SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
DECEMBER 29, 1999
Date of Report
(Date of Earliest Event Reported)
AMERICAN INFLATABLES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 0-26943 95-4702570
--------------- ----------- --------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
947 NEWHALL STREET, COSTA MESA, CALIFORNIA 92627
(Address of principal executive offices)
(949) 515-8952
(Registrant's telephone number)
GLOBALOCK CORPORATION
860 Via de la Paz, Suite E-1
Pacific Palisades, CA 90272
(Former name and former address)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to a MERGER AGREEMENT AND PLAN OF REORGANIZATION ("Agreement")
GLOBALOCK CORPORATION, a Delaware corporation ("Acquisition"), CAN/AM MARKETING
GROUP, LLC, a California limited liability company ("Client") and the persons
listed in Exhibit A hereof (collectively the "Shareholders"), being the owners
of record of all of the issued and outstanding membership interests of Client.
The Agreement was adopted by the unanimous consent of the Board of Directors of
the Registrant and approved by the unanimous consent of the shareholders of the
Registrant on December 30, 1999. The Agreement was adopted by the unanimous
consent of the Board of Directors of Client on December 30, 1999 and approved by
the unanimous consent of the Shareholders on December 30, 1999.
Prior to the Agreement, the Registrant had 1,000,000 shares of common stock
outstanding. Pursuant to the Agreement, the Registrant exchanged 3,498,000
shares of its common stock for 3,498,000 membership interests of Client. After
the effect of the Agreement, the Registrant had a total of 4,498,000 shares of
its common stock outstanding.
The sole source of consideration used by the Shareholders to acquire their
respective interest in the Registrant was the exchange of their membership
interests for common stock of the Acquisition. The Agreement was structured to
provide the Shareholders with a capital gain deferral under applicable
California tax laws, rules and regulations.
On the effective date of the Agreement, the officers and two directors of
GLOBALOCK CORPORATION resigned and new officers and directors of the Registrant
were appointed. See "Management" below.
Effective as of the date of the Agreement, the Registrant changed its name to
"American Inflatables, Inc."
GLOBALOCK CORPORATION was formed to provide a method for a foreign or domestic
private company to become a reporting company whose securities would be
qualified for trading in the United States secondary market. GLOBALOCK
CORPORATION had no operations, revenues, material assets or liabilities.
Copies of the Agreement are filed as exhibits to this Form 8-K and are
incorporated in their entirety herein. The description of the exhibits contained
in this report is modified by such reference.
(b) The following table contains information regarding the shareholdings of the
Registrant's current directors and executive officers and those persons or
entities who have the right to vote or direct the vote or beneficially own more
than 5% of the Registrant's common stock or rights to acquire common stock:
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Percent Of
Amount of Common Common Stock
Stock Beneficially Beneficially Owned
Owned or Right to Or Right to
Name Direct vote (1) Direct Vote
- ----------------- ----------------- ------------------
Gregg Mulholland
C/o 947 Newhall Street
Costa Mesa, California 92627 3,000,000 66.67%
Jeffrey Jacobson
C/o 947 Newhall Street
Costa Mesa, California 92627 0 0.00%
(1) Based upon 4,498,000 outstanding shares of common stock.
COMMON STOCK
The Purchaser has authorized 20,000,000 shares of Common Stock of which
3,498,000 have been issued pro rata to the Shareholders. The Shares are entitled
to receive notice of or to attend any meeting of the shareholders of the
Acquisition and to vote on any matters before the shareholders of the
Acquisition.
REGISTRATION OF REGISTRANT SHARES
The Registrant has agreed to register for sale in the United States secondary
market 3,498,000 of the Registrant Shares issued to Shareholders. The Registrant
intends to register such shares by filing with the United States Securities and
Exchange Commission, as soon as possible, a registration statement on Form S-4
pursuant to the Securities Act of 1933. The timing of the sales of the
registered sales, and the prices at which such shares are sold into the public
market (if such market develops, of which there can be no assurance), will be
determined, respectively, by the holders of the registered shares and by market
conditions at the time of such sales. None of the proceeds of such sales will
belong to the Registrant or be applied for its benefit.
PREFERRED STOCK
The Registrant has authorized 20,000,000 shares of non-designated preferred
stock, $.0001 par value per share, of which none have been issued. The Preferred
Shares are not entitled to dividends and are non-voting. In the event of the
liquidation, dissolution or winding up of the Registrant, whether voluntary or
involuntary, the holders of the Preferred Shares shall be entitled to receive
the par value of each share before any amount shall be paid or any property or
assets distributed to the holders of the ordinary shares. After payment in full
to the holders of the Preferred Shares, the surplus assets, if any, shall belong
to and shall be divided among the holders of other stock or shares in the
Registrant.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
The Registrant intends to continue the business development formerly undertaken
by Can/Am Marketing Group, LLC (referred to as the "Purchaser") is a
wholly-owned subsidiary of the Registrant and as a result of the Transaction,
Can/Am Marketing Group LLC, the California limited liability company (referred
to as "Can/Am"), has become a wholly-owned subsidiary of Globalock Corporation.
BUSINESS
References herein to the Company include the Company's wholly owned subsidiary,
Can/Am Marketing Group LLC, unless the context otherwise requires. The Company
is a start-up company and has insignificant operations or revenues to date. The
ability of the Company to continue is dependent upon it obtaining the necessary
financing to continue its expansion efforts and upon future-profitable
operations. There can be no assurance that the Company will be able to continue
the development of its products, and that it will be able to market them
successfully. There is no assurance that even if completed and marketed those
revenues from the products will be sufficient to fund the Company's operations
or fund any additional development or marketing.
COMPANY BACKGROUND
General
Can/Am Marketing Group, LLC, a California limited liability company (the
"Company") was organized under the laws of the state of California on May 2,
1997. The Company's Articles of Organization provide that the Company is to
dissolve on or before December 31, 2040. The Company's Manager and Chief
Executive Officer is Gregg R. Mulholland.
The Company operates under the "American Inflatables" tradename. The Company was
formed to manufacture and market an alternative advertising medium, namely,
inflatable blimps and other custom inflatable products. Since inception, the
Company has sought to develop a strong reputation for high quality inflatable
products used for advertising and marketing applications while also seeking to
enhance its product design through innovation in raw materials and in
manufacturing techniques.
The Company currently maintains one of the largest and most comprehensive
inventories of custom inflatable patterns. Whether floating in the air or
tethered to the ground, flying, this innovative advertising medium creates
strong brand awareness and low cost advertising to retailers alike.
The Company both designs and manufactures hot air and cold air inflatables. Hot
air inflatables are usually filled with helium, a non-flammable gas, which
floats effortlessly through the air. Cold air inflatables are usually powered by
an electrical fan, which provides a constant flow of air. Both kinds of
inflatables can either be rooftop based or ground based.
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The Company's inflatable products are manufactured at 941 Newhall Costa Mesa
Facilities. The Company uses lightweight and durable fabrics primarily composed
of coated nylon webbing and stainless steel rivets. The Company believes that
this serves to make each inflatable product easy to handle portable, and easily
installed/dismantled without special equipment. The Company believes that by
following its business plan the Company will become a strong manufacturer and
supplier of alternative promotional balloon solutions that are highly cost
effective and easy to use. Company products range from custom inflatable designs
and huge product replicas to standard, low cost, designs such as: cold air and
helium filled advertising balloons, airships, 'hot air balloon' rooftop
displays, airborne helium balls and large flying signs.
The Company seeks to maintain its commitment to producing radically effective
promotional specialties of the highest caliber in quality, durability and
craftsmanship. This continues the Company's tradition of providing quality
inflatable display media with the demonstration of unique capabilities,
attention to detail and variety.
The Company's products are designed with businesses in mind. The Company's
advertising inflatables have the capacity to expand profits by attracting
customers. The unique nature of this alternative advertising medium can lure
passersby with its strong visual appeal to generate an increase in business
turnover. Among the variety of promotional activities, they can be used in
retail as a sophisticated point-of-purchase display aid. The manners in which
these sales enhancement tools are applied are as flexible as your marketing
prowess.
The Company's strategy is to offer the most cost-effective solutions and options
with the biggest 'bang-for-the buck' in the industry. Rapid set-up along with
quick deflation and packing are second nature to this medium. From huge
oversized product replica models and corporate logo and standard designs such as
custom detailed spheres and globes floating above a stand. This ensures that the
customer promotes its stand and product effectively, and believes that they have
received the best value for their advertising dollar.
The Company believes that the most unusual form of advertising display is also
the most portable. The displays can be inflated and deflated within minutes,
with a change in size that has to be seen to be believed. Unlike billboards,
these publicity-generating tools are reusable both indoors and outdoors. The
choice of helium inflatables brings the aerial advantage with greater visibility
from a distance. This medium provides the power of billboard advertising without
the expense along with the benefits of portability and reusability.
The Company's products are primarily composed of helium inflatables and forced
air inflatables. While product designs vary and reflect customer preferences,
most inflatable products incorporate coated nylon webbing and stainless steel
rivets as raw material components. These raw materials are primarily purchased
from specific suppliers under purchasing agreements the Company has with each
supplier. The Company believes that it is not dependent upon its suppliers since
the raw materials it requires can be obtained from many sources.
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The Company's management believes that it will need to expend significant
efforts to introduce the Company's design and manufacturing capabilities to the
industry. As of September 25, 1999, the Company had approximately 15,000
customers. The Company's records show that the average customer order is $2,500.
As a group, the Company's customers are concentrated as follows: 50% of sales
have been made to customers in the auto industry, 20% of sales have been made to
customers in the housing industry, and 30% of these have been made to customers
in the various miscellaneous retail industries.
The Company secures orders through its own in-house marketing and sales staff.
Currently, the Company has nine persons devoted to full-time marketing and sales
of the Company's products. Each such account representative ("Account
Representative") receiving 80 hours of training from the Company's management.
Account representatives are compensated with basic salary and commission.
Each Account representative is required to meet a minimum sales quota of $25,000
each month (the "Quota Amount"). After an Account Representative meets or
exceeds the Quota Amount, he is eligible to receive 10% commission on each
additional sales order. The Company anticipates that it will need to increase
the number of its Account Representatives by a minimum of 5 in the next 12
months. After the Company receives an order for the sale of the Company's
products, the Company's design staff works with the Account Representative that
generated the order to develop the most effective design. The mock up design is
then submitted to the customer for approval. After the customer approves the
design, the Company's manufacturing staff commences work on the product. For
most orders, the Company has found that from product design to product
completion, the Company's manufacturing process requires seven to 10 days. After
completion, each product is then shipped to the customer via Federal Express.
Each inflatable product is packaged and delivered to the customer with
instructions to assist the customer in erecting the product for maximum
marketing impact.
