EXCHANGE AGREEMENT
Between
NEW WAVE WINDMILLS, INC.
and
GLOBAL AIRLINE SERVICES, INC.
Dated October 1, 2003
TABLE OF CONTENTS
ARTICLE I REPRESENTATIONS, COVENANTS, AND WARRANTIES OF GLOBAL AIRLINE
SERVICES, INC.
1.01 Organization............................................ 1
1.02 Capitalization.......................................... 1
1.03 Subsidiaries and Predecessor Corporations............... 1
1.04 Financial Statements.................................... 1
1.05 Information............................................. 2
1.06 Options and Warrants.................................... 2
1.07 Absence of Certain Changes or Events.................... 2
1.08 Title and Related Matters............................... 3
1.09 Litigation and Proceedings.............................. 3
1.10 Contracts............................................... 3
1.11 Material Contract Defaults.............................. 4
1.12 No Conflict With Other Instruments...................... 4
1.13 Governmental Authorizations............................. 4
1.14 Compliance With Laws and Regulations.................... 4
1.15 Insurance............................................... 4
1.16 Approval of Agreement................................... 4
1.17 Material Transactions or Affiliations................... 4
1.18 Labor Relations......................................... 5
1.19 Digital Concepts Schedules.............................. 5
1.20 Bank Accounts; Power of Attorney........................ 6
1.21 Valid Obligation........................................ 6
ARTICLE II REPRESENTATIONS, COVENANTS, AND WARRANTIES OF NEW WAVE
WINDMILLS, INC.
2.01 Organization........................................... 6
2.02 Capitalization......................................... 6
2.03 Subsidiaries and Predecessor Corporations ............. 6
2.04 Securities Filings; Financial Statements............... 6
2.05 Information............................................ 7
2.06 Options and Warrants................................... 7
2.07 Absence of Certain Changes or Events................... 7
2.08 Title and Related Matters.............................. 8
2.09 Litigation and Proceedings............................. 8
2.10 Contracts.............................................. 8
2.11 Material Contract Defaults............................. 9
2.12 No Conflict With Other Instruments..................... 9
2.13 Governmental Authorizations............................ 9
2.14 Compliance With Laws and Regulations................... 9
2.15 Insurance.............................................. 9
2.16 Approval of Agreement.................................. 9
2.17 Continuity of Business Enterprises..................... 9
2.18 Material Transactions or Affiliations.................. 10
2.19 Labor Relations........................................ 10
2.20 Atlantic Schedules..................................... 10
2.21 Bank Accounts; Power of Attorney....................... 11
2.22 Valid Obligation....................................... 11
ARTICLE III PLAN OF EXCHANGE
3.01 The Exchange........................................... 11
3.02 Anti-Dilution.......................................... 11
3.03 Closing................................................ 11
3.04 Closing Events......................................... 11
3.05 Termination............................................ 12
ARTICLE IV SPECIAL COVENANTS
4.01 Access to Properties and Records....................... 13
4.02 Delivery of Books and Records.......................... 13
4.03 Third Party Consents and Certificates.................. 13
4.04 Name Change and State of Incorporation................. 13
4.05 Atlantic Shareholder Meeting........................... 13
4.06 Consent of Digital Shareholders........................ 14
4.07 Designation of Directors and Officers.................. 14
4.08 Exclusive Dealing Rights............................... 14
4.09 Actions Prior to Closing............................... 14
4.10 Sales Under Rule 144 or 145, If Applicable............. 15
4.11 Indemnification........................................ 16
ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF NEW WAVE
5.01 Accuracy of Representations and Performance of Covenants 16
5.02 Officer's Certificates.................................. 16
5.03 No Material Adverse Change.............................. 16
5.04 Good Standing........................................... 16
5.05 Approval by Digital Shareholders........................ 16
5.06 No Governmental Prohibitions............................ 16
5.07 Consents................................................ 17
5.08 Other Items............................................. 17
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF GLOBAL AND THE
GLOBAL SHAREHOLDERS
6.01 Accuracy of Representations and Performance of Covenants 17
6.02 Officer's Certificate................................... 17
6.03 No Material Adverse Change.............................. 17
6.04 Good Standing........................................... 17
6.05 No Governmental Prohibition............................. 17
6.06 Consents................................................ 18
6.07 Other Items............................................. 18
ARTICLE VII MISCELLANEOUS
7.01 Brokers................................................. 18
7.02 Governing Law........................................... 18
7.03 Notices................................................. 18
7.04 Attorney's Fees......................................... 18
7.05 Confidentiality......................................... 18
7.06 Public Announcements and Filings........................ 19
7.07 Schedules; Knowledge.................................... 19
7.08 Third Party Beneficiaries............................... 19
7.09 Expenses................................................ 19
7.10 Entire Agreement........................................ 19
7.11 Survival; Termination................................... 19
7.12 Counterparts............................................ 19
7.13 Amendment or Waiver..................................... 19
7.14 Best Efforts............................................ 19
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement")
is entered into as of this 1st day of October 2003 by and between NEW WAVE
WINDMILLS, INC., an Ontario corporation (hereinafter referred to as "New Wave"
)and GLOBAL AIRLINE SERVICES, INC., a Delaware corporation referred to as
"Global"), upon the following premises:
Premises
WHEREAS, New Wave is a publicly held corporation organized under the
laws of the Province of Ontario, Canada.
WHEREAS, Global is a privately held corporation organized under the laws
of Delaware;
WHEREAS, management of the constituent corporations have determined
that it is in the best interest of the parties that New Wave acquire 100% of the
issued and outstanding securities of Global in exchange for the issuance of
certain shares of New Wave (the "Exchange") and Global agreed to use its best
efforts to cause its shareholders (the "Global Shareholders") to exchange their
securities of Global on the terms described herein; and
WHEREAS, New Wave and Global desire to set forth the terms of the
Exchange, which is intended to constitute a tax-free reorganization pursuant to
the provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986.
Agreement
NOW THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF Global
As an inducement to, and to obtain the reliance of New Wave, except as
set forth on the Global Schedules (as hereinafter defined), Global represents
and warrants as follows:
Section 1.01 Organization. Global is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware
and has the corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, including
qualification to do business as a foreign corporation in the states or countries
in which the character and location of the assets owned by it or the nature of
the business transacted by it requires qualification, except where failure to be
so qualified would not have a material adverse effect on its business. Included
in the Global Schedules are complete and correct copies of the articles of
incorporation, and bylaws of Global as in effect on the date hereof. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of Global'
articles of incorporation or bylaws. Global has taken all actions required by
law, its articles of incorporation, or otherwise to authorize the execution and
delivery of this Agreement. Global has full power, authority, and legal right
and has taken all action required by law, its articles of incorporation, and
otherwise to consummate the transactions herein contemplated.
Section 1.02 Capitalization. The authorized capitalization of Global
consists of 1,500 shares of common stock, no par value, of which 100 shares are
currently issued and outstanding. All issued and outstanding shares are legally
issued, fully paid, and non-assessable and not issued in violation of the
preemptive or other rights of any person.
Section 1.03 Subsidiaries and Predecessor Corporations. Global does not
have any predecessor corporation(s) or subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation, except as
disclosed in Schedule 1.03. For purposes hereinafter, the term "Global" also
includes those subsidiaries, if any, set forth on Schedule 1.03.
Section 1.04 Financial Statements.
(a) Included in the Global Schedules are (i)the audited
balance sheets of Global as successor in interest as of December 31,
2001 and 2002, and the related audited statements of operations,
stockholders' equity and cash flows for the two fiscal years ended
December 31, 2001 and 2002 together with the notes to such statements
and the opinion of Wiesenek, Xxxxxx & Co, PA, independent certified
public accountants, with respect thereto and the management accounts
for the six months ended September 30, 2002 and 2003 and the related
balance sheets, statements of operations and cash flows.
(b) All such financial statements have been prepared in
accordance with generally accepted accounting principles. The Global
balance sheets present a true and fair view as of the dates of such
balance sheets of the financial condition of Global. Global did not
have, as of the dates of such balance sheets, except as and to the
extent reflected or reserved against therein, any liabilities or
obligations (absolute or contingent) which should be reflected in the
balance sheets or the notes thereto, prepared in accordance with
generally accepted accounting principles, and all assets reflected
therein are properly reported and present fairly the value of the
assets of Global in accordance with generally accepted accounting
principles.
