<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
(Amendment No. 2)*
Under the Securities Exchange Act of 1934
GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 Par Value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
378927 10 7
- --------------------------------------------------------------------------------
(CUSIP Number)
Joseph P. Bartlett, Esq.
Kinsella, Boesch, Fujikawa & Towle, LLP
1901 Avenue of the Stars, 7th Fl., Los Angeles, California 90067
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 29, 1997
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act.
Page 1 of 6
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CUSIP NO. 378927 10 7 PAGE 2 OF 6
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EREKESEF SECURITIES LIMITED
Social Security No.: None
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS: WC (See response to Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
BRITISH VIRGIN ISLANDS
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH 10,377,093
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH 8,000,000
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,377,093
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT SHOWN IN ROW (11)
50.9%
14 TYPE OF REPORTING PERSON
CO
Page 2 of 6
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PAGE 3 OF 6
ITEM 1. SECURITY AND ISSUER
This Amendment No. 2 to Schedule 13D ("Amendment No. 2") amends the
Schedule 13D filed November 6, 1997 as amended (the "Schedule 13D") by Erekesef
Securities Limited ("Erekesef"), a British Virgin Islands Corporation, relating
to the common stock, $.01 par value (the "Common Stock") of Global One
Distribution & Merchandising, Inc., a Delaware corporation (the "Company").
Capitalized terms used herein and not defined have the same meanings ascribed to
them in the Schedule 13D.
ITEM 2. IDENTITY AND BACKGROUND
Item 2 is hereby amended in its entirety as follows:
This Statement is filed by Erekesef Securities Limited ("Erekesef"), a
British Virgin Island corporation, 100% of the outstanding capital of stock of
which is beneficially held by Carnation Holdings, Inc., ("Carnation"), a British
Virgin Islands Corporation, 100% of the outstanding stock of which is
beneficially held by Kevin Bermeister, who is the President and sole executive
officer of both Erekesef and Carnation. The address of the principal executive
offices of both Erekesef and Carnation is Post Office Box 438, Tropic Island
Bldg., Wickham Cay, Roadtown, Totola, British Virgin Islands.
Mr. Bermeister and Tradehold Limited, a British Virgin Islands
corporation, are the directors of Erekesef. Mr. Bermeister and FMC Limited are
the directors of Carnation Trading Limited. Mr. Bermeister is also
the managing director of Sega Ozisoft Pty. Ltd., a software distributor.
The following table presents the name, business address and principal
occupation of the directors and executive officers of Erekesef:
Directors
<TABLE>
<CAPTION>
Name Business Address Principal Occupation
- ---- ---------------- --------------------
<S> <C> <C>
K. Bermeister Level 53, MLC Centre Managing Director
King Street Sega Ozisoft Pty. Ltd.
200 Coward Street
Mascot, New South
Wales, 2020
Australia
Tradehold Limited P.O. Box 438 Company
Tropic Island Building Administrator,
Wickham Cay, Roadtown providing
Tortola administrative,
British Virgin Islands management and
accounting services
</TABLE>
The following table presents the name, business address and principal
occupation of the directors and executive officers of Carnation:
Directors
<TABLE>
<CAPTION>
Name Business Address Principal Occupation
- ---- ---------------- --------------------
<S> <C> <C>
K. Bermeister Level 53, MLC Centre Managing Director
King Street Sega Ozisoft Pty. Ltd.
200 Coward Street
Mascot, New South
Wales, 2020
Australia
FMC Limited P.O. Box 438 Company
Tropic Island Building Administrator,
Wickham Cay, Roadtown providing
Tortola administrative,
British Virgin Islands management and
accounting services
</TABLE>
During the past five years none of Erekesef or its officers, directors
or shareholders or Tradehold Limited or FMC Limited has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
During the past five years none of Erekesef or its officers, directors
or shareholders or Tradehold Limited or FMC Limited has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which any such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Kevin Bermeister is a citizen of Australia. Tradehold Limited and FMC
Limited are each a British Virgin Islands corporation.
Page 3 of 6
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PAGE 4 OF 6
ITEM 4. PURPOSE OF TRANSACTION
Item 4 is hereby amended in its entirety as follows:
Erekesef acquired the Common Stock pursuant to the terms of a Share
Exchange Agreement, dated as of October 24, 1997 (the "Share Exchange
Agreement") by and between Erekesef and the Company. Pursuant to the Share
Exchange Agreement, the Company agreed to expand the size of the Board of
Directors of the Company to seven persons, and to appoint a total of 3 designees
of Erekesef to be directors of the Company. The Company also agreed to include
designees of Erekesef in management's nominees to be directors of the Company
and to support such nominees' election at future meetings of shareholders of the
Company. Hilton Blieden, Nathan Peck and Gary Dyne are currently members of the
Board of Directors of the Company who have been appointed pursuant to Erekesef's
right of appointment under the Share Exchange Agreement.
On December 10, 1997, Erekesef and Joseph C. Angard ("Angard") entered
into a Voting Agreement and Conditional Irrevocable Proxy (the "Voting
Agreement") pursuant to which each party agreed to vote its shares of Common
Stock as directed by holders of a majority of shares of Common Stock held by the
parties. Erekesef owns 8,000,000 shares of Common Stock and Erekesef has been
advised and believes that Angard owns 2,377,093 shares of Common Stock
(including 300,000 shares of Common Stock subject to options exercisable within
60 days).
As described in Item 6, on April 29, 1998, Erekesef entered into an
agreement, dated as of April 6, 1998 to sell the shares of Global One Common
Stock held by it. Consummation of such agreement is subject to certain
conditions, and there can be no assurance that such transaction will be
consummated. Subject to the successful consummation of such agreement, Erekesef
is currently considering the acquisition of additional shares of Common Stock,
the disposition of shares of Common Stock, and the nomination and election of
additional persons to serve on the Board of Directors of the Company; however,
Erekesef has not entered into any agreements with respect to the foregoing, or
identified potential additional directors of the Company. Except as set forth
above, Erekesef has no plans of proposal which relate or would result in any
transaction, change or event specified in clauses (a) through (j) of Item 4 of
Schedule 13D. However, Erekesef reserves the right to propose or undertake or
participate in any of the foregoing actions in the future.
Page 4 of 6
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PAGE 5 OF 6
ITEM 5. INTEREST IN SECURITIES OF ISSUER
Item 5 is hereby amended in its entirety as follows:
(a) Amount beneficially owned by Erekesef: 10,377,093
Percent of Class: 50.9%
(b) Number of shares as to which such person has:
<TABLE>
<S> <C> <C>
(i) Sole power to vote or to
direct the vote: 0
(ii) Shared power to vote or
to direct the vote: 10,377,093
(iii) Sole power to dispose of
or direct the disposition of: 8,000,000
(iv) Shared power to dispose of
or direct disposition of: 0
</TABLE>
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
Item 6 is hereby amended in its entirety as follows:
Erekesef acquired the Common Stock pursuant to the Share Exchange
Agreement described in Item 4.
On December 10, 1997, Erekesef and Joseph C. Angard ("Angard") entered
into the Voting Agreement described in Item 3, pursuant to which each party
agreed to vote its shares of the Common Stock as directed by holders of a
majority of the Common Stock held by the parties. The Agreement has a term of
one year.
On April 29, 1998, Erekesef entered into an agreement, dated as of April
6, 1998, to transfer all shares of Common Stock held by it, as well as its
rights under the Share Exchange Agreement and the Voting Agreement
(Collectively, the "Global Shares") to GOGO Holdings, Inc., a Delaware
corporation wholly owned by 2d Interactive, Inc., a Delaware corporation ("2d"),
in exchange for $1,640,000 in cash and Common Stock of 2d representing 15% of
the outstanding Common Stock of 2d. Both the amount of cash and shares of 2d to
be received by Erekesef are subject to adjustment in certain circumstances. The
sale is scheduled to be consummated no later than July 28, 1998.
Erekesef has no other contracts, arrangements, understandings or
relationships with respect to the Common Stock required to be described pursuant
to Item 6 of Schedule 13D.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit A: Stock Purchase and Sale Agreement dated as of April 6, 1998,
by and between Erekesef Securities Limited, 2d Interactive,
Inc. and GOGO Holdings, Inc.
Page 5 of 6
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PAGE 6 OF 6
SIGNATURE
After reasonable inquiry, to the best of my knowledge and belief, I
certify that the information set forth in this statement of beneficial ownership
on Schedule 13D is true, complete and correct.
DATED: May 5, 1998 Signed: Erekesef Securities Limited
/S/ KEVIN BERMEISTER
-----------------------------------
Kevin Bermeister, President
Page 6 of 6
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STOCK PURCHASE AND SALE AGREEMENT
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April 6, 1998
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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PAGE
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ARTICLE I: PURCHASE AND SALE OF THE GLOBAL ONE SHARES.......................................1
SECTION 1.01 Purchase and Sale of the Global One Shares.............................1
SECTION 1.02 Purchase Price.........................................................2
SECTION 1.03 Advance and Further Advance............................................2
SECTION 1.04 Closing................................................................2
SECTION 1.05 Substitution of Shares; Repurchase.....................................4
SECTION 1.06 Further Assurances.....................................................5
SECTION 1.07 Adjustment to Consideration............................................5
SECTION 1.08 Initial Advance, Disclosure and Termination Option.....................5
ARTICLE II: REPRESENTATIONS AND WARRANTIES OF THE SELLER....................................6
SECTION 2.01 Title to and Ownership of Global One Shares............................6
SECTION 2.02 Authority to Enter into and Perform this Agreement.....................7
SECTION 2.03 Purchase For Investment................................................7
SECTION 2.04 Organization and Qualification; Ownership; Residence...................7
SECTION 2.05 Seller Power and Authority.............................................7
SECTION 2.06 Compliance with Law....................................................7
SECTION 2.07 Share Exchange and Voting Agreement; Disclosure........................7
SECTION 2.08 Accredited Investor....................................................8
SECTION 2.09 Opportunity to Investigate; Review of Documents and 2d and Buyer.......8
SECTION 2.10 Experience and Suitability.............................................8
SECTION 2.11 No Need for Liquidity..................................................8
SECTION 2.12 Legends................................................................8
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF BUYER AND 2D.................................9
SECTION 3.01 Organization and Qualification.........................................9
SECTION 3.02 Buyer's Power and Authority; Authorization.............................9
SECTION 3.03 Validity, Etc..........................................................9
SECTION 3.04 Capital Structure of 2d: Issuance of Securities.......................9
SECTION 3.05 Subsidiaries of 2d....................................................10
SECTION 3.06 Financial Statements..................................................10
SECTION 3.07 Affiliate Transactions................................................10
SECTION 3.08 Absence of Changes....................................................10
SECTION 3.09 Tax Returns and Audits................................................10
SECTION 3.10 Pending Litigation or Proceedings.....................................10
SECTION 3.11 Employee Benefits.....................................................11
SECTION 3.12 Investment Representation; Restrictions Upon Resale...................11
SECTION 3.13 Compliance with Law...................................................11
ARTICLE IV: COVENANTS......................................................................11
SECTION 4.01 Best Efforts Cooperation..............................................11
SECTION 4.02 Global One's Business Prior to Closing................................11
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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PAGE
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<S> <C> <C>
SECTION 4.03 Notice of Changes and Litigation......................................11
SECTION 4.04 No Negotiations.......................................................12
SECTION 4.05 Non-Competition.......................................................12
SECTION 4.06 Publicity.............................................................13
SECTION 4.07 Board Representation..................................................13
SECTION 4.08 Registration Rights...................................................14
SECTION 4.09 Co-Sale...............................................................15
SECTION 4.10 Private Placement; Public Offering....................................15
SECTION 4.11 Charter and By-Law Amendments.........................................17
SECTION 4.12 Rights of First Refusal...............................................17
SECTION 4.13 Management Agreements.................................................18
SECTION 4.14 Capitalization of Global One..........................................18
SECTION 4.15 Additional Covenants of 2d and Buyer..................................19
SECTION 4.16 Relationship Between 2d and Global One................................20
SECTION 4.17 Loan to Global One....................................................20
SECTION 4.18 Lawsuit Committee.....................................................21
ARTICLE V: CONDITIONS TO THE BUYER'S AND 2d's OBLIGATIONS..................................21
SECTION 5.01 Representations and Warranties True...................................21
SECTION 5.02 Performance...........................................................21
SECTION 5.03 Escrow Agreement......................................................22
SECTION 5.04 Opinion of the Seller's Counsel.......................................22
SECTION 5.05 Closing Documents.....................................................22
ARTICLE VI: CONDITIONS TO THE SELLER'S AND BERMEISTER'S OBLIGATIONS........................22
SECTION 6.01 Representations and Warranties True...................................22
SECTION 6.02 Performance...........................................................22
SECTION 6.03 Consents..............................................................22
SECTION 6.04 No Actions, Suits or Proceedings......................................22
SECTION 6.05 No Material Adverse Change............................................23
SECTION 6.06 Co-Sale Agreement.....................................................23
SECTION 6.07 Escrow Agreement......................................................23
SECTION 6.08 Opinion of the Buyer's and 2d's Counsel...............................23
SECTION 6.09 Closing Documents.....................................................23
SECTION 6.10 Amendments Certificate of Incorporation or By-Laws....................23
ARTICLE VII: INDEMNIFICATION...............................................................23
SECTION 7.01 Survival..............................................................23
SECTION 7.02 Indemnification.......................................................24
SECTION 7.03 Separate Counsel; Notice, Etc.........................................24
SECTION 7.04 Claims for Indemnification............................................24
SECTION 7.05 Limit of Recourse to the Buyer and 2d.................................25
ARTICLE VIII: TERMINATION..................................................................25
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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<S> <C> <C>
SECTION 8.01 Termination...........................................................25
SECTION 8.02 Effect of Termination.................................................26
ARTICLE IX: MISCELLANEOUS..................................................................27
SECTION 9.01 Notices...............................................................27
SECTION 9.02 Entire Agreement......................................................28
SECTION 9.03 Modifications and Amendments..........................................28
SECTION 9.04 Waivers and Consents..................................................28
SECTION 9.05 Assignment............................................................29
SECTION 9.06 Parties in Interest; Knowledge of the Seller; Affiliates..............29
SECTION 9.07 Governing Law.........................................................29
SECTION 9.08 Arbitration...........................................................29
SECTION 9.09 Severability..........................................................30
SECTION 9.10 Interpretation........................................................30
SECTION 9.11 Headings and Captions.................................................30
SECTION 9.12 Enforcement...........................................................30
SECTION 9.13 Reliance..............................................................31
SECTION 9.14 Expenses..............................................................31
SECTION 9.15 No Broker or Finder...................................................31
SECTION 9.16 Confidentiality.......................................................31
SECTION 9.17 Costs and Attorneys' Fees.............................................31
SECTION 9.18 Counterparts..........................................................32
</TABLE>
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EXHIBITS
1.04(c) - Escrow Agreement
1.04(a)(3) -A- Assignment of Share Exchange Agreement
1.04(a)(3)(B) - Assignment of Voting Agreement
1.08 - Confidentiality Agreement
4.09 - Co-Sale Agreement
5.04 - Opinion of Kinsella, Boesch, Fujikawa & Towle, LLP
6.08 - Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC
iv
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This Stock Purchase and Sale Agreement (this "Agreement") entered into this
6th day of April, 1998 and effective on April 29, 1998 by and among GOGO
Holdings, Inc. (the "Buyer"), a Delaware corporation and a wholly-owned
subsidiary of 2d Interactive, Inc., also a Delaware Corporation ("2d"), 2d and
Erekesef Securities Limited, a British Virgin Islands corporation (including any
permitted assignee, the "Seller").
