5 Attorneys' Fees.
In any action at law or suit in equity to enforce this Agreement
or the rights of any of the parties hereunder, the prevailing party in such
action or suit shall be entitled to receive a reasonable sum for its attorneys'
fees and all other reasonable costs and expenses incurred in such action or
suit.
12.6 Assignability; Third Party Beneficiaries.
This Agreement shall be binding upon, and shall be enforceable by
and inure solely to the benefit of, the parties hereto and their respective
successors and assigns; provided, however.. neither this Agreement nor any of
the Acquiror's rights hereunder may be assigned by the Acquiror without the
prior written consent of Titan. Acquiror shall not permit any of its capital
stock to be transferred, if such transfer will conflict with or violate the HSR
Act or other provisions of this Agreement. Any other attempted assignment of
this Agreement or any of such rights by Acquiror without such consent shall be
void and of no effect. Except as provided in Section 6.2, nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person
(other than the parties hereto) any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
12.7 Notices.
Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when actually delivered (by hand,
by registered mail, by courier or express delivery service or by facsimile) to
the address or facsimile telephone number set forth beneath the name of such
party below (or to such other address or facsimile telephone number as such
party shall have specified in a written notice given to the other parties
hereto); provided, however, that a written notice delivered via facsimile shall
be deemed delivered only if at the time of, or shortly after, such facsimile
transmission the party giving the notice confirms by telephone the actual
receipt by the other party of such facsimile transmission:
36
(a) If to Acquiror.
GlobalNet Systems, Inc.
Xxx Xxxxxxx
Xxxx Xxxxxx-Xxxxx
Xxxxxxx XX00 0XX
Xxxxxx Xxxxxxx
Facsimile No._______________
Attention: Xxxxx Xxxxxx, Managing Director
with a copy to (which shall not constitute notice hereunder), to:
Oscar de la Guardia, Esq.
SunTrust International Center
Xxx Xxxxxxxxx 0"x Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
(b) If to Titan or Company:
The Titan Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxx, Esq.
with a copy to (which shall not constitute notice hereunder), to:
Xxxxx & Xxxxxxx L.L.P.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 0000
XxXxxx, Xxxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: Xxxxxxx X. X. Xxxxxx, Esq.
Xxxxxx X. Xxxx, Esq.
12.8 Cooperation.
The parties agree to cooperate fully with each other and to
execute and deliver such further documents, certificates, agreements and
instruments and to take such other actions as may be reasonably requested by the
other party to evidence or reflect the transactions contemplated by this
Agreement and to carry out the intent and purposes of this Agreement.
37
12.9 Construction.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words 'include' and
`including,' and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words `without
limitation.'
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits' are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
(e) Any statute defined or referred to herein or in any agreement
or instrument that is referred to herein means such statute as from time to time
amended, modified or supplemented, including by comparable successor statutes.
(f) The table of contents, index of defined terms and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the intended meaning or interpretation of this Agreement.
[The remainder of this page intentionally left blank.]
38
IN WITNESS WHEREOF, the parties have caused this Stock Purchase
Agreement to be executed as of the date first above written.
GLOBALNET SYSTEMS, INC.
[GRAPHIC OMITTED][GRAPHIC OMITTED]
By:_______________________________________
Name: Oscar de la Guardia Title: President
GLOBALNET, INC.
By:
Name: Title:
THE TITAN CORPORATION
By:_______________________________________
Name: Title:
In WITNESS WHEREOF, the parties have caused this
Stock Purchase Agreement to be executed as of the date first above
written.
GLOBALNET SYSTEMS, INC.
By:________________________
Name:
Title:
GLOBALNET SYSTEMS, INC
By:________________________
Name:
Title:
THE TITAN CORPORATION
By:_________________________
Name:
Title:
IN WITNESS WHEREOF, the parties have caused this Stock Purchase
Agreement to be executed as of the date first above written.
GLOBALNET SYSTEMS, INC.