(c) Global has no liabilities with respect to the payment of
any federal, state, county, local or other taxes (including any
deficiencies, interest or penalties), except for taxes accrued but not
yet due and payable.
(d) Global has filed all state, federal or local income and/or
franchise tax returns required to be filed by it from inception to the
date hereof. Each of such income tax returns reflects the taxes due for
the period covered thereby, except for amounts which, in the aggregate,
are immaterial.
(e) The books and records, financial and otherwise, of Global
are in all material respects complete and correct and have been
maintained in accordance with good business and accounting practices.
(f) All of Global' assets are reflected on its financial
statements, and, except as set forth in the Global Schedules or the
financial statements of Global or the notes thereto, Global has no
material liabilities, direct or indirect, matured or unmatured,
contingent or otherwise.
Section 1.05 Information. The information concerning Global set forth
in this Agreement and in the Global Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading. In addition,
Global has fully disclosed in writing to New Wave (through this Agreement or the
Global Schedules) all information relating to matters involving Global or its
assets or its present or past operations or activities which (i) indicated or
may indicate, in the aggregate, the existence of a greater than $25,000
liability or diminution in value, (ii) have led or may lead to a competitive
disadvantage on the part of Global or (iii) either alone or in aggregation with
other information covered by this Section, otherwise have led or may lead to a
material adverse effect on the transactions contemplated herein or on Global,
its assets, or its operations or activities as presently conducted or as
contemplated to be conducted after the Closing Date, including, but not limited
to, information relating to governmental, employee, environmental, litigation
and securities matters and transactions with affiliates.
Section 1.06 Options or Warrants. There are no existing options,
warrants, calls, or commitments of any character relating to the authorized and
unissued Global common stock, except options, warrants, calls or commitments, if
any, to which Global is not a party and by which it is not bound.
Section 1.07 Absence of Certain Changes or Events. Except as set forth
in this Agreement or the Global Schedules, since December 31, 2002:
(a) there has not been (i) any material adverse change in the
business, operations, properties, assets, or condition of Global or
(ii) any damage, destruction, or loss to Global (whether or not covered
by insurance) materially and adversely affecting the business,
operations, properties, assets, or condition of Global;
(b) Global has not (i) amended its articles of incorporation
or bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed, or agreed to
purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are outside of the ordinary course of
business or material
considering the business of Global; (iv) made any material change in
its method of management, operation or accounting; (v) entered into any
other material transaction other than sales in the ordinary course of
its business; (vi) made any accrual or arrangement for payment of
bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee; (vii)
increased the rate of compensation payable or to become payable by it
to any of its officers or directors or any of its salaried employees
whose monthly compensation exceeds $1,000; or (viii) made any increase
in any profit sharing, bonus, deferred compensation, insurance,
pension, retirement, or other employee benefit plan, payment, or
arrangement made to, for, or with its officers, directors, or
employees;
(c) Global has not (i) borrowed or agreed to borrow any funds
or incurred, or become subject to, any material obligation or liability
(absolute or contingent) except as disclosed herein and except
liabilities incurred in the ordinary course of business; (ii) paid or
agreed to pay any material obligations or liability (absolute or
contingent) other than current liabilities reflected in or shown on the
most recent Global balance sheet, and current liabilities incurred
since that date in the ordinary course of business and professional and
other fees and expenses in connection with the preparation of this
Agreement and the consummation of the transactions contemplated hereby;
(iii) sold or transferred, or agreed to sell or transfer, any of its
assets, properties, or rights (except assets, properties, or rights not
used or useful in its business which, in the aggregate have a value of
less than $1,000), or canceled, or agreed to cancel, any debts or
claims (except debts or claims which in the aggregate are of a value of
less than $1,000); (iv) made or permitted any amendment or termination
of any contract, agreement, or license to which it is a party if such
amendment or termination is material, considering the business of
Global; or (v) issued, delivered, or agreed to issue or deliver any
stock, bonds or other corporate securities including debentures
(whether authorized and unissued or held as treasury stock); and
(d) to the best knowledge of Global, Global has not become
subject to any law or regulation which materially and adversely
affects, or in the future may adversely affect the business,
operations, properties, assets, or condition of Global.
Section 1.08 Title and Related Matters. Global has good and marketable
title to all of its properties, inventory, interests in properties, and assets,
real and personal, which are reflected in the most recent Global balance sheet
or acquired after that date (except properties, inventory, interests in
properties, and assets sold or otherwise disposed of since such date in the
ordinary course of business) free and clear of all liens, pledges, charges, or
encumbrances except (a) statutory liens or claims not yet delinquent; (b) such
imperfections of title and easements as do not and will not materially detract
from or interfere with the present or proposed use of the properties subject
thereto or affected thereby or otherwise materially impair present business
operations on such properties; and (c) as described in the Global Schedules.
Except as set forth in the Global Schedules, Global owns, free and clear of any
liens, claims, encumbrances, royalty interests, or other restrictions or
limitations of any nature whatsoever, any and all products it is currently
manufacturing, including the underlying technology and data, and all procedures,
techniques, marketing plans, business plans, methods of management, or other
information utilized in connection with Global' business. Except as set forth in
the Global Schedules, no third party has any right to, and Global has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any product, technology, data, trade secrets, know-how,
propriety techniques, trademarks, service marks, trade names, or copyrights
which, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a materially adverse effect on the
business, operations, financial condition, income, or business prospects of
Global or any material portion of its properties, assets, or rights.
Section 1.09 Litigation and Proceedings. Except as set forth in the
Global Schedules, there are no actions, suits, proceedings, or investigations
pending or, to the knowledge of Global after reasonable investigation,
threatened by or against Global or affecting Global or its properties, at law or
in equity, before any court or other governmental agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind. Global does not have
any knowledge of any material default on its part with respect to any judgment,
order, injunction, decree, award, rule, or regulation of any court, arbitrator,
or governmental agency or instrumentality or of any circumstances which, after
reasonable investigation, would result in the discovery of such a default.
Section 1.10 Contracts.
(a) Except as included or described in the Global Schedules,
there are no "material" contracts, agreements, franchises, license
agreements, debt instruments or other commitments to which Global is a
party or by which it or any of its assets, products, technology, or
properties are bound other than those incurred in the ordinary course
of business (as used in this Agreement, a "material" contract,
agreement, franchise, license agreement, debt instrument or commitment
is one which (i) will remain in effect for more than six (6) months
after the date of this Agreement or (ii) involves aggregate obligations
of at least fifty thousand dollars ($50,000));
(b) All contracts, agreements, franchises, license agreements,
and other commitments to which Global is a party or by which its
properties are bound and which are material to the operations of Global
taken as a whole are valid and enforceable by Global in all respects,
except as limited by bankruptcy and insolvency laws and by other laws
affecting the rights of creditors generally;
(c) Global is not a party to or bound by, and the properties
of Global are not subject to any contract, agreement, other commitment
or instrument; any charter or other corporate restriction; or any
judgment, order, writ, injunction, decree, or award which materially
and adversely affects, the business operations, properties, assets, or
condition of Global; and
(d) Except as included or described in the Global Schedules or
reflected in the most recent Global balance sheet, Global is not a
party to any oral or written (i) contract for the employment of any
officer or employee which is not terminable on 30 days, or less notice;
(ii) profit sharing, bonus, deferred compensation, stock option,
severance pay, pension benefit or retirement plan, (iii) agreement,
contract, or indenture relating to the borrowing of money, (iv)
guaranty of any obligation, other than one on which Global is a primary
obligor, for the borrowing of money or otherwise, excluding
endorsements made for collection and other guaranties of obligations
which, in the aggregate do not exceed more than one year or providing
for payments in excess of $25,000 in the aggregate; (vi) collective
bargaining agreement; or (vii) agreement with any present or former
officer or director of Global.
Section 1.11 Material Contract Defaults. Global is not in default in
any material respect under the terms of any outstanding contract, agreement,
lease, or other commitment which is material to the business, operations,
properties, assets or condition of Global and there is no event of default in
any material respect under any such contract, agreement, lease, or other
commitment in respect of which Global has not taken adequate steps to prevent
such a default from occurring.
Section 1.12 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
an event of default under, or terminate, accelerate or modify the terms of any
material indenture, mortgage, deed of trust, or other material contract,
agreement, or instrument to which Global is a party or to which any of its
properties or operations are subject.