W I T N E S E T H :
WHEREAS the Seller is the record and beneficial owner of 8,000,000 shares
of the Common Stock, $.01 par value per share (the "Global One Shares"), of
Global One Distribution & Merchandising, Inc., a Delaware corporation ("Global
One"), and, under a certain Voting Agreement dated as of December 10, 1997 with
Joseph and Susan Angard (the "Angards") currently controls the voting of at
least 2,000,000 additional shares of Global One Common Stock (the "Voting
Agreement");
WHEREAS the Seller and Global one are parties to a certain Share Exchange
Agreement dated as of October 24, 1997 (the "Share Exchange Agreement"), which
agreement provides by its terms that the rights of the Seller thereunder are
assignable by the Seller;
WHEREAS 2d has undertaken a private placement of its equity securities,
which may be consummated prior to, contemporaneously with or after the Closing
(as hereinafter defined) (the "Private Placement");
WHEREAS the Seller, desires to sell the Global One Shares, the Buyer
desires to purchase the Shares and 2d desires to have the Buyer purchase the
Global One Shares, upon the terms and conditions set forth herein; and
WHEREAS the Buyer, 2d and the Seller desire to enter into certain other
agreements for their mutual benefit;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, intending to be legally bound, the Buyer, 2d and the Seller hereby
agree as follows:
ARTICLE I: PURCHASE AND SALE OF THE GLOBAL ONE SHARES
SECTION 1.01 Purchase and Sale of the Global One Shares On the basis of the
representations, warranties and undertakings, and on the terms and subject to
the conditions set forth in this Agreement, the Seller shall sell the Global One
Shares to the Buyer, and the Buyer shall purchase the Global One Shares from the
Seller, free and clear of all adverse claims, charges, pledges, liens, security
interests, other interests of third parties and other encumbrances and
restrictions of every kind and nature ("Claims"), other than those imposed
pursuant to this Agreement, the Voting Agreement, the Share Exchange Agreement
and securities laws of general application.
1
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SECTION 1.02 Purchase Price Subject to the provisions of Section 1.04, the
total purchase price for the Global One Shares (the "Purchase Price") shall be
$3,890,000, or $3,490,000, if at the election of the Buyer the Purchase Price is
paid all in cash, as provided in Section 1.04(b)(2)(iii), consisting of the
following and payable as follows:
(a) $75,000 by bank check shall be paid by the Buyer to the Seller on the
date hereof (the "Effective Date") and subject to the terms set forth
in Section 1.08 hereof, as the initial advance of a cash portion of
the purchase price, which amount shall be non-refundable to the Buyer
except under the circumstances provided for in Section 8.02(b) (the
"Initial Advance").
(b) Subject to the Termination Option (as defined in Section 1.08 herein),
$215,000, by wire transfer or bank check, shall be paid by Buyer to
the Seller on the third full business day following the Delivery Date
(as defined in Section 1.08 herein) , as an advance of a cash portion
of the Purchase Price, which amount shall be non-refundable to the
Buyer except under the circumstances provided for in Section 8.02(b)
(the "Advance");
(c) Reserved
(d) $1,350,000 by wire transfer or bank check, shall be paid by the Buyer
to the Seller, at the Closing, of which $860,000 shall be delivered by
the Buyer directly to the Escrow Agent (as defined in Section
1.04(c)); and
(e) That number of shares of capital stock of 2d determined as provided in
Section 1.04(b)(2)(i) or Section 1.04(b)(2)(ii), as applicable, shall
be issued and delivered to the Seller, at the Closing, subject to a
possible post-closing repurchase thereof at the election of the Buyer
for cash in the aggregate amount of $2,250,000 plus the dollar values
pursuant to the schedule set forth in Section 1.07 or a substitution
thereof for shares of capital stock of 2d of the class to be sold and
issued to investors in the Private Placement, as more particularly
provided in Section 1.05 (the shares so issued and any shares so
substituted are hereinafter referred to as the "2d Stock"), or,
alternatively $1,850,000, by wire transfer or bank check, shall be
paid to the Sellers at the Closing, if, at the election of the Buyer
the Purchase Price is all cash, as provided in Section
1.04(b)(2)(iii), at the Closing.
SECTION 1.03 Advance and Further Advance The Initial Advance, the Advance
and Further Advance shall be non-refundable to the Buyer, except under certain
circumstances as provided in Section 8.02(b) upon termination of this Agreement.
SECTION 1.04 Closing Subject to the satisfaction or waiver of each of the
conditions set forth in Articles V and VI of this Agreement, the closing of the
transactions contemplated hereby (the "Closing") shall take place at the offices
of Kinsella, Boesch, Fujikawa & Towle, LLP in Los Angeles, California at such
time and on such date as may be agreed upon by the parties as soon as
practicable after the date hereof and upon the satisfaction or waiver of all
conditions to Closing as provided herein; provided that the parties hereto shall
use their reasonable best efforts to cause the Closing to occur on or before
July 28, 1998 (such time and date being hereinafter called the "Closing Date").
At the Closing:
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(a) The Seller shall deliver or cause to be delivered to the Buyer the
following:
(1) Stock certificates representing the Global One Shares registered
in the names of the Seller, duly endorsed to the Buyer or
accompanied by duly executed stock assignments separate from such
certificates and sufficient to transfer ownership of the Shares
to the Buyer;
(2) If the Private Placement shall have been consummated theretofore,
except as provided in Section 4.10, any registration rights,
stockholders, co-sale and/or other agreements (other than the
applicable investment or securities purchase agreement) entered
into by the Buyer and the investors in the Private Placement,
executed by the Seller in each instance;
(3) Assignments of the Share Exchange Agreement and the Voting
Agreement in the forms attached hereto as Exhibits 1.04(a)(3)-A
and 1.04(a)(3)-B, duly executed on behalf of the Seller;
(4) The certificates required by Sections 5.01 and 5.02; and
(5) The opinion of counsel required by Section 5.04.
(b) The Buyer shall pay and deliver, and 2d shall cause the Buyer to pay
and deliver, the following to the Seller:
(1) $1,350,000 or $1,550,000, representing the balance of the cash
portion of the Purchase Price after taking into account the
Advance and the Further Advance by wire transfer of same day
federal funds, of which $860,000 shall be delivered by the Buyer
directly to the Escrow Agent;
(2) (i) Stock certificates representing 71,631 shares of 2d Common
Stock, which represents fifteen percent (15%) of the outstanding
shares of 2d Common Stock as of the date hereof, unless the
Private Placement shall have been consummated theretofore, or,
(ii) if the Private Placement shall have been consummated
theretofore, except as provided in Section 4.10, stock
certificates representing that number of shares of the capital
stock of 2d of the class sold and issued to investors in the
Private Placement (rounded upward to the nearest whole share)
which, on the basis of the price paid for such securities
pursuant to the Private Placement, then have a value of
$2,250,000 plus the additional dollar values pursuant to the
schedule set forth in Section 1.07 and, except as provided in
Section 4.10, any registration rights, stockholders, co-sale
and/or other agreements (other than the applicable investment or
securities purchase agreement) entered
3
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into by 2d and such investors, in each case executed by or on
behalf of all of the parties thereto other than the Seller, or,
(iii) if 2d so elects by written notice to the Seller not less
than two (2) business days prior to the Closing Date, $1,850,000
plus the amount determined in accordance with Section 1.07, by
wire transfer of same day federal funds;
(3) The certificates required by Sections 6.01 and 6.02; and
(4) The opinion of counsel required by Section 6.08.
(c) In addition to the $860,000 referred to in Sections 1.02(d) and
1.04(b)(1), the 2d Stock delivered to Seller pursuant to paragraph (b)
of this Section shall be immediately transferred to Kinsella, Boesch,
Fujikawa & Towle, LLP and Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C. (the "Escrow Agent") under an escrow agreement (the
"Escrow Agreement") substantially in the form attached hereto as
Exhibit 1.04(c). The 2d Stock shall thereafter be released from escrow
in accordance with the terms of the Escrow Agreement.
SECTION 1.05 Substitution of Shares; Repurchase
(a) In the event that, at the Closing, 2d issues and delivers to the
Seller 2d Stock consisting of shares of 2d Common Stock pursuant to
Section 1.04(b)(2)(i) and thereafter the Private Placement is
consummated, the Seller shall, at the closing of the Private
Placement, re-deliver the stock certificates representing such shares
of 2d Common Stock and 2d shall issue and deliver to the Seller in
substitution therefor stock certificates representing that number of
shares of 2d capital stock of the kind being issued and sold in the
Private Placement which, on the post-Private Placement valuation of
2d, then have a value of $2,250,000 plus any additional stock
certificates deliverable pursuant to the schedule set forth in Section
1.07 herein.
(b) Notwithstanding the foregoing, 2d may elect, by written notice to the
Seller, to repurchase the 2d Stock from the Seller at any time within
sixty (60) days after the Closing Date in consideration of the payment
of $2,250,000 plus the amount determined pursuant to Section 1.07 by
wire transfer or bank check. In such a case, the closing of such
repurchase shall be held at such time on such date not less than three
(3) and not more than ten (10) days after such notice by 2d to the
Seller as 2d shall set forth in such notice, at the offices of
Kinsella, Boesch, Fujikawa & Towle, LLP or, if such law firm is not
agreeable thereto, at the offices of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., in Boston, Massachusetts. At such a closing,
the Seller shall deliver to 2d Stock certificates representing the 2d
Stock being repurchased, together with duly executed stock assignments
separate from certificates sufficient to transfer title to such 2d
Stock of 2d, free and clear of all Claims, and 2d shall deliver
payment therefor or evidence of payment in the case of payment by wire
transfer of same day federal funds.