Customers are responsible for all installation.
The Company currently anticipates that it will need to raise up to $500,000 in
additional capital on a private placement basis through the sale of the
Company's common stock, preferred stock, debt securities, or some combination
thereof. The Company believes that if it is able to raise an additional $500,000
in additional financing, this will meet the Company's external financing
requirements for a period of about six months after which the Company may need
additional financing on such terms as may then be available. The amount of
additional financing that the Company will need has not been determined. While
the Company is currently exploring opportunities it may have to raise additional
capital, the Company has not received any commitment from any investor,
underwriter, or broker-dealer to provide any such funds. There can be no
assurance that the Company will be successful in raising additional funds, or,
if it is successful, that any such funds can be raised on terms that are
reasonable in view of the Company's current circumstances.
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The Company will pursue a strategy of attracting proven management talent from
within the industry and outside to develop and execute the business plan. The
Company will further use its management expertise in developing a strategy of
rapid but sustainable growth. This growth strategy will be achieved by
implementing an acquisition strategy centered on local and regional competitors,
which can enhance the Company's overall business objective.
If the Company can successfully execute its business plan as well as obtain
additional financing, the Company seeks to undertake one or more acquisitions of
other firms in its industry.
PROPERTY
The Company has 22 employees of whom eight employees are employed in
administrative and marketing functions and an additional 14 employees work in
production areas. The Company believes it has an excellent relationship with its
employees. None of its employees are represented by a collective bargaining
agreement.
The Company leases 10,000 square feet of office and manufacturing facilities at
949 Newhall Street, Costa Mesa, California 92627 under the terms of a one-year
lease (the "Lease") with ten one-year renewal options. Under the terms of the
Lease the Company pays $6,800 in monthly rent and common area operating
expenses. The Company's Manager, Gregg R. Mulholland, has personally guaranteed
the Company's obligations under the Lease.
The Company Web site is http://www.americaninflatable.com.
MANAGEMENT
Name Age Title
- ---- --- ----------------------------
Gregg Mulholland 30 Chairman of the Board, Chief
Executive Officer
Jeffrey Jacobson 52 President, Chief Operating
Officer and Director
The person identified above may be deemed a "promoter" of the Company, as that
term is defined in the rules and regulations promulgated under the Securities
and &change Act of 1933.
GREGG R. MULHOLLAND, age 30, is the Company's Manager and has served in that
capacity since May 3, 1997. From February 1995 to May 1997, Mr. Mulholland was
President/CEO at Hurlys Roadhouse Inc. of Newport Beach, California. From March
1993 to January 1995, Mr. Mulholland was General Partner at Arpatia Inc. Mr.
Mulholland holds a BA degree (Economics and Mathematics) from California State
University at Long Beach (1991), Long Beach, California.
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JEFFREY JACOBSON, age 52, is the Company's Operations Officer and has served in
that capacity since February 1999. From January 1997 to February 1999, Mr.
Jacobson was National Sales Manager at Giant Advertising of Huntington Beach,
California. From June 1987 to June 1995, Mr. Jacobson was President of Micro
Warehouse, California. The Company has entered into an employment agreement with
Mr. Jacobson. Mr. Jacobson holds a Bachelor of Commerce degree from University
of Witwatersrand and the Company has entered into an employment agreement with
him (See "Certain Transactions.")
RISK FACTORS ASSOCIATED WITH THE BUSINESS:
HISTORY OF LOSSES AND LACK OF AUDITED FINANCIAL STATEMENTS. The Company has had
a history of losses and there can be no assurance that the Company will achieve
profitability. The Company is currently preparing audited financial statements.
The Company's financial condition for the six months ending June 30, 1999 and
for the 12 months ending December 31, 1998 shows that the Company incurred
losses of about $81,000 and $46,500 respectively. While the Company anticipates
that it will be better positioned to improve its operations if the
Reorganization with GLOBALOCK CORPORATION, a Delaware corporation (the "New
Company") is approved, there can be no assurance that the Company (or the New
Company) will achieve any such improvement. (See "Business")
RELATIVELY NEW BUSINESS & LIMITED MANAGEMENT EXPERIENCE. Because of, among other
things, the Company's limited operating history in 1997, 1998, and 1999, and the
losses that the Company has incurred since its inception on May 2, 1997, there
can be no assurance that the Company will achieve profitability or if
profitability is achieved, that it can be maintained. Management's experience in
the Company's industry has gained solely while working for the Company. (See
"Management.")
LACK OF SIGNIFICANT OPERATING HISTORY. The Company is a newly formed enterprise
and has only a limited operating history upon which investors may evaluate its
performance. The likelihood of the success of the Company must be considered in
light of the expenses, complications, and delays frequently encountered in
connection with the establishment and expansion of new businesses and the
competitive environment in which the Company will operate. There can be no
assurance that future revenues from sales of the Company's products will occur
or be significant enough or that the Company will be able to sell its products
and services at a profit. Future revenues and profits, if any, will depend on
various factors, including, but not limited to both initial and continued market
acceptance of the Company's products and services and the successful
implementation of its planned growth strategies. The Company's ability to
achieve and maintain profitability is dependent on the ability of its products
to generate sufficient operating cash flow to fund future growth and
acquisitions. There can be no assurance that the Company's results of operations
will be profitable or that its business strategy will be successful. (See
"Business.")
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MATTER OF REORGANIZATION WITH GLOBALOCK CORPORATION. The Company seeks to effect
a merger and reorganization (the "Reorganization") whereby the Company plans to
enter into a proposed Agreement and Plan of Reorganization (the 'Agreement")
with GLOBALOCK CORPORATION, a Delaware corporation (the 'New Company"). Under
the terms of the Agreement and subject to the approval of the holders of the
Company's Membership Interests, each of the Company's outstanding Membership
Interests will be exchanged for one share of the New Company's Common Stock (par
value $0.01) (the "Shares"). As a result and subject to the approval of the
holders of the Company's Membership Interests the Company will become a
subsidiary of the New Company and the holders of the Company's Membership
Interests will exchange their Interests for New Shares. And a total of 4,498,000
Shares of the New Company will be issued and outstanding with 3,498,000 or
77.77% of the New Company's Shares will be held by the holders of the Company's
Membership Interests. In addition, certain lenders of the New Company have made
an aggregate of $300,000 in loans to the New Company have agreed that, following
the consummation of the Reorganization, they will convert their loans into an
aggregate of 300,000 Shares. There can be no assurance that these loans will be
converted and, if they are not converted what other expenses or cost the New
Company will incur.
CONTROL BY MANAGEMENT. Upon consummation of the Reorganization with the New
Company and before an additional issuance of the New Company's Shares, the New
Company will have 4,498,000 Shares outstanding of which 3,000,000 Shares will be
held by the Company's current Manager and Chief Executive Officer, Gregg R.
Mulholland who will assume similar responsibilities and serve as Chairman of the
Board of the New Company. As a result, Mr. Mulholland will own 66.58% of the New
Company's Shares and thereby effectively control the New Company.
POTENTIAL DILUTION. Upon consummation of the Reorganization, the Company,
through the New Company, anticipates that it will need to raise $500,000 in
capital on a private placement basis and should the Company succeed in those
efforts, the Company will need to raise a substantial amount of additional
capital. Since the New Company has not received any commitment with respect to
these funds, there can be assurance that the New Company will not incur
substantial and on-going dilution.
LACK OF INDEPENDENT EVALUATION OF BUSINESS STRATEGY & TERMS OF REORGANIZATION.
The Company's current management has not received any independent third party
evaluation of the Company's business plan or any evaluation of terms of the
Company's reorganization (the "Reorganization") with GLOBALOCK CORPORATION, a
Delaware corporation (the "New Company"). While the Company believes that the
Company's business plan is sound and that the Reorganization with the New
Company is an effective and appropriate strategy, the Company has not received
any independent advice on these matters and there can be no assurance that the
Company's efforts will prove successful. (See "Business.")
LACK OF DISTRIBUTIONS & LACK OF DIVIDENDS. The Company has never paid any
distributions on its Membership Interests and it does not anticipate paying any
distributions on its Membership Interests at any time in the future. The New
Company has not paid any cash dividends on its common stock and it does not
anticipate paying any dividends on its common stock at any time in the future.
Any profits that the New Company may earn, if any, will likely be reinvested
into the New Company. (See "Business.")
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LIMITED MARKET FOR COMMON STOCK. There can be no assurance that a meaningful
trading market for the Company's Common Stock will be established, or, if
established that it can be maintained for any significant period.
POSSIBLE RULE 144 STOCK SALES. Upon consummation of the Reorganization with the
New Company, the New Company is expected to have a substantial amount of shares
of the Company's outstanding Common Stock as "restricted securities" which may
be sold only in compliance with Rule 144 adopted under the Securities Act of
1933 or other applicable exemptions from registration. Rule 144 provides that a
person holding restricted securities for a period of two years may thereafter
sell in brokerage transactions, an amount not exceeding in any three month
period the greater of either (i) 1% of the Company's outstanding Common Stock,
or (ii) the average weekly trading volume during a period of four calendar weeks
immediately preceding any sale. Persons who are not affiliated with the Company
and who have held their restricted securities for at least three years are not
subject to the volume limitation. Possible or actual sales of the Company's
Common Stock by present shareholders under Rule 144 may have a depressive effect
on the price of the Company's Common Stock if any liquid trading market
develops.
RISKS OF LOW PRICED STOCKS. The New Company's Shares have never traded and there
can be no assurance that any trading market will ever develop. Consequently, a
shareholder may find it more difficult to dispose of, or to obtain accurate
quotations as to the price of, the New Company's securities. In the absence of a
security being quoted on NASDAQ, or the New Company having $2,000,000 in net
tangible assets, trading in the New Company's Shares is covered by Rule 3a5l-l
promulgated under the Securities Exchange Act of 1934 for non-NASDAQ and
non-exchange listed securities.
Under such rules, broker/dealers who recommend such securities to persons other
than established customers and accredited investors (generally institutions with
assets in excess of $5,000,000 or individuals with net worth in excess of
$1,000,000 or an annual income exceeding $200,000 or $300,000 jointly with their
spouse) must make a special written suitability determination for the purchaser
and receive the purchaser's written agreement to a transaction prior to sale.
Securities are also exempt from this rule if the market price is at least $5.00
per share, or for warrants, if the warrants have an exercise price of at least
$5.00 per share. The Securities Enforcement and Penny Stock Reform Act of 1990
requires additional disclosure related to the market for penny stocks and for
trades in any stock defined as a penny stock.
The Commission has recently adopted regulations under such Act which define a
penny stock to be any NASDAQ or non-NASDAQ equity security that has a market
price or exercise price of less than $5.00 per share and allow for the
enforcement against violators of the proposed rules.