Section 1.13 Governmental Authorizations. Except as set forth in the
Global Schedules, Global has all licenses, franchises, permits, and other
governmental authorizations that are legally required to enable it to conduct
its business in all material respects as conducted on the date hereof. Except
for compliance with federal and state securities and corporation laws, as
hereinafter provided, no authorization, approval, consent, or order of, or
registration, declaration, or filing with, any court or other governmental body
is required in connection with the execution and delivery by Global of this
Agreement and the consummation by Global of the transactions contemplated
hereby.
Section 1.14 Compliance With Laws and Regulations. Except as set forth
in the Global Schedules, to the best of its knowledge Global has complied with
all applicable statutes and regulations of any federal, state, or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets, or condition of Global or except to the extent that noncompliance would
not result in the occurrence of any material liability for Global.
Section 1.15 Insurance. All of the properties of Global are fully
insured for their full replacement cost.
5
Section 1.16 Approval of Agreement. The board of directors of Global
has authorized the execution and delivery of this Agreement by Global and has
approved this Agreement and the transactions contemplated hereby, and will
recommend to the Global Shareholders that the Exchange be accepted by them.
7
Section 1.17 Material Transactions or Affiliations. Set forth in the
Global Schedules is a description of every contract, agreement, or arrangement
between Global and any predecessor and any person who was at the time of such
contract, agreement, or arrangement an officer, director, or person owning of
record, or known by Global to own beneficially, 5% or more of the issued and
outstanding common stock of Global and which is to be performed in whole or in
part after the date hereof or which was entered into not more than three years
prior to the date hereof. Except as disclosed in the Global Schedules or
otherwise disclosed herein, no officer, director, or 5% shareholder of Global
has, or has had since inception of Global, any known interest, direct or
indirect, in any transaction with Global which was material to the business of
Global. There are no commitments by Global, whether written or oral, to lend any
funds, or to borrow any money from, or enter into any other transaction with,
any such affiliated person.
Section 1.18 Labor Relations. Global has not had work stoppage
resulting from labor problems. To the knowledge of Global, no union or other
collective bargaining organization is organizing or attempting to organize any
employee of Global.
Section 1.19 Global Schedules. Global has delivered to New Wave the
following schedules, which are collectively referred to as the "Global
Schedules" and which consist of separate schedules dated as of the date of
execution of this Agreement, all certified by the chief executive officer of
Global as complete, true, and correct as of the date of this Agreement in all
material respects:
(a) a schedule containing complete and correct copies of the
Articles of Incorporation and Bylaws of Global in effect as of the date
of this Agreement;
(b) a schedule containing the financial statements of Global
identified in paragraph 1.04(a);
(c) a Schedule 1.19(c) containing a list indicating the name
and address of each shareholder of Global together with the number of
shares owned by him, her or it;
(d) a schedule containing a description of all real property
owned by Global, together with a description of every mortgage, deed of
trust, pledge, lien, agreement, encumbrance, claim, or equity interest
of any nature whatsoever in such real property;
(e) copies of all licenses, permits, and other governmental
authorizations (or requests or applications therefor) pursuant to which
Global carries on or proposes to carry on its business (except those
which, in the aggregate, are immaterial to the present or proposed
business of Global);
(f) a schedule listing the accounts receivable and notes and
other obligations receivable of Global as of September 30, 2002, or
thereafter other than in the ordinary course of business of Global,
indicating the debtor and amount, and classifying the accounts to show
in reasonable detail the length of time, if any, overdue, and stating
the nature and amount of any refunds, set offs, reimbursements,
discounts, or other adjustments, which are in the aggregate material
and due to or claimed by such debtor;
(g) a schedule listing the accounts payable and notes and
other obligations payable of Global as of September 30, 2002, or that
arose thereafter other than in the ordinary course of the business of
Global, indicating the creditor and amount, classifying the accounts to
show in reasonable detail the length of time, if any, overdue, and
stating the nature and amount of any refunds, set offs, reimbursements,
discounts, or other adjustments, which in the aggregate are material
and due to or claimed by Global respecting such obligations;
(h) a schedule setting forth a description of any material
adverse change in the business, operations, property, inventory,
assets, or condition of Global since September 30, 2002, required to be
provided pursuant to section 1.07 hereof; and
(i) a schedule setting forth any other information, together
with any required copies of documents, required to be disclosed in the
Global Schedules by Sections 1.01 through 1.18.
Global shall cause the Global Schedules and the instruments and data
delivered to New Wave hereunder to be promptly updated after the date hereof up
to and including the Closing Date.
6
It is understood and agreed that not all of the schedules referred to
above have been completed or are available to be furnished by Global. Global
shall have until October 31, 2003 to provide such schedules. If Global cannot or
fails to do so, or if New Wave acting reasonably finds any such schedules or
updates provided after the date hereof to be unacceptable according to the
criteria set forth below, New Wave may terminate this Agreement by giving
written notice to Global within five (5) days after the schedules or updates
were due to be produced or were provided. For purposes of the foregoing, New
Wave may consider a disclosure in the Global Schedules to be "unacceptable" only
if that item would have a material adverse impact on the financial statements
listed in Section 1.04(a), taken as a whole.
Section 1.20 Bank Accounts; Power of Attorney. Set forth in Schedule
1.20 is a true and complete list of (a) all accounts with banks, money market
mutual funds or securities or other financial institutions maintained by Global
within the past twelve (12) months, the account numbers thereof, and all persons
authorized to sign or act on behalf of Global, (b) all safe deposit boxes and
other similar custodial arrangements maintained by Global within the past twelve
(12) months, and (c) the names of all persons holding powers of attorney from
Global or who are otherwise authorized to act on behalf of Global with respect
to any matter, other than its officers and directors, and a summary of the terms
of such powers or authorizations.
Section 1.21 Valid Obligation. This Agreement and all agreements and
other documents executed by Global in connection herewith constitute the valid
and binding obligation of Global, enforceable in accordance with its or their
terms, except as may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF New Wave
As an inducement to, and to obtain the reliance of Global and the
Global Shareholders, except as set forth in the New Wave Schedules (as
hereinafter defined), New Wave represents and warrants as follows:
Section 2.01 Organization. New Wave is a corporation duly organized,
validly existing, and in good standing under the laws of the Province of
Ontario, Canada and has the corporate power and is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations, ordinances, and
orders of public authorities to own all of its properties and assets, to carry
on its business in all material respects as it is now being conducted, and
except where failure to be so qualified would not have a material adverse effect
on its business, there is no jurisdiction in which it is not qualified in which
the character and location of the assets owned by it or the nature of the
business transacted by it requires qualification. Included in the New Wave
Schedules are complete and correct copies of the certificate of incorporation
and bylaws of New Wave as in effect on the date hereof. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, violate any provision of New Wave's certificate of
incorporation or bylaws. New Wave has taken all action required by law, its
certificate of incorporation, its bylaws, or otherwise to authorize the
execution and delivery of this Agreement, and New Wave has full power,
authority, and legal right and has taken all action required by law, its
certificate of incorporation, bylaws, or otherwise to consummate the
transactions herein contemplated.
Section 2.02 Capitalization. New Wave's authorized capitalization
consists of an unlimited number of shares of common stock, no par value of which
30,142,699 shares are issued and outstanding. All issued and outstanding shares
are legally issued, fully paid, and non-assessable and not issued in violation
of the preemptive or other rights of any person.
Section 2.03 Subsidiaries and Predecessor Corporations. New Wave does
not have any predecessor corporation(s) or subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation, except as
disclosed in Schedule 2.03. For purposes hereinafter, the term "New Wave" also
includes those subsidiaries, if any, set forth on Schedule 2.03.
7
Section 2.04 Securities Filings; Financial Statements.
(a) Included in the New Wave Schedules is an unaudited balance
sheets of New Wave as of September 30, 2003.
8
(b) New Wave has no liabilities with respect to the payment of
any federal, state, county, local or other taxes (including any
deficiencies, interest or penalties), except for taxes accrued but not
yet due and payable.
(c) New Wave has timely filed all state, federal or local
income and/or franchise tax returns required to be filed by it from
inception to the date hereof. Each of such income tax returns reflects
the taxes due for the period covered thereby, except for amounts which,
in the aggregate, are immaterial.
(d) The books and records, financial and otherwise, of New
Wave are in all material aspects complete and correct and have been
maintained in accordance with good business and accounting practices.