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SECTION 1.06 Further Assurances Further, at any time and from time to time
after the Closing Date, at the request of 2d and without further consideration,
the Seller, on the one hand, and the Buyer and 2d, on the other hand, shall
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation as may be reasonably requested in order to more
effectively transfer, convey and assign to the Buyer and to confirm the Buyer's
title to and ownership of the Global One Shares, and the Buyer and 2d shall
perform the reciprocal for the Seller with respect to the 2d Stock, if any,
received by the Seller hereunder.
SECTION 1.07 Adjustment to Consideration In the event that the gross
proceeds to 2d from the Private Placement are at least $7,500,0000, Buyer shall
deliver to Seller Stock Certificates representing that number of additional
shares of capital stock of 2d of the class sold and issued to investors in the
Private Placement in accordance with the following schedule (or, in the event of
a repurchase of the 2d Stock from Seller or a cash payment pursuant to Section
1.04(b)(2)(iii), the payment price therefor shall be increased by the amount set
forth below in parentheses):
(a) upon a pre-Private Placement valuation determined by the Board of
Directors of 2d less than $15.0 million, no additional shares (or
$0.00);
(b) upon a pre-Private Placement valuation determined by the Board of
Directors of 2d between $15.0 and $17.49 million, that number of
shares purchasable with $675,000 (or $675,000);
(c) upon a pre-Private Placement valuation determined by the Board of
Directors of 2d between $17.50 and $19.99 million, that number of
shares purchasable with $900,000 (or $900,000);
(d) upon a pre-Private Placement valuation determined by the Board of
Directors of 2d between $20.00 and $24.99 million, that number of
shares purchasable with $1,125,000 (or $1,125,000); or
(e) upon a pre-Private Placement valuation determined by the Board of
Directors of 2d above $25 million, that number of shares purchasable
with $1,350,000 (or $1,350,000).
SECTION 1.08 Disclosure and Termination Option
(a) The Seller acknowledges that it possesses, and hereby informs Buyer
of, additional material information concerning the business,
operations, properties, assets, liabilities, condition (financial and
otherwise) and prospects of Global One, which the Seller is obligated
to keep confidential. Subject to a mutually satisfactory
confidentiality agreement having been executed and delivered among the
Buyer, 2d and Global One, substantially in the form of Exhibit 1.08
hereto, with such amendments, deletions and other changes as such
three parties thereto may agree (the "Confidentiality Agreement"),
which the Seller shall request Global One to negotiate in good faith
to enter into, as soon as practicable after the date hereof, the
Seller shall deliver and communicate to 2d and Buyer all material
non-public information related to Global One in its possession other
than the Excluded Global Information (as hereinafter defined) (the
"Global Information"); provided, however, it is mutually understood
and agreed that Global Information shall not include information which
relates to discussions, negotiations or other matters relating to
existing or prospective contracts between 2d and Global One (the
"Excluded Global Information").
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The date upon which the Buyer receives the Global Information shall be
defined as the "Delivery Date." Upon receipt of the Global
Information, 2d and Buyer shall have three full business days
following the Delivery Date to evaluate the Global Information. After
evaluation of the Global Information, 2d shall have the unconditional
right to terminate the Agreement (the "Termination Option"). In the
event that 2d wishes to exercise the Termination Option, 2d shall
inform the Seller no later than 5:00 p.m. Eastern Standard Time on the
third full business day following the Delivery Date via telephone call
followed by fascimile transmission that it will terminate the
Agreement; thereafter, the Termination Option shall expire and cease
to have any force or effect.
(b) Buyer acknowledges that it has reviewed all reports filed by Global
One with the Securities and Exchange Commission (the "Commission").
Except for the information to be provided on the Delivery Date, the
Seller has heretofore disclosed to 2d all material information which
it possesses regarding the business, operations, properties, assets,
liabilities, condition (financial or otherwise) and prospects of
Global One and regarding the Seller, the Global One Shares and the
transactions contemplated hereby (excluding information that is
included in reports filed by Global One with the Commission and the
Excluded Global Information). Except as disclosed in the Global
Information or in Global One's reports filed with the Commission, to
the Seller's knowledge, since the date of the last of such reports
which have been filed, there has not occurred any material adverse
change in the business, operations, properties, assets, liabilities,
condition (financial or otherwise) or prospects of Global One. The
Seller does not represent or warrant that any of the information filed
with the Commission or provided to the Seller by Global One (and
provided to the Buyer hereunder) is true and correct (although the
Seller represents and warrants that it has no knowledge that any of
such information is not true and correct as of the date hereof).
ARTICLE II: REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Buyer and 2d to enter into this Agreement and to
consummate the transactions contemplated hereby, the Seller hereby represents
and warrants to the Buyer and 2d that:
SECTION 2.01 Title to and Ownership of Global One Shares The Seller owns
the Global One Shares, of record and beneficially, free and clear of all Claims
and to the knowledge of the Seller, the Global One Shares represent
approximately forty percent of the total issued and outstanding Shares of Global
One, on a non-diluted basis (i.e., not subject to dilution as a result of the
issuance of shares of Global One pursuant to options, warrants or other rights
disclosed by Global One in reports it has filed with the Commission or by the
Seller to the Buyer not later than the Delivery Date). There is no restriction
affecting the ability of the Seller to transfer the record title and beneficial
ownership of the Global One Shares to the Buyer and, upon delivery thereof to
the Buyer in accordance with the provisions of this Agreement and of payment of
the Purchase Price, the Buyer will acquire good record title to and sole
beneficial ownership of the Global One Shares, free and clear of all Claims,
other than those imposed pursuant to this Agreement, the Voting Agreement and
securities laws of general application.
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SECTION 2.02 Authority to Enter into and Perform this Agreement The Seller
has the full legal right and power and all authority and approval required by
law to enter into this Agreement and to perform their obligations hereunder. The
Seller has duly executed and delivered this Agreement, and this Agreement is the
legal, valid and binding obligation of the Seller, enforceable against it in
accordance with its terms. On the Closing Date, neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, nor the performance of this Agreement in compliance with
its terms and conditions by the Seller will (a) conflict with or result in any
violation of any charter document, by-law, judgment, decree, order, statute or
regulation applicable to the Seller or the Global One Shares, or any breach of
any agreement to which the Seller is a party or by or to which the Seller or any
of the Global One Shares is bound or subject, or constitute a default
thereunder, or result in the creation of any Claim on, or with respect to, any
of the Global One Shares, or (b) result in any violation of, or be in conflict
with, or constitute a default under, any agreement, instrument, judgment, order,
decree, law, rule or regulation applicable to the Seller or the Global One
Shares.
SECTION 2.03 Purchase For Investment The Seller is acquiring any 2d Stock
which it is receiving, as provided in Section 1.04(b)(2), for investment, for
its own account and not with a view to the distribution thereof in violation of
the Securities Act or applicable state securities laws. The Seller understands
and accepts that such 2d Stock will not have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and may not be sold
or transferred without such registration or an exemption therefrom. The Seller
understands and accepts that the certificates for such 2d Stock will bear an
appropriate legend to the foregoing effect. The Seller is sufficiently
experienced in financial and business matters to be capable of evaluating the
risks of investment in the 2d Stock and to make an informed decision relating
thereto. The Seller has the financial capability for making the investment, can
afford a complete loss of the investment, and the investment is a suitable one
for the Seller. The Seller is an "accredited investor" within the meaning of
Rule 501 of the General Rules and Regulations of the Commission under the
Securities Act. Prior to the execution and delivery of this Agreement, the
Seller has had an opportunity to ask questions of and receive answers from
representatives of 2d concerning the business, operations, properties, assets,
liabilities, condition (financial and otherwise) and prospects of 2d deemed by
them to be adequate.
SECTION 2.04 Organization and Qualification; Ownership; Residence The
Seller is a corporation duly incorporated, validly existing and in good standing
under the laws of the British Virgin Islands.
SECTION 2.05 Seller Power and Authority The Seller has the corporate power
and authority to own and hold its assets and to carry on its business of being a
securities holding company as currently conducted.
SECTION 2.06 Compliance with Law The Seller has not failed to comply with,
and is not in default under, any law, ordinance, rule, regulation, judgment,
order or decree applicable to it or any of its assets which would impair the
ability of the Seller to consummate the transactions contemplated hereby.
SECTION 2.07 Share Exchange and Voting Agreement; Disclosure The Share
Exchange Agreement and Voting Agreement are valid and binding agreements, in
full force and effect, and enforceable against the parties thereto in accordance
with their terms. To the Seller's knowledge, without having conducted any
additional investigation or inquiry in connection herewith, the
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representations and warranties of Global One set forth in the Share Exchange
Agreement and the representations and warranties of Joseph and Susan Angard
under the Voting Agreement are true and correct and no party to any of such
agreements is in default of any of his, her or its obligations thereunder. Other
than the Global One Shares and rights under the Share Exchange Agreement and the
Voting Agreements, neither the Seller nor any affiliate of Seller has any
ownership of or other rights in or with respect to shares of capital stock of
Global One or of or in any of the assets of Global One.
SECTION 2.08 Accredited Investor The Seller is an "accredited investor" as
such term is defined in Regulation D promulgated under the Securities Act of
1933, as amended (the "Act").
SECTION 2.09 Opportunity to Investigate; Review of Documents and 2d and
Buyer Prior to the execution of this Agreement, the Seller has had the
opportunity to (i) read in full this Agreement and its Exhibits, and has
thoroughly reviewed, become familiar with and understands the Agreement and its
Exhibits; and (ii) ask questions of, and receive answers from, representatives
of 2d and the Buyer concerning the terms and conditions of this transaction, and
the finances, operations, business and prospects of 2d and the Buyer. The Seller
has also had the opportunity to obtain additional information necessary to
verify the accuracy of information furnished about 2d and the Buyer.
Accordingly, the Seller has independently evaluated the risks of purchasing the
2d Stock, and the Seller is satisfied that the Seller has received from the
Buyer and 2d information with respect to all matters that the Seller considers
material to the Seller's decision to make this investment.
SECTION 2.10. Experience and Suitability The Seller is qualified by the
Seller's knowledge and experience in financial and business matters to evaluate
the merits and risks of an investment in the 2d Stock and to make an informed
decision relating thereto. The Seller has the financial capability for making
the investment and protecting the Seller's interests, and can afford a complete
loss of the investment. The investment is a suitable one for the Seller.
SECTION 2.11 No Need for Liquidity The Seller is aware that the Seller
will be unable to liquidate the Seller's investment readily in case of an
emergency and that the 2d Stock being purchased may have to be held for an
indefinite period of time. The Seller's overall commitment to investments which
are not readily marketable is not excessive in view of the Seller's net worth
and financial circumstances and the purchase of the 2d Stock will not cause such
commitment to become excessive. In view of such facts, the Seller acknowledges
that the Seller has adequate means of providing for the Seller's current needs,
anticipated future needs and possible contingencies and emergencies and has no
need for liquidity in the investment in the 2d Stock. The Seller is able to bear
the economic risk of this investment.
SECTION 2.12 Legends The Seller understands that until the 2d Stock has
been registered under the Securities Act and applicable state securities laws
each certificate representing the 2d Stock shall bear a legend substantially
similar to the following;
The securities represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by any person,
including a pledgee, in the absence of an effective registration statement
for the shares under the Securities Act of 1933, as amended, and applicable
state securities laws or unless an exemption from such registration is
available.
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ARTICLE III: REPRESENTATIONS AND WARRANTIES OF BUYER AND 2D
As an inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, the Buyer and 2d, jointly and
severally, represent and warrant to the Seller as follows:
SECTION 3.01 Organization and Qualification Each of the Buyer and 2d is a
corporation duly incorporated, 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, if any, it purports to
own and hold under lease and to carry on its business as now being conducted and
as currently 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, operations, properties, assets, liabilities, condition (financial or
otherwise) or prospects of 2d. 2d has heretofore delivered to the Seller
accurate and complete copies of the Buyer's and 2d's certificates of
incorporation and by-laws, together, in each case, with any amendments thereto
to the date thereof.