By:
---------------------------------------
Name:
Title:
GLOBALNET, INC.
By:
---------------------------------------
Name:
Title:
THE TITAN CORPORATION
By:
--------------------------------------
Name:
Title:
LIST OF EXHIBITS
EXHIBIT A - CERTAIN DEFINITIONS
EXHIBIT B - OUTSTANDING OBLIGATIONS OF TITAN TO BE RELEASED
EXHIBIT C - PROPRIETARY INFORMATION AGREEMENT
EXHIBIT D - MANAGEMENT AGREEMENT
EXHIBIT E - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
"AAA" is defined in Section 11.4 to this Agreement.
"Acquired Company(ies)" is defined in Section 3.1 to this
Agreement.
"Acquired Company Contract" shall mean any Contract: (a) to which
any of the Acquired Companies is a party; (b) by which any of the Acquired
Companies or any asset of any of the Acquired Companies is or may become bound
or under which any of the Acquired Companies has, or may become subject to, any
obligation; or (c) under which any of the Acquired Companies has or may acquire
any right or interest.
"Acquiror" is defined in the Preamble to this Agreement.
"Acquiror Disclosure Schedule" is defined in Section 5 to this
Agreement.
"Agreed Amount" is defined in Section 11.4 to this Agreement.
"Agreement" is defined in the Preamble to this Agreement.
"Allocation" is defined in Section 2.3 to this Agreement.
"Application" is defined in Section 6.1(b) to this Agreement.
"Arbitrator" is defined in Section 1.7 to this Agreement.
"Assignment Agreement" is defined in Section 8.2(c) to this
Agreement.
"Audited 2002 Financial Statements" is defined in Section
7.2(f) to this Agreement.
"Basket Amount" is defined in Section 11.5 to this Agreement.
"Claimant" is defined in Section 11.4 to this Agreement.
"Closing" is defined in Section 8.1 to this Agreement.
"Closing Date" is defined in Section 8.1 to this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"COFETEL" shall mean the Federal Communications Commission of the
Republic of Mexico ("Comision Federal de Telecomunicaciones de Mexico").
"Company" is defined in the Preamble to this Agreement.
"Company Balance Sheet" is defined in Section 3.4 to this
Agreement.
"Company Benefit Plans" is defined in Section 3.11 to this
Agreement.
"Company Common Stock" is defined in the Recitals to this
Agreement.
"Company Creditor" is defined in Section 1.5 to this Agreement.
"Company Disclosure Schedule" is defined in Section 3 to this
Agreement.
"Company Financial Statements" is defined in Section 3.4 to this
Agreement.
"Company Indebtedness" is defined in the Recitals to this
Agreement.
"Company Material Contract" is defined in Section 3.7(a) to this
Agreement.
"Company Stock Rights" is defined in Section 3.3(b) to this
Agreement.
"Company Unaudited 2002 Financial Statements" is defined in
Section 3.4 to this Agreement.
"Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including Governmental Authorization).
"Contested Amount" is defined in Section 11.4 to this Agreement.
"Contract" shall mean any written contract, subcontract, lease,
understanding, instrument, note, option, warranty, purchase order, license,
sublicense, insurance policy, benefit plan or legally binding commitment or
undertaking of any nature.
"Encumbrance" shall mean any lien, pledge, hypothecation, charge,
mortgage, security interest, encumbrance, claim, infringement, interference,
option, right of first refusal, preemptive right, community property interest or
restriction of any nature (including any restriction on the voting of any
security, any restriction on the transfer of any security or other asset, any
restriction on the receipt of any income derived from any asset, any restriction
on the use of any asset and any restriction on the possession, exercise or
transfer of any other attribute of ownership of any asset).
"Environmental Law" is defined in Section 3.12(b)(i) to this
Agreement.
"ERISA" is defined in Section 3.11(a) to this Agreement.
"FCC" means the Federal Communications Commission.