(e) All of New Wave's assets are reflected on its financial
statements, and, except as set forth in the New Wave Schedules or the
financial statements of New Wave or the notes thereto, New Wave has no
material liabilities, direct or indirect, matured or unmatured,
contingent or otherwise.
Section 2.05 Information. The information concerning New Wave set forth
in this Agreement and the New Wave Schedules is complete and accurate in all
material respects and does not contain any untrue statements of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading. In addition,
New Wave has fully disclosed in writing to Global (through this Agreement or the
New Wave Schedules) all information relating to matters involving New Wave or
its assets or its present or past operations or activities which (i) indicated
or may indicate, in the aggregate, the existence of a greater than $25,000
liability or diminution in value, (ii) have led or may lead to a competitive
disadvantage on the part of New Wave or (iii) either alone or in aggregation
with other information covered by this Section, otherwise have led or may lead
to a material adverse effect on the transactions contemplated herein or on New
Wave, its assets, or its operations or activities as presently conducted or as
contemplated to be conducted after the Closing Date, including, but not limited
to, information relating to governmental, employee, environmental, litigation
and securities matters and transactions with affiliates.
Section 2.06 Options or Warrants. There are no existing options,
warrants, calls, or commitments of any character relating to the authorized and
unissued stock of New Wave.
Section 2.07 Absence of Certain Changes or Events. Except as disclosed
in Exhibit 2.07, or permitted in writing by Global, since the date of the most
recent New Wave balance sheet:
(a) there has not been (i) any material adverse change in the
business, operations, properties, assets or condition of New Wave or
(ii) any damage, destruction or loss to New Wave (whether or not
covered by insurance) materially and adversely affecting the business,
operations, properties, assets or condition of New Wave;
(b) New Wave has not (i) amended its certificate of
incorporation or bylaws; (ii) declared or made, or agreed to declare or
make any payment of dividends or distributions of any assets of any
kind whatsoever to stockholders or purchased or redeemed, or agreed to
purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are outside of the ordinary course of
business or material considering the business of New Wave; (iv) made
any material change in its method of management, operation, or
accounting; (v) entered into any transactions or agreements other than
in the ordinary course of business; (vi) made any accrual or
arrangement for or payment of bonuses or special compensation of any
kind or any severance or termination pay to any present or former
officer or employee; (vii) increased the rate of compensation payable
or to become payable by it to any of its officers or directors or any
of its salaried employees whose monthly compensation exceed $1,000; or
(viii) made any increase in any profit sharing, bonus, deferred
compensation, insurance, pension, retirement, or other employee benefit
plan, payment, or arrangement, made to, for or with its officers,
directors, or employees;
(c) New Wave has not (i) granted or agreed to grant any
options, warrants, or other rights for its stock, bonds, or other
corporate securities calling for the issuance thereof; (ii) borrowed or
agreed to borrow any funds or incurred, or become subject to, any
material obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business; (iii) paid or
agreed to pay any material obligations or liabilities (absolute or
contingent) other than current liabilities reflected in or shown on the
most recent New Wave balance sheet and current liabilities incurred
since that date in the ordinary course of business and professional and
other fees and expenses in connection with the preparation of this
Agreement and the consummation of the transaction contemplated hereby;
(iv) sold or transferred, or agreed to sell or transfer, any of its
assets, properties, or rights (except assets, properties, or rights not
used or useful in its business which, in the aggregate have a value of
less than $1000), or canceled, or agreed to cancel, any debts or claims
(except debts or claims which in the aggregate are of a value less than
$1000); (v) made or permitted any amendment or termination of any
contract, agreement, or license to which it is a party if such
amendment or termination is material, considering the business of New
Wave; or (vi) issued, delivered or agreed to issue or deliver, any
stock, bonds, or other corporate securities including debentures
(whether authorized and unissued or held as treasury stock), except in
connection with this Agreement; and
(d) to the best knowledge of New Wave, it has not become
subject to any law or regulation which materially and adversely
affects, or in the future, may adversely affect, the business,
operations, properties, assets or condition of New Wave.
Section 2.08 Title and Related Matters. New Wave has good and
marketable title to all of its properties, inventory, interest in properties,
and assets, real and personal, which are reflected in the most recent New Wave
balance sheet or acquired after that date (except properties, inventory,
interest in properties, and assets sold or otherwise disposed of since such date
in the ordinary course of business), free and clear of all liens, pledges,
charges, or encumbrances except (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will not
materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and (c) as described in the New
Wave Schedules. Except as set forth in the New Wave Schedules, New Wave owns,
free and clear of any liens, claims, encumbrances, royalty interests, or other
restrictions or limitations of any nature whatsoever, any and all products it is
currently manufacturing, including the underlying technology and data, and all
procedures, techniques, marketing plans, business plans, methods of management,
or other information utilized in connection with New Wave's business. Except as
set forth in the New Wave Schedules, no third party has any right to, and New
Wave has not received any notice of infringement of or conflict with asserted
rights of others with respect to any product, technology, data, trade secrets,
know-how, propriety techniques, trademarks, service marks, trade names, or
copyrights which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a materially adverse effect
on the business, operations, financial condition, income, or business prospects
of New Wave or any material portion of its properties, assets, or rights.
Section 2.09 Litigation and Proceedings. There are no actions, suits,
proceedings or investigations pending or, to the knowledge New Wave after
reasonable investigation, threatened by or against New Wave or affecting New
Wave or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind except as disclosed in Schedule 2.09. New Wave has no
knowledge of any default on its part with respect to any judgement, order, writ,
injunction, decree, award, rule or regulation of any court, arbitrator, or
governmental agency or instrumentality or any circumstance which after
reasonable investigation would result in the discovery of such default.
Section 2.10 Contracts.
(a) New Wave is not a party to, and its assets, products,
technology and properties are not bound by, any material contract,
franchise, license agreement, agreement, debt instrument or other
commitments whether such agreement is in writing or oral, except as
disclosed in Schedule 2.10.
(b) All contracts, agreements, franchises, license agreements,
and other commitments to which New Wave is a party or by which its
properties are bound and which are material to the operations of New
Wave taken as a whole are valid and enforceable by New Wave in all
respects, except as limited by bankruptcy and insolvency laws and by
other laws affecting the rights of creditors generally;
(c) New Wave is not a party to or bound by, and the properties
of New Wave are not subject to any contract, agreement, other
commitment or instrument; any charter or other corporate restriction;
or any judgment, order, writ, injunction, decree, or award which
materially and adversely affects, the business operations, properties,
assets, or condition of New Wave; and
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(d) Except as included or described in the New Wave Schedules
or reflected in the most recent New Wave balance sheet, New Wave is not
a party to any oral or written (i) contract for the employment of any
officer or employee which is not terminable on 30 days, or less notice;
(ii) profit sharing, bonus, deferred compensation, stock option,
severance pay, pension benefit or retirement plan, (iii) agreement,
contract, or indenture relating to the borrowing of money, (iv)
guaranty of any obligation, other than one on which New Wave is a
primary obligor, for the borrowing of money or otherwise, excluding
endorsements made for collection and other guaranties of obligations
which, in the aggregate do not exceed more than one year or providing
for payments in excess of $25,000 in the aggregate; (vi) collective
bargaining agreement; or (vii) agreement with any present or former
officer or director of New Wave.
Section 2.11 Material Contract Defaults. New Wave is not in default in
any material respect under the terms of any outstanding contract, agreement,
lease, or other commitment which is material to the business, operations,
properties, assets or condition of New Wave and there is no event of default in
any material respect under any such contract, agreement, lease, or other
commitment in respect of which New Wave has not taken adequate steps to prevent
such a default from occurring.
Section 2.12 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
a default under, or terminate, accelerate or modify the terms of, any indenture,
mortgage, deed of trust, or other material agreement or instrument to which New
Wave is a party or to which any of its assets or operations are subject.
Section 2.13 Governmental Authorizations. New Wave has all licenses,
franchises, permits, and other governmental authorizations, that are legally
required to enable it to conduct its business operations in all material
respects as conducted on the date hereof. Except for compliance with federal and
state securities or corporation laws, as hereinafter provided, no authorization,
approval, consent or order of, of registration, declaration or filing with, any
court or other governmental body is required in connection with the execution
and delivery by New Wave of this Agreement and the consummation by New Wave of
the transactions contemplated hereby.