SECTION 3.02 Buyer's Power and Authority; Authorization Each of the Buyer
and 2d has the corporate power and authority to execute, deliver and perform
this Agreement and the other agreements and documents provided for herein or
contemplated hereby. The execution, delivery and performance of this Agreement
and the other documents provided for herein or contemplated hereby have been
approved by the Boards of Directors of the Buyer and 2d and by 2d as the sole
stockholder of the Buyer and no other corporate action is required to be taken
by the Buyer or 2d to authorize them to execute and deliver this Agreement. This
Agreement, and each of the other agreements, documents and instruments to be
executed and delivered by the Buyer or 2d pursuant hereto have been duly
executed and delivered by, and constitute the valid and binding obligation of
Buyer or 2d, as the case may be, enforceable against Buyer or 2d in accordance
with their terms.
SECTION 3.03 Validity, Etc. Neither the execution and delivery of this
Agreement and the other agreements and documents provided for herein or
contemplated hereby, the consummation of the transactions contemplated hereby or
thereby, nor the performance of this Agreement and such other agreements in
accordance with the terms and conditions hereof and thereof, will: (i) conflict
with or result in any breach of any certificate of incorporation, bylaw,
judgment, decree, order, statute or regulation applicable to the Buyer, 2d or
the 2d Stock (ii) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority or
other third party (iii) result in a breach of or default (or give rise to any
right of termination, cancellation or acceleration) under any law, rule or
regulation or any judgment, decree, order, governmental permit, license or order
or any of the terms, conditions or provisions of any contract, mortgage,
indenture, note, license, agreement or other instrument to which the Buyer or 2d
is a party or (v) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Buyer, 2d or the 2d Stock which would materially
impair the Buyer's ability to consummate the transactions contemplated hereby.
SECTION 3.04 Capital Structure of 2d: Issuance of Securities The authorized
and outstanding capital stock of 2d is as set forth on Schedule 3.04 hereto. All
outstanding shares of such capital stock are
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validly issued, fully paid and non-assessable. Except as set forth on Schedule
3.04, there do not exist any other authorized or outstanding securities,
options, warrants, calls, commitments, rights to subscribe for or other
instruments, agreements or rights of any character exercisable for, 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 2d ("Rights").
Schedule 3.04 sets forth a description of the material terms of all Rights. The
issuance and sale of the 2d Stock to the Seller has been duly authorized and if,
when and as delivered to the Seller, the 2d Stock will be duly and validly
issued and outstanding, fully paid and non-assessable and will be free and clear
of all Claims, other than those imposed pursuant to this Agreement and
securities laws of general application.
SECTION 3.05 Subsidiaries of 2d. Schedule 3.05 sets forth a list of all
entities in which 2d has an equity or profit interest (each a "Subsidiary"). The
Company owns 100% of the capital stock of each Subsidiary. Except for the
Subsidiaries, 2d does not hold any equity or profit interest in any other
entities.
SECTION 3.06 Financial Statements 2d has provided to the Seller complete
and accurate copies of 2d consolidated financial statements for the one year
period ended December 31, 1997 (the "2d Financial Statements"). The 2d Financial
Statements, subject to normal year-end adjustments and the absence of footnotes,
(i) have been prepared from and on the basis of, and are in accordance with, the
books and records of 2d and in accordance with generally accepted accounting
principles applied on a basis consistent with prior accounting periods; and (ii)
fairly present the financial condition of 2d as of the date of the 2d Financial
Statements and the results of its operations for the period therein specified.
There are no material undisclosed liabilities which should be disclosed in the
2d Financial Statements pursuant to generally accepted accounting principles.
SECTION 3.07 Affiliate Transactions Except as set forth on Schedule 3.07,
2d 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 9.06).
SECTION 3.08 Absence of Changes Except as disclosed on Schedule 3.08 or in
the documents and other information referred to thereon, since December 31,
1997, there has not occurred any material adverse change on an overall net basis
in the business, operations, properties, assets, liabilities, condition
(financial or otherwise) or prospects of 2d.
SECTION 3.09 Tax Returns and Audits 2d has filed all tax returns and
reports required to be filed by it with federal and state tax authorities and
paid all taxes, if any, due thereunder. 2d has no unpaid tax liabilities except
as adequately reserved against in the 2d Financial Statements or as have arisen
in the ordinary course of business since November 30, 1997 and which are not
required to be paid, on as estimated or otherwise, since such date. Without
limiting the generally of the foregoing, 2d has paid all employment withholding
taxes required to be paid by it to date.
SECTION 3.10 Pending Litigation or Proceedings Except as disclosed on
Schedule 3.10, there is no pending or, to the best knowledge of 2d, threatened
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 2d, its properties, assets
or business, nor any facts which constitute a valid basis for any thereof, which
has had, is having or is reasonably likely to have a
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material adverse effect on the business, operations, properties, assets,
liabilities, condition (financial or otherwise) or prospects of 2d.
SECTION 3.11 Employee Benefits 2d 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 4.06(a) of
ERISA, and no "reportable event" within the meaning of Section 4.043 (b) of
ERISA, has occurred with respect to any employee benefit plan of 2d; and all
employee benefit plans of 2d have been established and operated in full
compliance with all applicable laws, rules and regulations.
SECTION 3.12 Investment Representation; Restrictions Upon Resale 2d shall
acquire the Global One Shares only for 2d's own account, for investment and not
with a view to distribution thereof in violation of the Securities Act or
applicable state securities laws. 2d acknowledges that the Global One Shares
have not been registered under the Securities Act of 1933 and can be transferred
only if so registered or if an exemption from registration is available. 2d 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 Global One Shares.
SECTION 3.13 Compliance with Law Neither the Buyer nor 2d has failed to
comply with, or is in default under, any law, ordinance, rule, regulation,
judgment, order or decree applicable to it or its assets which would impair the
ability of the Buyer or 2d to consummate the transactions contemplated hereby.
ARTICLE IV: COVENANTS
The Buyer, 2d and the Seller covenant and agree as follows:
SECTION 4.01 Best Efforts Cooperation Each of the Buyer, 2d and the Seller
shall use his or its respective reasonable best efforts in good faith to cause
to be satisfied all conditions to the others' obligations to consummate the
transactions contemplated hereby to be satisfied, to the end that the
transactions contemplated hereby will be fully and timely consummated.
Additionally, the Seller shall use reasonable best efforts to attend two to
three prospective investor meetings in connection with the Private Placement.
Without limiting the generality of the foregoing, the Seller shall use its
reasonable best efforts to obtain and furnish to 2d, or cause to be obtained and
furnished to 2d, such information regarding Global One in connection with 2d's
due diligence investigation thereof as 2d may reasonably request.
SECTION 4.02 Global One's Business Prior to Closing The Seller shall use
its reasonable best efforts to cause the Seller and its representatives to cause
Global One to conduct its business pending the Closing in a prudent manner and
in the ordinary course of business. 2d shall conduct its business pending the
Closing in a prudent manner and in the ordinary course of business.
SECTION 4.03 Notice of Changes and Litigation At any time prior to the
Closing, the Seller shall notify 2d of any material adverse change in the
business, operations, properties, assets, liabilities, condition (financial or
otherwise) or prospects of Global One as soon as they, or either of them, become
or becomes aware that any such change has occurred or is reasonably likely to
occur. Similarly, at any time prior to the Closing, 2d shall notify the Seller
of any material adverse change in the business,
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operations, properties, assets, liabilities, condition (financial or otherwise)
or prospects of 2d as soon as 2d becomes aware that any such change has occurred
or is reasonably likely to occur. At any time prior to the Closing, each of the
parties hereto shall also notify the other parties hereto as soon as such party
becomes aware of any lawsuits, claims, proceedings or investigations which are
threatened or commenced against or by such party or any of the other parties
hereto or any of their respective affiliates, directors, officers, employees,
consultants, agents or representatives, relating to the Shares or otherwise to
the Seller, Global One, 2d or the transactions contemplated hereby.
SECTION 4.04 No Negotiations Until June 1, 1998, or the earlier termination
of this Agreement in accordance with its terms, the Seller shall not, directly
or indirectly, initiate or engage in discussions or negotiations with, or
provide any information to, any person or entity regarding the possible sale,
pledge or grant of rights with respect to any of the Global One Shares or any
other matter inconsistent with the consummation of the transactions contemplates
hereby or the possible sale, pledge or grant of rights with respect to any of
the shares of Common Stock, $0.01 par value per share, of Global One held by the
Seller, or any similar transaction.
SECTION 4.05 Non-Competition Except to the extent the public policy of any
state applicable hereto renders the provisions of this Section 4.05
unenforceable, the Seller hereby agrees that, until the date (the "Disposition
Date") that the Seller, together with its affiliates, owns less than one-half of
the 2d Stock issued to the Seller pursuant hereto (or securities of 2d issued in
exchange therefor) and for a period of two years following the end of such time
or the time of the Seller's irrevocable surrender of all rights to which it is
otherwise entitled by reason of its owning not less than one-half of 2d Stock
issued to the Seller pursuant hereto, not to engage or permit their affiliates
to engage, directly or indirectly, in any business competitive with the business
of computer-based media kiosk advertising in connection with poster sales;
provided that, after the Disposition Date or the date the Seller irrevocably
surrenders the rights to which it is otherwise entitled by reason of holding not
less than one-half of the 2d Stock issued to the Seller pursuant hereto, the
restrictions set forth in the preceding clauses of this Section 4.05 shall apply
for the ensuing two years only within the United States of America. In the event
that Bermeister desires to enter into the business of computer-based media kiosk
advertising in connection with poster sales in Australia, 2d shall enter into
good-faith discussions with Bermeister related to such business, it being
understood and agreed that 2d and Bermeister will negotiate in good faith the
terms and conditions under which 2d would provide rights, know-how and
cooperation for the conduct of such business in Australia by Bermeister under an
agreement with 2d; provided that, if Bermeister and 2d do not conclude such an
agreement after such good-faith discussions, Bermeister shall be permitted to
conduct such business independently of 2d. Except to the extent that the public
policy of any state applicable hereto renders such provisions unenforceable, the
Seller acknowledges and accepts that the provisions of this Section 4.05 are
reasonable and valid in geographical and temporal scope and in all other
respects. Subject to the provisions of this Section 4.05 being rendered
unenforceable by any such public policy, if any court determines that any of
such restrictive covenants, or any part thereof, is invalid or unenforceable,
the remainder of such restrictive covenants shall not be affected thereby and
shall be given full effect, without regard to the invalid or unenforceable
portions; provided that, if any court determines that any of such provisions or
any part thereof, is invalid or unenforceable because of the duration or
geographic scope of such provision, such court shall have the power to reduce
the duration or geographic scope of such provision, as the case may be, and, in
its reduced form, such provision shall then be valid and enforceable.
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SECTION 4.06 Publicity Between the date hereof and the Closing Date, each
of the Buyer, 2d and the Seller agrees that, except as required by applicable
federal and state securities laws and regulations, he or it or any of their
affiliates: (a) will make no public announcement or filing regarding the
transactions contemplated hereby without the prior written consent of the other,
provided however, 2d may make communications related to the transactions
contemplated hereby without the consent of Seller in connection with the Private
Placement, (b) will respond to all inquiries regarding the transactions
contemplated hereby by stating that it is its policy not to comment on such
matters, (c) will institute reasonable procedures to restrict knowledge of the
transactions contemplated hereby to those who need to know, and (d) will use his
or its best efforts to ensure that no person who has knowledge regarding the
transactions contemplated hereby through him or it will trade in the securities
of Global One or, if 2d's securities are then publicly traded, 2d. In the event
the Seller, or 2d determines that public disclosure, by announcement or the
making of a filing, of the transactions contemplated hereby is necessary in
public documents required to be filed by any of them or by Global One or
pursuant to the exception in the preceding sentence, it agrees to notify the
others of such party's intention to make or cause to be made such disclosure and
provide the others with the text of the proposed disclosure reasonably in
advance of its release to the public and to consult with the others regarding
the proposed disclosure.
SECTION 4.07 Board Representation
(a) At the Closing, unless the Purchase Price is, at the election of the
Buyer, paid all in cash, as provided in Section 1.04(b)(2)(iii),
Seller shall have the right to Board representation proportionate to
the ownership percentage represented by its holdings relative to the
total outstanding shares of 2d Stock, calculated on a non-diluted
basis (as hereinabove defined) and rounded downward to the nearest
whole number but not less than one ("Proportionate Representation");
provided, however, such representation shall be by Mark Dyne ("Dyne")
or Kevin Bermeister ("Bermeister") or any other person designated by
the Seller and approved by 2d each in its complete discretion.