"FCC Licenses" means all licenses, permits or authorizations
issued by or pending before the FCC for use in the operation of the Company,
together with any and all renewals, extensions and modifications thereof.
"FCC Order" shall mean that the FCC (including the Media Bureau
pursuant to delegated authority) has granted or given its consent, without any
condition materially adverse to the Company or Acquiror, to the transfer of
control of the FCC Licenses from the Company to Acquiror.
"GAAP" is defined in Section 3.4 to this Agreement.
"Governmental Authorization" shall mean any: (a) permit, license,
certificate, franchise, permission, variance, clearance, registration,
qualification or authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement; or (b) right under any Contract with any Governmental Body.
"Governmental Body" shall mean any U.S.: (a) state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any
nature; (b) federal, state, local or municipal government; or (c) governmental
or quasi-governmental authority of any nature (including any governmental
division, department, agency, commission, instrumentality, official,
organization, unit, body or Entity and any court or other tribunal).
"Hazardous Materials" is defined in Section 3.12(b)(ii) to this
Agreement.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the regulations promulgated thereunder.
"Indemnified Person" is defined in Section 6.2(b) to this
Agreement.
"Indemnity Claim" is defined in Section 6.2(b) to this Agreement.
"Initial Closing" is defined in Section 8.1(a) to this Agreement.
"Initial Closing Date" is defined in Section 8.1(a) to this
Agreement.
"Initial Closing Assumed Liabilities" is defined in Section1.6 to
this Agreement.
"Legal Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), hearing, inquiry, audit, examination or
investigation commenced, brought, conducted or heard by or before, or otherwise
involving, any court or other Governmental Body or any arbitrator or arbitration
panel.
"Legal Requirement" shall mean any federal, state, local,
municipal, law, statute, ordinance, code, edict, decree, rule, regulation,
ruling or requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or
under the authority of any Governmental Body, including any Environmental Law or
export control law.
"Losses" is defined in Section 11.2 to this Agreement.
"Loss Amount" is defined in Section 11.4 to this Agreement.
"Loss Notice" is defined in Section 11.4 to this Agreement.
"Management Agreement" is defined in Section 6.8 to this
Agreement.
"Material Adverse Effect" means with respect to any Person, a
material adverse effect on the business, operations or assets of the referent
Person and its subsidiaries taken as a whole except for any material adverse
affect resulting from (w) the economy or financial markets in general, (x) in
general to the industries in which the referent Person operates and not
specifically relating to (or having the effect of specifically relating to or
having a materially disproportionate effect on (relative to most other industry
participants)) such referent Person, (y) the announcement of this Agreement and
the transactions contemplated hereby and the performance by the parties of their
respective obligations hereunder or (z) any changes, or the announcement by
COFETEL of impending changes, to the rules or regulations adopted by COFETEL and
any changes in the business of such Person as a result thereof.
"Net Cash Deficit" is defined in Section 1.6 to this Agreement.
"Nevada Law" shall mean the Nevada General Corporate Law.
"Order" shall mean any: (a) order, judgment, injunction, edict,
decree, ruling, pronouncement, determination, decision, opinion, verdict,
sentence, subpoena, writ or award issued, made, entered, rendered or otherwise
put into effect by or under the authority of any court, administrative agency or
other Governmental Body or any arbitrator or arbitration panel; or (b) Contract
with any Governmental Body entered into in connection with any Legal Proceeding.
"Person" shall mean any individual, Entity or Governmental Body.
"Pre-Closing Period" is defined in Section 2.1 to this Agreement.
"Proprietary Asset" means (a) all inventions (whether patentable
or not), patents and patent applications, together with all reissuances,
continuations, continuations-in-part, divisions, revisions, extensions, renewals
and reexaminations thereof, (b) all trademarks, service marks, domain names,
logos, trade names, and corporate names, and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all registered and unregistered copyrights and all applications,
registrations, and renewals in connection therewith, and (d) all trade secrets
and confidential business information.
