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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
(PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934)
October 27, 1997
(Date of Report (Date of Earliest Event Reported))
GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.
(Exact name of registrant as specified in its charter)
DELAWARE 2741 95-4578632
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Identification Number)
Code Number)
5548 Lindbergh Lane
Bell, California 90201-6410
(213) 980-4300
(Address, including ZIP code, and telephone number, including area code, of
registrant's principal executive offices)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Effective October 27, 1997, the Company acquired substantially all of the
assets owned by its former subsidiary, OSP Publishing, Inc. ("OSP"), in
consideration of the issuance of 8,000,000 shares of Global One common stock,
$.01 par value (the "Shares").
On October 8, 1997, all of the assets of OSP (the "Assets") were sold at a
public sale to Senoral, Inc. ("Senoral") for $1 million as the result of the
Company's defaults on certain indebtedness in favor of Senoral aggregating
approximately $1.7 million. The Assets, which include approximately $2
million of receivables, were subsequently sold to L.J.R. Trading, Inc., a
California corporation ("LJR") and a wholly owned subsidiary of Erekesef
Securities Limited, a British Virgin Islands company ("Erekesef").
Effective October 24, 1997, the Company and Erekesef entered into a Share
Exchange Agreement whereby the Company agreed to purchase all of the
outstanding stock of LJR in exchange for the Shares. In connection with the
transaction, the Company agreed to increase the number of directors on the
Board of Directors to seven and Erekesef will have the right to appoint up to
three members to the Board.
The book value of the Assets at September 30, 1997 was as follows:
ASSETS AS OF SEPTEMBER 30, 1997 OSP PUBLISHING, INC.
CURRENT ASSETS
Cash $ 152,157
Accounts Receivable - trade 1,829,403
Inventories 798,999
Royalty Advances 0
Deferred Income Taxes 0
Prepaid and Other Current Assets 92,548
-----------
Total Current Assets 2,873,107
PROPERTY & EQUIPMENT (net) 863,852
INTERCOMPANY ACCOUNTS (2,716,764)
DEPOSITS 172,197
GOODWILL/OTHER ASSETS (net) (7,254)
-----------
TOTAL ASSETS $ 1,185,138
-----------
-----------
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ITEM 5. OTHER EVENTS
Effective October 24, 1997, William Kampf resigned as a Class I Director of the
Board of Directors of the Company.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) Pro Forma Financial Information.
Global One Consolidated Pro Forma Balance Sheet at June 30, 1997
A Consolidated Pro Forma Income Statement for the Six Months
Ended June 30, 1997 and a Consolidated Pro Forma Income Statement
for the Year Ended December 31, 1996 have not been presented as
no changes would have occurred as the result of the transactions
discussed therein.
(c) Exhibits.
Exhibit No. Description Page No.
2.1 Share Exchange Agreement, dated
October 24, 1997, between Erekesef
and the Company
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SIGNATURES
Under the requirements of the Securities Exchange Act of 1934, Global One
Distribution & Merchandising Inc. has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: November 10, 1997
GLOBAL ONE DISTRIBUTION
& MERCHANDISING INC.
By: /s/ Douglass E. Coy
___________________________
Douglass E. Coy
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GLOBAL ONE CONSOLIDATED PRO FORMA
BALANCE SHEET AT JUNE 30, 1997
(UNAUDITED)*
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
HISTORICAL ADJUSTMENT PROFORMA
Current Assets ---------- ---------- --------
<S> <C> <C> <C>
Cash $ 0 $ 0 $ 0 (1)
Accounts receivables 4,260 0 4,260 (2)
Inventories 1,625 0 1,625 (2)
Prepaid royalties 716 493 223 (2)
Other current assets 1,495 1,379 116 (2)
------- ------- -------------
TOTAL CURRENT ASSETS 8,096 1,872 6,224
Property & equipment, net 1,150 0 1,150 (2)
Due from (to) subsidiaries 13 (1,353) 1,366 (2)
Other assets 160 170 (10) (2)
Goodwill 4,296 2 4,294 (2)
------- ------- -------------
TOTAL ASSETS $13,716 $691 $13,024
------- ------- -------------
------- ------- -------------
LIABILITIES AND STOCKHOLDER'S EQUITY
HISTORICAL ADJUSTMENT PROFORMA
Current liabilities ---------- ---------- --------
Accounts payable $ 4,428 $ 0 $ 4,428 (3)
Accrued expenses 1,255 0 1,255 (4)
Royalties payable 1,792 0 1,792 (4)
Subordinated debt 300 0 300 (4)
Current maturities of long term debt 100 0 100 (4)
Income taxes payable 53 0 53 (4)
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C>
Bank line of credit 2,767 0 2,767 (4)
Loan from factor 0 0 0 (4)
------- ------- -------------
TOTAL CURRENT LIABILITIES 10,695 0 10,695
------- ------- -------------
Capital leases 52 0 52 (4)
Subordinated long term debt 1,695 0 1,695 (4)
------- ------- -------------
TOTAL LIABILITIES $12,442 $0 $12,442
------- ------- -------------
Stockholder's equity
Common stock 10,792 (5,480) 17,272 (5)
Accumulated deficit (9,517) 7,171 (16,688) (6)
------- ------- -------------
Total stockholder's equity 1,275 691 584
------- ------- -------------
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY $13,716 $ 691 $ 13,024
------- ------- -------------
------- ------- -------------
</TABLE>
________________________________________________________
*The Company's auditors have neither reviewed nor approved the accuracy of these
pro forma financial statements; accordingly, these pro forma financial
statements are subject to further adjustment.
(1) Consolidated cash accounts held at zero balance. OSP negative cash balance
of $409,000 reflected in accounts payable.
(2) Consolidated balance reflects repurchase of OSP assets.
(3) Consolidated balance reflects removal of OSP assets in previous sale.
(4) In accordance with previous sale, consolidated accounts payable reflect
removal of OSP negative cash balance of $409,000 along with removal of
amounts owed Safcor, Inc., Senoral, Inc. and Brilliant Color totaling
$1,275,000.
(5) Consolidated balance includes OSP liability.
(6) Repurchase of OSP assets accomplished through issuance of common stock.
(7) Consolidated accumulated deficit reflects the disposition of OSP assets in
previous sale.
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SHARE EXCHANGE AGREEMENT
BETWEEN
GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.
AND
EREKESEF SECURITIES LIMITED
DATED AS OF OCTOBER 24, 1997
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SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (this "Agreement") is made and entered
into as of October 24, 1997, by and between Erekesef Securities Limited, a
British Virgin Islands company, and Global One Distribution & Merchandising
Inc., a Delaware corporation ("Global"). Certain capitalized terms used
herein are defined in Section 8 hereof.