Thereafter, so long as the Seller continues to hold not less than
one-half of the 2d Stock issued to the Seller pursuant hereto, the
Seller will be entitled to at least one seat on the Board of Directors
of 2d, and at the request of the Seller, 2d shall hold meetings of its
Board of Directors not less frequently than four times a year, at
which management of 2d shall discuss 2d's performance, prospects and
strategies. Until the Disposition Date, 2d shall also cause Dyne,
Bermeister or a designee of the Seller approved by 2d to be nominated
as a member of the Board of Directors of 2d as one of the nominees
nominated by 2d's Board of Directors, and shall use its reasonable
best efforts to cause Dyne, Bermeister or a designee of the Seller
approved by 2d to be elected as such. So long as the Seller is
entitled to Board representation, Seller shall also be entitled to
proportionate representation, as determined by the first sentence of
this Section 4.07(a), on each committee of the Board of Directors and
on the Board of Directors and each committee of each subsidiary of 2d.
At least one of Dyne, Bermeister or the designee of the Seller
approved by 2d shall initially hold a Board seat with the longest
remaining term prior to the next election of Directors, if the 2d
Board of Directors is divided into classes of Directors having
multiple-year terms expiring in successive years. Notwithstanding the
foregoing, in the event of a transfer of shares of 2d Stock issued to
the Seller pursuant hereto and of the rights of the Seller granted
hereunder other than an assignment in accordance with Section 9.05 of
this Agreement, the Seller's right to one or more Board seats and
related rights shall terminate,
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and the Board representative(s) of the Seller shall resign forthwith
or, failing such resignation, shall be subject to removal by the vote
of the 2d stockholders in which event the Seller hereby agrees to vote
the 2d Stock in the same proportion as the other 2d stockholders cast
their votes, or to the extent provided in the By-laws, and in
accordance with applicable law, by a majority vote of the Board of
Directors in which the Seller shall direct its representative(s) on
the Board of Directors not to vote.
(b) The foregoing provisions of this Section 4.07 are subject to the
provisions of Section 4.10.
SECTION 4.08 Registration Rights
(a)(i) From the date on which 2d first becomes eligible to use Form S-3 (or
such other form as the Commission may from time to time prescribe for such
purpose), until the third anniversary of the date on which 2d first becomes
eligible to use Form S-3 (or such other form as the Commission may from time to
time prescribe for such purpose) for the resale of shares of its capital stock
by holders thereof or the Seller becomes eligible to resell the 2d Stock
pursuant to subsection 144(k) of Rule 144 of the General Rules and Regulations
of the Commission, the Seller shall have the right to require 2d to file with
the Commission a single registration statement on Form S-3 (or such other form)
covering all or such portion of the 2d Stock as the Seller then determines and
notifies 2d it desires to resell (the "Resale Registration Statement") and to
use its reasonable best efforts to cause the Resale Registration Statement to
become effective 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 on which
the Seller shall become entitled to resell the 2d Stock pursuant to subsection
(k) of such Rule 144; in the event 2d proposes to register an underwritten
offering of its Common Stock for its own account under the Securities 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 the Seller proposes to effect an
underwritten offering of the 2d Stock, 2d and the Seller shall enter into an
underwriting agreement in customary form with the underwriters of recognized
national or regional standing selected by the Seller and reasonably acceptable
to 2d.
(ii) Notwithstanding the foregoing, in the event of a material development
in the business of, or otherwise related to, 2d which 2d determines, with the
advice of counsel, requires it to suspend the offering covered by the Resale
Registration Statement until public disclosure is made of such material
development, 2d shall notify the Seller of such suspension and the Seller shall
cease using the prospectus included in the Resale Registration Statement until
forty-eight hours following the public disclosure of such material development.
2d shall promptly publicly 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 as determined by its Board of Directors or if,
with the advice of counsel, it is required to do so under applicable law or in
the exercise of 2d's Board of Directors' fiduciary duties; provided that such
delay shall not exceed five (5) business days without the consent of the Seller
which, shall not be unreasonably withheld.
(iii) 2d shall pay the registration filing fee and legal costs of the 2d's
counsel's related to the preparation of the Resale Registration Statement, and
2d shall also pay all expenses related to 2d's preparation and filing of reports
to the Commission and all other documents of the Buyer
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incorporated by reference into the Resale Registration Statement, including the
fees and expenses of 2d's counsel in responding to comments of the Commission
relating to the Resale Registration Statement, including but not limited to the
documents which have been incorporated by reference into the Resale Registration
Statement.
(b) If, at any time or from time to time, 2d determines to register the
offer and sale of its equity securities for its own account or the account of
any other stockholder(s) of 2d, other than a registration relating to an
employee benefit plan (or the resale of securities acquired pursuant thereto) or
a transaction pursuant to Rule 145 of the Commission's General Rules and
Regulations, 2d shall include in such registration statement such number of
shares of the 2d Stock as the Seller shall elect by notice to 2d in writing
(which election may be rescinded at any time prior to the sale of such
securities) within twenty (20) business days following receipt by the Seller of
notice from 2d of such registration; provided that, if the offering covered by
such registration is underwritten, it shall be a condition of the inclusion in
such underwritten offering of shares of the 2d Stock as to which the Seller
shall have made such election that the Seller shall have entered into an
underwriting agreement in customary form with the underwriters selected by 2d or
such other stockholder(s) for such offering. If the managing underwriter of such
offering determines that the inclusion in such underwritten offering of all or
any portion of the 2d Stock as to which the Seller has made such election would
be detrimental to the offering of the equity securities being offered by 2d or
such other stockholder(s), the number of shares of such 2d Stock as to which the
Seller has made such election to be included in such underwritten offering shall
be limited pari passu with the equity securities of 2d of all other stockholders
of 2d which are proposed to be included in the underwritten offering.
(c) All registration expenses, including the fees and expenses of 2d's
counsel, incurred in connection with the registrations contemplated by this
Section 4.08 shall be borne by 2d, but all direct selling expenses of the Seller
(including broker's fees and underwriting commissions proportionate to the 2d
Stock of the Seller included therein) and the legal fees and expenses of the
Seller's counsel shall be borne by the Seller. In connection with any such
registration statement, the Seller shall promptly furnish 2d with such
representations, information, consents and indemnifications regarding the Seller
and the 2d Stock proposed to be included therein and the method of distribution
of such 2d Stock as shall be necessary and/or customary for inclusion in such
registration statement. In addition in the case of an underwritten offering, the
Seller shall deliver into the custody of the managing underwriter, the stock
certificates representing such 2d Stock as the seller proposes to be included
therein, under a customary custody agreement and power-of-attorney.
(d) The foregoing provisions of this Section 4.08 are subject to the
provisions of Section 4.10.
SECTION 4.09 Co-Sale The stockholders of the Buyer who are currently
members of 2d's management and who are named on Schedule 4.09 (the "Management
Stockholders") and the Seller shall enter into a Co-Sale Agreement in the form
attached hereto as Exhibit 4.09. The foregoing provisions of this Section 4.09
are subject to the provisions of Section 4.10.
SECTION 4.10 Private Placement; Public Offering
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(a) As a condition of the applicability of the purchase price paid in the
Private Placement for determining the number of shares of 2d capital
stock which the Seller is entitled to receive as the non-cash portion
of the Purchase Price, not more than one-half of the equity securities
sold in the Private Placement shall be sold to pre-existing
stockholders of 2d, affiliates of pre-existing stockholders of 2d or
affiliates of 2d and investors who have an existing or prospective
material commercial relationship with 2d.
(b) In the event the condition set forth in the preceding subsection (a)
of this Section 4.10 is not satisfied and the Seller and 2d do not
agree upon the valuation of the securities to be delivered to Seller
(the "Valuation")within three (3) business days after the date of the
closing of the Private Placement, the Valuation shall be determined by
a single arbitrator who shall be jointly selected by 2d and the Seller
or, if they shall not agree on such selection within ten (10) business
days after the date of the closing of the Private Placement, such
determination and the resulting determination of the number of shares
of 2d Stock to be issued to the Seller shall be made by three
arbitrators, one of whom shall be selected by each of the Seller and
2d and the third of whom shall be selected by agreement of the two
arbitrators so selected by the Seller and 2d. All such arbitrators
shall be accountants who are partners in one or more nationally
recognized accounting firms or investment bankers employed by
nationally or regionally recognized investment banking firms who are
experienced in performing company valuations. In the case of such a
determination by three arbitrators, the applicable post-Private
Placement valuation of 2d shall be the average of such valuations
determined by the two of such arbitrators whose valuations are closest
to one another. The parties shall use good faith efforts to provide
each other and the arbitrators all information they possess bearing on
the Valuation.
(c) If the Private Placement is consummated, the conditions set forth in
the first sentence of this Section 4.10 are satisfied, and the
purchasers of securities of 2d in the Private Placement are granted
registration rights with respect to such securities, then the Seller
shall enter into the agreement(s) granting such rights on a pari passu
basis with such purchasers and the provisions of such agreement(s)
shall then supersede the provisions of Section 4.08, which shall
thereafter be of no further force or effect. Similarly, if the
purchasers of such securities in the Private Placement are granted
co-sale or tag-along rights or any other rights vis-a-vis any other
stockholders of 2d, then the Seller shall enter into the agreement(s)
granting such rights on a pari passu basis with such purchasers and
such agreement(s) shall then supersede the provisions of Section 4.09,
which shall thereafter be of no further force or effect.
(d) Notwithstanding the provisions of any of Sections 4.07 and 4.09 or the
foregoing provisions of this Section 4.10 to the contrary, in the
event that 2d consummates an initial public offering (an "IPO") of its
equity securities, the rights granted to the Seller under Sections
4.07 and 4.09, if otherwise then applicable, shall lapse and be of no
further force or effect.
(e) In addition, if an investor or a group of affiliated investors
acquires greater than twenty-five percent of the securities sold in
the Private Placement, and if the Seller notifies 2d within ten (10)
days after the date of closing of the Private Placement that, as a
result of
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the concentration of ownership by such investor's or group's
acquisition of greater than twenty-five percent of the securities sold
in the Private Placement, the Seller believes that the value of the 2d
Stock issued to the Seller pursuant hereto is less than the pro rata
value of stock sold in the Private Placement, then the Valuation of
the 2d Stock otherwise issuable to the Seller pursuant hereto shall be
finally and conclusively determined by a single arbitrator selected in
accordance with the terms and procedures set forth in paragraph (b) of
this Section 4.10. If the value of the securities otherwise issuable
to the Seller pursuant hereto, as so determined, is less than
$2,250,000, then 2d shall forthwith issue to the Seller an additional
amount of such securities which will have a value, when held by the
Seller, equal to such shortfall in value below $2,250,000.
SECTION 4.11 Charter and By-Law Amendments At or prior to the Closing, 2d
covenants that it will amend its Certificate of Incorporation or its By-laws, as
applicable, in order to provide Seller the rights set forth on Schedule 4.11
attached hereto. In the event of any repeal of the provisions set forth in
Schedule 4.11, 2d hereby agrees to continue to provide to Seller the rights set
forth in Schedule 4.11, which are hereby incorporated by reference, until the
Disposition Date.
SECTION 4.12 Rights of First Refusal
(a) The Seller and all Stockholders of 2d whose terms of investment
provide for rights of first refusal shall have the right of first
refusal to purchase all or any part of their pro rata shares of Equity
Securities, as defined below, that a member of the Senior Management
(persons holding Vice Presidential positions or positions of greater
seniority with 2d), may from time to time propose to sell after the
date of this Agreement, and the members of Senior Management and all
such stockholders of 2d who have given reciprocal rights to the Seller
shall have a right of first refusal to purchase all or any part of
their pro rata share of all Equity Securities that the Seller may from
time to time propose to sell after the date of this Agreement. The pro
rata share of a holder of such rights shall be calculated as the
percentage of Equity Securities held by the holder in relation to all
Equity Securities held by the stockholders of 2d. The term "Equity
Securities" shall mean the following securities held by Senior
Management the Seller or (i) any Common Stock, Preferred Stock or
other capital stock of 2d, (ii) any security convertible, with or
without consideration, into any Common Stock, Preferred Stock or other
capital stock (including any option to purchase such a convertible
security) of 2d, (iii) any security carrying any option, warrant or
other right to subscribe to or purchase any Common Stock, Preferred
Stock or other capital stock of 2d or (iv) any option, warrant or
other right to purchase shares of Common Stock, Preferred Stock or
other capital stock of 2d. The foregoing pro rata rights shall be
determined on a non-diluted basis (i.e., without giving affect to the
exercise of any rights to acquire Common Stock or Preferred Stock of
2d through the exercise of options, warrants, rights of exchange or
other similar rights other than the exercise of rights to acquire
securities held pursuant to options granted pursuant to the Company's
stock option plan to its executive officers holding the title of vice
president or higher).