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In addition, unless exempt, the rules require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule prepared by the
Commission explaining important concepts involving a penny stock market, the
nature of such market, terms used in such market, the broker/dealer's duties to
the customer, a toll-free telephone number for inquiries about the
broker/dealer's disciplinary history, and the customer's rights and remedies in
case of fraud or abuse in the sale.
Disclosure also must be made about commissions payable to both the broker/dealer
and the registered representative, current quotations for the securities, and,
if the broker/dealer is the sole market maker, the broker/dealer must disclose
this fact and its control over the market.
Monthly statements must be sent disclosing recent price information for the
penny stock held in the account and information on the limited market in penny
stocks. While many NASDAQ stocks are covered by the proposed definition of penny
stock, transactions in NASDAQ stock are exempt from all but the sole
market-maker provision for (i) issuers who have $2,000,000 in tangible assets
($5,000,000 if the issuer has not been in continuous operation for three years),
(ii) transactions in which the customer is an institutional accredited investor
and (iii) transactions that are not recommended by the broker/dealer. In
addition, transactions in a NASDAQ security directly with the NASDAQ market
maker for such securities, are subject only to the sole market-maker disclosure,
and the disclosure with regard to commissions to be paid to the broker/dealer
and the registered representatives.
Finally, all NASDAQ securities are exempt if NASDAQ raised its requirements for
continued listing so that any issuer with less than $2,000,000 in net tangible
assets or stockholder's equity would be subject to delisting. These criteria are
more stringent than the proposed increase in NASDAQ's maintenance requirements.
The Company's securities are subject to the above rules on penny stocks and the
market liquidity for the Company's securities could be severely affected by
limiting the ability of broker/dealers to sell the Company's securities.
ABILITY TO IMPLEMENT AND MANAGE GROWTH STRATEGY. Although the Company expects to
experience significant growth in a relatively short period of time and
operations are expected to grow rapidly, the Company's revenues may not continue
to grow at the same rate. Implementation of the Company's growth strategy may
impose a significant strain on the New Company's management, operating systems,
and financial resources. Failure by the Company to manage growth, or unexpected
difficulties encountered during growth, could have a material adverse impact on
the New Company's results of operations or financial condition. The New
Company's ability to operate profitable product lines will depend upon a number
of factors, including: (i) generating sufficient funds from existing operations
or obtaining third-party financing or additional capital to develop new product
lines, (ii) the Company's executive management team and its financial and
accounting controls and (iii) staffing, training and retaining skilled
management personnel. Certain of these factors are beyond the Company's control
and may be affected by the economy or actions taken by competing companies.
Moreover, the number of potential products that meet the Company's product focus
and other criteria for developing new products or services are believed to be
limited. There can be no assurance that the Company will be able to execute and
manage its growth strategy effectively or at all.
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COMPETITIVE MARKET FOR PERSONNEL. The New Company's future success also depends
largely on its ability to attract, hire, train and retain highly qualified
personnel to provide the New Company's products and services. Competition for
such personnel is intense. There can be no assurance that the Company will be
successful in attracting and retaining the technical personnel it requires to
conduct and expand its operations successfully and to differentiate itself from
its competition. The New Company's results of operations and growth prospects
could be materially adversely affected if the Company were unable to attract,
hire, train and retain such qualified technical personnel.
FACTORS AFFECTING OPERATING RESULTS; POTENTIAL FLUCTUATIONS IN QUARTERLY
RESULTS. The Company's (including the New Company's) future quarterly operating
results may vary and reduced levels of earnings or losses could be experienced
in one or more quarters. Fluctuations in the Company's quarterly operating
results could result from a variety of factors, including changes in the levels
of revenues derived from significant project orders, changes in the mix of
products, the timing of new products by the Company or its competitors, new
office openings by the Company, changes in pricing policies by the Company or
its competitors, market acceptance of new and enhanced products offered by the
Company or its competitors, changes in operating expenses, availability of
qualified technical personnel, disruptions in sources of related products, the
effect of potential acquisitions and industry and general economic factors. The
Company has limited or no control over many of these factors. The Company's
expense levels are based, in part, on its expectations as to future revenues. If
revenue levels are below expectations, operating results are likely to be
adversely affected. (See "Business.")
COMPETITION. The advertising medium markets in which the Company operates (and,
the New Company, should the Reorganization be approved) are characterized by
intense competition from several types of competitors. The Company expects to
face further competition from new market entrants and possible alliances among
competitors in the future. Many of the Company's current and potential
competitors have greater financial, technical, marketing and other resources
than the Company. As a result, they may be better able to respond or adapt to
new or emerging technologies and changes in customer requirements or to devote
greater resources to the development, marketing and sales of their products than
the Company. There can be no assurance that the Company will be able to continue
to compete successfully. In addition, the Company will be faced with numerous
competitors, both strategic and financial, in attempting to obtain competitive
products. Many actual and potential competitors are part of larger companies
with substantially greater financial, marketing and other resources than the
Company, and there can be no assurance that the Company will be able to compete
effectively against its future competitors. (See 'Competition.")
ACQUISITION RISK. As part of its growth strategy, the New Company intends to
evaluate the acquisition of complementary organizations in attractive geographic
or markets or with desirable client relationships. The success of this strategy
will depend not only upon the Company's ability to locate and acquire such
businesses on a cost-effective basis but also upon its ability to integrate
acquired operations into its organization effectively, to retain and motivate
key personnel and to retain customers of acquired firms. Although the New
Company will periodically consider possible acquisitions, no specific
acquisitions are currently being negotiated or planned. In addition, although
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the New Company will conduct due diligence reviews of potential acquisition
candidates, there can be no assurance that the New Company can identify all
material liabilities or risks related to potential acquisition candidates. There
can be no assurance that the New Company will be able to acquire any businesses,
retain the technical and other key personnel of an acquired business or
integrate any acquired business successfully, that financing for any
acquisition, if necessary, will be available on acceptable terms, if at all, or
that the New Company will be able to accomplish its strategic objectives in
connection with any acquisition.
RISKS ASSOCIATED WITH RAPID TECHNOLOGICAL CHANGE. The market for the New
Company's is characterized by rapidly changing technology and frequent new
product introductions. The development and commercialization of new technologies
and the introduction of new products can render existing products and
technologies obsolete or unmarketable. The New Company's success will depend on
its ability to attract and retain highly capable technical personnel, to enhance
existing products and to package newly developed and introduced service
offerings of its own with products from vendors, on a timely and cost-effective
basis, that keep pace with technological developments and address increasingly
sophisticated client requirements. There can be no assurance that the New
Company will be successful in identifying and marketing service enhancements or
supporting new products and services introduced by vendors that respond to
technological change. In addition, the New Company may experience contractual or
technical difficulties that could delay or prevent its successfully deploying
newly developed and introduced products.
Although the New Company intends to arrange suitable backup plans, there can be
no assurance that the occurrence of any of these events would not have a
material adverse effect on the Company's business and the results of its
operations.
DEPENDENCE ON INDUSTRY ALLIANCES AND RELATIONSHIPS. The Company's success (and
that of the New Company's if the Reorganization is approved) depends in part
upon its alliances and relationships with leading vendors. Any adverse change in
these relationships could have a materially adverse effect on the Company's
results of operations and financial condition while it seeks to establish
alternative relationships. Also, the Company will likely need to establish
additional alliances and relationships in order to keep pace with evolutions in
technology and enhance its service offerings, and there can be no assurance such
additional alliances will be established.
LIMITED PROTECTION OF INTELLECTUAL PROPERTY RIGHTS; RISKS OF INFRINGEMENT. The
Company relies primarily on a combination of trade secrets, confidentiality
procedures and contractual provisions to protect its intellectual property
rights, which afford only limited protection. Despite the Company's efforts to
protect its proprietary rights, unauthorized parties may attempt to obtain and
use information that the Company regards as proprietary, and there can be no
assurance that the Company's means of protecting its proprietary rights will be
adequate.
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DEPENDENCE ON KEY PERSONNEL. The Company's success depends to a significant
extent upon the contributions of its two senior executives, Mr. Gregg R.
Mulholland, the Company's Chief Executive Officer, and Mr. Jeffrey Jacobson, the
Company's Operating Officer. The loss of the services of either of the two
executives could have a material adverse effect on the Company. The Company does
not have key man life insurance on the lives of Messrs. Mulholland or Jacobson.
The Company's future success will depend, in part, on its ability to attract,
retain and motivate qualified personnel. The Company believes that the success
of the Company is substantially dependent upon the time, talent and experience
of Messrs. Mulholland and Jacobson and, as such, the Company will enter into
one-year employment agreements with both Messrs. Mulholland and Jacobson. In the
event of the loss of services of any of these executives, there can be no
assurance that the Company will be able to attract or retain a suitable
successor for any of Messrs.
Mulholland or Jacobson or attract, retain or motivate other qualified personnel.
NEED FOR ADDITIONAL CAPITAL & LACK OF UNDERWRITER. Even if all of the holders of
the Company's Membership Interests were to affirm their prior investment, the
Company anticipates it will need to raise additional external capital from the
sale of its (or the New Company's) securities for its planned operations through
the first one hundred and eighty days. To the extent that the proceeds from this
offering and cash flow from operations are insufficient to fund the Company's
activities, the Company will be required to raise additional funds through
equity or debt financing. No assurance can be given that such financing will be
available on terms acceptable to the Company, if at all and, if available, such
financing may result in further dilution to the Company's membership interest
holders and in higher interest expense. Insufficient funds may require the
Company to scale back its growth plans or eliminate some or all of its plans for
growth in secondary markets. (See "Financial Plan.")
PREVIOUS SECURITIES LAWS VIOLATION. As a result of past acts, which include
failure of the Company's Managers to adhere to provisions Regulation D of the
Securities Act of 1933 in connection with the prior sale of the Company's
Membership Interests, the Company is unable to determine the likelihood of other
actions to be taken on the part of other securities regulators and no assurance
may be given as to the effects of such actions, if any.
MATTER OF EXISTING FEDERAL TAX -LIENS & RISK OF AUDIT. The Company's assets and
business operations are subject to two federal tax liens aggregating about
$10,000. In the event that the Company is unable to obtain additional capital to
pay all amounts due thereby, the Company may incur substantial losses. The
Company's federal information returns may be audited by the Internal Revenue
Service and the California Franchise Tax Board. Such audits may result in the
challenges and disallowance of some of the deductions described in such returns
with consequent costs and expenses for the Company.