R E C I T A L S
A. Erekesef is the owner of all the outstanding shares (the "LJR
Shares") of the Common Stock of L.J.R. Trading, Inc., a California
corporation ("LJR");
B. Erekesef desires to sell to Global and Global desires to purchase
from Erekesef, the LJR Shares, on the terms and subject to the conditions set
forth herein;
C. In consideration for the LJR Shares, Global will issue to Erekesef
Common Stock, par value $0.01 per share, of Global (the "Global Shares") as
described in Section 1.2; and
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties and covenants herein contained, Global and
Erekesef hereby agree as follows:
1. SHARE EXCHANGE.
1.1 AGREEMENT TO SELL AND PURCHASE LJR SHARES. Subject to the
terms and conditions of this Agreement, Erekesef agrees to sell, and Global
agrees to purchase from Erekesef, the LJR Shares, in exchange for the Global
Shares described in Section 1.2.
1.2 AGREEMENT TO SELL AND PURCHASE GLOBAL SHARES. Subject to the
terms and conditions of this Agreement, Global agrees to issue, and Erekesef
agrees to purchase from Global, in exchange for the LJR Shares, eight million
(8,000,000) Global Shares.
1.3 SHARES TO BE DELIVERED AT CLOSING. The purchase and sale of
the LJR Shares and the Global Shares shall take place at a closing (the
"Closing") to be held at the offices of Kinsella, Boesch, Fujikawa & Towle,
LLP at 11:00 A.M., local time, on October 24, 1997, or on such other date as
may be agreed upon in writing by Global and Erekesef (the "Closing Date").
At the Closing, (a) Erekesef shall deliver to Global a certificate or
certificates representing the LJR Shares and stock powers executed in favor
of Global sufficient
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to validly transfer title to the LJR Shares, and ownership thereof, to
Global, and (b) Global shall deliver to Erekesef a certificate or
certificates representing the Global Shares to be issued at the Closing to
Erekesef.
1.4 LEGENDS. All certificates representing the LJR Shares and the
Global Shares shall bear a legend in substantially the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")
OR ANY APPLICABLE STATE LAW, AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
ACCORDANCE WITH THE ACT AND THE RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION THEREUNDER AND WITH APPLICABLE
STATE LAWS AND REGULATIONS.
2. REPRESENTATIONS AND WARRANTIES OF GLOBAL. As a material inducement
to Erekesef to enter into and execute this Agreement and to perform its
covenants, agreements, duties and obligations hereunder, and in consideration
therefor, Global hereby makes the following representations and warranties
(as used in this Section 2 the term "Global" shall be deemed to refer also to
any Subsidiary of Global (as defined in Section 2.3)).
2.1 ORGANIZATION, ETC. OF GLOBAL; AUTHORIZATION; ENFORCEABILITY.
Global is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, has all requisite corporate power
and authority to own and hold under lease the properties and assets it
purports to own and hold under lease and to carry on its business as now
being conducted and as presently proposed to be conducted, and is duly
qualified or licensed as a foreign corporation and is in good standing in
each jurisdiction where the character of the properties owned or leased by it
or the nature of the business transacted by it makes qualification therein
necessary, except where the failure to be so licensed or qualified would not
have a material adverse effect on the business or properties of Global.
Global has heretofore delivered to Erekesef accurate and complete copies of
Global's certificate of incorporation and bylaws, together, in each case,
with any amendments thereto to the date hereof. All corporate and other
actions required to be taken by or on the part of Global to authorize Global
to execute and deliver this Agreement (including, without limitation,
approval by the Board of Directors of Global) and to perform its obligations
hereunder have been duly and validly taken. This Agreement constitutes the
legal, valid and binding obligation of Global and is enforceable against
Global in accordance with its terms, subject to applicable bankruptcy,
insolvency or other similar laws or proceedings limiting creditors' rights
generally and to general equitable principles.
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2.2 CAPITAL STRUCTURE OF GLOBAL; ISSUANCE OF SECURITIES. The
authorized and outstanding capital stock of Global is as set forth on
SCHEDULE 2.2 hereto. All outstanding shares are validly issued, fully paid
and non-assessable. Except as set forth on SCHEDULE 2.2, there do not exist
any other authorized or outstanding securities, options, warrants, calls,
commitments, rights to subscribe or other instruments, agreements or rights
of any character convertible into or exchangeable for, or requiring or
relating to the issuance, transfer or sale of, any shares of capital stock or
other securities (collectively, "Equity Securities") of Global. The issuance
and sale of the Global Shares to Erekesef has been duly authorized and if,
when and as delivered to Erekesef, the Global Shares will be duly and validly
issued and outstanding, fully paid and nonassessable and will be free of any
Lien, other than those imposed pursuant to this Agreement and securities laws
of general application.
2.3 SUBSIDIARIES OF GLOBAL. SCHEDULE 2.3 sets forth a list of all
Persons in which Global has an equity or profit interest (each a "Subsidiary").
The Company owns 100% of the capital stock of each Subsidiary. Except for the
Subsidiaries, Global does not hold any equity or profit interest in any other
Person.
2.4 FINANCIAL STATEMENTS.
(a) Global has provided to Erekesef complete and accurate copies of
Global's Annual Report on Form 10-K for the year ended December 31, 1996, the
Quarterly Reports on Form 10-Q for the two fiscal quarters ending June 30,
1997, and its Current Reports on Form 8-K dated October 6, 1997 and October 8,
1997, each, as amended to date (collectively, the "Reports"), which include
the consolidated financial statements of Global for the fiscal year ended
December 31, 1996 and for the quarters ended June 30, 1997 (collectively, the
"Global Financial Statements"). Each of the Reports complied in all material
respects with the rules of the SEC applicable to such Report on the date
filed with the SEC, and none of the Reports contained, on the date of filing
with the SEC, any untrue statement of a material fact, or omitted to state
any material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not materially misleading. Except for
the Reports, Global has not filed any other report with the SEC since June 30,
1997. All of the Global Financial Statements (subject to year-end accruals
in the case of the 1997 financial statements): (i) have been prepared from
and on the basis of, and are in accordance with, the books and records of
Global and with generally accepted accounting principles applied on a basis
consistent with prior accounting periods; (ii) fairly and accurately present
the financial condition of Global as of the date of each such Global
Financial Statement and the results of its operations for the periods therein
specified; and (iii) except in the case of the 1997 financial statements, are
accompanied by the audit opinion of Global's independent public accountants.
There are no undisclosed liabilities which should be disclosed in the Global
Financial Statements pursuant to generally accepted accounting principles.
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2.5 AFFILIATE TRANSACTIONS. Except as set forth in the Reports or
in SCHEDULE 2.5, Global is not a party to any transaction involving, and has
no direct or indirect obligation or liability to, any of its Affiliates (as
defined in Section 8).
2.6 ABSENCE OF CHANGES. Except (a) as set forth on SCHEDULE 2.6,
(b) as disclosed in Reports filed with the SEC and (c) the Public Sale
referred to in Section 3.5, since June 30, 1997, there has not been nor is
there currently pending any material change in the business, business plan,
operations, commercial practices, prospects, properties, assets or condition,
financial or otherwise, of Global other than changes in the ordinary course
of business, none of which, singly or in the aggregate, has been materially
adverse;
2.7 TAX RETURNS AND AUDITS. Global has paid all employment
withholding taxes required to be paid by it to date.