Section 2.14 Compliance With Laws and Regulations. To the best of its
knowledge, New Wave has complied with all applicable statutes and regulations of
any federal, state, or other applicable governmental entity or agency thereof,
except to the extent that noncompliance would not materially and adversely
affect the business, operations, properties, assets or condition of New Wave or
except to the extent that noncompliance would not result in the occurrence of
any material liability. This compliance includes, but is not limited to, the
filing of all reports to date with federal and state securities authorities.
Section 2.15 Insurance. All of the properties of New Wave are fully
insured for their full replacement cost.
Section 2.16 Approval of Agreement. The board of directors of New Wave
has authorized the execution and delivery of this Agreement by New Wave and has
approved this Agreement and the transactions contemplated hereby and will
recommend to its shareholders that they approve this Agreement and the
transactions contemplated hereby.
Section 2.17 Continuity of Business Enterprises. New Wave has no
commitment or present intention to liquidate Global or sell or otherwise dispose
of a material portion of Global' business or assets following the consummation
of the transactions contemplated hereby.
Section 2.18 Material Transactions or Affiliations. Except as disclosed
herein and in the New Wave Schedules, there exists no contract, agreement or
arrangement between New Wave and any predecessor and any person who was at the
time of such contract, agreement or arrangement an officer, director, or person
owning of record or known by New Wave to own beneficially, 5% or more of the
issued and outstanding common stock of New Wave and which is to be performed in
whole or in part after the date hereof or was entered into not more than three
years prior to the date hereof. Neither any officer, director, nor 5%
shareholder of New Wave has, or has had since inception of New Wave, any known
interest, direct or indirect, in any such transaction with New Wave which was
material to the business of New Wave. New Wave has no commitment, whether
written or oral, to lend any funds to, borrow any money from, or enter into any
other transaction with, any such affiliated person.
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Section 2.19 Labor Relations. New Wave has not had work stoppage
resulting from labor problems. To the knowledge of New Wave, no union or other
collective bargaining organization is organizing or attempting to organize any
employee of New Wave.
Section 2.20 New Wave Schedules. New Wave has delivered to Global the
following schedules, which are collectively referred to as the "New Wave
Schedules" and which consist of separate schedules, which are dated the date of
this Agreement, all certified by the chief executive officer of New Wave to be
complete, true, and accurate in all material respects as of the date of this
Agreement:
(a) a schedule containing complete and accurate copies of the
certificate of incorporation and bylaws of New Wave as in effect as of
the date of this Agreement;
(b) a schedule containing the financial statements of New Wave
identified in paragraph 2.04(a);
(c) a Schedule 2.20(c) containing a list indicating the name
and address of each shareholder of New Wave together with the number of
shares owned by him, her or it;
(d) a schedule containing a description of all real property
owned by New Wave, together with a description of every mortgage, deed
of trust, pledge, lien, agreement, encumbrance, claim, or equity
interest of any nature whatsoever in such real property;
(e) copies of all licenses, permits, and other governmental
authorizations (or requests or applications therefor) pursuant to which
New Wave carries on or proposes to carry on its business (except those
which, in the aggregate, are immaterial to the present or proposed
business of New Wave);
(f) a schedule listing the accounts receivable and notes and
other obligations receivable of New Wave as of September 30, 2002, or
thereafter other than in the ordinary course of business of New Wave,
indicating the debtor and amount, and classifying the accounts to show
in reasonable detail the length of time, if any, overdue, and stating
the nature and amount of any refunds, set offs, reimbursements,
discounts, or other adjustments which are in the aggregate material and
due to or claimed by such debtor;
(g) a schedule listing the accounts payable and notes and
other obligations payable of New Wave as of September 30, 2002, or that
arose thereafter other than in the ordinary course of the business of
New Wave, indicating the creditor and amount, classifying the accounts
to show in reasonable detail the length of time, if any, overdue, and
stating the nature and amount of any refunds, set offs, reimbursements,
discounts, or other adjustments, which in the aggregate are material
and due to or claimed by New Wave respecting such obligations;
(h) a schedule setting forth a description of any material
adverse change in the business, operations, property, inventory,
assets, or condition of New Wave since September 30, 2002 required to
be provided pursuant to section 2.07 hereof; and
(i) a schedule setting forth any other information, together
with any required copies of documents, required to be disclosed in the
New Wave Schedules by Sections 2.01 through 2.19.
New Wave shall cause the New Wave Schedules and the instruments and data
delivered to Global hereunder to be promptly updated after the date hereof up to
and including the Closing Date.
It is understood and agreed that not all of the schedules referred to
above have been completed or are available to be furnished by New Wave. New Wave
shall have until October 31, 2003 to provide such schedules. If New Wave cannot
or fails to do so, or if Global acting reasonably finds any such schedules or
updates provided after the date hereof to be unacceptable according to the
criteria set forth below, Global may terminate this Agreement by giving written
notice to New Wave within five (5) days after the schedules or updates were due
to be produced or were provided. For purposes of the foregoing, Global may
consider a disclosure in the New Wave Schedules to be "unacceptable" only if
that item would have a material adverse impact on the financial statements
listed in Section 2.04(b), taken as a whole.
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Section 2.21 Bank Accounts; Power of Attorney. Set forth in Schedule
2.21 is a true and complete list of (a) all accounts with banks, money market
mutual funds or securities or other financial institutions maintained by New
Wave within the past twelve (12) months, the account numbers thereof, and all
persons authorized to sign or act on behalf of New Wave, (b) all safe deposit
boxes and other similar custodial arrangements maintained by New Wave within the
past twelve (12) months, and (c) the names of all persons holding powers of
attorney from New Wave or who are otherwise authorized to act on behalf of New
Wave with respect to any matter, other than its officers and directors, and a
summary of the terms of such powers or authorizations.
Section 2.22 Valid Obligation. This Agreement and all agreements and
other documents executed by New Wave in connection herewith constitute the valid
and binding obligation of New Wave, enforceable in accordance with its or their
terms, except as may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought.
ARTICLE III
PLAN OF EXCHANGE
Section 3.01 The Exchange. On the terms and subject to the conditions
set forth in this Agreement, on the Closing Date (as defined in Section 3.03),
each Global Shareholder who shall elect to accept the exchange offer described
herein (the "Accepting Shareholders"), shall assign, transfer and deliver, free
and clear of all liens, pledges, encumbrances, charges, restrictions or known
claims of any kind, nature, or description, the number of shares of common stock
of Global set forth on Schedule 1.19(c) attached hereto, in the aggregate
constituting 100% of the issued and outstanding shares of common stock of Global
held by each of such shareholders; the objective of such Exchange being the
acquisition by New Wave of 100% of the issued and outstanding common stock of
Global. In exchange for the transfer of such securities by the Global
Shareholders, New Wave shall issue to the Global Shareholders (1) an aggregate
of 10,047,566 post reverse split shares of common stock of New Wave (the
"Initial Shares"). At the Closing, each Global Shareholder shall, on surrender
of his certificate or certificates representing such Global shares to New Wave
or its registrar or transfer agent, be entitled to receive a certificate or
certificates evidencing his proportionate interest in the Initial Shares. Upon
consummation of the transaction contemplated herein, assuming participation by
all of the Global Shareholders, all of the shares of capital stock of Global
shall be held by New Wave.
Section 3.02 Anti-Dilution. The number of shares of New Wave common
stock issuable upon exchange pursuant to Section 3.01 shall be appropriately
adjusted to take into account any other stock split, stock dividend, reverse
stock split, recapitalization, or similar change in the New Wave common stock
which may occur (i) between the date of the execution of this Agreement and the
Closing Date, as to the Initial Shares, and (ii) between the date of the
execution of this Agreement and the release date, as to the Additional Shares.
Section 3.03 Closing. The closing ("Closing") of the transactions
contemplated by this Agreement shall be on a date and at such time as the
parties may agree ("Closing Date") but not later than September 30, 2003,
subject to the right of New Wave or Global to extend such Closing Date by up to
an additional sixty (60) days. Such Closing shall take place at a mutually
agreeable time and place.