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LACK OF MANAGEMENT CONTROL BY MEMBERS. All decisions regarding day-to-day
management of the Company's affairs, including but not limited to investment
decisions, will be made by the Manager and not by the Members. The Manager may
only be removed by the Members by vote of the Members holding at least 50% of
the outstanding Membership Interests. The Manager has the right to terminate the
Company at any time. The Members will not have the authority or power to act for
or bind the Company. Accordingly, no person should purchase a Membership
Interest unless that person is willing to entrust all aspects of management to
the Manager or its successor. Prospective investors should carefully evaluate
the personal experience of the Manager. (See 'Operating Agreement - Exhibit B.")
MATTER OF LITIGATION. On July 12, 1999, the Company was named as a defendant in
a Complaint filed in the Superior Court of the State of California for Orange
County by Giant Advertising, Inc., a competitor of the Company ("Giant"). Giant
seeks damages of approximately $1,576,433. While the Company believes that
Giant's Complaint is not meritorious, the matter has not gone to trial and there
can be no assurance that the Company will successfully prevail in any resolution
of this litigation. In the event that the Company is not successful, the losses
incurred by the Company would likely endanger the viability of the Company.
Further, the Company anticipates that even if it does prevail, it will likely
incur substantial and prolonged legal fees, costs, and expenses in this matter.
The Company and its Manager also have an outstanding adverse judgement, which
seeks the Company's payment of about $34,347 to Glasforms, Inc. (See
"Litigation.")
LIMITED EVALUATION OF THE NEW COMPANY. While the Company believes that the
Reorganization with the New Company will assist the Company in achieving its
objectives, the Company has undertaken only a limited due diligence
investigation into the affairs of the New Company. In the event that the Company
later discovers that the New Company has committed any violations of state or
federal securities laws or has otherwise incurred any contingent or accrued
liabilities to one or more third parties, the holders of the Company's
Membership Interests would likely incur substantial losses.
MATTER OF INSURANCE COVERAGE. The Company has not carried, on a continuous
basis, workers' compensation insurance and general liability insurance. In the
event that any one or more employees of the Company were to incur injuries while
employed by the Company or if a customer, vendor, or other person were to incur
injuries on the Company's facilities, the Company would be exposed to
substantial costs and expenses that likely would result in immense losses to the
Company.
ISSUANCE OF FUTURE SHARES MAY DILUTE INVESTORS SHARE VALUE. The Certificate of
Incorporation of the Company authorizes the issuance of a maximum of 100,000,000
shares of common stock and 20,000,000 shares of preferred stock. The future
issuance of all or part of the remaining authorized common stock of the Company
may result in substantial dilution in the percentage of the Company's common
stock held by the Company's then existing shareholders. Moreover, any common
stock issued in the future may be valued on an arbitrary basis by the Company.
The issuance of the Company's shares for future services or acquisitions or
other corporate actions may have the effect of diluting the value of the shares
held by investors, and might have an adverse effect on any trading market,
should a trading market develop for the Company's common stock.
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POTENTIAL ADVERSE EFFECTS OF AUTHORIZATION OF PREFERRED STOCK. The Company may,
without further action or vote by shareholders of the Company, designate and
issue additional shares of preferred stock. The terms of any series of preferred
stock, which may include priority claims to assets and dividends and special
voting rights, could adversely affect the rights of holders of the common stock
and thereby reduce the value of the common stock. The designation and issuance
of preferred stock favorable to current management or shareholders could make
the possible takeover of the Company or the removal of management of the Company
more difficult and discourage hostile bids for control of the Company which bids
might have provided shareholders with premiums for their shares.
NO CURRENT TRADING MARKET FOR THE COMPANY'S SECURITIES. There is currently no
established public trading market for the securities of the Company. No
assurance can be given that an active trading market in the Company's securities
will develop or, if developed, that it will be sustained. The Company intends to
apply for admission to quotation of its securities on the NASD OTC Bulletin
Board and, if and when qualified, it intends to apply for admission to quotation
on the NASDAQ SmallCap Market. There can be no assurance that a regular trading
market for the common stock will develop or that, if developed, it will be
sustained. Various factors, such as the Company's operating results, changes in
laws, rules or regulations, general market fluctuations, changes in financial
estimates by securities analysts and other factors may have a significant impact
on the market price of the Company's securities. The market price for the
securities of public companies often experience wide fluctuations which are not
necessarily related to the operating performance of such public companies such
as high interest rates or impact of overseas markets.
PENNY STOCK REGULATION. Upon commencement of trading in the Company's stock, if
such occurs (of which there can be no assurance) the Company's common stock may
be deemed a penny stock. Penny stocks generally are equity securities with a
price of less than $5.00 per share other than securities registered on certain
national securities exchanges or quoted on the NASDAQ Stock Market, provided
that current price and volume information with respect to transactions in such
securities is provided by the exchange or system. The Company's securities may
be subject to "penny stock rules" that impose additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally those with assets in
excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together
with their spouse). For transactions covered by these rules, the broker-dealer
must make a special suitability determination for the purchase of such
securities and have received the purchaser's written consent to the transaction
prior to the purchase. Additionally, for any transaction involving a penny
stock, unless exempt, the "penny stock rules" require the delivery, prior to the
transaction, of a disclosure schedule prescribed by the Commission relating to
the penny stock market. The broker-dealer also must disclose the commissions
payable to both the broker-dealer and the registered representative and current
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quotations for the securities. Finally, monthly statements must be sent
disclosing recent price information on the limited market in penny stocks.
Consequently, the "penny stock rules" may restrict the ability of broker-dealers
to sell the Company's securities. The foregoing required penny stock
restrictions will not apply to the Company's securities if such securities
maintain a market price of $5.00 or greater. There can be no assurance that the
price of the Company's securities will reach or maintain such a level.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
As a result of the Agreement, the accountant to the Registrant, Weinberg &
Company will be replaced with the accountant for Can/Am Marketing Group, LLC,
Smith & Siegel LLP. The financial statements for the Registrant since inception
and prior to the change in such accountants have not contained any adverse
opinion or disclaimer or were modified as to any uncertainty, audit scope or
accounting principles and there were not any disagreements or "reportable
events" with such former accountant.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
Pursuant to the Agreement, two of the directors and the officers of the
Registrant resigned and the officers and directors of Can/Am Marketing Group,
LLC were designated to serve in their same capacities for the Registrant until
the next annual meeting of stockholders and until their respective successors
are elected and qualified or until their prior resignation or termination.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
It is impracticable to provide the required financial statements for the
acquired business referred to in Item 2 above. The registrant intends to file
such financial statements as soon as practicable but not later than 60 days
after the report on Form 8-K must be filed with respect to such acquisition.
(b) Pro forma Financial Information.
It is not practicable to provide the pro forma financial information required to
be filed as a result of the transactions referred to in Item 2 above. The
registrant intends to file such financial statements as soon as practicable but
not later than 60 days after the report on Form 8-K must be filed with respect
to such transactions.
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(c) Exhibits.
There is attached hereto the following exhibits:
Exhibit
No. Description
- ------- -----------
2.1 Merger Agreement and Plan of Reorganization among GLOBALOCK
CORPORATION, CAN/AM MARKETING GROUP, LLC, and all of the membership
interest-holders of CAN/AM MARKETING GROUP LLC.
16 Letter from Weinberg & Company, P.A., re Change in Certifying
Accountants.
99.1 Press Release issued by GLOBALOCK CORPORATION on January 3, 2000,
Globalock Corporation - dba American Inflatables crosses into the new
millennium.
99.2 Press Release issued by GLOBALOCK CORPORATION on December 29, 1999,
Globalock Corporation Announces Merger with Can/Am Marketing, LLC, a
leader in the Inflatable Advertising Industry.
99.3 Press Release issued by GLOBALOCK CORPORATION on December 28, 1999,
Globalock Corporation Appoints Dave Ariss to the Board of Directors.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN INFLATABLES, INC.
By /s/ Gregg Mulholland
President
Date: January 10, 2000
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EXHIBIT INDEX
2.1 Merger Agreement and Plan of Reorganization among GLOBALOCK CORPORATION,
CAN/AM MARKETING GROUP, LLC, and all of the membership interest-holders of
CAN/AM MARKETING GROUP LLC
16 Letter from Weinberg & Company, P.A., re Change in Certifying Accountants
99.1 Press Release issued by GLOBALOCK CORPORATION on January 3, 2000, Globalock
Corporation - dba American Inflatables crosses into the new millennium.
99.2 Press Release issued by GLOBALOCK CORPORATION on December 29, 1999,
Globalock Corporation Announces Merger with Can/Am Marketing, LLC, a leader
in the Inflatable Advertising Industry
99.3 Press Release issued by GLOBALOCK CORPORATION on December 28, 1999,
Globalock Corporation Appoints Dave Ariss to the Board of Directors
Exhibit 2.1
MERGER AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") among GLOBALOCK
CORPORATION, a Delaware corporation ("Acquisition"), CAN/AM MARKETING GROUP,
LLC, a California limited liability company ("Client") and the persons listed in
Exhibit "A" hereof (collectively the "Shareholders"), being the owners of record
of all of the issued and outstanding membership interests of Client.
Whereas, Acquisition wishes to acquire and the Shareholders wish to
transfer all of the issued and outstanding securities of Client in a transaction
intended to qualify as a reorganization within the meaning of ss.368(a)(1)(B) of
the Internal Revenue Code of 1986, as amended.
Now, therefore, Acquisition, Client, and the Shareholders adopt this
plan of reorganization and agree as follows:
1. EXCHANGE OF STOCK/MEMBERSHIP INTERESTS
1.1 EXCHANGE. The Shareholders agree to transfer to Acquisition at the Closing
(defined below) the number of membership interests of Client, shown opposite
their names in Exhibit "A", in exchange for an aggregate of 3,498,000 shares of
voting common stock of Acquisition, $.001 par value per share, at an exchange
ratio of 1.0 share of Acquisition common stock for each Client membership
interests.
1.2 EXCHANGE OF CERTIFICATES. Each holder of an outstanding certificate or
certificates theretofore representing ownership of Client membership interests
shall surrender such certificate(s) for cancellation to Acquisition, and shall
receive in exchange a certificate or certificates representing the number of
full shares of Acquisition common stock into which the shares of Client
membership interests represented by the certificate or certificates so
surrendered shall have been converted. The transfer of Client membership
interests by the Shareholders shall be effected by the delivery to Acquisition
at the Closing of certificates representing the transferred shares endorsed in
blank or accompanied by stock powers executed in blank.
1.3 FRACTIONAL SHARES. Fractional shares of Acquisition common stock shall not
be issued, but in lieu thereof Acquisition shall round up fractional shares to
the next highest whole number.
1.4 FURTHER ASSURANCES. At the Closing and from time to time thereafter, the
Shareholders shall execute such additional instruments and take such other
action as Acquisition may request in order more effectively to sell, transfer,
and assign the transferred stock to Acquisition and to confirm Acquisition's
title thereto.