2.8 PENDING LITIGATION OR PROCEEDINGS. Except as disclosed in the
Reports or as set forth on SCHEDULE 2.8, there is not pending, or, to the
best knowledge of Global, threatened, any action, suit, or legal,
administrative, arbitration or other proceeding or Governmental
investigation, or any change in zoning or building ordinances affecting the
real property or leasehold interests of Global, its properties, assets or
business, nor any facts which might result in such action, which may result
in any adverse change in the business, operations, prospects, properties,
assets or conditions, financial or otherwise, of Global.
2.9 EMPLOYEE BENEFITS. Global is not, and has never been subject
to any retirement, pension, profit sharing or other similar plan which is or
was subject to the Employee Retirement Income Securities Act of 1974, as
amended ("ERISA"); no "prohibited transaction" within the meaning of
Section 406(a) of ERISA, and no "reportable event" within the meaning of
Section 4043(b) of ERISA, has occurred with respect to any employee benefit
plan of Global; all employee benefit plans have been established and operated
in full compliance with all applicable laws, rules and regulations.
2.10 INVESTMENT REPRESENTATION; RESTRICTIONS UPON RESALE. Global
shall acquire the LJR Shares only for Global's own account for investment and
not with a view to, or for resale in connection with, any "distribution"
thereof for purposes of the United States Securities Act of 1933, as amended
(the "Act") or in violation of applicable state securities laws. Global
acknowledges that the LJR Shares have not been registered under the Act and
can be transferred only if so registered or if an exemption from such
registration is available. Global has such knowledge and experience in
financial and business matters that it is capable of protecting its own
interests in connection with the acquisition of the LJR Shares. Global has
executed and delivered to Erekesef a letter of investment intent in the form
attached as EXHIBIT "A" hereto.
3. REPRESENTATIONS AND WARRANTIES OF EREKESEF. As a material
inducement to Global to enter into and execute this Agreement and to perform
its covenants, agreements,
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duties and obligations hereunder, and in consideration therefor, Erekesef
hereby makes the following representations and warranties, each of which (a)
is material and is being relied upon by Global as a material inducement to
enter into this Agreement and (b) is true at and as of the date hereof and
shall be true at and as of the Closing Date with the same effect as if such
representations and warranties had been made at and as of the Closing Date.
3.1 ORGANIZATION, ETC. OF LJR. LJR is a corporation duly
organized, validly existing and in good standing under the laws of the State
of California, has all requisite corporate power and authority to own and
hold under lease the properties and assets it purports to own and hold under
lease and to carry on its business as now being conducted and as presently
proposed to be conducted, and is in good standing in each jurisdiction where
the character of the properties owned or leased by it or the nature of the
business transacted by it makes qualification therein necessary, except where
the failure to be so licensed or qualified would not have a material adverse
effect on the business or properties of LJR.
3.2 CAPITAL STRUCTURE OF LJR. The LJR Shares have been validly
issued, are fully paid and non-assessable and are owned by Erekesef, free and
clear of any Liens. Except for the LJR Shares, there do not exist any other
authorized or outstanding securities, options, warrants, calls, commitments,
rights to subscribe or other instruments, agreements or rights of any
character convertible into or exchangeable for, or requiring or relating to
the issuance, transfer or sale of, any shares of capital stock or other
securities of LJR.
3.3 SUBSIDIARIES OF LJR. LJR does not have an equity or profit
interest in any other Person.
3.4 BUSINESS OPERATIONS. Except for the assets and liabilities
described in Section 3.5 and Section 3.6, LJR has conducted no operations,
and has no material assets or liabilities.
3.5 OWNERSHIP OF ASSETS. LJR is the owner of all of the following
assets (the "OSP Assets") acquired by Senoral, Inc. ("Senoral") from OSP
Publishing Inc. at a public sale conducted on October 8, 1997 (the "Public
Sale"):
(a) all receivables outstanding and not paid on October 22,
1997, at 6:00 p.m., plus any amounts in the OSP lockbox account, in each case
acquired by Senoral at the Public Sale, subject to the obligation of LJR to
pay to Joseph C. Angard, if, as and when collected, 45% of the receiveables,
up to the total amount of approximately $720,000 due to Joseph C. Angard
pursuant to an intercreditor agreement between Angard and Senoral;
(b) all goods, merchandise and other personal property
acquired by Senoral at the Public Sale;
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(c) all machinery, equipment, furniture and fixtures acquired by
Senoral at the Public Sale;
(d) all ledger sheets, files, records, documents and
instruments (including but not limited to computer programs, tapes and
related electronic data processing software) evidencing an interest in or
relating to the above, in each case to the extent acquired by Senoral at the
Public Sale; and
(e) all patents, patent applications, copyrights, and royalties
acquired by Senoral at the Public Sale.
Notwithstanding the foregoing, the OSP Assets do not include any assets
acquired from Senoral to the extent that such assets have been physically
altered, damaged, lost or converted. Global acknowledges that it has
maintained possession of all such assets at all times since the Public Sale.
3.6 TITLE TO PROPERTIES OF LJR. Subject to receipt of all consents
described in Section 4.3, LJR has title to all of the OSP Assets, free and
clear of all Liens other than Liens for sales taxes and Liens on the OSP
Assets which existed immediately prior to the Public Sale or which attached
to the OSP Assets as a result of actions taken by the owner or owners of such
assets prior to the Public Sale. Global acknowledges that except as set
forth above, Erekesef makes no representations regarding the assets of LJR,
and, through ownership of the LJR Shares, Global shall acquire indirect title
to the OSP Assets on an "as is" basis. Global acknowledges that no agent,
employee or representative of Erekesef has made any representation or
warranty concerning the OSP Assets, and it is the intent of the parties to
provide in this Agreement an effective disclaimer of all express warranties
with respect to the OSP Assets. Both parties are represented by counsel and
have reduced the entire agreement of the parties to this writing. No
statement of fact, promise, representation, affirmation or other indication
has been made with respect to the quality of the OSP Assets, the
collectibility of the receivables, the enforceability of intellectual
property rights, the condition of the machinery, equipment, furniture and
fixtures, the condition of the records or any other matter, except as is
expressly set forth in this Agreement.
3.7 PENDING LITIGATION OR PROCEEDINGS. There is not pending, or,
to the best knowledge of Erekesef, threatened, any action, suit, or legal,
administrative, arbitration or other proceeding or Governmental
investigation, or any change in zoning or building ordinances affecting the
real property or leasehold interests of LJR, its properties, assets or
business, nor any facts which might result in such action, which may result
in any adverse change in the business, operations, prospects, properties,
assets or conditions, financial or otherwise, of LJR.