(b) If any member of Senior Management proposes to sell any Equity
Securities, it shall give written notice to the Seller of the terms
and conditions upon which the member of Senior
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Management proposes to sell the same. The Seller shall have ten (10)
days from the giving of such notice to agree to purchase all or a
portion of the Equity Securities from the member of Senior Management
selling Equity Securities and stating therein the quantity of Equity
Securities to be purchased. In addition, failure to exercise such
right of first refusal within such ten (10) day period shall waive all
rights of first refusal with respect to such sale. If the Seller
proposes to sell any Equity Securities, it shall comply with the same
conditions set forth in the preceding provisions of this Section
4.12(b) vis-a-vis to members of Senior Management.
(c) If less than all of the eligible participants elect to purchase their
pro rata share of the Equity Securities, then the selling party shall
promptly notify in writing the participants who do so elect and shall
offer such participants the right to acquire such unsubscribed shares.
Such participants shall have five (5) days after receipt of such
notice to notify the other eligible participants of their election to
purchase all or a portion thereof of the unsubscribed shares. If the
participants fail to exercise in full the rights of first refusal, the
selling party shall have ninety (90) days thereafter to sell the
Equity Securities in respect of which the participants' rights of
first refusal were not exercised, at a price and upon the terms and
conditions specified in the notice to the participants pursuant to
subsection (b) hereof. If the selling party has not sold such Equity
Securities within such ninety day period, the selling party shall not
thereafter sell any Equity Securities, without first offering such
securities in the manner provided above.
(d) The rights of first refusal provided for in this Section 4.12 shall
terminate upon the earlier of (i) seven years after the date hereof,
(ii) the effectiveness of a registration statement under the
Securities Act for a public offering of 2d's equity securities having
an aggregate offering price to the public of not less than $7,000,000,
(iii) the Disposition Date, or (iv) any consolidation or merger of 2d
with or into any other corporation or other entity or person, or any
other corporate reorganization, in which the stockholders of 2d
immediately prior to such consolidation, merger or reorganization, own
less than 50% of the combined voting power of 2d or its successor
immediately after such consolidation, merger or reorganization. An
event described in the immediately preceding clause (iv) shall be
deemed a "Change of Control" for purposes of this Agreement, including
Schedule 4.11 hereto.
SECTION 4.13 Management Agreements 2d shall use its reasonable best efforts
to cause Dominic Ianno, Lewis Chester, Rick Weiler, and Rosanna Giacalone to
enter into management agreements, the material terms of which are set forth on
Schedule 4.13.
SECTION 4.14 Capitalization of Global One The Seller is not aware of any
plan or proposed agreement or transaction relating to the issuance of particular
securities or any securities to a particular investor pursuant to which Global
One has issued or will issue additional securities or has engaged or will engage
in a recapitalization which has resulted or will result in the Global One Shares
representing less than forty percent of the outstanding capital stock of Global
One on a non-diluted basis (as hereinabove defined). In the event of any
offering of debt or equity securities by Global One, Seller shall use best
efforts to provide to 2d the right to participate in any such offering, either
by transferring to 2d any preemptive or other rights it has or acquires as a
shareholder of Global One,
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or, if such rights are not transferable, by exercising such rights for the
account of, and at the expense of, 2d; provided that (a) Seller shall not be
required to advance funds or to subject itself to any potential loss (including
any potential Section 16 liability), (b) 2d shall advance to Seller sufficient
funds to compensate Seller for all out of pocket costs including Section 16
liabilities to be incurred by Seller in acquiring any such securities or
providing to 2d the right to acquire such securities, and (c) if the transaction
contemplated by this Agreement does not close for any reason, Seller shall have
the right (but not the obligation) to repurchase from 2d all such securities, at
2d's cost therefor.
SECTION 4.15 Additional Covenants of 2d and Buyer 2d and Buyer covenant and
agree with Seller that, unless otherwise consented to in writing by the Seller,
2d and the Buyer shall:
(a) Operate and conduct its business in the ordinary course of
business, and use reasonable efforts to maintain its business and
properties.
(b) Accounting; Financial Statements
(i) maintain a system of accounting established and administered
in accordance with generally accepted accounting principles
consistently applied, and shall set aside on its books all such proper
reserves as shall be required by generally accepted accounting
principles.
(ii) deliver to the Seller:
(A) Within 30 days after the end of each monthly accounting
period in each fiscal year of 2d, a consolidated balance sheet of 2d and
its subsidiaries and at the end of each such period, and consolidated
statements of operations and shareholders' equity (deficit) for each such
period and for the period from the beginning of the current fiscal year to
the end of such monthly period, and the corresponding periods of the
previous fiscal year, accompanied by a certificate of an officer of 2d
certifying that such financial statements have been prepared from and on
the basis of, and are in accordance with, the books and records of 2d and
with generally accepted accounting principles applied on a basis consistent
with prior accounting periods; are true, correct, complete and fairly and
accurately present the financial condition of 2d as of the date of each
such financial statement and the results of its operations for the periods
therein specified.
(B) Within 90 days after the end of each fiscal year of 2d,
a consolidated balance sheet of 2d and its subsidiaries as at the end of
such year and consolidated statements of operations and shareholders'
equity (deficit) and changes in consolidated financial position of 2d for
such year, all in reasonable detail and accompanied by a report of 2d's
certified public accountants that such financial statements have been
audited in accordance with generally accepted auditing standards, that it
is the opinion of 2d's certified public accountants that such financial
statements present fairly, in all material respects, the financial
position, results of operations and cash flows of 2d for the year, in
conformity with generally accepted accounting principles and in a
consistent manner with prior periods, and that 2d's certified public
accountants believe that their audit provides a reasonable basis for such
opinion.
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(C) Within ten (10) days after receipt by 2d, a copy of any
management letter delivered to 2d by its certified public accountants.
(D) Promptly (but in any event within ten (10) days) after
the discovery of any material adverse event or circumstance affecting 2d or
any of its subsidiaries (including, but not limited to, the filing of any
material litigation against 2d or any subsidiary or the discovery that 2d
or any subsidiary is not, or with the passage of time will not be, in
material compliance with any provision of this Agreement, its Certificate
of Incorporation, its Bylaws, or any other material agreement of 2d), a
notice specifying the nature and period of existence thereof, and what
actions 2d has taken and/or proposes to take with respect thereto.
(c) Inspection Rights 2d shall permit any authorized representative
designated by the Seller, at the Seller's expense, to visit and inspect any
of the properties of 2d or any of its subsidiaries, and to discuss its and
their affairs, finances and accounts with its and their officers or
employees; all at such reasonable times and as often as may be reasonably
requested; provided that such rights shall be exercised in a manner so as
not to materially and adversely disrupt the ordinary course of business of
2d or any of its subsidiaries.
(d) Affiliate Transactions Neither 2d nor any subsidiary shall enter
into any transaction with any director, officer, stockholder or any of
their affiliates other than transactions of a type which are in the
ordinary course of business and which are on terms no less favorable to 2d
or such subsidiary, as the case may be, than could be obtained from an
independent third party.
(e) Lapse of Rights In the event that at any time the Seller holds
less than one-half of the 2d Stock issued to the Seller pursuant hereto,
the provisions of this Section 4.15 (a), (c) and (d) shall thereupon and
forever cease to have any force or effect. In the event that at any time
the Seller ceases to hold 2d Stock, the provisions of this Section 4.15(d)
shall thereupon and forever cease to have any force or effect.
SECTION 4.16 Relationship Between 2d and Global One. 2d has advised
Erekesef that it has certain existing and potential commercial relationships
with Global One, 2d is aware of the conflict of interest that will exist between
2d and other shareholders of Global One with respect to transactions between 2d
and Global One; to the extent required by 2d's fiduciary duties as a stockholder
of Global One under Delaware law, 2d agrees that it will not attempt to
influence the terms of any such transactions through its shareholdings or
ability to nominate directors of Global One; and 2d agrees that it will seek the
advice of counsel regarding all material matters relating to the commercial
relationship between Global One and 2d and to its fiduciary obligations as a
shareholder of Global One and related competitive issues. The foregoing is not
intended to enlarge the obligations required of 2d by Delaware law as a
stockholder of Global One.
SECTION 4.17 Loan to Global One: Within seven business days (unless
otherwise agreed to by the Parties) of the Buyer furnishing the Advance to the
Seller, the Seller shall loan the Advance (the "Loan") to Global One
Distribution and Merchandising, Inc. ("Global One") in exchange for a 120 day
term secured subordinated promissory note at an annual interest rate of eight
(8) percent
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pursuant to an existing loan agreement between the Seller and Global One or in
exchange for a secured subordinated promissory note at an annual interest rate
of twelve (12) percent (or such lower rate as may be approved by Erekesef in its
sole discretion) which will provide for a single balloon payment of the of the
outstanding principal and interest at the expiration of a 120 day term. Such
notes shall be subordinated to the current secured indebtedness (including
future Safcor, Inc. advances) of Global One. Upon receipt by the Seller of the
full amount of the principal outstanding under the Loan, the Seller shall
deposit $100,000 with the Escrow Agent pursuant to the Escrow Agreement. Refusal
by the Seller to loan the Advance to Global One on the terms described above
shall constitute a material breach of the Agreement pursuant to Section
8.01(b)(iii) of the Agreement for which the Buyer shall be entitled to a refund
of the Advance pursuant to Section 8.02(b) of the Agreement.
SECTION 4.18 Lawsuit Committee: The Parties shall create or cause to be
created a committee comprised of the President of 2d, Dyne, acting as
representative of the Seller and the President of Global One (the "Lawsuit
Committee"), whose purpose shall be to approve strategic decisions and final
settlements regarding pending or threatened litigation against Global One and/or
its subsidiaries in connection with the creditors of OSP Publishing, Inc., a
subsidiary of Global One (the "Lawsuits"). A good faith vote based on the merits
and risks of particular Lawsuits by the majority of the members comprising the
Lawsuit Committee shall be required to approve such strategic decisions and
final settlements. Erekesef agrees that certain of the funds deposited into the
Escrow Account may be used to fund loans from Erekesef to Global One.
ARTICLE V: CONDITIONS TO THE BUYER'S AND 2d's OBLIGATIONS
The obligations of the Buyer to pay, and of 2d to cause the Buyer to pay,
the Purchase Price to the Seller on the Closing Date and to consummate the other
transactions contemplated hereby are subject to the satisfaction, on or before
the time of the Closing, of the following conditions, each of which may be
waived by 2d in its sole discretion:
SECTION 5.01 Representations and Warranties True All of the
representations and warranties of the Seller set forth in this Agreement,
including in any of the Schedules hereto or other agreements or documents
attached hereto or referred to herein or delivered pursuant hereto or in
connection with the transactions contemplated hereby shall be true and correct
as of the time of the Closing, as if made at and as of such time, in all
material respects unless qualified as to materiality by their terms, in which
case they shall be true and correct. On the Closing Date, the Seller shall have
executed and delivered to 2d a certificate, in form and substance reasonably
satisfactory to 2d and its counsel, to such effect.
SECTION 5.02 Performance The Seller shall have performed and complied with
all covenants and agreements contained herein required to be performed or
complied with by them prior to or at the Closing Date. The Seller shall have
executed and delivered to 2d a certificate, in form and substance reasonably
satisfactory to 2d and its counsel, to such effect and to the further effect
that all of the conditions set forth in this Article V have, to the best of
their knowledge, been satisfied.
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SECTION 5.03 Escrow Agreement The Escrow Agreement shall have been entered
into and shall be in full force and effect.
SECTION 5.04 Opinion of the Seller's Counsel The Buyer shall have received
the opinion of Kinsella, Boesch, Fujikawa & Towle, LLP, in substantially the
form attached hereto as Exhibit 5.08.
SECTION 5.05 Closing Documents The Seller shall have delivered the
certificates representing the Shares, duly endorsed to the Buyer or accompanied
by stock assignments separate from the certificates duly executed by the Seller
and sufficient to transfer ownership of the Shares to the Buyer, free and clear
of all Claims, and all of the resolutions, certificates, documents and
instruments required by this Agreement to be executed and delivered by the
Sellers shall have been so executed and delivered.