Section 3.04 Closing Events. At the Closing, New Wave, Global and each
of the Accepting Shareholders shall execute, acknowledge, and deliver (or shall
ensure to be executed, acknowledged, and delivered) any and all certificates,
opinions, financial statements, schedules, agreements, resolutions, rulings or
other instruments required by this Agreement to be so delivered at or prior to
the Closing, together with such other items as may be reasonably requested by
the parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby. Among other things, New Wave
shall provide an opinion of counsel acceptable to Global as to such matters as
Global may reasonably request, which shall include, but not be limited to, a
statement, to the effect that (i) to such counsel's best knowledge, after
reasonable investigation, from inception until the Closing Date, New Wave has
complied with all applicable statutes and regulations of any federal, state, or
other applicable governmental entity or agency thereof, except to the extent
that noncompliance would not materially and adversely affect the business,
operations, properties, assets or condition of New Wave or except to the extent
that noncompliance would not result in the occurrence of any material liability
(such compliance including, but not being limited to, the filing of all reports
to date with federal and state securities authorities) and (ii) based on a
summary of the facts and applicable law, such counsel believes that the
Placement described in Section 4.08 below is not subject to "integration" with
the offering being made pursuant to the Registration Statement (Global
acknowledges that "integration" is a highly factual issue not susceptible to the
rendering of a legal opinion and that the statement to be delivered hereunder
shall merely constitute a summary of the reasoning which counsel to New Wave
believes would apply if a third party were to assert that such offerings should
be integrated).
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Section 3.05 Termination.
(a) This Agreement may be terminated by the board of directors
of either New Wave or Global at any time prior to the Closing Date if:
(i) there shall be any actual or threatened action or
proceeding before any court or any governmental body which
shall seek to restrain, prohibit, or invalidate the
transactions contemplated by this Agreement and which, in the
judgement of such board of directors, made in good faith and
based upon the advice of its legal counsel, makes it
inadvisable to proceed with the Exchange; or
(ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions (which does not
include the Securities and Exchange Commission) or in the
judgement of such board of directors, made in good faith and
based on the advice of counsel, there is substantial
likelihood that any such approval will not be obtained or will
be obtained only on a condition or conditions which would be
unduly burdensome, making it inadvisable to proceed with the
Exchange.
In the event of termination pursuant to this paragraph (a) of Section
3.05, no obligation, right or liability shall arise hereunder, and each
party shall bear all of the expenses incurred by it in connection with
the negotiation, drafting, and execution of this Agreement and the
transactions herein contemplated in accordance with the Expense Sharing
Agreement attached hereto as Exhibit "B".
(b) This Agreement may be terminated by the board of directors
of New Wave at any time prior to the Closing Date if:
(i) there shall have been any change after the date
of the latest balance sheet of Global in the assets,
properties, business, or financial condition of Global, which
could have a materially adverse effect on the financial
statements of Global listed in Section 1.04(a) taken as a
whole, except any changes disclosed in the Global Schedules;
(ii) the board of directors of New Wave determines in
good faith that one or more of New Wave's conditions to
Closing has not occurred, through no fault of New Wave.
(iii) New Wave takes the termination action specified
in Section 1.18 as a result of Global Schedules or updates
thereto which New Wave finds unacceptable;
(iv) on or before September 30, 2003, New Wave
notifies Global that New Wave's investigation pursuant to
Section 4.01 below has uncovered information which it finds
unacceptable by the same criteria set forth in Section 1.19;
or
(v) Global shall fail to comply in any material
respect with any of its covenants or agreements contained in
this Agreement or if any of the representations or warranties
of Global contained herein shall be inaccurate in any material
respect, where such noncompliance or inaccuracy has not been
cured within ten (10) days after written notice thereof.
If this Agreement is terminated pursuant to this paragraph (b) of
Section 3.05, this Agreement shall be of no further force or effect,
and no obligation, right or liability shall arise hereunder, except
that Global shall bear its own costs as well as the reasonable costs of
New Wave in connection with the negotiation, preparation, and execution
of this Agreement and qualifying the offer and sale of securities to be
issued in the Exchange under the registration requirements, or
exemption from the registration requirements, of state and federal
securities laws.
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(c) This Agreement may be terminated by the board of directors
of Global at any time prior to the Closing Date if:
(i) there shall have been any change after the date
of the latest balance sheet of New Wave in the assets,
properties, business or financial condition of New Wave, which
could have a material adverse effect on the financial
statements of New Wave listed in Section 2.04(b) taken as a
whole, except any changes disclosed in the New Wave Schedules;
(ii) the board of directors of Global determines in
good faith that one or more of Global' conditions to Closing
has not occurred, through no fault of Global;
(iii) Global takes the termination action specified
in Section 2.20 as a result of New Wave Schedules or updates
thereto which Global finds unacceptable;
(iv) on or before September 30, 2003 Global notifies
New Wave that Global' investigation pursuant to Section 4.01
below has uncovered information which it finds unacceptable by
the same criteria set forth in Section 2.20; or
(v) New Wave shall fail to comply in any material
respect with any of its covenants or agreements contained in
this Agreement or if any of the representations or warranties
of New Wave contained herein shall be inaccurate in any
material respect, where such noncompliance or inaccuracy has
not been cured within ten (10) days after written notice
thereof.
If this Agreement is terminated pursuant to this paragraph (c) of
Section 3.05, this Agreement shall be of no further force or effect,
and no obligation, right or liability shall arise hereunder, except
that New Wave shall bear its own costs as well as the reasonable costs
of Global and its principal shareholders incurred in connection with
the negotiation, preparation and execution of this Agreement.
ARTICLE IV
SPECIAL COVENANTS
Section 4.01 Access to Properties and Records. New Wave and Global will
each afford to the officers and authorized representatives of the other full
access to the properties, books and records of New Wave or Global, as the case
may be, in order that each may have a full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of the other, and each
will furnish the other with such additional financial and operating data and
other information as to the business and properties of New Wave or Global, as
the case may be, as the other shall from time to time reasonably request.
Without limiting the foregoing, as soon as practicable after the end of each
fiscal quarter (and in any event through the last fiscal quarter prior to the
Closing Date), each party shall provide the other with quarterly internally
prepared and unaudited financial statements.
Section 4.02 Delivery of Books and Records. At the Closing, Global
shall deliver to New Wave the originals of the corporate minute books, books of
account, contracts, records, and all other books or documents of Global now in
the possession of Global or its representatives.
Section 4.03 Third Party Consents and Certificates. New Wave and Global
agree to cooperate with each other in order to obtain any required third party
consents to this Agreement and the transactions herein contemplated.
Section 4.04 Name Change & Reverse Split.. At or prior to the Closing
Date, New Wave's Board of Directors shall have approved an amendment to the
certificate of incorporation to change the name of New Wave to "Global Airline
Services, Inc. " and to approve a one for two reverse split. Such amendment
shall be carried out promptly upon approval of the same by the shareholders of
New Wave.
Section 4.05 New Wave Shareholder Meeting. New Wave shall call a
special shareholders meeting to be held on or prior to the Closing Date at which
meeting the shareholders of New Wave shall be requested to approve, and New
Wave's Board of Directors shall recommend approval of, the terms of this
Agreement, including the name change and the change in
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the state of incorporation described in Section 4.04 and such other
matters as shall require shareholder approval hereunder.
Section 4.06 Consent of Global Shareholders. Global shall use its best
efforts to obtain the consent of all Global Shareholders to participate in the
Exchange.
Section 4.07 Designation of Directors and Officers. On or before the
Closing Date, New Wave shall increase its board of directors to three persons.
Xxxxxx X. Xxxxxx shall be designated as Chairman of the Board of New Wave and
Xxxxxx Xxxxxxxx, and Xxxx Xxxxxx shall be designated as additional board
members.
Section 4.08 Exclusive Dealing Rights. Until 5:00 P.M. Eastern
Daylight Time on September 30, 2003.
(a) In recognition of the substantial time and effort which
New Wave has spent and will continue to spend in investigating Global
and its business and in addressing the matters related to the
transactions contemplated herein, each of which may preempt or delay
other management activities, neither Global, nor any of its officers,
employees, representatives or agents will directly or indirectly
solicit or initiate any discussions or negotiations with, or, except
where required by fiduciary obligations under applicable law as advised
by counsel, participate in any negotiations with or provide any
information to or otherwise cooperate in any other way with, or
facilitate or encourage any effort or attempt by, any corporation,
partnership, person or other entity or group (other than New Wave and
its directors, officers, employees, representatives and agents)
concerning any merger, sale of substantial assets, sale of shares of
capital stock, (including without limitation, any public or private
offering of the common stock of Global) or similar transactions
involving Global (all such transactions being referred to as "Global
Acquisition Transactions"). If Global receives any proposal with
respect to a Global Acquisition Transaction, it will immediately
communicate to New Wave the fact that it has received such proposal and
the principal terms thereof.