3.8 AUTHORITY OF EREKESEF TO SELL THE SHARES. This Agreement has
been duly executed and delivered by Erekesef and constitutes Erekesef's
legal, valid and binding
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agreement, enforceable against Erekesef in accordance with its terms, except
to the extent that enforceability may be limited by applicable
reorganization, insolvency, liquidation, readjustment of debt or other
similar laws and judicial decisions generally affecting the enforcement of
rights of creditors and by general principles of equity. Erekesef owns and
holds of record the LJR Shares to be delivered by Erekesef at the Closing in
accordance with Section 1.2 hereof, and Erekesef has full voting power over
such shares, subject to no proxy, shareholders' agreement or voting trust,
and has full right, power and authority to sell and deliver such shares to
Global in the manner provided for in this Agreement. Upon delivery of the
certificates representing the LJR Shares by Erekesef to Global, Erekesef will
transfer to Global and Global will acquire good title to the LJR Shares, free
and clear of all Liens other than Liens created by this Agreement and by
securities laws of general application.
3.9 INVESTMENT REPRESENTATION; RESTRICTIONS UPON RESALE. Erekesef
shall acquire the Global Shares only for Erekesef's own account for
investment and not with a view to, or for resale in connection with, any
"distribution" thereof for purposes of the United States Securities Act of
1933, as amended (the "Act") or in violation of applicable state securities
laws. Erekesef acknowledges that the Global Shares have not been registered
under the Act and can be transferred only if so registered or if an exemption
from such registration is available. Erekesef has executed and delivered to
Global a Letter of Investment Intent in the form attached as EXHIBIT "B"
hereto.
4. CONDUCT PENDING CLOSING.
4.1 CONDUCT OF THE AFFAIRS OF GLOBAL PENDING THE CLOSING. From the
date of this Agreement until October 31, 1997, Global is authorized, without
notice to Erekesef, to purchase from Erekesef such items of inventory
included in the OSP Assets as it actually ships during such period, in
exchange for a payment to LJR equal to one-half the net sales price received
for such inventory by Global; provided, that upon the Closing of the
transactions contemplated hereby, such assets shall instead be deemed to be
sold to Global in consideration of the Global Shares described herein. The
purchase of Inventory by Global shall be made upon the following terms and
conditions:
(a) Global shall only purchase such Inventory as it ships, on a
day-to-day basis, in the ordinary course of business, consistent with past
practices;
(b) Global shall not sell any Inventory for less than 75% of the
customary sales price of such Inventory;
(c) Global shall not sell any Inventory in a bulk sale or to any
Affiliate of Global. As used herein, the term, "Affiliate" means (1) any
person who is an "affiliate" of a person as defined in Rule 12b-2 of the
United States Securities Exchange Commission under the United States
Securities and Exchange Act of 1934, as amended, (2) any person who is a
director, officer or partner or holds a similar position with any entity in
which such person has
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a 10% or greater equity or profit interest, and (3) any family member of a
person referred to in (1) or (2);
(d) Global shall provide to LJR a weekly report, within 3 business
days following the end of each week, describing all items of Inventory
purchased hereunder and setting forth Global's sales price therefore;
(e) Global covenants and agrees that it shall not purchase any item
of Inventory until it has received and provided to LJR proof that it has
received adequate written consents to sell the Inventory from the copyright
holders, licensors and others with intellectual property rights relating to
the Inventory;
(f) Global agrees to fully indemnify and hold LJR and Erekesef
harmless from and to defend LJR and Erekesef and their affiliates (the
"Indemnified Parties") against, any and all Damages (as defined below)
incurred or suffered by the Indemnified Parties arising out of Global's
failure to obtain all consents described in Section 4.1(e). No investigation
by LJR or Erekesef at or prior to the date hereof shall relieve Global of any
liability hereunder. "Damages" as used herein shall mean any and all
claims, actions, demands, losses, costs, expenses, liabilities, damages and
recoveries to the full amount of the actual damage occasioned by each
deficiency, misrepresentation, inaccuracy, omission or breach in each case
including interest, penalties or other damage (including, without limitation,
reasonable attorneys' fees and other costs and expenses reasonably incurred
in investigating or in attempting to avoid the same or oppose the imposition
thereof or of enforcing this indemnity); and
(g) Subject to receipt of all consents described in Section 4.1(e),
LJR shall convey to Global title to each item of Inventory purchased
hereunder, free and clear of any lien other than liens for sales taxes or
liens created as a result of actions taken prior to the public sale of the
Inventory on October 8, 1997.
If the Closing does not occur within seven days following the date
hereof, all payments for inventory due under this Section 4.1 shall be
immediately due and payable. Subject to the express limitations and
restrictions set forth in this Agreement, Global shall not act or fail to act
in a manner which is likely to result in any representation or warranty of
Global hereunder not to be true and correct as of the Closing or which, if
occurring after the Closing Date, would violate the covenants of Global set
forth herein or require the approval of Erekesef pursuant to the terms hereof.
4.2 COVENANT TO USE BEST EFFORTS TO CLOSE. Erekesef and Global
hereby covenant and agree to use their respective best efforts to perform
each of their obligations hereunder, to satisfy all of the conditions set
forth in this Agreement and to close the transactions contemplated by this
Agreement on the Closing Date.
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4.3 CONSENTS TO SALES. Global covenants and agrees that it shall
not sell any item of Inventory until it has received and provided to LJR
proof that it has received adequate written consents to sell the Inventory
from the copyright holders, licensors and others with intellectual property
rights relating to the Inventory.
5. COVENANTS OF GLOBAL. Global covenants and agrees with Erekesef that
during the term of this Agreement, unless otherwise consented to in writing
by Erekesef:
5.1 BOARD OF DIRECTORS; VOTING OF GLOBAL SHARES.
(a) APPOINTMENTS. At the Closing, Global shall cause three persons
nominated by Erekesef to be appointed to the Board of Directors of Global,
and shall set and maintain the size of the Board of Directors of Global at
seven (7). In addition, Global shall cause the Board of Directors to be
maintained as a classified board of three classes, with directors of each
class serving for a period of three years. Each of Erekesef's nominees shall
be appointed to serve in a separate class. At least one of Erekesef's
nominees shall be appointed to and maintained as a member of each Board of
Directors of each Subsidiary of Global, and of each Committee of the Board of
Directors of Global and each Subsidiary of Global.
(b) VOTING. For a period of three years and for so long as
Erekesef maintains at least a 5% interest in the Equity Securities of Global,
at the request of Erekesef, from time to time, up to three designees of
Erekesef shall be appointed to the Board of Directors of Global: (i) upon
expiration of the term of any such designee, Global shall include and support
a designee of Erekesef as part of management's nominees for Directors, and
(ii) upon the termination of either such designee's services as a director
other than upon the expiration of term of office, Global shall appoint in the
place of such director a replacement designated by Erekesef. Notwithstanding
the foregoing, if Erekesef's interest in the outstanding Global Shares falls
below 20%, it shall be entitled to have only two nominees appointed,
maintained and supported as nominees to be directors of Global, as described
above, and if Erekesef's interest in the outstanding Global Shares falls
below 10%, it shall be entitled to have only one nominee appointed,
maintained and supported as a director of Global, as described above.