1.5 SECURITIES OUTSTANDING AFTER CLOSING. Immediately following the Closing,
there will be issued and outstanding in Acquisition 4,498,000 common shares
issued as follows:
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Number of
Shares Name of Shareholder Address
--------- ------------------- -------
3,000,000 Gregg Mulholland 947 Newhall Street, Costa Mesa,
California, 92727
100,000 Michael Davis P.O. Box 20143, Riverside,
California, 92516
70,000 Stephen Livingston 1943 Port Cardigan, Newport
Beach, California, 92660
50,000 Lucille Barnes 2027 43rd Avenue, Suite D,
Seattle, Washington 98112
40,000 Greg Barton 17403 NE 45th Street, Suite
149, Redmond, Washington 98052
20,000 Michelle Heuring 656 South Ridgley Drive, Suite
202, Los Angeles,
California 90036
20,000 David Engel 15008 Wildwood Road,
Burnsville, Minnesota 55306
20,000 Gus Danielson 947 Newhall Street, Costa Mesa,
California 92627
20,000 Michael DeLew 920 Portoluca Court, Henderson,
Nevada 89015
20,000 Thomas Van Betten 3800 Howard Hughes Parkway, Las
Vegas, Nevada 89109
20,000 Scott Gragson 10404 Pacific Palisades, Las
Vegas, Nevada 89134
20,000 Eric Luria 87 Raft Island, Gig harbor,
Washington 98775
14,000 Darren Candiotty 3150 Lily Avenue, Long Beach,
California 90808
10,000 Caroline Roman 23592 Windsong, Suite J-19,
Aliso Viejo, California 92656
10,000 David Candiotty 3150 Lily Avenue, Long Beach,
California 90808
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Number of
Shares Name of Shareholder Address
--------- ------------------- -------
10,000 Schuyler Shimanek 9221 Holm Bursun Drive, NW
Albuquerque, New Mexico 87114
10,000 Cookie Robertson 2109 Barclay Court, Santa Ana,
California 92701
10,000 Ken Schueller P.O. Box 237, Mt. Lake Terrace,
Washington 98043
10,000 Martin Nelson 10716 206th Street, SE
Snohornish, Washington 98290
10,000 Kirti Shab 5552 Serene Drive, Huntington
Beach, California 92649
6,000 Kevin Candiotty 3150 Lily Avenue, Long Beach,
California 90808
4,000 Mike Herr 9672 Delafield Circle,
Huntington Beach, California
92646
4,000 Spencer Pinter 173 Ultra Drive, Henderson,
Nevada 89014
1,000,000 Pre-Merger Shareholders of C/O Globalock Corporation
Globalock Corporation George Todt, 860 Via de la Paz,
Suite E-1, Pacific Palisades,
California 90272
---------
4,498,000
Following the closing, loans of $300,000 shown in the balance sheet of Client at
August 31, 1999 will be converted to stockholder's equity for an aggregate of
300,000 shares of voting common stock of Acquisition at a conversion ratio of
1:1.
2. EXCHANGE OF OTHER SECURITIES.
2.1 SECURITIES EXCHANGED. All outstanding warrants, options, stock rights and
all other securities of Client owned by the Shareholders shall be exchanged and
adjusted, subject to the terms contained in such warrants, options, stock rights
or other securities, for similar securities of Acquisition.
2.2 RATIO OF EXCHANGE. The securities of Client owned by the Shareholders, and
the relative securities of Acquisition for which they will be exchanged, are set
out opposite their names in Exhibit A.
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3. CLOSING. The Closing contemplated herein shall be held on ________ at the
principal offices of Acquisition, at 860 Via de la Paz, Suite E-1, Pacific
Palisades, CA 90272 unless another place or time is agreed upon in writing by
the parties without requiring the meeting of the parties hereof. All proceedings
to be taken and all documents to be executed at the Closing shall be deemed to
have been taken, delivered and executed simultaneously, and no proceeding shall
be deemed taken nor documents deemed executed or delivered until all have been
taken, delivered and executed. The date of Closing may be accelerated or
extended by agreement of the parties.
Any copy, facsimile telecommunication or other reliable reproduction of the
writing or transmission required by this Agreement or any signature required
thereon may be used in lieu of an original writing or transmission or signature
for any and all purposes for which the original could be used, provided that
such copy, facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission or original
signature.
4. UNEXCHANGED CERTIFICATES. Until surrendered, each outstanding certificate
that prior to the Closing represented Client membership interests shall be
deemed for all purposes, other than the payment of dividends or other
distributions, to evidence ownership of the number of shares of Acquisition
common stock into which it was converted. No dividend or other distribution
shall be paid to the holders of certificates of Client membership interests
until presented for exchange at which time any outstanding dividends or other
distributions shall be paid.
5. REPRESENTATIONS AND WARRANTIES OF CLIENT
Client represents and warrants as follows:
5.1 ORGANIZED STATUS. Client is a limited liability corporation duly organized,
validly existing, and in good standing under the laws of the state of California
and is licensed or qualified as a foreign corporation in all states in which the
nature of its business or the character or ownership of its properties makes
such licensing or qualification necessary. Attached hereto are complete and
correct copies of the articles of organization and operating agreement of Client
as in effect on the date hereof. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not, violate any provision of
(a) articles of organization and operating agreement of Client, or (b) any
resolution adopted by the managers of Client or the Shareholders.
5.2 CAPITALIZATION. The equity structure of Client consists of membership
interests in the aggregate of 20,000,000, of which 3,498,000 membership
interests are issued and outstanding, all fully paid and nonassessable.
Shareholders are, and will be on the Closing Date, the record and beneficial
owners and holders of all of the outstanding equity securities and other
securities of Client, free and clear of all liens, claims, or other adverse
interests. All issued and outstanding membership interest of Client have been
duly authorized, validly issued and are fully paid and nonassessable, and none
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of such shares of such interests were issued in violation of the preemptive or
other rights of any person or the provisions of any applicable law, rule or
regulation. Except as set forth on the attached exhibit, there are no: (a)
outstanding securities convertible into or exchangeable for any of Client
interests capital stock; (b) outstanding options, warrants, calls or other
rights, including rights to demand registration or to sell in connection with
any registration by Client under the Securities Act of 1933, as amended (the
"Securities Act") to purchase or subscribe to membership interests of Client or
securities convertible into or exchangeable for membership interest of Client;
or (c) contracts, agreements, arrangements, commitments, plans or understandings
relating to the issuance, sale or transfer of any equity or other security of
Client, other than this Agreement.
5.3 SUBSIDIARIES. Client does not have any subsidiaries and does not own,
beneficially or of record, directly or indirectly, any equity securities or
other securities issued by any other person, or any direct or indirect equity or
ownership interest in any other business.
5.4 Financial Statements. The unaudited financial statements of Client at and
for the year ended December 31, 1998 and at and for the 8-month period ended
August 31, 1999 or such other period as acceptable to Acquisition ("Client's
Financial Statements") furnished to Acquisition are correct and fairly present
the financial condition of Client as of the dates and for the periods involved,
and such statements were prepared in accordance with generally accepted
accounting principles consistently applied.
5.5 UNDISCLOSED LIABILITIES. Client had no liabilities of any nature except to
the extent reflected or reserved against in Client's Financial Statements,
whether accrued, absolute, contingent, or otherwise, including, without
limitation, tax liabilities and interest due or to become due, and Client's
accounts receivable, if any, are collectible in accordance with the terms of
such accounts, except to the extent of the reserve therefor in Client's
Financial Statements.
5.6 ABSENCE OF MATERIAL CHANGES. Between the date of Client's Financial
Statements and the date of this Agreement, there have not been, except as set
forth in a list certified by the president of Client and delivered to
Acquisition, (1) any changes in Client's financial condition, assets,
liabilities, or business which, in the aggregate, have been materially adverse;
(2) any damage, destruction, or loss of or to Client's property, whether or not
covered by insurance; (3) any declaration or payment of any dividend or other
distribution in respect of Client's capital structure, or any direct or indirect
redemption, purchase, or other acquisition of any such stock or equity
instrument; (4) any increase paid or agreed to in the compensation, retirement
benefits, or other commitments to employees, (5) made any change in any method
of accounting or accounting practice, (6) made any gifts, or sold, transferred
or exchanged any property of any material value for less than the fair value
thereof.
5.7 LITIGATION. There is no litigation or proceeding pending, or to Client's
knowledge threatened, against or relating to Client, its properties or business,
except as set forth in a list certified by the president of Client and delivered
to Acquisition.
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5.8 CONTRACTS. Client is not a party to any material contract other than those
listed as attachment hereto.
5.9 NO VIOLATION. Execution of this Agreement and performance by Client
hereunder has been duly authorized by all requisite corporate action on the part
of Client, and this Agreement constitutes a valid and binding obligation of
Client, performance hereunder will not violate any provision of any charter,
bylaw, indenture, mortgage, lease, or agreement, or any order, judgment, decree,
law, or regulation to which any property of Client is subject or by which Client
is bound.
5.10 TAXES. Client has filed in correct form all federal, state, and other tax
returns of every nature required to be filed by it and has paid all taxes as
shown on such returns and all assessments, fees and charges received by it to
the extent that such taxes, assessments, fees and charges have become due.
Client has also paid all taxes which do not require the filing of returns and
which are required to be paid by it. To the extent that tax liabilities have
accrued, but have not become payable, they have been adequately reflected as
liabilities on the books of Client and are reflected in the financial statements
furnished hereto.
5.11 TITLE TO PROPERTY. Client has good and marketable title to all properties
and assets, real and personal, reflected in Client's Financial Statements,
except as since sold or otherwise disposed of in the ordinary course of
business, and Client's properties and assets are subject to no mortgage, pledge,
lien, or encumbrance, except for liens shown therein, with respect to which no
default exists.
5.12 CORPORATE AUTHORITY. Client has full corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder, and will deliver
at the Closing a certified copy of resolutions of its board of directors
authorizing execution of this Agreement by its officers and performance
thereunder.
5.13 ACCESS TO RECORDS. From the date of this Agreement to the Closing, Client
will (1) give to Acquisition and its representatives full access during normal
business hours to all of its offices, books, records, contracts, and other
corporate documents and properties so that Acquisition may inspect and audit
them and (2) furnish such information concerning Client's properties and affairs
as Acquisition may reasonably request.
5.14 CONFIDENTIALITY. Until the Closing (and permanently if there is no
Closing), Client and the Shareholders will keep confidential any information
which they obtain from Acquisition concerning its properties, assets, and
business. If the transactions contemplated by this Agreement are not
consummated, Client and the Shareholders will return to Acquisition all written
matter with respect to Acquisition obtained by them in connection with the
negotiation or consummation of this Agreement.