(b) In recognition of the substantial time and effort which
Global has spent and will continue to spend in investigating New Wave
and its business and in addressing the matters related to the
transactions contemplated herein, each of which may preempt or delay
other management activities, neither New Wave, nor any of its officers,
employees, representatives or agents will directly or indirectly
solicit or initiate any discussions or negotiations with, or, except
where required by fiduciary obligations under applicable law as advised
by counsel, participate in any negotiations with or provide any
information to or otherwise cooperate in any other way with, or
facilitate or encourage any effort or attempt by, any corporation,
partnership, person or other entity or group (other than Global and its
directors, officers, employees, representatives and agents) concerning
any merger, sale of substantial assets, sale of shares of capital
stock, (including without limitation, any public or private offering of
the common stock of New Wave or similar transactions involving New Wave
(all such transactions being referred to as "New Wave Acquisition
Transactions"). If New Wave receives any proposal with respect to a New
Wave Acquisition Transaction, it will immediately communicate to Global
the fact that it has received such proposal and the principal terms
thereof.
Section 4.09 Actions Prior to Closing.
(a) From and after the date of this Agreement until the
Closing Date and except as set forth in the New Wave Schedules or
Global Schedules or as permitted or contemplated by this Agreement, New
Wave (subject to paragraph (d) below) and Global respectively, will
each:
(i) carry on its business in substantially the same
manner as it has heretofore;
(ii) maintain and keep its properties in states of
good repair and condition as at present, except for
depreciation due to ordinary wear and tear and damage due to
casualty;
(iii) maintain in full force and effect insurance
comparable in amount and in scope of coverage to that now
maintained by it;
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(iv) perform in all material respects all of its
obligations under material contracts, leases, and instruments
relating to or affecting its assets, properties, and business;
(v) use its best efforts to maintain and preserve its
business organization intact, to retain its key employees, and
to maintain its relationship with its material suppliers and
customers; and
(vi) fully comply with and perform in all material
respects all obligations and duties imposed on it by all
federal and state laws and all rules, regulations, and orders
imposed by federal or state governmental authorities.
(b) From and after the date of this Agreement until the
Closing Date, neither New Wave nor Global will:
(i) make any changes in their articles or certificate
of incorporation or bylaws;
(ii) take any action described in Section 1.07 in the
case of Global, or in Section 2.07, in the case of New Wave
(all except as permitted therein or as disclosed in the
applicable party's schedules);
(iii) enter into or amend any contract, agreement, or
other instrument of any of the types described in such party's
schedules, except that a party may enter into or amend any
contract, agreement, or other instrument in the ordinary
course of business involving the sale of goods or services; or
(iv) sell any assets or discontinue any operations
(other than the Divestiture), sell any shares of capital stock
(other than as contemplated in Sections 4.07 and 4.08 hereof
and the sale of securities underlying existing warrants or
options of New Wave) or conduct any similar transactions other
than in the ordinary course of business.
(C) In light of the fact that Global' shareholders will
control New Wave as a result of the Exchange, from and after the date
of this Agreement until the Closing Date, New Wave shall take no action
which is material to its business without the prior written approval of
Global, which Global may give or withhold in its sole discretion after
consultation with New Wave.
Section 4.10 Sales Under Rule 144 or 145,If Applicable.
(a) New Wave will use its best efforts to at all times comply
with the reporting requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), including timely filing of all
periodic reports required under the provisions of the Exchange Act and
the rules and regulations promulgated thereunder.
(b) Upon being informed in writing by any such person holding
restricted stock of New Wave that such person intends to sell any
shares under Rule 144, Rule 145 or Regulation S promulgated under the
Securities Act (including any rule adopted in substitution or
replacement thereof), New Wave will certify in writing to such person
that it has filed all of the reports required to be filed by it under
the Exchange Act to enable such person to sell such person's restricted
stock under Rule 144, 145 or Regulation S, as may be applicable in the
circumstances, or will inform such person in writing that it has not
filed any such report or reports.
(c) If any certificate representing any such restricted stock is
presented to New Wave's transfer agent for registration of transfer in
connection with any sale theretofore made under Rule 144, 145 or
Regulation S, provided such certificate is duly endorsed for transfer
by the appropriate person(s) or accompanied by a separate stock power
duly executed by the appropriate person(s) in each case with reasonable
assurances that such endorsements are genuine and effective, and is
accompanied by an opinion of counsel satisfactory to New Wave and its
counsel that the stock transfer has complied with the requirements of
Rule 144, 145 or Regulation S, as the case may be, New Wave will
promptly instruct its transfer agent to register such shares and to
issue one or more new certificates representing such shares to the
transferee and, if appropriate under the provisions of Rule 144, 145 or
Regulation S, as the case may be, free of any stop transfer order or
restrictive legend. The provisions of this Section 4.11 shall survive
the Closing and the consummation of the transactions contemplated by
this Agreement.
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Section 4.11 Indemnification.
(a) Global hereby agrees to indemnify New Wave and each of the
officers, agents and directors of New Wave as of the date of execution
of this Agreement against any loss, liability, claim, damage, or
expense (including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever), to
which it or they may become subject arising out of or based on any
inaccuracy appearing in or misrepresentations made under Article I of
this Agreement. The indemnification provided for in this paragraph
shall survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement.
(b) New Wave hereby agrees to indemnify Global and each of the
officers, agents, and directors of Global and each of the Global
Shareholders as of the date of execution of this Agreement against any
loss, liability, claim, damage, or expense (including, but not limited
to, any and all expense whatsoever reasonably incurred in
investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever), to which it or they
may become subject arising out of or based on any inaccuracy appearing
in or misrepresentation made under Article II of this Agreement. The
indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and
termination of this Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF New Wave
The obligations of New Wave under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.01 Accuracy of Representations and Performance of Covenants.
The representations and warranties made by Global in this Agreement were true
when made and shall be true at the Closing Date with the same force and effect
as if such representations and warranties were made at and as of the Closing
Date (except for changes therein permitted by this Agreement). Global shall have
performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by Global prior to or at the Closing.
New Wave shall be furnished with a certificate, signed by a duly authorized
executive officer of Global and dated the Closing Date, to the foregoing effect.
Section 5.02 Officer's Certificate. New Wave shall have been furnished
with a certificate dated the Closing Date and signed by a duly authorized
officer of Global to the effect that no litigation, proceeding, investigation,
or inquiry is pending, or to the best knowledge of Global threatened, which
might result in an action to enjoin or prevent the consummation of the
transactions contemplated by this Agreement, or, to the extent not disclosed in
the Global Schedules, by or against Global, which might result in any material
adverse change in any of the assets, properties, business, or operations of
Global.
Section 5.03 No Material Adverse Change. Prior to the Closing Date,
there shall not have occurred any change in the financial condition, business,
or operations of Global nor shall any event have occurred which, with the lapse
of time or the giving of notice, is determined to be unacceptable using the
criteria set forth in Section 1.19.
Section 5.04 Good Standing. New Wave shall have received a certificate
of good standing from the British Virgin Islands, dated as of a date within ten
days prior to the Closing Date certifying that Global is in good standing as a
corporation in the State of Delaware.
Section 5.05 Approval by Global Shareholders. The Exchange shall have
been approved, and shares delivered in accordance with Section 3.01, by the
holders of not less than ninety percent (90%) of the outstanding common stock of
Global, unless a lesser number is agreed to by New Wave.
Section 5.06 No Governmental Prohibition. No order, statute, rule,
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
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Section 5.07 Consents. All consents, approvals, waivers or amendments
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of New Wave and Global after the Closing Date on the basis as
presently operated shall have been obtained.
Section 5.08 Other Items.
(a) New Wave shall have received a list of Global'
shareholders containing the name, address, and number of shares held by
each Global shareholder as of the date of Closing, certified by an
executive officer of Global as being true, complete and accurate; and
(b) New Wave shall have received such further opinions,
documents, certificates or instruments relating to the transactions
contemplated hereby as New Wave may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF Global
AND THE Global SHAREHOLDERS
The obligations of Global and the Global Shareholders under this
Agreement are subject to the satisfaction, at or before the Closing Date, of the
following conditions:
Section 6.01 Accuracy of Representations and Performance of Covenants.