ARTICLE VI: CONDITIONS TO THE SELLER'S AND BERMEISTER'S OBLIGATIONS
The obligations of the Seller to sell the Shares to the Buyer and to
consummate the other transactions contemplated hereby, are subject to the
satisfaction, on or before the time of the Closing, of the following conditions,
each of which may be waived by the Seller in his discretion:
SECTION 6.01 Representations and Warranties True All of the representations
and warranties of the Buyer and 2d set forth in this Agreement, including in any
of the Schedules hereto or other agreements or documents attached hereto or
referred to herein or delivered pursuant hereto or in connection with the
transactions contemplated hereby shall be true and correct as of the time of the
Closing, as if made at and as of such time, in all material respects unless
qualified as to materiality by the terms, in which case they shall be true and
correct. On the Closing Date, the Buyer and 2d shall have executed and delivered
to Seller a certificate, in form and substance reasonably satisfactory to Seller
and its counsel, to such effect.
SECTION 6.02 Performance The Buyer and 2d shall have performed and complied
with all agreements contained herein required to be performed or complied with
by them prior to or at the time of the Closing, and the Buyer and 2d shall have
delivered a certificate to the Seller, in form and substance reasonably
satisfactory to the Seller and its counsel, to such effect.
SECTION 6.03 Consents All governmental approvals and consents of third
parties required to be received to prevent any material license, permit or
agreement relating to the business of 2d from terminating prior to its scheduled
termination, or any indebtedness of 2d from becoming due or being subject to
becoming due, in each case as a result of the consummation of the transactions
contemplated hereby, shall have been obtained.
SECTION 6.04 No Actions, Suits or Proceedings As of the Closing Date, no
action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity (other than the Seller or an affiliate of
the Seller) shall be pending or, to the knowledge of any of the parties to this
Agreement, threatened, before any court or governmental body to restrain,
prohibit, restrict or delay, or to obtain damages or a discovery order in
respect of this Agreement or the consummation of the transactions contemplated
hereby. No judgment, order or decree of any court or governmental body shall
have been issued restraining, prohibiting, restricting or delaying, the
consummation of the transactions
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contemplated by this Agreement. No insolvency proceeding of any character,
including, without limitation, bankruptcy, receivership, reorganization,
dissolution or arrangement with creditors, voluntary or involuntary, affecting
the Buyer or 2d shall be pending, and neither the Buyer nor 2d shall have taken
any action in contemplation of, or which would constitute the basis for, the
institution of any such proceedings.
SECTION 6.05 No Material Adverse Change No change shall have occurred since
the date hereof which has had, is having or is reasonably likely to have a
material adverse effect on 2d's business, operations, properties, assets,
liabilities, condition (financial or otherwise) or prospects, other than a
change which results, directly or indirectly, from the public announcement or
disclosure of the transactions contemplated hereby, and 2d shall have delivered
to the Seller a certificate dated the Closing Date and executed by its chief
executive officer and chief financial officer, to the effect that, to their best
knowledge, no such material adverse change has occurred.
SECTION 6.06 Co-Sale Agreement The Management Stockholders shall have
subscribed to the provisions of Section 4.09 by entering into an agreement with
2d and the Seller to the effect of such provisions, in substantially the form of
Exhibit 4.09.
SECTION 6.07 Escrow Agreement. The Escrow Agreement shall have been entered
into and shall be in full force and effect.
SECTION 6.08 Opinion of the Buyer's and 2d's Counsel. The Seller shall have
received from Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., an opinion
dated the Closing Date, in substantially the form attached hereto as Exhibit
6.08.
SECTION 6.09 Closing Documents. The Buyer, and the Escrow Agent in the case
of that portion thereof represented by the Further Advance, shall have delivered
the Purchase Price to the Sellers and all of the resolutions, certificates,
documents and instruments required by this Agreement to be executed and
delivered by the Buyer and/or 2d shall have been so executed and delivered.
SECTION 6.10 Amendments Certificate of Incorporation or By-Laws. 2d shall
have amended its Certificate of Incorporation or By-Laws in the manner described
in Schedule 4.11.
ARTICLE VII: INDEMNIFICATION
SECTION 7.01 Survival. All representations and warranties in this
Agreement, or in any instrument or document furnished in connection with this
Agreement or the transactions contemplated hereby, shall survive the Closing and
any investigation at any time made by or on behalf of any party for a period of
twelve (12) months after the Closing Date. All such representations and
warranties shall expire the date which is twelve (12) months after the Closing
Date, except that (a) claims, if any, asserted in writing prior to such date
identified as a claim for indemnification pursuant to this Article VII shall
survive until finally resolved and satisfied in full, and (b) claims, if any,
which are based upon fraud, which are based on Article IV hereof, which relate
to title to the Shares or which assert tax liability shall survive for the full
period of the applicable statute of limitations, and until finally resolved and
satisfied in full if asserted on or prior to such date or the end of such
period. All covenants and agreements contained herein shall survive until fully
performed in accordance with their terms.
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SECTION 7.02 Indemnification. Each of the parties hereto (jointly and
severally, in the case of the Buyer and 2d) (the "Indemnifying Parties" when
indemnification by them hereunder is required) agrees to indemnify, defend and
hold harmless the other, the other's affiliates, directors, officers, employees,
stockholders, consultants and representatives and the successors and assigns
thereof (the "Indemnified Parties") from, against and with respect to any claim,
liability, obligation, loss, damage, assessment, judgment, cost or expense
(including, without limitation, reasonable attorneys' and accountants' fees and
costs and expenses reasonably incurred in investigating, preparing, defending
against or prosecuting any litigation or claim, action, suit, proceeding or
demand) of any kind or character, arising out of or in any manner incident,
relating or attributable to:
(a) Any breach of any representation or warranty of such party
contained in this Agreement or in any certificate, instrument of transfer
or other agreement or document executed or otherwise made or given by such
party in connection with this Agreement;
(b) Any failure by such party to perform or observe, or to cause to be
performed or observed, in full, any covenant or agreement to be performed
or observed or caused to be performed or observed, by such party under this
Agreement or under any other agreement or documents executed and delivered
by such party in connection with this Agreement;
SECTION 7.03 Separate Counsel; Notice, Etc. If any indemnifiable event
under Section 7.02 may also entail claims for relief by a third party as to
which an Indemnified Party is not entitled to indemnification hereunder, such
Indemnified Party shall give the Indemnifying Party prompt notice thereof and
shall have the right, at such Indemnified Party's expense, to appoint separate
counsel to contest any such claim as to which such Indemnified Party is not
entitled to indemnification hereunder; provided that the failure to give such
notice shall not relieve any Indemnifying Party of the obligation to provide
indemnification hereunder for indemnifiable matters.
SECTION 7.04 Claims for Indemnification. In the event of the occurrence of
any event which any party hereto asserts is an indemnifiable event under this
Article VII, such party shall provide prompt notice to the other party or
parties asserted to be required to provide indemnification, specifying in
reasonable detail the facts and circumstances with respect to such claim and the
basis for which indemnification is available hereunder. If such event involves
the claim of any third party, the Indemnifying Party in such a case shall have
the right to control the defense or settlement of such claim; provided, however,
that (a) if the Indemnifying Party elects to exercise such rights, it shall
assume such defense by written notice to the Indemnified Party, (b) the
Indemnified Party shall be entitled to participate in the defense of such claim
at its own expense, (c) the Indemnifying Party shall obtain the prior written
consent of the Indemnified Party (which consent may be withheld in the sole and
absolute discretion of the Indemnified Party) before entering into any
settlement of such claim if, pursuant to or as a result of such settlement,
injunctive or other non-monetary relief would be imposed against the Indemnified
Party, (d) the Indemnifying Party shall not be entitled to control (but shall be
entitled to participate at its own expense in the defense of), and the
Indemnified Party shall be entitled to have sole control over, at the
Indemnifying Party's sole expense, the defense or settlement of any claim to the
extent such claim seeks an order, injunction or other equitable relief against
the Indemnified Party which, if successful, could materially interfere with the
business, operations, properties, assets, liabilities, condition (financial or
otherwise) or prospects of the Indemnified Party or any of the Indemnified
Party's affiliates, provided that the Indemnified Party shall provide written
notice to the Indemnifying Party of its election to assume control
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over the defense of such claim pursuant to this Section 7.04. If the
Indemnifying Party is entitled but fails to assume control over the defense of
any claim as provided in this Section 7.04, the Indemnified Party shall have the
right to defend and settle such claim at the Indemnifying Party's expense. The
Indemnifying Party shall promptly pay or reimburse the Indemnified Party for all
amounts paid or payable by the Indemnified Party for which the Indemnifying
Party is obligated to provide indemnification hereunder, without set-off for any
amount asserted by the Indemnifying Party to be owed to the Indemnifying Party
by the Indemnified Party. In the event that the Indemnifying Party shall be
obligated to indemnify the Indemnified Party pursuant to this Article VII, the
Indemnifying Party shall, upon payment of such indemnity in full, be subrogated
to all rights of the Indemnified Party with respect to the claim to which such
indemnification relates.
SECTION 7.05 Limit of Recourse to the Buyer and 2d.
1. (a) In any event, if 2d terminates this Agreement on the basis that
any of the conditions to the Buyer's and 2d's obligations to pay the
Purchase Price and to consummate the transactions contemplated hereby shall
not have been satisfied, or the Buyer and 2d otherwise fail to pay the full
Purchase Price and to consummate such transactions, the maximum recourse of
the Seller to the Buyer and/or 2d, under this Agreement or otherwise, shall
be the retention of the Advance and the Further Advance, which shall
constitute mutually agreed-upon liquidated damages owing by the Buyer and
2d to the Seller and Bermeister as a result of such termination. Recovery
for any claims, other than fraud, by the Buyer or 2d in which
indemnification is sought, shall be limited as set forth in the Escrow
Agreement, the form of which is attached hereto as Exhibit 1.03(b).
(b) The parties shall not bring any action, suit, arbitration or other
proceeding arising from this Agreement unless the damages alleged by the party
bringing the action, suit, arbitration or other proceeding exceed $400,000. In
no event shall any party be required to pay the first $400,000 in liabilities
recoverable by another party. The maximum aggregate liability for 2d and the
Buyer to the Seller resulting from any and all claims, actions, suits,
arbitrations and other proceedings arising from this Agreement shall be the
amount of the consideration being delivered by the Buyer to the Seller under
this Agreement, less $400,000. The maximum aggregate liability of the Seller to
2d and the Buyer resulting from any and all claims, actions, suits, arbitrations
and other proceedings arising from this Agreement shall be the $500,000 of funds
and the 2d Stock to be deposited in escrow with the Escrow Agent. Any amounts
recoverable by the Buyer or 2d against the Seller shall be paid in cash,
provided that at the option of the Seller up to 65% may be paid by delivery of
2d Stock valued at a per-share price equal to the greater of the amount paid by
Erekesef and the fair market value of such shares on the date the damages are
determined, established by the agreement of the parties or established by
arbitration as provided for in Section 4.10(b), with the remainder payable in
cash. Any amounts recoverable by the Seller shall be paid entirely in cash,
unless 2d and the Seller shall then otherwise agree.
ARTICLE VIII: TERMINATION
SECTION 8.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
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(a) By mutual written consent of the Seller's and 2d, duly authorized
by the Board of Directors;
(b) By 2d or the Seller if:
(i) any court of competent jurisdiction or other governmental
body shall have issued a judgment, order or decree, or taken
any other action restraining, enjoining or otherwise
prohibiting the limiting or delaying beyond July 28, 1998
the consummation of the transactions contemplated hereby;
provided that this Agreement shall not be terminated by a
party hereto pursuant to this clause if such court's or
other body's action is based on any action or failure to act
of such party;
(ii) the Closing has not occurred on or prior to July 28, 1998;
provided that this Agreement shall not be terminated by a
party if any such failure so to close is the result of any
action or failure to act of such party constituting breach
of any provision of this Agreement by such party;
(iii) the Seller, on the other hand, or 2d and/or Buyer, on the
other hand breaches any of his or its representations,
warranties, covenants or agreement hereunder a (breach by
the Buyer being deemed a breach by 2d for purposes of this
Section 8.01) and such breach is not cured not later than
the earlier of ten (10) business days after written
notification of such breach to the other party by the
terminating party or July 28, 1998; or
(iv) a condition to the obligation of the terminating party to
consummate the transactions contemplated hereby becomes
impossible to satisfy on or prior to July 28, 1998;
(c) By 2d, (i) by virtue of the fact that the Buyer fails to
consummate the transactions contemplated hereby for any reason even though
the conditions to its obligations to do so shall have been satisfied or
waived, and without notice to the Seller, or (ii) if 2d notifies the Seller
in writing that the Buyer will not consummate the transactions contemplated
hereby in any event.
(d) By 2d pursuant to the Termination Option set forth in Section 1.08
herein.