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6. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders, individually and separately, represent and warrant as follows:
6.1 TITLE TO MEMBERSHIP INTERESTS. The Shareholders, and each of them, are the
owners, free and clear of any liens and encumbrances, of the number of Client
membership interests which are listed in the attached schedule and which they
have contracted to exchange.
6.2 LITIGATION. There is no litigation or proceeding pending or to each
Shareholder's knowledge threatened, against or relating membership interest of
Client held by the Shareholders.
6.3 SECURITIES REPRESENTATIONS
(a) The shares of common stock of Acquisition are being acquired for the
account of the Shareholders and not with a view to sale in connection with any
distribution of the Acquisition common stock;
(b) Each of the Shareholders is acquiring the Acquisition common stock
hereunder without having received any form of general solicitation or general
advertising;
(c) Each of the Shareholders or his representative, if any, have been
provided with, or given reasonable access to, full and fair disclosure of all
material information concerning Acquisition;
(d) Each of the Shareholders has a preexisting personal or business
relationship with Acquisition or certain of its officers, directors or
controlling persons, or by reason of its business or financial experience, each
of the Shareholders could reasonably be assumed to have the capacity to
represent his own interests in connection with this Agreement;
(e) Each of the Shareholders understands and hereby acknowledges that the
Acquisition common stock will be issued pursuant only to those restrictions
imposed by and exemptions available pursuant to applicable federal and state
laws and that the certificates to be issued in respect of the Acquisition common
stock may bear a legend in a form satisfactory to counsel for Acquisition; in
part, Acquisition's reliance upon such exemptions is based on the
representations and warranties made by Shareholders in this Section 6.3;
(f) Each of the Shareholders agrees that the certificates to be issued in
respect of the Acquisition common stock may bear a legend in a form satisfactory
to counsel for Acquisition reflecting the status of the Acquisition common stock
as restricted securities under Rule 144(a)(3) promulgated under the Securities
Act and acknowledges that the transfer agent or registrar for Acquisition may be
instructed to restrict the transfer of the Acquisition common stock in
accordance with such legend and any other restrictions provided in this
Agreement;
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(g) Each of the Shareholders hereby agrees that he will not sell, transfer,
hypothecate, pledge, assign or otherwise dispose of any of the Acquisition
common stock, except pursuant to the terms of this Agreement and to a
registration statement filed under the provisions of the Securities Act, a
favorable no-action or interpretive letter received from the Commission or an
opinion of counsel satisfactory to Acquisition that such sale, transfer,
hypothecation, pledge, assignment or other disposition will not violate the
registration requirements of the Securities Act, pursuant to an opinion of
counsel satisfactory to Acquisition that such sale, transfer, hypothecation,
pledge, assignment or other disposition will not violate the registration
requirements of the Securities Act and does not in any way violate the terms of
this Agreement; and
(h) Each of the Shareholders hereby acknowledges that: (i) the shares of
Acquisition common stock referred to herein are being acquired after adequate
investigation of the business plan and prospects of Acquisition; (ii) that none
of the Shareholders is relying upon the accuracy of any predictions as to the
future prospects or developments of Acquisition or its business and is well
informed as to the business of Acquisition and has reviewed its operations and
financial statements; (iii) each of the Shareholders or his professional
advisors have discussed the financial condition and business operations of
Acquisition with the officers, directors and principal stockholders of
Acquisition and has been afforded the opportunity to ask questions with respect
thereto; and (iv) each of the Shareholders specifically acknowledges that the
shares of Acquisition common stock are speculative and involve a very high
degree of risk and that there can be no assurance that Acquisition will achieve
its business objectives or, in particular, that it will ever have cash available
for distribution to its stockholders.
7. REPRESENTATIONS AND WARRANTIES OF ACQUISITION
The Acquisition represents and warrants as follows:
7.1 CORPORATE STATUS. Acquisition is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware and is
licensed or qualified as a foreign corporation in all states in which the nature
of its business or the character or ownership of its properties makes such
licensing or qualification necessary.
7.2 CAPITALIZATION. The authorized capital stock of Acquisition consists of
100,000,000 shares of common stock, $.001 par value per share, of which
1,000,000 shares are issued and outstanding, all fully paid and nonassessable.
7.3 SUBSIDIARIES. Acquisition has no subsidiaries.
7.4 PUBLIC COMPANY. Acquisition filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, a registration
statement on August 27, 1999 registering its common stock.
7.5 PUBLIC FILINGS. Acquisition has timely filed all reports required to be
filed by it under Section 13 of the Securities Exchange Act of 1934.
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7.6 FINANCIAL STATEMENTS. The audited financial statements of Acquisition of
December 31, 1998 and for the period May 29, 1998 (inception) to September 30,
1999 or such other period as acceptable Client ("Acquisition's Financial
Statements") furnished to Client are correct and fairly present the financial
condition of Acquisition as of the dates and for the periods involved, and such
statements were prepared in accordance with generally accepted accounting
principles consistently applied.
7.7 UNDISCLOSED LIABILITIES. Acquisition had no liabilities of any nature except
to the extent reflected or reserved against in Acquisition's Financial
Statements, whether accrued, absolute, contingent, or otherwise, including,
without limitation, tax liabilities and interest due or to become due, and
Acquisition's accounts receivable, if any, are collectible in accordance with
the terms of such accounts, except to the extent of the reserve therefor in
Acquisition's Financial Statements.
7.8 ABSENCE OF MATERIAL CHANGES. Between the date of Acquisition's Financial
Statements and the date of this Agreement, there have not been, except as set
forth in a list certified by the president of Acquisition and delivered to
Client, (1) any changes in Acquisition's financial condition, assets,
liabilities, or business which, in the aggregate, have been materially adverse;
(2) any damage, destruction, or loss of or to Acquisition's property, whether or
not covered by insurance; (3) any declaration or payment of any dividend or
other distribution in respect of Acquisition's capital stock, or any direct or
indirect redemption, purchase, or other acquisition of any such stock; or (4)
any increase paid or agreed to in the compensation, retirement benefits, or
other commitments to employees.
7.9 LITIGATION. There is no litigation or proceeding pending, or to the
Company's knowledge threatened, against or relating to Acquisition, its
properties or business, except as set forth in a list certified by the president
of Acquisition and delivered to Client.
7.10 CONTRACTS. Acquisition is not a party to any material contract other than
those listed as an attachment hereto.
7.11 NO VIOLATION. Execution of this Agreement and performance by Acquisition
hereunder has been duly authorized by all requisite corporate action on the part
of Acquisition, and this Agreement constitutes a valid and binding obligation of
Acquisition, performance hereunder will not violate any provision of any
charter, bylaw, indenture, mortgage, lease, or agreement, or any order,
judgment, decree, law, or regulation to which any property of Acquisition is
Subject or by which Acquisition is bound.
7.12 TAXES. Acquisition has filed in correct form all federal, state, and other
tax returns of every nature required to be filed by it and has paid all taxes as
shown on such returns and all assessments, fees and charges received by it to
the extent that such taxes, assessments, fees and charges have become due.
Acquisition has also paid all taxes which do not require the filing of returns
and which are required to be paid by it. To the extent that tax liabilities have
accrued, but have not become payable, they have been adequately reflected as
liabilities on the books of Acquisition and are reflected in the financial
statements furnished hereto.
9
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7.13 TITLE TO PROPERTY. Acquisition has good and marketable title to all
properties and assets, real and personal, reflected in Acquisition's Financial
Statements, except as since sold or otherwise disposed of in the ordinary course
of business, and Acquisition's properties and assets are Subject to no mortgage,
pledge, lien, or encumbrance, except for liens shown therein, with respect to
which no default exists.
7.14 CORPORATE AUTHORITY. Acquisition has full corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder, and will
deliver at the Closing a certified copy of resolutions of its board of directors
authorizing execution of this Agreement by its officers and performance
thereunder.
7.15 CONFIDENTIALITY. Until the Closing (and permanently if there is no
Closing), Acquisition and its representatives will keep confidential any
information which they obtain from Client concerning its properties, assets, and
business. If the transactions contemplated by this Agreement are not
consummated, Acquisition will return to Client all written matter with respect
to Client obtained by it in connection with the negotiation or consummation of
this Agreement.
7.16 INVESTMENT INTENT. Acquisition is acquiring the Client membership interests
to be transferred to it under this Agreement for investment and not with a view
to the sale or distribution thereof, and Acquisition has no commitment or
present intention to liquidate Client or to sell or otherwise dispose of its
stock.
8. CONDUCT PENDING THE CLOSING
Acquisition, Client and the Shareholders covenant that between the date of this
Agreement and the Closing as to each of them:
8.1 No change will be made in the charter documents, by-laws, or other corporate
documents of Acquisition or Client.
8.2 This Agreement will be submitted for shareholder approval with a favorable
recommendation by the Board of Directors of each of Client and Acquisition and
the Board of Directors of each will use its best efforts to obtain the requisite
shareholder approval.
8.3 Client and Acquisition will use their best efforts to maintain and preserve
its business organization, employee relationships, and goodwill intact, and will
not enter into any material commitment except in the ordinary course of
business.
8.4 None of the Shareholders will sell, transfer, assign, hypothecate, lien, or
otherwise dispose or encumber the Client membership interests by them.
9. CONDITIONS PRECEDENT TO OBLIGATION OF CLIENT AND THE SHAREHOLDERS
Client's and the Shareholder's obligation to consummate this exchange shall be
Subject to fulfillment on or before the Closing of each of the following
conditions, unless waived in writing by Client or the Shareholders as
appropriate:
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9.1 ACQUISITION'S REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Acquisition set forth herein shall be true and correct at the
Closing as though made at and as of that date, except as affected by
transactions contemplated hereby.
9.2 ACQUISITION'S COVENANTS. Acquisition shall have performed all covenants
required by this Agreement to be performed by it on or before the Closing.
9.3 BOARD OF DIRECTOR APPROVAL. This Agreement shall have been approved by the
Board of Directors of Acquisition.
9.4 SUPPORTING DOCUMENTS OF ACQUISITION. Acquisition shall have delivered to
Client and the Shareholders supporting documents in form and substance
reasonably satisfactory to Client and the Shareholders, to the effect that:
(a) Acquisition is a corporation duly organized, validly existing, and in
good standing;
(b) Acquisition's authorized capital stock is as set forth herein;
(c) Certified copies of the resolutions of the board of directors of
Acquisition authorizing the execution of this Agreement and the consummation
hereof;
(d) Secretary's certificate of incumbency of the officers and directors of
Acquisition;
(e) Acquisition's Financial Statement and unaudited financial statement
from January 1, 1999 to close of most recent fiscal quarter; and
(f) Any document as may be specified herein or required to satisfy the
conditions, representations and warranties enumerated elsewhere herein.