(c) ATTENDANCE AT BOARD MEETINGS. For a period of three years, and
at any time when Erekesef does not have a nominee sitting on the Board of
Directors of Global, then Erekesef shall have the right, directly or through
an agent, to attend all meetings of the Board of Directors of Global and each
Subsidiary, and all committees thereof, and shall be provided prior written
notice of all such meetings in the manner notices are provided to directors,
provided that if advance notice is not provided to directors, Global shall
provide advance notice to Erekesef, via fax as set forth below and shall use
its best efforts to allow Erekesef or its agent to attend such meetings
telephonically or otherwise. In addition, Global shall deliver to Erekesef
copies of all actions by written consent of the directors of Global and each
subsidiary,
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and each committee thereof. Erekesef shall execute a confidentiality
agreement in form reasonably acceptable to Global. Notwithstanding the
foregoing, Erekesef may be excluded from those portions of meetings which are
conducted solely for the purpose of (a) discussing transactions between the
company and/or any Subsidiary, on one hand, and Erekesef and its affiliates,
on the other hand, or (b) communicating to and receiving advice from counsel.
5.2 REGISTRATION RIGHTS.
(a) RESALE REGISTRATION. Until the earlier of the third
anniversary of the Closing Date and the date Erekesef shall become entitled
to sell the Global Shares pursuant to subsection (k) of Rule 144, Erekesef
shall have the right to require Global to file with the Securities and
Exchange Commission (the "SEC"), a registration statement on Form S-3 (or
such other form as the SEC may from time to time prescribe for such purposes)
covering the Global Shares (the "Resale Registration Statement") and to cause
the Resale Registration Statement to be declared effective by the SEC within
90 days thereafter and to maintain the effectiveness of the Resale
Registration Statement until the earlier of (i) the completion of the
offering covered by the Resale Registration Statement, and (ii) the date
Erekesef shall become entitled to sell the Global Shares pursuant to
subsection (k) of Rule 144; in the event Global proposes to register an
underwritten offering of its Common Stock for its own account under the Act,
it shall have the right to delay or suspend the filing or effectiveness of
the Resale Registration Statement for up to an aggregate of 104 days in any
12-month period to facilitate such registration. If Erekesef proposes to
effect an underwritten offering, Global shall enter into an underwriting
agreement in customary form with the managing underwriter selected by
Erekesef.
Notwithstanding the foregoing, in the event of a material development in
the business of Global, Global shall advise Erekesef of such event and
Erekesef shall cease using the prospectus included in the Resale Registration
Statement until forty-eight (48) hours following the public disclosure of
such event. Global shall promptly disclose all such material developments
PROVIDED THAT it shall be entitled to delay such disclosure for a reasonable
period of time for valid business purposes, not to exceed five (5) business
days without the consent of Erekesef, not to be unreasonably withheld.
Erekesef shall pay the registration filing fee and legal costs related
to the preparation of the Resale Registration Statement (provided that Global
shall use lawyers reasonably designated by Erekesef for such purpose), and
Global shall pay all expenses related to the preparation and filing of
reports to the Securities and Exchange Commission under the Securities
Exchange Act of 1934 and all other documents incorporated by reference into
the registration statement, including the cost of responding to comments of
the SEC relating to the documents which have been incorporated by reference
into the registration statement.
(b) PIGGY BACK REGISTRATION RIGHTS. If, at any time or from time
to time, Global determines to register any of its securities for its own
account or the account of any
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other shareholder, other than a registration relating to employee benefit
plans (or the resale of securities acquired pursuant thereto) or a
transaction pursuant to Rule 145 of the SEC, Global shall include in such
registration such number of the Global Shares as Erekesef shall elect in
writing (which election may be rescinded at any time prior to the sale of
such securities) within twenty (20) business days following receipt of notice
of such registration, PROVIDED THAT, if such registration is underwritten, it
shall be a condition that Erekesef participate in such underwriting and enter
into an underwriting agreement in customary form with the managing
underwriter selected by Global. If the managing underwriter determines that
market forces require limitation of the number of shares to be underwritten,
then, so long as Global is not in violation of its obligations pursuant to
Section 5.2(a), the number of Global Shares owned by Erekesef to be included
in the registration may be limited to no less on a pari passu basis with
other shareholders; if Global is in violation of such obligations, then
Erekesef shall be entitled to cause all Global Shares held by it to be
included in the registration in preference to all other shareholders of
Global. Erekesef shall have the right to approve the underwriter of any
offering by Global, such approval not to be unreasonably withheld.
All registration expenses (excluding the cost of special legal counsel
to be retained by Erekesef) in connection with the registrations contemplated
by this Section 5.2 shall be borne by Global, but all direct selling expenses
of Erekesef (including broker fees and underwriting commissions) shall be
borne by Erekesef. In connection with any such registration statement,
Erekesef shall promptly furnish Global with such written representations,
information and consents regarding Erekesef, the Global Shares and the
intended method of distribution of the Global Shares as shall be necessary
for inclusion in the Registration Statement.
5.3 MANAGEMENT MEETINGS. At the request of Erekesef, no more than
four (4) times per year, management of Global shall meet (the "Management
Meetings") with Erekesef at Global's offices to discuss the performance,
prospects and strategies of Global. The Management Meetings shall be
utilized to discuss the general business and prospects of Global and its
Subsidiaries. The management of Global shall attend such meetings, and
Global shall use good faith efforts to discuss any concerns of Erekesef with
respect to the business and prospects of Global. Erekesef shall bear its own
expenses in connection with such meetings.
5.4 PREEMPTIVE RIGHTS.
(a) RIGHT TO PURCHASE. Except for the transaction currently
contemplated between Global and Michael Malm, substantially on the terms set
forth in the draft provided to Erekesef's counsel on October 15, 1997 (the
"Malm Transaction"), for three years following the date hereof, in the event
Global determines to issue additional debt securities or Equity Securities or
rights therefor, Global shall so inform Erekesef, and Erekesef shall have the
right, exercisable within twenty (20) days of receipt of written notice from
Global, to elect to purchase (which election may be rescinded at any time
prior to the issuance of such securities), at a price per share equal to the
purchase price at which such securities are proposed to be offered by Global,
a percentage of such securities equal to Erekesef's then current percentage
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ownership interest in the Global Shares. The foregoing rights shall not
apply to an issuance of Equity Securities which are outstanding on the date
hereof or which are issuable upon the exercise, exchange or conversion of
such outstanding Equity Securities in accordance with their terms on the date
hereof.