Upon the occurrence of any of the events set forth in this Section 8.01 and of a
determination of the notifying party to terminate this Agreement (other than
pursuant to Paragraph A hereof), written notice of such event shall forthwith be
given to the other parties to this Agreement, whereupon this Agreement shall
terminate.
SECTION 8.02 Effect of Termination. (a) Subject to Section 8.02(b), in the
event of the termination of this Agreement pursuant to Section 8.01, this
Agreement, except as hereinafter provided,
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shall forthwith become void and be of no further force or effect. Subject to the
provisions of Article VIII, nothing in this Section 8.02 shall relieve any party
to this Agreement, however, from liability for any breach of this Agreement
which shall have occurred prior to such termination; and, (b) in the event of
any such termination, the following provision shall nonetheless remain in full
force and effect: this Section 8.02 and Sections 1.02(a), 1.02(b), 1.02 (c),
1.03, 4.06, 7.01 through 7.05, inclusive, and 9.1 through 9.16, inclusive.
(b) Upon termination of this Agreement, the Seller shall be entitled to
retain the Initial Advance, the Advance and the Further Advance unless this
Agreement is terminated by Buyer or 2d upon a breach by the Seller pursuant to
Section 8.01(b)(iii) hereof, in which case the entire Advance and Further
Advance shall be repaid to Buyer; provided that the Initial Advance shall not be
repayable unless the Seller shall have breached any of its representations and
warranties set forth in Section 1.08, in which case the Initial Advance shall
also be repaid to the Buyer. Otherwise, the Initial Advance, the Advance and the
Further Advance shall be retained by the Seller (or with respect to the Further
Advance, if the Agreement is terminated prior to the payment, paid to the
Seller) as liquidated damages. The parties agree that it would be extremely
difficult or impractical to estimate the actual damages that would result from
the failure of 2d and the Buyer to consummate the transactions contemplated
hereby and that the retention of the Initial Advance, the Advance and the
Further Advance by the Seller as set forth above constitutes a reasonable
estimate of and agreed stipulation to such damages, and shall be the Seller's
sole recourse for the failure of 2d and the Buyer to consummate the transactions
contemplated hereby.
ARTICLE IX: MISCELLANEOUS
SECTION 9.01 Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by recognized
overnight courier, or (iv) sent by registered or certified mail, return receipt
requested, postage prepaid.
If to the Buyer or 2d:
2d Interactive, Inc.
186 South Street
Boston, MA 02111
Attn: President
Fax: (617) 574-7326
With a copy to:
Richard R. Kelly, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Fax: (617) 542-2241
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If to the Seller or Bermeister:
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
All notices, requests, consents and other communications hereunder shall be
deemed to have been (i) if by hand, at the time of the delivery thereof to the
receiving party at the address of such party set forth above, (ii) if made by
telex, telecopy or facsimile transmission, at the time that receipt thereof has
been acknowledged by electronic confirmation or otherwise, (iii) if sent by
overnight courier, on the next business day following the day such notice is
delivered to the courier service, or (iv) if sent by registered or certified
mail, on the fifth business day following the day such mailing is made.
SECTION 9.02 Entire Agreement. This Agreement, together with the Exhibits
and Schedules hereto and the other agreements and documents executed in
connection herewith and the Share Exchange Agreement and the Voting Agreement,
embodies the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof, and supersedes all prior or
contemporaneous oral or written agreements and understandings relating to the
subject matter hereof No statement, representation, warranty, covenant or
agreement of any kind not expressly set forth herein or therein shall affect, or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement.
SECTION 9.03 Modifications and Amendments. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by all
parties hereto.
SECTION 9.04 Waivers and Consents. No failure or delay by a party hereto in
exercising any right, power or remedy under this Agreement, and no course of
dealing between the parties hereto, shall operate as a waiver of any such right,
power or remedy of the party. No single or partial exercise of any right, power
or remedy under this Agreement by a party hereto, nor any abandonment or
discontinuance of steps to enforce any such right, power or remedy, shall
preclude such party from any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. The election of any remedy by a
party hereto shall not constitute a waiver of the right of such party to pursue
other available remedies. No notice to or demand on a party not expressly
required under this Agreement shall entitle the party receiving such notice or
demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand. The terms and provisions of this
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Agreement may be waived, or consent for the departure therefrom granted, only by
written document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
SECTION 9.05 Assignment. Neither this Agreement, nor any right hereunder,
may be assigned by any of the parties hereto without the prior written consent
of the other parties. Notwithstanding the foregoing, it is expressly agreed that
(a) the Seller may freely transfer the 2d Stock acquired hereunder (but not the
other rights hereunder), subject to applicable state and federal securities laws
and (b) if Seller transfers the Global One shares to Bermeister or to an entity
directly or indirectly controlled and majority-owned by Bermeister, the Seller
may assign this Agreement and all rights hereunder to such purchaser or
transferee on the condition that such purchaser or transferee agrees in writing
with 2d to become bound hereby (in which case, such purchaser or transferee
shall be deemed to be the "Seller" hereunder).
SECTION 9.06 Parties in Interest; Knowledge of the Seller; Affiliates. This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto and their permitted assigns, and nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement. Nothing in this
Agreement shall be construed to create any rights or obligations except among
the parties hereto, and no person or entity shall be regarded as a third-party
beneficiary of this Agreement. In any instance in which reference is made herein
to the "knowledge" of the Seller or that the Seller is "aware", such knowledge
or awareness shall be deemed to include the knowledge or awareness of Dyne or
Bermeister or of any of the other agents and representatives of the Seller who
are knowledgeable about or acting in connection with this Agreement and the
transactions contemplated hereby. Without limiting the foregoing, possession of
the Global Information by the Seller referred to in Section 1.07 shall include
material, non-public information related to Global One in the possession of Dyne
or Bermeister or any of their agents or representatives (except any Excluded
Global Information). For purposes of this Agreement, the term "affiliate" when
used with respect to a person or entity shall mean (a) any person or entity who
is an "affiliate" of such person or entity as defined in Rule 12b-2 of the
General Rules of the Commission under the Securities Exchange Act of 1934, as
amended, (b) any director, officer or partner of such person or entity or a
person who holds a similar position with any entity in which such person or
entity has a 10% or greater equity or profit interest, and (c) any family member
of a person referred to in clause (a) or clause (b). Notwithstanding the
foregoing, each of Dyne and Bermeister and their respective affiliates shall be
deemed an "affiliate" of the Seller for purposes of this Agreement, and any
action by Dyne or Bermeister or any of their respective affiliates which, if
committed by the Seller would constitute a breach of this Agreement by the
Seller shall be deemed a breach of this Agreement by the Seller.
SECTION 9.07 Governing Law. This Agreement and the rights and obligations
of the parties hereunder shall be construed in accordance with and governed by
the internal law of the State of Delaware, without giving effect to the conflict
of law principles thereof.
SECTION 9.08 Arbitration.
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(a) All disputes arising in connection with this Agreement, other than
matters pertaining to injunctive relief, shall be finally settled by arbitration
in the State of Delaware, in accordance with the rules (the "Arbitration Rules")
of the American Arbitration Association. Judgment on the award rendered by the
arbitration panel appointed as hereinafter provided (the "Arbitration Panel")
may be entered in any court of competent jurisdiction.
(b) Any party which desires to initiate arbitration proceedings may do so
by delivering written notice to the other parties (the "Arbitration Notice") in
accordance with the Arbitration Rules. Unless otherwise agreed by all parties
hereto, any dispute shall be resolved by a three-person arbitration panel.
(c) 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 Rules of Civil Procedure for the State of Delaware.
(d) 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 Delaware courts for such purpose.
SECTION 9.09 Severability. In the event that any court of competent
jurisdiction shall finally determine that any provision, or any portion thereof,
set forth in this Agreement shall be void or unenforceable in any respect, then
such provision shall be deemed limited to the extent that such court determines
it enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall determine any such provision, or portion thereof,
wholly unenforceable, the remaining provisions of this Agreement shall
nevertheless remain in full force and effect.
SECTION 9.10 Interpretation. The parties hereto acknowledge and agree that:
(i) each party and its counsel reviewed and negotiated the terms and provisions
of this Agreement and have contributed to its revision; (ii) the rule of
construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement;
and (iii) the terms and provisions of this Agreement shall be construed fairly
as to all parties hereto and not in favor of or against any party, regardless of
which party was generally responsible for the preparation of this Agreement.
SECTION 9.11 Headings and Captions. The headings and captions of the
various subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect, or be considered in construing or
interpreting the meaning or construction of any of the terms or provisions
hereof.
SECTION 9.12 Enforcement. Each of the parties hereto acknowledges and
agrees that the rights acquired by each party hereunder are unique and that
substantial immediate and irreparable damage would occur in the event that any
of the provisions of this Agreement to be performed by the other party were not
performed in accordance with their specific terms or were otherwise breached.
Accordingly, in addition to any other remedy to which the parties hereto are
entitled at law or in equity, each party hereto shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement by the other
party
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and to enforce specifically the terms and provisions hereof in any state
or federal court to which the parties have agreed hereunder to submit to
jurisdiction and which has jurisdiction over any such matter.
SECTION 9.13 Reliance. The parties hereto agree that, notwithstanding any
investigation of the affairs of any other party to this Agreement, the party so
investigating shall have the right to rely fully upon the representations and
warranties of the other party expressly set forth in this Agreement and on the
accuracy of any Schedule or Exhibit document attached hereto or referred to
herein or delivered by such other party pursuant to this Agreement.
SECTION 9.14 Expenses. Subject to the provisions of Section 4.08, Article
VII and Section 9.08, each of the parties hereto shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection with this Agreement and the transactions
contemplated hereby, whether or not the transactions contemplated hereby are
consummated.
SECTION 9.15 No Broker or Finder. Each of the parties hereto represents and
warrants to the other that no broker, finder or other financial consultant has
acted on its behalf in connection with this Agreement or the transactions
contemplated hereby in such a way as to create any liability. Each of the
parties hereto agrees to indemnify, defend and save the other harmless from and
against any claim or demand for commission or other compensation by any broker,
finder, financial consultant or similar agent claiming to have been employed by
or on behalf of such party and to bear the cost of legal expenses incurred in
defending against any such claim.
SECTION 9.16 Confidentiality. The Seller acknowledges and agrees, and shall
cause Dyne and Bermeister to agree in writing for themselves, that any
information or data which it (or they) has (have) acquired, or which it (they)
will acquire as a result of the exercise of rights under Sections 4.07, 4.08 and
4.15 or otherwise, regarding Global One or 2d not otherwise already in the
public domain, if any, was or will be, as the case may be, acquired in
confidence. The Seller hereby agrees, and agrees to cause Dyne and Bermeister to
agree in writing for themselves, not to divulge, communicate or disclose, except
as may be required by law or for the performance of this Agreement, or use to
the detriment of Global One or 2d or for the benefit of any other person or
persons, or misuse in any way, any such confidential information, including any
trade or business secrets of Global One or 2d and any technical or business
materials that are treated by Global One or 2d as confidential or proprietary,
including, without limitation, information (whether in written, oral or
machine-readable form) concerning: general business operations; methods of doing
business, servicing clients, client relations, and of pricing and making charge
for services and products; financial information, including costs, profits and
sales; marketing strategies; business forms developed by or for the disclosing
party; names of suppliers, personnel, customers, clients and potential clients;
negotiations or other business contacts with suppliers, personnel, customers,
clients and potential clients; form and content of bids, proposals and
contracts; the disclosing party's internal reporting methods; technical and
business data, documentation and drawings; software programs, however embodied;
manufacturing processes; inventions; techniques; and information obtained by or
given to Global One or 2d about or belonging to a third party and with respect
to which Global One or 2d is under a confidentiality obligation.
SECTION 9.17 Costs and Attorneys' Fees. If any action, suit, arbitration
proceeding or other proceeding is instituted arising out of this Agreement, the
prevailing party, in proportion to the degree to which such party prevails,
shall recover such party's costs, including, without limitation, the court
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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 rates of fees charged by
the attorneys performing such services.
SECTION 9.18 Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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IN WITNESS WHEREOF, the Buyer, 2d and the Seller have executed this
Agreement as of the day and year first above written.
ATTEST: GOGO HOLDINGS, INC.
/s/ LOUIS CHESTER By: /s/ DOMINICK A. IANNO
ATTEST: 2d INTERACTIVE, INC.
/s/ LOUIS CHESTER By: /s/ DOMINICK A. IANNO
ATTEST: EREKESEF SECURITIES LIMITED
- ---------------------------------- By: /s/ KEVIN BERMEISTER
33