10. CONDITIONS PRECEDENT TO OBLIGATION OF ACQUISITION
Acquisition's obligation to consummate this merger shall be Subject to
fulfillment on or before the Closing of each of the following conditions, unless
waived in writing by Acquisition:
10.1 CLIENT'S AND THE SHAREHOLDER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Client and the Shareholders set forth herein
shall be true and correct at the Closing as though made at and as of that date,
except as affected by transactions contemplated hereby.
10.2 CLIENT'S AND THE SHAREHOLDERS' COVENANTS. Client and the Shareholders shall
have performed all covenants required by this Agreement to be performed by them
on or before the Closing.
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10.3 MANAGER APPROVAL. This Agreement shall have been approved by the Manager of
Client.
10.4 SHAREHOLDER EXECUTION. This Agreement shall have been executed by all the
members of Client.
10.5 SUPPORTING DOCUMENTS OF CLIENT. Client shall have delivered to Acquisition
supporting documents in form and Substance reasonably satisfactory to
Acquisition to the effect that:
(a) Client is a limited liability company duly organized, validly existing,
and in good standing;
(b) Client's capital stock/equity is as set forth herein;
(c) Certified copies of the resolutions of the board of directors of Client
authorizing the execution of this Agreement and the consummation hereof;
(d) Secretary's certificate of incumbency of the officers and directors of
Client;
(e) Client's Financial Statements and unaudited financial statements for
the period from the date of the unaudited financial statements to the close of
the most recent fiscal quarter; audited financial statements are to be finished
within 60 days from the closing date of this agreement, and
(f) Any document as may be specified herein or required to satisfy the
conditions, representations and warranties enumerated elsewhere herein.
11. INDEMNIFICATION
11.1 INDEMNIFICATION OF ACQUISITION. Client and the Shareholders severally (and
not jointly) agree to indemnify Acquisition against any loss, damage, or expense
(including reasonable attorney fees) suffered by Acquisition from (1) any breach
by Client or the Shareholders of this Agreement or (2) any inaccuracy in or
breach of any of the representations, warranties, or covenants by Client or the
Shareholders herein; provided, however, that (a) Acquisition shall be entitled
to assert rights of indemnification hereunder only if and to the extent that it
suffers losses, damages, and expenses (including reasonable attorney fees)
exceeding $50,000 in the aggregate and (b) Acquisition shall give notice of any
claims hereunder within twenty-four months beginning on the date of the Closing.
No loss, damage, or expense shall be deemed to have been sustained by
Acquisition to the extent of insurance proceeds paid to, or tax benefits
realizable by, Acquisition as a result of the event giving rise to such right to
indemnification.
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11.2 PROPORTIONATE LIABILITY. The liability of each Shareholder under this
Section shall be in the proportion that the total number of Acquisition shares
to be received by him bears to the total number of Acquisition shares to be
received by all the Shareholders and shall in no event exceed 25 percent of the
value of the Acquisition shares received by such Shareholder. With respect to
Shareholders that are estates, trusts, or custodianships, the executor, trustee,
or custodian is a party to this Agreement only in its fiduciary capacity and
liability hereunder shall be limited to the fiduciary assets and shall not
extend to the assets of the executor, trustee, or custodian.
11.3 INDEMNIFICATION OF CLIENT AND THE SHAREHOLDERS. Acquisition agrees to
indemnify Client and the Shareholders against any loss, damage, or expense
(including reasonable attorney fees) suffered by Client or by any of the
Shareholders from (1) any breach by Acquisition of this Agreement or (2) any
inaccuracy in or breach of any of Acquisition's representations, warranties, or
covenants herein.
11.4 DEFENSE OF CLAIMS. Upon obtaining knowledge thereof, the indemnified party
shall promptly notify the indemnifying party of any claim, which has given or
could give rise to a right of indemnification under this Agreement. If the right
of indemnification relates to a claim asserted by a third party against the
indemnified party, the indemnifying party shall have the right to employ counsel
acceptable to the indemnified party to cooperate in the defense of any such
claim. As long as the indemnifying party is defending any such claim in good
faith, the indemnified party will not settle such claim. If the indemnifying
party does not elect to defend any such claim, the indemnified party shall have
no obligation to do so.
12. TERMINATION. This Agreement may be terminated (1) by mutual consent in
writing; (2) by either Client, the Shareholders or Acquisition if there has been
a material misrepresentation or material breach of any warranty or covenant by
any other party; or (3) by either Client, the Shareholders or Acquisition if the
Closing shall not have taken place, unless adjourned to a later date by mutual
consent in writing.
13. SHAREHOLDERS' REPRESENTATIVE. The Shareholders hereby irrevocably designate
and appoint Gregg Mulholland as their agent and attorney in fact ("Shareholders'
Representative") with full power and authority until the Closing to execute,
deliver, and receive on their behalf all notices, requests, and other
communications hereunder; to fix and alter on their behalf the date, time, and
place of the Closing; to waive, amend, or modify any provisions of this
Agreement, and to take such other action on their behalf in connection with this
Agreement, the Closing, and the transactions contemplated hereby as such agent
or agents deem appropriate; provided, however, that no such waiver, amendment,
or modification may be made if it would decrease the number of shares to be
issued to the Shareholders hereunder or increase the extent of their obligation
to indemnify Acquisition hereunder.
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Client, the Shareholders and Acquisition set out herein shall
survive the Closing.
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15. ARBITRATION
SCOPE. The parties hereby agree that any and all claims (except only for
requests for injunctive or other equitable relief) whether existing now, in the
past or in the future as to which the parties or any affiliates may be adverse
parties, and whether arising out of this agreement or from any other cause, will
be resolved by arbitration before the American Arbitration Association. Situs.
The situs of arbitration shall be chosen by the party against whom arbitration
is sought, provided only that arbitration shall be held at a place in the
reasonable vicinity of such party's place of business or primary residence and
shall be within the United States. The situs of counterclaims will be the same
as the situs of the original arbitration. Any disputes concerning situs will be
decided by the American Arbitration Association.
APPLICABLE LAW. The law applicable to the arbitration and this agreement shall
be that of the State of Delaware, determined without regard to its provisions
which would otherwise apply to a question of conflict of laws. Any dispute as to
the applicable law shall be decided by the arbitrator.
DISCLOSURE AND DISCOVERY. The arbitrator may, in its discretion, allow the
parties to make reasonable disclosure and discovery in regard to any matters,
which are the Subject of the arbitration, and to compel compliance with such
disclosure and discovery order. The arbitrator may order the parties to comply
with all or any of the disclosure and discovery provisions of the Federal Rules
of Civil Procedure, as they then exist, as may be modified by the arbitrator
consistent with the desire to simplify the conduct and minimize the expense of
the arbitration.
FINALITY AND FEES. Any award or decision by the American Arbitration Association
shall be final, binding and non-appealable except as to errors of law. Each
party to the arbitration shall pay its own costs and counsel fees.
MEASURE OF DAMAGES. In any adverse action, the parties shall restrict themselves
to claims for compensatory damages and no claims shall be made by any party or
affiliate for lost profits, punitive or multiple damages.
COVENANT NOT TO SUE. The parties covenant that under no conditions will any
party or any affiliate file any action against the other (except only requests
for injunctive or other equitable relief) in any forum other than before the
American Arbitration Association, and the parties agree that any such action, if
filed, shall be dismissed upon application and shall be referred for arbitration
hereunder with costs and attorney's fees to the prevailing party.
INTENTION. It is the intention of the parties and their affiliates that all
disputes of any nature between them, whenever arising, from whatever cause,
based on whatever law, rule or regulation, whether statutory or common law, and
however characterized, be decided by arbitration as provided herein and that no
party or affiliate be required to litigate in any other forum any disputes or
other matters except for requests for injunctive or equitable relief. This
agreement shall be interpreted in conformance with this stated intent of the
parties and their affiliates.
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16. GENERAL PROVISIONS
16.1 FURTHER ASSURANCES. From time to time, each party will execute such
additional instruments and take such actions as may be reasonably required to
carry out the intent and purposes of this Agreement.
16.2 WAIVER. Any failure on the part of either party hereto to comply with any
of its obligations, agreements, or conditions hereunder may be waived in writing
by the party to whom such compliance is owed.
16.3 BROKERS. Each party agrees to indemnify and hold harmless the other party
against any fee, loss, or expense arising out of claims by brokers or finders
employed or alleged to have been employed by the indemnifying party.
16.4 NOTICES. All notices and other communications hereunder shall be in writing
and shall be deemed to have been given if delivered in person or sent by prepaid
first-class certified mail, return receipt requested, or recognized commercial
courier service, as follows:
If to Acquisition, to:
GLOBALOCK CORPORATION
George Todt
President
860 Via de la Paz, Suite E-1
Pacific Palisades, California 90272
If to Client, to
CAN/AM MARKETING GROUP, LLC C/O Gregg Mulholland 947 Newhall Street Costa Mesa,
California 92067
If to the Shareholders, to
CAN/AM MARKETING GROUP, LLC C/O Gregg Mulholland 947 Newhall Street Costa Mesa,
California 92067
16.5 GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware.
16.6 ASSIGNMENT. This Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their successors and assigns; provided, however,
that any assignment by either party of its rights under this Agreement without
the written consent of the other party shall be void.
16.7 COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Signatures sent by
facsimile transmission shall be deemed to be evidence of the original execution
thereof.
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16.8 EFFECTIVE DATE. This effective date of this Agreement shall
be December 29, 1999.