The representations and warranties made by New Wave in this Agreement were true
when made and shall be true as of the Closing Date (except for changes therein
permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing Date.
Additionally, New Wave shall have performed and complied with all covenants and
conditions required by this Agreement to be performed or complied with by New
Wave and shall have satisfied the conditions described below prior to or at the
Closing:
(a) Immediately prior to the Closing, New Wave shall have no
more than an aggregate of 3,000,000 shares of common stock issued and
outstanding or issuable pursuant to outstanding warrants and options,
excluding any shares and warrants issuable pursuant to the Exchange or
the Placement.
(b) The shareholders of New Wave shall have approved the
Exchange and the related transactions described herein.
Global shall have been furnished with certificates, signed by duly authorized
executive officers of New Wave and dated the Closing Date, to the foregoing
effect.
Section 6.02 Officer's Certificate. Global shall have been furnished
with certificates dated the Closing Date and signed by duly authorized executive
officers of New Wave, to the effect that no litigation, proceeding,
investigation or inquiry is pending, or to the best knowledge of New Wave
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to the
extent not disclosed in the New Wave Schedules, by or against New Wave, which
might result in any material adverse change in any of the assets, properties or
operations of New Wave.
Section 6.03 No Material Adverse Change. Prior to the Closing Date,
there shall not have occurred any change in the financial condition, business or
operations of New Wave nor shall any event have occurred which, with the lapse
of time or the giving of notice, is determined to be unacceptable using the
criteria set forth in Section 2.20.
Section 6.04 Good Standing. Global shall have received a certificate of
good standing from the Ministry of the Province of Ontario or other appropriate
office, dated as of a date within ten days prior to the Closing Date certifying
that New Wave is in good standing as a corporation in the Province of Ontario
and has filed all tax returns required to have been filed by it to date and has
paid all taxes reported as due thereon.
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Section 6.05 No Governmental Prohibition. No order, statute, rule,
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 6.06 Consents. All consents, approvals, waivers or amendments
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of New Wave and Global after the Closing Date on the basis as
presently operated shall have been obtained.
Section 6.07 Other Items. Global shall have received further opinions,
documents, certificates, or instruments relating to the transactions
contemplated hereby as Global may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Brokers. New Wave and Global agree that, except as set out
on Schedule 7.01 attached hereto, there were no finders or brokers involved in
bringing the parties together or who were instrumental in the negotiation,
execution or consummation of this Agreement. New Wave and Global each agree to
indemnify the other against any claim by any third person other than those
described above for any commission, brokerage, or finder's fee arising from the
transactions contemplated hereby based on any alleged agreement or understanding
between the indemnifying party and such third person, whether express or implied
from the actions of the indemnifying party.
Section 7.02 Governing Law. This Agreement shall be governed by,
enforced, and construed under and in accordance with the laws of the United
States of America and, with respect to the matters of state law, with the laws
of the State of Delaware without giving effect to principles of conflicts of law
thereunder. Each of the parties (a) irrevocably consents and agrees that any
legal or equitable action or proceedings arising under or in connection with
this Agreement shall be brought exclusively in the federal courts of the United
States, (b) by execution and delivery of this Agreement, irrevocably submits to
and accepts, with respect to any such action or proceeding, generally and
unconditionally, the jurisdiction of the aforesaid court, and irrevocably waives
any and all rights such party may now or hereafter have to object to such
jurisdiction.
Section 7.03 Notices. Any notice or other communications required or
permitted hereunder shall be in writing and shall be sufficiently given if
personally delivered to it or sent by telecopy, overnight courier or registered
mail or certified mail, postage prepaid, addressed as follows:
If to New Wave, to: NEW WAVE WINDMILLS, INC.
0000 Xxxxxx, #0000
Xxxxxxx, XX 00000
If to Global, to: Global Airline Services, Inc.
000 Xxxxx Xxxxxx Xx.
Xxxxxxx Xxxx
Xx. Xxxxxxxxxx, XX 00000
With copies to: Vanderkam & Associates
1301 Xxxxxx, #1200
Xxxxxxx, Xxxxx 00000
or such other addresses as shall be furnished in writing by any party
in the manner for giving notices hereunder, and any such notice or communication
shall be deemed to have been given (i) upon receipt, if personally delivered,
(ii) on the day after dispatch, if sent by overnight courier, (iii) upon
dispatch, if transmitted by telecopy and receipt is confirmed by telephone and
(iv) three (3) days after mailing, if sent by registered or certified mail.
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Section 7.04 Attorney's Fees. In the event that either party institutes
any action or suit to enforce this Agreement or to secure relief from any
default hereunder or breach hereof, the prevailing party shall be reimbursed by
the losing party for all costs, including reasonable attorney's fees, incurred
in connection therewith and in enforcing or collecting any judgement rendered
therein.
Section 7.05 Confidentiality. Each party hereto agrees with the other
that, unless and until the transactions contemplated by this Agreement have been
consummated, it and its representatives will hold in strict confidence all data
and information obtained with respect to another party or any subsidiary thereof
from any representative, officer, director or employee, or from any books or
records or from personal inspection, of such other party, and shall not use such
data or information or disclose the same to others, except (i) to the extent
such data or information is published, is a matter of public knowledge, or is
required by law to be published; or (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement. In the event of the termination of this
Agreement, each party shall return to the other party all documents and other
materials obtained by it or on its behalf and shall destroy all copies, digests,
work papers, abstracts or other materials relating thereto, and each party will
continue to comply with the confidentiality provisions set forth herein.
Section 7.06 Public Announcements and Filings. Unless required by
applicable law or regulatory authority, none of the parties will issue any
report, statement or press release to the general public, to the trade, to the
general trade or trade press, or to any third party (other than its advisors and
representatives in connection with the transactions contemplated hereby) or file
any document, relating to this Agreement and the transactions contemplated
hereby, except as may be mutually agreed by the parties. Copies of any such
filings, public announcements or disclosures, including any announcements or
disclosures mandated by law or regulatory authorities, shall be delivered to
each party at least one (1) business day prior to the release thereof.
Section 7.07 Schedules; Knowledge. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
Section 7.08 Third Party Beneficiaries. This contract is strictly
between New Wave and Global, and, except as specifically provided, no director,
officer, stockholder (other than the Global Shareholders), employee, agent,
independent contractor or any other person or entity shall be deemed to be a
third party beneficiary of this Agreement.
Section 7.09 Expenses. Subject to Sections 3.05 and 7.04 above, whether
or not the Exchange is consummated, each of New Wave and Global will bear their
own respective expenses, including legal, accounting and professional fees,
incurred in connection with the Exchange or any of the other transactions
contemplated hereby.
Section 7.10 Entire Agreement. This Agreement represents the entire
agreement between the parties relating to the subject matter thereof and
supersedes all prior agreements, understandings and negotiations, written or
oral, with respect to such subject matter.
Section 7.11 Survival; Termination. The representations, warranties,
and covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for a period of two years.
Section 7.12 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 7.13 Amendment or Waiver. Every right and remedy provided
herein shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently herewith, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may by amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance may be extended by a writing
signed by the party or parties for whose benefit the provision is intended.
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Section 7.14 Best Efforts. Subject to the terms and conditions herein
provided, each party shall use its best efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by it under this
Agreement so that the transactions contemplated hereby shall be consummated as
soon as practicable. Each party also agrees that it shall use its best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective this Agreement and the transactions contemplated
herein.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
as of the date first-above written.
ATTEST: NEW WAVE WINDMILLS, INC.
BY:
Secretary or Assistant Secretary President
ATTEST: GLOBAL AIRLINE SERVICES, INC.
BY:
Secretary or Assistant Secretary President
The undersigned shareholders of GLOBAL AIRLINE SERVICES, INC. hereby agree
to participate in the Exchange on the terms set forth above. Subject to Section
7.11 above, each of the undersigned hereby represents and affirms that he has
read each of the representations and warranties of GLOBAL AIRLINE SERVICES, INC.
set out in Article I hereof and that, to the best of his knowledge, all of such
representations and warranties are true and correct.
Date: September ____, 2003 Xxxxxx X. Xxxxxx, individually
Date: September ____, 2003 Xxxxxx Xxxxxxxx, individually
Date: September ____, 2003 Xxxx Xxxxxx, individually