(b) NON-CASH CONSIDERATION. If Global proposes to issue Global
Shares for non-cash consideration, Global shall be deemed to have issued such
Global Shares for cash in an amount equal to the fair market value of the
cash, securities and other property received by Global for such Global
Shares. If Global proposes to issue Shares for non-cash consideration,
Global shall provide to Erekesef a description of the transaction which shall
specify Global's estimate of the fair market value of such consideration,
which estimate shall conclusively bind Global, but not Erekesef. Erekesef
may, by giving written notice to Global, challenge such estimate in which
case the parties shall endeavor in good faith to negotiate and agree upon the
fair market value of the non-cash consideration. Erekesef shall have the
right to request and receive responses to inquiries and such other
information from Global as it may reasonably request to allow it to ascertain
the fair market value of the non-cash consideration. All such documents and
information shall be supplied promptly. If the parties are unable to reach
agreement on such issue within ten (10) days following the delivery of notice
to Global of the challenge of the fair market value of the non-cash
consideration, the parties shall submit such issue for resolution to a
mutually agreeable national accounting firm with whom neither party then has
a professional relationship (the "Independent Accountant") for final
determination using the following procedures. Each party shall submit its
determination of the fair market value of the non-cash consideration,
together with reasonable supporting materials, including materials reasonably
requested by the Independent Accountant. The Independent Accountant shall
promptly thereafter choose between the submitted valuations and declare one
valuation as the conclusive and binding valuation. No party may challenge,
dispute or otherwise contest the Independent Accountant's choice (judicially
or otherwise) except on the grounds of actual fraud or manifest error.
Erekesef shall have ten (10) days following the determination by the
Independent Accountant to elect to exercise its right to purchase securities
as described above. The party whose valuation is not selected shall pay the
costs and fees of the Independent Accountant.
5.5 AFFILIATE TRANSACTIONS. Except for the Malm transaction, for a
period of three years following the date hereof, neither Global nor any
Subsidiary shall enter into any transaction (other than the employment
relationships currently existing) with any director, officer, shareholder or
any of their Affiliates other than transactions in the ordinary course of
business on terms no less favorable to Global or such Subsidiary, as the case
may be, than could be obtained from an independent third party.
5.6 ANTIDILUTION RIGHTS. Except for the Malm transaction, prior to
the date of the next shareholders meeting, Global shall not issue or sell, or
enter into any agreement to issue or sell, any debt or equity securities, or
rights therefor, or amend its certificate of
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incorporation or bylaws in a manner which affects its outstanding securities,
without the prior written consent of Erekesef, which consent may be withheld
in its absolute discretion.
6. CONDITIONS TO THE OBLIGATIONS OF EREKESEF. The obligation of
Erekesef to consummate the transactions under this Agreement shall be subject
to the satisfaction of each of the conditions set forth in this Section 6,
unless waived by Erekesef.
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES OF GLOBAL AND
RELATED CERTIFICATE. The representations and warranties of Global set forth
in Section 2 shall be true and correct as of the Closing Date as though made
on and as of such date; and Erekesef shall have received from Global a
certificate to such effect, dated the Closing Date, signed by an officer duly
authorized to act on its behalf.
6.2 PERFORMANCE AND RELATED CERTIFICATES. Global shall have
performed all obligations and complied with all covenants required to be
performed or to be complied with by Global under this Agreement on or prior
to the Closing Date, and all conditions to the obligations of Erekesef shall
have been satisfied, and Erekesef shall have received from Global a
certificate to such effect, dated the Closing Date, signed by an officer duly
authorized to act on its behalf.
6.3 NO PENDING OR THREATENED LEGAL ACTION. No order, injunction,
decree or other action or legal, administrative, arbitration or other
proceeding or investigation by any Government shall be pending or threatened,
challenging or imposing a material limitation on the execution, delivery or
performance of this Agreement, the consummation of any of the transactions
contemplated hereby or the operation by Global of its business as now
conducted or as presently proposed to be conducted.
6.4 AUTHORIZATION OF AGREEMENTS BY GLOBAL. Global shall deliver to
Erekesef resolutions of the Board of Directors of Global authorizing the
Global to enter into the agreements contemplated by this Agreement,
accompanied by a certificate of the Secretary of the Company certifying that
such resolutions have been duly adopted by the Board of Directors of Global,
have not been amended or superseded by any other action of the Board of
Directors of Global, and remain in full force and effect.
6.5 PROCEEDINGS AND DOCUMENTS. All proceedings taken in connection
with the transactions contemplated hereby and all documents incident to such
transactions shall be reasonably satisfactory in form and substance to
Erekesef and its counsel.
6.6 APPOINTMENT OF DIRECTORS. Nominees of Erekesef shall have been
appointed to the Board of Directors of Global as specified in Section 5.1(a).
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7. CONDITIONS TO THE OBLIGATIONS OF GLOBAL. The obligations of Global
to consummate the transactions under this Agreement shall be subject to the
satisfaction of each of the conditions set forth in this Section 7, unless
waived by Global.
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES OF EREKESEF;
PERFORMANCE OF OBLIGATIONS AND RELATED CERTIFICATES. The representations and
warranties of Erekesef set forth in Section 3 shall be true and correct as of
the Closing Date as though made on and as of such date; Erekesef shall have
performed all obligations and complied with all covenants required to be
performed or complied with by it under this Agreement and Global shall have
received on the Closing Date from Erekesef a certificate dated the Closing
Date, to such effect, which certificate or certificates shall be signed by
Erekesef.
7.2 PERFORMANCE AND RELATED CERTIFICATES. Erekesef shall have
performed all obligations and complied with all covenants required to be
performed or to be complied with by it under this Agreement on or prior to
the Closing Date and all conditions to the obligations of Global shall have
been satisfied, and Global shall have received from Erekesef a certificate to
such effect, dated the Closing Date, signed by Erekesef.
7.3 NO PENDING OR THREATENED LEGAL ACTION. No order, injunction,
decree or other action or legal, administrative, arbitration or other
proceeding or investigation by any Government shall be pending or threatened,
challenging or imposing a material limitation on the execution, delivery or
performance of this Agreement, or the consummation of any of the transactions
contemplated hereby.
7.4 PROCEEDINGS AND DOCUMENTS. All proceedings taken in connection
with the transactions contemplated hereby and all documents incident to such
transactions shall be reasonably satisfactory in form and substance to Global
and its counsel.
8. DEFINITIONS
8.1 "AFFILIATE" means, with respect to any Person: (A) any Person
who is an "affiliate" of such Person as defined in Rule 12b-2 of the United
States Securities Exchange Commission under the United States Securities and
Exchange Act of 1934, as amended, (B) any Person who is a director, officer
or partner or holds a similar position with any entity in which such Person
has a 10% or greater equity or profit interest, and (C) any family member of
a person referred to in (A) or (B).
8.2 "CONTRACTUAL OBLIGATION" means, in respect of any Person, any
agreement or instrument, written or oral, to which such Person is a party or
by which it or any of its properties or assets are bound, including, without
limitation, (i) any charter, bylaw, trust instrument, indenture or evidence
of indebtedness and (ii) any lease, contract, guarantee, indemnity or other
obligation or commitment either by the Person or by any other person which
relates to the property, assets, obligations or commitments of the Person.