GLOBALOCK CORPORATION
By /s/ George Todt
-------------------------
George Todt
CLIENT CORPORATION
By /s/ Gregg Mulholland
------------------------
Gregg Mulholland
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EXHIBIT A
Number of
Client
Membership Number of
Interests Acquisition
To Be Shares To Be Name of
Transferred Received Shareholder Address
- ----------- ----------- ----------- -------
3,000,000 3,000,000 Gregg Mulholland 947 Newhall Street,
Costa Mesa, CA 92727
100,000 100,000 Michael Davis P.O. Box 20143,
Riverside, CA 92516
70,000 70,000 Stephen Livingston 1943 Port Cardigan,
Newport Beach, CA 92660
50,000 50,000 Lucille Barnes 2027 43rd Avenue, Ste D,
Seattle, WA 98112
40,000 40,000 Greg Barton 17403 NE 45th St., Ste 149
Redmond, Washington 98052
20,000 20,000 Michelle Heuring 656 So. Ridgley Dr., Ste 202
Los Angeles, CA 90036
20,000 20,000 David Engel 15008 Wildwood Road,
Burnsville, MN 55306
20,000 20,000 Gus Danielson 947 Newhall Street,
Costa Mesa, CA 92627
20,000 20,000 Michael DeLew 920 Portoluca Court,
Henderson, Nevada 89015
20,000 20,000 Thomas Van Betten 3800 Howard Hughes Parkway,
Las Vegas, Nevada 89109
20,000 20,000 Scott Gragson 10404 Pacific Palisades,
Las Vegas, Nevada 89134
20,000 20,000 Eric Luria 87 Raft Island,
Gig harbor, WA 98775
14,000 14,000 Darren Candiotty 3150 Lily Avenue,
Long Beach, CA 90808
A-1
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Number of
Client
Membership Number of
Interests Acquisition
To Be Shares To Be Name of
Transferred Received Shareholder Address
- ----------- ----------- ----------- -------
10,000 10,000 Caroline Roman 23592 Windsong, Ste J-19,
Aliso Viejo, CA 92656
10,000 10,000 David Candiotty 3150 Lily Avenue,
Long Beach, CA 90808
10,000 10,000 Schuyler Shimanek 9221 Holm Bursun Dr, NW
Albuquerque, NM 87114
10,000 10,000 Cookie Robertson 2109 Barclay Court,
Santa Ana, CA 92701
10,000 10,000 Ken Schueller P.O. Box 237,
Mt. Lake Terrace, WA 98043
10,000 10,000 Martin Nelson 10716 206th Street, SE
Snohornish, WA 98290
10,000 10,000 Kirti Shab 5552 Serene Drive,
Huntington Beach, CA 92649
6,000 6,000 Kevin Candiotty 3150 Lily Avenue,
Long Beach, CA 90808
4,000 4,000 Mike Herr 9672 Delafield Circle,
Huntington Beach, CA 92646
4,000 4,000 Spencer Pinter 173 Ultra Drive,
Henderson, NV, 89014
--------- ---------
3,498,000 3,498,000
A-2
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EXHIBIT B
Agreement made this 29th day of December, 1999, between CLIENT CORPORATION, a
California limited liability company ("Client"), and the individuals whose names
and signatures are set out below (the "Shareholders"), being the owners of all
of the issued and outstanding stock of Client. As of the date hereof, Client
hereby releases the Shareholders and the Shareholders jointly and severally
hereby release Client from all claims of every kind and description, known and
unknown, without regard to the capacity in which such claims may have arisen.
CLIENT CORPORATION
By /s /Gregg Mulholland
-------------------------
THE SHAREHOLDERS:
Gregg Mulholland
Michael Davis
Stephen Livingston
Lucille Barnes
Greg Barton
Michelle Heuring
David Engel
Gus Danielson
Michael DeLew
Thomas Van Betten
Scott Gragson
Eric Luria
Darren Candiotty
Caroline Roman
David Candiotty
Schuyler Shimanek
Cookie Robertson
Ken Schueller
Martin Nelson
Kirti Shab
Daniel Cunningham
Kevin Candiotty
Mike Herr
Spencer Pinter
EXHIBIT 16
January 7, 2000
Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549
Re: Globalock Corporation
File Ref. No. 0-26943
We were previously the principal accountant for Globalock Corporation and, under
the dates of March 15, 1999 and June 15, 1999, we reported on financial
statements of Globalock Corporation for the periods from August 5, 1998
(inception) to October 31, 1998 and August 5, 1998 (inception) to April 30,
1999, respectively. On January 7, 2000 our appointment as principal accountant
was terminated. We have read Globalock Corporation's statements included under
Item 4 of its Form 8-K dated January 7, 2000 and we agree with such statements.
Very truly yours,
/s/ Weinberg & Company
WEINBERG & COMPANY, P.A.
EXHIBIT 99.1
News January 3, 14:21 Eastern Time
Globalock Corp. -- dba American Inflatables -- Crosses Into the New Millennium
PACIFIC PALISADES, Calif., Jan 3, 2000 (BUSINESS WIRE) -- Globalock Corp.
(OTCBB: GLLK), a publicly traded company, dba American Inflatables (the
"Company" or "AMIN") Monday announced that it believes that it is well prepared
for the year 2000.
AMIN manufactures and markets inflatable blimps and other custom inflatable
products, and maintains one of the largest and most comprehensive inventories of
custom inflatable patterns. Whether floating in the air, tethered to the ground
or flying, this innovative advertising medium creates strong brand awareness and
low cost advertising to manufacturers and retailers alike.
The company designs and manufactures helium and cold air inflatables:
-- Helium inflatables -- filled with helium, a non-flammable gas, floats
effortlessly through the air.
-- Cold air inflatables -- powered by an electrical fan, constant flow of
air.
-- Remote controlled inflatables -- for use in stadiums, arenas and
convention centers.
The company's inflatable products are manufactured using lightweight and durable
fabrics, making them easy to handle, portable, and can be installed/dismantled
single-handedly. The company believes with a few strategic acquisitions that it
will become the premier manufacturer and supplier of alternative promotional
advertising solutions. Products range from custom inflatable designs and huge
product replicas to standard, low cost, designs such as: cold air and
helium-filled advertising balloons, airships, "hot air balloon" rooftop
displays, airborne helium balls and large flying signs.
The company's promotional specialties are of the highest caliber in quality,
durability and craftsmanship. This continues the tradition of providing quality
inflatable display media with the demonstration of unique capabilities,
attention to detail and variety.
The company's products are designed with businesses in mind; AMIN's advertising
inflatables have the capacity to expand profits by attracting customers, lure
passers-by and increase business and walk-in traffic with its strong visual
appeal. Among the variety of promotional activities, they can be used in retail
as a sophisticated point-of-purchase display aid; sales enhancement tools which
are as flexible as your marketing prowess.
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The company's products offer:
-- Cost-effective solutions and options
-- Rapid set-up along with quick deflation
-- Huge oversized product replica models
-- Corporate logos
-- Standard designs
-- Custom detailed spheres and globes
-- Unusual form of advertising display
-- Remote controlled blimps and custom shapes
-- Reusable both indoors and outdoors
-- Aerial advantage of greater visibility from a distance
Within the last few years, cost effective and back to basic marketing has led to
the use of inflatable advertising. Inflatable advertising has earned the
reputation of "dollar for dollar" being the most cost-effective advertising
available to retailers who rely on walk-in traffic. Inflatable advertising,
still in its infancy, is reaching annual sales of nearly $1 billion. Inflatable
advertising is effective for businesses that rely on walk-in traffic; product
identification or trade shows recognition. Inflatable products have many
industrial uses. Inflatables that safely lift a 12-ton vehicle in soft terrain
to tethered inflatables that carry a variety of payloads including satellite
equipment, camera equipment, and even military equipment. This industry is
growing substantially and the company is going to capitalize on that growth
during the year 2000.
For more information, call 310/230-6122 or 949/515-8952.
Except for historical matter contained herein, the matters discussed in this
news release are forward-looking statements and are made pursuant to the safe
harbor provision of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect assumptions and involve risks and
uncertainties, which may affect the company's business and prospects and cause
actual results to differ materially from these forward-looking statements.
Copyright (C) 2000 Business Wire. All rights reserved.
Distributed via COMTEX.
CONTACT: Globalock Corp., Pacific Palisades
Gregg Mulholland, 949/515-8952
EXHIBIT 99.2
News December 29, 17:02 Eastern Time
Globalock Corporation Announces Merger with Can/Am Marketing, LLC, a leader in
the Inflatable Advertising Industry
PACIFIC PALISADES, Calif., Dec 29, 1999 (BUSINESS WIRE) -- Globalock Corporation
(the Company) (OTC BB: GLLK), a publicly traded company, is pleased to announce
that the Company has entered into a merger agreement with Can/Am Marketing
Group, LLC. Wednesday.
Can/Am Marketing Group, LLC, a California limited liability company ("Can/Am")
was organized under the laws of the state of California on May 2, 1997. Can/Am's
Articles of Organization provide that Can/Am is to dissolve on or before
December 31, 2040. Can/Am's Manager and Chief Executive Officer is Gregg R.
Mulholland.
Can/Am operates under the "American Inflatables" tradename. Can/Am was formed to
manufacture and market an alternative advertising medium, namely, inflatable
blimps and other custom inflatable products. Since inception, Can/Am has sought
to develop a strong reputation for high quality inflatable products used for
advertising and marketing applications while also seeking to enhance its product
design through innovation in raw materials and in manufacturing techniques.
George Todt CEO of Globalock Corporation, said, "We are pleased to enter into
this merger with Can/Am Marketing Group, LLC. The new combined company will
become a leader in inflatable advertising industry. The Company will change its
name to American Inflatables, Inc. and will pursue its acquisition and
consolidation strategy in the diverse and fragmented industry and pass over the
reigns of the Company to Mr. Gregg Mulholland, the President and Chief Executive
Officer Can/Am Marketing LLC."
For more information, call 310/230-6122.
Except for historical matter contained herein, the matters discussed in this
news release are forward-looking statements and are made pursuant to the safe
harbor provision of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect assumptions and involve risks and
uncertainties, which may affect the Company's business and prospects and cause
actual results to differ materially from these forward-looking statements.
Copyright (C) 1999 Business Wire. All rights reserved.
Distributed via COMTEX.
CONTACT: George Todt, 310/230-6122
Gregg Mulholland, 949/515-8952
EXHIBIT 99.3
News December 28, 16:23 Eastern Time
Globalock Corp. Appoints Dave Ariss to Board of Directors
PACIFIC PALISADES, Calif., Dec 28, 1999 (BUSINESS WIRE) -- Globalock Corp. (the
company) (OTCBB: GLLK), a publicly traded company, board of directors Tuesday
announced that Dave Ariss has joined the company as a board member.
Ariss has spent the majority of his professional career in the industrial and
commercial real estate industry. Ariss is currently the managing director of the
California Commerce Center, a significant master-planned mixed-use business park
located in Ontario, Calif. This master-planned mixed-use park is one of the
largest business parks in Southern California.
Ariss, in addition to his capacity as managing director of the California
Commerce Center, is principal with P.I.B. Realty Advisors, a real estate
consulting firm, and was recently appointed to the California World Trade
Commission by Governor Pete Wilson.
Ariss' list of professional accomplishments over his career, spanning 30 years,
is extensively involved in the California business market and significantly in
the global market. Ariss will be a significant asset to the company and to the
board of directors.
George Todt, chief executive officer of Globalock, said, "We are pleased to have
Mr. Ariss join the board of directors and become a significant contributor to
the company."
For more information, call 310/230-6122.
Except for historical matter contained herein, the matters discussed in this
news release are forward-looking statements and are made pursuant to the safe
harbor provision of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect assumptions and involve risks and
uncertainties, which may affect the company's business and prospects and cause
actual results to differ materially from these forward-looking statements.
Copyright (C) 1999 Business Wire. All rights reserved.
Distributed via COMTEX.
CONTACT: Globalock Corp.
George Todt, 310/230-6122