"Proprietary Information Agreement" is defined in Section 2.1 to
this Agreement.
Exhibit A-4
"Release" is defined in Section 1.2 to this Agreement.
"Representatives" shall mean officers, directors, employees,
agents, attorneys, accountants, advisors, consultants and representatives.
"Response Notice" is defined in Section 11.4 to this Agreement.
"Restraint" is defined in Section 7.1(a) to this Agreement.
"Section 338(h)(10) Election" is defined in Section 2.3 to this
Agreement.
A "Subsidiary" of any Person means any corporation, partnership,
joint venture or other legal entity of which such Person (either alone or
through or together with any other Subsidiary of such Person) (a) owns, directly
or indirectly fifty percent (50%) or more of the capital stock, partnership
interests or other equity interest the holders of which are generally entitled
to vote for the election of the board of directors or other governing body of
such corporation, partnership, joint venture of other legal entity; or (b)
possesses, directly or indirectly, control over the direction of management or
policies of such corporation, partnership, joint venture or other legal entity
(whether through ownership of voting securities, by agreement or otherwise).
"Subsidiary Conversion" shall mean the conversion of GlobalNet
International, Inc., a Delaware corporation, to GlobalNet International LLC, a
Delaware limited liability company, pursuant to the certificate of conversion
filed on April 15, 2003 with the Secretary of State of the State of Delaware.
"Tax" shall mean any tax (including any income tax, franchise
tax, capital gains tax, gross receipts tax, value-added tax, surtax, excise tax,
ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, withholding tax or payroll tax), levy, assessment, tariff, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or collected
by or under the authority of any Governmental Body.
"Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"Termination Date" is defined in Section 9.1(b) to this
Agreement.
"Third Party Claim" is defined in Section 11.6 to this Agreement.
"Titan Credit Agreement" shall mean that certain Amended and
Restated Senior Secured Credit Agreement, dated as of February 13, 2002, among
Titan, as the Borrower, various financial institutions from time to time parties
thereto,
Exhibit A-5
as Lenders, Credit Suisse First Boston, as Lead Arranger and as Administration
Agent for the Lenders, First Union Securities, Inc., as Co-Arranger and as
Syndication Agent, and The Bank of Nova Scotia, as the Document Agent, as may be
further amended from time to time.
"Titan Guarantees" is defined in Section 1.2 to this Agreement.
"Titan Disclosure Schedule" is defined in Section 4 to this
Agreement.
"Transaction Expenses" is defined in Section 9.3 to this
Agreement.
"Transfer Taxes" is defined in Section 9.3 to this Agreement.
"VEBA" is defined in Section 3.11(f) to this Agreement.
Exhibit A-6
EXHIBIT B
OUTSTANDING OBLIGATIONS OF TITAN TO BE RELEASED
MCI Worldcom Communications and General Electric Capital Corporation, Inc. The
Release shall be for an amount up to $11 million in the aggregate.