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8.3 "GOVERNMENT" means the government of the United States of
America, or any political subdivision of the United States of America
(including, without limitation, any state, territory, federal district,
county, municipality or possession), and any department, agency or
instrumentality of any of the foregoing; and "Governmental" means of, by, or
pertaining to any Government.
8.4 "INTANGIBLE" means any trademark, service mark, trade name
(whether registered or unregistered), copyright, license, patent or design
patent, or pending application therefor, trade secret, process, recipe or
formula, and any right with respect to the foregoing and with respect to the
use of any brand name, distinctive emblem or devices of merchandising and
design.
8.5 "LIEN" means any mortgage, lien, charge, security interest,
encumbrance, pledge, adverse claim, interest of third parties or other
encumbrance or restriction of any nature whatsoever, including, without
limitation, any of the foregoing arising under any title retention or
conditional sale agreement but does not include Liens for current Taxes not
yet due and payable or being contested in good faith by appropriate
proceedings (and for which adequate reserves have been set aside on the books
of the person subject to such taxes).
8.6 "PERSON" means any individual, corporation, partnership, joint
venture, trust, estate, unincorporated organization, Government or
Governmental body.
8.7 "REQUIREMENT OF LAW" in respect of any Person means (i) any
law, rule, regulation, restriction, order, writ, judgment, award,
determination, injunction or decree of any court or Government, or any
decision or ruling of any arbitrator, applicable to such Person or any of its
properties or assets, and (ii) the certificate of incorporation or other
charter document or bylaws of such Person.
8.8 "TAXES" means all Governmental taxes, assessments, fees,
levies, imposts, duties, license and registration fees, charges or
withholdings of any nature whatsoever arising in connection with or in
respect of any assets, income, profits, businesses or other properties of any
nature whatsoever.
9. BROKERS AND FINDERS. Neither Global nor Erekesef, or any of them
(whether individually or as a representative), nor any Person acting on
behalf of any of them has employed any broker, agent or finder, or incurred
any liability for any brokerage fees, agents' commissions, finders' fees or
advisory fees in connection with the transactions contemplated hereby; and
Erekesef agrees that it shall indemnify and hold Global harmless in respect
of any damages (as defined in Section 10.4) arising out of any agreements or
arrangements or understandings claimed to have been made by Erekesef, or any
Person acting on its behalf, with any third party; and Global shall indemnify
and hold Erekesef harmless in respect of any
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damages arising out of any agreements or arrangements or understandings
claimed to have been made by Global, or any Person acting on its behalf, with
any third party.
10. INDEMNIFICATION.
10.1 INDEMNIFICATION BY EREKESEF. Erekesef hereby indemnifies
Global and/or its Affiliates (collectively the "Erekesef Indemnified Parties"
and each individually a "Erekesef Indemnified Party") against, and agrees to
hold the Erekesef Indemnified Parties harmless from, and to defend Erekesef
Indemnified Parties against, any and all Damages (as defined below) incurred
or suffered by the Erekesef Indemnified Parties arising out of any
misrepresentation, inaccuracy or omission in any representation or warranty
made by Erekesef under this Agreement or any agreement delivered in
connection herewith, or any breach of any warranty, covenant or agreement
made or to be performed by Erekesef pursuant to this Agreement. No
investigation by Global at or prior to the date hereof shall relieve Erekesef
of any liability hereunder.
10.2 INDEMNIFICATION BY GLOBAL. Global hereby indemnifies
Erekesef and/or its Affiliates (collectively, the "Global Indemnified
Parties" and each individually a "Global Indemnified Party") against, and
agrees to hold the Global Indemnified Parties from, and to defend the Global
Indemnified Parties against, any and all Damages incurred or suffered by the
Global Indemnified Parties arising out of any misrepresentation, inaccuracy
or omission in any representation or warranty of Global under this Agreement
or any agreement delivered in connection herewith, or any breach of any
warranty, covenant or agreement made or to be performed by Global pursuant to
this Agreement. No investigation by Erekesef at or prior to the date hereof
shall relieve Global of any liability hereunder.
10.3 RIGHTS CUMULATIVE; SEVERABILITY. No right granted to the
parties hereunder on default or breach is intended to be in full or complete
satisfaction of any damages arising out of such default or breach, and each
and every such right hereunder, or under any other document delivered
hereunder, or allowed by law or equity, shall be cumulative and may be
exercised from time to time. If any provision of this Agreement or the
application thereof to any person or circumstance is held unconstitutional or
otherwise invalid, the unconstitutionality or invalidity thereof shall not
affect other provisions or applications which can be given reasonable effect
without the unconstitutional or invalid provision or application, and to this
end the provisions of this Agreement are severable.
10.4 DAMAGES. "Damages" as used herein shall mean any and all
claims, actions, demands, losses, costs, expenses, liabilities, damages and
recoveries to the full amount of the actual damage occasioned by each
deficiency, misrepresentation, inaccuracy, omission or breach in each case
including interest, penalties or other damage (including, without limitation,
reasonable attorneys' fees and other costs and expenses reasonably incurred
in investigating or in attempting to avoid the same or oppose the imposition
thereof or of enforcing this indemnity).
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10.5 RIGHT TO DEFEND, ETC. If the facts giving rise to any such
indemnification shall involve any actual claim or demand by any third Person
against an Erekesef Indemnified Party or a Global Indemnified Party (referred
to hereinafter as an "Indemnified Party"), the indemnifying party shall be
entitled to notice of and entitled (without prejudice to the right of any
Indemnified Party to participate at its own expense through counsel of its
own choosing) to defend or prosecute such claim at its expense and through
counsel of its own choosing and to control such defense if it gives written
notice of its intention to do so no later than the time by which the
interests of the Indemnified Party would be materially prejudiced as a result
of its failure to have received such notice; PROVIDED, HOWEVER, that if the
defendants in any action shall include both the indemnifying party and an
Indemnified Party, and the Indemnified Party shall have reasonably concluded
that counsel selected by the indemnifying party has a conflict of interest
because of the availability of different or additional defenses to the
Indemnified Party, each Indemnified Party shall have the right to select
separate counsel to participate in the defense of such action on its behalf,
at the expense of the indemnifying party. The Indemnified Party shall
cooperate fully in the defense of such claim and shall make available to the
indemnifying party pertinent information under its control relating thereto,
but shall be entitled to be reimbursed, as provided in this SECTION 10, for
all costs and expenses incurred by it in connection therewith.
10.6 SUBROGATION. If the Indemnified Party receives payment or
other indemnification from the indemnifying party hereunder with respect to
any claim or demand by any third Person against the Indemnified Party, the
indemnifying party shall be subrogated to the extent of such payment or
indemnification to all rights in respect of the subject matter of such claim
to which the Indemnified Party may be entitled, to institute appropriate
action for the recovery thereof, and the Indemnified Party agrees to provide
reasonable levels of assistance and cooperation to the indemnifying party
(but only if such does not involve expense to the Indemnified Party) in
enforcing such rights.
11. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties hereto and
their respective successors and assigns, nor relieve or discharge the
obligation or liability of any third party to either party to this Agreement,
nor give any third party any right of subrogation or action against any party
to this Agreement.
12. TERM. The term of this Agreement shall commence on the date hereof
and shall terminate upon date that Erekesef owns less than 5% of the issued
and outstanding equity securities of the Corporation.
13. TERMINATION. The transactions contemplated herein may be
terminated at any time prior to the Closing, by mutual written consent of
Global and Erekesef or by either party if the satisfaction of the conditions
to the obligation of such party to effect the transactions contemplated
hereby becomes impossible.
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14. WAIVER AND AMENDMENT. Any of the terms and provisions of this
Agreement may be waived at any time by the party which is entitled to the
benefit thereof, but only by a written instrument executed by such party.
This Agreement may be amended only by an agreement in writing executed by
Global and Erekesef.
15. NOTICES. All notices, requests, demands, deliveries and other
communications hereunder shall be in writing and, except as otherwise
specifically provided in this Agreement, shall be deemed to have been duly
given, upon receipt, if delivered personally or via fax, or ten business days
after deposit in the mail, if mailed, first class with postage prepaid
(confirmed by telex if the addressee is in a country other than that of the
sender) to the parties at the following addresses:
If to Global:
Global One Distribution & Merchandising Inc.
5548 Lindbergh Lane
Bell, California 90201
Attn: President
Fax (213) 263-9258
with a copy to:
Kampf & Associates, Inc.
Suite 901
821 Marquette Avenue South
Minneapolis, Minnesota 55402-2903
Attn: Mr. William I. Kampf, Esq.
with a copy to:
Jeffrey P. Grogin, Esq.
Samaha Grogin LLP
911 East Colorado Boulevard
Third Floor
Pasadena, California 91106
Fax: (626) 584-6664
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If to Seller:
Erekesef Securities Limited
6355 Topanga Canyon Boulevard
Suite 331
Woodland Hills, California 91367
Attn: President
Fax: (818) 712-0810
with a copy to:
Joseph P. Bartlett, Esq.
Kinsella, Boesch, Fujikawa & Towle, LLP
1901 Avenue of the Stars, Seventh Floor
Los Angeles, California 90067-6009
Fax: (310) 284-6018
Any of the parties hereto may, from time to time, change its address for
receiving notices by giving written notice thereof in the manner outlined
above.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. ENTIRE AGREEMENT. This Agreement and the other agreements entered
into in connection herewith supersede all prior and contemporaneous
negotiations and agreements (whether written or oral) and constitute the
entire understanding among the parties hereto.
18. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the parties named herein and their respective successors and
assigns.
19. HEADINGS. The section headings contained in this Agreement are for
convenience only and shall not control or affect the meaning or construction
of any of the provisions of this Agreement.
20. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of California applicable to Agreements
to be entered into and entirely performed within such State.
21. ARBITRATION.
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21.1 RULES OF ARBITRATION. All disputes arising in connection
with this Agreement, other than matters pertaining to injunctive relief,
shall be finally settled by arbitration by the American Arbitration
Association ("AAA") in Los Angeles, California, in accordance with the rules
of the AAA provided that to the extent necessary to render the decision of
the Arbitrator enforceable in the courts of the State of California, the
arbitration rules set forth in the California Code of Civil Procedure,
Section 1280 ET SEQ. (the "Rules of Arbitration") and the provisions of
Section 1283.05 of the Rules of Arbitration concerning rights of discovery
shall govern. Judgment on the award rendered by the arbitration panel (the
"Arbitration Panel") may be entered in any court of competent jurisdiction.
21.2 INITIATION OF ARBITRATION. Any party which desires to
initiate arbitration proceedings may do so by delivering written notice to
the other party (the "Arbitration Notice") specifying (x) the nature of the
dispute or controversy to be arbitrated; (y) the name and address of the
arbitrator appointed by the party initiating such arbitration; and (z) such
other matters as may be required by the Rules of Arbitration. The party who
receives an Arbitration Notice shall appoint an arbitrator and notify the
initiating party of such arbitrator's name and address within 30 days after
delivery of the Arbitration Notice; otherwise, a second arbitrator shall be
appointed at the request of the party who delivered the Arbitration Notice.
The two arbitrators so appointed shall appoint a third arbitrator who shall
be chairman of the Arbitration Panel and the "neutral arbitrator" for
purposes of the Rules of Arbitration.
21.3 DECISIONS FINAL. All decisions of the Arbitration Panel
shall be final, conclusive and binding on all parties and shall not be
subject to judicial review except to the extent set forth in the California
Code of Civil Procedure, Section 1285 ET SEQ.
21.4 INJUNCTIVE RELIEF. Any proceeding for injunctive relief
(including temporary restraining orders, preliminary injunctions and
permanent injunctions) may be brought in any court of competent jurisdiction,
and the parties consent to the non-exclusive jurisdiction of the California
courts for such purpose.
22. DELAY, ETC. No delay or omission to exercise any right, power or
remedy accruing to any party hereto shall impair any such right, power or
remedy of such party nor be construed to be a waiver of any such right, power
or remedy nor constitute any course of dealing or performance hereunder.
23. COSTS AND ATTORNEYS' FEES. If any action, suit, arbitration
proceeding or other proceeding is instituted arising out of this Agreement,
the prevailing party shall recover all of such party's costs, including,
without limitation, the court costs and attorneys' fees incurred therein,
including any and all appeals or petitions therefrom. As used herein,
"attorneys' fees" shall mean the full and actual costs of any legal services
actually rendered in connection with the matters involved, calculated on the
basis of the usual fee charged by the attorneys performing such services.
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<PAGE>
24. SPECIFIC PERFORMANCE. The parties hereto agree that the parties
will be irreparably damaged in the event that this Agreement is not
specifically enforced. Accordingly, in the event of any controversy
concerning the LJR Shares or the Global Shares which are the subject of this
Agreement, such rights or obligations shall be enforceable in a court of
equity by a decree of specific performance. Such remedy shall be cumulative
and not exclusive, and shall be in addition to any and all remedies which the
parties hereto may have hereunder at law or in equity.
25. ASSIGNMENT. Neither this Agreement nor any right pursuant hereto
or interest herein shall be assignable by Global without the prior written
consent of Erekesef, which may be withheld in Erekesef's absolute discretion;
Erekesef may assign its rights hereunder to any person.
IN WITNESS WHEREOF, the undersigned parties hereto have duly
executed this Agreement as of the date first above written.
Global One Distribution & Merchandising Inc.
By: ________________________________________
Title: _____________________________________
Erekesef Securities Limited
By: ________________________________________
Title: _____________________________________
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