EXHIBIT C
PROPRIETARY INFORMATION AGREEMENT
EXHIBIT D
MANAGEMENT AGREEMENT
EXHIBIT E
ASSIGNMENT AND ASSUMPTION AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1. SALE AND PURCHASE OF STOCK 1
1.1 Sale and Purchase of Stock............................................................1
1.2 Release of Guarantees.................................................................2
1.3 Transfer and Contribution of Company Indebtedness.....................................2
1.4 Delivery of Release and Transaction Expenses..........................................2
1.5 Terms of the Release..................................................................2
1.6 Net Cash Deficit......................................................................3
SECTION 2. ADDITIONAL UNDERTAKINGS AND COVENANTS..............................................3
2.1 Access and Investigation..............................................................3
2.2 Public Announcement...................................................................4
2.3 Section 338(h)(10) Election...........................................................4
2.4 Exclusivity...........................................................................4
SECTION 3. REPRESENTATIONS AND WARRANTIES OF COMPANY..........................................5
3.1 Due Organization; Subsidiaries........................................................5
3.2 Authority; Binding Nature of Agreement................................................5
3.3 Capitalization........................................................................6
3.4 Financial Statements..................................................................7
3.5 Absence of Changes....................................................................7
3.6 Proprietary Assets....................................................................9
3.7 Contracts.............................................................................9
3.8 Liabilities...........................................................................10
3.9 Compliance with Legal Requirements....................................................11
3.10 Tax Matters...........................................................................11
3.11 Benefit Plans.........................................................................12
3.12 Environmental Matters.................................................................13
3.13 Legal Proceedings; Orders.............................................................14
3.14 Non-Contravention; Consents...........................................................14
3.15 Financial Advisor.....................................................................14
SECTION 4. REPRESENTATIONS AND WARRANTIES OF titan 14 4.1 Title to Common Stock...............15
4.2 Authority; Binding Nature of Agreement................................................15
4.3 Non-Contravention; Consents...........................................................15
SECTION 5. REPRESENTATIONS AND WARRANTIES OF ACQUIROR.........................................15
5.1 Due Organization; Subsidiaries........................................................16
5.2 Authority; Binding Nature of Agreement................................................16
5.3 Non-Contravention; Consents...........................................................16
5.4 Compliance with Legal Requirements....................................................16
5.5 Governmental Authorizations...........................................................17
5.6 No Outside Reliance...................................................................17
5.7 Interpretation of Certain Provisions..................................................17
5.8 Availability of Funds.................................................................17
5.9 Financial Advisor.....................................................................18
5.10 Tax Matters...........................................................................18
5.11 HSR Matters...........................................................................18
SECTION 6. ADDITIONAL COVENANTS OF THE PARTIES................................................18
6.1 Regulatory Approvals..................................................................18
6.2 Indemnification of Officers and Directors.............................................19
6.4 Employee Matters......................................................................20
6.5 Disclosure Schedules..................................................................21
6.6 Ordinary Course of Business...........................................................21
6.7 Tax Covenant..........................................................................23
6.8 Management Agreement..................................................................23
SECTION 7. CONDITIONS PRECEDENT 23 7.1 Conditions To Each Party's Obligation..................23
7.2 Additional Conditions to Acquiror's Obligations.......................................24
7.3 Additional Conditions to the Company's and Titan's Obligations........................25
SECTION 8. CLOSING 26 8.1 Closing of Sale and Purchase........................................26
8.2 Deliveries by Titan...................................................................26
8.3 Deliveries by Company.................................................................26
8.4 Deliveries by Acquiror................................................................27
SECTION 9. TERMINATION........................................................................28
9.1 Termination...........................................................................28
9.2 Effect of Termination.................................................................28
9.3 Transaction Expenses..................................................................29
SECTION 10. DEFAULT; REMEDIES.................................................................29
10.1 Default by Acquiror...................................................................29
10.2 Default by Company or Titan...........................................................30
10.3 Specific Performance..................................................................30
10.4 Liquidated Damages....................................................................30
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES.....31
11.1 Representations and Warranties........................................................31
11.2 Indemnification by Titan. 31 11.3 Indemnification by Acquiror.........................31
11.4 Procedure for Indemnification.........................................................31
11.5 Limitations on Indemnification........................................................33
11.6. Third Party Claims. 33 SECTION 12. MISCELLANEOUS PROVISIONS...........................35
12.1 Amendment.............................................................................35
12.2 Waiver................................................................................35
12.3 Entire Agreement; Counterparts........................................................35
12.4 Applicable Law; Jurisdiction..........................................................35
12.5 Attorneys'Fees........................................................................36
12.6 Assignability; Third Party Beneficiaries..............................................36
12.7 Notices...............................................................................36
12.8 Cooperation...........................................................................37
12.9 Construction..........................................................................38
